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) | |||||||||||||||||||
JOHN PAK 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: | 10-31-2023 |
ITEM 1. REPORTS TO STOCKHOLDERS.
(a) Provided under separate cover.
![image29.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image29.jpg)
Annual Report | |||||
October 31, 2023 | |||||
Balanced Fund | |||||
Investor Class (TWBIX) | |||||
I Class (ABINX) | |||||
R5 Class (ABGNX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
![image26a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image26a.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of October 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWBIX | 5.20% | 5.32% | 5.64% | — | 10/20/88 | ||||||||||||||
Blended Index | — | 6.26% | 6.83% | 7.21% | — | — | ||||||||||||||
S&P 500 Index | — | 10.14% | 11.01% | 11.18% | — | — | ||||||||||||||
Bloomberg U.S. Aggregate Bond Index | — | 0.36% | -0.06% | 0.88% | — | — | ||||||||||||||
I Class | ABINX | 5.41% | 5.53% | 5.85% | — | 5/1/00 | ||||||||||||||
R5 Class | ABGNX | 5.41% | 5.53% | — | 5.61% | 4/10/17 |
Average annual returns since inception are presented when ten years of performance history is not available.
The blended index combines monthly returns of two widely known indices in proportion to the asset mix of the fund. The S&P 500 Index represents 60% of the index and the remaining 40% is represented by the Bloomberg U.S. Aggregate Bond Index.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-d41b51adcee54d3eb65a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-d41b51adcee54d3eb65a.jpg)
Value on October 31, 2023 | |||||
Investor Class — $17,305 | |||||
Blended Index — $20,053 | |||||
S&P 500 Index — $28,847 | |||||
Bloomberg U.S. Aggregate Bond Index — $10,921 | |||||
Total Annual Fund Operating Expenses | ||||||||
Investor Class | I Class | R5 Class | ||||||
0.91% | 0.71% | 0.71% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Equity Portfolio Managers: Joseph Reiland, Justin Brown and Robert Bove
Fixed-Income Portfolio Managers: Bob Gahagan, Charles Tan and Jason Greenblath
Performance Summary
Balanced returned 5.20%* for the 12 months ended October 31, 2023. By comparison, the fund’s benchmark (a blended index consisting of 60% S&P 500 Index and 40% Bloomberg U.S. Aggregate Bond Index) returned 6.26%. The fund’s return reflects operating expenses, while the index return does not.
Communication Services Hampered Equity Performance
Significant detractors in the communication services sector included Meta Platforms, where an underweight to Facebook’s parent company hampered relative performance. Meta beat sales and earnings estimates as digital advertising revenue is starting to recover and cost-cutting measures have proved helpful.
Elsewhere, NextEra Energy was a top detractor. Utilities generally underperformed on a combination of higher interest rates and investor rotation to growth-oriented sectors. Semiconductor company Broadcom detracted from relative performance because the fund did not own the benchmark component. Broadcom delivered solid results and recently detailed strong exposure to artificial intelligence, specifically in its custom ASIC and networking businesses. Keysight Technologies manufactures test and measurement instruments for use in communications, networking and electronics applications. It posted mixed results with revenues and earnings that beat expectations but new orders that lagged. The company also issued disappointing guidance
Information Technology Stocks Benefited Performance
Top contributors in the information technology sector included a pair of semiconductor stocks, led by NVIDIA. The chipmaker’s stock surged after increasing its future business guidance well above expectations. NVIDIA’s growth was driven by its data center business, which reflects the demand for computing power required for artificial intelligence applications. Applied Materials, a semiconductor equipment manufacturer, continued to benefit from management’s greater focus on margins and returns on capital. The company also was helped by industry consolidation and increased demand for chips.
Software company Microsoft reported better-than-expected revenue and earnings and offered upbeat guidance. Microsoft benefited from lower expenses and improved performance of its cloud unit. Other significant contributors included Novo Nordisk. The Denmark-based pharmaceutical company surged on its weight-loss drug Wegovy, and late-stage trial results also showed that Wegovy was beneficial for treating Type 2 diabetes and chronic kidney disease.
Bonds Also Lagged
The fiscal year includes the last two months of 2022, which concluded the worst calendar year on record for bond markets. Though inflation moderated and the Federal Reserve (Fed) paused rate hikes in June, the second quarter of 2023 was difficult amid better-than-expected economic data. What’s more, U.S. investment-grade bonds declined again in the third quarter of 2023. Surging Treasury yields and a still-hawkish Fed were among the key culprits. Indeed, the yield on the benchmark 10-year Treasury note touched 5% for the first time in 16 years in October 2023. In that environment, the fixed-income portion of the portfolio posted a loss in absolute terms and underperformed its benchmark.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Because the fund considers environmental, social and governance (ESG) metrics in addition to fundamental financial metrics when selecting securities, its portfolio may perform differently than funds that do not use ESG metrics. ESG considerations may prioritize long-term rather than short-term returns. Furthermore, when analyzing ESG criteria for securities, the portfolio management team relies on the information and scoring models published by third-party sources, there is a risk that this information might be incorrect or only take into account one of many ESG-related components of portfolio companies. Moreover, scores and ratings across third-party providers may be inconsistent or incomparable.
6
Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 60.0% | ||||
U.S. Government Agency Mortgage-Backed Securities | 13.6% | ||||
Corporate Bonds | 9.6% | ||||
U.S. Treasury Securities | 8.7% | ||||
Collateralized Loan Obligations | 2.1% | ||||
Asset-Backed Securities | 1.4% | ||||
Collateralized Mortgage Obligations | 1.1% | ||||
Municipal Securities | 0.5% | ||||
U.S. Government Agency Securities | 0.5% | ||||
Sovereign Governments and Agencies | 0.3% | ||||
Commercial Mortgage-Backed Securities | 0.2% | ||||
Exchange-Traded Funds | —* | ||||
Short-Term Investments | 2.4% | ||||
Other Assets and Liabilities | (0.4)% | ||||
*Category is less than 0.05% of total net assets. | |||||
Top Five Common Stocks Industries* | % of net assets | ||||
Software | 7.1% | ||||
Interactive Media and Services | 3.7% | ||||
Semiconductors and Semiconductor Equipment | 3.6% | ||||
Technology Hardware, Storage and Peripherals | 3.2% | ||||
Health Care Providers and Services | 2.8% |
*Exposure indicated excludes Exchange-Traded Funds. The Schedule of Investments provides additional information on the fund's portfolio holdings.
7
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 May 1, 2023 to October 31, 2023.
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 mutual 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 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 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.
8
Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $979.10 | $4.54 | 0.91% | ||||||||||
I Class | $1,000 | $979.50 | $3.54 | 0.71% | ||||||||||
R5 Class | $1,000 | $980.10 | $3.54 | 0.71% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.62 | $4.63 | 0.91% | ||||||||||
I Class | $1,000 | $1,021.63 | $3.62 | 0.71% | ||||||||||
R5 Class | $1,000 | $1,021.63 | $3.62 | 0.71% |
(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 184, the number of days in the most recent fiscal half-year, divided by 365, 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.
9
Schedule of Investments |
OCTOBER 31, 2023
Shares/Principal Amount | Value | ||||||||||
COMMON STOCKS — 60.0% | |||||||||||
Aerospace and Defense — 0.4% | |||||||||||
Lockheed Martin Corp. | 7,217 | $ | 3,281,137 | ||||||||
Air Freight and Logistics — 0.5% | |||||||||||
FedEx Corp. | 3,261 | 782,966 | |||||||||
United Parcel Service, Inc., Class B | 24,505 | 3,461,331 | |||||||||
4,244,297 | |||||||||||
Automobile Components — 0.5% | |||||||||||
Aptiv PLC(1) | 48,816 | 4,256,755 | |||||||||
Automobiles — 0.7% | |||||||||||
Tesla, Inc.(1) | 27,192 | 5,461,241 | |||||||||
Banks — 1.7% | |||||||||||
Bank of America Corp. | 149,879 | 3,947,813 | |||||||||
JPMorgan Chase & Co. | 52,269 | 7,268,527 | |||||||||
Regions Financial Corp. | 174,885 | 2,541,079 | |||||||||
13,757,419 | |||||||||||
Beverages — 0.8% | |||||||||||
PepsiCo, Inc. | 41,661 | 6,802,408 | |||||||||
Biotechnology — 1.4% | |||||||||||
AbbVie, Inc. | 40,339 | 5,695,060 | |||||||||
Amgen, Inc. | 13,950 | 3,567,015 | |||||||||
Vertex Pharmaceuticals, Inc.(1) | 5,885 | 2,131,017 | |||||||||
11,393,092 | |||||||||||
Broadline Retail — 1.8% | |||||||||||
Amazon.com, Inc.(1) | 110,142 | 14,658,799 | |||||||||
Building Products — 0.8% | |||||||||||
Johnson Controls International PLC | 90,191 | 4,421,163 | |||||||||
Masco Corp. | 43,377 | 2,259,508 | |||||||||
6,680,671 | |||||||||||
Capital Markets — 2.3% | |||||||||||
Ameriprise Financial, Inc. | 9,589 | 3,016,412 | |||||||||
BlackRock, Inc. | 5,892 | 3,607,554 | |||||||||
Intercontinental Exchange, Inc. | 22,438 | 2,410,739 | |||||||||
Morgan Stanley | 91,305 | 6,466,220 | |||||||||
S&P Global, Inc. | 8,372 | 2,924,423 | |||||||||
18,425,348 | |||||||||||
Chemicals — 1.3% | |||||||||||
Air Products & Chemicals, Inc. | 11,763 | 3,322,342 | |||||||||
Ecolab, Inc. | 12,804 | 2,147,743 | |||||||||
Linde PLC | 12,782 | 4,884,769 | |||||||||
10,354,854 | |||||||||||
Communications Equipment — 0.8% | |||||||||||
Cisco Systems, Inc. | 119,740 | 6,242,046 | |||||||||
Consumer Finance — 0.3% | |||||||||||
American Express Co. | 17,068 | 2,492,440 | |||||||||
Consumer Staples Distribution & Retail — 1.7% | |||||||||||
Costco Wholesale Corp. | 6,018 | 3,324,584 | |||||||||
Kroger Co. | 67,947 | 3,082,755 |
10
Shares/Principal Amount | Value | ||||||||||
Sysco Corp. | 67,520 | $ | 4,489,405 | ||||||||
Target Corp. | 26,617 | 2,948,898 | |||||||||
13,845,642 | |||||||||||
Containers and Packaging — 0.3% | |||||||||||
Ball Corp. | 43,804 | 2,109,163 | |||||||||
Distributors — 0.4% | |||||||||||
LKQ Corp. | 70,645 | 3,102,728 | |||||||||
Diversified Telecommunication Services — 0.7% | |||||||||||
Verizon Communications, Inc. | 161,406 | 5,670,193 | |||||||||
Electric Utilities — 0.9% | |||||||||||
NextEra Energy, Inc. | 123,995 | 7,228,909 | |||||||||
Electrical Equipment — 0.7% | |||||||||||
Eaton Corp. PLC | 23,874 | 4,963,643 | |||||||||
Generac Holdings, Inc.(1) | 5,482 | 460,872 | |||||||||
5,424,515 | |||||||||||
Electronic Equipment, Instruments and Components — 1.1% | |||||||||||
CDW Corp. | 23,872 | 4,783,949 | |||||||||
Keysight Technologies, Inc.(1) | 34,793 | 4,246,485 | |||||||||
9,030,434 | |||||||||||
Energy Equipment and Services — 0.9% | |||||||||||
Schlumberger NV | 125,898 | 7,007,483 | |||||||||
Entertainment — 0.6% | |||||||||||
Electronic Arts, Inc. | 14,885 | 1,842,614 | |||||||||
Liberty Media Corp.-Liberty Formula One, Class C(1) | 16,020 | 1,036,334 | |||||||||
Walt Disney Co.(1) | 24,922 | 2,033,386 | |||||||||
4,912,334 | |||||||||||
Financial Services — 1.8% | |||||||||||
Mastercard, Inc., Class A | 14,867 | 5,595,195 | |||||||||
Visa, Inc., Class A | 37,977 | 8,928,393 | |||||||||
14,523,588 | |||||||||||
Food Products — 0.5% | |||||||||||
Mondelez International, Inc., Class A | 56,740 | 3,756,755 | |||||||||
Ground Transportation — 0.7% | |||||||||||
Uber Technologies, Inc.(1) | 29,195 | 1,263,560 | |||||||||
Union Pacific Corp. | 20,195 | 4,192,684 | |||||||||
5,456,244 | |||||||||||
Health Care Equipment and Supplies — 0.4% | |||||||||||
Dexcom, Inc.(1) | 7,952 | 706,376 | |||||||||
Intuitive Surgical, Inc.(1) | 9,114 | 2,389,873 | |||||||||
3,096,249 | |||||||||||
Health Care Providers and Services — 2.8% | |||||||||||
Cigna Group | 26,139 | 8,082,179 | |||||||||
CVS Health Corp. | 56,429 | 3,894,165 | |||||||||
UnitedHealth Group, Inc. | 20,038 | 10,731,551 | |||||||||
22,707,895 | |||||||||||
Hotels, Restaurants and Leisure — 0.6% | |||||||||||
Airbnb, Inc., Class A(1) | 9,686 | 1,145,757 | |||||||||
Chipotle Mexican Grill, Inc.(1) | 610 | 1,184,742 | |||||||||
Starbucks Corp. | 26,466 | 2,441,224 | |||||||||
4,771,723 |
11
Shares/Principal Amount | Value | ||||||||||
Household Products — 0.8% | |||||||||||
Colgate-Palmolive Co. | 26,686 | $ | 2,004,652 | ||||||||
Procter & Gamble Co. | 31,869 | 4,781,306 | |||||||||
6,785,958 | |||||||||||
Industrial Conglomerates — 0.5% | |||||||||||
Honeywell International, Inc. | 21,256 | 3,895,375 | |||||||||
Industrial REITs — 0.9% | |||||||||||
Prologis, Inc. | 71,879 | 7,241,809 | |||||||||
Insurance — 1.6% | |||||||||||
Marsh & McLennan Cos., Inc. | 21,070 | 3,995,926 | |||||||||
MetLife, Inc. | 29,042 | 1,742,810 | |||||||||
Prudential Financial, Inc. | 33,412 | 3,055,193 | |||||||||
Travelers Cos., Inc. | 23,647 | 3,959,454 | |||||||||
12,753,383 | |||||||||||
Interactive Media and Services — 3.7% | |||||||||||
Alphabet, Inc., Class A(1) | 173,921 | 21,580,118 | |||||||||
Meta Platforms, Inc., Class A(1) | 28,306 | 8,527,748 | |||||||||
30,107,866 | |||||||||||
IT Services — 1.3% | |||||||||||
Accenture PLC, Class A | 17,599 | 5,228,487 | |||||||||
International Business Machines Corp. | 33,286 | 4,814,487 | |||||||||
10,042,974 | |||||||||||
Life Sciences Tools and Services — 1.5% | |||||||||||
Agilent Technologies, Inc. | 34,352 | 3,550,966 | |||||||||
Danaher Corp. | 20,376 | 3,912,600 | |||||||||
Thermo Fisher Scientific, Inc. | 9,901 | 4,403,668 | |||||||||
11,867,234 | |||||||||||
Machinery — 1.4% | |||||||||||
Cummins, Inc. | 16,409 | 3,549,267 | |||||||||
Deere & Co. | 6,751 | 2,466,545 | |||||||||
Parker-Hannifin Corp. | 7,392 | 2,726,983 | |||||||||
Xylem, Inc. | 23,966 | 2,241,779 | |||||||||
10,984,574 | |||||||||||
Oil, Gas and Consumable Fuels — 1.9% | |||||||||||
ConocoPhillips | 68,386 | 8,124,257 | |||||||||
EOG Resources, Inc. | 55,069 | 6,952,461 | |||||||||
15,076,718 | |||||||||||
Pharmaceuticals — 2.3% | |||||||||||
Bristol-Myers Squibb Co. | 80,947 | 4,171,199 | |||||||||
Eli Lilly & Co. | 5,245 | 2,905,363 | |||||||||
Merck & Co., Inc. | 43,768 | 4,494,973 | |||||||||
Novo Nordisk AS, Class B | 37,324 | 3,600,878 | |||||||||
Zoetis, Inc. | 22,952 | 3,603,464 | |||||||||
18,775,877 | |||||||||||
Semiconductors and Semiconductor Equipment — 3.6% | |||||||||||
Advanced Micro Devices, Inc.(1) | 46,477 | 4,577,984 | |||||||||
Analog Devices, Inc. | 21,699 | 3,413,904 | |||||||||
Applied Materials, Inc. | 28,448 | 3,765,093 | |||||||||
ASML Holding NV | 2,124 | 1,276,780 | |||||||||
GLOBALFOUNDRIES, Inc.(1) | 17,663 | 876,438 | |||||||||
NVIDIA Corp. | 36,518 | 14,892,040 | |||||||||
28,802,239 |
12
Shares/Principal Amount | Value | ||||||||||
Software — 7.1% | |||||||||||
Adobe, Inc.(1) | 3,173 | $ | 1,688,226 | ||||||||
Cadence Design Systems, Inc.(1) | 18,994 | 4,555,711 | |||||||||
Microsoft Corp. | 127,962 | 43,265,232 | |||||||||
Salesforce, Inc.(1) | 24,848 | 4,990,224 | |||||||||
ServiceNow, Inc.(1) | 2,187 | 1,272,506 | |||||||||
Workday, Inc., Class A(1) | 7,756 | 1,642,023 | |||||||||
57,413,922 | |||||||||||
Specialized REITs — 0.4% | |||||||||||
Equinix, Inc. | 3,909 | 2,852,163 | |||||||||
Specialty Retail — 2.0% | |||||||||||
CarMax, Inc.(1) | 18,007 | 1,100,048 | |||||||||
Home Depot, Inc. | 27,548 | 7,842,640 | |||||||||
TJX Cos., Inc. | 60,536 | 5,331,405 | |||||||||
Tractor Supply Co. | 8,426 | 1,622,511 | |||||||||
15,896,604 | |||||||||||
Technology Hardware, Storage and Peripherals — 3.2% | |||||||||||
Apple, Inc. | 149,514 | 25,532,506 | |||||||||
Textiles, Apparel and Luxury Goods — 0.4% | |||||||||||
Deckers Outdoor Corp.(1) | 4,820 | 2,877,829 | |||||||||
TOTAL COMMON STOCKS (Cost $385,311,343) | 481,601,393 | ||||||||||
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES — 13.6% | |||||||||||
Adjustable-Rate U.S. Government Agency Mortgage-Backed Securities — 0.1% | |||||||||||
FHLMC, VRN, 5.11%, (1-year H15T1Y plus 2.25%), 9/1/35 | $ | 51,673 | 52,471 | ||||||||
FHLMC, VRN, 5.30%, (1-year RFUCC plus 1.87%), 7/1/36 | 13,238 | 13,454 | |||||||||
FHLMC, VRN, 6.04%, (1-year H15T1Y plus 2.14%), 10/1/36 | 42,387 | 43,172 | |||||||||
FHLMC, VRN, 5.03%, (1-year H15T1Y plus 2.26%), 4/1/37 | 53,604 | 54,332 | |||||||||
FHLMC, VRN, 5.67%, (1-year RFUCC plus 1.89%), 7/1/41 | 24,077 | 23,902 | |||||||||
FHLMC, VRN, 3.60%, (1-year RFUCC plus 1.63%), 1/1/44 | 56,247 | 57,061 | |||||||||
FHLMC, VRN, 5.51%, (1-year RFUCC plus 1.60%), 6/1/45 | 27,105 | 27,334 | |||||||||
FHLMC, VRN, 5.76%, (1-year RFUCC plus 1.63%), 8/1/46 | 67,106 | 67,969 | |||||||||
FHLMC, VRN, 3.11%, (1-year RFUCC plus 1.64%), 9/1/47 | 116,752 | 115,352 | |||||||||
FNMA, VRN, 6.94%, (6-month RFUCC plus 1.57%), 6/1/35 | 21,690 | 22,045 | |||||||||
FNMA, VRN, 6.94%, (6-month RFUCC plus 1.57%), 6/1/35 | 21,618 | 21,961 | |||||||||
FNMA, VRN, 5.56%, (1-year H15T1Y plus 2.15%), 3/1/38 | 53,360 | 54,358 | |||||||||
FNMA, VRN, 3.19%, (1-year RFUCC plus 1.61%), 3/1/47 | 98,507 | 92,174 | |||||||||
FNMA, VRN, 3.12%, (1-year RFUCC plus 1.61%), 4/1/47 | 53,213 | 49,740 | |||||||||
FNMA, VRN, 3.20%, (1-year RFUCC plus 1.62%), 5/1/47 | 78,330 | 78,842 | |||||||||
774,167 | |||||||||||
Fixed-Rate U.S. Government Agency Mortgage-Backed Securities — 13.5% | |||||||||||
FHLMC, 2.00%, 6/1/36 | 1,799,868 | 1,538,708 | |||||||||
FHLMC, 3.50%, 2/1/49 | 1,825,651 | 1,556,261 | |||||||||
FHLMC, 3.00%, 1/1/50 | 1,664,242 | 1,336,526 | |||||||||
FHLMC, 3.50%, 5/1/50 | 295,184 | 250,239 | |||||||||
FHLMC, 2.50%, 5/1/51 | 1,961,945 | 1,516,547 | |||||||||
FHLMC, 3.50%, 5/1/51 | 959,173 | 811,528 | |||||||||
FHLMC, 3.00%, 7/1/51 | 744,119 | 601,083 | |||||||||
FHLMC, 2.00%, 8/1/51 | 1,617,020 | 1,196,638 | |||||||||
FHLMC, 2.50%, 8/1/51 | 1,764,500 | 1,359,764 | |||||||||
FHLMC, 2.50%, 10/1/51 | 922,152 | 718,775 | |||||||||
FHLMC, 3.00%, 12/1/51 | 1,138,094 | 913,934 |
13
Shares/Principal Amount | Value | ||||||||||
FHLMC, 3.00%, 2/1/52 | $ | 1,022,329 | $ | 823,745 | |||||||
FHLMC, 3.50%, 5/1/52 | 1,240,906 | 1,049,461 | |||||||||
FHLMC, 4.00%, 5/1/52 | 1,525,837 | 1,320,433 | |||||||||
FHLMC, 4.00%, 5/1/52 | 1,091,204 | 952,001 | |||||||||
FHLMC, 4.00%, 6/1/52 | 3,323,205 | 2,898,479 | |||||||||
FHLMC, 5.00%, 7/1/52 | 663,536 | 617,350 | |||||||||
FHLMC, 4.50%, 10/1/52 | 2,314,759 | 2,069,371 | |||||||||
FHLMC, 4.50%, 10/1/52 | 1,733,157 | 1,550,282 | |||||||||
FHLMC, 6.00%, 11/1/52 | 3,023,491 | 2,961,664 | |||||||||
FHLMC, 5.50%, 12/1/52 | 486,961 | 462,669 | |||||||||
FHLMC, 6.00%, 1/1/53 | 1,636,006 | 1,601,275 | |||||||||
FNMA, 2.00%, 5/1/36 | 822,078 | 701,810 | |||||||||
FNMA, 2.00%, 11/1/36 | 2,802,366 | 2,390,531 | |||||||||
FNMA, 2.50%, 12/1/36 | 1,973,180 | 1,732,811 | |||||||||
FNMA, 2.00%, 1/1/37 | 1,120,312 | 955,717 | |||||||||
FNMA, 4.50%, 9/1/41 | 133,043 | 122,688 | |||||||||
FNMA, 3.50%, 5/1/42 | 640,827 | 563,139 | |||||||||
FNMA, 3.50%, 6/1/42 | 211,392 | 185,764 | |||||||||
FNMA, 3.00%, 2/1/50 | 251,310 | 203,378 | |||||||||
FNMA, 2.50%, 6/1/50 | 955,642 | 742,609 | |||||||||
FNMA, 2.50%, 10/1/50 | 1,997,025 | 1,535,268 | |||||||||
FNMA, 2.50%, 12/1/50 | 1,374,566 | 1,059,366 | |||||||||
FNMA, 2.50%, 2/1/51 | 2,473,830 | 1,917,259 | |||||||||
FNMA, 3.00%, 6/1/51 | 130,051 | 106,574 | |||||||||
FNMA, 2.50%, 12/1/51 | 1,066,032 | 820,863 | |||||||||
FNMA, 2.50%, 2/1/52 | 590,042 | 456,218 | |||||||||
FNMA, 3.00%, 2/1/52 | 1,940,375 | 1,563,451 | |||||||||
FNMA, 3.00%, 2/1/52 | 1,100,864 | 887,005 | |||||||||
FNMA, 2.00%, 3/1/52 | 2,897,490 | 2,148,171 | |||||||||
FNMA, 2.50%, 3/1/52 | 1,348,770 | 1,047,017 | |||||||||
FNMA, 3.00%, 3/1/52 | 1,990,327 | 1,620,889 | |||||||||
FNMA, 3.00%, 4/1/52 | 445,596 | 359,116 | |||||||||
FNMA, 3.50%, 4/1/52 | 733,458 | 611,917 | |||||||||
FNMA, 4.00%, 4/1/52 | 1,414,054 | 1,228,072 | |||||||||
FNMA, 4.00%, 4/1/52 | 638,690 | 557,253 | |||||||||
FNMA, 4.00%, 4/1/52 | 462,971 | 401,283 | |||||||||
FNMA, 3.00%, 5/1/52 | 1,158,207 | 946,025 | |||||||||
FNMA, 3.50%, 5/1/52 | 2,034,291 | 1,703,075 | |||||||||
FNMA, 3.50%, 5/1/52 | 1,808,977 | 1,509,770 | |||||||||
FNMA, 3.50%, 5/1/52 | 1,735,756 | 1,472,336 | |||||||||
FNMA, 4.00%, 5/1/52 | 1,944,107 | 1,683,199 | |||||||||
FNMA, 3.00%, 6/1/52 | 510,181 | 416,714 | |||||||||
FNMA, 3.50%, 6/1/52 | 1,658,576 | 1,408,193 | |||||||||
FNMA, 4.50%, 7/1/52 | 1,492,976 | 1,335,345 | |||||||||
FNMA, 5.00%, 8/1/52 | 3,294,120 | 3,042,151 | |||||||||
FNMA, 4.50%, 9/1/52 | 815,481 | 738,623 | |||||||||
FNMA, 5.00%, 9/1/52 | 987,977 | 919,270 | |||||||||
FNMA, 5.50%, 10/1/52 | 1,607,430 | 1,526,562 | |||||||||
FNMA, 5.50%, 1/1/53 | 2,725,318 | 2,590,046 | |||||||||
FNMA, 6.50%, 1/1/53 | 2,772,926 | 2,759,335 | |||||||||
FNMA, 5.00%, 8/1/53 | 1,716,463 | 1,595,036 |
14
Shares/Principal Amount | Value | ||||||||||
FNMA, 6.00%, 9/1/53 | $ | 1,621,969 | $ | 1,580,387 | |||||||
FNMA, 6.00%, 9/1/53 | 1,613,389 | 1,572,151 | |||||||||
GNMA, 7.00%, 4/20/26 | 5,061 | 5,130 | |||||||||
GNMA, 7.50%, 8/15/26 | 4,088 | 4,098 | |||||||||
GNMA, 7.00%, 5/15/31 | 13,810 | 14,080 | |||||||||
GNMA, 5.50%, 11/15/32 | 33,924 | 33,306 | |||||||||
GNMA, 4.50%, 6/15/41 | 137,423 | 129,549 | |||||||||
GNMA, 3.50%, 6/20/42 | 244,060 | 212,755 | |||||||||
GNMA, 3.00%, 4/20/50 | 522,307 | 434,971 | |||||||||
GNMA, 3.00%, 5/20/50 | 534,003 | 444,463 | |||||||||
GNMA, 3.00%, 6/20/50 | 798,608 | 665,461 | |||||||||
GNMA, 3.00%, 7/20/50 | 1,409,181 | 1,171,018 | |||||||||
GNMA, 2.00%, 10/20/50 | 4,379,565 | 3,402,068 | |||||||||
GNMA, 2.50%, 11/20/50 | 1,890,707 | 1,475,819 | |||||||||
GNMA, 2.50%, 2/20/51 | 1,351,193 | 1,078,954 | |||||||||
GNMA, 3.50%, 6/20/51 | 927,357 | 796,108 | |||||||||
GNMA, 2.50%, 9/20/51 | 1,158,247 | 924,427 | |||||||||
GNMA, 2.50%, 12/20/51 | 1,772,795 | 1,414,868 | |||||||||
GNMA, 4.00%, 9/20/52 | 3,571,245 | 3,142,614 | |||||||||
GNMA, 4.50%, 9/20/52 | 3,422,896 | 3,098,470 | |||||||||
GNMA, 4.50%, 10/20/52 | 2,785,463 | 2,519,727 | |||||||||
GNMA, 5.00%, 4/20/53 | 1,596,432 | 1,487,920 | |||||||||
GNMA, 5.50%, 4/20/53 | 2,004,765 | 1,919,066 | |||||||||
GNMA, 6.00%, TBA | 1,660,000 | 1,626,391 | |||||||||
GNMA, 6.50%, TBA | 987,000 | 984,798 | |||||||||
UMBS, 5.00%, TBA | 2,522,000 | 2,433,064 | |||||||||
108,242,245 | |||||||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $119,349,170) | 109,016,412 | ||||||||||
CORPORATE BONDS — 9.6% | |||||||||||
Aerospace and Defense — 0.1% | |||||||||||
Boeing Co., 5.81%, 5/1/50 | 168,000 | 144,769 | |||||||||
Northrop Grumman Corp., 5.15%, 5/1/40 | 195,000 | 171,058 | |||||||||
RTX Corp., 4.125%, 11/16/28 | 520,000 | 477,720 | |||||||||
RTX Corp., 3.125%, 7/1/50 | 165,000 | 95,806 | |||||||||
889,353 | |||||||||||
Air Freight and Logistics† | |||||||||||
GXO Logistics, Inc., 2.65%, 7/15/31 | 257,000 | 190,794 | |||||||||
Automobiles — 0.3% | |||||||||||
Ford Motor Credit Co. LLC, 7.20%, 6/10/30 | 260,000 | 260,104 | |||||||||
General Motors Financial Co., Inc., 2.75%, 6/20/25 | 700,000 | 660,821 | |||||||||
Hyundai Capital America, 6.50%, 1/16/29(2)(3) | 117,000 | 116,692 | |||||||||
Hyundai Capital America, 6.20%, 9/21/30(2) | 233,000 | 226,432 | |||||||||
Toyota Motor Credit Corp., 5.25%, 9/11/28 | 310,000 | 305,257 | |||||||||
Toyota Motor Credit Corp., 4.55%, 5/17/30 | 490,000 | 458,625 | |||||||||
2,027,931 | |||||||||||
Banks — 2.0% | |||||||||||
Banco Santander SA, 6.94%, 11/7/33(3) | 200,000 | 200,754 | |||||||||
Banco Santander SA, VRN, 1.72%, 9/14/27 | 400,000 | 346,841 | |||||||||
Bank of America Corp., VRN, 5.82%, 9/15/29 | 380,000 | 370,110 | |||||||||
Bank of America Corp., VRN, 2.88%, 10/22/30 | 1,421,000 | 1,163,254 |
15
Shares/Principal Amount | Value | ||||||||||
Bank of America Corp., VRN, 2.57%, 10/20/32 | $ | 225,000 | $ | 168,573 | |||||||
Bank of America Corp., VRN, 4.57%, 4/27/33 | 375,000 | 323,537 | |||||||||
Bank of America Corp., VRN, 5.29%, 4/25/34 | 340,000 | 307,217 | |||||||||
Barclays PLC, VRN, 2.28%, 11/24/27 | 267,000 | 233,793 | |||||||||
Barclays PLC, VRN, 6.69%, 9/13/34 | 200,000 | 189,250 | |||||||||
BNP Paribas SA, VRN, 5.34%, 6/12/29(2) | 295,000 | 283,341 | |||||||||
BPCE SA, VRN, 7.00%, 10/19/34(2) | 260,000 | 252,778 | |||||||||
Canadian Imperial Bank of Commerce, 5.00%, 4/28/28 | 350,000 | 333,399 | |||||||||
Canadian Imperial Bank of Commerce, 6.09%, 10/3/33 | 145,000 | 139,733 | |||||||||
Citigroup, Inc., VRN, 3.07%, 2/24/28 | 376,000 | 338,533 | |||||||||
Citigroup, Inc., VRN, 3.52%, 10/27/28 | 178,000 | 160,063 | |||||||||
Citigroup, Inc., VRN, 3.98%, 3/20/30 | 273,000 | 241,607 | |||||||||
Citigroup, Inc., VRN, 4.41%, 3/31/31 | 120,000 | 106,206 | |||||||||
Citigroup, Inc., VRN, 3.06%, 1/25/33 | 560,000 | 431,341 | |||||||||
Citigroup, Inc., VRN, 6.27%, 11/17/33 | 160,000 | 155,420 | |||||||||
Credit Agricole SA, VRN, 6.32%, 10/3/29(2) | 377,000 | 370,552 | |||||||||
Credit Agricole SA, VRN, 4.00%, 1/10/33(2) | 555,000 | 483,354 | |||||||||
Danske Bank A/S, VRN, 1.55%, 9/10/27(2) | 385,000 | 334,425 | |||||||||
HSBC Holdings PLC, VRN, 5.89%, 8/14/27 | 330,000 | 324,279 | |||||||||
HSBC Holdings PLC, VRN, 2.80%, 5/24/32 | 415,000 | 312,571 | |||||||||
Huntington Bancshares, Inc., VRN, 6.21%, 8/21/29 | 206,000 | 198,084 | |||||||||
Intesa Sanpaolo SpA, 6.625%, 6/20/33(2) | 380,000 | 348,817 | |||||||||
JPMorgan Chase & Co., VRN, 4.01%, 4/23/29 | 347,000 | 316,130 | |||||||||
JPMorgan Chase & Co., VRN, 2.07%, 6/1/29 | 862,000 | 716,693 | |||||||||
JPMorgan Chase & Co., VRN, 2.52%, 4/22/31 | 550,000 | 437,609 | |||||||||
JPMorgan Chase & Co., VRN, 2.58%, 4/22/32 | 375,000 | 289,734 | |||||||||
JPMorgan Chase & Co., VRN, 6.25%, 10/23/34 | 190,000 | 187,513 | |||||||||
KeyBank NA, 3.40%, 5/20/26 | 370,000 | 325,737 | |||||||||
KeyCorp, VRN, 3.88%, 5/23/25 | 330,000 | 315,935 | |||||||||
Lloyds Banking Group PLC, VRN, 5.99%, 8/7/27 | 314,000 | 309,544 | |||||||||
PNC Financial Services Group, Inc., VRN, 6.62%, 10/20/27 | 320,000 | 320,879 | |||||||||
PNC Financial Services Group, Inc., VRN, 5.58%, 6/12/29 | 144,000 | 137,923 | |||||||||
PNC Financial Services Group, Inc., VRN, 5.94%, 8/18/34 | 205,000 | 191,174 | |||||||||
PNC Financial Services Group, Inc., VRN, 6.875%, 10/20/34 | 210,000 | 209,961 | |||||||||
Societe Generale SA, VRN, 6.69%, 1/10/34(2) | 286,000 | 267,998 | |||||||||
Truist Bank, 3.625%, 9/16/25 | 250,000 | 235,932 | |||||||||
Truist Bank, 3.30%, 5/15/26 | 495,000 | 453,399 | |||||||||
Truist Bank, VRN, 2.64%, 9/17/29 | 270,000 | 249,145 | |||||||||
Truist Financial Corp., VRN, 7.16%, 10/30/29 | 123,000 | 123,758 | |||||||||
U.S. Bancorp, VRN, 6.79%, 10/26/27 | 475,000 | 478,680 | |||||||||
U.S. Bancorp, VRN, 5.78%, 6/12/29 | 521,000 | 501,129 | |||||||||
Wells Fargo & Co., VRN, 5.57%, 7/25/29 | 220,000 | 212,200 | |||||||||
Wells Fargo & Co., VRN, 6.30%, 10/23/29 | 145,000 | 143,838 | |||||||||
Wells Fargo & Co., VRN, 5.39%, 4/24/34 | 841,000 | 761,705 | |||||||||
Wells Fargo & Co., VRN, 5.56%, 7/25/34 | 372,000 | 340,672 | |||||||||
15,645,120 | |||||||||||
Beverages — 0.2% | |||||||||||
Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide, Inc., 4.70%, 2/1/36 | 840,000 | 739,680 | |||||||||
Anheuser-Busch Cos. LLC / Anheuser-Busch InBev Worldwide, Inc., 4.90%, 2/1/46 | 795,000 | 662,630 | |||||||||
1,402,310 |
16
Shares/Principal Amount | Value | ||||||||||
Biotechnology — 0.3% | |||||||||||
AbbVie, Inc., 4.40%, 11/6/42 | $ | 260,000 | $ | 206,636 | |||||||
Amgen, Inc., 4.05%, 8/18/29 | 740,000 | 677,078 | |||||||||
Amgen, Inc., 5.25%, 3/2/33 | 428,000 | 399,360 | |||||||||
Amgen, Inc., 5.65%, 3/2/53 | 465,000 | 409,308 | |||||||||
Gilead Sciences, Inc., 5.55%, 10/15/53 | 450,000 | 406,822 | |||||||||
2,099,204 | |||||||||||
Capital Markets — 0.8% | |||||||||||
Bank of New York Mellon Corp., VRN, 6.47%, 10/25/34 | 480,000 | 481,800 | |||||||||
Blue Owl Capital Corp., 3.40%, 7/15/26 | 72,000 | 64,264 | |||||||||
Blue Owl Credit Income Corp., 3.125%, 9/23/26 | 183,000 | 160,653 | |||||||||
Charles Schwab Corp., VRN, 5.85%, 5/19/34 | 358,000 | 328,524 | |||||||||
Charles Schwab Corp., VRN, 6.14%, 8/24/34 | 180,000 | 168,692 | |||||||||
Deutsche Bank AG, VRN, 7.15%, 7/13/27 | 315,000 | 314,859 | |||||||||
Goldman Sachs Group, Inc., VRN, 1.76%, 1/24/25 | 199,000 | 196,566 | |||||||||
Goldman Sachs Group, Inc., VRN, 1.95%, 10/21/27 | 714,000 | 626,369 | |||||||||
Goldman Sachs Group, Inc., VRN, 6.48%, 10/24/29 | 290,000 | 290,005 | |||||||||
Goldman Sachs Group, Inc., VRN, 1.99%, 1/27/32 | 225,000 | 165,131 | |||||||||
Goldman Sachs Group, Inc., VRN, 2.65%, 10/21/32 | 220,000 | 165,481 | |||||||||
Golub Capital BDC, Inc., 2.50%, 8/24/26 | 168,000 | 147,047 | |||||||||
Morgan Stanley, VRN, 1.16%, 10/21/25 | 544,000 | 514,747 | |||||||||
Morgan Stanley, VRN, 2.63%, 2/18/26 | 209,000 | 199,035 | |||||||||
Morgan Stanley, VRN, 3.59%, 7/22/28 | 65,000 | 58,970 | |||||||||
Morgan Stanley, VRN, 5.12%, 2/1/29 | 118,000 | 112,380 | |||||||||
Morgan Stanley, VRN, 5.16%, 4/20/29 | 311,000 | 295,973 | |||||||||
Morgan Stanley, VRN, 2.70%, 1/22/31 | 540,000 | 434,033 | |||||||||
Morgan Stanley, VRN, 2.51%, 10/20/32 | 460,000 | 344,212 | |||||||||
Morgan Stanley, VRN, 5.42%, 7/21/34 | 172,000 | 157,040 | |||||||||
Morgan Stanley, VRN, 6.63%, 11/1/34(3) | 320,000 | 319,866 | |||||||||
Nasdaq, Inc., 5.55%, 2/15/34 | 261,000 | 242,225 | |||||||||
Nasdaq, Inc., 5.95%, 8/15/53 | 116,000 | 103,607 | |||||||||
UBS AG, 5.80%, 9/11/25 | 295,000 | 293,509 | |||||||||
UBS Group AG, 4.28%, 1/9/28(2) | 319,000 | 291,138 | |||||||||
UBS Group AG, VRN, 6.30%, 9/22/34(2) | 255,000 | 241,636 | |||||||||
6,717,762 | |||||||||||
Chemicals† | |||||||||||
CF Industries, Inc., 4.95%, 6/1/43 | 195,000 | 150,744 | |||||||||
Commercial Services and Supplies — 0.2% | |||||||||||
Republic Services, Inc., 2.30%, 3/1/30 | 358,000 | 290,598 | |||||||||
Veralto Corp., 5.45%, 9/18/33(2) | 510,000 | 476,836 | |||||||||
Waste Connections, Inc., 3.20%, 6/1/32 | 335,000 | 271,377 | |||||||||
Waste Management, Inc., 4.625%, 2/15/33 | 170,000 | 154,286 | |||||||||
1,193,097 | |||||||||||
Construction and Engineering† | |||||||||||
Quanta Services, Inc., 2.35%, 1/15/32 | 410,000 | 295,367 | |||||||||
Consumer Finance — 0.1% | |||||||||||
American Express Co., VRN, 6.34%, 10/30/26 | 500,000 | 501,508 | |||||||||
Containers and Packaging† | |||||||||||
WRKCo, Inc., 3.00%, 9/15/24 | 201,000 | 195,814 | |||||||||
Distributors† | |||||||||||
Genuine Parts Co., 6.50%, 11/1/28(3) | 204,000 | 204,070 |
17
Shares/Principal Amount | Value | ||||||||||
Diversified Consumer Services† | |||||||||||
Novant Health, Inc., 3.17%, 11/1/51 | $ | 245,000 | $ | 147,979 | |||||||
Pepperdine University, 3.30%, 12/1/59 | 355,000 | 203,589 | |||||||||
351,568 | |||||||||||
Diversified REITs — 0.2% | |||||||||||
Agree LP, 2.90%, 10/1/30 | 400,000 | 318,768 | |||||||||
Essex Portfolio LP, 3.00%, 1/15/30 | 247,000 | 201,824 | |||||||||
Extra Space Storage LP, 5.50%, 7/1/30 | 136,000 | 128,709 | |||||||||
Extra Space Storage LP, 2.20%, 10/15/30 | 120,000 | 91,629 | |||||||||
Federal Realty OP LP, 3.50%, 6/1/30 | 380,000 | 317,903 | |||||||||
GLP Capital LP / GLP Financing II, Inc., 5.375%, 4/15/26 | 200,000 | 191,866 | |||||||||
Kilroy Realty LP, 3.05%, 2/15/30 | 125,000 | 96,089 | |||||||||
Kilroy Realty LP, 2.50%, 11/15/32 | 165,000 | 109,338 | |||||||||
Kilroy Realty LP, 2.65%, 11/15/33 | 16,000 | 10,471 | |||||||||
Spirit Realty LP, 3.20%, 2/15/31 | 192,000 | 151,269 | |||||||||
1,617,866 | |||||||||||
Diversified Telecommunication Services — 0.3% | |||||||||||
AT&T, Inc., 5.40%, 2/15/34 | 453,000 | 416,389 | |||||||||
AT&T, Inc., 4.50%, 5/15/35 | 357,000 | 297,841 | |||||||||
AT&T, Inc., 4.90%, 8/15/37 | 286,000 | 240,971 | |||||||||
AT&T, Inc., 4.85%, 3/1/39 | 390,000 | 318,383 | |||||||||
Ooredoo International Finance Ltd., 2.625%, 4/8/31(2) | 323,000 | 262,612 | |||||||||
Sprint Capital Corp., 6.875%, 11/15/28 | 291,000 | 298,860 | |||||||||
Sprint Capital Corp., 8.75%, 3/15/32 | 545,000 | 614,161 | |||||||||
Telefonica Emisiones SA, 4.90%, 3/6/48 | 285,000 | 205,486 | |||||||||
Verizon Communications, Inc., 4.81%, 3/15/39 | 145,000 | 120,241 | |||||||||
2,774,944 | |||||||||||
Electric Utilities — 0.8% | |||||||||||
Baltimore Gas & Electric Co., 2.25%, 6/15/31 | 207,000 | 161,190 | |||||||||
CenterPoint Energy Houston Electric LLC, 4.95%, 4/1/33 | 153,000 | 141,407 | |||||||||
CenterPoint Energy Houston Electric LLC, 4.45%, 10/1/32 | 340,000 | 304,436 | |||||||||
Commonwealth Edison Co., 5.30%, 2/1/53 | 264,000 | 228,156 | |||||||||
Duke Energy Carolinas LLC, 2.55%, 4/15/31 | 154,000 | 123,234 | |||||||||
Duke Energy Corp., 2.55%, 6/15/31 | 230,000 | 177,439 | |||||||||
Duke Energy Corp., 5.00%, 8/15/52 | 230,000 | 178,810 | |||||||||
Duke Energy Florida LLC, 1.75%, 6/15/30 | 370,000 | 284,941 | |||||||||
Duke Energy Florida LLC, 3.85%, 11/15/42 | 220,000 | 156,544 | |||||||||
Duke Energy Progress LLC, 2.00%, 8/15/31 | 440,000 | 331,080 | |||||||||
Duke Energy Progress LLC, 4.15%, 12/1/44 | 335,000 | 245,070 | |||||||||
Duke Energy Progress LLC, 5.35%, 3/15/53 | 120,000 | 102,310 | |||||||||
Exelon Corp., 5.15%, 3/15/28 | 203,000 | 197,030 | |||||||||
Florida Power & Light Co., 2.45%, 2/3/32 | 391,000 | 305,139 | |||||||||
Florida Power & Light Co., 4.125%, 2/1/42 | 169,000 | 131,260 | |||||||||
Georgia Power Co., 4.95%, 5/17/33 | 150,000 | 137,005 | |||||||||
MidAmerican Energy Co., 4.40%, 10/15/44 | 265,000 | 205,139 | |||||||||
MidAmerican Energy Co., 3.15%, 4/15/50 | 200,000 | 119,970 | |||||||||
MidAmerican Energy Co., 5.85%, 9/15/54 | 90,000 | 84,396 | |||||||||
Nevada Power Co., 6.00%, 3/15/54 | 90,000 | 82,837 | |||||||||
NextEra Energy Capital Holdings, Inc., 4.90%, 2/28/28 | 280,000 | 267,709 | |||||||||
NextEra Energy Capital Holdings, Inc., 5.05%, 2/28/33 | 170,000 | 154,394 | |||||||||
NextEra Energy Capital Holdings, Inc., 5.25%, 2/28/53 | 240,000 | 195,028 |
18
Shares/Principal Amount | Value | ||||||||||
Northern States Power Co., 3.20%, 4/1/52 | $ | 240,000 | $ | 143,748 | |||||||
Northern States Power Co., 5.10%, 5/15/53 | 260,000 | 220,481 | |||||||||
Oncor Electric Delivery Co. LLC, 4.95%, 9/15/52(2) | 150,000 | 123,375 | |||||||||
Pacific Gas & Electric Co., 6.40%, 6/15/33 | 80,000 | 75,113 | |||||||||
Pacific Gas & Electric Co., 4.20%, 6/1/41 | 155,000 | 103,399 | |||||||||
PECO Energy Co., 4.375%, 8/15/52 | 340,000 | 256,067 | |||||||||
Public Service Co. of Colorado, 1.875%, 6/15/31 | 312,000 | 234,289 | |||||||||
Southern Co., 5.20%, 6/15/33 | 182,000 | 167,439 | |||||||||
Southern Co. Gas Capital Corp., 1.75%, 1/15/31 | 200,000 | 147,728 | |||||||||
Union Electric Co., 3.90%, 4/1/52 | 238,000 | 164,154 | |||||||||
Union Electric Co., 5.45%, 3/15/53 | 240,000 | 209,311 | |||||||||
Xcel Energy, Inc., 3.40%, 6/1/30 | 174,000 | 147,483 | |||||||||
Xcel Energy, Inc., 4.60%, 6/1/32 | 136,000 | 120,318 | |||||||||
6,427,429 | |||||||||||
Energy Equipment and Services† | |||||||||||
Schlumberger Investment SA, 4.85%, 5/15/33 | 150,000 | 138,145 | |||||||||
Entertainment — 0.1% | |||||||||||
Warnermedia Holdings, Inc., 3.64%, 3/15/25 | 111,000 | 107,307 | |||||||||
Warnermedia Holdings, Inc., 3.79%, 3/15/25 | 93,000 | 89,952 | |||||||||
Warnermedia Holdings, Inc., 3.76%, 3/15/27 | 83,000 | 76,430 | |||||||||
Warnermedia Holdings, Inc., 5.05%, 3/15/42 | 250,000 | 185,309 | |||||||||
Warnermedia Holdings, Inc., 5.14%, 3/15/52 | 330,000 | 233,688 | |||||||||
692,686 | |||||||||||
Financial Services — 0.1% | |||||||||||
Antares Holdings LP, 2.75%, 1/15/27(2) | 256,000 | 215,167 | |||||||||
Corebridge Financial, Inc., 3.90%, 4/5/32 | 375,000 | 306,986 | |||||||||
GE Capital Funding LLC, 4.55%, 5/15/32 | 360,000 | 323,560 | |||||||||
845,713 | |||||||||||
Food Products — 0.3% | |||||||||||
J M Smucker Co., 5.90%, 11/15/28 | 573,000 | 568,728 | |||||||||
JDE Peet's NV, 2.25%, 9/24/31(2) | 325,000 | 236,581 | |||||||||
Kraft Heinz Foods Co., 5.00%, 6/4/42 | 985,000 | 812,401 | |||||||||
Mars, Inc., 4.75%, 4/20/33(2) | 352,000 | 323,352 | |||||||||
Mars, Inc., 3.875%, 4/1/39(2) | 109,000 | 83,580 | |||||||||
Mondelez International, Inc., 2.625%, 3/17/27 | 310,000 | 280,637 | |||||||||
Nestle Holdings, Inc., 4.85%, 3/14/33(2) | 310,000 | 291,077 | |||||||||
2,596,356 | |||||||||||
Ground Transportation — 0.2% | |||||||||||
Ashtead Capital, Inc., 5.50%, 8/11/32(2) | 304,000 | 272,199 | |||||||||
Ashtead Capital, Inc., 5.95%, 10/15/33(2) | 400,000 | 365,174 | |||||||||
Burlington Northern Santa Fe LLC, 4.15%, 4/1/45 | 300,000 | 224,476 | |||||||||
Burlington Northern Santa Fe LLC, 3.30%, 9/15/51 | 175,000 | 109,216 | |||||||||
Burlington Northern Santa Fe LLC, 5.20%, 4/15/54 | 162,000 | 140,049 | |||||||||
CSX Corp., 4.25%, 3/15/29 | 224,000 | 209,129 | |||||||||
Union Pacific Corp., 3.55%, 8/15/39 | 480,000 | 354,558 | |||||||||
United Rentals North America, Inc., 6.00%, 12/15/29(2) | 170,000 | 163,699 | |||||||||
1,838,500 | |||||||||||
Health Care Equipment and Supplies — 0.2% | |||||||||||
GE HealthCare Technologies, Inc., 5.65%, 11/15/27 | 735,000 | 727,726 | |||||||||
Zimmer Biomet Holdings, Inc., 1.45%, 11/22/24 | 750,000 | 714,324 | |||||||||
1,442,050 |
19
Shares/Principal Amount | Value | ||||||||||
Health Care Providers and Services — 0.6% | |||||||||||
Centene Corp., 2.45%, 7/15/28 | $ | 560,000 | $ | 471,590 | |||||||
Centene Corp., 4.625%, 12/15/29 | 214,000 | 191,346 | |||||||||
Centene Corp., 3.375%, 2/15/30 | 349,000 | 288,884 | |||||||||
CVS Health Corp., 4.78%, 3/25/38 | 160,000 | 132,452 | |||||||||
CVS Health Corp., 5.05%, 3/25/48 | 400,000 | 314,729 | |||||||||
CVS Health Corp., 5.625%, 2/21/53 | 505,000 | 428,325 | |||||||||
Duke University Health System, Inc., 3.92%, 6/1/47 | 160,000 | 116,183 | |||||||||
HCA, Inc., 5.20%, 6/1/28 | 310,000 | 295,273 | |||||||||
HCA, Inc., 2.375%, 7/15/31 | 250,000 | 186,000 | |||||||||
HCA, Inc., 5.50%, 6/1/33 | 307,000 | 280,218 | |||||||||
HCA, Inc., 5.90%, 6/1/53 | 335,000 | 283,450 | |||||||||
Kaiser Foundation Hospitals, 3.00%, 6/1/51 | 220,000 | 129,331 | |||||||||
Quest Diagnostics, Inc., 6.40%, 11/30/33(3) | 300,000 | 299,427 | |||||||||
Roche Holdings, Inc., 2.61%, 12/13/51(2) | 440,000 | 244,185 | |||||||||
UnitedHealth Group, Inc., 5.05%, 4/15/53 | 540,000 | 454,599 | |||||||||
Universal Health Services, Inc., 1.65%, 9/1/26 | 377,000 | 332,614 | |||||||||
4,448,606 | |||||||||||
Hotels, Restaurants and Leisure — 0.1% | |||||||||||
Marriott International, Inc., 3.50%, 10/15/32 | 212,000 | 168,407 | |||||||||
Starbucks Corp., 2.55%, 11/15/30 | 475,000 | 383,321 | |||||||||
551,728 | |||||||||||
Household Durables† | |||||||||||
DR Horton, Inc., 2.50%, 10/15/24 | 310,000 | 299,879 | |||||||||
Household Products† | |||||||||||
Clorox Co., 1.80%, 5/15/30 | 385,000 | 296,350 | |||||||||
Insurance — 0.1% | |||||||||||
Belrose Funding Trust, 2.33%, 8/15/30(2) | 358,000 | 260,727 | |||||||||
Five Corners Funding Trust III, 5.79%, 2/15/33(2) | 184,000 | 174,106 | |||||||||
MetLife, Inc., 5.375%, 7/15/33 | 199,000 | 186,225 | |||||||||
621,058 | |||||||||||
IT Services — 0.1% | |||||||||||
Black Knight InfoServ LLC, 3.625%, 9/1/28(2) | 715,000 | 638,241 | |||||||||
Kyndryl Holdings, Inc., 3.15%, 10/15/31 | 79,000 | 57,614 | |||||||||
695,855 | |||||||||||
Machinery — 0.1% | |||||||||||
Ingersoll Rand, Inc., 5.70%, 8/14/33 | 197,000 | 186,232 | |||||||||
John Deere Capital Corp., 4.95%, 7/14/28 | 430,000 | 419,651 | |||||||||
John Deere Capital Corp., 4.70%, 6/10/30 | 283,000 | 266,533 | |||||||||
John Deere Capital Corp., Series I, 5.15%, 9/8/33 | 180,000 | 171,269 | |||||||||
1,043,685 | |||||||||||
Media — 0.4% | |||||||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 6.48%, 10/23/45 | 290,000 | 243,956 | |||||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 5.125%, 7/1/49 | 235,000 | 162,700 | |||||||||
Comcast Corp., 3.20%, 7/15/36 | 320,000 | 236,336 | |||||||||
Comcast Corp., 3.75%, 4/1/40 | 440,000 | 323,558 | |||||||||
Comcast Corp., 2.94%, 11/1/56 | 285,000 | 151,115 | |||||||||
Cox Communications, Inc., 3.15%, 8/15/24(2) | 96,000 | 93,758 | |||||||||
Cox Communications, Inc., 3.85%, 2/1/25(2) | 172,000 | 167,038 | |||||||||
Cox Communications, Inc., 5.70%, 6/15/33(2) | 149,000 | 140,195 |
20
Shares/Principal Amount | Value | ||||||||||
Cox Communications, Inc., 4.50%, 6/30/43(2) | $ | 83,000 | $ | 59,718 | |||||||
Fox Corp., 6.50%, 10/13/33 | 255,000 | 249,167 | |||||||||
Paramount Global, 4.00%, 1/15/26 | 495,000 | 469,945 | |||||||||
Paramount Global, 4.95%, 1/15/31 | 525,000 | 438,615 | |||||||||
WPP Finance 2010, 3.75%, 9/19/24 | 316,000 | 308,416 | |||||||||
3,044,517 | |||||||||||
Metals and Mining — 0.1% | |||||||||||
Glencore Funding LLC, 6.375%, 10/6/30(2) | 165,000 | 161,746 | |||||||||
Glencore Funding LLC, 2.625%, 9/23/31(2) | 440,000 | 331,626 | |||||||||
South32 Treasury Ltd., 4.35%, 4/14/32(2) | 285,000 | 234,374 | |||||||||
727,746 | |||||||||||
Multi-Utilities — 0.3% | |||||||||||
Ameren Corp., 3.50%, 1/15/31 | 430,000 | 360,739 | |||||||||
Ameren Illinois Co., 4.95%, 6/1/33 | 170,000 | 156,703 | |||||||||
CenterPoint Energy, Inc., 2.65%, 6/1/31 | 255,000 | 199,186 | |||||||||
Dominion Energy, Inc., 4.90%, 8/1/41 | 270,000 | 216,110 | |||||||||
DTE Energy Co., 4.875%, 6/1/28 | 200,000 | 190,347 | |||||||||
Public Service Enterprise Group, Inc., 6.125%, 10/15/33 | 480,000 | 468,765 | |||||||||
Sempra, 3.25%, 6/15/27 | 180,000 | 163,238 | |||||||||
Sempra, 5.50%, 8/1/33 | 400,000 | 372,242 | |||||||||
WEC Energy Group, Inc., 1.375%, 10/15/27 | 60,000 | 50,621 | |||||||||
2,177,951 | |||||||||||
Oil, Gas and Consumable Fuels — 0.7% | |||||||||||
Aker BP ASA, 6.00%, 6/13/33(2) | 480,000 | 452,474 | |||||||||
BP Capital Markets America, Inc., 3.06%, 6/17/41 | 250,000 | 165,506 | |||||||||
Cenovus Energy, Inc., 2.65%, 1/15/32 | 255,000 | 192,849 | |||||||||
Columbia Pipelines Operating Co. LLC, 6.04%, 11/15/33(2) | 370,000 | 351,529 | |||||||||
ConocoPhillips Co., 5.55%, 3/15/54 | 83,000 | 74,263 | |||||||||
Diamondback Energy, Inc., 6.25%, 3/15/33 | 320,000 | 316,017 | |||||||||
Enbridge, Inc., 5.70%, 3/8/33 | 323,000 | 302,166 | |||||||||
Energy Transfer LP, 5.75%, 2/15/33 | 312,000 | 292,717 | |||||||||
Energy Transfer LP, 6.55%, 12/1/33 | 156,000 | 154,079 | |||||||||
Energy Transfer LP, 4.90%, 3/15/35 | 270,000 | 229,444 | |||||||||
Energy Transfer LP, 6.125%, 12/15/45 | 140,000 | 121,068 | |||||||||
Enterprise Products Operating LLC, 4.85%, 3/15/44 | 237,000 | 196,451 | |||||||||
Equinor ASA, 3.25%, 11/18/49 | 230,000 | 146,250 | |||||||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39 | 173,000 | 160,605 | |||||||||
Occidental Petroleum Corp., 6.625%, 9/1/30 | 527,000 | 529,027 | |||||||||
Occidental Petroleum Corp., 6.45%, 9/15/36 | 150,000 | 145,817 | |||||||||
ONEOK, Inc., 6.05%, 9/1/33 | 125,000 | 119,856 | |||||||||
Petroleos Mexicanos, 6.625%, 6/15/35 | 50,000 | 33,010 | |||||||||
Sabine Pass Liquefaction LLC, 5.00%, 3/15/27 | 460,000 | 443,170 | |||||||||
Shell International Finance BV, 2.375%, 11/7/29 | 290,000 | 242,763 | |||||||||
Shell International Finance BV, 4.375%, 5/11/45 | 180,000 | 140,685 | |||||||||
Western Midstream Operating LP, 6.15%, 4/1/33 | 195,000 | 184,611 | |||||||||
Williams Cos., Inc., 5.30%, 8/15/28 | 215,000 | 207,307 | |||||||||
5,201,664 | |||||||||||
Personal Care Products — 0.1% | |||||||||||
Kenvue, Inc., 4.90%, 3/22/33 | 1,020,000 | 956,427 | |||||||||
Pharmaceuticals — 0.2% | |||||||||||
Eli Lilly & Co., 4.875%, 2/27/53 | 255,000 | 221,205 | |||||||||
Pfizer Investment Enterprises Pte. Ltd., 5.11%, 5/19/43 | 525,000 | 461,142 |
21
Shares/Principal Amount | Value | ||||||||||
Pfizer Investment Enterprises Pte. Ltd., 5.30%, 5/19/53 | $ | 335,000 | $ | 293,328 | |||||||
Utah Acquisition Sub, Inc., 3.95%, 6/15/26 | 675,000 | 632,439 | |||||||||
Viatris, Inc., 4.00%, 6/22/50 | 91,000 | 52,395 | |||||||||
1,660,509 | |||||||||||
Residential REITs† | |||||||||||
Invitation Homes Operating Partnership LP, 5.50%, 8/15/33 | 140,000 | 127,023 | |||||||||
Retail REITs — 0.1% | |||||||||||
Kimco Realty OP LLC, 4.60%, 2/1/33 | 520,000 | 449,684 | |||||||||
NNN REIT, Inc., 5.60%, 10/15/33 | 405,000 | 373,569 | |||||||||
NNN REIT, Inc., 4.80%, 10/15/48 | 270,000 | 199,418 | |||||||||
1,022,671 | |||||||||||
Semiconductors and Semiconductor Equipment — 0.1% | |||||||||||
Broadcom, Inc., 3.42%, 4/15/33(2) | 380,000 | 295,582 | |||||||||
Intel Corp., 5.70%, 2/10/53 | 316,000 | 283,025 | |||||||||
NXP BV / NXP Funding LLC / NXP USA, Inc., 2.50%, 5/11/31 | 495,000 | 378,220 | |||||||||
956,827 | |||||||||||
Software — 0.1% | |||||||||||
Oracle Corp., 3.85%, 7/15/36 | 153,000 | 116,767 | |||||||||
Oracle Corp., 3.60%, 4/1/40 | 422,000 | 289,951 | |||||||||
406,718 | |||||||||||
Specialized REITs — 0.1% | |||||||||||
American Tower Corp., 5.55%, 7/15/33 | 457,000 | 421,197 | |||||||||
Crown Castle, Inc., 4.15%, 7/1/50 | 221,000 | 147,676 | |||||||||
568,873 | |||||||||||
Specialty Retail — 0.1% | |||||||||||
AutoZone, Inc., 4.00%, 4/15/30 | 280,000 | 246,756 | |||||||||
AutoZone, Inc., 6.55%, 11/1/33 | 203,000 | 203,642 | |||||||||
Lowe's Cos., Inc., 5.625%, 4/15/53 | 595,000 | 514,541 | |||||||||
964,939 | |||||||||||
Technology Hardware, Storage and Peripherals — 0.1% | |||||||||||
Apple, Inc., 3.95%, 8/8/52 | 545,000 | 404,419 | |||||||||
Dell International LLC / EMC Corp., 5.75%, 2/1/33 | 230,000 | 217,583 | |||||||||
622,002 | |||||||||||
Trading Companies and Distributors† | |||||||||||
Aircastle Ltd., 5.25%, 8/11/25(2) | 196,000 | 190,888 | |||||||||
Water Utilities† | |||||||||||
Essential Utilities, Inc., 2.70%, 4/15/30 | 380,000 | 307,132 | |||||||||
Wireless Telecommunication Services† | |||||||||||
Vodafone Group PLC, 6.15%, 2/27/37 | 210,000 | 199,474 | |||||||||
TOTAL CORPORATE BONDS (Cost $86,245,204) | 77,330,853 | ||||||||||
U.S. TREASURY SECURITIES — 8.7% | |||||||||||
U.S. Treasury Bonds, 5.00%, 5/15/37 | 200,000 | 200,461 | |||||||||
U.S. Treasury Bonds, 4.375%, 11/15/39 | 300,000 | 273,586 | |||||||||
U.S. Treasury Bonds, 1.375%, 11/15/40 | 200,000 | 112,817 | |||||||||
U.S. Treasury Bonds, 4.375%, 5/15/41 | 1,400,000 | 1,263,500 | |||||||||
U.S. Treasury Bonds, 3.25%, 5/15/42 | 1,500,000 | 1,142,754 | |||||||||
U.S. Treasury Bonds, 3.375%, 8/15/42 | 600,000 | 464,426 | |||||||||
U.S. Treasury Bonds, 2.75%, 11/15/42 | 750,000 | 522,861 | |||||||||
U.S. Treasury Bonds, 4.00%, 11/15/42 | 1,900,000 | 1,611,252 | |||||||||
U.S. Treasury Bonds, 3.875%, 2/15/43 | 1,400,000 | 1,164,297 | |||||||||
U.S. Treasury Bonds, 2.875%, 5/15/43 | 1,300,000 | 919,877 |
22
Shares/Principal Amount | Value | ||||||||||
U.S. Treasury Bonds, 3.875%, 5/15/43 | $ | 2,400,000 | $ | 1,993,688 | |||||||
U.S. Treasury Bonds, 4.375%, 8/15/43 | 780,000 | 695,784 | |||||||||
U.S. Treasury Bonds, 3.75%, 11/15/43 | 600,000 | 487,172 | |||||||||
U.S. Treasury Bonds, 3.00%, 11/15/44 | 600,000 | 426,281 | |||||||||
U.S. Treasury Bonds, 2.50%, 2/15/45 | 1,500,000 | 968,408 | |||||||||
U.S. Treasury Bonds, 2.375%, 11/15/49 | 1,400,000 | 841,477 | |||||||||
U.S. Treasury Bonds, 3.00%, 8/15/52 | 100,000 | 68,617 | |||||||||
U.S. Treasury Bonds, 4.00%, 11/15/52 | 3,100,000 | 2,591,406 | |||||||||
U.S. Treasury Bonds, 3.625%, 2/15/53 | 200,000 | 155,875 | |||||||||
U.S. Treasury Bonds, 4.125%, 8/15/53 | 500,000 | 427,813 | |||||||||
U.S. Treasury Notes, 1.50%, 2/15/25(4) | 1,500,000 | 1,429,277 | |||||||||
U.S. Treasury Notes, 2.875%, 6/15/25(4) | 500,000 | 482,188 | |||||||||
U.S. Treasury Notes, 0.875%, 6/30/26 | 200,000 | 180,195 | |||||||||
U.S. Treasury Notes, 4.375%, 8/15/26 | 3,500,000 | 3,450,234 | |||||||||
U.S. Treasury Notes, 4.625%, 9/15/26 | 18,060,000 | 17,928,783 | |||||||||
U.S. Treasury Notes, 1.625%, 10/31/26 | 100,000 | 90,965 | |||||||||
U.S. Treasury Notes, 1.75%, 12/31/26 | 700,000 | 636,371 | |||||||||
U.S. Treasury Notes, 1.125%, 2/29/28 | 1,000,000 | 855,625 | |||||||||
U.S. Treasury Notes, 3.625%, 5/31/28 | 6,000,000 | 5,706,328 | |||||||||
U.S. Treasury Notes, 4.375%, 8/31/28 | 9,300,000 | 9,123,445 | |||||||||
U.S. Treasury Notes, 3.125%, 11/15/28 | 6,000,000 | 5,533,359 | |||||||||
U.S. Treasury Notes, 1.875%, 2/28/29 | 1,500,000 | 1,289,766 | |||||||||
U.S. Treasury Notes, 2.875%, 4/30/29 | 700,000 | 632,051 | |||||||||
U.S. Treasury Notes, 3.875%, 11/30/29 | 700,000 | 661,664 | |||||||||
U.S. Treasury Notes, 3.875%, 12/31/29 | 1,000,000 | 944,492 | |||||||||
U.S. Treasury Notes, 4.125%, 8/31/30 | 1,600,000 | 1,526,500 | |||||||||
U.S. Treasury Notes, 4.875%, 10/31/30 | 2,880,000 | 2,874,600 | |||||||||
TOTAL U.S. TREASURY SECURITIES (Cost $74,643,715) | 69,678,195 | ||||||||||
COLLATERALIZED LOAN OBLIGATIONS — 2.1% | |||||||||||
ABPCI Direct Lending Fund CLO IV Ltd., Series 2017-2A, Class BR, VRN, 7.55%, (3-month SOFR plus 2.16%), 10/27/33(2) | 600,000 | 572,960 | |||||||||
ACREC LLC, Series 2023-FL2, Class A, VRN, 7.56%, (1-month SOFR plus 2.23%), 2/19/38(2) | 474,000 | 473,463 | |||||||||
AIMCO CLO Ltd., Series 2019-10A, Class BR, VRN, 7.27%, (3-month SOFR plus 1.86%), 7/22/32(2) | 650,000 | 641,570 | |||||||||
Arbor Realty Commercial Real Estate Notes Ltd., Series 2021-FL1, Class A, VRN, 6.42%, (1-month SOFR plus 1.08%), 12/15/35(2) | 506,083 | 499,271 | |||||||||
Arbor Realty Commercial Real Estate Notes Ltd., Series 2021-FL2, Class A, VRN, 6.55%, (1-month SOFR plus 1.21%), 5/15/36(2) | 545,000 | 537,626 | |||||||||
Ares XL CLO Ltd., Series 2016-40A, Class BRR, VRN, 7.46%, (3-month SOFR plus 2.06%), 1/15/29(2) | 500,000 | 493,716 | |||||||||
Barings Private Credit Corp. CLO Ltd., Series 2023-1A, Class A1, VRN, 7.81%, (3-month SOFR plus 2.40%), 7/15/31(2) | 500,000 | 500,189 | |||||||||
BDS Ltd., Series 2021-FL8, Class A, VRN, 6.37%, (1-month SOFR plus 1.03%), 1/18/36(2) | 482,488 | 474,683 | |||||||||
BDS Ltd., Series 2021-FL8, Class D, VRN, 7.35%, (1-month SOFR plus 2.01%), 1/18/36(2) | 400,000 | 371,418 | |||||||||
BXMT Ltd., Series 2020-FL2, Class C, VRN, 7.10%, (1-month SOFR plus 1.76%), 2/15/38(2) | 1,090,000 | 943,146 | |||||||||
Canyon Capital CLO Ltd., Series 2017-1A, Class BR, VRN, 7.26%, (3-month SOFR plus 1.86%), 7/15/30(2) | 350,000 | 345,297 |
23
Shares/Principal Amount | Value | ||||||||||
Carlyle Global Market Strategies CLO Ltd., Series 2013-1A, Class BRR, VRN, 7.83%, (3-month SOFR plus 2.46%), 8/14/30(2) | $ | 450,000 | $ | 449,347 | |||||||
Cerberus Loan Funding XXXI LP, Series 2021-1A, Class A, VRN, 7.16%, (3-month SOFR plus 1.76%), 4/15/32(2) | 398,842 | 397,618 | |||||||||
Cerberus Loan Funding XXXIX LP, Series 2022-3A, Class A, VRN, 7.79%, (3-month SOFR plus 2.40%), 1/20/33(2) | 687,015 | 684,705 | |||||||||
Cerberus Loan Funding XXXVI LP, Series 2021-6A, Class A, VRN, 7.06%, (3-month SOFR plus 1.66%), 11/22/33(2) | 106,465 | 106,129 | |||||||||
FS Rialto Issuer LLC, Series 2022-FL6, Class A, SEQ, VRN, 7.91%, (1-month SOFR plus 2.58%), 8/17/37(2) | 566,000 | 567,891 | |||||||||
KKR CLO Ltd., Series 2018, Class BR, VRN, 7.26%, (3-month SOFR plus 1.86%), 7/18/30(2) | 575,000 | 568,477 | |||||||||
KKR CLO Ltd., Series 2022A, Class A, VRN, 6.83%, (3-month SOFR plus 1.41%), 7/20/31(2) | 442,217 | 440,352 | |||||||||
KREF Ltd., Series 2021-FL2, Class B, VRN, 7.10%, (1-month SOFR plus 1.76%), 2/15/39(2) | 800,000 | 742,862 | |||||||||
MF1 Ltd., Series 2021-FL7, Class AS, VRN, 6.90%, (1-month SOFR plus 1.56%), 10/16/36(2) | 1,075,000 | 1,041,483 | |||||||||
Mountain View CLO LLC, Series 2017-2A, Class B, VRN, 7.36%, (3-month SOFR plus 1.96%), 1/16/31(2) | 375,000 | 369,256 | |||||||||
Octagon Investment Partners XV Ltd., Series 2013-1A, Class BRR, VRN, 7.16%, (3-month SOFR plus 1.76%), 7/19/30(2) | 700,000 | 687,803 | |||||||||
Palmer Square CLO Ltd., Series 2023-4A, Class B, VRN, 7.56%, (3-month SOFR plus 2.15%), 10/20/33(2) | 650,000 | 649,217 | |||||||||
Palmer Square Loan Funding Ltd., Series 2022-2A, Class A2, VRN, 7.29%, (3-month SOFR plus 1.90%), 10/15/30(2) | 550,000 | 547,857 | |||||||||
PFP Ltd., Series 2021-8, Class C, VRN, 7.25%, (1-month SOFR plus 1.91%), 8/9/37(2) | 807,000 | 769,554 | |||||||||
Shelter Growth CRE Issuer Ltd., Series 2023-FL5, Class A, VRN, 8.09%, (1-month SOFR plus 2.75%), 5/19/38(2) | 475,500 | 473,635 | |||||||||
Sound Point CLO XXII Ltd., Series 2019-1A, Class BR, VRN, 7.38%, (3-month SOFR plus 1.96%), 1/20/32(2) | 500,000 | 491,000 | |||||||||
TCW CLO Ltd., Series 2018-1A, Class BR, VRN, 7.29%, (3-month SOFR plus 1.91%), 4/25/31(2) | 725,000 | 718,267 | |||||||||
THL Credit Wind River CLO Ltd., Series 2013-2A, Class BR2, VRN, 7.23%, (3-month SOFR plus 1.83%), 10/18/30(2) | 525,000 | 516,438 | |||||||||
THL Credit Wind River CLO Ltd., Series 2017-4A, Class B, VRN, 7.09%, (3-month SOFR plus 1.71%), 11/20/30(2) | 300,000 | 294,703 | |||||||||
TSTAT Ltd., Series 2022-1A, Class B, VRN, 8.60%, (3-month SOFR plus 3.27%), 7/20/31(2) | 500,000 | 500,482 | |||||||||
Wind River CLO Ltd., Series 2013-1A, Class A1RR, VRN, 6.66%, (3-month SOFR plus 1.24%), 7/20/30(2) | 228,777 | 227,899 | |||||||||
TOTAL COLLATERALIZED LOAN OBLIGATIONS (Cost $17,480,146) | 17,098,314 | ||||||||||
ASSET-BACKED SECURITIES — 1.4% | |||||||||||
Aaset Trust, Series 2021-2A, Class A, SEQ, 2.80%, 1/15/47(2) | 698,466 | 588,479 | |||||||||
Aligned Data Centers Issuer LLC, Series 2021-1A, Class B, 2.48%, 8/15/46(2) | 642,000 | 550,089 | |||||||||
Blackbird Capital Aircraft, Series 2021-1A, Class A, SEQ, 2.44%, 7/15/46(2) | 699,287 | 591,475 | |||||||||
Castlelake Aircraft Structured Trust, Series 2017-1R, Class A, SEQ, 2.74%, 8/15/41(2) | 350,794 | 318,734 | |||||||||
Clsec Holdings 22t LLC, Series 2021-1, Class B, 3.46%, 5/11/37(2) | 1,428,959 | 1,168,857 | |||||||||
DI Issuer LLC, Series 2021-1A, Class A2, SEQ, 3.72%, 9/15/51(2) | 1,826,955 | 1,609,170 | |||||||||
Edgeconnex Data Centers Issuer LLC, Series 2022-1, Class A2, SEQ, 4.25%, 3/25/52(2) | 930,225 | 834,674 |
24
Shares/Principal Amount | Value | ||||||||||
FirstKey Homes Trust, Series 2021-SFR1, Class D, 2.19%, 8/17/38(2) | $ | 600,000 | $ | 520,189 | |||||||
Flexential Issuer, Series 2021-1A, Class A2, SEQ, 3.25%, 11/27/51(2) | 1,150,000 | 997,832 | |||||||||
Goodgreen Trust, Series 2018-1A, Class A, VRN, 3.93%, 10/15/53(2) | 298,386 | 271,533 | |||||||||
Goodgreen Trust, Series 2020-1A, Class A, SEQ, 2.63%, 4/15/55(2) | 559,395 | 459,716 | |||||||||
Goodgreen Trust, Series 2021-1A, Class A, SEQ, 2.66%, 10/15/56(2) | 389,297 | 316,627 | |||||||||
J.G. Wentworth XL LLC, Series 2017-3A, Class B, 5.43%, 2/15/69(2) | 81,602 | 68,496 | |||||||||
J.G. Wentworth XLII LLC, Series 2018-2A, Class B, 4.70%, 10/15/77(2) | 509,320 | 420,784 | |||||||||
J.G. Wentworth XXXIX LLC, Series 2017-2A, Class B, 5.09%, 9/17/74(2) | 153,527 | 126,405 | |||||||||
J.G. Wentworth XXXVIII LLC, Series 2017-1A, Class B, 5.43%, 8/15/62(2) | 185,953 | 157,793 | |||||||||
MAPS Trust, Series 2021-1A, Class A, SEQ, 2.52%, 6/15/46(2) | 931,946 | 804,959 | |||||||||
New Economy Assets Phase 1 Sponsor LLC, Series 2021-1, Class B1, 2.41%, 10/20/61(2) | 1,310,000 | 1,094,490 | |||||||||
Sierra Timeshare Receivables Funding LLC, Series 2021-1A, Class C, 1.79%, 11/20/37(2) | 152,924 | 142,350 | |||||||||
VSE VOI Mortgage LLC, Series 2018-A, Class B, 3.72%, 2/20/36(2) | 133,306 | 129,255 | |||||||||
TOTAL ASSET-BACKED SECURITIES (Cost $13,178,755) | 11,171,907 | ||||||||||
COLLATERALIZED MORTGAGE OBLIGATIONS — 1.1% | |||||||||||
Private Sponsor Collateralized Mortgage Obligations — 1.1% | |||||||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 3,014 | 2,631 | |||||||||
Bellemeade Re Ltd., Series 2019-3A, Class B1, VRN, 7.94%, (1-month LIBOR plus 2.50%), 7/25/29(2) | 400,000 | 401,777 | |||||||||
Bellemeade Re Ltd., Series 2019-3A, Class M1C, VRN, 7.39%, (1-month LIBOR plus 1.95%), 7/25/29(2) | 198,300 | 198,858 | |||||||||
CHL Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35 | 996 | 897 | |||||||||
CHNGE Mortgage Trust, Series 2022-1, Class A1, SEQ, VRN, 3.01%, 1/25/67(2) | 614,244 | 537,909 | |||||||||
Credit Suisse Mortgage Trust, Series 2021-NQM2, Class A2, SEQ, VRN, 1.38%, 2/25/66(2) | 260,307 | 213,731 | |||||||||
Credit Suisse Mortgage Trust, Series 2021-NQM6, Class A1, SEQ, VRN, 1.17%, 7/25/66(2) | 230,775 | 177,074 | |||||||||
Credit Suisse Mortgage Trust, Series 2021-NQM6, Class A3, SEQ, VRN, 1.59%, 7/25/66(2) | 618,147 | 472,292 | |||||||||
Credit Suisse Mortgage Trust, Series 2022-NQM4, Class A3, SEQ, 4.82%, 6/25/67(2) | 472,045 | 445,127 | |||||||||
Deephaven Residential Mortgage Trust, Series 2020-2, Class M1, VRN, 4.11%, 5/25/65(2) | 525,000 | 484,837 | |||||||||
Eagle RE Ltd., Series 2021-1, Class M1C, VRN, 8.02%, (30-day average SOFR plus 2.70%), 10/25/33(2) | 343,890 | 345,479 | |||||||||
FS Commercial Mortgage Trust, Series 2023-4SZN, Class A, SEQ, 7.07%, 11/10/27(2)(3) | 760,000 | 764,702 | |||||||||
GCAT Trust, Series 2021-CM2, Class A1, SEQ, VRN, 2.35%, 8/25/66(2) | 942,134 | 841,169 | |||||||||
GCAT Trust, Series 2021-NQM1, Class A3, SEQ, VRN, 1.15%, 1/25/66(2) | 203,078 | 159,230 | |||||||||
GCAT Trust, Series 2023-NQM3, Class A2, VRN, 7.19%, 8/25/68(2) | 572,390 | 571,805 |
25
Shares/Principal Amount | Value | ||||||||||
Home RE Ltd., Series 2022-1, Class M1A, VRN, 8.17%, (30-day average SOFR plus 2.85%), 10/25/34(2) | $ | 350,244 | $ | 352,850 | |||||||
JP Morgan Mortgage Trust, Series 2017-1, Class A2, VRN, 3.45%, 1/25/47(2) | 115,786 | 97,365 | |||||||||
JP Morgan Mortgage Trust, Series 2020-3, Class A15, VRN, 3.50%, 8/25/50(2) | 172,134 | 142,607 | |||||||||
MFA Trust, Series 2021-INV2, Class A3, SEQ, VRN, 2.26%, 11/25/56(2) | 673,825 | 549,712 | |||||||||
NewRez Warehouse Securitization Trust, Series 2021-1, Class A, VRN, 6.19%, (1-month SOFR plus 0.86%), 5/25/55(2) | 650,000 | 648,745 | |||||||||
PRMI Securitization Trust, Series 2021-1, Class A5, VRN, 2.50%, 4/25/51(2) | 815,606 | 584,736 | |||||||||
Sofi Mortgage Trust, Series 2016-1A, Class 1A4, SEQ, VRN, 3.00%, 11/25/46(2) | 37,424 | 31,204 | |||||||||
Starwood Mortgage Residential Trust, Series 2020-2, Class B1E, VRN, 3.00%, 4/25/60(2) | 446,000 | 402,193 | |||||||||
Verus Securitization Trust, Series 2021-6, Class A2, VRN, 1.78%, 10/25/66(2) | 181,708 | 142,997 | |||||||||
Verus Securitization Trust, Series 2021-R2, Class A2, VRN, 1.12%, 2/25/64(2) | 201,079 | 171,546 | |||||||||
Verus Securitization Trust, Series 2021-R2, Class A3, VRN, 1.23%, 2/25/64(2) | 229,941 | 196,264 | |||||||||
8,937,737 | |||||||||||
U.S. Government Agency Collateralized Mortgage Obligations† | |||||||||||
FHLMC, Series 2023-HQA2, Class M1A, VRN, 7.32%, (30-day average SOFR plus 2.00%), 6/25/43(2) | 221,567 | 222,544 | |||||||||
FNMA, Series 2014-C02, Class 2M2, VRN, 8.04%, (30-day average SOFR plus 2.71%), 5/25/24 | 97,023 | 97,702 | |||||||||
FNMA, Series 2017-C03, Class 1M2C, VRN, 8.44%, (30-day average SOFR plus 3.11%), 10/25/29 | 110,000 | 113,326 | |||||||||
433,572 | |||||||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $10,213,470) | 9,371,309 | ||||||||||
MUNICIPAL SECURITIES — 0.5% | |||||||||||
Bay Area Toll Authority Rev., 6.92%, 4/1/40 | 295,000 | 316,860 | |||||||||
California State University Rev., 2.98%, 11/1/51 | 500,000 | 298,711 | |||||||||
Foothill-Eastern Transportation Corridor Agency Rev., 4.09%, 1/15/49 | 275,000 | 198,156 | |||||||||
Golden State Tobacco Securitization Corp. Rev., 2.75%, 6/1/34 | 660,000 | 504,286 | |||||||||
Houston GO, 3.96%, 3/1/47 | 120,000 | 94,373 | |||||||||
Michigan Strategic Fund Rev., (Flint Water Advocacy Fund), 3.23%, 9/1/47 | 570,000 | 388,261 | |||||||||
Missouri Highway & Transportation Commission Rev., 5.45%, 5/1/33 | 130,000 | 127,660 | |||||||||
New Jersey Turnpike Authority Rev., 7.41%, 1/1/40 | 200,000 | 225,279 | |||||||||
New Jersey Turnpike Authority Rev., 7.10%, 1/1/41 | 95,000 | 104,072 | |||||||||
New York City GO, 6.27%, 12/1/37 | 95,000 | 97,560 | |||||||||
Ohio Turnpike & Infrastructure Commission Rev., 3.22%, 2/15/48 | 330,000 | 213,240 | |||||||||
Port Authority of New York & New Jersey Rev., 4.93%, 10/1/51 | 50,000 | 42,957 | |||||||||
Regents of the University of California Medical Center Pooled Rev., 3.26%, 5/15/60 | 245,000 | 143,034 | |||||||||
Rutgers The State University of New Jersey Rev., 5.67%, 5/1/40 | 300,000 | 292,343 | |||||||||
Sacramento Municipal Utility District Rev., 6.16%, 5/15/36 | 210,000 | 214,493 | |||||||||
San Francisco Public Utilities Commission Water Rev., 6.00%, 11/1/40 | 105,000 | 104,336 |
26
Shares/Principal Amount | Value | ||||||||||
State of California GO, 4.60%, 4/1/38 | $ | 180,000 | $ | 157,090 | |||||||
State of California GO, 7.55%, 4/1/39 | 100,000 | 114,326 | |||||||||
State of California GO, 7.30%, 10/1/39 | 160,000 | 176,690 | |||||||||
State of California GO, 7.60%, 11/1/40 | 80,000 | 91,668 | |||||||||
Texas Natural Gas Securitization Finance Corp. Rev., 5.17%, 4/1/41 | 185,000 | 171,354 | |||||||||
University of California Rev., 3.07%, 5/15/51 | 180,000 | 107,323 | |||||||||
TOTAL MUNICIPAL SECURITIES (Cost $5,183,787) | 4,184,072 | ||||||||||
U.S. GOVERNMENT AGENCY SECURITIES — 0.5% | |||||||||||
FHLMC, 6.25%, 7/15/32 | 700,000 | 756,011 | |||||||||
FNMA, 0.75%, 10/8/27 | 2,000,000 | 1,702,675 | |||||||||
FNMA, 0.875%, 8/5/30 | 1,200,000 | 909,841 | |||||||||
FNMA, 6.625%, 11/15/30 | 400,000 | 433,994 | |||||||||
Tennessee Valley Authority, 1.50%, 9/15/31 | 300,000 | 227,082 | |||||||||
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $4,564,146) | 4,029,603 | ||||||||||
SOVEREIGN GOVERNMENTS AND AGENCIES — 0.3% | |||||||||||
Germany — 0.2% | |||||||||||
Bundesrepublik Deutschland Bundesanleihe, 0.00%, 5/15/35(5) | EUR | 1,700,000 | 1,290,441 | ||||||||
Mexico — 0.1% | |||||||||||
Mexico Government International Bond, 4.15%, 3/28/27 | $ | 600,000 | 576,266 | ||||||||
Peru† | |||||||||||
Peruvian Government International Bond, 5.625%, 11/18/50 | 170,000 | 150,606 | |||||||||
Philippines† | |||||||||||
Philippine Government International Bond, 6.375%, 10/23/34 | 150,000 | 154,264 | |||||||||
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES (Cost $2,347,172) | 2,171,577 | ||||||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES — 0.2% | |||||||||||
BX Commercial Mortgage Trust, Series 2020-VIV2, Class C, VRN, 3.54%, 3/9/44(2) | 537,839 | 425,780 | |||||||||
BX Commercial Mortgage Trust, Series 2021-VOLT, Class F, VRN, 7.85%, (1-month SOFR plus 2.51%), 9/15/36(2) | 600,000 | 559,028 | |||||||||
BX Trust, Series 2018-GW, Class A, VRN, 6.43%, (1-month SOFR plus 1.10%), 5/15/35(2) | 492,000 | 486,764 | |||||||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $1,644,283) | 1,471,572 | ||||||||||
EXCHANGE-TRADED FUNDS† | |||||||||||
SPDR S&P 500 ETF Trust (Cost $232,107) | 549 | 229,592 | |||||||||
SHORT-TERM INVESTMENTS — 2.4% | |||||||||||
Money Market Funds — 2.0% | |||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 15,698,034 | 15,698,034 | |||||||||
Treasury Bills(6) — 0.4% | |||||||||||
U.S. Treasury Bills, 4.21%, 10/3/24 | $ | 3,500,000 | 3,330,447 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $19,029,808) | 19,028,481 | ||||||||||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $739,423,106) | 806,383,280 | ||||||||||
OTHER ASSETS AND LIABILITIES — (0.4)% | (3,295,233) | ||||||||||
TOTAL NET ASSETS — 100.0% | $ | 803,088,047 |
27
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
EUR | 25,048 | USD | 26,636 | Bank of America N.A. | 12/15/23 | $ | (81) | |||||||||||||
EUR | 20,315 | USD | 21,553 | Bank of America N.A. | 12/15/23 | (16) | ||||||||||||||
EUR | 21,540 | USD | 22,812 | Bank of America N.A. | 12/15/23 | 23 | ||||||||||||||
EUR | 27,262 | USD | 28,823 | Bank of America N.A. | 12/22/23 | 90 | ||||||||||||||
EUR | 958,564 | USD | 1,014,072 | Morgan Stanley | 12/22/23 | 2,566 | ||||||||||||||
EUR | 36,830 | USD | 39,103 | Morgan Stanley | 12/22/23 | (41) | ||||||||||||||
USD | 1,322,184 | EUR | 1,225,118 | Bank of America N.A. | 12/15/23 | 23,381 | ||||||||||||||
USD | 30,867 | EUR | 29,002 | JPMorgan Chase Bank N.A. | 12/15/23 | 121 | ||||||||||||||
USD | 696,254 | EUR | 655,025 | Bank of America N.A. | 12/22/23 | 1,545 | ||||||||||||||
USD | 31,592 | EUR | 29,970 | Bank of America N.A. | 12/22/23 | (194) | ||||||||||||||
USD | 696,380 | EUR | 655,025 | JPMorgan Chase Bank N.A. | 12/22/23 | 1,671 | ||||||||||||||
USD | 696,520 | EUR | 655,025 | Morgan Stanley | 12/22/23 | 1,810 | ||||||||||||||
USD | 28,038 | EUR | 26,359 | Morgan Stanley | 12/22/23 | 82 | ||||||||||||||
$ | 30,957 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation)^ | ||||||||||
U.S. Treasury 2-Year Notes | 266 | December 2023 | $ | 53,844,219 | $ | (34,086) | ||||||||
U.S. Treasury 5-Year Notes | 207 | December 2023 | 21,626,649 | (70,004) | ||||||||||
U.S. Treasury 10-Year Notes | 25 | December 2023 | 2,654,297 | 4,210 | ||||||||||
U.S. Treasury 10-Year Ultra Notes | 13 | December 2023 | 1,414,766 | (6,119) | ||||||||||
U.S. Treasury Long Bonds | 1 | December 2023 | 109,437 | (1,096) | ||||||||||
U.S. Treasury Ultra Bonds | 42 | December 2023 | 4,727,625 | (200,036) | ||||||||||
$ | 84,376,993 | $ | (307,131) |
^Amount represents value and unrealized appreciation (depreciation).
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 Investment Grade Index Series 41 | Sell | 1.00% | 12/20/28 | $ | 6,400,000 | $ | 55,523 | $ | 10,747 | $ | 66,270 |
‡The maximum potential amount the fund could be required to deliver as a seller of credit protection if a credit event occurs as defined under the terms of the agreement is the notional amount. The maximum potential amount may be partially offset by any recovery values of the reference entities and upfront payments received upon entering into the agreement.
^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.
28
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
CDX | – | Credit Derivatives Indexes | ||||||
EUR | – | Euro | ||||||
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 | ||||||
RFUCC | – | Refinitiv USD IBOR Consumer Cash Fallbacks | ||||||
SEQ | – | Sequential Payer | ||||||
SOFR | – | Secured Overnight Financing Rate | ||||||
TBA | – | To-Be-Announced. Security was purchased on a forward commitment basis with an approximate principal amount and maturity date. Actual principal amount and maturity date will be determined upon settlement. | ||||||
UMBS | – | Uniform Mortgage-Backed Securities | ||||||
USD | – | United States Dollar | ||||||
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 was purchased pursuant to Rule 144A or Section 4(2) 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 $48,725,548, which represented 6.1% of total net assets.
(3)When-issued security. The issue price and yield are fixed on the date of the commitment, but payment and delivery are scheduled for a future date.
(4)Security, or a portion thereof, has been pledged at the custodian bank or with a broker for collateral requirements on forward commitments, forward foreign currency exchange contracts, futures contracts and/or swap agreements. At the period end, the aggregate value of securities pledged was $1,333,996.
(5)Security is a zero-coupon bond. Zero-coupon securities may be issued at a substantial discount from their value at maturity.
(6)The rate indicated is the yield to maturity at purchase for non-interest bearing securities. For interest bearing securities, the stated coupon rate is shown.
See Notes to Financial Statements.
29
Statement of Assets and Liabilities |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $739,423,106) | $ | 806,383,280 | |||
Cash | 62,842 | ||||
Receivable for investments sold | 1,351,561 | ||||
Receivable for capital shares sold | 1,238,400 | ||||
Receivable for variation margin on swap agreements | 4,757 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 31,289 | ||||
Interest and dividends receivable | 2,739,408 | ||||
811,811,537 | |||||
Liabilities | |||||
Payable for investments purchased | 7,769,072 | ||||
Payable for capital shares redeemed | 301,359 | ||||
Payable for variation margin on futures contracts | 41,703 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 332 | ||||
Accrued management fees | 611,024 | ||||
8,723,490 | |||||
Net Assets | $ | 803,088,047 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 816,894,424 | |||
Distributable earnings (loss) | (13,806,377) | ||||
$ | 803,088,047 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $727,083,397 | 45,088,934 | $16.13 | ||||||||
I Class, $0.01 Par Value | $74,455,129 | 4,612,921 | $16.14 | ||||||||
R5 Class, $0.01 Par Value | $1,549,521 | 96,027 | $16.14 |
See Notes to Financial Statements.
30
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Interest | $ | 13,963,908 | |||
Dividends (net of foreign taxes withheld of $11,758) | 8,459,281 | ||||
22,423,189 | |||||
Expenses: | |||||
Management fees | 7,473,825 | ||||
Directors' fees and expenses | 28,558 | ||||
Other expenses | 14,663 | ||||
7,517,046 | |||||
Net investment income (loss) | 14,906,143 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | (29,275,821) | ||||
Forward foreign currency exchange contract transactions | (149,157) | ||||
Futures contract transactions | (4,138,905) | ||||
Swap agreement transactions | (478,922) | ||||
Foreign currency translation transactions | (2,580) | ||||
(34,045,385) | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 63,335,860 | ||||
Forward foreign currency exchange contracts | 50,480 | ||||
Futures contracts | (155,618) | ||||
Swap agreements | 97,806 | ||||
Translation of assets and liabilities in foreign currencies | 280 | ||||
63,328,808 | |||||
Net realized and unrealized gain (loss) | 29,283,423 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 44,189,566 |
See Notes to Financial Statements.
31
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 14,906,143 | $ | 9,929,564 | ||||
Net realized gain (loss) | (34,045,385) | (45,718,048) | ||||||
Change in net unrealized appreciation (depreciation) | 63,328,808 | (147,043,622) | ||||||
Net increase (decrease) in net assets resulting from operations | 44,189,566 | (182,832,106) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (13,812,825) | (182,013,217) | ||||||
I Class | (1,594,809) | (19,755,430) | ||||||
R5 Class | (31,717) | (1,288,948) | ||||||
Decrease in net assets from distributions | (15,439,351) | (203,057,595) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (59,916,954) | 102,479,503 | ||||||
Net increase (decrease) in net assets | (31,166,739) | (283,410,198) | ||||||
Net Assets | ||||||||
Beginning of period | 834,254,786 | 1,117,664,984 | ||||||
End of period | $ | 803,088,047 | $ | 834,254,786 |
See Notes to Financial Statements.
32
Notes to Financial Statements |
OCTOBER 31, 2023
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities are valued at the evaluated mean as provided by independent pricing services or at the mean of the most recent bid and asked prices as provided by investment dealers. Corporate bonds, U.S. Treasury and Government Agency securities, 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. Fixed income securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported NAV 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. 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.
33
If the valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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.
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.
Investment Income — 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. 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.
Forward Commitments — The fund may engage in securities transactions on a forward commitment basis. In these transactions, the securities’ prices and yields are fixed on the date of the commitment. The fund may sell a to-be-announced (TBA) security and at the same time make a commitment to purchase the same security at a future date at a specified price. Conversely, the fund may purchase a TBA security and at the same time make a commitment to sell the same security at a future date at a specified price. These types of transactions are known as “TBA roll” transactions and are accounted for as purchases and sales. The fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet the purchase price.
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.
34
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation's investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that 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), as well as exchange-traded funds managed by the investment advisor, 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 October 31, 2023 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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the period ended October 31, 2023 totaled $606,925,410, of which $332,891,286 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the period ended October 31, 2023 totaled $686,985,435, of which $313,288,103 represented U.S. Treasury and Government Agency obligations.
35
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 530,000,000 | 530,000,000 | ||||||||||||
Sold | 2,145,009 | $ | 35,573,892 | 3,005,843 | $ | 55,164,090 | ||||||||
Issued in reinvestment of distributions | 815,337 | 13,421,174 | 9,390,770 | 177,010,306 | ||||||||||
Redeemed | (6,475,000) | (106,569,604) | (7,454,780) | (129,723,101) | ||||||||||
(3,514,654) | (57,574,538) | 4,941,833 | 102,451,295 | |||||||||||
I Class/Shares Authorized | 100,000,000 | 50,000,000 | ||||||||||||
Sold | 870,449 | 14,326,672 | 655,830 | 11,760,961 | ||||||||||
Issued in reinvestment of distributions | 96,717 | 1,594,096 | 1,047,229 | 19,742,816 | ||||||||||
Redeemed | (1,105,908) | (18,192,814) | (1,644,932) | (28,254,238) | ||||||||||
(138,742) | (2,272,046) | 58,127 | 3,249,539 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 8,706 | 144,578 | 28,087 | 525,838 | ||||||||||
Issued in reinvestment of distributions | 1,925 | 31,717 | 68,140 | 1,288,948 | ||||||||||
Redeemed | (14,966) | (246,665) | (302,630) | (5,036,117) | ||||||||||
(4,335) | (70,370) | (206,403) | (3,221,331) | |||||||||||
Net increase (decrease) | (3,657,731) | $ | (59,916,954) | 4,793,557 | $ | 102,479,503 |
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.
36
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 | $ | 476,723,735 | $ | 4,877,658 | — | ||||||
U.S. Government Agency Mortgage-Backed Securities | — | 109,016,412 | — | ||||||||
Corporate Bonds | — | 77,330,853 | — | ||||||||
U.S. Treasury Securities | — | 69,678,195 | — | ||||||||
Collateralized Loan Obligations | — | 17,098,314 | — | ||||||||
Asset-Backed Securities | — | 11,171,907 | — | ||||||||
Collateralized Mortgage Obligations | — | 9,371,309 | — | ||||||||
Municipal Securities | — | 4,184,072 | — | ||||||||
U.S. Government Agency Securities | — | 4,029,603 | — | ||||||||
Sovereign Governments and Agencies | — | 2,171,577 | — | ||||||||
Commercial Mortgage-Backed Securities | — | 1,471,572 | — | ||||||||
Exchange-Traded Funds | 229,592 | — | — | ||||||||
Short-Term Investments | 15,698,034 | 3,330,447 | — | ||||||||
$ | 492,651,361 | $ | 313,731,919 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 4,210 | — | — | |||||||
Swap Agreements | — | $ | 66,270 | — | |||||||
Forward Foreign Currency Exchange Contracts | — | 31,289 | — | ||||||||
$ | 4,210 | $ | 97,559 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 311,341 | — | — | |||||||
Forward Foreign Currency Exchange Contracts | — | $ | 332 | — | |||||||
$ | 311,341 | $ | 332 | — |
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. A fund may incur charges or earn income on cash deposit balances, which are reflected in interest expenses or interest income, respectively. 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 $16,060,815.
37
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $4,909,452.
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. A fund may incur charges or earn income on cash deposit balances, which are reflected in interest expenses or interest income, respectively. 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 $57,046,865 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. A fund may incur charges or earn income on cash deposit balances, which are reflected in interest expenses or interest income, respectively. 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 $5,750,000.
38
Value of Derivative Instruments as of October 31, 2023
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* | $ | 4,757 | Payable for variation margin on swap agreements* | — | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | 31,289 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 332 | |||||||||
Interest Rate Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | 41,703 | ||||||||||
$ | 36,046 | $ | 42,035 |
*Included in the unrealized appreciation (depreciation) on futures contracts or centrally cleared swap agreements, as applicable, as reported in the Schedule of Investments.
Effect of Derivative Instruments on the Statement of Operations for the Year Ended October 31, 2023
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 | $ | (501,519) | Change in net unrealized appreciation (depreciation) on swap agreements | $ | 108,332 | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | (149,157) | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 50,480 | ||||||||||
Interest Rate Risk | Net realized gain (loss) on futures contract transactions | (4,138,905) | Change in net unrealized appreciation (depreciation) on futures contracts | (155,618) | ||||||||||
Other Contracts | Net realized gain (loss) on swap agreement transactions | 22,597 | Change in net unrealized appreciation (depreciation) on swap agreements | (10,526) | ||||||||||
$ | (4,766,984) | $ | (7,332) |
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, war, 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. Financial institutions have started the process of phasing out LIBOR and the transition process to a replacement rate 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 or a change in the cost of temporary borrowing for the fund.
39
9. Federal Tax Information
The tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 15,439,351 | $ | 96,155,315 | ||||
Long-term capital gains | — | $ | 106,902,280 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 742,234,192 | |||
Gross tax appreciation of investments | $ | 136,054,239 | |||
Gross tax depreciation of investments | (71,905,151) | ||||
Net tax appreciation (depreciation) of investments | 64,149,088 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 3,062 | ||||
Net tax appreciation (depreciation) | $ | 64,152,150 | |||
Undistributed ordinary income | $ | 1,860,231 | |||
Accumulated short-term capital losses | $ | (50,797,465) | |||
Accumulated long-term capital losses | $ | (29,021,293) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
40
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 | |||||||||||||||||||||||||||||||||||||||||
2023 | $15.61 | 0.29 | 0.53 | 0.82 | (0.30) | — | (0.30) | $16.13 | 5.20% | 0.91% | 1.72% | 72% | $727,083 | ||||||||||||||||||||||||||||
2022 | $22.97 | 0.18 | (3.38) | (3.20) | (0.15) | (4.01) | (4.16) | $15.61 | (16.94)% | 0.91% | 1.00% | 94% | $758,468 | ||||||||||||||||||||||||||||
2021 | $19.73 | 0.14 | 4.30 | 4.44 | (0.17) | (1.03) | (1.20) | $22.97 | 23.34% | 0.90% | 0.67% | 225% | $1,002,740 | ||||||||||||||||||||||||||||
2020 | $19.25 | 0.20 | 1.22 | 1.42 | (0.25) | (0.69) | (0.94) | $19.73 | 7.54% | 0.90% | 1.03% | 165% | $841,328 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $15.62 | 0.32 | 0.53 | 0.85 | (0.33) | — | (0.33) | $16.14 | 5.41% | 0.71% | 1.92% | 72% | $74,455 | ||||||||||||||||||||||||||||
2022 | $22.98 | 0.21 | (3.37) | (3.16) | (0.19) | (4.01) | (4.20) | $15.62 | (16.76)% | 0.71% | 1.20% | 94% | $74,220 | ||||||||||||||||||||||||||||
2021 | $19.74 | 0.19 | 4.29 | 4.48 | (0.21) | (1.03) | (1.24) | $22.98 | 23.58% | 0.70% | 0.87% | 225% | $107,875 | ||||||||||||||||||||||||||||
2020 | $19.26 | 0.23 | 1.23 | 1.46 | (0.29) | (0.69) | (0.98) | $19.74 | 7.75% | 0.70% | 1.23% | 165% | $99,524 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $15.62 | 0.32 | 0.53 | 0.85 | (0.33) | — | (0.33) | $16.14 | 5.41% | 0.71% | 1.92% | 72% | $1,550 | ||||||||||||||||||||||||||||
2022 | $22.98 | 0.19 | (3.35) | (3.16) | (0.19) | (4.01) | (4.20) | $15.62 | (16.76)% | 0.71% | 1.20% | 94% | $1,567 | ||||||||||||||||||||||||||||
2021 | $19.74 | 0.18 | 4.30 | 4.48 | (0.21) | (1.03) | (1.24) | $22.98 | 23.58% | 0.70% | 0.87% | 225% | $7,050 | ||||||||||||||||||||||||||||
2020 | $19.26 | 0.24 | 1.22 | 1.46 | (0.29) | (0.69) | (0.98) | $19.74 | 7.75% | 0.70% | 1.23% | 165% | $3,545 | ||||||||||||||||||||||||||||
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 |
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.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Balanced Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Balanced Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors.
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In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was slightly below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the five- and ten-year periods and below the median for the one- and three-year periods. The Board discussed the Fund's performance with the Advisor, including steps being taken to address underperformance, and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services
48
provided, staffing levels, shareholder satisfaction, technology support (including information security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They
49
observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
50
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for
the fiscal year ended October 31, 2023.
For corporate taxpayers, the fund hereby designates $7,407,708 or up to the maximum amount
allowable, of ordinary income distributions paid during the fiscal year ended October 31, 2023 as
qualified for the corporate dividends received deduction.
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90968 2312 |
![image29.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image29.jpg)
Annual Report | |||||
October 31, 2023 | |||||
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) | |||||
G Class (ACIHX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
![image26a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image26a.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of October 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWCGX | 20.47% | 12.85% | 12.43% | — | 6/30/71 | ||||||||||||||
Russell 1000 Growth Index | — | 18.95% | 14.22% | 13.82% | — | — | ||||||||||||||
I Class | TWGIX | 20.72% | 13.08% | 12.65% | — | 6/16/97 | ||||||||||||||
Y Class | AGYWX | 20.91% | 13.25% | — | 14.03% | 4/10/17 | ||||||||||||||
A Class | TCRAX | 6/4/97 | ||||||||||||||||||
No sales charge | 20.18% | 12.57% | 12.14% | — | ||||||||||||||||
With sales charge | 13.27% | 11.24% | 11.48% | — | ||||||||||||||||
C Class | TWRCX | 19.27% | 11.73% | 11.31% | — | 3/1/10 | ||||||||||||||
R Class | AGWRX | 19.84% | 12.29% | 11.86% | — | 8/29/03 | ||||||||||||||
R5 Class | AGWUX | 20.70% | 13.07% | — | 13.86% | 4/10/17 | ||||||||||||||
R6 Class | AGRDX | 20.89% | 13.25% | 12.82% | — | 7/26/13 | ||||||||||||||
G Class | ACIHX | 21.60% | — | — | 0.25% | 3/1/22 |
Average annual returns since inception are presented when ten years of performance history is not available. Fund returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-27197031df4e489ab42a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-27197031df4e489ab42a.jpg)
Value on October 31, 2023 | |||||
Investor Class — $32,258 | |||||
Russell 1000 Growth Index — $36,502 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
0.97% | 0.77% | 0.62% | 1.22% | 1.97% | 1.47% | 0.77% | 0.62% | 0.62% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Joe Reiland, Justin Brown and Scott Marolf
Performance Summary
Growth returned 20.47%* for the 12 months ended October 31, 2023, versus the 18.95% return of the fund’s benchmark, the Russell 1000 Growth Index. The fund’s return reflects operating expenses, while the index return does not.
Stock selection in the information technology and health care sectors helped drive outperformance relative to the benchmark. Stock decisions in the real estate sector detracted.
Information Technology Benefited Performance
Semiconductors and semiconductor equipment stocks were top contributors in information technology. NVIDIA beat revenue and earnings expectations and raised guidance due to demand for its graphics processing units for generative artificial intelligence (AI), which relies on NVIDIA for training models and inference (utilizing the model to perform a function). Advanced Micro Devices continued to gain share in data and also received a boost from improving sentiment toward AI. Strong performance of its business segment and better expense management drove solid earnings for software company Microsoft, which is also well positioned in AI, having taken an ownership stake in OpenAI (ChatGPT’s parent). Cybersecurity company Splunk’s stock jumped on news that it would be acquired by Cisco Systems.
Elsewhere, Novo Nordisk, a Denmark-based pharmaceutical company, surged on its weight-loss drug Wegovy, and late-stage trial results also showed that Wegovy was beneficial for treating Type 2 diabetes and chronic kidney disease.
Real Estate Stocks Weighed on Performance
SBA Communications was a significant detractor in the real estate sector. Tower real estate investment trusts such as SBA are experiencing depressed growth following initial investments in 5G. We eliminated our position.
Other detractors included lack of exposure to benchmark component Broadcom. The semiconductor company delivered solid results and has strong exposure to artificial intelligence. Keysight Technologies, a manufacturer of test and measurement instruments, posted mixed results with revenues and earnings that beat expectations but new orders that lagged. The company also issued disappointing guidance. Headwinds in the managed care industry weighed on Cigna Group. In addition, there is increased congressional scrutiny of pharmacy benefit managers (PBM), and Cigna has the highest mix of PBM earnings within the group of publicly traded managed care companies. The stock of UnitedHealth Group, the world’s largest private health insurer, fell after a company executive said health care costs were likely to soar as people resume elective procedures.
*All fund returns referenced in this commentary are for Investor Class shares. Fund returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 99.5% | ||||
Short-Term Investments | 0.5% | ||||
Other Assets and Liabilities | —* | ||||
*Category is less than 0.05% of total net assets. | |||||
Top Five Industries | % of net assets | ||||
Software | 19.4% | ||||
Interactive Media and Services | 11.0% | ||||
Technology Hardware, Storage and Peripherals | 10.3% | ||||
Semiconductors and Semiconductor Equipment | 8.5% | ||||
Broadline Retail | 5.4% |
6
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 May 1, 2023 to October 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,064.90 | $4.84 | 0.93% | ||||||||||
I Class | $1,000 | $1,065.80 | $3.80 | 0.73% | ||||||||||
Y Class | $1,000 | $1,066.70 | $3.02 | 0.58% | ||||||||||
A Class | $1,000 | $1,063.30 | $6.14 | 1.18% | ||||||||||
C Class | $1,000 | $1,059.40 | $10.02 | 1.93% | ||||||||||
R Class | $1,000 | $1,062.20 | $7.43 | 1.43% | ||||||||||
R5 Class | $1,000 | $1,065.70 | $3.80 | 0.73% | ||||||||||
R6 Class | $1,000 | $1,066.80 | $3.02 | 0.58% | ||||||||||
G Class | $1,000 | $1,069.80 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.52 | $4.74 | 0.93% | ||||||||||
I Class | $1,000 | $1,021.53 | $3.72 | 0.73% | ||||||||||
Y Class | $1,000 | $1,022.28 | $2.96 | 0.58% | ||||||||||
A Class | $1,000 | $1,019.26 | $6.01 | 1.18% | ||||||||||
C Class | $1,000 | $1,015.48 | $9.80 | 1.93% | ||||||||||
R Class | $1,000 | $1,018.00 | $7.27 | 1.43% | ||||||||||
R5 Class | $1,000 | $1,021.53 | $3.72 | 0.73% | ||||||||||
R6 Class | $1,000 | $1,022.28 | $2.96 | 0.58% | ||||||||||
G Class | $1,000 | $1,025.21 | $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 184, the number of days in the most recent fiscal half-year, divided by 365, 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%.
8
Schedule of Investments |
OCTOBER 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 99.5% | ||||||||
Aerospace and Defense — 0.8% | ||||||||
Lockheed Martin Corp. | 201,898 | $ | 91,790,907 | |||||
Air Freight and Logistics — 0.5% | ||||||||
United Parcel Service, Inc., Class B | 402,657 | 56,875,301 | ||||||
Automobile Components — 0.5% | ||||||||
Aptiv PLC(1) | 708,459 | 61,777,625 | ||||||
Automobiles — 2.2% | ||||||||
Tesla, Inc.(1) | 1,292,220 | 259,529,465 | ||||||
Beverages — 1.1% | ||||||||
PepsiCo, Inc. | 816,552 | 133,326,610 | ||||||
Biotechnology — 3.1% | ||||||||
AbbVie, Inc. | 1,825,097 | 257,667,195 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 315,831 | 114,365,563 | ||||||
372,032,758 | ||||||||
Broadline Retail — 5.4% | ||||||||
Amazon.com, Inc.(1) | 4,891,384 | 650,994,296 | ||||||
Building Products — 0.4% | ||||||||
Trex Co., Inc.(1) | 923,357 | 51,901,897 | ||||||
Capital Markets — 0.7% | ||||||||
S&P Global, Inc. | 249,978 | 87,319,815 | ||||||
Chemicals — 0.5% | ||||||||
Air Products & Chemicals, Inc. | 220,429 | 62,257,967 | ||||||
Consumer Staples Distribution & Retail — 1.7% | ||||||||
Costco Wholesale Corp. | 126,977 | 70,147,174 | ||||||
Sysco Corp. | 719,580 | 47,844,874 | ||||||
Target Corp. | 724,369 | 80,252,842 | ||||||
198,244,890 | ||||||||
Electrical Equipment — 0.7% | ||||||||
Eaton Corp. PLC | 327,298 | 68,048,527 | ||||||
Generac Holdings, Inc.(1) | 225,953 | 18,995,869 | ||||||
87,044,396 | ||||||||
Electronic Equipment, Instruments and Components — 1.6% | ||||||||
CDW Corp. | 537,939 | 107,802,975 | ||||||
Keysight Technologies, Inc.(1) | 688,453 | 84,025,689 | ||||||
191,828,664 | ||||||||
Energy Equipment and Services — 0.5% | ||||||||
Schlumberger NV | 955,811 | 53,200,440 | ||||||
Entertainment — 0.8% | ||||||||
Liberty Media Corp.-Liberty Formula One, Class C(1) | 907,269 | 58,691,232 | ||||||
Take-Two Interactive Software, Inc.(1) | 226,518 | 30,296,782 | ||||||
88,988,014 | ||||||||
Financial Services — 4.9% | ||||||||
Adyen NV(1) | 29,978 | 20,219,737 | ||||||
Block, Inc.(1) | 744,884 | 29,981,581 | ||||||
Visa, Inc., Class A | 2,290,900 | 538,590,590 | ||||||
588,791,908 | ||||||||
Food Products — 0.5% | ||||||||
Mondelez International, Inc., Class A | 784,115 | 51,916,254 |
9
Shares | Value | |||||||
Vital Farms, Inc.(1) | 975,643 | $ | 10,790,612 | |||||
62,706,866 | ||||||||
Ground Transportation — 1.7% | ||||||||
Uber Technologies, Inc.(1) | 2,520,397 | 109,082,782 | ||||||
Union Pacific Corp. | 458,695 | 95,229,669 | ||||||
204,312,451 | ||||||||
Health Care Equipment and Supplies — 2.0% | ||||||||
Dexcom, Inc.(1) | 818,690 | 72,724,233 | ||||||
IDEXX Laboratories, Inc.(1) | 126,089 | 50,368,773 | ||||||
Intuitive Surgical, Inc.(1) | 317,004 | 83,124,789 | ||||||
Shockwave Medical, Inc.(1) | 156,243 | 32,226,681 | ||||||
238,444,476 | ||||||||
Health Care Providers and Services — 2.9% | ||||||||
Cigna Group | 249,643 | 77,189,616 | ||||||
UnitedHealth Group, Inc. | 510,706 | 273,513,705 | ||||||
350,703,321 | ||||||||
Hotels, Restaurants and Leisure — 3.0% | ||||||||
Airbnb, Inc., Class A(1) | 463,217 | 54,793,939 | ||||||
Chipotle Mexican Grill, Inc.(1) | 67,227 | 130,568,280 | ||||||
Dutch Bros, Inc., Class A(1) | 1,120,539 | 27,273,919 | ||||||
Expedia Group, Inc.(1) | 283,939 | 27,056,547 | ||||||
Starbucks Corp. | 1,320,557 | 121,808,178 | ||||||
361,500,863 | ||||||||
Household Products — 0.6% | ||||||||
Procter & Gamble Co. | 502,611 | 75,406,728 | ||||||
Insurance — 0.9% | ||||||||
Progressive Corp. | 703,396 | 111,199,874 | ||||||
Interactive Media and Services — 11.0% | ||||||||
Alphabet, Inc., Class A(1) | 7,264,223 | 901,344,790 | ||||||
Meta Platforms, Inc., Class A(1) | 1,383,607 | 416,839,281 | ||||||
1,318,184,071 | ||||||||
IT Services — 3.0% | ||||||||
Accenture PLC, Class A | 682,622 | 202,800,170 | ||||||
Okta, Inc.(1) | 776,089 | 52,316,159 | ||||||
Snowflake, Inc., Class A(1) | 499,069 | 72,429,884 | ||||||
Twilio, Inc., Class A(1) | 504,841 | 25,878,150 | ||||||
353,424,363 | ||||||||
Life Sciences Tools and Services — 0.5% | ||||||||
Agilent Technologies, Inc. | 578,227 | 59,771,325 | ||||||
Machinery — 1.0% | ||||||||
Parker-Hannifin Corp. | 161,188 | 59,463,865 | ||||||
Xylem, Inc. | 677,101 | 63,336,028 | ||||||
122,799,893 | ||||||||
Personal Care Products — 0.2% | ||||||||
Estee Lauder Cos., Inc., Class A | 198,253 | 25,548,864 | ||||||
Pharmaceuticals — 4.0% | ||||||||
Eli Lilly & Co. | 529,711 | 293,422,814 | ||||||
Novo Nordisk AS, Class B | 1,168,723 | 112,753,962 | ||||||
Zoetis, Inc. | 470,031 | 73,794,867 | ||||||
479,971,643 | ||||||||
Professional Services — 0.1% | ||||||||
Paycor HCM, Inc.(1)(2) | 486,219 | 10,492,606 |
10
Shares | Value | |||||||
Semiconductors and Semiconductor Equipment — 8.5% | ||||||||
Advanced Micro Devices, Inc.(1) | 1,410,349 | $ | 138,919,377 | |||||
Analog Devices, Inc. | 563,708 | 88,688,180 | ||||||
Applied Materials, Inc. | 797,909 | 105,603,256 | ||||||
ASML Holding NV | 119,251 | 71,684,216 | ||||||
GLOBALFOUNDRIES, Inc.(1)(2) | 415,670 | 20,625,545 | ||||||
NVIDIA Corp. | 1,439,993 | 587,229,145 | ||||||
1,012,749,719 | ||||||||
Software — 19.4% | ||||||||
Cadence Design Systems, Inc.(1) | 492,534 | 118,134,280 | ||||||
Crowdstrike Holdings, Inc., Class A(1) | 570,434 | 100,835,618 | ||||||
Datadog, Inc., Class A(1) | 871,575 | 71,007,215 | ||||||
Microsoft Corp. | 5,029,866 | 1,700,647,993 | ||||||
PagerDuty, Inc.(1) | 1,292,548 | 26,070,693 | ||||||
Salesforce, Inc.(1) | 565,125 | 113,494,054 | ||||||
Splunk, Inc.(1) | 553,022 | 81,382,718 | ||||||
Workday, Inc., Class A(1) | 513,792 | 108,774,904 | ||||||
2,320,347,475 | ||||||||
Specialized REITs — 0.6% | ||||||||
Equinix, Inc. | 103,481 | 75,503,877 | ||||||
Specialty Retail — 2.7% | ||||||||
CarMax, Inc.(1) | 453,720 | 27,717,755 | ||||||
Home Depot, Inc. | 379,841 | 108,136,934 | ||||||
Ross Stores, Inc. | 583,689 | 67,690,413 | ||||||
TJX Cos., Inc. | 1,398,951 | 123,205,615 | ||||||
326,750,717 | ||||||||
Technology Hardware, Storage and Peripherals — 10.3% | ||||||||
Apple, Inc. | 7,237,630 | 1,235,970,075 | ||||||
Textiles, Apparel and Luxury Goods — 1.2% | ||||||||
Deckers Outdoor Corp.(1) | 94,154 | 56,215,587 | ||||||
NIKE, Inc., Class B | 777,803 | 79,934,814 | ||||||
136,150,401 | ||||||||
TOTAL COMMON STOCKS (Cost $6,044,031,143) | 11,917,844,561 | |||||||
SHORT-TERM INVESTMENTS — 0.5% | ||||||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 235,314 | 235,314 | ||||||
State Street Navigator Securities Lending Government Money Market Portfolio(3) | 1,089,903 | 1,089,903 | ||||||
1,325,217 | ||||||||
Repurchase Agreements — 0.5% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.50% - 4.00%, 11/30/28 - 11/15/52, valued at $4,556,819), in a joint trading account at 5.26%, dated 10/31/23, due 11/1/23 (Delivery value $4,449,551) | 4,448,901 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 10/15/28, valued at $57,184,330), at 5.28%, dated 10/31/23, due 11/1/23 (Delivery value $56,071,223) | 56,063,000 | |||||||
60,511,901 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $61,837,118) | 61,837,118 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $6,105,868,261) | 11,979,681,679 | |||||||
OTHER ASSETS AND LIABILITIES† | (3,943,786) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 11,975,737,893 |
11
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
EUR | 2,238,967 | USD | 2,367,215 | Bank of America N.A. | 12/22/23 | $ | 7,398 | |||||||||||||
EUR | 5,510,187 | USD | 5,863,114 | JPMorgan Chase Bank N.A. | 12/22/23 | (19,097) | ||||||||||||||
EUR | 1,798,305 | USD | 1,906,281 | JPMorgan Chase Bank N.A. | 12/22/23 | 974 | ||||||||||||||
EUR | 2,656,430 | USD | 2,820,351 | Morgan Stanley | 12/22/23 | (2,983) | ||||||||||||||
USD | 25,928,644 | EUR | 24,393,259 | Bank of America N.A. | 12/22/23 | 57,539 | ||||||||||||||
USD | 3,427,585 | EUR | 3,255,561 | Bank of America N.A. | 12/22/23 | (25,212) | ||||||||||||||
USD | 2,246,436 | EUR | 2,131,102 | Bank of America N.A. | 12/22/23 | (13,778) | ||||||||||||||
USD | 25,933,328 | EUR | 24,393,260 | JPMorgan Chase Bank N.A. | 12/22/23 | 62,222 | ||||||||||||||
USD | 25,938,524 | EUR | 24,393,260 | Morgan Stanley | 12/22/23 | 67,418 | ||||||||||||||
USD | 3,424,300 | EUR | 3,249,900 | Morgan Stanley | 12/22/23 | (22,493) | ||||||||||||||
USD | 2,627,121 | EUR | 2,469,779 | Morgan Stanley | 12/22/23 | 7,712 | ||||||||||||||
$ | 119,700 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation)^ | ||||||||||
Nasdaq 100 E-Mini | 114 | December 2023 | $ | 33,037,770 | $ | (1,905,055) |
^Amount represents value and unrealized appreciation (depreciation).
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.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $1,063,523. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(3)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $1,089,903.
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $6,104,778,358) — including $1,063,523 of securities on loan | $ | 11,978,591,776 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $1,089,903) | 1,089,903 | ||||
Total investment securities, at value (cost of $6,105,868,261) | 11,979,681,679 | ||||
Deposits with broker for futures contracts | 1,915,200 | ||||
Receivable for investments sold | 17,939,753 | ||||
Receivable for capital shares sold | 2,077,083 | ||||
Receivable for variation margin on futures contracts | 546,347 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 203,263 | ||||
Dividends and interest receivable | 5,167,524 | ||||
Securities lending receivable | 36,190 | ||||
12,007,567,039 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 1,089,903 | ||||
Payable for investments purchased | 17,951,066 | ||||
Payable for capital shares redeemed | 4,787,150 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 83,563 | ||||
Accrued management fees | 7,849,755 | ||||
Distribution and service fees payable | 67,709 | ||||
31,829,146 | |||||
Net Assets | $ | 11,975,737,893 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 5,473,954,361 | |||
Distributable earnings (loss) | 6,501,783,532 | ||||
$ | 11,975,737,893 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $7,846,335,436 | 178,429,099 | $43.97 | ||||||||
I Class, $0.01 Par Value | $1,503,056,335 | 33,136,394 | $45.36 | ||||||||
Y Class, $0.01 Par Value | $10,658,394 | 233,847 | $45.58 | ||||||||
A Class, $0.01 Par Value | $122,252,560 | 2,935,952 | $41.64 | ||||||||
C Class, $0.01 Par Value | $9,153,350 | 246,731 | $37.10 | ||||||||
R Class, $0.01 Par Value | $74,850,870 | 1,888,146 | $39.64 | ||||||||
R5 Class, $0.01 Par Value | $2,489,859 | 54,829 | $45.41 | ||||||||
R6 Class, $0.01 Par Value | $1,098,477,463 | 24,144,005 | $45.50 | ||||||||
G Class, $0.01 Par Value | $1,308,463,626 | 28,646,138 | $45.68 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except A Class, for which the maximum offering price per share was $44.18 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of A Class and C Class.
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $426,785) | $ | 100,145,095 | |||
Interest | 3,238,000 | ||||
Securities lending, net | 1,262,712 | ||||
104,645,807 | |||||
Expenses: | |||||
Management fees | 101,338,507 | ||||
Distribution and service fees: | |||||
A Class | 278,893 | ||||
C Class | 95,367 | ||||
R Class | 387,846 | ||||
Directors' fees and expenses | 391,146 | ||||
Other expenses | 5,536 | ||||
102,497,295 | |||||
Fees waived(1) | (12,226,058) | ||||
90,271,237 | |||||
Net investment income (loss) | 14,374,570 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 661,595,344 | ||||
Forward foreign currency exchange contract transactions | (5,737,006) | ||||
Futures contract transactions | 1,459,265 | ||||
Foreign currency translation transactions | 8,678 | ||||
657,326,281 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 1,479,328,462 | ||||
Forward foreign currency exchange contracts | 834,337 | ||||
Futures contracts | (584,661) | ||||
Translation of assets and liabilities in foreign currencies | 27,230 | ||||
1,479,605,368 | |||||
Net realized and unrealized gain (loss) | 2,136,931,649 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,151,306,219 |
(1)Amount consists of $2,887,826, $581,299, $3,052, $42,610, $3,631, $29,562, $907, $391,248 and $8,285,923 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.
14
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 14,374,570 | $ | (9,631,518) | ||||
Net realized gain (loss) | 657,326,281 | 485,747,879 | ||||||
Change in net unrealized appreciation (depreciation) | 1,479,605,368 | (4,518,219,436) | ||||||
Net increase (decrease) in net assets resulting from operations | 2,151,306,219 | (4,042,103,075) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (130,923,030) | (1,115,919,430) | ||||||
I Class | (28,431,909) | (218,489,765) | ||||||
Y Class | (77,719) | (6,859,773) | ||||||
A Class | (2,025,018) | (16,507,216) | ||||||
C Class | (200,352) | (1,609,267) | ||||||
R Class | (1,501,407) | (13,326,719) | ||||||
R5 Class | (39,996) | (495,405) | ||||||
R6 Class | (19,062,256) | (94,719,581) | ||||||
G Class | (34,721,085) | (53) | ||||||
Decrease in net assets from distributions | (216,982,772) | (1,467,927,209) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (598,653,692) | 2,682,027,313 | ||||||
Net increase (decrease) in net assets | 1,335,669,755 | (2,828,002,971) | ||||||
Net Assets | ||||||||
Beginning of period | 10,640,068,138 | 13,468,071,109 | ||||||
End of period | $ | 11,975,737,893 | $ | 10,640,068,138 |
See Notes to Financial Statements.
15
Notes to Financial Statements |
OCTOBER 31, 2023
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, 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 March 1, 2022.
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 NAV 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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
16
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
17
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.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of October 31, 2023.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 1,089,903 | — | — | — | $ | 1,089,903 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 1,089,903 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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, 7% of the shares of the fund.
18
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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets). From November 1, 2022 through July 31, 2023, the investment advisor agreed to waive a portion of the fund’s management fee such that the management fee does not exceed 0.936% for Investor Class, A Class, C Class and R Class, 0.736% for I Class and R5 Class, and 0.586% for Y Class and R6 Class. Effective August 1, 2023, the investment advisor agreed to waive a portion of the fund’s management fee such that the management fee does not exceed 0.915% for Investor Class, A Class, C Class and R Class, 0.715% for I Class and R5 Class, and 0.565% for Y Class and R6 Class. The investment advisor expects this waiver arrangement to continue until July 31, 2024 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.
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended October 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | ||||||||||
Before Waiver | After Waiver | ||||||||||
Investor Class | 0.800% to 0.990% | 0.97% | 0.93% | ||||||||
I Class | 0.600% to 0.790% | 0.77% | 0.73% | ||||||||
Y Class | 0.450% to 0.640% | 0.62% | 0.58% | ||||||||
A Class | 0.800% to 0.990% | 0.97% | 0.93% | ||||||||
C Class | 0.800% to 0.990% | 0.97% | 0.93% | ||||||||
R Class | 0.800% to 0.990% | 0.97% | 0.93% | ||||||||
R5 Class | 0.600% to 0.790% | 0.77% | 0.73% | ||||||||
R6 Class | 0.450% to 0.640% | 0.62% | 0.58% | ||||||||
G Class | 0.450% to 0.640% | 0.62% | 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 October 31, 2023 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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
19
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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended October 31, 2023 were $2,374,548,673 and $3,159,137,536, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022(1) | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 2,100,000,000 | 2,100,000,000 | ||||||||||||
Sold | 5,003,563 | $ | 209,159,760 | 6,391,740 | $ | 297,390,697 | ||||||||
Issued in reinvestment of distributions | 3,478,510 | 125,885,867 | 20,434,759 | 1,074,423,880 | ||||||||||
Redeemed | (14,333,740) | (589,337,794) | (17,480,300) | (782,195,190) | ||||||||||
(5,851,667) | (254,292,167) | 9,346,199 | 589,619,387 | |||||||||||
I Class/Shares Authorized | 460,000,000 | 460,000,000 | ||||||||||||
Sold | 3,889,383 | 159,997,823 | 5,934,225 | 266,630,922 | ||||||||||
Issued in reinvestment of distributions | 755,840 | 28,162,602 | 4,000,612 | 216,189,001 | ||||||||||
Redeemed | (8,490,684) | (367,145,727) | (7,491,997) | (347,687,734) | ||||||||||
(3,845,461) | (178,985,302) | 2,442,840 | 135,132,189 | |||||||||||
Y Class/Shares Authorized | 30,000,000 | 40,000,000 | ||||||||||||
Sold | 176,638 | 8,054,735 | 225,208 | 10,058,408 | ||||||||||
Issued in reinvestment of distributions | 1,679 | 62,797 | 124,070 | 6,727,246 | ||||||||||
Redeemed | (1,123,917) | (44,653,042) | (287,650) | (13,390,946) | ||||||||||
(945,600) | (36,535,510) | 61,628 | 3,394,708 | |||||||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 733,176 | 29,013,946 | 631,470 | 26,719,672 | ||||||||||
Issued in reinvestment of distributions | 54,233 | 1,862,349 | 302,755 | 15,172,225 | ||||||||||
Redeemed | (687,738) | (26,909,622) | (693,020) | (29,569,792) | ||||||||||
99,671 | 3,966,673 | 241,205 | 12,322,105 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 52,077 | 1,837,383 | 116,881 | 4,505,694 | ||||||||||
Issued in reinvestment of distributions | 6,237 | 192,040 | 33,783 | 1,532,167 | ||||||||||
Redeemed | (97,406) | (3,410,654) | (112,566) | (4,159,173) | ||||||||||
(39,092) | (1,381,231) | 38,098 | 1,878,688 | |||||||||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 394,197 | 15,015,805 | 319,143 | 12,981,909 | ||||||||||
Issued in reinvestment of distributions | 45,822 | 1,501,361 | 277,158 | 13,325,583 | ||||||||||
Redeemed | (695,231) | (26,332,522) | (576,540) | (24,349,882) | ||||||||||
(255,212) | (9,815,356) | 19,761 | 1,957,610 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 9,502 | 443,429 | 3,880 | 180,466 | ||||||||||
Issued in reinvestment of distributions | 990 | 36,932 | 8,690 | 471,376 | ||||||||||
Redeemed | (20,023) | (852,243) | (31,042) | (1,503,613) | ||||||||||
(9,531) | (371,882) | (18,472) | (851,771) | |||||||||||
R6 Class/Shares Authorized | 300,000,000 | 200,000,000 | ||||||||||||
Sold | 4,928,009 | 214,001,505 | 9,854,771 | 425,174,120 | ||||||||||
Issued in reinvestment of distributions | 509,251 | 19,010,326 | 1,749,733 | 94,651,353 | ||||||||||
Redeemed | (4,169,726) | (180,290,513) | (3,392,419) | (153,693,823) | ||||||||||
1,267,534 | 52,721,318 | 8,212,085 | 366,131,650 | |||||||||||
G Class/Shares Authorized | 780,000,000 | 780,000,000 | ||||||||||||
Sold | 2,923,661 | 116,695,506 | 3,787,174 | 153,740,082 | ||||||||||
Issued in connection with reorganization (Note 10) | — | — | 31,393,184 | 1,540,737,439 | ||||||||||
Issued in reinvestment of distributions | 931,110 | 34,721,085 | 1 | 53 | ||||||||||
Redeemed | (7,627,884) | (325,376,826) | (2,761,108) | (122,034,827) | ||||||||||
(3,773,113) | (173,960,235) | 32,419,251 | 1,572,442,747 | |||||||||||
Net increase (decrease) | (13,352,471) | $ | (598,653,692) | 52,762,595 | $ | 2,682,027,313 |
(1)March 1, 2022 (commencement of sale) through October 31, 2022 for the G Class.
21
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 | $ | 11,713,186,646 | $ | 204,657,915 | — | ||||||
Short-Term Investments | 1,325,217 | 60,511,901 | — | ||||||||
$ | 11,714,511,863 | $ | 265,169,816 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 203,263 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 1,905,055 | — | — | |||||||
Forward Foreign Currency Exchange Contracts | — | $ | 83,563 | — | |||||||
$ | 1,905,055 | $ | 83,563 | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). A fund may incur charges or earn income on cash deposit balances, which are reflected in interest expenses or interest income, respectively. 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 $34,089,343 futures contracts purchased.
22
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $133,841,583.
Value of Derivative Instruments as of October 31, 2023
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* | $ | 546,347 | Payable for variation margin on futures contracts* | — | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | 203,263 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 83,563 | |||||||||
$ | 749,610 | $ | 83,563 |
*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 Year Ended October 31, 2023
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 | $ | 1,459,265 | Change in net unrealized appreciation (depreciation) on futures contracts | $ | (584,661) | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | (5,737,006) | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 834,337 | ||||||||||
$ | (4,277,741) | $ | 249,676 |
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, war, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
23
9. Federal Tax Information
The tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 15,441,373 | $ | 79,614,038 | ||||
Long-term capital gains | $ | 201,541,399 | $ | 1,388,313,171 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 6,108,985,190 | |||
Gross tax appreciation of investments | $ | 6,217,873,993 | |||
Gross tax depreciation of investments | (347,177,504) | ||||
Net tax appreciation (depreciation) of investments | 5,870,696,489 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (31,859) | ||||
Net tax appreciation (depreciation) | $ | 5,870,664,630 | |||
Undistributed ordinary income | $ | 8,151,136 | |||
Accumulated long-term gains | $ | 622,967,766 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains (losses) on futures contracts.
10. Reorganization
On December 2, 2021, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of NT 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 March 25, 2022.
The reorganization was accomplished by a tax-free exchange of shares. On March 25, 2022, NT Growth Fund exchanged its shares for shares of Growth Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||||||||
NT Growth Fund – G Class | 71,233,354 | Growth Fund – G Class | 31,393,184 |
The net assets of NT Growth Fund and Growth Fund immediately before the reorganization were $1,540,737,439 and $12,083,608,261, respectively. NT Growth Fund's unrealized appreciation of $732,269,787 was combined with that of Growth Fund. Immediately after the reorganization, the combined net assets were $13,624,345,700.
24
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $37.23 | (0.01) | 7.47 | 7.46 | — | (0.72) | (0.72) | $43.97 | 20.47% | 0.93% | 0.97% | (0.03)% | (0.07)% | 20% | $7,846,335 | ||||||||||||||||||||||||||||||||
2022 | $58.23 | (0.09) | (14.59) | (14.68) | — | (6.32) | (6.32) | $37.23 | (28.26)% | 0.95% | 0.97% | (0.19)% | (0.21)% | 25% | $6,859,912 | ||||||||||||||||||||||||||||||||
2021 | $41.94 | (0.18) | 18.03 | 17.85 | — | (1.56) | (1.56) | $58.23 | 43.66% | 0.96% | 0.96% | (0.36)% | (0.36)% | 21% | $10,186,486 | ||||||||||||||||||||||||||||||||
2020 | $35.80 | (0.02) | 9.12 | 9.10 | (0.15) | (2.81) | (2.96) | $41.94 | 26.70% | 0.97% | 0.97% | (0.04)% | (0.04)% | 33% | $7,656,430 | ||||||||||||||||||||||||||||||||
2019 | $34.94 | 0.08 | 4.70 | 4.78 | (0.08) | (3.84) | (3.92) | $35.80 | 16.35% | 0.98% | 0.98% | 0.24% | 0.24% | 30% | $5,937,959 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.35 | 0.07 | 7.71 | 7.78 | (0.05) | (0.72) | (0.77) | $45.36 | 20.72% | 0.73% | 0.77% | 0.17% | 0.13% | 20% | $1,503,056 | ||||||||||||||||||||||||||||||||
2022 | $59.70 | —(3) | (15.03) | (15.03) | — | (6.32) | (6.32) | $38.35 | (28.14)% | 0.75% | 0.77% | 0.01% | (0.01)% | 25% | $1,418,404 | ||||||||||||||||||||||||||||||||
2021 | $42.87 | (0.08) | 18.47 | 18.39 | — | (1.56) | (1.56) | $59.70 | 43.95% | 0.76% | 0.76% | (0.16)% | (0.16)% | 21% | $2,061,819 | ||||||||||||||||||||||||||||||||
2020 | $36.56 | 0.06 | 9.29 | 9.35 | (0.23) | (2.81) | (3.04) | $42.87 | 26.93% | 0.77% | 0.77% | 0.16% | 0.16% | 33% | $1,719,814 | ||||||||||||||||||||||||||||||||
2019 | $35.59 | 0.15 | 4.81 | 4.96 | (0.15) | (3.84) | (3.99) | $36.56 | 16.62% | 0.78% | 0.78% | 0.44% | 0.44% | 30% | $1,382,618 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations*: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.53 | 0.15 | 7.73 | 7.88 | (0.11) | (0.72) | (0.83) | $45.58 | 20.91% | 0.58% | 0.62% | 0.32% | 0.28% | 20% | $10,658 | ||||||||||||||||||||||||||||||||
2022 | $59.86 | 0.07 | (15.08) | (15.01) | — | (6.32) | (6.32) | $38.53 | (28.02)% | 0.60% | 0.62% | 0.16% | 0.14% | 25% | $45,448 | ||||||||||||||||||||||||||||||||
2021 | $42.93 | (0.01) | 18.50 | 18.49 | — | (1.56) | (1.56) | $59.86 | 44.13% | 0.61% | 0.61% | (0.01)% | (0.01)% | 21% | $66,916 | ||||||||||||||||||||||||||||||||
2020 | $36.61 | 0.13 | 9.30 | 9.43 | (0.30) | (2.81) | (3.11) | $42.93 | 27.15% | 0.62% | 0.62% | 0.31% | 0.31% | 33% | $52,046 | ||||||||||||||||||||||||||||||||
2019 | $35.64 | 0.20 | 4.81 | 5.01 | (0.20) | (3.84) | (4.04) | $36.61 | 16.78% | 0.63% | 0.63% | 0.59% | 0.59% | 30% | $53,641 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $35.37 | (0.11) | 7.10 | 6.99 | — | (0.72) | (0.72) | $41.64 | 20.18% | 1.18% | 1.22% | (0.28)% | (0.32)% | 20% | $122,253 | ||||||||||||||||||||||||||||||||
2022 | $55.78 | (0.19) | (13.90) | (14.09) | — | (6.32) | (6.32) | $35.37 | (28.46)% | 1.20% | 1.22% | (0.44)% | (0.46)% | 25% | $100,332 | ||||||||||||||||||||||||||||||||
2021 | $40.32 | (0.30) | 17.32 | 17.02 | — | (1.56) | (1.56) | $55.78 | 43.31% | 1.21% | 1.21% | (0.61)% | (0.61)% | 21% | $144,743 | ||||||||||||||||||||||||||||||||
2020 | $34.52 | (0.10) | 8.75 | 8.65 | (0.04) | (2.81) | (2.85) | $40.32 | 26.38% | 1.22% | 1.22% | (0.29)% | (0.29)% | 33% | $102,472 | ||||||||||||||||||||||||||||||||
2019 | $33.82 | —(3) | 4.54 | 4.54 | — | (3.84) | (3.84) | $34.52 | 16.06% | 1.23% | 1.23% | (0.01)% | (0.01)% | 30% | $93,422 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $31.83 | (0.36) | 6.35 | 5.99 | — | (0.72) | (0.72) | $37.10 | 19.27% | 1.93% | 1.97% | (1.03)% | (1.07)% | 20% | $9,153 | ||||||||||||||||||||||||||||||||
2022 | $51.16 | (0.46) | (12.55) | (13.01) | — | (6.32) | (6.32) | $31.83 | (28.97)% | 1.95% | 1.97% | (1.19)% | (1.21)% | 25% | $9,097 | ||||||||||||||||||||||||||||||||
2021 | $37.37 | (0.59) | 15.94 | 15.35 | — | (1.56) | (1.56) | $51.16 | 42.23% | 1.96% | 1.96% | (1.36)% | (1.36)% | 21% | $12,674 | ||||||||||||||||||||||||||||||||
2020 | $32.37 | (0.37) | 8.18 | 7.81 | — | (2.81) | (2.81) | $37.37 | 25.43% | 1.97% | 1.97% | (1.04)% | (1.04)% | 33% | $13,527 | ||||||||||||||||||||||||||||||||
2019 | $32.18 | (0.23) | 4.26 | 4.03 | — | (3.84) | (3.84) | $32.37 | 15.23% | 1.98% | 1.98% | (0.76)% | (0.76)% | 30% | $8,408 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $33.80 | (0.20) | 6.76 | 6.56 | — | (0.72) | (0.72) | $39.64 | 19.84% | 1.43% | 1.47% | (0.53)% | (0.57)% | 20% | $74,851 | ||||||||||||||||||||||||||||||||
2022 | $53.69 | (0.29) | (13.28) | (13.57) | — | (6.32) | (6.32) | $33.80 | (28.62)% | 1.45% | 1.47% | (0.69)% | (0.71)% | 25% | $72,437 | ||||||||||||||||||||||||||||||||
2021 | $38.96 | (0.40) | 16.69 | 16.29 | — | (1.56) | (1.56) | $53.69 | 42.94% | 1.46% | 1.46% | (0.86)% | (0.86)% | 21% | $114,022 | ||||||||||||||||||||||||||||||||
2020 | $33.50 | (0.19) | 8.49 | 8.30 | (0.03) | (2.81) | (2.84) | $38.96 | 26.07% | 1.47% | 1.47% | (0.54)% | (0.54)% | 33% | $96,170 | ||||||||||||||||||||||||||||||||
2019 | $33.02 | (0.08) | 4.40 | 4.32 | — | (3.84) | (3.84) | $33.50 | 15.78% | 1.48% | 1.48% | (0.26)% | (0.26)% | 30% | $87,302 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.40 | 0.07 | 7.71 | 7.78 | (0.05) | (0.72) | (0.77) | $45.41 | 20.70% | 0.73% | 0.77% | 0.17% | 0.13% | 20% | $2,490 | ||||||||||||||||||||||||||||||||
2022 | $59.76 | (0.01) | (15.03) | (15.04) | — | (6.32) | (6.32) | $38.40 | (28.12)% | 0.75% | 0.77% | 0.01% | (0.01)% | 25% | $2,471 | ||||||||||||||||||||||||||||||||
2021 | $42.91 | (0.09) | 18.50 | 18.41 | — | (1.56) | (1.56) | $59.76 | 43.96% | 0.76% | 0.76% | (0.16)% | (0.16)% | 21% | $4,950 | ||||||||||||||||||||||||||||||||
2020 | $36.59 | 0.08 | 9.28 | 9.36 | (0.23) | (2.81) | (3.04) | $42.91 | 26.94% | 0.77% | 0.77% | 0.16% | 0.16% | 33% | $433 | ||||||||||||||||||||||||||||||||
2019 | $35.62 | 0.15 | 4.81 | 4.96 | (0.15) | (3.84) | (3.99) | $36.59 | 16.61% | 0.78% | 0.78% | 0.44% | 0.44% | 30% | $533 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.47 | 0.13 | 7.73 | 7.86 | (0.11) | (0.72) | (0.83) | $45.50 | 20.89% | 0.58% | 0.62% | 0.32% | 0.28% | 20% | $1,098,477 | ||||||||||||||||||||||||||||||||
2022 | $59.77 | 0.07 | (15.05) | (14.98) | — | (6.32) | (6.32) | $38.47 | (28.01)% | 0.60% | 0.62% | 0.16% | 0.14% | 25% | $879,964 | ||||||||||||||||||||||||||||||||
2021 | $42.86 | (0.01) | 18.48 | 18.47 | — | (1.56) | (1.56) | $59.77 | 44.15% | 0.61% | 0.61% | (0.01)% | (0.01)% | 21% | $876,460 | ||||||||||||||||||||||||||||||||
2020 | $36.56 | 0.12 | 9.29 | 9.41 | (0.30) | (2.81) | (3.11) | $42.86 | 27.13% | 0.62% | 0.62% | 0.31% | 0.31% | 33% | $611,600 | ||||||||||||||||||||||||||||||||
2019 | $35.59 | 0.21 | 4.80 | 5.01 | (0.20) | (3.84) | (4.04) | $36.56 | 16.81% | 0.63% | 0.63% | 0.59% | 0.59% | 30% | $479,123 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.62 | 0.39 | 7.72 | 8.11 | (0.33) | (0.72) | (1.05) | $45.68 | 21.60% | 0.00%(4) | 0.62% | 0.90% | 0.28% | 20% | $1,308,464 | ||||||||||||||||||||||||||||||||
2022(5) | $47.73 | 0.23 | (8.33) | (8.10) | — | (1.01) | (1.01) | $38.62 | (17.41)% | 0.00%(4)(6) | 0.62%(6) | 0.82%(6) | 0.20%(6) | 25%(7) | $1,252,003 |
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)Per-share amount was less than $0.005.
(4)Ratio was less than 0.005%.
(5)March 1, 2022 (commencement of sale) through October 31, 2022.
(6)Annualized.
(7)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2022.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Growth Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Growth Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
29
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
30
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
31
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
32
Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
33
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the one-, three-, five-, and ten-year periods. The Board discussed the Fund's performance with the Advisor, including steps being taken to address underperformance, and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including information security), new products and services offered to Fund shareholders, securities trading activities,
34
portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow. Assets of various classes of the same Fund or similarly-managed products are combined with the assets of the Fund to help achieve those breakpoints.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee such that the Investor Class management fee not exceed 0.915% for at least one year beginning August 1, 2023. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
35
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
36
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
37
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended October 31, 2023.
For corporate taxpayers, the fund hereby designates $15,441,373, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended October 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $226,620,952, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended October 31, 2023.
The fund utilized earnings and profits of $27,661,113 distributed to shareholders on redemption of
shares as part of the dividends paid deduction (tax equalization).
38
Notes |
39
Notes |
40
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90970 2312 |
![image29.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image29.jpg)
Annual Report | |||||
October 31, 2023 | |||||
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) | |||||
G Class (ACILX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
![image26a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image26a.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of October 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWHIX | 0.11% | 7.41% | 7.69% | — | 11/10/87 | ||||||||||||||
Russell Midcap Growth Index | — | 3.35% | 8.09% | 9.09% | — | — | ||||||||||||||
I Class | ATHIX | 0.29% | 7.63% | 7.91% | — | 6/16/97 | ||||||||||||||
Y Class | ATHYX | 0.42% | 7.79% | — | 8.66% | 4/10/17 | ||||||||||||||
A Class | ATHAX | 7/11/97 | ||||||||||||||||||
No sales charge | -0.13% | 7.14% | 7.43% | — | ||||||||||||||||
With sales charge | -5.87% | 5.88% | 6.79% | — | ||||||||||||||||
C Class | AHGCX | -0.97% | 6.33% | 6.62% | — | 6/26/01 | ||||||||||||||
R Class | ATHWX | -0.39% | 6.88% | 7.16% | — | 9/28/07 | ||||||||||||||
R5 Class | ATHGX | 0.34% | 7.64% | — | 8.51% | 4/10/17 | ||||||||||||||
R6 Class | ATHDX | 0.42% | 7.79% | 8.07% | — | 7/26/13 | ||||||||||||||
G Class | ACILX | 1.13% | — | — | -7.12% | 3/1/22 |
Average annual returns since inception are presented when ten years of performance history is not available.
G Class returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-c59ad789965d4f4182ba.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-c59ad789965d4f4182ba.jpg)
Value on October 31, 2023 | |||||
Investor Class — $20,981 | |||||
Russell Midcap Growth Index — $23,865 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
1.01% | 0.81% | 0.66% | 1.26% | 2.01% | 1.51% | 0.81% | 0.66% | 0.66% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Rob Brookby and Nalin Yogasundram
Performance Summary
Heritage returned 0.11%* for the 12 months ended October 31, 2023, versus the 3.35% return of the fund’s benchmark, the Russell Midcap Growth Index. The fund’s return reflects operating expenses, while the index return does not.
Performance relative to the benchmark was hampered by stock selection, especially in the health care, consumer discretionary and financials sectors. Stock choices in communication services and consumer staples benefited performance.
Health Care Detracted
Stock selection hampered performance in the health care sector relative to the benchmark. Sarepta Therapeutics was a key detractor. The Food and Drug Administration approved Sarepta’s gene therapy for Duchenne muscular dystrophy but added an extra step in the regulatory approval process and ultimately approved the drug for a narrower-than-expected use. The chief financial officer of Catalent, a contract drug manufacturer, left the firm as the company restated prior financial statements, delayed its quarterly earnings call and lowered guidance. We eliminated our holdings of Sarepta and Catalent. Mettler-Toledo International, a maker of laboratory and sales equipment, reported better-than-expected quarterly results but guided lower due to its large-capitalization pharmaceutical customers stretching their sales cycles because of the uncertain macroeconomic environment.
Other significant detractors included The Hershey Co. The candy maker reported revenues in line with expectations driven by stronger pricing but weaker volumes. The stock also started to face headwinds on concerns about the impact of weight-loss drugs on confectionary volumes. We eliminated Hershey. Keysight Technologies, which manufactures test and measurement instruments for use in communications, networking and electronics applications, posted mixed quarterly results with revenues and earnings that beat expectations but new orders that lagged. The company also issued disappointing guidance. Another notable detractor was Netherlands-based Adyen, which operates a global payments platform. Adyen failed to gain market share as quickly as we expected, and we exited the position.
Communication Services Benefited Performance
Stock choices in the entertainment industry led performance in the communication services sector. Stock choices among media companies were also helpful.
Top individual contributors included Cadence Design Systems, which sells software to help design semiconductor chips. Semiconductor companies have to spend on research and development regardless of economic conditions, which benefits Cadence. The energy drink manufacturer Celsius Holdings reported strong results with revenue and earnings coming in much better than expected. The company’s market share gains continued to accelerate with its PepsiCo distribution agreement. Manhattan Associates, a provider of warehouse management software solutions, began to see an acceleration by customers moving from on-premise to its cloud offering. Palo Alto Networks sells cybersecurity software for on-premise and cloud applications. Security spending is defensive because companies have to protect against cyber threats regardless of economic conditions. Vertiv Holdings, a manufacturer of power and cooling equipment for data centers, reported strong results driven by increased spending by large cloud computing providers and data center real estate investment trusts to meet increased demand from artificial intelligence.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 98.0% | ||||
Short-Term Investments | 0.7% | ||||
Other Assets and Liabilities | 1.3% | ||||
Top Five Industries | % of net assets | ||||
Software | 13.1% | ||||
Life Sciences Tools and Services | 7.7% | ||||
Capital Markets | 6.8% | ||||
Hotels, Restaurants and Leisure | 5.6% | ||||
Biotechnology | 5.5% |
6
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 May 1, 2023 to October 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $945.20 | $4.90 | 1.00% | ||||||||||
I Class | $1,000 | $946.30 | $3.92 | 0.80% | ||||||||||
Y Class | $1,000 | $946.70 | $3.19 | 0.65% | ||||||||||
A Class | $1,000 | $944.00 | $6.12 | 1.25% | ||||||||||
C Class | $1,000 | $940.60 | $9.78 | 2.00% | ||||||||||
R Class | $1,000 | $942.60 | $7.34 | 1.50% | ||||||||||
R5 Class | $1,000 | $946.30 | $3.92 | 0.80% | ||||||||||
R6 Class | $1,000 | $946.70 | $3.19 | 0.65% | ||||||||||
G Class | $1,000 | $950.20 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.16 | $5.09 | 1.00% | ||||||||||
I Class | $1,000 | $1,021.17 | $4.08 | 0.80% | ||||||||||
Y Class | $1,000 | $1,021.93 | $3.31 | 0.65% | ||||||||||
A Class | $1,000 | $1,018.90 | $6.36 | 1.25% | ||||||||||
C Class | $1,000 | $1,015.12 | $10.16 | 2.00% | ||||||||||
R Class | $1,000 | $1,017.64 | $7.63 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,021.17 | $4.08 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,021.93 | $3.31 | 0.65% | ||||||||||
G Class | $1,000 | $1,025.21 | $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 184, the number of days in the most recent fiscal half-year, divided by 365, 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%.
8
Schedule of Investments |
OCTOBER 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 98.0% | ||||||||
Aerospace and Defense — 3.8% | ||||||||
CAE, Inc.(1) | 1,684,057 | $ | 35,168,769 | |||||
Curtiss-Wright Corp. | 403,169 | 80,154,029 | ||||||
HEICO Corp. | 413,962 | 65,575,721 | ||||||
180,898,519 | ||||||||
Automobile Components — 2.2% | ||||||||
Aptiv PLC(1) | 584,120 | 50,935,264 | ||||||
Mobileye Global, Inc., Class A(1) | 1,525,509 | 54,414,906 | ||||||
105,350,170 | ||||||||
Beverages — 2.3% | ||||||||
Celsius Holdings, Inc.(1) | 729,711 | 110,981,746 | ||||||
Biotechnology — 5.5% | ||||||||
Amicus Therapeutics, Inc.(1) | 2,206,111 | 24,201,038 | ||||||
BioMarin Pharmaceutical, Inc.(1) | 446,165 | 36,340,139 | ||||||
Cytokinetics, Inc.(1) | 2,287,217 | 79,732,384 | ||||||
Natera, Inc.(1) | 777,378 | 30,683,110 | ||||||
Neurocrine Biosciences, Inc.(1) | 646,935 | 71,770,969 | ||||||
Viking Therapeutics, Inc.(1) | 1,925,685 | 18,890,970 | ||||||
261,618,610 | ||||||||
Building Products — 1.5% | ||||||||
Trane Technologies PLC | 388,038 | 73,847,512 | ||||||
Capital Markets — 6.8% | ||||||||
Ares Management Corp., Class A | 1,118,253 | 110,248,563 | ||||||
LPL Financial Holdings, Inc. | 477,045 | 107,106,143 | ||||||
MSCI, Inc. | 223,572 | 105,425,377 | ||||||
322,780,083 | ||||||||
Chemicals — 2.3% | ||||||||
Avient Corp. | 1,540,294 | 48,704,096 | ||||||
Element Solutions, Inc. | 3,286,966 | 59,921,390 | ||||||
108,625,486 | ||||||||
Commercial Services and Supplies — 2.0% | ||||||||
Republic Services, Inc. | 631,974 | 93,841,819 | ||||||
Communications Equipment — 1.1% | ||||||||
Arista Networks, Inc.(1) | 266,967 | 53,492,178 | ||||||
Containers and Packaging — 1.4% | ||||||||
Avery Dennison Corp. | 372,626 | 64,863,008 | ||||||
Diversified Consumer Services — 0.8% | ||||||||
Duolingo, Inc.(1) | 255,031 | 37,247,278 | ||||||
Electrical Equipment — 4.3% | ||||||||
AMETEK, Inc. | 634,580 | 89,329,827 | ||||||
Regal Rexnord Corp. | 547,445 | 64,822,962 | ||||||
Vertiv Holdings Co., Class A | 1,273,514 | 50,010,895 | ||||||
204,163,684 | ||||||||
Electronic Equipment, Instruments and Components — 0.8% | ||||||||
Keysight Technologies, Inc.(1) | 299,186 | 36,515,651 | ||||||
Entertainment — 3.3% | ||||||||
Spotify Technology SA(1) | 633,835 | 104,430,655 |
9
Shares | Value | |||||||
Take-Two Interactive Software, Inc.(1) | 416,970 | $ | 55,769,737 | |||||
160,200,392 | ||||||||
Ground Transportation — 1.9% | ||||||||
Norfolk Southern Corp. | 260,585 | 49,717,012 | ||||||
XPO, Inc.(1) | 537,630 | 40,757,730 | ||||||
90,474,742 | ||||||||
Health Care Equipment and Supplies — 4.9% | ||||||||
Dexcom, Inc.(1) | 1,176,350 | 104,495,170 | ||||||
GE HealthCare Technologies, Inc. | 658,101 | 43,809,784 | ||||||
Glaukos Corp.(1) | 603,759 | 41,176,364 | ||||||
Lantheus Holdings, Inc.(1) | 681,644 | 44,034,202 | ||||||
233,515,520 | ||||||||
Health Care Technology — 0.9% | ||||||||
Veeva Systems, Inc., Class A(1) | 221,197 | 42,626,874 | ||||||
Hotels, Restaurants and Leisure — 5.6% | ||||||||
Airbnb, Inc., Class A(1) | 678,190 | 80,223,095 | ||||||
Chipotle Mexican Grill, Inc.(1) | 20,349 | 39,521,828 | ||||||
Hilton Worldwide Holdings, Inc. | 985,194 | 149,286,447 | ||||||
269,031,370 | ||||||||
Household Products — 2.6% | ||||||||
Church & Dwight Co., Inc. | 1,374,006 | 124,952,106 | ||||||
Insurance — 1.3% | ||||||||
Ryan Specialty Holdings, Inc., Class A(1) | 1,447,962 | 62,551,958 | ||||||
Interactive Media and Services — 0.9% | ||||||||
Match Group, Inc.(1) | 1,289,389 | 44,612,859 | ||||||
IT Services — 1.3% | ||||||||
Cloudflare, Inc., Class A(1) | 1,066,610 | 60,466,121 | ||||||
Life Sciences Tools and Services — 7.7% | ||||||||
Agilent Technologies, Inc. | 790,053 | 81,667,779 | ||||||
Avantor, Inc.(1) | 1,405,093 | 24,490,771 | ||||||
Bio-Techne Corp. | 1,032,880 | 56,426,234 | ||||||
IQVIA Holdings, Inc.(1) | 594,700 | 107,539,601 | ||||||
Mettler-Toledo International, Inc.(1) | 100,000 | 98,520,000 | ||||||
368,644,385 | ||||||||
Machinery — 2.1% | ||||||||
Graco, Inc. | 513,660 | 38,190,621 | ||||||
Parker-Hannifin Corp. | 166,552 | 61,442,698 | ||||||
99,633,319 | ||||||||
Media — 1.8% | ||||||||
Trade Desk, Inc., Class A(1) | 1,221,811 | 86,699,709 | ||||||
Metals and Mining — 0.2% | ||||||||
Capstone Copper Corp.(1) | 3,133,774 | 10,666,244 | ||||||
Oil, Gas and Consumable Fuels — 3.9% | ||||||||
Excelerate Energy, Inc., Class A | 910,314 | 12,944,665 | ||||||
Hess Corp. | 1,197,801 | 172,962,464 | ||||||
185,907,129 | ||||||||
Professional Services — 4.0% | ||||||||
Jacobs Solutions, Inc. | 654,272 | 87,214,458 | ||||||
Paycom Software, Inc. | 170,824 | 41,846,755 | ||||||
Verisk Analytics, Inc. | 265,429 | 60,347,937 | ||||||
189,409,150 | ||||||||
Semiconductors and Semiconductor Equipment — 3.1% | ||||||||
Marvell Technology, Inc. | 945,804 | 44,660,865 |
10
Shares | Value | |||||||
Monolithic Power Systems, Inc. | 136,537 | $ | 60,313,855 | |||||
Teradyne, Inc. | 538,316 | 44,825,573 | ||||||
149,800,293 | ||||||||
Software — 13.1% | ||||||||
Atlassian Corp., Class A(1) | 126,619 | 22,872,456 | ||||||
Cadence Design Systems, Inc.(1) | 407,721 | 97,791,882 | ||||||
Crowdstrike Holdings, Inc., Class A(1) | 391,816 | 69,261,314 | ||||||
Datadog, Inc., Class A(1) | 815,067 | 66,403,509 | ||||||
HubSpot, Inc.(1) | 217,166 | 92,028,436 | ||||||
Manhattan Associates, Inc.(1) | 558,891 | 108,972,567 | ||||||
Palantir Technologies, Inc., Class A(1) | 3,846,295 | 56,925,166 | ||||||
Palo Alto Networks, Inc.(1) | 333,548 | 81,058,835 | ||||||
Splunk, Inc.(1) | 214,202 | 31,521,966 | ||||||
626,836,131 | ||||||||
Specialty Retail — 1.0% | ||||||||
Burlington Stores, Inc.(1) | 401,837 | 48,634,332 | ||||||
Textiles, Apparel and Luxury Goods — 3.6% | ||||||||
Lululemon Athletica, Inc.(1) | 185,774 | 73,098,354 | ||||||
On Holding AG, Class A(1) | 3,799,454 | 97,531,984 | ||||||
170,630,338 | ||||||||
TOTAL COMMON STOCKS (Cost $4,129,321,021) | 4,679,518,716 | |||||||
SHORT-TERM INVESTMENTS — 0.7% | ||||||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 133,041 | 133,041 | ||||||
Repurchase Agreements — 0.7% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.50% - 4.00%, 11/30/28 - 11/15/52, valued at $2,586,541), in a joint trading account at 5.26%, dated 10/31/23, due 11/1/23 (Delivery value $2,525,654) | 2,525,285 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 10/15/28, valued at $32,459,474), at 5.28%, dated 10/31/23, due 11/1/23 (Delivery value $31,827,667) | 31,823,000 | |||||||
34,348,285 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $34,481,326) | 34,481,326 | |||||||
TOTAL INVESTMENT SECURITIES — 98.7% (Cost $4,163,802,347) | 4,714,000,042 | |||||||
OTHER ASSETS AND LIABILITIES — 1.3% | 63,690,638 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 4,777,690,680 |
11
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 1,867,539 | USD | 1,386,063 | Goldman Sachs & Co. | 12/22/23 | $ | (38,148) | |||||||||||||
CAD | 1,643,087 | USD | 1,199,603 | Goldman Sachs & Co. | 12/22/23 | (13,689) | ||||||||||||||
CAD | 1,659,960 | USD | 1,220,494 | Goldman Sachs & Co. | 12/22/23 | (22,402) | ||||||||||||||
CAD | 2,133,636 | USD | 1,556,375 | Goldman Sachs & Co. | 12/22/23 | (16,402) | ||||||||||||||
CAD | 1,726,520 | USD | 1,262,192 | Goldman Sachs & Co. | 12/22/23 | (16,060) | ||||||||||||||
USD | 47,713,283 | CAD | 64,334,205 | Goldman Sachs & Co. | 12/22/23 | 1,279,442 | ||||||||||||||
USD | 1,346,851 | CAD | 1,840,122 | Goldman Sachs & Co. | 12/22/23 | 18,725 | ||||||||||||||
EUR | 703,037 | USD | 743,307 | Bank of America N.A. | 12/22/23 | 2,323 | ||||||||||||||
EUR | 887,647 | USD | 944,501 | JPMorgan Chase Bank N.A. | 12/22/23 | (3,076) | ||||||||||||||
EUR | 17,242,108 | USD | 18,290,442 | JPMorgan Chase Bank N.A. | 12/22/23 | (3,735) | ||||||||||||||
EUR | 584,178 | USD | 620,226 | Morgan Stanley | 12/22/23 | (656) | ||||||||||||||
EUR | 429,915 | USD | 459,779 | Morgan Stanley | 12/22/23 | (3,818) | ||||||||||||||
USD | 5,825,085 | EUR | 5,480,148 | Bank of America N.A. | 12/22/23 | 12,927 | ||||||||||||||
USD | 627,076 | EUR | 591,765 | Bank of America N.A. | 12/22/23 | (541) | ||||||||||||||
USD | 857,337 | EUR | 814,309 | Bank of America N.A. | 12/22/23 | (6,306) | ||||||||||||||
USD | 469,176 | EUR | 445,088 | Bank of America N.A. | 12/22/23 | (2,878) | ||||||||||||||
USD | 5,826,137 | EUR | 5,480,148 | JPMorgan Chase Bank N.A. | 12/22/23 | 13,979 | ||||||||||||||
USD | 5,827,304 | EUR | 5,480,148 | Morgan Stanley | 12/22/23 | 15,146 | ||||||||||||||
USD | 860,753 | EUR | 814,309 | Morgan Stanley | 12/22/23 | (2,890) | ||||||||||||||
USD | 788,176 | EUR | 740,971 | Morgan Stanley | 12/22/23 | 2,314 | ||||||||||||||
$ | 1,214,255 |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
CAD | – | Canadian Dollar | ||||||
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.
12
Statement of Assets and Liabilities |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $4,163,802,347) | $ | 4,714,000,042 | |||
Receivable for investments sold | 72,615,295 | ||||
Receivable for capital shares sold | 13,601,779 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 1,344,856 | ||||
Dividends and interest receivable | 315,801 | ||||
Securities lending receivable | 34 | ||||
4,801,877,807 | |||||
Liabilities | |||||
Payable for investments purchased | 16,932,785 | ||||
Payable for capital shares redeemed | 3,768,344 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 130,601 | ||||
Accrued management fees | 3,297,379 | ||||
Distribution and service fees payable | 58,018 | ||||
24,187,127 | |||||
Net Assets | $ | 4,777,690,680 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 4,226,215,793 | |||
Distributable earnings (loss) | 551,474,887 | ||||
$ | 4,777,690,680 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $3,168,263,373 | 171,984,862 | $18.42 | ||||||||
I Class, $0.01 Par Value | $203,612,035 | 9,804,340 | $20.77 | ||||||||
Y Class, $0.01 Par Value | $68,371,342 | 3,209,855 | $21.30 | ||||||||
A Class, $0.01 Par Value | $194,096,351 | 12,401,572 | $15.65 | ||||||||
C Class, $0.01 Par Value | $6,198,414 | 674,972 | $9.18 | ||||||||
R Class, $0.01 Par Value | $19,693,589 | 1,276,103 | $15.43 | ||||||||
R5 Class, $0.01 Par Value | $986,877 | 47,509 | $20.77 | ||||||||
R6 Class, $0.01 Par Value | $154,171,456 | 7,238,565 | $21.30 | ||||||||
G Class, $0.01 Par Value | $962,297,243 | 44,710,832 | $21.52 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except A Class, for which the maximum offering price per share was $16.60 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of A Class and C Class.
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends | $ | 26,359,381 | |||
Interest | 4,433,006 | ||||
Securities lending, net | 64,458 | ||||
30,856,845 | |||||
Expenses: | |||||
Management fees | 47,450,588 | ||||
Distribution and service fees: | |||||
A Class | 553,091 | ||||
C Class | 85,288 | ||||
R Class | 111,892 | ||||
Directors' fees and expenses | 175,729 | ||||
Other expenses | 90 | ||||
48,376,678 | |||||
Fees waived - G Class | (6,484,858) | ||||
41,891,820 | |||||
Net investment income (loss) | (11,034,975) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 27,378,877 | ||||
Forward foreign currency exchange contract transactions | 557,094 | ||||
Foreign currency translation transactions | 20,998 | ||||
27,956,969 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 11,604,361 | ||||
Forward foreign currency exchange contracts | 1,026,128 | ||||
12,630,489 | |||||
Net realized and unrealized gain (loss) | 40,587,458 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 29,552,483 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (11,034,975) | $ | (26,978,024) | ||||
Net realized gain (loss) | 27,956,969 | 25,575,200 | ||||||
Change in net unrealized appreciation (depreciation) | 12,630,489 | (2,065,258,931) | ||||||
Net increase (decrease) in net assets resulting from operations | 29,552,483 | (2,066,661,755) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | — | (547,949,693) | ||||||
I Class | — | (38,407,013) | ||||||
Y Class | — | (7,958,731) | ||||||
A Class | — | (42,842,616) | ||||||
C Class | — | (3,844,904) | ||||||
R Class | — | (4,516,028) | ||||||
R5 Class | — | (89,193) | ||||||
R6 Class | — | (19,749,500) | ||||||
G Class | — | (17) | ||||||
From tax return of capital: | ||||||||
Investor Class | — | (26,689,361) | ||||||
I Class | — | (1,870,717) | ||||||
Y Class | — | (387,652) | ||||||
A Class | — | (2,086,765) | ||||||
C Class | — | (187,276) | ||||||
R Class | — | (219,965) | ||||||
R5 Class | — | (4,344) | ||||||
R6 Class | — | (961,952) | ||||||
G Class | — | (1) | ||||||
Decrease in net assets from distributions | — | (697,765,728) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (258,313,812) | 1,344,144,810 | ||||||
Net increase (decrease) in net assets | (228,761,329) | (1,420,282,673) | ||||||
Net Assets | ||||||||
Beginning of period | 5,006,452,009 | 6,426,734,682 | ||||||
End of period | $ | 4,777,690,680 | $ | 5,006,452,009 |
See Notes to Financial Statements.
15
Notes to Financial Statements |
OCTOBER 31, 2023
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, 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 March 1, 2022.
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 NAV 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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
16
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
17
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, 12% 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 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.
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 | G Class | ||||||||||||||||||
1.00% | 0.80% | 0.65% | 1.00% | 1.00% | 1.00% | 0.80% | 0.65% | 0.00%(1) |
(1)Annual management fee before waiver was 0.65%.
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 October 31, 2023 are detailed in the Statement of Operations.
18
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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended October 31, 2023 were $2,629,494,596 and $2,971,488,960, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022(1) | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 2,100,000,000 | 2,100,000,000 | ||||||||||||
Sold | 5,915,280 | $ | 115,691,946 | 5,450,159 | $ | 117,591,534 | ||||||||
Issued in reinvestment of distributions | — | — | 21,908,157 | 555,645,736 | ||||||||||
Redeemed | (16,814,748) | (330,515,624) | (21,411,659) | (453,757,160) | ||||||||||
(10,899,468) | (214,823,678) | 5,946,657 | 219,480,110 | |||||||||||
I Class/Shares Authorized | 175,000,000 | 175,000,000 | ||||||||||||
Sold | 1,299,595 | 28,734,407 | 2,286,889 | 53,737,981 | ||||||||||
Issued in reinvestment of distributions | — | — | 1,350,856 | 38,443,277 | ||||||||||
Redeemed | (2,673,209) | (59,195,148) | (4,894,049) | (111,937,246) | ||||||||||
(1,373,614) | (30,460,741) | (1,256,304) | (19,755,988) | |||||||||||
Y Class/Shares Authorized | 75,000,000 | 30,000,000 | ||||||||||||
Sold | 661,984 | 15,134,926 | 773,501 | 18,473,033 | ||||||||||
Issued in reinvestment of distributions | — | — | 281,698 | 8,188,472 | ||||||||||
Redeemed | (392,256) | (8,926,683) | (641,475) | (14,996,714) | ||||||||||
269,728 | 6,208,243 | 413,724 | 11,664,791 | |||||||||||
A Class/Shares Authorized | 170,000,000 | 170,000,000 | ||||||||||||
Sold | 1,329,664 | 22,192,452 | 1,566,938 | 27,642,868 | ||||||||||
Issued in reinvestment of distributions | — | — | 1,998,593 | 43,327,936 | ||||||||||
Redeemed | (2,856,500) | (47,723,276) | (3,608,747) | (64,855,097) | ||||||||||
(1,526,836) | (25,530,824) | (43,216) | 6,115,707 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 40,000,000 | ||||||||||||
Sold | 30,539 | 302,741 | 35,190 | 368,852 | ||||||||||
Issued in reinvestment of distributions | — | — | 309,641 | 4,016,798 | ||||||||||
Redeemed | (464,630) | (4,589,739) | (524,168) | (5,884,153) | ||||||||||
(434,091) | (4,286,998) | (179,337) | (1,498,503) | |||||||||||
R Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 187,462 | 3,088,278 | 193,183 | 3,472,000 | ||||||||||
Issued in reinvestment of distributions | — | — | 220,330 | 4,731,864 | ||||||||||
Redeemed | (384,696) | (6,271,888) | (397,202) | (7,139,270) | ||||||||||
(197,234) | (3,183,610) | 16,311 | 1,064,594 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 30,280 | 678,145 | 1,746 | 41,396 | ||||||||||
Issued in reinvestment of distributions | — | — | 3,272 | 93,537 | ||||||||||
Redeemed | (652) | (14,694) | (16,382) | (428,965) | ||||||||||
29,628 | 663,451 | (11,364) | (294,032) | |||||||||||
R6 Class/Shares Authorized | 120,000,000 | 70,000,000 | ||||||||||||
Sold | 1,249,662 | 28,659,310 | 2,340,269 | 59,207,062 | ||||||||||
Issued in reinvestment of distributions | — | — | 710,311 | 20,669,761 | ||||||||||
Redeemed | (1,304,785) | (29,709,979) | (1,499,478) | (36,291,908) | ||||||||||
(55,123) | (1,050,669) | 1,551,102 | 43,584,915 | |||||||||||
G Class/Shares Authorized | 600,000,000 | 600,000,000 | ||||||||||||
Sold | 5,964,401 | 133,588,209 | 4,284,233 | 87,885,057 | ||||||||||
Issued in connection with reorganization (Note 10) | — | — | 44,533,666 | 1,106,922,147 | ||||||||||
Issued in reinvestment of distributions | — | — | 1 | 18 | ||||||||||
Redeemed | (5,169,941) | (119,437,195) | (4,901,528) | (111,024,006) | ||||||||||
794,460 | 14,151,014 | 43,916,372 | 1,083,783,216 | |||||||||||
Net increase (decrease) | (13,392,550) | $ | (258,313,812) | 50,353,945 | $ | 1,344,144,810 |
(1)March 1, 2022 (commencement of sale) through October 31, 2022 for the G Class.
20
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 | $ | 4,633,683,703 | $ | 45,835,013 | — | ||||||
Short-Term Investments | 133,041 | 34,348,285 | — | ||||||||
$ | 4,633,816,744 | $ | 80,183,298 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,344,856 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 130,601 | — |
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $63,472,169.
21
The value of foreign currency risk derivative instruments as of October 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $1,344,856 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $130,601 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended October 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $557,094 in net realized gain (loss) on forward foreign currency exchange contract transactions and $1,026,128 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, war, 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 common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing solely in larger, more established companies.
9. Federal Tax Information
The tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | — | $ | 161,008,056 | |||||
Long-term capital gains | — | $ | 504,349,639 | |||||
Tax return of capital | — | $ | 32,408,033 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 4,191,084,134 | |||
Gross tax appreciation of investments | $ | 930,504,751 | |||
Gross tax depreciation of investments | (407,588,843) | ||||
Net tax appreciation (depreciation) of investments | 522,915,908 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | — | ||||
Net tax appreciation (depreciation) | $ | 522,915,908 | |||
Undistributed ordinary income | — | ||||
Accumulated long-term gains | $ | 39,205,069 | |||
Late-year ordinary loss deferral | $ | (10,646,090) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Loss deferrals 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.
22
10. Reorganization
On December 2, 2021, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of NT Heritage Fund, one fund in a series issued by the corporation, were transferred to Heritage Fund in exchange for shares of Heritage 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 Heritage Fund survived after the reorganization. The reorganization was effective at the close of the NYSE on March 25, 2022.
The reorganization was accomplished by a tax-free exchange of shares. On March 25, 2022, NT Heritage Fund exchanged its shares for shares of Heritage Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||||||||
NT Heritage Fund – G Class | 82,805,306 | Heritage Fund – G Class | 44,533,666 |
The net assets of NT Heritage Fund and Heritage Fund immediately before the reorganization were $1,106,922,147 and $5,030,214,398, respectively. NT Heritage Fund's unrealized appreciation of $213,647,362 was combined with that of Heritage Fund. Immediately after the reorganization, the combined net assets were $6,137,136,545.
23
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 Realized Gains | Tax Return of Capital | 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $18.42 | (0.08) | 0.08 | — | — | — | — | $18.42 | 0.11% | 1.00% | 1.00% | (0.41)% | (0.41)% | 51% | $3,168,263 | ||||||||||||||||||||||||||||||||
2022 | $30.00 | (0.13) | (8.19) | (8.32) | (3.12) | (0.14) | (3.26) | $18.42 | (30.66)% | 1.01% | 1.01% | (0.62)% | (0.62)% | 47% | $3,369,474 | ||||||||||||||||||||||||||||||||
2021 | $24.38 | (0.18) | 9.35 | 9.17 | (3.55) | — | (3.55) | $30.00 | 40.54% | 1.00% | 1.00% | (0.66)% | (0.66)% | 44% | $5,307,249 | ||||||||||||||||||||||||||||||||
2020 | $21.74 | (0.10) | 5.09 | 4.99 | (2.35) | — | (2.35) | $24.38 | 25.00% | 1.00% | 1.00% | (0.47)% | (0.47)% | 85% | $4,083,843 | ||||||||||||||||||||||||||||||||
2019 | $23.19 | (0.08) | 2.95 | 2.87 | (4.32) | — | (4.32) | $21.74 | 17.22% | 1.00% | 1.00% | (0.38)% | (0.38)% | 82% | $3,702,699 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $20.73 | (0.05) | 0.09 | 0.04 | — | — | — | $20.77 | 0.29% | 0.80% | 0.80% | (0.21)% | (0.21)% | 51% | $203,612 | ||||||||||||||||||||||||||||||||
2022 | $33.26 | (0.10) | (9.17) | (9.27) | (3.12) | (0.14) | (3.26) | $20.73 | (30.49)% | 0.81% | 0.81% | (0.42)% | (0.42)% | 47% | $231,708 | ||||||||||||||||||||||||||||||||
2021 | $26.66 | (0.14) | 10.29 | 10.15 | (3.55) | — | (3.55) | $33.26 | 40.78% | 0.80% | 0.80% | (0.46)% | (0.46)% | 44% | $413,523 | ||||||||||||||||||||||||||||||||
2020 | $23.52 | (0.06) | 5.55 | 5.49 | (2.35) | — | (2.35) | $26.66 | 25.25% | 0.80% | 0.80% | (0.27)% | (0.27)% | 85% | $328,636 | ||||||||||||||||||||||||||||||||
2019 | $24.66 | (0.04) | 3.22 | 3.18 | (4.32) | — | (4.32) | $23.52 | 17.50% | 0.80% | 0.80% | (0.18)% | (0.18)% | 82% | $336,242 |
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 Realized Gains | Tax Return of Capital | 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $21.23 | (0.01) | 0.08 | 0.07 | — | — | — | $21.30 | 0.42% | 0.65% | 0.65% | (0.06)% | (0.06)% | 51% | $68,371 | ||||||||||||||||||||||||||||||||
2022 | $33.93 | (0.07) | (9.37) | (9.44) | (3.12) | (0.14) | (3.26) | $21.23 | (30.38)% | 0.66% | 0.66% | (0.27)% | (0.27)% | 47% | $62,416 | ||||||||||||||||||||||||||||||||
2021 | $27.10 | (0.10) | 10.48 | 10.38 | (3.55) | — | (3.55) | $33.93 | 40.98% | 0.65% | 0.65% | (0.31)% | (0.31)% | 44% | $85,720 | ||||||||||||||||||||||||||||||||
2020 | $23.84 | (0.03) | 5.64 | 5.61 | (2.35) | — | (2.35) | $27.10 | 25.43% | 0.65% | 0.65% | (0.12)% | (0.12)% | 85% | $52,978 | ||||||||||||||||||||||||||||||||
2019 | $24.90 | (0.01) | 3.27 | 3.26 | (4.32) | — | (4.32) | $23.84 | 17.68% | 0.65% | 0.65% | (0.03)% | (0.03)% | 82% | $29,803 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $15.69 | (0.11) | 0.07 | (0.04) | — | — | — | $15.65 | (0.13)% | 1.25% | 1.25% | (0.66)% | (0.66)% | 51% | $194,096 | ||||||||||||||||||||||||||||||||
2022 | $26.11 | (0.16) | (7.00) | (7.16) | (3.12) | (0.14) | (3.26) | $15.69 | (30.80)% | 1.26% | 1.26% | (0.87)% | (0.87)% | 47% | $218,573 | ||||||||||||||||||||||||||||||||
2021 | $21.67 | (0.22) | 8.21 | 7.99 | (3.55) | — | (3.55) | $26.11 | 40.12% | 1.25% | 1.25% | (0.91)% | (0.91)% | 44% | $364,852 | ||||||||||||||||||||||||||||||||
2020 | $19.61 | (0.14) | 4.55 | 4.41 | (2.35) | — | (2.35) | $21.67 | 24.73% | 1.25% | 1.25% | (0.72)% | (0.72)% | 85% | $281,637 | ||||||||||||||||||||||||||||||||
2019 | $21.42 | (0.12) | 2.63 | 2.51 | (4.32) | — | (4.32) | $19.61 | 16.91% | 1.25% | 1.25% | (0.63)% | (0.63)% | 82% | $263,578 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.28 | (0.14) | 0.04 | (0.10) | — | — | — | $9.18 | (0.97)% | 2.00% | 2.00% | (1.41)% | (1.41)% | 51% | $6,198 | ||||||||||||||||||||||||||||||||
2022 | $16.95 | (0.18) | (4.23) | (4.41) | (3.12) | (0.14) | (3.26) | $9.28 | (31.31)% | 2.01% | 2.01% | (1.62)% | (1.62)% | 47% | $10,289 | ||||||||||||||||||||||||||||||||
2021 | $15.22 | (0.25) | 5.53 | 5.28 | (3.55) | — | (3.55) | $16.95 | 39.13% | 2.00% | 2.00% | (1.66)% | (1.66)% | 44% | $21,836 | ||||||||||||||||||||||||||||||||
2020 | $14.54 | (0.20) | 3.23 | 3.03 | (2.35) | — | (2.35) | $15.22 | 23.73% | 2.00% | 2.00% | (1.47)% | (1.47)% | 85% | $31,677 | ||||||||||||||||||||||||||||||||
2019 | $17.18 | (0.19) | 1.87 | 1.68 | (4.32) | — | (4.32) | $14.54 | 16.06% | 2.00% | 2.00% | (1.38)% | (1.38)% | 82% | $39,794 |
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 Realized Gains | Tax Return of Capital | 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $15.51 | (0.15) | 0.07 | (0.08) | — | — | — | $15.43 | (0.39)% | 1.50% | 1.50% | (0.91)% | (0.91)% | 51% | $19,694 | ||||||||||||||||||||||||||||||||
2022 | $25.91 | (0.20) | (6.94) | (7.14) | (3.12) | (0.14) | (3.26) | $15.51 | (30.98)% | 1.51% | 1.51% | (1.12)% | (1.12)% | 47% | $22,855 | ||||||||||||||||||||||||||||||||
2021 | $21.57 | (0.27) | 8.16 | 7.89 | (3.55) | — | (3.55) | $25.91 | 39.80% | 1.50% | 1.50% | (1.16)% | (1.16)% | 44% | $37,753 | ||||||||||||||||||||||||||||||||
2020 | $19.58 | (0.18) | 4.52 | 4.34 | (2.35) | — | (2.35) | $21.57 | 24.37% | 1.50% | 1.50% | (0.97)% | (0.97)% | 85% | $31,862 | ||||||||||||||||||||||||||||||||
2019 | $21.43 | (0.17) | 2.64 | 2.47 | (4.32) | — | (4.32) | $19.58 | 16.66% | 1.50% | 1.50% | (0.88)% | (0.88)% | 82% | $32,803 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $20.73 | (0.05) | 0.09 | 0.04 | — | — | — | $20.77 | 0.34% | 0.80% | 0.80% | (0.21)% | (0.21)% | 51% | $987 | ||||||||||||||||||||||||||||||||
2022 | $33.26 | (0.11) | (9.16) | (9.27) | (3.12) | (0.14) | (3.26) | $20.73 | (30.50)% | 0.81% | 0.81% | (0.42)% | (0.42)% | 47% | $371 | ||||||||||||||||||||||||||||||||
2021 | $26.66 | (0.14) | 10.29 | 10.15 | (3.55) | — | (3.55) | $33.26 | 40.78% | 0.80% | 0.80% | (0.46)% | (0.46)% | 44% | $973 | ||||||||||||||||||||||||||||||||
2020 | $23.52 | (0.04) | 5.53 | 5.49 | (2.35) | — | (2.35) | $26.66 | 25.25% | 0.80% | 0.80% | (0.27)% | (0.27)% | 85% | $1,339 | ||||||||||||||||||||||||||||||||
2019 | $24.66 | (0.04) | 3.22 | 3.18 | (4.32) | — | (4.32) | $23.52 | 17.50% | 0.80% | 0.80% | (0.18)% | (0.18)% | 82% | $3,663 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $21.23 | (0.01) | 0.08 | 0.07 | — | — | — | $21.30 | 0.42% | 0.65% | 0.65% | (0.06)% | (0.06)% | 51% | $154,171 | ||||||||||||||||||||||||||||||||
2022 | $33.93 | (0.07) | (9.37) | (9.44) | (3.12) | (0.14) | (3.26) | $21.23 | (30.38)% | 0.66% | 0.66% | (0.27)% | (0.27)% | 47% | $154,825 | ||||||||||||||||||||||||||||||||
2021 | $27.10 | (0.09) | 10.47 | 10.38 | (3.55) | — | (3.55) | $33.93 | 40.98% | 0.65% | 0.65% | (0.31)% | (0.31)% | 44% | $194,829 | ||||||||||||||||||||||||||||||||
2020 | $23.84 | (0.03) | 5.64 | 5.61 | (2.35) | — | (2.35) | $27.10 | 25.43% | 0.65% | 0.65% | (0.12)% | (0.12)% | 85% | $148,536 | ||||||||||||||||||||||||||||||||
2019 | $24.90 | (0.01) | 3.27 | 3.26 | (4.32) | — | (4.32) | $23.84 | 17.68% | 0.65% | 0.65% | (0.03)% | (0.03)% | 82% | $134,822 |
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 Realized Gains | Tax Return of Capital | 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $21.31 | 0.13 | 0.08 | 0.21 | — | — | — | $21.52 | 1.13% | 0.00%(3) | 0.65% | 0.59% | (0.06)% | 51% | $962,297 | ||||||||||||||||||||||||||||||||
2022(4) | $24.55 | 0.06 | (3.12) | (3.06) | (0.04) | (0.14) | (0.18) | $21.31 | (12.57)% | 0.01%(5) | 0.66%(5) | 0.43%(5) | (0.22)%(5) | 47%(6) | $935,941 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)Ratio was less than 0.005%.
(4)March 1, 2022 (commencement of sale) through October 31, 2022.
(5)Annualized.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2022.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Heritage Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Heritage Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
28
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
29
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
30
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
31
Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors.
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In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was above its benchmark for the three- and five-year periods and below its benchmark for the one- and ten-year periods reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the one- and three-year periods and below the median for the five- and ten-year periods. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including information
33
security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this
34
information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
35
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
36
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates $4,364,716, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended October 31, 2023.
The fund utilized earnings and profits of $4,364,716 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
38
Notes |
39
Notes |
40
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90977 2312 |
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Annual Report | |||||
October 31, 2023 | |||||
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) | |||||
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
![image26a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image26a.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of October 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWCIX | 15.85% | 12.71% | 12.71% | — | 6/30/71 | ||||||||||||||
Russell 1000 Growth Index | — | 18.95% | 14.22% | 13.82% | — | — | ||||||||||||||
I Class | TWSIX | 16.07% | 12.94% | 12.94% | — | 3/13/97 | ||||||||||||||
Y Class | ASLWX | 16.24% | 13.10% | — | 13.68% | 4/10/17 | ||||||||||||||
A Class | TWCAX | 8/8/97 | ||||||||||||||||||
No sales charge | 15.54% | 12.42% | 12.43% | — | ||||||||||||||||
With sales charge | 8.90% | 11.10% | 11.76% | — | ||||||||||||||||
C Class | ACSLX | 14.69% | 11.59% | 11.59% | — | 1/31/03 | ||||||||||||||
R Class | ASERX | 15.27% | 12.15% | 12.15% | — | 7/29/05 | ||||||||||||||
R5 Class | ASLGX | 16.08% | 12.93% | — | 13.50% | 4/10/17 | ||||||||||||||
R6 Class | ASDEX | 16.24% | 13.10% | 13.11% | — | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available. Fund returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-9ef8a1c901f349eda4fa.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-9ef8a1c901f349eda4fa.jpg)
Value on October 31, 2023 | |||||
Investor Class — $33,088 | |||||
Russell 1000 Growth Index — $36,502 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | ||||||||||||||||
1.00% | 0.80% | 0.65% | 1.25% | 2.00% | 1.50% | 0.80% | 0.65% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Portfolio Commentary |
Portfolio Managers: Keith Lee, Michael Li and Chris Krantz
Performance Summary
Select returned 15.85%* for the 12 months ended October 31, 2023, underperforming the 18.95% return of the fund’s benchmark, the Russell 1000 Growth Index.
Stock selection in the health care sector helped drive underperformance relative to the benchmark. Positioning in the information technology sector also detracted. Positioning in the consumer staples and communication services sectors benefited relative performance.
Health Care Stocks Hampered Performance
Pharmaceuticals weighed on performance in the health care sector. Bristol-Myers Squibb’s stock declined after the company reported that several of its drugs missed sales targets because of near-term headwinds. In the biotechnology industry, Biogen’s stock declined after the Food and Drug Administration approved its new drug to treat postpartum depression but not major depressive disorder. Danaher, a life sciences tools and diagnostics company, fell despite management reporting revenue and earnings that beat expectations because of a sharp slowdown in its China and COVID-19 testing businesses. UnitedHealth Group weighed on performance. The stock of the world’s largest private health insurer fell after a company executive said its costs were likely to soar as people resume elective procedures.
In the information technology sector, Microsoft reported better-than-expected revenue and earnings and offered upbeat guidance, with Azure, its cloud unit, growing fastest of the company’s key business segments. Strong revenue growth and tighter cost controls meant margins improved. We have some exposure to the stock but less than the benchmark because of concern about valuation relative to other investment alternatives. Broadcom’s stock rose on the strength of its smartphone and data center businesses and benefited along with other semiconductor stocks from optimism on artificial intelligence opportunities. Our lack of exposure to Broadcom detracted from performance compared with the benchmark.
Consumer Staples Benefited Relative Performance
We were underweight the consumer staples sector, which was helpful as the sector lagged during the period. Stock selection in the sector was also positive. Not owning beverage company PepsiCo was a key contributor.
In communication services, Alphabet was a top contributor. Google’s parent company reported better-than-expected revenue and earnings, aided by signs of growth in digital advertising. Alphabet also benefited from its cloud business and its artificial intelligence focus. Facebook’s parent company Meta Platforms struggled early in our reporting period on weaker advertising revenue amid an economic slowdown and Apple’s privacy changes. Our underweight versus the benchmark was advantageous to relative results.
Elsewhere, semiconductor capital equipment company KLA was another source of strength. We believe the company enjoys a significant advantage over the competition in its area of expertise and also benefits from consolidation in the industry. The company repeatedly beat revenue and earnings expectations.
*All fund returns referenced in this commentary are for Investor Class shares. Fund returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
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Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 99.7% | ||||
Short-Term Investments | 0.1% | ||||
Other Assets and Liabilities | 0.2% | ||||
Top Five Industries | % of net assets | ||||
Software | 16.2% | ||||
Technology Hardware, Storage and Peripherals | 13.2% | ||||
Interactive Media and Services | 11.5% | ||||
Semiconductors and Semiconductor Equipment | 9.0% | ||||
Broadline Retail | 6.7% |
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Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from May 1, 2023 to October 31, 2023.
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 mutual 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 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 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
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Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,050.00 | $4.86 | 0.94% | ||||||||||
I Class | $1,000 | $1,051.00 | $3.83 | 0.74% | ||||||||||
Y Class | $1,000 | $1,051.80 | $3.05 | 0.59% | ||||||||||
A Class | $1,000 | $1,048.60 | $6.14 | 1.19% | ||||||||||
C Class | $1,000 | $1,044.70 | $10.00 | 1.94% | ||||||||||
R Class | $1,000 | $1,047.40 | $7.43 | 1.44% | ||||||||||
R5 Class | $1,000 | $1,051.10 | $3.83 | 0.74% | ||||||||||
R6 Class | $1,000 | $1,051.80 | $3.05 | 0.59% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.47 | $4.79 | 0.94% | ||||||||||
I Class | $1,000 | $1,021.48 | $3.77 | 0.74% | ||||||||||
Y Class | $1,000 | $1,022.23 | $3.01 | 0.59% | ||||||||||
A Class | $1,000 | $1,019.21 | $6.06 | 1.19% | ||||||||||
C Class | $1,000 | $1,015.43 | $9.86 | 1.94% | ||||||||||
R Class | $1,000 | $1,017.95 | $7.32 | 1.44% | ||||||||||
R5 Class | $1,000 | $1,021.48 | $3.77 | 0.74% | ||||||||||
R6 Class | $1,000 | $1,022.23 | $3.01 | 0.59% |
(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 184, the number of days in the most recent fiscal half-year, divided by 365, 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.
8
Schedule of Investments |
OCTOBER 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 99.7% | ||||||||
Automobiles — 3.0% | ||||||||
Tesla, Inc.(1) | 621,100 | $ | 124,741,724 | |||||
Beverages — 2.3% | ||||||||
Constellation Brands, Inc., Class A | 263,700 | 61,745,355 | ||||||
Diageo PLC | 917,900 | 34,711,282 | ||||||
96,456,637 | ||||||||
Biotechnology — 4.2% | ||||||||
Biogen, Inc.(1) | 216,400 | 51,403,656 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 77,300 | 60,285,497 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 172,800 | 62,572,608 | ||||||
174,261,761 | ||||||||
Broadline Retail — 6.7% | ||||||||
Amazon.com, Inc.(1) | 2,070,600 | 275,576,154 | ||||||
Capital Markets — 1.4% | ||||||||
MSCI, Inc. | 126,300 | 59,556,765 | ||||||
Commercial Services and Supplies — 0.5% | ||||||||
VERALTO Corp.(1) | 308,200 | 21,265,800 | ||||||
Consumer Staples Distribution & Retail — 1.8% | ||||||||
Costco Wholesale Corp. | 130,200 | 71,927,688 | ||||||
Energy Equipment and Services — 1.2% | ||||||||
ChampionX Corp. | 1,556,800 | 47,949,440 | ||||||
Entertainment — 0.6% | ||||||||
Electronic Arts, Inc. | 184,800 | 22,876,392 | ||||||
Financial Services — 6.7% | ||||||||
Mastercard, Inc., Class A | 470,100 | 176,922,135 | ||||||
PayPal Holdings, Inc.(1) | 183,700 | 9,515,660 | ||||||
Visa, Inc., Class A | 377,100 | 88,656,210 | ||||||
275,094,005 | ||||||||
Ground Transportation — 0.4% | ||||||||
Canadian Pacific Kansas City Ltd. | 204,000 | 14,484,110 | ||||||
Health Care Equipment and Supplies — 1.1% | ||||||||
GE HealthCare Technologies, Inc. | 425,300 | 28,312,221 | ||||||
Penumbra, Inc.(1) | 90,400 | 17,279,960 | ||||||
45,592,181 | ||||||||
Health Care Providers and Services — 3.7% | ||||||||
UnitedHealth Group, Inc. | 287,300 | 153,866,388 | ||||||
Hotels, Restaurants and Leisure — 1.6% | ||||||||
Airbnb, Inc., Class A(1) | 378,500 | 44,772,765 | ||||||
Starbucks Corp. | 226,200 | 20,864,688 | ||||||
65,637,453 | ||||||||
Insurance — 0.7% | ||||||||
Progressive Corp. | 188,700 | 29,831,583 | ||||||
Interactive Media and Services — 11.5% | ||||||||
Alphabet, Inc., Class A(1) | 1,656,400 | 205,526,112 | ||||||
Alphabet, Inc., Class C(1) | 1,451,400 | 181,860,420 | ||||||
Meta Platforms, Inc., Class A(1) | 292,500 | 88,121,475 | ||||||
475,508,007 |
9
Shares | Value | |||||||
Life Sciences Tools and Services — 0.9% | ||||||||
Danaher Corp. | 199,600 | $ | 38,327,192 | |||||
Machinery — 4.5% | ||||||||
FANUC Corp. | 273,900 | 6,797,211 | ||||||
Graco, Inc. | 906,600 | 67,405,710 | ||||||
Lincoln Electric Holdings, Inc. | 188,200 | 32,897,360 | ||||||
Middleby Corp.(1) | 253,100 | 28,567,397 | ||||||
Otis Worldwide Corp. | 620,500 | 47,908,805 | ||||||
183,576,483 | ||||||||
Personal Care Products — 0.1% | ||||||||
Estee Lauder Cos., Inc., Class A | 32,400 | 4,175,388 | ||||||
Pharmaceuticals — 2.1% | ||||||||
Bristol-Myers Squibb Co. | 793,200 | 40,873,596 | ||||||
Eli Lilly & Co. | 79,200 | 43,871,256 | ||||||
84,744,852 | ||||||||
Professional Services — 0.2% | ||||||||
Verisk Analytics, Inc. | 43,200 | 9,821,952 | ||||||
Semiconductors and Semiconductor Equipment — 9.0% | ||||||||
Analog Devices, Inc. | 463,300 | 72,890,989 | ||||||
KLA Corp. | 97,500 | 45,795,750 | ||||||
NVIDIA Corp. | 515,100 | 210,057,780 | ||||||
Texas Instruments, Inc. | 301,100 | 42,759,211 | ||||||
371,503,730 | ||||||||
Software — 16.2% | ||||||||
Adobe, Inc.(1) | 104,200 | 55,440,652 | ||||||
Atlassian Corp., Class A(1) | 259,700 | 46,912,208 | ||||||
Autodesk, Inc.(1) | 199,200 | 39,367,896 | ||||||
Crowdstrike Holdings, Inc., Class A(1) | 227,000 | 40,126,790 | ||||||
Microsoft Corp. | 1,070,000 | 361,777,700 | ||||||
Roper Technologies, Inc. | 134,000 | 65,468,380 | ||||||
Salesforce, Inc.(1) | 198,500 | 39,864,755 | ||||||
Zscaler, Inc.(1) | 120,600 | 19,138,014 | ||||||
668,096,395 | ||||||||
Specialized REITs — 1.3% | ||||||||
American Tower Corp. | 149,800 | 26,692,862 | ||||||
Equinix, Inc. | 36,400 | 26,558,896 | ||||||
53,251,758 | ||||||||
Specialty Retail — 3.6% | ||||||||
Home Depot, Inc. | 133,600 | 38,034,584 | ||||||
Lowe's Cos., Inc. | 346,600 | 66,051,562 | ||||||
TJX Cos., Inc. | 364,500 | 32,101,515 | ||||||
Tractor Supply Co. | 60,800 | 11,707,648 | ||||||
147,895,309 | ||||||||
Technology Hardware, Storage and Peripherals — 13.2% | ||||||||
Apple, Inc. | 3,187,000 | 544,243,990 | ||||||
Textiles, Apparel and Luxury Goods — 1.2% | ||||||||
NIKE, Inc., Class B | 485,500 | 49,894,835 | ||||||
TOTAL COMMON STOCKS (Cost $1,750,882,072) | 4,110,157,972 | |||||||
SHORT-TERM INVESTMENTS — 0.1% | ||||||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 13,063 | 13,063 |
10
Shares | Value | |||||||
Repurchase Agreements — 0.1% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.50% - 4.00%, 11/30/28 - 11/15/52, valued at $262,511), in a joint trading account at 5.26%, dated 10/31/23, due 11/1/23 (Delivery value $256,331) | $ | 256,294 | ||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 10/15/28, valued at $3,293,590), at 5.28%, dated 10/31/23, due 11/1/23 (Delivery value $3,229,474) | 3,229,000 | |||||||
3,485,294 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $3,498,357) | 3,498,357 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $1,754,380,429) | 4,113,656,329 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 8,502,931 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 4,122,159,260 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 529,424 | USD | 392,931 | Goldman Sachs & Co. | 12/22/23 | $ | (10,814) | |||||||||||||
CAD | 2,195,536 | USD | 1,614,279 | Goldman Sachs & Co. | 12/22/23 | (29,630) | ||||||||||||||
CAD | 405,552 | USD | 294,081 | Goldman Sachs & Co. | 12/22/23 | (1,369) | ||||||||||||||
USD | 12,418,930 | CAD | 16,745,064 | Goldman Sachs & Co. | 12/22/23 | 333,016 | ||||||||||||||
USD | 294,530 | CAD | 408,408 | Goldman Sachs & Co. | 12/22/23 | (242) | ||||||||||||||
$ | 290,961 |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
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 |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $1,754,380,429) | $ | 4,113,656,329 | |||
Receivable for investments sold | 9,846,389 | ||||
Receivable for capital shares sold | 652,412 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 333,016 | ||||
Dividends and interest receivable | 1,848,079 | ||||
4,126,336,225 | |||||
Liabilities | |||||
Payable for capital shares redeemed | 852,776 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 42,055 | ||||
Accrued management fees | 3,264,853 | ||||
Distribution and service fees payable | 17,281 | ||||
4,176,965 | |||||
Net Assets | $ | 4,122,159,260 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,523,813,639 | |||
Distributable earnings (loss) | 2,598,345,621 | ||||
$ | 4,122,159,260 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $3,741,138,090 | 40,653,154 | $92.03 | ||||||||
I Class, $0.01 Par Value | $146,334,965 | 1,536,937 | $95.21 | ||||||||
Y Class, $0.01 Par Value | $97,252,325 | 1,012,502 | $96.05 | ||||||||
A Class, $0.01 Par Value | $61,960,631 | 705,268 | $87.85 | ||||||||
C Class, $0.01 Par Value | $2,302,906 | 32,315 | $71.26 | ||||||||
R Class, $0.01 Par Value | $3,511,909 | 41,067 | $85.52 | ||||||||
R5 Class, $0.01 Par Value | $11,522 | 121 | $95.22 | ||||||||
R6 Class, $0.01 Par Value | $69,646,912 | 726,228 | $95.90 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except A Class, for which the maximum offering price per share was $93.21 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of A Class and C Class.
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $77,557) | $ | 31,709,563 | |||
Interest | 1,287,196 | ||||
Securities lending, net | 301,012 | ||||
33,297,771 | |||||
Expenses: | |||||
Management fees | 38,778,878 | ||||
Distribution and service fees: | |||||
A Class | 143,171 | ||||
C Class | 25,744 | ||||
R Class | 20,176 | ||||
Directors' fees and expenses | 134,663 | ||||
Other expenses | 1,802 | ||||
39,104,434 | |||||
Fees waived(1) | (2,171,167) | ||||
36,933,267 | |||||
Net investment income (loss) | (3,635,496) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 249,830,879 | ||||
Forward foreign currency exchange contract transactions | 91,929 | ||||
Written options contract transactions | 1,014,480 | ||||
Foreign currency translation transactions | (2,067) | ||||
250,935,221 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 325,704,275 | ||||
Forward foreign currency exchange contracts | 178,603 | ||||
Written options contracts | (112,628) | ||||
Translation of assets and liabilities in foreign currencies | 6,997 | ||||
325,777,247 | |||||
Net realized and unrealized gain (loss) | 576,712,468 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 573,076,972 |
(1)Amount consists of $1,980,427, $74,654, $45,988, $31,028, $1,389, $2,187, $6 and $35,488 for Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and R6 Class, respectively.
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (3,635,496) | $ | (11,718,738) | ||||
Net realized gain (loss) | 250,935,221 | 343,453,191 | ||||||
Change in net unrealized appreciation (depreciation) | 325,777,247 | (1,516,001,847) | ||||||
Net increase (decrease) in net assets resulting from operations | 573,076,972 | (1,184,267,394) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (300,981,895) | (367,899,374) | ||||||
I Class | (10,057,502) | (11,838,751) | ||||||
Y Class | (5,975,720) | (7,876,454) | ||||||
A Class | (4,699,301) | (5,779,062) | ||||||
C Class | (284,405) | (386,505) | ||||||
R Class | (349,201) | (370,140) | ||||||
R5 Class | (856) | (978) | ||||||
R6 Class | (4,781,866) | (492,899) | ||||||
Decrease in net assets from distributions | (327,130,746) | (394,644,163) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 152,592,387 | 183,740,003 | ||||||
Net increase (decrease) in net assets | 398,538,613 | (1,395,171,554) | ||||||
Net Assets | ||||||||
Beginning of period | 3,723,620,647 | 5,118,792,201 | ||||||
End of period | $ | 4,122,159,260 | $ | 3,723,620,647 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
OCTOBER 31, 2023
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded options contracts are valued at a mean as provided by independent pricing services. 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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
15
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
16
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.
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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets). From November 1, 2022 through July 31, 2023, the investment advisor agreed to waive a portion of the fund’s management fee such that the management fee does not exceed 0.937% for Investor Class, A Class, C Class and R Class, 0.737% for I Class and R5 Class, and 0.587% for Y Class and R6 Class. Effective August 1, 2023, the investment advisor agreed to waive a portion of the fund’s management fee such that the management fee does not exceed 0.928% for Investor Class, A Class, C Class and R Class, 0.728% for I Class and R5 Class, and 0.578% for Y Class and R6 Class. The investment advisor expects this waiver arrangement to continue until July 31, 2024 and cannot terminate it prior to such date without the approval of the Board of Directors.
17
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended October 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | ||||||||||
Before Waiver | After Waiver | ||||||||||
Investor Class | 0.800% to 0.990% | 0.99% | 0.94% | ||||||||
I Class | 0.600% to 0.790% | 0.79% | 0.74% | ||||||||
Y Class | 0.450% to 0.640% | 0.64% | 0.59% | ||||||||
A Class | 0.800% to 0.990% | 0.99% | 0.94% | ||||||||
C Class | 0.800% to 0.990% | 0.99% | 0.94% | ||||||||
R Class | 0.800% to 0.990% | 0.99% | 0.94% | ||||||||
R5 Class | 0.600% to 0.790% | 0.79% | 0.74% | ||||||||
R6 Class | 0.450% to 0.640% | 0.64% | 0.59% |
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 October 31, 2023 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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
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 $3,861,957 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $3,756,087 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 October 31, 2023 were $570,130,836 and $681,720,861, respectively.
18
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 475,000,000 | 475,000,000 | ||||||||||||
Sold | 976,277 | $ | 88,329,108 | 961,456 | $ | 97,839,389 | ||||||||
Issued in reinvestment of distributions | 3,720,926 | 285,842,677 | 3,012,004 | 350,115,324 | ||||||||||
Redeemed | (3,098,095) | (272,712,253) | (3,355,187) | (334,401,604) | ||||||||||
1,599,108 | 101,459,532 | 618,273 | 113,553,109 | |||||||||||
I Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 425,730 | 37,948,863 | 290,331 | 29,975,712 | ||||||||||
Issued in reinvestment of distributions | 120,626 | 9,570,439 | 94,457 | 11,283,831 | ||||||||||
Redeemed | (341,985) | (31,586,054) | (281,924) | (28,747,163) | ||||||||||
204,371 | 15,933,248 | 102,864 | 12,512,380 | |||||||||||
Y Class/Shares Authorized | 25,000,000 | 30,000,000 | ||||||||||||
Sold | 381,128 | 34,369,699 | 195,249 | 20,961,209 | ||||||||||
Issued in reinvestment of distributions | 74,022 | 5,917,295 | 65,028 | 7,809,242 | ||||||||||
Redeemed | (202,482) | (17,866,164) | (311,173) | (32,029,898) | ||||||||||
252,668 | 22,420,830 | (50,896) | (3,259,447) | |||||||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 133,927 | 11,603,275 | 63,203 | 6,035,283 | ||||||||||
Issued in reinvestment of distributions | 62,534 | 4,595,613 | 50,370 | 5,639,954 | ||||||||||
Redeemed | (101,631) | (8,695,169) | (110,162) | (10,511,367) | ||||||||||
94,830 | 7,503,719 | 3,411 | 1,163,870 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 6,103 | 429,552 | 4,731 | 394,505 | ||||||||||
Issued in reinvestment of distributions | 4,615 | 276,897 | 4,031 | 379,383 | ||||||||||
Redeemed | (15,408) | (1,107,555) | (12,297) | (943,621) | ||||||||||
(4,690) | (401,106) | (3,535) | (169,733) | |||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 17,295 | 1,481,435 | 11,613 | 1,074,576 | ||||||||||
Issued in reinvestment of distributions | 4,852 | 347,831 | 3,372 | 370,140 | ||||||||||
Redeemed | (25,315) | (2,098,827) | (8,546) | (800,152) | ||||||||||
(3,168) | (269,561) | 6,439 | 644,564 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Issued in reinvestment of distributions | 11 | 856 | 8 | 978 | ||||||||||
R6 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 175,160 | 16,742,040 | 626,176 | 61,006,124 | ||||||||||
Issued in reinvestment of distributions | 59,852 | 4,776,814 | 4,066 | 487,636 | ||||||||||
Redeemed | (167,811) | (15,573,985) | (22,329) | (2,199,478) | ||||||||||
67,201 | 5,944,869 | 607,913 | 59,294,282 | |||||||||||
Net increase (decrease) | 2,210,331 | $ | 152,592,387 | 1,284,477 | $ | 183,740,003 |
19
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 | $ | 4,054,165,369 | $ | 55,992,603 | — | ||||||
Short-Term Investments | 13,063 | 3,485,294 | — | ||||||||
$ | 4,054,178,432 | $ | 59,477,897 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 333,016 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 42,055 | — |
20
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 will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 718 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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $13,544,079.
Value of Derivative Instruments as of October 31, 2023
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 | $ | 333,016 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 42,055 |
21
Effect of Derivative Instruments on the Statement of Operations for the Year Ended October 31, 2023
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 | $ | 1,014,480 | Change in net unrealized appreciation (depreciation) on written options contracts | $ | (112,628) | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 91,929 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 178,603 | ||||||||||
$ | 1,106,409 | $ | 65,975 |
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, war, 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 tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | — | — | ||||||
Long-term capital gains | $ | 327,130,746 | $ | 394,644,163 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,756,427,323 | |||
Gross tax appreciation of investments | $ | 2,391,347,241 | |||
Gross tax depreciation of investments | (34,118,235) | ||||
Net tax appreciation (depreciation) of investments | 2,357,229,006 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (3,535) | ||||
Net tax appreciation (depreciation) | $ | 2,357,225,471 | |||
Undistributed ordinary income | — | ||||
Accumulated long-term gains | $ | 245,382,307 | |||
Late-year ordinary loss deferral | $ | (4,262,157) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Loss deferrals 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.
22
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $87.50 | (0.09) | 12.42 | 12.33 | — | (7.80) | (7.80) | $92.03 | 15.85% | 0.94% | 0.99% | (0.11)% | (0.16)% | 14% | $3,741,138 | ||||||||||||||||||||||||||||||||
2022 | $124.12 | (0.28) | (26.71) | (26.99) | — | (9.63) | (9.63) | $87.50 | (23.66)% | 0.96% | 1.00% | (0.28)% | (0.32)% | 15% | $3,417,398 | ||||||||||||||||||||||||||||||||
2021 | $93.93 | (0.40) | 36.91 | 36.51 | — | (6.32) | (6.32) | $124.12 | 40.63% | 0.97% | 0.99% | (0.37)% | (0.39)% | 11% | $4,770,672 | ||||||||||||||||||||||||||||||||
2020 | $78.58 | (0.13) | 19.83 | 19.70 | — | (4.35) | (4.35) | $93.93 | 26.10% | 0.97% | 0.99% | (0.15)% | (0.17)% | 16% | $3,596,722 | ||||||||||||||||||||||||||||||||
2019 | $73.74 | —(3) | 10.42 | 10.42 | (0.03) | (5.55) | (5.58) | $78.58 | 15.98% | 0.97% | 0.99% | 0.00%(4) | (0.02)% | 17% | $3,054,007 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $90.09 | 0.08 | 12.84 | 12.92 | — | (7.80) | (7.80) | $95.21 | 16.07% | 0.74% | 0.79% | 0.09% | 0.04% | 14% | $146,335 | ||||||||||||||||||||||||||||||||
2022 | $127.27 | (0.08) | (27.47) | (27.55) | — | (9.63) | (9.63) | $90.09 | (23.51)% | 0.76% | 0.80% | (0.08)% | (0.12)% | 15% | $120,051 | ||||||||||||||||||||||||||||||||
2021 | $95.99 | (0.19) | 37.79 | 37.60 | — | (6.32) | (6.32) | $127.27 | 40.90% | 0.77% | 0.79% | (0.17)% | (0.19)% | 11% | $156,502 | ||||||||||||||||||||||||||||||||
2020 | $80.06 | 0.05 | 20.23 | 20.28 | — | (4.35) | (4.35) | $95.99 | 26.35% | 0.77% | 0.79% | 0.05% | 0.03% | 16% | $119,954 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $90.69 | 0.22 | 12.94 | 13.16 | — | (7.80) | (7.80) | $96.05 | 16.24% | 0.59% | 0.64% | 0.24% | 0.19% | 14% | $97,252 | ||||||||||||||||||||||||||||||||
2022 | $127.87 | 0.07 | (27.62) | (27.55) | — | (9.63) | (9.63) | $90.69 | (23.39)% | 0.61% | 0.65% | 0.07% | 0.03% | 15% | $68,908 | ||||||||||||||||||||||||||||||||
2021 | $96.28 | (0.03) | 37.94 | 37.91 | — | (6.32) | (6.32) | $127.87 | 41.11% | 0.62% | 0.64% | (0.02)% | (0.04)% | 11% | $103,669 | ||||||||||||||||||||||||||||||||
2020 | $80.17 | 0.16 | 20.30 | 20.46 | — | (4.35) | (4.35) | $96.28 | 26.55% | 0.62% | 0.64% | 0.20% | 0.18% | 16% | $72,595 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $84.10 | (0.31) | 11.86 | 11.55 | — | (7.80) | (7.80) | $87.85 | 15.54% | 1.19% | 1.24% | (0.36)% | (0.41)% | 14% | $61,961 | ||||||||||||||||||||||||||||||||
2022 | $119.94 | (0.51) | (25.70) | (26.21) | — | (9.63) | (9.63) | $84.10 | (23.85)% | 1.21% | 1.25% | (0.53)% | (0.57)% | 15% | $51,336 | ||||||||||||||||||||||||||||||||
2021 | $91.18 | (0.65) | 35.73 | 35.08 | — | (6.32) | (6.32) | $119.94 | 40.26% | 1.22% | 1.24% | (0.62)% | (0.64)% | 11% | $72,806 | ||||||||||||||||||||||||||||||||
2020 | $76.58 | (0.33) | 19.28 | 18.95 | — | (4.35) | (4.35) | $91.18 | 25.79% | 1.22% | 1.24% | (0.40)% | (0.42)% | 16% | $54,558 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $70.21 | (0.76) | 9.61 | 8.85 | — | (7.80) | (7.80) | $71.26 | 14.69% | 1.94% | 1.99% | (1.11)% | (1.16)% | 14% | $2,303 | ||||||||||||||||||||||||||||||||
2022 | $102.40 | (1.05) | (21.51) | (22.56) | — | (9.63) | (9.63) | $70.21 | (24.42)% | 1.96% | 2.00% | (1.28)% | (1.32)% | 15% | $2,598 | ||||||||||||||||||||||||||||||||
2021 | $79.23 | (1.21) | 30.70 | 29.49 | — | (6.32) | (6.32) | $102.40 | 39.23% | 1.97% | 1.99% | (1.37)% | (1.39)% | 11% | $4,151 | ||||||||||||||||||||||||||||||||
2020 | $67.55 | (0.82) | 16.85 | 16.03 | — | (4.35) | (4.35) | $79.23 | 24.85% | 1.97% | 1.99% | (1.15)% | (1.17)% | 16% | $5,390 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $82.26 | (0.51) | 11.57 | 11.06 | — | (7.80) | (7.80) | $85.52 | 15.27% | 1.44% | 1.49% | (0.61)% | (0.66)% | 14% | $3,512 | ||||||||||||||||||||||||||||||||
2022 | $117.80 | (0.74) | (25.17) | (25.91) | — | (9.63) | (9.63) | $82.26 | (24.04)% | 1.46% | 1.50% | (0.78)% | (0.82)% | 15% | $3,639 | ||||||||||||||||||||||||||||||||
2021 | $89.86 | (0.90) | 35.16 | 34.26 | — | (6.32) | (6.32) | $117.80 | 39.92% | 1.47% | 1.49% | (0.87)% | (0.89)% | 11% | $4,452 | ||||||||||||||||||||||||||||||||
2020 | $75.71 | (0.53) | 19.03 | 18.50 | — | (4.35) | (4.35) | $89.86 | 25.48% | 1.47% | 1.49% | (0.65)% | (0.67)% | 16% | $3,384 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $90.09 | 0.09 | 12.84 | 12.93 | — | (7.80) | (7.80) | $95.22 | 16.08% | 0.74% | 0.79% | 0.09% | 0.04% | 14% | $12 | ||||||||||||||||||||||||||||||||
2022 | $127.28 | (0.08) | (27.48) | (27.56) | — | (9.63) | (9.63) | $90.09 | (23.51)% | 0.76% | 0.80% | (0.08)% | (0.12)% | 15% | $10 | ||||||||||||||||||||||||||||||||
2021 | $95.99 | (0.18) | 37.79 | 37.61 | — | (6.32) | (6.32) | $127.28 | 40.91% | 0.77% | 0.79% | (0.17)% | (0.19)% | 11% | $13 | ||||||||||||||||||||||||||||||||
2020 | $80.07 | 0.03 | 20.24 | 20.27 | — | (4.35) | (4.35) | $95.99 | 26.34% | 0.77% | 0.79% | 0.05% | 0.03% | 16% | $9 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $90.56 | 0.22 | 12.92 | 13.14 | — | (7.80) | (7.80) | $95.90 | 16.24% | 0.59% | 0.64% | 0.24% | 0.19% | 14% | $69,647 | ||||||||||||||||||||||||||||||||
2022 | $127.70 | 0.06 | (27.57) | (27.51) | — | (9.63) | (9.63) | $90.56 | (23.39)% | 0.61% | 0.65% | 0.07% | 0.03% | 15% | $59,681 | ||||||||||||||||||||||||||||||||
2021 | $96.16 | (0.02) | 37.88 | 37.86 | — | (6.32) | (6.32) | $127.70 | 41.11% | 0.62% | 0.64% | (0.02)% | (0.04)% | 11% | $6,527 | ||||||||||||||||||||||||||||||||
2020 | $80.08 | 0.16 | 20.27 | 20.43 | — | (4.35) | (4.35) | $96.16 | 26.54% | 0.62% | 0.64% | 0.20% | 0.18% | 16% | $4,256 | ||||||||||||||||||||||||||||||||
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 |
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)Per-share amount was less than $0.005.
(4)Ratio was less than 0.005%.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Select Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Select Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
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Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was above its benchmark for the one-year period and below its benchmark for the three-, five-, and ten-year periods reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the one-, three-, five-, and ten-year periods. The Board discussed the Fund's performance with the Advisor, including steps being taken to address underperformance, and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including information security), new products and services offered to Fund shareholders, securities trading activities,
32
portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow. Assets of various classes of the same Fund or similarly-managed products are combined with the assets of the Fund to help achieve those breakpoints.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee such that the Investor Class management fee not exceed 0.928% for at least one year beginning August 1, 2023. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
33
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
34
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
35
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates $334,649,500, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended October 31, 2023.
The fund utilized earnings and profits of $7,518,754 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
36
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90969 2312 |
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Annual Report | |||||
October 31, 2023 | |||||
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) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
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Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of October 31, 2023 | |||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||
Investor Class | ANOIX | -5.83% | 7.43% | 8.46% | — | 6/1/01 | |||||||||||||||||
Russell 2000 Growth Index | — | -7.63% | 2.68% | 5.67% | — | — | |||||||||||||||||
I Class | ANONX | -5.61% | 7.64% | 8.68% | — | 5/18/07 | |||||||||||||||||
Y Class | ANOYX | -5.47% | 7.81% | — | 9.75% | 4/10/17 | |||||||||||||||||
A Class | ANOAX | 1/31/03 | |||||||||||||||||||||
No sales charge | -6.05% | 7.18% | 8.19% | — | |||||||||||||||||||
With sales charge | -11.45% | 5.91% | 7.56% | — | |||||||||||||||||||
C Class | ANOCX | -6.79% | 6.36% | 7.38% | — | 1/31/03 | |||||||||||||||||
R Class | ANORX | -6.24% | 6.90% | 7.92% | — | 9/28/07 | |||||||||||||||||
R5 Class | ANOGX | -5.66% | 7.65% | — | 9.58% | 4/10/17 | |||||||||||||||||
R6 Class | ANODX | -5.47% | 7.81% | 8.84% | — | 7/26/13 | |||||||||||||||||
G Class | ANOHX | -4.74% | — | — | 7.56% | 4/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available. G Class returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-ffc127ad65574e41af3a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-ffc127ad65574e41af3a.jpg)
Value on October 31, 2023 | |||||
Investor Class — $22,536 | |||||
Russell 2000 Growth Index — $17,362 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
1.17% | 0.97% | 0.82% | 1.42% | 2.17% | 1.67% | 0.97% | 0.82% | 0.82% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Jackie Wagner and Jeff Hoernemann
Performance Summary
Small Cap Growth returned -5.83%* for the 12 months ended October 31, 2023, versus the -7.63% return of the fund’s benchmark, the Russell 2000 Growth Index. The fund’s return reflects operating expenses, while the index return does not.
Stock choices within the information technology, energy and consumer discretionary sectors benefited performance relative to the benchmark. Stock selection in the consumer staples and health care sectors detracted.
Information Technology Was The Top Contributor
Stock choices in software led outperformance in the information technology sector. Manhattan Associates, a provider of warehouse management software, saw an acceleration by customers moving from on-premise to its cloud offering. Elsewhere in the sector, Lattice Semiconductor, which develops programmable logic devices for a variety of end markets, benefited from broad-based design wins, higher average selling prices, greater software content and market share gains.
Stock selection in the energy sector was positive, led by Weatherford International. This oil field services company reported strong revenue and earnings and raised guidance. Weatherford also benefited from a rise in the spot price of crude oil.
Other top contributors included Clean Harbors. This environmental cleanup and industrial waste management service provider reported better-than-expected earnings and offered strong long-term financial forecasts. Ollie’s Bargain Outlet Holdings is a value-oriented off-price retailer that operates a warehouse-style format focused on brand-name merchandise sold at discount prices. Ollie’s benefited as budget-conscious consumers looked for deals on household purchases.
Consumer Staples Weighed on Performance
Stock selection in the consumer staples sector detracted. SunOpta, a manufacturer of plant- and fruit-based beverages and ingredients, was hurt by category softness and slower ramp-up of new business in its plant-based milk alternatives. Results for The Beauty Health Co., a medical devices company focused on aesthetics, were worse than expected due to weak system sales. We eliminated both holdings.
Health care hampered relative performance due to stock choices. Silk Road Medical, a maker of cardiovascular devices, saw a slowdown in the uptake of its less-invasive solution for carotid artery opening. The underperformance also reflects concerns that a Centers for Medicare and Medicaid Services coverage decision on carotid artery stenting could lead to an increase in the use of that alternative technology in the future. We eliminated the holding.
Other significant detractors included Driven Brands Holdings. Consumers focused on necessities and pulled back on some discretionary spending such as carwashes, hurting this automotive-services franchisor. In addition, integration issues with the recent acquisitions in the carwash and automotive glass segments are causing near-term and midterm execution challenges. We eliminated Driven Brands. Not owning benchmark component Super Micro Computer, a distributor and manufacturer of high-performance supercomputer technologies, detracted. The company benefited from the generative artificial intelligence themes.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 97.4% | ||||
Short-Term Investments | 2.7% | ||||
Other Assets and Liabilities | (0.1)% | ||||
Top Five Industries | % of net assets | ||||
Software | 10.1% | ||||
Biotechnology | 8.1% | ||||
Health Care Providers and Services | 5.7% | ||||
Semiconductors and Semiconductor Equipment | 5.4% | ||||
Health Care Equipment and Supplies | 5.1% |
6
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 May 1, 2023 to October 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $900.80 | $5.56 | 1.16% | ||||||||||
I Class | $1,000 | $901.60 | $4.60 | 0.96% | ||||||||||
Y Class | $1,000 | $902.60 | $3.88 | 0.81% | ||||||||||
A Class | $1,000 | $899.80 | $6.75 | 1.41% | ||||||||||
C Class | $1,000 | $896.20 | $10.32 | 2.16% | ||||||||||
R Class | $1,000 | $898.80 | $7.94 | 1.66% | ||||||||||
R5 Class | $1,000 | $901.20 | $4.60 | 0.96% | ||||||||||
R6 Class | $1,000 | $902.10 | $3.88 | 0.81% | ||||||||||
G Class | $1,000 | $905.90 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.36 | $5.90 | 1.16% | ||||||||||
I Class | $1,000 | $1,020.37 | $4.89 | 0.96% | ||||||||||
Y Class | $1,000 | $1,021.12 | $4.13 | 0.81% | ||||||||||
A Class | $1,000 | $1,018.10 | $7.17 | 1.41% | ||||||||||
C Class | $1,000 | $1,014.32 | $10.97 | 2.16% | ||||||||||
R Class | $1,000 | $1,016.84 | $8.44 | 1.66% | ||||||||||
R5 Class | $1,000 | $1,020.37 | $4.89 | 0.96% | ||||||||||
R6 Class | $1,000 | $1,021.12 | $4.13 | 0.81% | ||||||||||
G Class | $1,000 | $1,025.21 | $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 184, the number of days in the most recent fiscal half-year, divided by 365, 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%.
8
Schedule of Investments |
OCTOBER 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 97.4% | ||||||||
Aerospace and Defense — 1.6% | ||||||||
CAE, Inc.(1) | 1,054,270 | $ | 22,016,700 | |||||
Mercury Systems, Inc.(1) | 463,409 | 16,673,456 | ||||||
38,690,156 | ||||||||
Air Freight and Logistics — 1.5% | ||||||||
Cargojet, Inc.(2) | 271,216 | 15,450,560 | ||||||
GXO Logistics, Inc.(1) | 420,804 | 21,254,810 | ||||||
36,705,370 | ||||||||
Automobile Components — 1.1% | ||||||||
Fox Factory Holding Corp.(1) | 242,767 | 19,778,227 | ||||||
Gentherm, Inc.(1) | 203,439 | 8,182,317 | ||||||
27,960,544 | ||||||||
Banks — 0.4% | ||||||||
Commerce Bancshares, Inc. | 220,654 | 9,677,884 | ||||||
Beverages — 1.8% | ||||||||
Duckhorn Portfolio, Inc.(1) | 1,517,797 | 15,830,622 | ||||||
MGP Ingredients, Inc. | 292,039 | 27,644,412 | ||||||
43,475,034 | ||||||||
Biotechnology — 8.1% | ||||||||
ADMA Biologics, Inc.(1) | 2,121,306 | 7,170,014 | ||||||
Alkermes PLC(1) | 584,823 | 14,146,868 | ||||||
Arcus Biosciences, Inc.(1) | 196,979 | 3,094,540 | ||||||
Arcutis Biotherapeutics, Inc.(1) | 854,309 | 1,922,195 | ||||||
Biohaven Ltd.(1) | 450,557 | 11,944,266 | ||||||
Blueprint Medicines Corp.(1) | 219,296 | 12,907,763 | ||||||
Bridgebio Pharma, Inc.(1) | 351,140 | 9,143,686 | ||||||
Celldex Therapeutics, Inc.(1) | 146,095 | 3,436,154 | ||||||
Centessa Pharmaceuticals PLC, ADR(1)(2) | 638,508 | 4,194,998 | ||||||
Cerevel Therapeutics Holdings, Inc.(1) | 282,656 | 6,684,815 | ||||||
Cytokinetics, Inc.(1) | 437,112 | 15,237,724 | ||||||
Halozyme Therapeutics, Inc.(1) | 556,892 | 18,861,932 | ||||||
ImmunoGen, Inc.(1) | 642,642 | 9,549,660 | ||||||
Insmed, Inc.(1) | 556,154 | 13,937,219 | ||||||
Karuna Therapeutics, Inc.(1) | 36,579 | 6,094,427 | ||||||
Keros Therapeutics, Inc.(1) | 196,422 | 5,605,884 | ||||||
Kymera Therapeutics, Inc.(1) | 209,705 | 2,447,257 | ||||||
Madrigal Pharmaceuticals, Inc.(1) | 58,925 | 7,741,567 | ||||||
Mineralys Therapeutics, Inc.(1) | 383,719 | 2,966,148 | ||||||
Natera, Inc.(1) | 587,945 | 23,206,189 | ||||||
Relay Therapeutics, Inc.(1) | 299,647 | 1,977,670 | ||||||
Vaxcyte, Inc.(1) | 339,075 | 16,309,508 | ||||||
198,580,484 | ||||||||
Broadline Retail — 1.6% | ||||||||
Ollie's Bargain Outlet Holdings, Inc.(1) | 356,449 | 27,532,121 | ||||||
Savers Value Village, Inc.(1) | 820,074 | 12,276,508 | ||||||
39,808,629 |
9
Shares | Value | |||||||
Building Products — 4.1% | ||||||||
AZEK Co., Inc.(1) | 1,335,305 | $ | 34,984,991 | |||||
Fortune Brands Innovations, Inc. | 340,592 | 19,005,034 | ||||||
Hayward Holdings, Inc.(1) | 2,356,901 | 24,747,460 | ||||||
JELD-WEN Holding, Inc.(1) | 1,825,934 | 20,687,832 | ||||||
99,425,317 | ||||||||
Capital Markets — 2.4% | ||||||||
Donnelley Financial Solutions, Inc.(1) | 415,947 | 22,639,995 | ||||||
Evercore, Inc., Class A | 81,816 | 10,650,807 | ||||||
Hamilton Lane, Inc., Class A | 289,901 | 24,386,472 | ||||||
57,677,274 | ||||||||
Chemicals — 1.0% | ||||||||
Element Solutions, Inc. | 1,323,710 | 24,131,233 | ||||||
Commercial Services and Supplies — 1.8% | ||||||||
Clean Harbors, Inc.(1) | 164,728 | 25,313,752 | ||||||
Healthcare Services Group, Inc. | 1,904,858 | 18,096,151 | ||||||
43,409,903 | ||||||||
Communications Equipment — 0.6% | ||||||||
Ciena Corp.(1) | 361,969 | 15,275,092 | ||||||
Construction and Engineering — 0.7% | ||||||||
Construction Partners, Inc., Class A(1) | 458,468 | 17,628,095 | ||||||
Construction Materials — 1.4% | ||||||||
Eagle Materials, Inc. | 90,727 | 13,963,793 | ||||||
Summit Materials, Inc., Class A(1) | 641,655 | 21,110,449 | ||||||
35,074,242 | ||||||||
Consumer Staples Distribution & Retail — 1.1% | ||||||||
Grocery Outlet Holding Corp.(1) | 540,663 | 14,960,145 | ||||||
PriceSmart, Inc. | 176,210 | 11,011,363 | ||||||
25,971,508 | ||||||||
Containers and Packaging — 1.4% | ||||||||
AptarGroup, Inc. | 154,160 | 18,849,143 | ||||||
O-I Glass, Inc.(1) | 1,005,013 | 15,527,451 | ||||||
34,376,594 | ||||||||
Diversified Consumer Services — 0.9% | ||||||||
European Wax Center, Inc., Class A(1)(2) | 1,434,570 | 21,188,599 | ||||||
Electric Utilities — 0.5% | ||||||||
IDACORP, Inc. | 129,873 | 12,300,272 | ||||||
Electrical Equipment — 0.8% | ||||||||
NEXTracker, Inc., Class A(1) | 81,093 | 2,818,793 | ||||||
Sensata Technologies Holding PLC | 495,787 | 15,805,689 | ||||||
18,624,482 | ||||||||
Electronic Equipment, Instruments and Components — 2.5% | ||||||||
Celestica, Inc.(1) | 503,986 | 11,768,073 | ||||||
Fabrinet(1) | 129,706 | 20,104,430 | ||||||
Littelfuse, Inc. | 83,353 | 18,060,095 | ||||||
Mirion Technologies, Inc., Class A(1) | 1,729,824 | 11,987,680 | ||||||
61,920,278 | ||||||||
Energy Equipment and Services — 4.2% | ||||||||
Expro Group Holdings NV(1) | 1,763,880 | 27,781,110 | ||||||
Transocean Ltd.(1) | 2,486,591 | 16,461,232 | ||||||
Weatherford International PLC(1) | 625,200 | 58,199,868 | ||||||
102,442,210 |
10
Shares | Value | |||||||
Financial Services — 1.0% | ||||||||
AvidXchange Holdings, Inc.(1) | 1,418,173 | $ | 12,253,015 | |||||
Shift4 Payments, Inc., Class A(1) | 251,970 | 11,217,704 | ||||||
23,470,719 | ||||||||
Food Products — 0.9% | ||||||||
J & J Snack Foods Corp. | 139,092 | 21,783,198 | ||||||
Ground Transportation — 1.1% | ||||||||
Knight-Swift Transportation Holdings, Inc. | 536,804 | 26,244,348 | ||||||
Health Care Equipment and Supplies — 5.1% | ||||||||
Alphatec Holdings, Inc.(1) | 1,890,090 | 17,351,026 | ||||||
Establishment Labs Holdings, Inc.(1) | 260,203 | 7,618,744 | ||||||
ICU Medical, Inc.(1) | 108,710 | 10,660,103 | ||||||
Inari Medical, Inc.(1) | 386,924 | 23,490,156 | ||||||
Lantheus Holdings, Inc.(1) | 394,267 | 25,469,648 | ||||||
PROCEPT BioRobotics Corp.(1) | 614,955 | 16,474,644 | ||||||
SI-BONE, Inc.(1) | 644,566 | 10,964,068 | ||||||
TransMedics Group, Inc.(1) | 311,680 | 11,681,766 | ||||||
123,710,155 | ||||||||
Health Care Providers and Services — 5.7% | ||||||||
Acadia Healthcare Co., Inc.(1) | 351,483 | 25,837,515 | ||||||
HealthEquity, Inc.(1) | 396,017 | 28,386,499 | ||||||
NeoGenomics, Inc.(1) | 1,667,022 | 23,371,649 | ||||||
Option Care Health, Inc.(1) | 798,090 | 22,131,036 | ||||||
R1 RCM, Inc.(1) | 2,116,317 | 24,951,377 | ||||||
RadNet, Inc.(1) | 490,546 | 13,225,120 | ||||||
137,903,196 | ||||||||
Health Care Technology — 1.1% | ||||||||
Evolent Health, Inc., Class A(1) | 771,654 | 18,851,507 | ||||||
Schrodinger, Inc.(1) | 353,380 | 7,668,346 | ||||||
26,519,853 | ||||||||
Hotel & Resort REITs — 1.3% | ||||||||
Ryman Hospitality Properties, Inc. | 369,653 | 31,642,297 | ||||||
Hotels, Restaurants and Leisure — 1.8% | ||||||||
Planet Fitness, Inc., Class A(1) | 320,356 | 17,706,076 | ||||||
Wingstop, Inc. | 149,284 | 27,284,637 | ||||||
44,990,713 | ||||||||
Household Durables — 0.8% | ||||||||
TopBuild Corp.(1) | 88,028 | 20,137,285 | ||||||
Industrial REITs — 0.5% | ||||||||
Terreno Realty Corp. | 247,586 | 13,191,382 | ||||||
Insurance — 4.3% | ||||||||
Goosehead Insurance, Inc., Class A(1) | 237,216 | 15,388,202 | ||||||
Kinsale Capital Group, Inc. | 86,259 | 28,802,743 | ||||||
Palomar Holdings, Inc.(1) | 307,871 | 15,418,180 | ||||||
RLI Corp. | 218,811 | 29,154,377 | ||||||
Skyward Specialty Insurance Group, Inc.(1) | 576,358 | 16,224,478 | ||||||
104,987,980 | ||||||||
Interactive Media and Services — 0.9% | ||||||||
Eventbrite, Inc., Class A(1) | 2,592,345 | 21,464,617 | ||||||
IT Services — 0.3% | ||||||||
Perficient, Inc.(1) | 141,801 | 8,251,400 |
11
Shares | Value | |||||||
Leisure Products — 1.1% | ||||||||
Brunswick Corp. | 246,889 | $ | 17,151,379 | |||||
Topgolf Callaway Brands Corp.(1) | 678,902 | 8,296,182 | ||||||
YETI Holdings, Inc.(1) | 57,763 | 2,456,083 | ||||||
27,903,644 | ||||||||
Machinery — 0.3% | ||||||||
ATS Corp.(1) | 234,763 | 7,905,846 | ||||||
Oil, Gas and Consumable Fuels — 1.5% | ||||||||
Antero Resources Corp.(1) | 1,203,074 | 35,418,499 | ||||||
Paper and Forest Products — 1.4% | ||||||||
Louisiana-Pacific Corp. | 199,031 | 10,206,310 | ||||||
Stella-Jones, Inc. | 466,133 | 24,416,730 | ||||||
34,623,040 | ||||||||
Personal Care Products — 1.6% | ||||||||
BellRing Brands, Inc.(1) | 449,078 | 19,638,181 | ||||||
elf Beauty, Inc.(1) | 201,983 | 18,709,685 | ||||||
38,347,866 | ||||||||
Pharmaceuticals — 1.5% | ||||||||
Arvinas, Inc.(1) | 239,649 | 3,863,142 | ||||||
Edgewise Therapeutics, Inc.(1) | 453,680 | 2,903,552 | ||||||
Intra-Cellular Therapies, Inc.(1) | 409,861 | 20,394,684 | ||||||
Ventyx Biosciences, Inc.(1) | 227,291 | 3,277,536 | ||||||
Verona Pharma PLC, ADR(1) | 377,237 | 5,262,456 | ||||||
35,701,370 | ||||||||
Professional Services — 3.9% | ||||||||
CACI International, Inc., Class A(1) | 80,208 | 26,048,350 | ||||||
First Advantage Corp. | 1,297,915 | 16,885,874 | ||||||
FTI Consulting, Inc.(1) | 102,380 | 21,731,179 | ||||||
Korn Ferry | 365,186 | 16,623,267 | ||||||
Paycor HCM, Inc.(1) | 650,246 | 14,032,308 | ||||||
95,320,978 | ||||||||
Real Estate Management and Development — 1.0% | ||||||||
FirstService Corp. (Toronto)(2) | 179,593 | 25,413,041 | ||||||
Semiconductors and Semiconductor Equipment — 5.4% | ||||||||
Credo Technology Group Holding Ltd.(1) | 1,238,884 | 17,616,931 | ||||||
FormFactor, Inc.(1) | 223,831 | 7,583,394 | ||||||
Lattice Semiconductor Corp.(1) | 153,787 | 8,552,095 | ||||||
MACOM Technology Solutions Holdings, Inc.(1) | 410,689 | 28,970,002 | ||||||
Onto Innovation, Inc.(1) | 231,665 | 26,032,196 | ||||||
Power Integrations, Inc. | 414,957 | 28,768,969 | ||||||
Silicon Laboratories, Inc.(1) | 147,039 | 13,554,055 | ||||||
131,077,642 | ||||||||
Software — 10.1% | ||||||||
Blackbaud, Inc.(1) | 285,852 | 18,694,721 | ||||||
CyberArk Software Ltd.(1) | 78,708 | 12,879,777 | ||||||
DoubleVerify Holdings, Inc.(1) | 684,005 | 19,035,859 | ||||||
Five9, Inc.(1) | 416,642 | 24,111,073 | ||||||
Guidewire Software, Inc.(1) | 270,550 | 24,384,672 | ||||||
JFrog Ltd.(1) | 556,741 | 12,521,105 | ||||||
Klaviyo, Inc., Class A(1) | 114,505 | 3,262,247 | ||||||
Manhattan Associates, Inc.(1) | 159,139 | 31,028,922 | ||||||
nCino, Inc.(1) | 569,910 | 16,014,471 |
12
Shares | Value | |||||||
New Relic, Inc.(1) | 182,695 | $ | 15,834,176 | |||||
SPS Commerce, Inc.(1) | 237,695 | 38,112,016 | ||||||
Tenable Holdings, Inc.(1) | 716,690 | 30,179,816 | ||||||
246,058,855 | ||||||||
Specialty Retail — 1.4% | ||||||||
Boot Barn Holdings, Inc.(1) | 323,290 | 22,468,655 | ||||||
Murphy USA, Inc. | 29,797 | 10,807,074 | ||||||
33,275,729 | ||||||||
Technology Hardware, Storage and Peripherals — 0.5% | ||||||||
Pure Storage, Inc., Class A(1) | 357,358 | 12,082,274 | ||||||
Textiles, Apparel and Luxury Goods — 0.5% | ||||||||
Crocs, Inc.(1) | 136,787 | 12,217,815 | ||||||
Trading Companies and Distributors — 1.9% | ||||||||
MRC Global, Inc.(1) | 1,862,873 | 19,578,795 | ||||||
NOW, Inc.(1) | 2,364,264 | 26,054,189 | ||||||
45,632,984 | ||||||||
Water Utilities — 1.0% | ||||||||
SJW Group | 403,442 | 25,207,056 | ||||||
TOTAL COMMON STOCKS (Cost $2,493,692,577) | 2,374,826,982 | |||||||
SHORT-TERM INVESTMENTS — 2.7% | ||||||||
Money Market Funds — 0.1% | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 251,694 | 251,694 | ||||||
State Street Navigator Securities Lending Government Money Market Portfolio(3) | 1,377,412 | 1,377,412 | ||||||
1,629,106 | ||||||||
Repurchase Agreements — 2.6% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.50% - 4.00%, 11/30/28 - 11/15/52, valued at $4,883,283), in a joint trading account at 5.26%, dated 10/31/23, due 11/1/23 (Delivery value $4,768,331) | 4,767,634 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 10/15/28, valued at $61,281,637), at 5.28%, dated 10/31/23, due 11/1/23 (Delivery value $60,088,812) | 60,080,000 | |||||||
64,847,634 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $66,476,740) | 66,476,740 | |||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $2,560,169,317) | 2,441,303,722 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (1,288,846) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,440,014,876 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 3,835,286 | USD | 2,797,639 | Goldman Sachs & Co. | 12/22/23 | $ | (29,484) | |||||||||||||
USD | 89,793,084 | CAD | 121,072,504 | Goldman Sachs & Co. | 12/22/23 | 2,407,822 | ||||||||||||||
USD | 3,273,340 | CAD | 4,446,143 | Goldman Sachs & Co. | 12/22/23 | 64,294 | ||||||||||||||
$ | 2,442,632 |
13
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | – | American Depositary Receipt | ||||||
CAD | – | Canadian Dollar | ||||||
USD | – | United States Dollar |
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $13,842,329. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(3)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $14,812,730, which includes securities collateral of $13,435,318.
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $2,558,791,905) — including $13,842,329 of securities on loan | $ | 2,439,926,310 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $1,377,412) | 1,377,412 | ||||
Total investment securities, at value (cost of $2,560,169,317) | 2,441,303,722 | ||||
Receivable for investments sold | 13,987,317 | ||||
Receivable for capital shares sold | 4,969,540 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 2,472,116 | ||||
Dividends and interest receivable | 180,845 | ||||
Securities lending receivable | 6,790 | ||||
2,462,920,330 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 1,377,412 | ||||
Payable for investments purchased | 16,003,308 | ||||
Payable for capital shares redeemed | 3,629,310 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 29,484 | ||||
Accrued management fees | 1,830,813 | ||||
Distribution and service fees payable | 35,127 | ||||
22,905,454 | |||||
Net Assets | $ | 2,440,014,876 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 2,792,169,329 | |||
Distributable earnings (loss) | (352,154,453) | ||||
$ | 2,440,014,876 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $616,511,840 | 39,718,587 | $15.52 | ||||||||
I Class, $0.01 Par Value | $604,489,359 | 37,058,435 | $16.31 | ||||||||
Y Class, $0.01 Par Value | $123,007,467 | 7,375,572 | $16.68 | ||||||||
A Class, $0.01 Par Value | $89,236,808 | 6,176,438 | $14.45 | ||||||||
C Class, $0.01 Par Value | $12,981,069 | 1,113,149 | $11.66 | ||||||||
R Class, $0.01 Par Value | $8,797,924 | 643,685 | $13.67 | ||||||||
R5 Class, $0.01 Par Value | $734,899 | 45,025 | $16.32 | ||||||||
R6 Class, $0.01 Par Value | $695,930,994 | 41,745,152 | $16.67 | ||||||||
G Class, $0.01 Par Value | $288,324,516 | 16,642,382 | $17.32 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except A Class, for which the maximum offering price per share was $15.33 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of A Class and C Class.
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $134,055) | $ | 10,349,970 | |||
Interest | 3,222,755 | ||||
Securities lending, net | 58,115 | ||||
13,630,840 | |||||
Expenses: | |||||
Management fees | 22,459,290 | ||||
Distribution and service fees: | |||||
A Class | 239,481 | ||||
C Class | 117,363 | ||||
R Class | 51,557 | ||||
Directors' fees and expenses | 78,500 | ||||
Other expenses | 45,704 | ||||
22,991,895 | |||||
Fees waived - G Class | (2,506,457) | ||||
20,485,438 | |||||
Net investment income (loss) | (6,854,598) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | (48,561,182) | ||||
Forward foreign currency exchange contract transactions | 1,113,820 | ||||
Foreign currency translation transactions | (5,159) | ||||
(47,452,521) | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (121,013,002) | ||||
Forward foreign currency exchange contracts | 1,698,069 | ||||
Translation of assets and liabilities in foreign currencies | (872) | ||||
(119,315,805) | |||||
Net realized and unrealized gain (loss) | (166,768,326) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (173,622,924) |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (6,854,598) | $ | (6,203,045) | ||||
Net realized gain (loss) | (47,452,521) | (165,115,033) | ||||||
Change in net unrealized appreciation (depreciation) | (119,315,805) | (451,125,193) | ||||||
Net increase (decrease) in net assets resulting from operations | (173,622,924) | (622,443,271) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | — | (122,931,535) | ||||||
I Class | — | (76,314,465) | ||||||
Y Class | (36,299) | (30,096,913) | ||||||
A Class | — | (23,815,635) | ||||||
C Class | — | (2,264,825) | ||||||
R Class | — | (2,347,192) | ||||||
R5 Class | — | (1,046,109) | ||||||
R6 Class | (127,260) | (56,730,478) | ||||||
G Class | (2,238,802) | (60,650,367) | ||||||
Decrease in net assets from distributions | (2,402,361) | (376,197,519) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 568,276,121 | 779,423,619 | ||||||
Net increase (decrease) in net assets | 392,250,836 | (219,217,171) | ||||||
Net Assets | ||||||||
Beginning of period | 2,047,764,040 | 2,266,981,211 | ||||||
End of period | $ | 2,440,014,876 | $ | 2,047,764,040 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
OCTOBER 31, 2023
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.
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 NAV 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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
18
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
19
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.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of October 31, 2023.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 1,377,412 | — | — | — | $ | 1,377,412 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 1,377,412 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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, 7% 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), as well as exchange-traded funds managed by the investment advisor, 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.
20
The management fee schedule range and the effective annual management fee for each class for the period ended October 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 1.100% to 1.500% | 1.16% | ||||||
I Class | 0.900% to 1.300% | 0.96% | ||||||
Y Class | 0.750% to 1.150% | 0.81% | ||||||
A Class | 1.100% to 1.500% | 1.16% | ||||||
C Class | 1.100% to 1.500% | 1.16% | ||||||
R Class | 1.100% to 1.500% | 1.16% | ||||||
R5 Class | 0.900% to 1.300% | 0.96% | ||||||
R6 Class | 0.750% to 1.150% | 0.81% | ||||||
G Class | 0.750% to 1.150% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.81%.
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 October 31, 2023 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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended October 31, 2023 were $2,217,248,350 and $1,570,447,557, respectively.
21
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 450,000,000 | 335,000,000 | ||||||||||||
Sold | 9,664,523 | $ | 165,974,487 | 13,339,669 | $ | 232,213,257 | ||||||||
Issued in reinvestment of distributions | — | — | 5,388,578 | 115,638,892 | ||||||||||
Redeemed | (8,549,529) | (144,382,136) | (6,364,731) | (113,460,104) | ||||||||||
1,114,994 | 21,592,351 | 12,363,516 | 234,392,045 | |||||||||||
I Class/Shares Authorized | 375,000,000 | 210,000,000 | ||||||||||||
Sold | 19,391,336 | 348,607,214 | 13,495,288 | 251,882,616 | ||||||||||
Issued in reinvestment of distributions | — | — | 3,285,206 | 73,818,580 | ||||||||||
Redeemed | (7,827,992) | (138,737,911) | (7,662,984) | (142,163,256) | ||||||||||
11,563,344 | 209,869,303 | 9,117,510 | 183,537,940 | |||||||||||
Y Class/Shares Authorized | 145,000,000 | 45,000,000 | ||||||||||||
Sold | 2,232,981 | 40,951,504 | 5,727,995 | 120,183,758 | ||||||||||
Issued in reinvestment of distributions | 534 | 9,204 | 312,106 | 7,150,342 | ||||||||||
Redeemed | (3,072,149) | (54,630,450) | (4,837,380) | (93,841,274) | ||||||||||
(838,634) | (13,669,742) | 1,202,721 | 33,492,826 | |||||||||||
A Class/Shares Authorized | 70,000,000 | 70,000,000 | ||||||||||||
Sold | 1,178,250 | 18,590,724 | 716,199 | 12,279,729 | ||||||||||
Issued in reinvestment of distributions | — | — | 1,153,265 | 23,146,028 | ||||||||||
Redeemed | (978,154) | (15,588,766) | (1,086,574) | (19,044,576) | ||||||||||
200,096 | 3,001,958 | 782,890 | 16,381,181 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 560,448 | 7,219,869 | 248,066 | 3,481,441 | ||||||||||
Issued in reinvestment of distributions | — | — | 137,205 | 2,254,281 | ||||||||||
Redeemed | (158,156) | (2,038,860) | (153,990) | (2,101,776) | ||||||||||
402,292 | 5,181,009 | 231,281 | 3,633,946 | |||||||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 310,848 | 4,721,645 | 179,162 | 2,864,123 | ||||||||||
Issued in reinvestment of distributions | — | — | 122,925 | 2,345,411 | ||||||||||
Redeemed | (284,935) | (4,163,577) | (195,209) | (3,158,172) | ||||||||||
25,913 | 558,068 | 106,878 | 2,051,362 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 71,248 | 1,350,261 | 274,361 | 5,403,546 | ||||||||||
Issued in reinvestment of distributions | — | — | 46,535 | 1,046,109 | ||||||||||
Redeemed | (154,076) | (2,749,175) | (418,340) | (7,132,576) | ||||||||||
(82,828) | (1,398,914) | (97,444) | (682,921) | |||||||||||
R6 Class/Shares Authorized | 530,000,000 | 80,000,000 | ||||||||||||
Sold | 24,904,736 | 459,985,311 | 14,132,982 | 265,555,653 | ||||||||||
Issued in reinvestment of distributions | 7,230 | 124,420 | 2,448,923 | 56,080,343 | ||||||||||
Redeemed | (6,814,736) | (124,681,880) | (4,630,700) | (89,487,995) | ||||||||||
18,097,230 | 335,427,851 | 11,951,205 | 232,148,001 | |||||||||||
G Class/Shares Authorized | 200,000,000 | 140,000,000 | ||||||||||||
Sold | 1,781,973 | 33,353,493 | 1,674,311 | 37,100,478 | ||||||||||
Issued in reinvestment of distributions | 126,059 | 2,238,802 | 2,568,842 | 60,650,367 | ||||||||||
Redeemed | (1,468,791) | (27,878,058) | (978,802) | (23,281,606) | ||||||||||
439,241 | 7,714,237 | 3,264,351 | 74,469,239 | |||||||||||
Net increase (decrease) | 30,921,648 | $ | 568,276,121 | 38,922,908 | $ | 779,423,619 |
22
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 | $ | 2,279,624,105 | $ | 95,202,877 | — | ||||||
Short-Term Investments | 1,629,106 | 64,847,634 | — | ||||||||
$ | 2,281,253,211 | $ | 160,050,511 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 2,472,116 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 29,484 | — |
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $93,021,399.
23
The value of foreign currency risk derivative instruments as of October 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $2,472,116 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $29,484 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended October 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $1,113,820 in net realized gain (loss) on forward foreign currency exchange contract transactions and $1,698,069 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, war, 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 tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 2,402,361 | $ | 169,173,414 | ||||
Long-term capital gains | — | $ | 207,024,105 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 2,576,443,611 | |||
Gross tax appreciation of investments | $ | 223,075,139 | |||
Gross tax depreciation of investments | (358,215,028) | ||||
Net tax appreciation (depreciation) of investments | (135,139,889) | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (1,553) | ||||
Net tax appreciation (depreciation) | $ | (135,141,442) | |||
Undistributed ordinary income | — | ||||
Accumulated short-term capital losses | $ | (151,692,909) | |||
Accumulated long-term capital losses | $ | (60,621,940) | |||
Late-year ordinary loss deferral | $ | (4,698,162) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized
capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an
unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue
Code limitations.
Loss deferrals 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.
24
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $16.48 | (0.10) | (0.86) | (0.96) | — | — | — | $15.52 | (5.83)% | 1.17% | 1.17% | (0.59)% | (0.59)% | 69% | $616,512 | ||||||||||||||||||||||||||||||||
2022 | $27.32 | (0.11) | (6.12) | (6.23) | — | (4.61) | — | $16.48 | (26.71)% | 1.17% | 1.17% | (0.61)% | (0.61)% | 61% | $636,149 | ||||||||||||||||||||||||||||||||
2021 | $22.00 | (0.21) | 8.25 | 8.04 | — | (2.72) | — | $27.32 | 38.56% | 1.17% | 1.17% | (0.82)% | (0.82)% | 96% | $716,869 | ||||||||||||||||||||||||||||||||
2020 | $17.54 | (0.15) | 5.61 | 5.46 | — | (1.00) | — | $22.00 | 32.43% | 1.22% | 1.22% | (0.81)% | (0.81)% | 141% | $531,353 | ||||||||||||||||||||||||||||||||
2019 | $18.08 | (0.12) | 1.91 | 1.79 | — | (2.33) | — | $17.54 | 13.00% | 1.28% | 1.28% | (0.70)% | (0.70)% | 92% | $392,956 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.28 | (0.07) | (0.90) | (0.97) | — | — | — | $16.31 | (5.61)% | 0.97% | 0.97% | (0.39)% | (0.39)% | 69% | $604,489 | ||||||||||||||||||||||||||||||||
2022 | $28.37 | (0.08) | (6.40) | (6.48) | — | (4.61) | — | $17.28 | (26.59)% | 0.97% | 0.97% | (0.41)% | (0.41)% | 61% | $440,618 | ||||||||||||||||||||||||||||||||
2021 | $22.71 | (0.17) | 8.55 | 8.38 | — | (2.72) | — | $28.37 | 38.81% | 0.97% | 0.97% | (0.62)% | (0.62)% | 96% | $464,632 | ||||||||||||||||||||||||||||||||
2020 | $18.04 | (0.11) | 5.78 | 5.67 | — | (1.00) | — | $22.71 | 32.76% | 1.02% | 1.02% | (0.61)% | (0.61)% | 141% | $317,466 | ||||||||||||||||||||||||||||||||
2019 | $18.50 | (0.09) | 1.96 | 1.87 | — | (2.33) | — | $18.04 | 13.16% | 1.08% | 1.08% | (0.50)% | (0.50)% | 92% | $305,249 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.65 | (0.04) | (0.92) | (0.96) | (0.01) | — | (0.01) | $16.68 | (5.47)% | 0.82% | 0.82% | (0.24)% | (0.24)% | 69% | $123,007 | ||||||||||||||||||||||||||||||||
2022 | $28.83 | (0.05) | (6.52) | (6.57) | — | (4.61) | — | $17.65 | (26.45)% | 0.82% | 0.82% | (0.26)% | (0.26)% | 61% | $144,975 | ||||||||||||||||||||||||||||||||
2021 | $23.02 | (0.13) | 8.66 | 8.53 | — | (2.72) | — | $28.83 | 39.02% | 0.82% | 0.82% | (0.47)% | (0.47)% | 96% | $202,169 | ||||||||||||||||||||||||||||||||
2020 | $18.24 | (0.10) | 5.88 | 5.78 | — | (1.00) | — | $23.02 | 32.96% | 0.87% | 0.87% | (0.46)% | (0.46)% | 141% | $130,958 | ||||||||||||||||||||||||||||||||
2019 | $18.65 | (0.06) | 1.98 | 1.92 | — | (2.33) | — | $18.24 | 13.34% | 0.93% | 0.93% | (0.35)% | (0.35)% | 92% | $6,392 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $15.38 | (0.13) | (0.80) | (0.93) | — | — | — | $14.45 | (6.05)% | 1.42% | 1.42% | (0.84)% | (0.84)% | 69% | $89,237 | ||||||||||||||||||||||||||||||||
2022 | $25.87 | (0.15) | (5.73) | (5.88) | — | (4.61) | — | $15.38 | (26.89)% | 1.42% | 1.42% | (0.86)% | (0.86)% | 61% | $91,898 | ||||||||||||||||||||||||||||||||
2021 | $21.00 | (0.26) | 7.85 | 7.59 | — | (2.72) | — | $25.87 | 38.22% | 1.42% | 1.42% | (1.07)% | (1.07)% | 96% | $134,367 | ||||||||||||||||||||||||||||||||
2020 | $16.82 | (0.19) | 5.37 | 5.18 | — | (1.00) | — | $21.00 | 32.14% | 1.47% | 1.47% | (1.06)% | (1.06)% | 141% | $98,200 | ||||||||||||||||||||||||||||||||
2019 | $17.49 | (0.16) | 1.82 | 1.66 | — | (2.33) | — | $16.82 | 12.72% | 1.53% | 1.53% | (0.95)% | (0.95)% | 92% | $80,127 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $12.50 | (0.20) | (0.64) | (0.84) | — | — | — | $11.66 | (6.79)% | 2.17% | 2.17% | (1.59)% | (1.59)% | 69% | $12,981 | ||||||||||||||||||||||||||||||||
2022 | $22.08 | (0.23) | (4.74) | (4.97) | — | (4.61) | — | $12.50 | (27.44)% | 2.17% | 2.17% | (1.61)% | (1.61)% | 61% | $8,889 | ||||||||||||||||||||||||||||||||
2021 | $18.38 | (0.38) | 6.80 | 6.42 | — | (2.72) | — | $22.08 | 37.19% | 2.17% | 2.17% | (1.82)% | (1.82)% | 96% | $10,587 | ||||||||||||||||||||||||||||||||
2020 | $14.94 | (0.28) | 4.72 | 4.44 | — | (1.00) | — | $18.38 | 31.18% | 2.22% | 2.22% | (1.81)% | (1.81)% | 141% | $5,298 | ||||||||||||||||||||||||||||||||
2019 | $15.92 | (0.25) | 1.60 | 1.35 | — | (2.33) | — | $14.94 | 11.84% | 2.28% | 2.28% | (1.70)% | (1.70)% | 92% | $4,790 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $14.58 | (0.16) | (0.75) | (0.91) | — | — | — | $13.67 | (6.24)% | 1.67% | 1.67% | (1.09)% | (1.09)% | 69% | $8,798 | ||||||||||||||||||||||||||||||||
2022 | $24.84 | (0.18) | (5.47) | (5.65) | — | (4.61) | — | $14.58 | (27.12)% | 1.67% | 1.67% | (1.11)% | (1.11)% | 61% | $9,010 | ||||||||||||||||||||||||||||||||
2021 | $20.30 | (0.31) | 7.57 | 7.26 | — | (2.72) | — | $24.84 | 37.88% | 1.67% | 1.67% | (1.32)% | (1.32)% | 96% | $12,690 | ||||||||||||||||||||||||||||||||
2020 | $16.33 | (0.23) | 5.20 | 4.97 | — | (1.00) | — | $20.30 | 31.80% | 1.72% | 1.72% | (1.31)% | (1.31)% | 141% | $8,492 | ||||||||||||||||||||||||||||||||
2019 | $17.09 | (0.19) | 1.76 | 1.57 | — | (2.33) | — | $16.33 | 12.39% | 1.78% | 1.78% | (1.20)% | (1.20)% | 92% | $6,099 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.29 | (0.06) | (0.91) | (0.97) | — | — | — | $16.32 | (5.66)% | 0.97% | 0.97% | (0.39)% | (0.39)% | 69% | $735 | ||||||||||||||||||||||||||||||||
2022 | $28.39 | (0.07) | (6.42) | (6.49) | — | (4.61) | — | $17.29 | (26.56)% | 0.97% | 0.97% | (0.41)% | (0.41)% | 61% | $2,211 | ||||||||||||||||||||||||||||||||
2021 | $22.73 | (0.18) | 8.56 | 8.38 | — | (2.72) | — | $28.39 | 38.84% | 0.97% | 0.97% | (0.62)% | (0.62)% | 96% | $6,396 | ||||||||||||||||||||||||||||||||
2020 | $18.05 | (0.12) | 5.80 | 5.68 | — | (1.00) | — | $22.73 | 32.74% | 1.02% | 1.02% | (0.61)% | (0.61)% | 141% | $9 | ||||||||||||||||||||||||||||||||
2019 | $18.51 | (0.08) | 1.95 | 1.87 | — | (2.33) | — | $18.05 | 13.21% | 1.08% | 1.08% | (0.50)% | (0.50)% | 92% | $7 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.64 | (0.04) | (0.92) | (0.96) | (0.01) | — | (0.01) | $16.67 | (5.47)% | 0.82% | 0.82% | (0.24)% | (0.24)% | 69% | $695,931 | ||||||||||||||||||||||||||||||||
2022 | $28.82 | (0.05) | (6.52) | (6.57) | — | (4.61) | — | $17.64 | (26.46)% | 0.82% | 0.82% | (0.26)% | (0.26)% | 61% | $417,197 | ||||||||||||||||||||||||||||||||
2021 | $23.01 | (0.13) | 8.66 | 8.53 | — | (2.72) | — | $28.82 | 39.04% | 0.82% | 0.82% | (0.47)% | (0.47)% | 96% | $337,132 | ||||||||||||||||||||||||||||||||
2020 | $18.24 | (0.09) | 5.86 | 5.77 | — | (1.00) | — | $23.01 | 32.91% | 0.87% | 0.87% | (0.46)% | (0.46)% | 141% | $108,820 | ||||||||||||||||||||||||||||||||
2019 | $18.65 | (0.06) | 1.98 | 1.92 | — | (2.33) | — | $18.24 | 13.40% | 0.93% | 0.93% | (0.35)% | (0.35)% | 92% | $48,763 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $18.32 | 0.11 | (0.98) | (0.87) | (0.13) | — | (0.13) | $17.32 | (4.74)% | 0.01% | 0.82% | 0.57% | (0.24)% | 69% | $288,325 | ||||||||||||||||||||||||||||||||
2022 | $29.53 | 0.11 | (6.71) | (6.60) | — | (4.61) | — | $18.32 | (25.84)% | 0.00%(3) | 0.82% | 0.56% | (0.26)% | 61% | $296,816 | ||||||||||||||||||||||||||||||||
2021 | $23.35 | 0.10 | 8.80 | 8.90 | — | (2.72) | — | $29.53 | 40.15% | 0.00%(3) | 0.82% | 0.35% | (0.47)% | 96% | $382,140 | ||||||||||||||||||||||||||||||||
2020 | $18.34 | 0.08 | 5.93 | 6.01 | — | (1.00) | — | $23.35 | 34.09% | 0.01% | 0.87% | 0.40% | (0.46)% | 141% | $299,803 | ||||||||||||||||||||||||||||||||
2019(4) | $17.43 | 0.05 | 0.86 | 0.91 | — | — | — | $18.34 | 5.22% | 0.00%(3)(5) | 0.93%(5) | 0.52%(5) | (0.41)%(5) | 92%(6) | $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)Ratio was less than 0.005%.
(4)April 1, 2019 (commencement of sale) through October 31, 2019.
(5)Annualized.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2019.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Small Cap Growth Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Small Cap Growth Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
31
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors.
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In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was above its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the one-, three-, five-, and ten-year periods. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including information security), new products and services offered to Fund shareholders, securities trading activities,
34
portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow. Assets of various classes of the same Fund or similarly-managed products are combined with the assets of the Fund to help achieve those breakpoints.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was near the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They
35
observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
36
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
37
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended October 31, 2023.
For corporate taxpayers, the fund hereby designates $2,402,361, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended October 31, 2023 as qualified for the corporate dividends received deduction.
38
Notes |
39
Notes |
40
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90978 2312 |
![image29.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image29.jpg)
Annual Report | |||||
October 31, 2023 | |||||
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) |
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
![image26a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image26a.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of October 31, 2023 | |||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||
Investor Class | AFDIX | 9.26% | 10.88% | 10.72% | — | 7/29/05 | |||||||||||||||||
S&P 500 Index | — | 10.14% | 11.01% | 11.18% | — | — | |||||||||||||||||
I Class | AFEIX | 9.46% | 11.11% | 10.93% | — | 7/29/05 | |||||||||||||||||
Y Class | AFYDX | 9.63% | 11.27% | — | 11.86% | 4/10/17 | |||||||||||||||||
A Class | AFDAX | 11/30/04 | |||||||||||||||||||||
No sales charge | 8.96% | 10.60% | 10.44% | — | |||||||||||||||||||
With sales charge | 2.70% | 9.30% | 9.78% | — | |||||||||||||||||||
C Class | AFDCX | 8.14% | 9.78% | 9.61% | — | 11/30/04 | |||||||||||||||||
R Class | AFDRX | 8.71% | 10.33% | 10.16% | — | 7/29/05 | |||||||||||||||||
R5 Class | AFDGX | 9.46% | 11.10% | — | 11.69% | 4/10/17 | |||||||||||||||||
R6 Class | AFEDX | 9.62% | — | — | 10.71% | 4/1/19 | |||||||||||||||||
G Class | AFEGX | 10.12% | — | — | 11.20% | 4/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available.
Fund returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-0c5ea9c640184259946a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-0c5ea9c640184259946a.jpg)
Value on October 31, 2023 | |||||
Investor Class — $27,678 | |||||
S&P 500 Index — $28,847 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
0.79% | 0.59% | 0.44% | 1.04% | 1.79% | 1.29% | 0.59% | 0.44% | 0.44% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Joe Reiland, Justin Brown and Rob Bove
Performance Summary
Sustainable Equity returned 9.26%* for the 12 months ended October 31, 2023, versus the 10.14% return of the fund’s benchmark, the S&P 500 Index. The fund’s return reflects operating expenses, while the index return does not.
Stock selection in the communication services and industrials sectors helped drive underperformance relative to the benchmark. Stock decisions in information technology and financials benefited performance.
Communication Services Hampered Performance
Significant detractors in the communication services sector included Meta Platforms, where an underweight to Facebook’s parent company hampered relative performance. Meta beat sales and earnings estimates as digital advertising revenue is starting to recover and cost-cutting measures have proved helpful.
Elsewhere, NextEra Energy was a top detractor. Utilities generally underperformed on a combination of higher interest rates and investor rotation to growth-oriented sectors. Semiconductor company Broadcom detracted from relative performance because the fund did not own the benchmark component. Broadcom delivered solid results and recently detailed strong exposure to artificial intelligence, specifically in its custom ASIC and networking businesses. ConocoPhillips hurt performance as concerns about global economic growth and oil demand led to a fall in the price of oil. Keysight Technologies manufactures test and measurement instruments for use in communications, networking and electronics applications. It posted mixed results with revenues and earnings that beat expectations but new orders that lagged. The company also issued disappointing guidance.
Information Technology Stocks Benefited Performance
Top contributors in the information technology sector included a pair of semiconductor stocks, led by NVIDIA. The chipmaker’s stock surged after increasing its future business guidance well above Wall Street analysts’ expectations. NVIDIA’s growth was driven by its data center business, which reflects the demand for computing power required for artificial intelligence applications. Applied Materials, a semiconductor equipment manufacturer, continued to benefit from management’s greater focus on margins and returns on capital. The company also was helped by industry consolidation and increased demand for chips. Software company Microsoft reported better-than-expected revenue and earnings and offered upbeat guidance. Microsoft benefited from lower expenses and improved performance of its cloud unit.
Other significant contributors included Novo Nordisk. The Denmark-based pharmaceutical company surged on its weight-loss drug Wegovy, and late-stage trial results also showed that Wegovy was beneficial for treating Type 2 diabetes and chronic kidney disease. Not owning Pfizer contributed positively to relative performance. The large pharmaceutical company struggled with decreased demand for its COVID-19 vaccine, and it halted trials for its obesity drug on safety concerns.
Because the fund considers environmental, social and governance (ESG) metrics in addition to fundamental financial metrics when selecting securities, its portfolio may perform differently than funds that do not use ESG metrics. ESG considerations may prioritize long-term rather than short-term returns. Furthermore, when analyzing ESG criteria for securities, the portfolio management team relies on the information and scoring models published by third-party sources, there is a risk that this information might be incorrect or only take into account one of many ESG-related components of portfolio companies. Moreover, scores and ratings across third-party providers may be inconsistent or incomparable.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 99.0% | ||||
Short-Term Investments | 0.9% | ||||
Other Assets and Liabilities | 0.1% | ||||
Top Five Industries | % of net assets | ||||
Software | 11.8% | ||||
Interactive Media and Services | 6.2% | ||||
Semiconductors and Semiconductor Equipment | 5.9% | ||||
Technology Hardware, Storage and Peripherals | 5.3% | ||||
Health Care Providers and Services | 4.7% |
6
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 May 1, 2023 to October 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,012.00 | $4.01 | 0.79% | ||||||||||
I Class | $1,000 | $1,012.90 | $2.99 | 0.59% | ||||||||||
Y Class | $1,000 | $1,013.60 | $2.23 | 0.44% | ||||||||||
A Class | $1,000 | $1,010.40 | $5.27 | 1.04% | ||||||||||
C Class | $1,000 | $1,006.60 | $9.05 | 1.79% | ||||||||||
R Class | $1,000 | $1,009.30 | $6.53 | 1.29% | ||||||||||
R5 Class | $1,000 | $1,012.70 | $2.99 | 0.59% | ||||||||||
R6 Class | $1,000 | $1,013.60 | $2.23 | 0.44% | ||||||||||
G Class | $1,000 | $1,016.00 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,021.22 | $4.02 | 0.79% | ||||||||||
I Class | $1,000 | $1,022.23 | $3.01 | 0.59% | ||||||||||
Y Class | $1,000 | $1,022.99 | $2.24 | 0.44% | ||||||||||
A Class | $1,000 | $1,019.96 | $5.30 | 1.04% | ||||||||||
C Class | $1,000 | $1,016.18 | $9.10 | 1.79% | ||||||||||
R Class | $1,000 | $1,018.70 | $6.56 | 1.29% | ||||||||||
R5 Class | $1,000 | $1,022.23 | $3.01 | 0.59% | ||||||||||
R6 Class | $1,000 | $1,022.99 | $2.24 | 0.44% | ||||||||||
G Class | $1,000 | $1,025.21 | $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 184, the number of days in the most recent fiscal half-year, divided by 365, 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%.
8
Schedule of Investments |
OCTOBER 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 99.0% | ||||||||
Aerospace and Defense — 0.7% | ||||||||
Lockheed Martin Corp. | 60,840 | $ | 27,660,298 | |||||
Air Freight and Logistics — 0.9% | ||||||||
FedEx Corp. | 27,491 | 6,600,589 | ||||||
United Parcel Service, Inc., Class B | 208,793 | 29,492,011 | ||||||
36,092,600 | ||||||||
Automobile Components — 0.9% | ||||||||
Aptiv PLC(1) | 411,525 | 35,884,980 | ||||||
Automobiles — 1.1% | ||||||||
Tesla, Inc.(1) | 230,061 | 46,205,451 | ||||||
Banks — 2.8% | ||||||||
Bank of America Corp. | 1,277,011 | 33,636,470 | ||||||
JPMorgan Chase & Co. | 444,211 | 61,771,981 | ||||||
Regions Financial Corp. | 1,479,709 | 21,500,172 | ||||||
116,908,623 | ||||||||
Beverages — 1.4% | ||||||||
PepsiCo, Inc. | 358,855 | 58,593,844 | ||||||
Biotechnology — 2.3% | ||||||||
AbbVie, Inc. | 348,921 | 49,260,667 | ||||||
Amgen, Inc. | 117,354 | 30,007,418 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 49,084 | 17,773,807 | ||||||
97,041,892 | ||||||||
Broadline Retail — 3.0% | ||||||||
Amazon.com, Inc.(1) | 943,881 | 125,621,122 | ||||||
Building Products — 1.4% | ||||||||
Johnson Controls International PLC | 759,903 | 37,250,445 | ||||||
Masco Corp. | 367,828 | 19,160,161 | ||||||
56,410,606 | ||||||||
Capital Markets — 3.8% | ||||||||
Ameriprise Financial, Inc. | 80,884 | 25,443,680 | ||||||
BlackRock, Inc. | 49,668 | 30,410,723 | ||||||
Intercontinental Exchange, Inc. | 190,266 | 20,442,179 | ||||||
Morgan Stanley | 774,242 | 54,831,819 | ||||||
S&P Global, Inc. | 71,701 | 25,045,876 | ||||||
156,174,277 | ||||||||
Chemicals — 2.1% | ||||||||
Air Products & Chemicals, Inc. | 99,164 | 28,007,880 | ||||||
Ecolab, Inc. | 106,648 | 17,889,135 | ||||||
Linde PLC | 111,105 | 42,459,887 | ||||||
88,356,902 | ||||||||
Communications Equipment — 1.3% | ||||||||
Cisco Systems, Inc. | 1,014,511 | 52,886,458 | ||||||
Consumer Finance — 0.5% | ||||||||
American Express Co. | 143,092 | 20,895,725 | ||||||
Consumer Staples Distribution & Retail — 2.8% | ||||||||
Costco Wholesale Corp. | 51,030 | 28,191,013 | ||||||
Kroger Co. | 576,170 | 26,140,833 |
9
Shares | Value | |||||||
Sysco Corp. | 574,584 | $ | 38,204,090 | |||||
Target Corp. | 225,702 | 25,005,525 | ||||||
117,541,461 | ||||||||
Containers and Packaging — 0.4% | ||||||||
Ball Corp. | 376,767 | 18,141,331 | ||||||
Distributors — 0.6% | ||||||||
LKQ Corp. | 595,540 | 26,156,117 | ||||||
Diversified Telecommunication Services — 1.2% | ||||||||
Verizon Communications, Inc. | 1,368,676 | 48,081,588 | ||||||
Electric Utilities — 1.5% | ||||||||
NextEra Energy, Inc. | 1,051,447 | 61,299,360 | ||||||
Electrical Equipment — 1.1% | ||||||||
Eaton Corp. PLC | 202,355 | 42,071,628 | ||||||
Generac Holdings, Inc.(1) | 46,247 | 3,887,985 | ||||||
45,959,613 | ||||||||
Electronic Equipment, Instruments and Components — 1.9% | ||||||||
CDW Corp. | 206,762 | 41,435,105 | ||||||
Keysight Technologies, Inc.(1) | 293,304 | 35,797,753 | ||||||
77,232,858 | ||||||||
Energy Equipment and Services — 1.4% | ||||||||
Schlumberger NV | 1,065,161 | 59,286,861 | ||||||
Entertainment — 1.0% | ||||||||
Electronic Arts, Inc. | 126,219 | 15,624,650 | ||||||
Liberty Media Corp.-Liberty Formula One, Class C(1) | 135,842 | 8,787,619 | ||||||
Walt Disney Co.(1) | 215,042 | 17,545,277 | ||||||
41,957,546 | ||||||||
Financial Services — 3.0% | ||||||||
Mastercard, Inc., Class A | 126,064 | 47,444,186 | ||||||
Visa, Inc., Class A | 327,410 | 76,974,091 | ||||||
124,418,277 | ||||||||
Food Products — 0.8% | ||||||||
Mondelez International, Inc., Class A | 485,645 | 32,154,555 | ||||||
Ground Transportation — 1.1% | ||||||||
Uber Technologies, Inc.(1) | 256,868 | 11,117,247 | ||||||
Union Pacific Corp. | 172,572 | 35,827,673 | ||||||
46,944,920 | ||||||||
Health Care Equipment and Supplies — 0.6% | ||||||||
Dexcom, Inc.(1) | 67,235 | 5,972,485 | ||||||
Intuitive Surgical, Inc.(1) | 77,285 | 20,265,673 | ||||||
26,238,158 | ||||||||
Health Care Providers and Services — 4.7% | ||||||||
Cigna Group | 224,398 | 69,383,862 | ||||||
CVS Health Corp. | 481,032 | 33,196,018 | ||||||
UnitedHealth Group, Inc. | 170,763 | 91,453,832 | ||||||
194,033,712 | ||||||||
Hotels, Restaurants and Leisure — 1.0% | ||||||||
Airbnb, Inc., Class A(1) | 82,132 | 9,715,394 | ||||||
Chipotle Mexican Grill, Inc.(1) | 5,174 | 10,048,943 | ||||||
Starbucks Corp. | 226,286 | 20,872,621 | ||||||
40,636,958 | ||||||||
Household Products — 1.4% | ||||||||
Colgate-Palmolive Co. | 224,324 | 16,851,219 |
10
Shares | Value | |||||||
Procter & Gamble Co. | 270,902 | $ | 40,643,427 | |||||
57,494,646 | ||||||||
Industrial Conglomerates — 0.8% | ||||||||
Honeywell International, Inc. | 180,246 | 33,031,882 | ||||||
Industrial REITs — 1.5% | ||||||||
Prologis, Inc. | 607,990 | 61,254,993 | ||||||
Insurance — 2.6% | ||||||||
Marsh & McLennan Cos., Inc. | 180,031 | 34,142,879 | ||||||
MetLife, Inc. | 244,824 | 14,691,888 | ||||||
Prudential Financial, Inc. | 283,322 | 25,906,964 | ||||||
Travelers Cos., Inc. | 200,517 | 33,574,567 | ||||||
108,316,298 | ||||||||
Interactive Media and Services — 6.2% | ||||||||
Alphabet, Inc., Class A(1) | 1,488,152 | 184,649,900 | ||||||
Meta Platforms, Inc., Class A(1) | 243,952 | 73,495,419 | ||||||
258,145,319 | ||||||||
IT Services — 2.1% | ||||||||
Accenture PLC, Class A | 152,583 | 45,330,883 | ||||||
International Business Machines Corp. | 289,601 | 41,887,889 | ||||||
87,218,772 | ||||||||
Life Sciences Tools and Services — 2.4% | ||||||||
Agilent Technologies, Inc. | 291,294 | 30,111,061 | ||||||
Danaher Corp. | 171,770 | 32,983,275 | ||||||
Thermo Fisher Scientific, Inc. | 86,097 | 38,293,363 | ||||||
101,387,699 | ||||||||
Machinery — 2.3% | ||||||||
Cummins, Inc. | 139,140 | 30,095,982 | ||||||
Deere & Co. | 57,524 | 21,016,969 | ||||||
Parker-Hannifin Corp. | 63,588 | 23,458,249 | ||||||
Xylem, Inc. | 203,227 | 19,009,853 | ||||||
93,581,053 | ||||||||
Oil, Gas and Consumable Fuels — 3.1% | ||||||||
ConocoPhillips | 582,130 | 69,157,044 | ||||||
EOG Resources, Inc. | 468,431 | 59,139,414 | ||||||
128,296,458 | ||||||||
Pharmaceuticals — 3.9% | ||||||||
Bristol-Myers Squibb Co. | 703,723 | 36,262,846 | ||||||
Eli Lilly & Co. | 44,473 | 24,634,929 | ||||||
Merck & Co., Inc. | 371,141 | 38,116,181 | ||||||
Novo Nordisk AS, Class B | 316,776 | 30,561,347 | ||||||
Zoetis, Inc. | 194,627 | 30,556,439 | ||||||
160,131,742 | ||||||||
Semiconductors and Semiconductor Equipment — 5.9% | ||||||||
Advanced Micro Devices, Inc.(1) | 393,135 | 38,723,797 | ||||||
Analog Devices, Inc. | 183,541 | 28,876,506 | ||||||
Applied Materials, Inc. | 240,628 | 31,847,116 | ||||||
ASML Holding NV | 17,902 | 10,761,258 | ||||||
GLOBALFOUNDRIES, Inc.(1) | 157,770 | 7,828,547 | ||||||
NVIDIA Corp. | 312,892 | 127,597,358 | ||||||
245,634,582 | ||||||||
Software — 11.8% | ||||||||
Adobe, Inc.(1) | 27,083 | 14,409,781 |
11
Shares | Value | |||||||
Cadence Design Systems, Inc.(1) | 160,665 | $ | 38,535,500 | |||||
Microsoft Corp. | 1,094,907 | 370,199,006 | ||||||
Salesforce, Inc.(1) | 211,914 | 42,558,689 | ||||||
ServiceNow, Inc.(1) | 18,544 | 10,789,826 | ||||||
Workday, Inc., Class A(1) | 66,835 | 14,149,638 | ||||||
490,642,440 | ||||||||
Specialized REITs — 0.6% | ||||||||
Equinix, Inc. | 32,808 | 23,938,029 | ||||||
Specialty Retail — 3.2% | ||||||||
CarMax, Inc.(1) | 147,074 | 8,984,751 | ||||||
Home Depot, Inc. | 233,201 | 66,389,993 | ||||||
TJX Cos., Inc. | 514,124 | 45,278,901 | ||||||
Tractor Supply Co. | 72,701 | 13,999,304 | ||||||
134,652,949 | ||||||||
Technology Hardware, Storage and Peripherals — 5.3% | ||||||||
Apple, Inc. | 1,279,469 | 218,494,921 | ||||||
Textiles, Apparel and Luxury Goods — 0.6% | ||||||||
Deckers Outdoor Corp.(1) | 40,463 | 24,158,839 | ||||||
TOTAL COMMON STOCKS (Cost $3,139,183,503) | 4,105,196,715 | |||||||
SHORT-TERM INVESTMENTS — 0.9% | ||||||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 138,101 | 138,101 | ||||||
Repurchase Agreements — 0.9% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.50% - 4.00%, 11/30/28 - 11/15/52, valued at $2,675,095), in a joint trading account at 5.26%, dated 10/31/23, due 11/1/23 (Delivery value $2,612,123) | 2,611,741 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 10/15/28, valued at $33,570,256), at 5.28%, dated 10/31/23, due 11/1/23 (Delivery value $32,916,827) | 32,912,000 | |||||||
35,523,741 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $35,661,842) | 35,661,842 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $3,174,845,345) | 4,140,858,557 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 5,464,873 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 4,146,323,430 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
EUR | 229,772 | USD | 242,933 | Bank of America N.A. | 12/22/23 | $ | 759 | |||||||||||||
EUR | 7,751,210 | USD | 8,200,059 | Morgan Stanley | 12/22/23 | 20,751 | ||||||||||||||
EUR | 310,421 | USD | 329,576 | Morgan Stanley | 12/22/23 | (349) | ||||||||||||||
USD | 5,752,123 | EUR | 5,411,506 | Bank of America N.A. | 12/22/23 | 12,765 | ||||||||||||||
USD | 266,267 | EUR | 252,597 | Bank of America N.A. | 12/22/23 | (1,633) | ||||||||||||||
USD | 5,753,162 | EUR | 5,411,507 | JPMorgan Chase Bank N.A. | 12/22/23 | 13,804 | ||||||||||||||
USD | 5,754,315 | EUR | 5,411,507 | Morgan Stanley | 12/22/23 | 14,956 | ||||||||||||||
USD | 236,317 | EUR | 222,164 | Morgan Stanley | 12/22/23 | 694 | ||||||||||||||
$ | 61,747 |
12
FUTURES CONTRACTS PURCHASED | ||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Unrealized Appreciation (Depreciation)^ | ||||||||||
S&P 500 E-Mini | 112 | December 2023 | $ | 23,588,600 | $ | (593,602) |
^Amount represents value and unrealized appreciation (depreciation).
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.
13
Statement of Assets and Liabilities |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $3,174,845,345) | $ | 4,140,858,557 | |||
Deposits with broker for futures contracts | 1,254,400 | ||||
Receivable for capital shares sold | 1,542,006 | ||||
Receivable for variation margin on futures contracts | 148,400 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 63,729 | ||||
Dividends and interest receivable | 4,044,913 | ||||
4,147,912,005 | |||||
Liabilities | |||||
Payable for capital shares redeemed | 696,716 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 1,982 | ||||
Accrued management fees | 855,712 | ||||
Distribution and service fees payable | 34,165 | ||||
1,588,575 | |||||
Net Assets | $ | 4,146,323,430 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 3,116,024,402 | |||
Distributable earnings (loss) | 1,030,299,028 | ||||
$ | 4,146,323,430 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $785,687,412 | 18,646,639 | $42.14 | ||||||||
I Class, $0.01 Par Value | $400,915,573 | 9,480,451 | $42.29 | ||||||||
Y Class, $0.01 Par Value | $22,099,091 | 521,565 | $42.37 | ||||||||
A Class, $0.01 Par Value | $88,136,282 | 2,104,855 | $41.87 | ||||||||
C Class, $0.01 Par Value | $9,665,289 | 242,524 | $39.85 | ||||||||
R Class, $0.01 Par Value | $14,574,423 | 351,734 | $41.44 | ||||||||
R5 Class, $0.01 Par Value | $5,157,003 | 121,872 | $42.31 | ||||||||
R6 Class, $0.01 Par Value | $71,864,875 | 1,694,405 | $42.41 | ||||||||
G Class, $0.01 Par Value | $2,748,223,482 | 64,547,380 | $42.58 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except A Class, for which the maximum offering price per share was $44.42 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of A Class and C Class.
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $91,514) | $ | 65,723,130 | |||
Interest | 2,560,649 | ||||
68,283,779 | |||||
Expenses: | |||||
Management fees | 21,858,647 | ||||
Distribution and service fees: | |||||
A Class | 221,102 | ||||
C Class | 102,349 | ||||
R Class | 78,805 | ||||
Directors' fees and expenses | 137,172 | ||||
Other expenses | 33,850 | ||||
22,431,925 | |||||
Fees waived - G Class | (11,879,136) | ||||
10,552,789 | |||||
Net investment income (loss) | 57,730,990 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 36,822,987 | ||||
Forward foreign currency exchange contract transactions | (853,988) | ||||
Futures contract transactions | (1,531,053) | ||||
Foreign currency translation transactions | (11,797) | ||||
34,426,149 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 261,496,642 | ||||
Forward foreign currency exchange contracts | 173,559 | ||||
Futures contracts | 381,787 | ||||
Translation of assets and liabilities in foreign currencies | 5,959 | ||||
262,057,947 | |||||
Net realized and unrealized gain (loss) | 296,484,096 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 354,215,086 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 57,730,990 | $ | 37,493,196 | ||||
Net realized gain (loss) | 34,426,149 | 54,563,587 | ||||||
Change in net unrealized appreciation (depreciation) | 262,057,947 | (719,539,525) | ||||||
Net increase (decrease) in net assets resulting from operations | 354,215,086 | (627,482,742) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (4,703,433) | (18,997,998) | ||||||
I Class | (3,225,447) | (12,504,157) | ||||||
Y Class | (183,618) | (523,036) | ||||||
A Class | (309,322) | (2,155,985) | ||||||
C Class | (8,235) | (301,327) | ||||||
R Class | (19,136) | (345,587) | ||||||
R5 Class | (49,068) | (152,501) | ||||||
R6 Class | (648,296) | (1,671,016) | ||||||
G Class | (37,755,401) | (71,512,712) | ||||||
Decrease in net assets from distributions | (46,901,956) | (108,164,319) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 817,919,463 | (109,858,853) | ||||||
Net increase (decrease) in net assets | 1,125,232,593 | (845,505,914) | ||||||
Net Assets | ||||||||
Beginning of period | 3,021,090,837 | 3,866,596,751 | ||||||
End of period | $ | 4,146,323,430 | $ | 3,021,090,837 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
OCTOBER 31, 2023
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Sustainable Equity Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective.
The fund offers the Investor Class, I Class, 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.
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 NAV 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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
17
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
18
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation's investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation's transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 43% 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), as well as exchange-traded funds managed by the investment advisor, 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.
The management fee schedule range and the effective annual management fee for each class for the period ended October 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.740% to 0.790% | 0.79% | ||||||
I Class | 0.540% to 0.590% | 0.59% | ||||||
Y Class | 0.390% to 0.440% | 0.44% | ||||||
A Class | 0.740% to 0.790% | 0.79% | ||||||
C Class | 0.740% to 0.790% | 0.79% | ||||||
R Class | 0.740% to 0.790% | 0.79% | ||||||
R5 Class | 0.540% to 0.590% | 0.59% | ||||||
R6 Class | 0.390% to 0.440% | 0.44% | ||||||
G Class | 0.390% to 0.440% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.44%.
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 October 31, 2023 are detailed in the Statement of Operations.
19
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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
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 $126,501,855 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended October 31, 2023 were $1,659,162,350 and $849,912,174, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 230,000,000 | 230,000,000 | ||||||||||||
Sold | 4,994,761 | $ | 204,635,419 | 2,153,769 | $ | 94,682,130 | ||||||||
Issued in reinvestment of distributions | 119,111 | 4,647,708 | 392,775 | 18,727,551 | ||||||||||
Redeemed | (2,552,300) | (106,610,347) | (3,844,149) | (166,180,504) | ||||||||||
2,561,572 | 102,672,780 | (1,297,605) | (52,770,823) | |||||||||||
I Class/Shares Authorized | 160,000,000 | 60,000,000 | ||||||||||||
Sold | 1,915,160 | 80,617,505 | 4,104,054 | 178,948,732 | ||||||||||
Issued in reinvestment of distributions | 78,829 | 3,081,437 | 246,421 | 11,771,507 | ||||||||||
Redeemed | (2,819,227) | (118,487,348) | (3,786,589) | (156,033,845) | ||||||||||
(825,238) | (34,788,406) | 563,886 | 34,686,394 | |||||||||||
Y Class/Shares Authorized | 25,000,000 | 30,000,000 | ||||||||||||
Sold | 143,495 | 6,093,453 | 158,367 | 6,693,832 | ||||||||||
Issued in reinvestment of distributions | 4,670 | 182,677 | 10,875 | 519,740 | ||||||||||
Redeemed | (112,188) | (4,749,240) | (75,607) | (3,218,336) | ||||||||||
35,977 | 1,526,890 | 93,635 | 3,995,236 | |||||||||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||
Sold | 329,592 | 13,739,258 | 437,345 | 19,088,308 | ||||||||||
Issued in reinvestment of distributions | 7,068 | 274,665 | 39,834 | 1,891,744 | ||||||||||
Redeemed | (404,699) | (16,809,729) | (335,476) | (13,891,180) | ||||||||||
(68,039) | (2,795,806) | 141,703 | 7,088,872 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 33,508 | 1,370,821 | 45,289 | 1,874,998 | ||||||||||
Issued in reinvestment of distributions | 180 | 6,716 | 5,567 | 254,494 | ||||||||||
Redeemed | (79,580) | (3,156,200) | (76,167) | (3,059,799) | ||||||||||
(45,892) | (1,778,663) | (25,311) | (930,307) | |||||||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Sold | 104,694 | 4,361,281 | 152,944 | 6,572,356 | ||||||||||
Issued in reinvestment of distributions | 497 | 19,136 | 7,335 | 345,587 | ||||||||||
Redeemed | (149,707) | (6,098,849) | (145,270) | (6,282,968) | ||||||||||
(44,516) | (1,718,432) | 15,009 | 634,975 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 37,365 | 1,583,243 | 71,614 | 3,061,514 | ||||||||||
Issued in reinvestment of distributions | 963 | 37,647 | 2,292 | 109,528 | ||||||||||
Redeemed | (72,144) | (3,140,013) | (38,805) | (1,582,623) | ||||||||||
(33,816) | (1,519,123) | 35,101 | 1,588,419 | |||||||||||
R6 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 1,387,412 | 57,645,643 | 1,359,287 | 58,850,417 | ||||||||||
Issued in reinvestment of distributions | 16,555 | 648,296 | 34,929 | 1,671,016 | ||||||||||
Redeemed | (1,214,910) | (52,084,582) | (854,032) | (34,400,294) | ||||||||||
189,057 | 6,209,357 | 540,184 | 26,121,139 | |||||||||||
G Class/Shares Authorized | 775,000,000 | 525,000,000 | ||||||||||||
Sold | 27,021,462 | 1,107,199,103 | 3,532,127 | 143,877,234 | ||||||||||
Issued in reinvestment of distributions | 964,132 | 37,755,401 | 1,495,144 | 71,512,712 | ||||||||||
Redeemed | (9,398,094) | (394,843,638) | (7,693,538) | (345,662,704) | ||||||||||
18,587,500 | 750,110,866 | (2,666,267) | (130,272,758) | |||||||||||
Net increase (decrease) | 20,356,605 | $ | 817,919,463 | (2,599,665) | $ | (109,858,853) |
21
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 | $ | 4,063,874,110 | $ | 41,322,605 | — | ||||||
Short-Term Investments | 138,101 | 35,523,741 | — | ||||||||
$ | 4,064,012,211 | $ | 76,846,346 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 63,729 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 593,602 | — | — | |||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,982 | — | |||||||
$ | 593,602 | $ | 1,982 | — |
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). A fund may incur charges or earn income on cash deposit balances, which are reflected in interest expenses or interest income, respectively. 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 $41,950,462 futures contracts purchased.
22
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $28,711,536.
Value of Derivative Instruments as of October 31, 2023
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* | $ | 148,400 | Payable for variation margin on futures contracts* | — | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | 63,729 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 1,982 | |||||||||
$ | 212,129 | $ | 1,982 |
*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 Year Ended October 31, 2023
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 | $ | (1,531,053) | Change in net unrealized appreciation (depreciation) on futures contracts | $ | 381,787 | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | (853,988) | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 173,559 | ||||||||||
$ | (2,385,041) | $ | 555,346 |
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, war, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
23
9. Federal Tax Information
The tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 43,778,205 | $ | 33,385,674 | ||||
Long-term capital gains | $ | 3,123,751 | $ | 74,778,645 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 3,197,893,379 | |||
Gross tax appreciation of investments | $ | 1,071,239,247 | |||
Gross tax depreciation of investments | (128,274,069) | ||||
Net tax appreciation (depreciation) of investments | 942,965,178 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (7,448) | ||||
Net tax appreciation (depreciation) | $ | 942,957,730 | |||
Undistributed ordinary income | $ | 49,255,115 | |||
Accumulated long-term gains | $ | 38,086,183 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
24
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.81 | 0.36 | 3.21 | 3.57 | (0.21) | (0.03) | (0.24) | $42.14 | 9.26% | 0.79% | 0.79% | 0.87% | 0.87% | 21% | $785,687 | ||||||||||||||||||||||||||||||||
2022 | $48.06 | 0.26 | (8.36) | (8.10) | (0.19) | (0.96) | (1.15) | $38.81 | (17.29)% | 0.79% | 0.79% | 0.62% | 0.62% | 15% | $624,266 | ||||||||||||||||||||||||||||||||
2021 | $33.63 | 0.19 | 14.40 | 14.59 | (0.16) | — | (0.16) | $48.06 | 43.50% | 0.79% | 0.79% | 0.46% | 0.46% | 18% | $835,453 | ||||||||||||||||||||||||||||||||
2020 | $30.40 | 0.28 | 3.15 | 3.43 | — | (0.20) | (0.20) | $33.63 | 11.33% | 0.79% | 0.83% | 0.88% | 0.84% | 36% | $595,557 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.95 | 0.45 | 3.21 | 3.66 | (0.29) | (0.03) | (0.32) | $42.29 | 9.46% | 0.59% | 0.59% | 1.07% | 1.07% | 21% | $400,916 | ||||||||||||||||||||||||||||||||
2022 | $48.23 | 0.35 | (8.38) | (8.03) | (0.29) | (0.96) | (1.25) | $38.95 | (17.13)% | 0.59% | 0.59% | 0.82% | 0.82% | 15% | $401,398 | ||||||||||||||||||||||||||||||||
2021 | $33.75 | 0.27 | 14.44 | 14.71 | (0.23) | — | (0.23) | $48.23 | 43.78% | 0.59% | 0.59% | 0.66% | 0.66% | 18% | $469,840 | ||||||||||||||||||||||||||||||||
2020 | $30.50 | 0.35 | 3.16 | 3.51 | (0.06) | (0.20) | (0.26) | $33.75 | 11.55% | 0.59% | 0.63% | 1.08% | 1.04% | 36% | $245,759 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $39.02 | 0.51 | 3.22 | 3.73 | (0.35) | (0.03) | (0.38) | $42.37 | 9.63% | 0.44% | 0.44% | 1.22% | 1.22% | 21% | $22,099 | ||||||||||||||||||||||||||||||||
2022 | $48.32 | 0.42 | (8.40) | (7.98) | (0.36) | (0.96) | (1.32) | $39.02 | (17.01)% | 0.44% | 0.44% | 0.97% | 0.97% | 15% | $18,949 | ||||||||||||||||||||||||||||||||
2021 | $33.81 | 0.34 | 14.46 | 14.80 | (0.29) | — | (0.29) | $48.32 | 44.01% | 0.44% | 0.44% | 0.81% | 0.81% | 18% | $18,939 | ||||||||||||||||||||||||||||||||
2020 | $30.56 | 0.43 | 3.12 | 3.55 | (0.10) | (0.20) | (0.30) | $33.81 | 11.70% | 0.44% | 0.48% | 1.23% | 1.19% | 36% | $8,115 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.57 | 0.26 | 3.19 | 3.45 | (0.12) | (0.03) | (0.15) | $41.87 | 8.96% | 1.04% | 1.04% | 0.62% | 0.62% | 21% | $88,136 | ||||||||||||||||||||||||||||||||
2022 | $47.77 | 0.16 | (8.33) | (8.17) | (0.07) | (0.96) | (1.03) | $38.57 | (17.50)% | 1.04% | 1.04% | 0.37% | 0.37% | 15% | $83,808 | ||||||||||||||||||||||||||||||||
2021 | $33.43 | 0.08 | 14.32 | 14.40 | (0.06) | — | (0.06) | $47.77 | 43.13% | 1.04% | 1.04% | 0.21% | 0.21% | 18% | $97,032 | ||||||||||||||||||||||||||||||||
2020 | $30.29 | 0.21 | 3.13 | 3.34 | — | (0.20) | (0.20) | $33.43 | 11.07% | 1.04% | 1.08% | 0.63% | 0.59% | 36% | $54,638 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $36.88 | (0.05) | 3.05 | 3.00 | — | (0.03) | (0.03) | $39.85 | 8.14% | 1.79% | 1.79% | (0.13)% | (0.13)% | 21% | $9,665 | ||||||||||||||||||||||||||||||||
2022 | $45.99 | (0.16) | (7.99) | (8.15) | — | (0.96) | (0.96) | $36.88 | (18.12)% | 1.79% | 1.79% | (0.38)% | (0.38)% | 15.0% | $10,636 | ||||||||||||||||||||||||||||||||
2021 | $32.37 | (0.22) | 13.84 | 13.62 | — | — | — | $45.99 | 42.08% | 1.79% | 1.79% | (0.54)% | (0.54)% | 18% | $14,427 | ||||||||||||||||||||||||||||||||
2020 | $29.56 | (0.02) | 3.03 | 3.01 | — | (0.20) | (0.20) | $32.37 | 10.22% | 1.79% | 1.83% | (0.12)% | (0.16)% | 36% | $10,178 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.17 | 0.15 | 3.17 | 3.32 | (0.02) | (0.03) | (0.05) | $41.44 | 8.71% | 1.29% | 1.29% | 0.37% | 0.37% | 21% | $14,574 | ||||||||||||||||||||||||||||||||
2022 | $47.33 | 0.05 | (8.25) | (8.20) | — | (0.96) | (0.96) | $38.17 | (17.71)% | 1.29% | 1.29% | 0.12% | 0.12% | 15% | $15,124 | ||||||||||||||||||||||||||||||||
2021 | $33.15 | (0.02) | 14.20 | 14.18 | — | — | — | $47.33 | 42.78% | 1.29% | 1.29% | (0.04)% | (0.04)% | 18% | $18,044 | ||||||||||||||||||||||||||||||||
2020 | $30.12 | 0.12 | 3.11 | 3.23 | — | (0.20) | (0.20) | $33.15 | 10.77% | 1.29% | 1.33% | 0.38% | 0.34% | 36% | $9,014 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $38.97 | 0.46 | 3.20 | 3.66 | (0.29) | (0.03) | (0.32) | $42.31 | 9.46% | 0.59% | 0.59% | 1.07% | 1.07% | 21% | $5,157 | ||||||||||||||||||||||||||||||||
2022 | $48.26 | 0.35 | (8.39) | (8.04) | (0.29) | (0.96) | (1.25) | $38.97 | (17.14)% | 0.59% | 0.59% | 0.82% | 0.82% | 15% | $6,068 | ||||||||||||||||||||||||||||||||
2021 | $33.77 | 0.27 | 14.45 | 14.72 | (0.23) | — | (0.23) | $48.26 | 43.78% | 0.59% | 0.59% | 0.66% | 0.66% | 18% | $5,819 | ||||||||||||||||||||||||||||||||
2020 | $30.52 | 0.34 | 3.17 | 3.51 | (0.06) | (0.20) | (0.26) | $33.77 | 11.55% | 0.59% | 0.63% | 1.08% | 1.04% | 36% | $3,195 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $39.06 | 0.51 | 3.22 | 3.73 | (0.35) | (0.03) | (0.38) | $42.41 | 9.62% | 0.44% | 0.44% | 1.22% | 1.22% | 21% | $71,865 | ||||||||||||||||||||||||||||||||
2022 | $48.37 | 0.42 | (8.41) | (7.99) | (0.36) | (0.96) | (1.32) | $39.06 | (17.02)% | 0.44% | 0.44% | 0.97% | 0.97% | 15% | $58,804 | ||||||||||||||||||||||||||||||||
2021 | $33.84 | 0.32 | 14.50 | 14.82 | (0.29) | — | (0.29) | $48.37 | 44.03% | 0.44% | 0.44% | 0.81% | 0.81% | 18% | $46,681 | ||||||||||||||||||||||||||||||||
2020 | $30.56 | 0.39 | 3.17 | 3.56 | (0.08) | (0.20) | (0.28) | $33.84 | 11.70% | 0.44% | 0.48% | 1.23% | 1.19% | 36% | $5,150 | ||||||||||||||||||||||||||||||||
2019(3) | $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%(5) | $3,979 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $39.21 | 0.70 | 3.22 | 3.92 | (0.52) | (0.03) | (0.55) | $42.58 | 10.12% | 0.00%(6) | 0.44% | 1.66% | 1.22% | 21% | $2,748,223 | ||||||||||||||||||||||||||||||||
2022 | $48.54 | 0.60 | (8.40) | (7.80) | (0.57) | (0.96) | (1.53) | $39.21 | (16.63)% | 0.00%(6) | 0.44% | 1.41% | 0.97% | 15% | $1,802,038 | ||||||||||||||||||||||||||||||||
2021 | $33.97 | 0.53 | 14.49 | 15.02 | (0.45) | — | (0.45) | $48.54 | 44.61% | 0.00%(6) | 0.44% | 1.25% | 0.81% | 18% | $2,360,362 | ||||||||||||||||||||||||||||||||
2020 | $30.64 | 0.54 | 3.18 | 3.72 | (0.19) | (0.20) | (0.39) | $33.97 | 12.21% | 0.00%(6) | 0.48% | 1.67% | 1.19% | 36% | $1,800,919 | ||||||||||||||||||||||||||||||||
2019(3) | $28.05 | 0.37 | 2.22 | 2.59 | — | — | — | $30.64 | 9.23% | 0.00%(4)(6) | 0.49%(4) | 2.04%(4) | 1.55%(4) | 33%(5) | $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)April 1, 2019 (commencement of sale) through October 31, 2019.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2019.
(6)Ratio was less than 0.005%.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Sustainable Equity Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Sustainable Equity Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
29
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
30
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
31
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
32
Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors.
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In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the one-, three-, five-, and ten-year periods. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including information security), new products and services offered to Fund shareholders, securities trading activities,
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portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow. Assets of various classes of the same Fund or similarly-managed products are combined with the assets of the Fund to help achieve those breakpoints.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They
35
observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
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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 at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for
the fiscal year ended October 31, 2023.
For corporate taxpayers, the fund hereby designates $43,740,666 or up to the maximum amount
allowable, of ordinary income distributions paid during the fiscal year ended October 31, 2023 as
qualified for the corporate dividends received deduction.
The fund hereby designates $3,123,751, or up to the maximum amount allowable, as long-term
capital gain distributions (20% rate gain distributions) for the fiscal year ended October 31, 2023.
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Notes |
39
Notes |
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90971 2312 |
![image29.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image29.jpg)
Annual Report | |||||
October 31, 2023 | |||||
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) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Additional Information |
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 |
![image26a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image26a.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ending October 31, 2023. Annual reports help convey important information about fund returns, including market factors that affect performance. For additional investment insights, please visit americancentury.com.
Asset Class Performance Was Mixed as Volatility Reigned
While most asset class returns improved versus the previous fiscal year, investors faced ongoing challenges from a variety of sources. The Federal Reserve (Fed) and other central banks continued to aggressively raise interest rates, and inflation persisted. Additionally, banking industry turmoil, economic uncertainty and geopolitical unrest added to the volatile backdrop.
Overall, investor expectations for the Fed to conclude its rate-hike campaign fueled optimism. Early on, inflation’s steady slowdown, a series of bank failures and mounting recession worries prompted investors to regularly recalibrate their monetary policy outlooks. However, with inflation still higher than central bank targets, the Fed and its developed markets peers continued to raise rates.
By period-end, most central banks had paused their tightening campaigns, leaving government bond yields and interest rates at multiyear highs. While many observers believed the pauses indicated tightening had ended, still-high inflation prompted policymakers to leave their options open. Economic growth remained stronger than expected in the U.S., muddying the Fed’s monetary policy strategy, but it cooled notably in Europe and the U.K.
Despite this volatile backdrop, corporate earnings generally remained better than expected. The broad S&P 500 Index gained 10.14% for the 12-month period. However, returns for size and style indices varied widely. Bond returns in developed markets were modest. Conversely, emerging markets bonds rallied as inflation eased and most central banks ended their tightening campaigns.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of persistent inflation, tighter financial conditions and recession risk. In addition, the Israel-Hamas war further complicates the global backdrop and represents another key geopolitical consideration for our investment teams.
Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re determined to meet today’s challenges. Thank you for your trust and confidence in American Century Investments.
With appreciation and respect,
![image48a16a.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/image48a16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of October 31, 2023 | |||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||
Investor Class | TWCUX | 15.91% | 13.46% | 13.44% | — | 11/2/81 | |||||||||||||||||
Russell 1000 Growth Index | — | 18.95% | 14.22% | 13.82% | — | — | |||||||||||||||||
S&P 500 Index | — | 10.14% | 11.01% | 11.18% | — | — | |||||||||||||||||
I Class | TWUIX | 16.12% | 13.69% | 13.67% | — | 11/14/96 | |||||||||||||||||
Y Class | AULYX | 16.30% | 13.86% | — | 15.32% | 4/10/17 | |||||||||||||||||
A Class | TWUAX | 10/2/96 | |||||||||||||||||||||
No sales charge | 15.61% | 13.18% | 13.15% | — | |||||||||||||||||||
With sales charge | 8.96% | 11.85% | 12.49% | — | |||||||||||||||||||
C Class | TWCCX | 14.76% | 12.33% | 12.31% | — | 10/29/01 | |||||||||||||||||
R Class | AULRX | 15.31% | 12.90% | 12.87% | — | 8/29/03 | |||||||||||||||||
R5 Class | AULGX | 16.13% | 13.69% | — | 15.14% | 4/10/17 | |||||||||||||||||
R6 Class | AULDX | 16.32% | 13.86% | 13.84% | — | 7/26/13 | |||||||||||||||||
G Class | AULNX | 16.98% | — | — | 14.13% | 8/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available.
Fund returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over 10 Years | ||
$10,000 investment made October 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-98bf14e9c6cf4681a6ba.jpg](https://capedge.com/proxy/N-CSR/0000100334-23-000073/chart-98bf14e9c6cf4681a6ba.jpg)
Value on October 31, 2023 | |||||
Investor Class — $35,285 | |||||
Russell 1000 Growth Index — $36,502 | |||||
S&P 500 Index — $28,847 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
0.95% | 0.75% | 0.60% | 1.20% | 1.95% | 1.45% | 0.75% | 0.60% | 0.60% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Portfolio Commentary |
Portfolio Managers: Keith Lee, Michael Li and Jeff Bourke
Performance Summary
Ultra returned 15.91%* for the 12 months ended October 31, 2023, trailing the 18.95% return of the fund’s benchmark, the Russell 1000 Growth Index. The fund’s return reflects operating expenses, while the index return does not.
Positioning in the information technology and health care sectors detracted from performance relative to the benchmark. Positioning in the consumer staples and real estate sectors benefited relative performance.
Information Technology Hampered Performance
Software holdings led detractors in the information technology sector. Microsoft reported better-than-expected revenue and earnings and offered upbeat guidance, with Azure, its cloud unit, growing fastest of the company’s key business segments. Strong revenue growth and tighter cost controls meant margins improved. We had some exposure to the stock but less than the benchmark because of concern about valuation relative to other investment alternatives.
Health care holdings also detracted. Insulet, a maker of insulin delivery devices, reported record revenues, but the stock fell on worry about competition from new, more effective diabetes drugs. Dexcom makes continuous glucose monitoring systems for diabetes patients. Its stock also lagged amid worry that a new class of diabetes and obesity drugs would reduce the need for such devices. We believe market sentiment has run ahead of the actual likely uptake and impact on diabetes that these drugs will have. UnitedHealth Group weighed on performance. The stock of the world’s largest private health insurer fell after a company executive said its costs were likely to soar as people resume elective procedures.
Elsewhere, the stock of human resources software company Paycom Software lagged after slashing future earnings guidance. The sell-off reflected a decision to focus on sales conversions in a key product line at the expense of other opportunities.
Consumer Staples Benefited Performance
We were underweight the consumer staples sector, which was helpful as the sector lagged during the period. Stock selection in the sector was also positive. Not owning beverage company PepsiCo was a key contributor to relative results. We did not own any real estate stocks, which also benefited performance.
Top individual contributors included a pair of semiconductor stocks, led by NVIDIA. The chipmaker’s stock surged after increasing its future business guidance well above expectations. NVIDIA’s growth was driven by its data center business, which reflects the demand for computing power required for artificial intelligence applications. Applied Materials, a semiconductor equipment manufacturer, benefited from a new management team that has brought a greater focus to margins and returns on capital. The company also was helped by increased demand for chips.
Alphabet was a significant contributor. Google’s parent company reported better-than-expected revenue and earnings, aided by signs of growth in digital advertising. Alphabet also benefited from its cloud business and its artificial intelligence focus.
*All fund returns referenced in this commentary are for Investor Class shares. Fund returns would have been
lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
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Fund Characteristics |
OCTOBER 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 99.8% | ||||
Short-Term Investments | 0.2% | ||||
Other Assets and Liabilities | —* | ||||
*Category is less than 0.05% of total net assets. | |||||
Top Five Industries | % of net assets | ||||
Software | 14.0% | ||||
Technology Hardware, Storage and Peripherals | 13.7% | ||||
Semiconductors and Semiconductor Equipment | 10.6% | ||||
Interactive Media and Services | 9.3% | ||||
Financial Services | 7.0% |
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Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from May 1, 2023 to October 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 5/1/23 | Ending Account Value 10/31/23 | Expenses Paid During Period(1) 5/1/23 - 10/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,044.50 | $4.74 | 0.92% | ||||||||||
I Class | $1,000 | $1,045.40 | $3.71 | 0.72% | ||||||||||
Y Class | $1,000 | $1,046.20 | $2.94 | 0.57% | ||||||||||
A Class | $1,000 | $1,043.10 | $6.03 | 1.17% | ||||||||||
C Class | $1,000 | $1,039.20 | $9.87 | 1.92% | ||||||||||
R Class | $1,000 | $1,041.70 | $7.31 | 1.42% | ||||||||||
R5 Class | $1,000 | $1,045.50 | $3.71 | 0.72% | ||||||||||
R6 Class | $1,000 | $1,046.30 | $2.94 | 0.57% | ||||||||||
G Class | $1,000 | $1,049.30 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.57 | $4.69 | 0.92% | ||||||||||
I Class | $1,000 | $1,021.58 | $3.67 | 0.72% | ||||||||||
Y Class | $1,000 | $1,022.33 | $2.91 | 0.57% | ||||||||||
A Class | $1,000 | $1,019.31 | $5.96 | 1.17% | ||||||||||
C Class | $1,000 | $1,015.53 | $9.75 | 1.92% | ||||||||||
R Class | $1,000 | $1,018.05 | $7.22 | 1.42% | ||||||||||
R5 Class | $1,000 | $1,021.58 | $3.67 | 0.72% | ||||||||||
R6 Class | $1,000 | $1,022.33 | $2.91 | 0.57% | ||||||||||
G Class | $1,000 | $1,025.21 | $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 184, the number of days in the most recent fiscal half-year, divided by 365, 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%.
8
Schedule of Investments |
OCTOBER 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 99.8% | ||||||||
Automobiles — 3.0% | ||||||||
Tesla, Inc.(1) | 2,734,000 | $ | 549,096,560 | |||||
Beverages — 0.8% | ||||||||
Constellation Brands, Inc., Class A | 635,000 | 148,685,250 | ||||||
Biotechnology — 3.3% | ||||||||
Biogen, Inc.(1) | 423,000 | 100,479,420 | ||||||
Genmab A/S(1) | 311,000 | 87,914,361 | ||||||
Gilead Sciences, Inc. | 643,000 | 50,501,220 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 464,000 | 361,868,960 | ||||||
600,763,961 | ||||||||
Broadline Retail — 6.2% | ||||||||
Amazon.com, Inc.(1) | 8,534,000 | 1,135,790,060 | ||||||
Building Products — 1.0% | ||||||||
Advanced Drainage Systems, Inc. | 1,014,000 | 108,325,620 | ||||||
Johnson Controls International PLC | 1,452,000 | 71,177,040 | ||||||
179,502,660 | ||||||||
Capital Markets — 1.2% | ||||||||
MSCI, Inc. | 451,000 | 212,669,050 | ||||||
Chemicals — 0.8% | ||||||||
Ecolab, Inc. | 858,000 | 143,920,920 | ||||||
Commercial Services and Supplies — 1.0% | ||||||||
Cintas Corp. | 136,000 | 68,968,320 | ||||||
Copart, Inc.(1) | 2,721,616 | 118,444,728 | ||||||
187,413,048 | ||||||||
Consumer Staples Distribution & Retail — 2.1% | ||||||||
Costco Wholesale Corp. | 676,413 | 373,677,598 | ||||||
Distributors — 0.2% | ||||||||
Pool Corp. | 111,000 | 35,050,470 | ||||||
Electrical Equipment — 0.5% | ||||||||
Acuity Brands, Inc. | 574,000 | 92,970,780 | ||||||
Electronic Equipment, Instruments and Components — 1.0% | ||||||||
Cognex Corp. | 1,370,000 | 49,306,300 | ||||||
Keyence Corp. | 330,000 | 127,749,088 | ||||||
177,055,388 | ||||||||
Energy Equipment and Services — 0.6% | ||||||||
Schlumberger NV | 2,121,000 | 118,054,860 | ||||||
Entertainment — 1.7% | ||||||||
Netflix, Inc.(1) | 758,000 | 312,061,020 | ||||||
Financial Services — 7.0% | ||||||||
Block, Inc.(1) | 705,000 | 28,376,250 | ||||||
Mastercard, Inc., Class A | 1,926,827 | 725,161,342 | ||||||
Visa, Inc., Class A | 2,237,000 | 525,918,700 | ||||||
1,279,456,292 | ||||||||
Ground Transportation — 0.6% | ||||||||
JB Hunt Transport Services, Inc. | 652,000 | 112,059,240 | ||||||
Health Care Equipment and Supplies — 3.8% | ||||||||
Contra Abiomed, Inc.(1) | 281,340 | 286,967 | ||||||
Dexcom, Inc.(1) | 2,182,000 | 193,827,060 |
9
Shares | Value | |||||||
Edwards Lifesciences Corp.(1) | 1,349,000 | $ | 85,958,280 | |||||
IDEXX Laboratories, Inc.(1) | 202,000 | 80,692,940 | ||||||
Insulet Corp.(1) | 353,000 | 46,797,210 | ||||||
Intuitive Surgical, Inc.(1) | 1,075,564 | 282,034,392 | ||||||
689,596,849 | ||||||||
Health Care Providers and Services — 3.2% | ||||||||
UnitedHealth Group, Inc. | 1,100,000 | 589,116,000 | ||||||
Hotels, Restaurants and Leisure — 3.1% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 197,000 | 382,613,400 | ||||||
Wingstop, Inc. | 954,000 | 174,362,580 | ||||||
556,975,980 | ||||||||
Interactive Media and Services — 9.3% | ||||||||
Alphabet, Inc., Class A(1) | 5,765,580 | 715,393,166 | ||||||
Alphabet, Inc., Class C(1) | 6,325,160 | 792,542,548 | ||||||
Meta Platforms, Inc., Class A(1) | 615,000 | 185,281,050 | ||||||
1,693,216,764 | ||||||||
IT Services — 1.4% | ||||||||
Gartner, Inc.(1) | 229,000 | 76,037,160 | ||||||
Okta, Inc.(1) | 2,643,000 | 178,164,630 | ||||||
254,201,790 | ||||||||
Life Sciences Tools and Services — 0.5% | ||||||||
Waters Corp.(1) | 380,000 | 90,641,400 | ||||||
Machinery — 2.1% | ||||||||
Donaldson Co., Inc. | 889,000 | 51,259,740 | ||||||
Fortive Corp. | 1,791,000 | 116,916,480 | ||||||
Nordson Corp. | 467,000 | 99,279,530 | ||||||
Westinghouse Air Brake Technologies Corp. | 705,000 | 74,744,100 | ||||||
Yaskawa Electric Corp. | 970,000 | 31,751,130 | ||||||
373,950,980 | ||||||||
Oil, Gas and Consumable Fuels — 0.9% | ||||||||
EOG Resources, Inc. | 1,331,000 | 168,038,750 | ||||||
Pharmaceuticals — 2.3% | ||||||||
Eli Lilly & Co. | 757,000 | 419,325,010 | ||||||
Professional Services — 1.0% | ||||||||
Paycom Software, Inc. | 753,000 | 184,462,410 | ||||||
Semiconductors and Semiconductor Equipment — 10.6% | ||||||||
Advanced Micro Devices, Inc.(1) | 807,000 | 79,489,500 | ||||||
Analog Devices, Inc. | 1,246,000 | 196,033,180 | ||||||
Applied Materials, Inc. | 2,454,000 | 324,786,900 | ||||||
ASML Holding NV | 298,000 | 179,133,896 | ||||||
Lattice Semiconductor Corp.(1) | 1,455,000 | 80,912,550 | ||||||
NVIDIA Corp. | 2,615,000 | 1,066,397,000 | ||||||
1,926,753,026 | ||||||||
Software — 14.0% | ||||||||
Datadog, Inc., Class A(1) | 1,497,000 | 121,960,590 | ||||||
DocuSign, Inc.(1) | 2,597,000 | 100,971,360 | ||||||
Dynatrace, Inc.(1) | 2,396,000 | 107,125,160 | ||||||
Fair Isaac Corp.(1) | 294,000 | 248,685,780 | ||||||
Microsoft Corp. | 4,090,401 | 1,383,005,482 | ||||||
Salesforce, Inc.(1) | 1,936,000 | 388,806,880 | ||||||
Zscaler, Inc.(1) | 1,240,000 | 196,775,600 | ||||||
2,547,330,852 |
10
Shares | Value | |||||||
Technology Hardware, Storage and Peripherals — 13.7% | ||||||||
Apple, Inc. | 14,566,254 | $ | 2,487,479,196 | |||||
Textiles, Apparel and Luxury Goods — 2.9% | ||||||||
Lululemon Athletica, Inc.(1) | 1,018,000 | 400,562,640 | ||||||
NIKE, Inc., Class B | 1,322,000 | 135,861,940 | ||||||
536,424,580 | ||||||||
TOTAL COMMON STOCKS (Cost $7,026,081,615) | 18,175,740,744 | |||||||
SHORT-TERM INVESTMENTS — 0.2% | ||||||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 143,879 | 143,879 | ||||||
Repurchase Agreements — 0.2% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.50% - 4.00%, 11/30/28 - 11/15/52, valued at $2,793,736), in a joint trading account at 5.26%, dated 10/31/23, due 11/1/23 (Delivery value $2,727,971) | 2,727,572 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 10/15/28, valued at $35,059,512), at 5.28%, dated 10/31/23, due 11/1/23 (Delivery value $34,377,041) | 34,372,000 | |||||||
37,099,572 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $37,243,451) | 37,243,451 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $7,063,325,066) | 18,212,984,195 | |||||||
OTHER ASSETS AND LIABILITIES† | 1,077,061 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 18,214,061,256 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
JPY | 456,340,500 | USD | 3,071,000 | UBS AG | 12/22/23 | $ | (35,349) | |||||||||||||
USD | 56,645,592 | JPY | 8,315,884,500 | UBS AG | 12/22/23 | 1,326,984 | ||||||||||||||
$ | 1,291,635 |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
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.
11
Statement of Assets and Liabilities |
OCTOBER 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $7,063,325,066) | $ | 18,212,984,195 | |||
Receivable for investments sold | 103,749,352 | ||||
Receivable for capital shares sold | 4,461,987 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 1,326,984 | ||||
Dividends and interest receivable | 1,673,700 | ||||
18,324,196,218 | |||||
Liabilities | |||||
Payable for investments purchased | 89,898,475 | ||||
Payable for capital shares redeemed | 6,277,326 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 35,349 | ||||
Accrued management fees | 13,827,082 | ||||
Distribution and service fees payable | 96,730 | ||||
110,134,962 | |||||
Net Assets | $ | 18,214,061,256 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 5,906,153,102 | |||
Distributable earnings (loss) | 12,307,908,154 | ||||
$ | 18,214,061,256 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $15,289,489,460 | 226,390,415 | $67.54 | ||||||||
I Class, $0.01 Par Value | $988,431,340 | 13,837,056 | $71.43 | ||||||||
Y Class, $0.01 Par Value | $36,238,381 | 501,957 | $72.19 | ||||||||
A Class, $0.01 Par Value | $223,761,377 | 3,566,417 | $62.74 | ||||||||
C Class, $0.01 Par Value | $28,609,826 | 599,066 | $47.76 | ||||||||
R Class, $0.01 Par Value | $51,020,053 | 855,315 | $59.65 | ||||||||
R5 Class, $0.01 Par Value | $36,770,714 | 514,329 | $71.49 | ||||||||
R6 Class, $0.01 Par Value | $1,549,990,121 | 21,498,032 | $72.10 | ||||||||
G Class, $0.01 Par Value | $9,749,984 | 131,523 | $74.13 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except A Class, for which the maximum offering price per share was $66.57 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of A Class and C Class.
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED OCTOBER 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $307,532) | $ | 93,712,748 | |||
Interest | 4,763,015 | ||||
Securities lending, net | 40,947 | ||||
98,516,710 | |||||
Expenses: | |||||
Management fees | 158,884,315 | ||||
Distribution and service fees: | |||||
A Class | 505,099 | ||||
C Class | 276,624 | ||||
R Class | 230,821 | ||||
Directors' fees and expenses | 584,852 | ||||
Other expenses | 40,417 | ||||
160,522,128 | |||||
Fees waived(1) | (4,383,634) | ||||
156,138,494 | |||||
Net investment income (loss) | (57,621,784) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 1,263,135,715 | ||||
Forward foreign currency exchange contract transactions | (2,350,360) | ||||
Foreign currency translation transactions | (441,627) | ||||
1,260,343,728 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 1,267,686,099 | ||||
Forward foreign currency exchange contracts | 1,038,830 | ||||
Translation of assets and liabilities in foreign currencies | 58,125 | ||||
1,268,783,054 | |||||
Net realized and unrealized gain (loss) | 2,529,126,782 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,471,504,998 |
(1)Amount consists of $3,738,403, $216,334, $5,911, $50,416, $6,909, $11,568, $9,228, $312,565 and $32,300 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.
13
Statement of Changes in Net Assets |
YEARS ENDED OCTOBER 31, 2023 AND OCTOBER 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | October 31, 2023 | October 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (57,621,784) | $ | (71,411,317) | ||||
Net realized gain (loss) | 1,260,343,728 | 1,090,107,299 | ||||||
Change in net unrealized appreciation (depreciation) | 1,268,783,054 | (7,273,773,500) | ||||||
Net increase (decrease) in net assets resulting from operations | 2,471,504,998 | (6,255,077,518) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (896,713,481) | (1,280,659,962) | ||||||
I Class | (46,333,790) | (52,994,662) | ||||||
Y Class | (215,908) | (187,141) | ||||||
A Class | (11,837,304) | (17,349,829) | ||||||
C Class | (2,245,082) | (2,961,708) | ||||||
R Class | (2,878,068) | (2,905,579) | ||||||
R5 Class | (2,023,455) | (22,646) | ||||||
R6 Class | (55,607,014) | (48,932,667) | ||||||
G Class | (14,068) | (620) | ||||||
Decrease in net assets from distributions | (1,017,868,170) | (1,406,014,814) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 1,099,543,835 | 1,145,217,950 | ||||||
Net increase (decrease) in net assets | 2,553,180,663 | (6,515,874,382) | ||||||
Net Assets | ||||||||
Beginning of period | 15,660,880,593 | 22,176,754,975 | ||||||
End of period | $ | 18,214,061,256 | $ | 15,660,880,593 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
OCTOBER 31, 2023
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.
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 (NAV) 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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 NAV 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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
15
The valuation designee monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
16
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.
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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets). From November 1, 2022 through July 31, 2023, the investment advisor agreed to waive a portion of the fund’s management fee such that the management fee does not exceed 0.928% for Investor Class, A Class, C Class and R Class, 0.728% for I Class and R5 Class, and 0.578% for Y Class and R6 Class. Effective August 1, 2023, the investment advisor agreed to waive a portion of the fund’s management fee such that the management fee does not exceed 0.911% for Investor Class, A Class, C Class and R Class, 0.711% for I Class and R5 Class, and 0.561% for Y Class and R6 Class. The investment advisor expects this waiver arrangement to continue until July 31, 2024 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.
17
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended October 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | ||||||||||
Before Waiver | After Waiver | ||||||||||
Investor Class | 0.800% to 0.990% | 0.95% | 0.93% | ||||||||
I Class | 0.600% to 0.790% | 0.75% | 0.73% | ||||||||
Y Class | 0.450% to 0.640% | 0.60% | 0.58% | ||||||||
A Class | 0.800% to 0.990% | 0.95% | 0.93% | ||||||||
C Class | 0.800% to 0.990% | 0.95% | 0.93% | ||||||||
R Class | 0.800% to 0.990% | 0.95% | 0.93% | ||||||||
R5 Class | 0.600% to 0.790% | 0.75% | 0.73% | ||||||||
R6 Class | 0.450% to 0.640% | 0.60% | 0.58% | ||||||||
G Class | 0.450% to 0.640% | 0.60% | 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 October 31, 2023 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.
Other Expenses — A fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, fees associated with the recovery of foreign tax reclaims and other miscellaneous expenses.
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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended October 31, 2023 were $3,712,230,016 and $3,501,561,852, respectively.
18
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended October 31, 2023 | Year ended October 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 3,000,000,000 | 3,000,000,000 | ||||||||||||
Sold | 8,060,745 | $ | 530,238,612 | 8,135,056 | $ | 598,685,724 | ||||||||
Issued in reinvestment of distributions | 15,165,813 | 855,808,956 | 14,055,454 | 1,225,916,765 | ||||||||||
Redeemed | (17,350,464) | (1,123,638,507) | (18,002,094) | (1,314,146,186) | ||||||||||
5,876,094 | 262,409,061 | 4,188,416 | 510,456,303 | |||||||||||
I Class/Shares Authorized | 220,000,000 | 120,000,000 | ||||||||||||
Sold | 6,602,248 | 471,376,367 | 4,448,913 | 343,822,287 | ||||||||||
Issued in reinvestment of distributions | 715,408 | 42,623,986 | 526,979 | 48,255,456 | ||||||||||
Redeemed | (4,549,800) | (318,387,098) | (2,515,718) | (190,427,803) | ||||||||||
2,767,856 | 195,613,255 | 2,460,174 | 201,649,940 | |||||||||||
Y Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 485,922 | 32,573,254 | 19,261 | 1,498,589 | ||||||||||
Issued in reinvestment of distributions | 2,012 | 120,975 | 1,273 | 117,405 | ||||||||||
Redeemed | (36,999) | (2,690,871) | (1,016) | (87,262) | ||||||||||
450,935 | 30,003,358 | 19,518 | 1,528,732 | |||||||||||
A Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 1,060,340 | 64,847,082 | 783,879 | 54,250,243 | ||||||||||
Issued in reinvestment of distributions | 212,777 | 11,177,165 | 202,249 | 16,548,087 | ||||||||||
Redeemed | (626,796) | (38,541,529) | (977,454) | (67,216,794) | ||||||||||
646,321 | 37,482,718 | 8,674 | 3,581,536 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 126,936 | 5,906,258 | 158,031 | 8,597,018 | ||||||||||
Issued in reinvestment of distributions | 46,222 | 1,860,437 | 39,175 | 2,529,562 | ||||||||||
Redeemed | (119,933) | (5,563,701) | (142,611) | (7,653,360) | ||||||||||
53,225 | 2,202,994 | 54,595 | 3,473,220 | |||||||||||
R Class/Shares Authorized | 25,000,000 | 30,000,000 | ||||||||||||
Sold | 345,043 | 20,799,015 | 288,585 | 18,499,188 | ||||||||||
Issued in reinvestment of distributions | 57,503 | 2,878,025 | 37,039 | 2,905,336 | ||||||||||
Redeemed | (233,772) | (13,665,587) | (130,237) | (8,695,824) | ||||||||||
168,774 | 10,011,453 | 195,387 | 12,708,700 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 233,600 | 16,071,078 | 515,024 | 36,057,190 | ||||||||||
Issued in reinvestment of distributions | 33,751 | 2,012,590 | 80 | 7,330 | ||||||||||
Redeemed | (254,594) | (17,990,190) | (17,322) | (1,131,238) | ||||||||||
12,757 | 93,478 | 497,782 | 34,933,282 | |||||||||||
R6 Class/Shares Authorized | 250,000,000 | 110,000,000 | ||||||||||||
Sold | 11,203,592 | 771,609,769 | 7,411,532 | 533,392,489 | ||||||||||
Issued in reinvestment of distributions | 906,288 | 54,431,628 | 525,013 | 48,359,000 | ||||||||||
Redeemed | (3,917,306) | (273,261,287) | (2,781,944) | (205,088,810) | ||||||||||
8,192,574 | 552,780,110 | 5,154,601 | 376,662,679 | |||||||||||
G Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||
Sold | 157,166 | 11,154,947 | 3,322 | 222,941 | ||||||||||
Issued in reinvestment of distributions | 229 | 14,068 | 7 | 620 | ||||||||||
Redeemed | (29,305) | (2,221,607) | — | (3) | ||||||||||
128,090 | 8,947,408 | 3,329 | 223,558 | |||||||||||
Net increase (decrease) | 18,296,626 | $ | 1,099,543,835 | 12,582,476 | $ | 1,145,217,950 |
19
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 | $ | 17,749,192,269 | $ | 426,548,475 | — | ||||||
Short-Term Investments | 143,879 | 37,099,572 | — | ||||||||
$ | 17,749,336,148 | $ | 463,648,047 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,326,984 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 35,349 | — |
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 settlement 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 $144,944,098.
20
The value of foreign currency risk derivative instruments as of October 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $1,326,984 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $35,349 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended October 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(2,350,360) in net realized gain (loss) on forward foreign currency exchange contract transactions and $1,038,830 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, war, 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 tax character of distributions paid during the years ended October 31, 2023 and October 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | — | — | ||||||
Long-term capital gains | $ | 1,017,868,170 | $ | 1,406,014,814 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 7,068,115,976 | |||
Gross tax appreciation of investments | $ | 11,479,274,473 | |||
Gross tax depreciation of investments | (334,406,254) | ||||
Net tax appreciation (depreciation) of investments | 11,144,868,219 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 26,360 | ||||
Net tax appreciation (depreciation) | $ | 11,144,894,579 | |||
Undistributed ordinary income | — | ||||
Accumulated long-term gains | $ | 1,218,867,849 | |||
Late-year ordinary loss deferral | $ | (55,854,274) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Loss deferrals 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 | 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 | |||||||||||||||||||||||||||||||||||||||||
2023 | $62.50 | (0.24) | 9.37 | 9.13 | (4.09) | $67.54 | 15.91% | 0.93% | 0.95% | (0.37)% | (0.39)% | 20% | $15,289,489 | ||||||||||||||||||||||||||||
2022 | $93.37 | (0.30) | (24.63) | (24.93) | (5.94) | $62.50 | (28.50)% | 0.94% | 0.95% | (0.42)% | (0.43)% | 13% | $13,781,358 | ||||||||||||||||||||||||||||
2021 | $66.38 | (0.38) | 29.49 | 29.11 | (2.12) | $93.37 | 44.70% | 0.95% | 0.95% | (0.47)% | (0.47)% | 8% | $20,198,765 | ||||||||||||||||||||||||||||
2020 | $50.27 | (0.21) | 18.55 | 18.34 | (2.23) | $66.38 | 37.77% | 0.97% | 0.97% | (0.36)% | (0.36)% | 6% | $14,648,925 | ||||||||||||||||||||||||||||
2019 | $47.74 | (0.06) | 5.92 | 5.86 | (3.33) | $50.27 | 13.83% | 0.97% | 0.97% | (0.13)% | (0.13)% | 13% | $11,308,500 | ||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $65.74 | (0.12) | 9.90 | 9.78 | (4.09) | $71.43 | 16.12% | 0.73% | 0.75% | (0.17)% | (0.19)% | 20% | $988,431 | ||||||||||||||||||||||||||||
2022 | $97.72 | (0.16) | (25.88) | (26.04) | (5.94) | $65.74 | (28.36)% | 0.74% | 0.75% | (0.22)% | (0.23)% | 13% | $727,643 | ||||||||||||||||||||||||||||
2021 | $69.25 | (0.23) | 30.82 | 30.59 | (2.12) | $97.72 | 45.00% | 0.75% | 0.75% | (0.27)% | (0.27)% | 8% | $841,255 | ||||||||||||||||||||||||||||
2020 | $52.25 | (0.10) | 19.33 | 19.23 | (2.23) | $69.25 | 38.05% | 0.77% | 0.77% | (0.16)% | (0.16)% | 6% | $588,451 | ||||||||||||||||||||||||||||
2019 | $49.39 | 0.03 | 6.16 | 6.19 | (3.33) | $52.25 | 14.05% | 0.77% | 0.77% | 0.07% | 0.07% | 13% | $365,036 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations*: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $66.30 | (0.05) | 10.03 | 9.98 | (4.09) | $72.19 | 16.30% | 0.58% | 0.60% | (0.02)% | (0.04)% | 20% | $36,238 | ||||||||||||||||||||||||||||
2022 | $98.36 | (0.04) | (26.08) | (26.12) | (5.94) | $66.30 | (28.25)% | 0.59% | 0.60% | (0.07)% | (0.08)% | 13% | $3,383 | ||||||||||||||||||||||||||||
2021 | $69.59 | (0.11) | 31.00 | 30.89 | (2.12) | $98.36 | 45.21% | 0.60% | 0.60% | (0.12)% | (0.12)% | 8% | $3,099 | ||||||||||||||||||||||||||||
2020 | $52.42 | (0.01) | 19.41 | 19.40 | (2.23) | $69.59 | 38.26% | 0.62% | 0.62% | (0.01)% | (0.01)% | 6% | $1,708 | ||||||||||||||||||||||||||||
2019 | $49.47 | 0.10 | 6.18 | 6.28 | (3.33) | $52.42 | 14.22% | 0.62% | 0.62% | 0.22% | 0.22% | 13% | $1,259 | ||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $58.50 | (0.38) | 8.71 | 8.33 | (4.09) | $62.74 | 15.61% | 1.18% | 1.20% | (0.62)% | (0.64)% | 20% | $223,761 | ||||||||||||||||||||||||||||
2022 | $87.98 | (0.46) | (23.08) | (23.54) | (5.94) | $58.50 | (28.69)% | 1.19% | 1.20% | (0.67)% | (0.68)% | 13% | $170,819 | ||||||||||||||||||||||||||||
2021 | $62.81 | (0.56) | 27.85 | 27.29 | (2.12) | $87.98 | 44.35% | 1.20% | 1.20% | (0.72)% | (0.72)% | 8% | $256,161 | ||||||||||||||||||||||||||||
2020 | $47.79 | (0.34) | 17.59 | 17.25 | (2.23) | $62.81 | 37.43% | 1.22% | 1.22% | (0.61)% | (0.61)% | 6% | $167,682 | ||||||||||||||||||||||||||||
2019 | $45.67 | (0.17) | 5.62 | 5.45 | (3.33) | $47.79 | 13.54% | 1.22% | 1.22% | (0.38)% | (0.38)% | 13% | $116,630 | ||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $45.85 | (0.64) | 6.64 | 6.00 | (4.09) | $47.76 | 14.76% | 1.93% | 1.95% | (1.37)% | (1.39)% | 20% | $28,610 | ||||||||||||||||||||||||||||
2022 | $70.74 | (0.76) | (18.19) | (18.95) | (5.94) | $45.85 | (29.22)% | 1.94% | 1.95% | (1.42)% | (1.43)% | 13% | $25,028 | ||||||||||||||||||||||||||||
2021 | $51.23 | (0.91) | 22.54 | 21.63 | (2.12) | $70.74 | 43.28% | 1.95% | 1.95% | (1.47)% | (1.47)% | 8% | $34,751 | ||||||||||||||||||||||||||||
2020 | $39.65 | (0.62) | 14.43 | 13.81 | (2.23) | $51.23 | 36.39% | 1.97% | 1.97% | (1.36)% | (1.36)% | 6% | $24,320 | ||||||||||||||||||||||||||||
2019 | $38.77 | (0.43) | 4.64 | 4.21 | (3.33) | $39.65 | 12.69% | 1.97% | 1.97% | (1.13)% | (1.13)% | 13% | $16,676 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations*: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $55.96 | (0.51) | 8.29 | 7.78 | (4.09) | $59.65 | 15.31% | 1.43% | 1.45% | (0.87)% | (0.89)% | 20% | $51,020 | ||||||||||||||||||||||||||||
2022 | $84.62 | (0.59) | (22.13) | (22.72) | (5.94) | $55.96 | (28.86)% | 1.44% | 1.45% | (0.92)% | (0.93)% | 13% | $38,416 | ||||||||||||||||||||||||||||
2021 | $60.62 | (0.72) | 26.84 | 26.12 | (2.12) | $84.62 | 44.00% | 1.45% | 1.45% | (0.97)% | (0.97)% | 8% | $41,561 | ||||||||||||||||||||||||||||
2020 | $46.31 | (0.46) | 17.00 | 16.54 | (2.23) | $60.62 | 37.08% | 1.47% | 1.47% | (0.86)% | (0.86)% | 6% | $26,729 | ||||||||||||||||||||||||||||
2019 | $44.47 | (0.28) | 5.45 | 5.17 | (3.33) | $46.31 | 13.26% | 1.47% | 1.47% | (0.63)% | (0.63)% | 13% | $17,240 | ||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $65.79 | (0.11) | 9.90 | 9.79 | (4.09) | $71.49 | 16.13% | 0.73% | 0.75% | (0.17)% | (0.19)% | 20% | $36,771 | ||||||||||||||||||||||||||||
2022 | $97.78 | (0.12) | (25.93) | (26.05) | (5.94) | $65.79 | (28.35)% | 0.74% | 0.75% | (0.22)% | (0.23)% | 13% | $32,996 | ||||||||||||||||||||||||||||
2021 | $69.29 | (0.23) | 30.84 | 30.61 | (2.12) | $97.78 | 45.00% | 0.75% | 0.75% | (0.27)% | (0.27)% | 8% | $371 | ||||||||||||||||||||||||||||
2020 | $52.28 | (0.12) | 19.36 | 19.24 | (2.23) | $69.29 | 38.05% | 0.77% | 0.77% | (0.16)% | (0.16)% | 6% | $258 | ||||||||||||||||||||||||||||
2019 | $49.42 | 0.01 | 6.18 | 6.19 | (3.33) | $52.28 | 14.04% | 0.77% | 0.77% | 0.07% | 0.07% | 13% | $94 | ||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $66.21 | (0.02) | 10.00 | 9.98 | (4.09) | $72.10 | 16.32% | 0.58% | 0.60% | (0.02)% | (0.04)% | 20% | $1,549,990 | ||||||||||||||||||||||||||||
2022 | $98.25 | (0.05) | (26.05) | (26.10) | (5.94) | $66.21 | (28.26)% | 0.59% | 0.60% | (0.07)% | (0.08)% | 13% | $881,007 | ||||||||||||||||||||||||||||
2021 | $69.51 | (0.11) | 30.97 | 30.86 | (2.12) | $98.25 | 45.22% | 0.60% | 0.60% | (0.12)% | (0.12)% | 8% | $800,782 | ||||||||||||||||||||||||||||
2020 | $52.36 | —(3) | 19.38 | 19.38 | (2.23) | $69.51 | 38.26% | 0.62% | 0.62% | (0.01)% | (0.01)% | 6% | $509,484 | ||||||||||||||||||||||||||||
2019 | $49.42 | 0.10 | 6.17 | 6.27 | (3.33) | $52.36 | 14.22% | 0.62% | 0.62% | 0.22% | 0.22% | 13% | $461,623 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations*: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $67.60 | 0.36 | 10.26 | 10.62 | (4.09) | $74.13 | 16.98% | 0.00%(4) | 0.60% | 0.56% | (0.04)% | 20% | $9,750 | ||||||||||||||||||||||||||||
2022 | $99.61 | 0.23 | (26.30) | (26.07) | (5.94) | $67.60 | (27.84)% | 0.00%(4) | 0.60% | 0.52% | (0.08)% | 13% | $232 | ||||||||||||||||||||||||||||
2021 | $70.04 | 0.42 | 31.27 | 31.69 | (2.12) | $99.61 | 46.08% | 0.00%(4) | 0.60% | 0.48% | (0.12)% | 8% | $10 | ||||||||||||||||||||||||||||
2020 | $52.44 | 0.37 | 19.46 | 19.83 | (2.23) | $70.04 | 39.09% | 0.01% | 0.62% | 0.60% | (0.01)% | 6% | $7 | ||||||||||||||||||||||||||||
2019(5) | $51.28 | 0.10 | 1.06 | 1.16 | — | $52.44 | 2.26% | 0.00%(4)(6) | 0.62%(6) | 0.78%(6) | 0.16%(6) | 13%(7) | $5 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)Per-share amount was less than $0.005.
(4)Ratio was less than 0.005%.
(5)August 1, 2019 (commencement of sale) through October 31, 2019.
(6)Annualized.
(7)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2019.
*The amount shown for a share outstanding throughout the period may not correlate with the Statement(s) of Operations or precisely reflect the class expense differentials due to the timing of transactions in shares of a fund in relation to income earned and/or fluctuations in the fair value of a fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders of the Ultra Fund and the Board of Directors of American Century Mutual Funds, Inc.
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Ultra Fund (the “Fund”), one of the funds constituting the American Century Mutual Funds, Inc., as of October 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of the Fund as of October 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of October 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
December 18, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S.Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 65 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 65 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 65 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 65 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 65 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 65 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 65 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 65 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 115 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 147 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018; Vice President since 2023 | Vice President, ACS, (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present). Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
Cihan Kasikara (1974) | Vice President since 2023 | Senior Vice President, ACS (2022 to present); Treasurer, ACS (2023 to present); Vice President, ACS (2020 to 2022); Vice President, Franklin Templeton (2015 to 2020) | ||||||
Kathleen Gunja Nelson (1976) | Vice President since 2023 | Vice President, ACS (2017 to present) | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 28, 2023, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under the Investment Company Act of 1940 (the “Investment Company Act”), contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed data and information compiled by the Advisor and certain independent data providers concerning the Fund. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the information that the Board and its committees receive and consider over time.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to
•the nature, extent, and quality of investment management, shareholder services, distribution services, and other services provided to the Fund;
•the wide range of programs and services the Advisor and other service providers provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance compared to appropriate benchmarks and/or peer groups of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similarly-managed funds;
•the Advisor’s compliance policies, procedures, and regulatory experience and those of certain other service providers;
•the Advisor’s strategic plans, generally, and with respect to areas of heightened regulatory interest in the mutual fund industry and certain recent geopolitical and other issues;
•the Advisor’s business continuity plans, vendor management practices, and information security practices;
•the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the Advisor’s financial results of operation;
•possible economies of scale associated with the Advisor’s management of the Fund;
•any collateral benefits derived by the Advisor from the management of the Fund;
•fees and expenses associated with any investment by the Fund in other funds;
•payments to intermediaries by the Fund and the Advisor and services provided by intermediaries in connection therewith; and
•services provided and charges to the Advisor's other investment management clients.
The Board held two meetings to consider the renewal. The independent Directors also met in private session multiple times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors.
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In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include, without limitation, the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including information security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and principal investment strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Board discusses with the Advisor the reasons for such results and any actions being taken to improve performance and may conduct special reviews until performance improves. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. In relation to industry peers, the Fund was above the median of its peer performance universe as identified by a third-party service provider for the three-, five-, and ten-year periods and below the median for the one-year period. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including information security), new products and services offered to Fund shareholders, securities trading activities,
31
portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), and its financial results of operation. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the terms of the current management agreement. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its fee structure, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow. Assets of various classes of the same Fund or similarly-managed products are combined with the assets of the Fund to help achieve those breakpoints.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage and other transaction fees and expenses relating to acquisition and disposition of portfolio securities, acquired fund fees and expenses, taxes, interest, extraordinary expenses, fund litigation expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Investment Company Act Rule 12b-1. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee such that the Investor Class management fee not exceed 0.911% for at least one year beginning August 1, 2023. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
32
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with prospective clients, service providers, and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and received over time, determined that the terms of the management agreement are fair and reasonable and that the management fee charged to the Fund is reasonable in light of the services provided and that the management agreement between the Fund and the Advisor should be renewed for an additional one-year period.
33
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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. These portfolio holdings are available on the fund's website at americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov.
34
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates $1,059,311,590, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended October 31, 2023.
The fund utilized earnings and profits of $41,443,420 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
35
Notes |
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Mutual Funds, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-90975 2312 |
(b) None.
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions.
(b) No response required.
(c) None.
(d) None.
(e) Not applicable.
(f) The registrant’s Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.’s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant’s board has determined that the registrant has at least one audit committee financial expert serving on its audit committee.
(a)(2) Chris H. Cheesman, Lynn M. Jenkins, Barry Fink and Gary Meltzer are the registrant’s designated audit committee financial experts. They are “independent” as defined in Item 3 of Form N-CSR.
(a)(3) Not applicable.
(b) No response required.
(c) No response required.
(d) No response required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees.
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows:
FY 2022: $126,100
FY 2023: $142,920
(b) Audit-Related Fees.
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were as follows:
For services rendered to the registrant:
FY 2022: $0
FY 2023: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2022: $0
FY 2023: $0
(c) Tax Fees.
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows:
For services rendered to the registrant:
FY 2022: $0
FY 2023: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2022: $0
FY 2023: $0
(d) All Other Fees.
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows:
For services rendered to the registrant:
FY 2022: $0
FY 2023: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2022: $0
FY 2023: $0
(e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant’s audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant’s audit committee also pre-approves its accountant’s engagements for non-audit services with the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.
(e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant’s audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C).
(f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than 50%.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows:
FY 2022: $50,000
FY 2023: $343,325
(h) The registrant’s investment adviser and accountant have notified the registrant’s audit committee of all non-audit services that were rendered by the registrant’s accountant to the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant’s audit committee included sufficient details regarding such services to allow the registrant’s audit committee to consider the continuing independence of its principal accountant.
(i) Not applicable.
(j) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the 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) Registrant’s Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.’s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005.
(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: | December 28, 2023 |
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: | December 28, 2023 |
By: | /s/ R. Wes Campbell | |||||||
Name: | R. Wes Campbell | |||||||
Title: | Treasurer and | |||||||
Chief Financial Officer | ||||||||
(principal financial officer) | ||||||||
Date: | December 28, 2023 |