UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-00816 | |||||
AMERICAN CENTURY MUTUAL FUNDS, INC. | ||||||
(Exact name of registrant as specified in charter) | ||||||
4500 MAIN STREET, KANSAS CITY, MISSOURI | 64111 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
CHARLES A. ETHERINGTON 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 | ||||||
(Name and address of agent for service) | ||||||
Registrant’s telephone number, including area code: | 816-531-5575 | |||||
Date of fiscal year end: | 10-31 | |||||
Date of reporting period: | 04-30-2011 |
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMIANNUAL REPORT | APRIL 30, 2011
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Balanced Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 23 |
Statement of Operations | 24 |
Statement of Changes in Net Assets | 25 |
Notes to Financial Statements | 26 |
Financial Highlights | 33 |
Additional Information | 35 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12–18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
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Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWBIX | 10.03% | 12.66% | 4.31% | 4.37% | 7.98% | 10/20/88 |
Blended index(2) | — | 9.62% | 12.80% | 4.69% | 4.33% | 9.00%(3) | — |
S&P 500 Index | — | 16.36% | 17.22% | 2.95% | 2.82% | 9.70%(3) | — |
Barclays Capital U.S. Aggregate Bond Index | — | 0.02% | 5.36% | 6.33% | 5.74% | 7.18%(3) | — |
Institutional Class | ABINX | 10.14% | 12.80% | 4.52% | 4.58% | 3.69% | 5/1/00 |
(1) | Total returns for periods less than one year are not annualized. |
(2) | The blended index combines two widely known indices in proportion to the asset mix of the fund. The S&P 500 Index represents 60% of the index and the remaining 40% is represented by the Barclays Capital U.S. Aggregate Bond Index. |
(3) | Since 10/31/88, the date nearest the Investor Class’s inception for which data are available. |
Total Annual Fund Operating Expenses | |
Investor Class | Institutional Class |
0.91% | 0.71% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
4
APRIL 30, 2011 | |
Top Ten Stock Holdings | % of net assets |
Exxon Mobil Corp. | 2.3% |
Chevron Corp. | 1.5% |
International Business Machines Corp. | 1.4% |
Microsoft Corp. | 1.3% |
General Electric Co. | 1.3% |
Johnson & Johnson | 1.3% |
Apple, Inc. | 1.2% |
AT&T, Inc. | 1.1% |
Philip Morris International, Inc. | 1.1% |
Wells Fargo & Co. | 1.1% |
Top Five Stock Industries | % of net assets |
Oil, Gas & Consumable Fuels | 7.1% |
Pharmaceuticals | 3.7% |
Insurance | 2.9% |
IT Services | 2.7% |
Diversified Financial Services | 2.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 60.4% |
U.S. Government Agency Mortgage-Backed Securities | 10.5% |
Corporate Bonds | 10.4% |
U.S. Treasury Securities | 9.5% |
U.S. Government Agency Securities and Equivalents | 2.7% |
Commercial Mortgage-Backed Securities | 2.2% |
Collateralized Mortgage Obligations | 1.5% |
Municipal Securities | 1.1% |
Sovereign Governments and Agencies | 0.6% |
Temporary Cash Investments | 1.1% |
Other Assets and Liabilities | —* |
*Category is less than 0.05% of total net assets. | |
Key Fixed-Income Portfolio Statistics | |
Weighted Average Life | 6.7 years |
Average Duration (Effective) | 5.1 years |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,100.30 | $4.69 | 0.90% |
Institutional Class | $1,000 | $1,101.40 | $3.65 | 0.70% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.33 | $4.51 | 0.90% |
Institutional Class | $1,000 | $1,021.32 | $3.51 | 0.70% |
* Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
APRIL 30, 2011 (UNAUDITED)
Shares/ Principal Amount | Value | |||||||
Common Stocks — 60.4% | ||||||||
AEROSPACE & DEFENSE — 1.0% | ||||||||
General Dynamics Corp. | 40,039 | $ | 2,915,640 | |||||
Raytheon Co. | 45,581 | 2,212,958 | ||||||
5,128,598 | ||||||||
AIR FREIGHT & LOGISTICS — 0.9% | ||||||||
United Parcel Service, Inc., Class B | 62,742 | 4,703,768 | ||||||
AUTO COMPONENTS — 0.7% | ||||||||
Magna International, Inc. | 25,889 | 1,326,811 | ||||||
TRW Automotive Holdings Corp.(1) | 39,712 | 2,265,967 | ||||||
3,592,778 | ||||||||
AUTOMOBILES — 0.2% | ||||||||
Ford Motor Co.(1) | 69,657 | 1,077,594 | ||||||
BEVERAGES — 1.0% | ||||||||
Coca-Cola Co. (The) | 27,826 | 1,877,142 | ||||||
Coca-Cola Enterprises, Inc. | 11,128 | 316,146 | ||||||
Constellation Brands, Inc., Class A(1) | 11,879 | 265,971 | ||||||
Dr Pepper Snapple Group, Inc. | 62,050 | 2,432,360 | ||||||
PepsiCo, Inc. | 9,009 | 620,630 | ||||||
5,512,249 | ||||||||
BIOTECHNOLOGY — 1.2% | ||||||||
Amgen, Inc.(1) | 35,769 | 2,033,468 | ||||||
Biogen Idec, Inc.(1) | 32,184 | 3,133,112 | ||||||
Cephalon, Inc.(1) | 18,160 | 1,394,688 | ||||||
6,561,268 | ||||||||
CAPITAL MARKETS — 1.3% | ||||||||
Franklin Resources, Inc. | 8,350 | 1,078,152 | ||||||
Goldman Sachs Group, Inc. (The) | 556 | 83,962 | ||||||
Legg Mason, Inc. | 76,917 | 2,857,466 | ||||||
Morgan Stanley | 114,906 | 3,004,792 | ||||||
7,024,372 | ||||||||
CHEMICALS — 0.9% | ||||||||
Monsanto Co. | 14,374 | 978,007 | ||||||
PPG Industries, Inc. | 27,958 | 2,646,784 | ||||||
W.R. Grace & Co.(1) | 26,141 | 1,185,756 | ||||||
4,810,547 | ||||||||
COMMERCIAL BANKS — 1.5% | ||||||||
PNC Financial Services Group, Inc. | 20,691 | 1,289,877 | ||||||
U.S. Bancorp. | 37,225 | 961,149 | ||||||
Wells Fargo & Co. | 201,664 | 5,870,439 | ||||||
8,121,465 | ||||||||
COMMUNICATIONS EQUIPMENT — 0.4% | ||||||||
Cisco Systems, Inc. | 24,435 | 429,079 | ||||||
Harris Corp. | 18,849 | 1,001,447 | ||||||
Motorola Solutions, Inc.(1) | 8,110 | 372,087 | ||||||
Research In Motion Ltd.(1) | 8,195 | 398,687 | ||||||
2,201,300 | ||||||||
COMPUTERS & PERIPHERALS — 2.1% | ||||||||
Apple, Inc.(1) | 17,938 | 6,246,550 | ||||||
Dell, Inc.(1) | 199,922 | 3,100,790 | ||||||
Hewlett-Packard Co. | 6,070 | 245,046 | ||||||
Lexmark International, Inc., Class A(1) | 58,749 | 1,894,655 | ||||||
11,487,041 | ||||||||
CONSTRUCTION & ENGINEERING — 0.4% | ||||||||
Chicago Bridge & Iron Co. NV New York Shares | 1,805 | 73,175 | ||||||
KBR, Inc. | 51,874 | 1,990,405 | ||||||
URS Corp.(1) | 3,608 | 161,458 | ||||||
2,225,038 | ||||||||
CONSUMER FINANCE — 0.3% | ||||||||
American Express Co. | 13,492 | 662,187 | ||||||
Cash America International, Inc. | 25,011 | 1,186,772 | ||||||
1,848,959 | ||||||||
CONTAINERS & PACKAGING — 0.1% | ||||||||
Crown Holdings, Inc.(1) | 8,520 | 318,648 | ||||||
DIVERSIFIED CONSUMER SERVICES — 0.4% | ||||||||
Career Education Corp.(1) | 3,838 | 83,707 | ||||||
ITT Educational Services, Inc.(1) | 28,175 | 2,020,993 | ||||||
2,104,700 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 2.3% | ||||||||
Bank of America Corp. | 255,270 | 3,134,716 | ||||||
Citigroup, Inc.(1) | 801,004 | 3,676,608 | ||||||
JPMorgan Chase & Co. | 61,131 | 2,789,407 | ||||||
McGraw-Hill Cos., Inc. (The) | 64,348 | 2,604,164 | ||||||
12,204,895 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.1% | ||||||||
AT&T, Inc. | 197,394 | 6,142,901 | ||||||
Verizon Communications, Inc. | 140,861 | 5,321,729 | ||||||
11,464,630 | ||||||||
ELECTRIC UTILITIES — 0.6% | ||||||||
Entergy Corp. | 34,622 | 2,413,846 | ||||||
Exelon Corp. | 17,362 | 731,808 | ||||||
3,145,654 |
8
Shares/ Principal Amount | Value | |||||||
ELECTRICAL EQUIPMENT — 0.2% | ||||||||
Emerson Electric Co. | 13,813 | $ | 839,278 | |||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 1.2% | ||||||||
Anixter International, Inc. | 25 | 1,879 | ||||||
Corning, Inc. | 78,816 | 1,650,407 | ||||||
TE Connectivity Ltd. | 59,604 | 2,136,803 | ||||||
Vishay Intertechnology, Inc.(1) | 134,279 | 2,562,043 | ||||||
6,351,132 | ||||||||
ENERGY EQUIPMENT & SERVICES — 1.0% | ||||||||
Core Laboratories NV | 19,609 | 1,882,072 | ||||||
Diamond Offshore Drilling, Inc. | 9,299 | 705,515 | ||||||
Schlumberger Ltd. | 12,046 | 1,081,128 | ||||||
SEACOR Holdings, Inc. | 15,884 | 1,569,816 | ||||||
5,238,531 | ||||||||
FOOD & STAPLES RETAILING — 0.7% | ||||||||
Walgreen Co. | 74,142 | 3,167,346 | ||||||
Wal-Mart Stores, Inc. | 12,387 | 681,038 | ||||||
3,848,384 | ||||||||
FOOD PRODUCTS — 1.7% | ||||||||
H.J. Heinz Co. | 29,636 | 1,518,252 | ||||||
Hershey Co. (The) | 42,825 | 2,471,431 | ||||||
Hormel Foods Corp. | 7,036 | 206,929 | ||||||
Sara Lee Corp. | 91,216 | 1,751,347 | ||||||
Smithfield Foods, Inc.(1) | 4,976 | 117,235 | ||||||
Tyson Foods, Inc., Class A | 142,609 | 2,837,919 | ||||||
8,903,113 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 0.5% | ||||||||
Cooper Cos., Inc. (The) | 2,320 | 173,768 | ||||||
Zimmer Holdings, Inc.(1) | 38,488 | 2,511,342 | ||||||
2,685,110 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 1.9% | ||||||||
AMERIGROUP Corp.(1) | 3,322 | 226,893 | ||||||
Cardinal Health, Inc. | 34,534 | 1,508,790 | ||||||
Health Net, Inc.(1) | 13,192 | 439,294 | ||||||
Humana, Inc.(1) | 40,089 | 3,051,575 | ||||||
Magellan Health Services, Inc.(1) | 13,208 | 687,080 | ||||||
UnitedHealth Group, Inc. | 78,341 | 3,856,727 | ||||||
WellCare Health Plans, Inc.(1) | 4,553 | 199,467 | ||||||
9,969,826 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 0.1% | ||||||||
Brinker International, Inc. | 12,925 | 311,363 | ||||||
McDonald’s Corp. | 167 | 13,078 | ||||||
Starbucks Corp. | 1,600 | 57,904 | ||||||
382,345 | ||||||||
HOUSEHOLD DURABLES — 0.1% | ||||||||
Tupperware Brands Corp. | 8,708 | 554,438 | ||||||
HOUSEHOLD PRODUCTS — 0.6% | ||||||||
Colgate-Palmolive Co. | 3,178 | 268,064 | ||||||
Procter & Gamble Co. (The) | 42,880 | 2,782,912 | ||||||
3,050,976 | ||||||||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS — 0.2% | ||||||||
AES Corp. (The)(1) | 87,684 | 1,160,936 | ||||||
INDUSTRIAL CONGLOMERATES — 1.8% | ||||||||
3M Co. | 26,033 | 2,530,668 | ||||||
General Electric Co. | 352,336 | 7,205,271 | ||||||
Seaboard Corp. | 17 | 40,579 | ||||||
9,776,518 | ||||||||
INSURANCE — 2.9% | ||||||||
ACE Ltd. | 24,299 | 1,634,108 | ||||||
Allied World Assurance Co. Holdings Ltd. | 28,525 | 1,853,269 | ||||||
American Financial Group, Inc. | 57,616 | 2,060,924 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 19,047 | 1,586,615 | ||||||
Chubb Corp. (The) | 9,286 | 605,355 | ||||||
Horace Mann Educators Corp. | 1,483 | 26,516 | ||||||
Principal Financial Group, Inc. | 74,836 | 2,525,715 | ||||||
Prudential Financial, Inc. | 56,356 | 3,574,098 | ||||||
Travelers Cos., Inc. (The) | 22,915 | 1,450,061 | ||||||
15,316,661 | ||||||||
INTERNET & CATALOG RETAIL — 0.1% | ||||||||
Expedia, Inc. | 13,894 | 347,767 | ||||||
INTERNET SOFTWARE & SERVICES — 0.7% | ||||||||
AOL, Inc.(1) | 40,027 | 815,750 | ||||||
Google, Inc., Class A(1) | 5,781 | 3,145,442 | ||||||
3,961,192 | ||||||||
IT SERVICES — 2.7% | ||||||||
Accenture plc, Class A | 38,864 | 2,220,300 | ||||||
Computer Sciences Corp. | 29,641 | 1,511,098 | ||||||
Global Payments, Inc. | 11,185 | 595,490 | ||||||
International Business Machines Corp. | 45,407 | 7,745,526 | ||||||
Visa, Inc., Class A | 33,911 | 2,649,127 | ||||||
14,721,541 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 0.4% | ||||||||
Polaris Industries, Inc. | 19,665 | 2,073,281 | ||||||
MACHINERY — 1.6% | ||||||||
Caterpillar, Inc. | 37,043 | 4,275,133 | ||||||
Dover Corp. | 29,014 | 1,974,113 | ||||||
Eaton Corp. | 10,172 | 544,507 | ||||||
Parker-Hannifin Corp. | 13,391 | 1,263,039 | ||||||
Sauer-Danfoss, Inc.(1) | 11,121 | 656,250 | ||||||
8,713,042 |
9
Shares/ Principal Amount | Value |
MEDIA — 2.0% | ||||||||
Comcast Corp., Class A | 158,083 | $ | 4,148,098 | |||||
DirecTV, Class A(1) | 39,487 | 1,918,673 | ||||||
Interpublic Group of Cos., Inc. (The) | 103,754 | 1,219,110 | ||||||
Time Warner, Inc. | 87,033 | 3,295,069 | ||||||
10,580,950 | ||||||||
METALS & MINING — 1.4% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 65,832 | 3,622,735 | ||||||
Newmont Mining Corp. | 48,439 | 2,839,010 | ||||||
Walter Energy, Inc. | 6,866 | 949,018 | ||||||
7,410,763 | ||||||||
MULTILINE RETAIL — 0.6% | ||||||||
Dillard’s, Inc., Class A | 30,918 | 1,484,682 | ||||||
Target Corp. | 38,846 | 1,907,339 | ||||||
3,392,021 | ||||||||
MULTI-UTILITIES — 0.6% | ||||||||
DTE Energy Co. | 2,199 | 111,116 | ||||||
Integrys Energy Group, Inc. | 56,454 | 2,955,931 | ||||||
3,067,047 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 7.1% | ||||||||
Canadian Natural Resources Ltd. | 13,082 | 614,331 | ||||||
Chevron Corp. | 75,510 | 8,263,814 | ||||||
ConocoPhillips | 68,831 | 5,432,831 | ||||||
Exxon Mobil Corp. | 142,083 | 12,503,304 | ||||||
Murphy Oil Corp. | 35,440 | 2,745,891 | ||||||
Occidental Petroleum Corp. | 42,632 | 4,872,411 | ||||||
Sunoco, Inc. | 19,524 | 832,894 | ||||||
Valero Energy Corp. | 68,469 | 1,937,673 | ||||||
Williams Cos., Inc. (The) | 20,338 | 674,611 | ||||||
37,877,760 | ||||||||
PAPER & FOREST PRODUCTS — 0.4% | ||||||||
Domtar Corp. | 24,437 | 2,273,130 | ||||||
PERSONAL PRODUCTS — 0.6% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 15,409 | 1,494,673 | ||||||
Herbalife Ltd. | 18,906 | 1,697,381 | ||||||
3,192,054 | ||||||||
PHARMACEUTICALS — 3.7% | ||||||||
Abbott Laboratories | 55,407 | 2,883,380 | ||||||
Bristol-Myers Squibb Co. | 35,689 | 1,002,861 | ||||||
Eli Lilly & Co. | 97,368 | 3,603,590 | ||||||
Forest Laboratories, Inc.(1) | 70,134 | 2,325,643 | ||||||
Johnson & Johnson | 109,369 | 7,187,731 | ||||||
Merck & Co., Inc. | 22,286 | 801,182 | ||||||
Pfizer, Inc. | 104,353 | 2,187,239 | ||||||
19,991,626 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.4% | ||||||||
Rayonier, Inc. | 29,042 | 1,927,227 | ||||||
Simon Property Group, Inc. | 2,635 | 301,813 | ||||||
2,229,040 | ||||||||
ROAD & RAIL — 0.7% | ||||||||
CSX Corp. | 39,150 | 3,080,713 | ||||||
Norfolk Southern Corp. | 10,429 | 778,838 | ||||||
3,859,551 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.1% | ||||||||
Intel Corp. | 252,838 | 5,863,313 | ||||||
LSI Corp.(1) | 283,809 | 2,080,320 | ||||||
Micron Technology, Inc.(1) | 95,069 | 1,073,329 | ||||||
Teradyne, Inc.(1) | 123,359 | 1,986,080 | ||||||
11,003,042 | ||||||||
SOFTWARE — 2.2% | ||||||||
Cadence Design Systems, Inc.(1) | 39,835 | 413,487 | ||||||
Electronic Arts, Inc.(1) | 13,767 | 277,818 | ||||||
Intuit, Inc.(1) | 18,491 | 1,027,360 | ||||||
Microsoft Corp. | 276,961 | 7,206,525 | ||||||
Oracle Corp. | 53,453 | 1,926,981 | ||||||
Symantec Corp.(1) | 42,203 | 829,289 | ||||||
11,681,460 | ||||||||
SPECIALTY RETAIL — 1.3% | ||||||||
AutoZone, Inc.(1) | 8,984 | 2,536,902 | ||||||
Bed Bath & Beyond, Inc.(1) | 29,056 | 1,630,623 | ||||||
Best Buy Co., Inc. | 15,318 | 478,228 | ||||||
Williams-Sonoma, Inc. | 50,382 | 2,187,082 | ||||||
6,832,835 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 0.4% | ||||||||
VF Corp. | 23,531 | 2,366,277 | ||||||
TOBACCO — 1.1% | ||||||||
Philip Morris International, Inc. | 85,418 | 5,931,426 | ||||||
TOTAL COMMON STOCKS (Cost $254,162,416) | 323,116,557 | |||||||
U.S. Government Agency Mortgage-Backed Securities(6) — 10.5% | ||||||||
FHLMC, 7.00%, 10/1/12(3) | $ | 20,524 | 21,256 | |||||
FHLMC, 4.50%, 1/1/19(3) | 986,791 | 1,051,182 | ||||||
FHLMC, 6.50%, 1/1/28(3) | 70,175 | 79,268 | ||||||
FHLMC, 5.50%, 12/1/33(3) | 619,258 | 670,330 | ||||||
FHLMC, 5.50%, 1/1/38(3) | 1,493,938 | 1,611,078 |
10
Shares/ Principal Amount | Value |
FHLMC, 6.00%, 8/1/38(3) | $ | 409,077 | $ | 448,583 | ||||
FHLMC, 6.50%, 7/1/47(3) | 67,335 | 75,334 | ||||||
FNMA, 7.50%, 11/1/11(3) | 10,965 | 11,168 | ||||||
FNMA, 6.50%, 5/1/13(3) | 1,447 | 1,591 | ||||||
FNMA, 6.50%, 5/1/13(3) | 2,787 | 2,897 | ||||||
FNMA, 6.50%, 6/1/13(3) | 439 | 483 | ||||||
FNMA, 6.50%, 6/1/13(3) | 4,213 | 4,634 | ||||||
FNMA, 6.50%, 6/1/13(3) | 6,055 | 6,660 | ||||||
FNMA, 6.50%, 6/1/13(3) | 9,271 | 10,197 | ||||||
FNMA, 6.00%, 1/1/14(3) | 28,754 | 31,369 | ||||||
FNMA, 6.00%, 4/1/14(3) | 105,197 | 114,766 | ||||||
FNMA, 4.50%, 5/1/19(3) | 1,154,178 | 1,228,049 | ||||||
FNMA, 5.00%, 9/1/20(3) | 1,520,578 | 1,635,670 | ||||||
FNMA, 6.50%, 1/1/28(3) | 24,816 | 28,077 | ||||||
FNMA, 7.00%, 1/1/28(3) | 37,385 | 43,073 | ||||||
FNMA, 6.50%, 1/1/29(3) | 86,109 | 97,425 | ||||||
FNMA, 7.50%, 7/1/29(3) | 159,101 | 185,449 | ||||||
FNMA, 7.50%, 9/1/30(3) | 46,594 | 54,288 | ||||||
FNMA, 6.50%, 9/1/31(3) | 78,345 | 88,641 | ||||||
FNMA, 7.00%, 9/1/31(3) | 24,690 | 28,485 | ||||||
FNMA, 6.50%, 1/1/32(3) | 121,323 | 137,267 | ||||||
FNMA, 7.00%, 6/1/32(3) | 310,955 | 358,172 | ||||||
FNMA, 6.50%, 8/1/32(3) | 120,804 | 136,680 | ||||||
FNMA, 5.50%, 6/1/33(3) | 643,956 | 697,770 | ||||||
FNMA, 5.50%, 7/1/33(3) | 903,623 | 979,136 | ||||||
FNMA, 5.50%, 8/1/33(3) | 973,432 | 1,054,779 | ||||||
FNMA, 5.50%, 9/1/33(3) | 651,809 | 706,279 | ||||||
FNMA, 5.00%, 11/1/33(3) | 2,742,606 | 2,915,556 | ||||||
FNMA, 5.50%, 1/1/34(3) | 3,782,329 | 4,108,408 | ||||||
FNMA, 4.50%, 9/1/35(3) | 2,358,117 | 2,445,111 | ||||||
FNMA, 5.00%, 2/1/36(3) | 2,872,133 | 3,046,968 | ||||||
FNMA, 5.50%, 4/1/36(3) | 1,156,206 | 1,251,020 | ||||||
FNMA, 5.50%, 5/1/36(3) | 2,303,469 | 2,492,364 | ||||||
FNMA, 5.50%, 2/1/37(3) | 740,095 | 798,936 | ||||||
FNMA, 6.00%, 7/1/37 | 5,079,629 | 5,581,297 | ||||||
FNMA, 6.50%, 8/1/37(3) | 743,241 | 829,883 | ||||||
FNMA, 4.50%, 9/1/40 | 7,317,669 | 7,551,038 | ||||||
FNMA, 4.00%, 1/1/41 | 2,287,761 | 2,284,309 | ||||||
FNMA, 4.50%, 2/1/41 | 2,093,599 | 2,158,403 | ||||||
FNMA, 6.50%, 6/1/47(3) | 57,924 | 64,550 | ||||||
FNMA, 6.50%, 8/1/47(3) | 161,447 | 179,914 | ||||||
FNMA, 6.50%, 8/1/47(3) | 234,426 | 261,241 | ||||||
FNMA, 6.50%, 9/1/47(3) | 19,485 | 21,714 | ||||||
FNMA, 6.50%, 9/1/47(3) | 68,642 | 76,494 | ||||||
FNMA, 6.50%, 9/1/47(3) | 266,945 | 297,479 | ||||||
FNMA, 6.50%, 9/1/47(3) | 327,483 | 364,942 | ||||||
GNMA, 7.00%, 4/20/26(3) | 130,517 | 150,173 | ||||||
GNMA, 7.50%, 8/15/26(3) | 70,741 | 82,322 | ||||||
GNMA, 7.00%, 2/15/28(3) | 16,625 | 19,225 | ||||||
GNMA, 7.50%, 2/15/28(3) | 35,281 | 41,144 | ||||||
GNMA, 7.00%, 12/15/28(3) | 37,475 | 43,334 | ||||||
GNMA, 7.00%, 5/15/31(3) | 143,985 | 166,760 | ||||||
GNMA, 5.50%, 11/15/32(3) | 816,409 | 894,952 | ||||||
GNMA, 4.00%, 1/20/41 | 6,187,041 | 6,278,052 | ||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $52,761,609) | 56,005,625 | |||||||
Corporate Bonds — 10.4% | ||||||||
AEROSPACE & DEFENSE — 0.1% | ||||||||
Lockheed Martin Corp., 4.25%, 11/15/19(3) | 150,000 | 153,313 | ||||||
United Technologies Corp., 6.05%, 6/1/36(3) | 454,000 | 513,514 | ||||||
666,827 | ||||||||
BEVERAGES — 0.1% | ||||||||
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/19(3) | 150,000 | 188,477 | ||||||
Anheuser-Busch InBev Worldwide, Inc., 6.875%, 11/15/19 | 250,000 | 302,014 | ||||||
Dr Pepper Snapple Group, Inc., 2.90%, 1/15/16(3) | 60,000 | 60,379 | ||||||
PepsiCo, Inc., 4.875%, 11/1/40(3) | 50,000 | 47,998 | ||||||
598,868 | ||||||||
BIOTECHNOLOGY(2) | ||||||||
Amgen, Inc., 3.45%, 10/1/20(3) | 100,000 | 95,455 | ||||||
CAPITAL MARKETS — 1.1% | ||||||||
Bear Stearns Cos. LLC (The), 6.40%, 10/2/17(3) | 330,000 | 377,608 | ||||||
Credit Suisse (New York), 5.00%, 5/15/13(3) | 340,000 | 364,603 | ||||||
Credit Suisse (New York), 5.50%, 5/1/14(3) | 200,000 | 221,470 | ||||||
Credit Suisse (New York), 6.00%, 2/15/18(3) | 100,000 | 108,679 | ||||||
Credit Suisse (New York), 5.30%, 8/13/19(3) | 230,000 | 246,928 | ||||||
Deutsche Bank AG (London), 4.875%, 5/20/13(3) | 330,000 | 352,451 | ||||||
Deutsche Bank AG (London), 3.875%, 8/18/14(3) | 190,000 | 200,131 | ||||||
Goldman Sachs Group, Inc. (The), 3.625%, 2/7/16(3) | 525,000 | 529,683 |
11
Shares/ Principal Amount | Value |
Goldman Sachs Group, Inc. (The), 7.50%, 2/15/19(3) | $ | 900,000 | $ | 1,071,005 | ||||
Goldman Sachs Group, Inc. (The), 6.25%, 2/1/41(3) | 100,000 | 103,083 | ||||||
Jefferies Group, Inc., 5.125%, 4/13/18 | 50,000 | 50,417 | ||||||
Jefferies Group, Inc., 8.50%, 7/15/19(3) | 130,000 | 156,250 | ||||||
Korea Development Bank, 3.25%, 3/9/16(3) | 130,000 | 128,673 | ||||||
Korea Development Bank, 4.00%, 9/9/16(3) | 110,000 | 111,690 | ||||||
Morgan Stanley, 4.20%, 11/20/14(3) | 200,000 | 208,553 | ||||||
Morgan Stanley, 6.625%, 4/1/18(3) | 410,000 | 458,616 | ||||||
Morgan Stanley, 5.625%, 9/23/19(3) | 250,000 | 260,457 | ||||||
Morgan Stanley, 5.50%, 7/24/20(3) | 200,000 | 204,829 | ||||||
Morgan Stanley, 5.75%, 1/25/21(3) | 250,000 | 260,719 | ||||||
UBS AG (Stamford Branch), 2.25%, 8/12/13(3) | 100,000 | 101,703 | ||||||
UBS AG (Stamford Branch), 2.25%, 1/28/14(3) | 80,000 | 81,052 | ||||||
UBS AG (Stamford Branch), 5.875%, 12/20/17(3) | 380,000 | 425,014 | ||||||
6,023,614 | ||||||||
CHEMICALS — 0.2% | ||||||||
CF Industries, Inc., 6.875%, 5/1/18 | 210,000 | 237,563 | ||||||
Dow Chemical Co. (The), 5.90%, 2/15/15(3) | 110,000 | 123,825 | ||||||
Dow Chemical Co. (The), 2.50%, 2/15/16(3) | 170,000 | 166,981 | ||||||
Rohm & Haas Co., 5.60%, 3/15/13(3) | 240,000 | 258,217 | ||||||
786,586 | ||||||||
COMMERCIAL BANKS — 0.7% | ||||||||
Barclays Bank plc, 5.00%, 9/22/16(3) | 200,000 | 215,697 | ||||||
BB&T Corp., 5.70%, 4/30/14(3) | 60,000 | 66,565 | ||||||
BB&T Corp., 3.20%, 3/15/16 | 190,000 | 191,851 | ||||||
BNP Paribas, 3.60%, 2/23/16(3) | 130,000 | 132,391 | ||||||
BNP Paribas, 5.00%, 1/15/21(3) | 80,000 | 80,803 | ||||||
Fifth Third Bancorp., 6.25%, 5/1/13(3) | 170,000 | 184,781 | ||||||
HSBC Bank plc, 3.50%, 6/28/15(3)(4) | 140,000 | 144,211 | ||||||
HSBC Holdings plc, 5.10%, 4/5/21 | 120,000 | 123,845 | ||||||
HSBC Holdings plc, 6.80%, 6/1/38(3) | 80,000 | 86,089 | ||||||
Huntington Bancshares, Inc., 7.00%, 12/15/20(3) | 30,000 | 33,676 | ||||||
Lloyds TSB Bank plc, 4.875%, 1/21/16(3) | 130,000 | 136,631 | ||||||
National Australia Bank Ltd., 2.25%, 4/11/14(4) | 320,000 | 322,405 | ||||||
National Australia Bank Ltd., 2.75%, 9/28/15(3)(4) | 100,000 | 99,772 | ||||||
PNC Bank N.A., 6.00%, 12/7/17(3) | 290,000 | 325,601 | ||||||
PNC Funding Corp., 4.25%, 9/21/15(3) | 50,000 | 53,247 | ||||||
Royal Bank of Scotland plc (The), 3.95%, 9/21/15 | 220,000 | 224,385 | ||||||
SunTrust Bank, 7.25%, 3/15/18(3) | 110,000 | 127,593 | ||||||
SunTrust Banks, Inc., 3.60%, 4/15/16(3) | 50,000 | 50,713 | ||||||
U.S. Bancorp., 3.44%, 2/1/16 | 120,000 | 121,291 | ||||||
Wachovia Bank N.A., 4.80%, 11/1/14(3) | 373,000 | 402,706 | ||||||
Wachovia Bank N.A., 4.875%, 2/1/15(3) | 123,000 | 132,908 | ||||||
Wells Fargo & Co., 3.68%, 6/15/16(3) | 140,000 | 144,113 | ||||||
Wells Fargo & Co., 5.625%, 12/11/17(3) | 50,000 | 55,884 | ||||||
Wells Fargo & Co., 4.60%, 4/1/21(3) | 190,000 | 192,564 | ||||||
3,649,722 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 0.2% | ||||||||
Corrections Corp. of America, 6.25%, 3/15/13(3) | 250,000 | 250,625 | ||||||
Corrections Corp. of America, 7.75%, 6/1/17(3) | 90,000 | 99,000 | ||||||
Republic Services, Inc., 5.50%, 9/15/19(3) | 300,000 | 326,963 | ||||||
Waste Management, Inc., 6.125%, 11/30/39(3) | 120,000 | 127,940 | ||||||
804,528 | ||||||||
COMMUNICATIONS EQUIPMENT(2) | ||||||||
Cisco Systems, Inc., 5.90%, 2/15/39(3) | 130,000 | 139,187 | ||||||
CONSUMER FINANCE — 0.3% | ||||||||
American Express Centurion Bank, 5.55%, 10/17/12(3) | 150,000 | 159,167 | ||||||
American Express Centurion Bank, 6.00%, 9/13/17(3) | 250,000 | 284,606 |
12
Shares/ Principal Amount | Value |
American Express Co., 7.25%, 5/20/14(3) | $ | 200,000 | $ | 229,720 | ||||
American Honda Finance Corp., 2.375%, 3/18/13(3)(4) | 170,000 | 173,110 | ||||||
American Honda Finance Corp., 2.50%, 9/21/15(3)(4) | 220,000 | 218,941 | ||||||
Capital One Bank USA N.A., 8.80%, 7/15/19(3) | 250,000 | 320,863 | ||||||
Nissan Motor Acceptance Corp., 3.25%, 1/30/13(3)(4) | 50,000 | 51,202 | ||||||
SLM Corp., 5.00%, 10/1/13(3) | 180,000 | 187,753 | ||||||
SLM Corp., 6.25%, 1/25/16(3) | 130,000 | 138,014 | ||||||
1,763,376 | ||||||||
CONTAINERS & PACKAGING — 0.1% | ||||||||
Ball Corp., 7.125%, 9/1/16(3) | 130,000 | 142,350 | ||||||
Ball Corp., 6.75%, 9/15/20(3) | 120,000 | 126,900 | ||||||
269,250 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 1.3% | ||||||||
Arch Western Finance LLC, 6.75%, 7/1/13(3) | 47,000 | 47,529 | ||||||
Bank of America Corp., 4.50%, 4/1/15(3) | 190,000 | 200,135 | ||||||
Bank of America Corp., 6.50%, 8/1/16(3) | 620,000 | 700,027 | ||||||
Bank of America Corp., 5.75%, 12/1/17(3) | 150,000 | 162,117 | ||||||
Bank of America N.A., 5.30%, 3/15/17(3) | 720,000 | 757,108 | ||||||
Citigroup, Inc., 6.00%, 12/13/13(3) | 330,000 | 361,343 | ||||||
Citigroup, Inc., 6.01%, 1/15/15(3) | 520,000 | 576,960 | ||||||
Citigroup, Inc., 4.75%, 5/19/15 | 70,000 | 74,660 | ||||||
Citigroup, Inc., 6.125%, 5/15/18(3) | 660,000 | 730,262 | ||||||
Citigroup, Inc., 8.50%, 5/22/19(3) | 100,000 | 124,864 | ||||||
General Electric Capital Corp., 3.75%, 11/14/14(3) | 200,000 | 210,747 | ||||||
General Electric Capital Corp., 2.25%, 11/9/15(3) | 200,000 | 196,345 | ||||||
General Electric Capital Corp., 5.625%, 9/15/17(3) | 450,000 | 498,898 | ||||||
General Electric Capital Corp., 6.00%, 8/7/19(3) | 350,000 | 390,620 | ||||||
General Electric Capital Corp., 4.375%, 9/16/20(3) | 320,000 | 316,463 | ||||||
General Electric Capital Corp., 4.625%, 1/7/21(3) | 160,000 | 161,261 | ||||||
General Electric Capital Corp., 5.30%, 2/11/21(3) | 80,000 | 83,232 | ||||||
JPMorgan Chase & Co., 3.70%, 1/20/15(3) | 110,000 | 114,333 | ||||||
JPMorgan Chase & Co., 3.45%, 3/1/16 | 190,000 | 192,497 | ||||||
JPMorgan Chase & Co., 6.00%, 1/15/18(3) | 840,000 | 936,599 | ||||||
6,836,000 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.7% | ||||||||
Alltel Corp., 7.875%, 7/1/32(3) | 100,000 | 131,267 | ||||||
AT&T, Inc., 6.80%, 5/15/36(3) | 350,000 | 389,397 | ||||||
AT&T, Inc., 6.55%, 2/15/39(3) | 470,000 | 514,783 | ||||||
British Telecommunications plc, 5.95%, 1/15/18(3) | 120,000 | 133,450 | ||||||
Cellco Partnership/Verizon Wireless Capital LLC, 8.50%, 11/15/18(3) | 330,000 | 429,156 | ||||||
CenturyLink, Inc., 6.15%, 9/15/19(3) | 140,000 | 147,337 | ||||||
CenturyLink, Inc., 7.60%, 9/15/39(3) | 60,000 | 60,827 | ||||||
Deutsche Telekom International Finance BV, 6.75%, 8/20/18(3) | 150,000 | 178,338 | ||||||
Embarq Corp., 7.08%, 6/1/16(3) | 69,000 | 78,153 | ||||||
Qwest Corp., 7.875%, 9/1/11(3) | 120,000 | 123,000 | ||||||
Qwest Corp., 7.50%, 10/1/14(3) | 200,000 | 227,500 | ||||||
Telecom Italia Capital SA, 6.175%, 6/18/14(3) | 340,000 | 371,136 | ||||||
Telecom Italia Capital SA, 7.00%, 6/4/18(3) | 130,000 | 145,145 | ||||||
Telecom Italia Capital SA, 7.175%, 6/18/19(3) | 80,000 | 90,392 | ||||||
Telefonica Emisiones SAU, 5.88%, 7/15/19(3) | 220,000 | 235,683 | ||||||
Telefonica Emisiones SAU, 5.46%, 2/16/21 | 160,000 | 166,493 | ||||||
Verizon Communications, Inc., 7.35%, 4/1/39(3) | 160,000 | 192,529 | ||||||
Windstream Corp., 7.875%, 11/1/17(3) | 150,000 | 162,750 | ||||||
3,777,336 | ||||||||
ELECTRIC UTILITIES — 0.2% | ||||||||
Carolina Power & Light Co., 5.15%, 4/1/15(3) | 100,000 | 110,968 | ||||||
Cleveland Electric Illuminating Co. (The), 5.70%, 4/1/17(3) | 81,000 | 87,494 | ||||||
Duke Energy Corp., 6.30%, 2/1/14(3) | 100,000 | 111,911 |
13
Shares/ Principal Amount | Value |
Duke Energy Corp., 3.95%, 9/15/14(3) | $ | 130,000 | $ | 137,660 | ||||
Edison International, 3.75%, 9/15/17(3) | 130,000 | 129,959 | ||||||
FirstEnergy Solutions Corp., 6.05%, 8/15/21(3) | 300,000 | 320,253 | ||||||
Florida Power Corp., 6.35%, 9/15/37(3) | 230,000 | 262,962 | ||||||
Southern California Edison Co., 5.625%, 2/1/36(3) | 60,000 | 63,254 | ||||||
1,224,461 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS(2) | ||||||||
Jabil Circuit, Inc., 7.75%, 7/15/16(3) | 150,000 | 171,000 | ||||||
Jabil Circuit, Inc., 5.625%, 12/15/20(3) | 80,000 | 80,400 | ||||||
251,400 | ||||||||
ENERGY EQUIPMENT & SERVICES — 0.1% | ||||||||
Ensco plc, 3.25%, 3/15/16(3) | 120,000 | 121,319 | ||||||
Transocean, Inc., 6.50%, 11/15/20(3) | 100,000 | 112,528 | ||||||
Weatherford International Ltd., 9.625%, 3/1/19(3) | 150,000 | 194,928 | ||||||
428,775 | ||||||||
FOOD & STAPLES RETAILING — 0.3% | ||||||||
CVS Caremark Corp., 6.60%, 3/15/19(3) | 350,000 | 406,985 | ||||||
Kroger Co. (The), 6.40%, 8/15/17(3) | 200,000 | 233,502 | ||||||
Wal-Mart Stores, Inc., 5.875%, 4/5/27(3) | 468,000 | 521,528 | ||||||
Wal-Mart Stores, Inc., 6.20%, 4/15/38(3) | 220,000 | 244,327 | ||||||
Wal-Mart Stores, Inc., 5.00%, 10/25/40(3) | 150,000 | 142,361 | ||||||
1,548,703 | ||||||||
FOOD PRODUCTS — 0.2% | ||||||||
Archer Daniels Midland Co., 5.765%, 3/1/41(3) | 130,000 | 138,705 | ||||||
Kellogg Co., 4.45%, 5/30/16(3) | 200,000 | 217,195 | ||||||
Kraft Foods, Inc., 6.00%, 2/11/13(3) | 70,000 | 75,823 | ||||||
Kraft Foods, Inc., 6.125%, 2/1/18(3) | 160,000 | 181,965 | ||||||
Kraft Foods, Inc., 5.375%, 2/10/20(3) | 330,000 | 358,044 | ||||||
Mead Johnson Nutrition Co., 3.50%, 11/1/14(3) | 120,000 | 125,879 | ||||||
1,097,611 | ||||||||
GAS UTILITIES — 0.1% | ||||||||
CenterPoint Energy Resources Corp., 6.25%, 2/1/37(3) | 330,000 | 341,548 | ||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 0.1% | ||||||||
Baxter International, Inc., 5.90%, 9/1/16(3) | 130,000 | 151,722 | ||||||
Covidien International Finance SA, 1.875%, 6/15/13(3) | 170,000 | 172,859 | ||||||
324,581 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 0.2% | ||||||||
Express Scripts, Inc., 5.25%, 6/15/12(3) | 230,000 | 240,817 | ||||||
Express Scripts, Inc., 7.25%, 6/15/19(3) | 360,000 | 435,781 | ||||||
Medco Health Solutions, Inc., 7.25%, 8/15/13(3) | 270,000 | 302,932 | ||||||
WellPoint, Inc., 5.80%, 8/15/40(3) | 60,000 | 60,972 | ||||||
1,040,502 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 0.1% | ||||||||
McDonald’s Corp., 5.35%, 3/1/18(3) | 170,000 | 191,387 | ||||||
Wyndham Worldwide Corp., 6.00%, 12/1/16(3) | 50,000 | 53,607 | ||||||
Yum! Brands, Inc., 5.30%, 9/15/19(3) | 310,000 | 332,807 | ||||||
577,801 | ||||||||
HOUSEHOLD DURABLES — 0.1% | ||||||||
Jarden Corp., 8.00%, 5/1/16 | 230,000 | �� | 253,575 | |||||
Toll Brothers Finance Corp., 6.75%, 11/1/19(3) | 100,000 | 104,291 | ||||||
357,866 | ||||||||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS(2) | ||||||||
Exelon Generation Co. LLC, 5.20%, 10/1/19(3) | 150,000 | 156,604 | ||||||
INDUSTRIAL CONGLOMERATES — 0.1% | ||||||||
General Electric Co., 5.00%, 2/1/13(3) | 158,000 | 168,749 | ||||||
General Electric Co., 5.25%, 12/6/17(3) | 230,000 | 255,160 | ||||||
423,909 | ||||||||
INSURANCE — 0.5% | ||||||||
Allstate Corp. (The), 7.45%, 5/16/19 | 150,000 | 181,083 | ||||||
American International Group, Inc., 3.65%, 1/15/14 | 70,000 | 71,846 | ||||||
American International Group, Inc., 5.85%, 1/16/18(3) | 250,000 | 265,044 | ||||||
American International Group, Inc., 8.25%, 8/15/18(3) | 100,000 | 119,093 |
14
Shares/ Principal Amount | Value |
Berkshire Hathaway Finance Corp., 4.25%, 1/15/21(3) | $ | 120,000 | $ | 121,936 | ||||
CNA Financial Corp., 5.875%, 8/15/20(3) | 60,000 | 63,600 | ||||||
CNA Financial Corp., 5.75%, 8/15/21 | 50,000 | 52,568 | ||||||
Genworth Financial, Inc., 7.20%, 2/15/21(3) | 70,000 | 70,412 | ||||||
Hartford Financial Services Group, Inc., 4.00%, 3/30/15(3) | 180,000 | 185,248 | ||||||
Hartford Financial Services Group, Inc., 6.30%, 3/15/18(3) | 110,000 | 121,013 | ||||||
Lincoln National Corp., 6.25%, 2/15/20(3) | 160,000 | 180,125 | ||||||
MetLife Global Funding I, 5.125%, 4/10/13(3)(4) | 200,000 | 214,247 | ||||||
MetLife, Inc., 6.75%, 6/1/16(3) | 260,000 | 304,839 | ||||||
New York Life Global Funding, 4.65%, 5/9/13(3)(4) | 150,000 | 160,709 | ||||||
Prudential Financial, Inc., 7.375%, 6/15/19(3) | 100,000 | 119,345 | ||||||
Prudential Financial, Inc., 5.375%, 6/21/20(3) | 70,000 | 74,520 | ||||||
Prudential Financial, Inc., 5.40%, 6/13/35(3) | 270,000 | 257,907 | ||||||
2,563,535 | ||||||||
INTERNET SOFTWARE & SERVICES(2) | ||||||||
eBay, Inc., 3.25%, 10/15/20(3) | 60,000 | 55,787 | ||||||
MACHINERY(2) | ||||||||
Deere & Co., 5.375%, 10/16/29(3) | 200,000 | 215,114 | ||||||
MEDIA — 0.8% | ||||||||
CBS Corp., 4.30%, 2/15/21(3) | 160,000 | 154,227 | ||||||
Comcast Corp., 5.90%, 3/15/16(3) | 339,000 | 382,434 | ||||||
Comcast Corp., 5.70%, 5/15/18(3) | 120,000 | 132,990 | ||||||
Comcast Corp., 6.40%, 5/15/38(3) | 220,000 | 234,425 | ||||||
Comcast Corp., 6.40%, 3/1/40(3) | 80,000 | 85,375 | ||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 4.75%, 10/1/14(3) | 155,000 | 168,253 | ||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 3.55%, 3/15/15(3) | 190,000 | 196,910 | ||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 5.00%, 3/1/21(3) | 380,000 | 390,883 | ||||||
Interpublic Group of Cos., Inc. (The), 10.00%, 7/15/17(3) | 300,000 | 359,250 | ||||||
Lamar Media Corp., 9.75%, 4/1/14(3) | 150,000 | 175,500 | ||||||
NBCUniversal Media LLC, 5.15%, 4/30/20(3)(4) | 90,000 | 94,252 | ||||||
NBCUniversal Media LLC, 4.375%, 4/1/21(4) | 220,000 | 215,317 | ||||||
NBCUniversal Media LLC, 5.95%, 4/1/41(4) | 70,000 | 70,435 | ||||||
News America, Inc., 6.90%, 8/15/39(3) | 150,000 | 169,033 | ||||||
Omnicom Group, Inc., 4.45%, 8/15/20(3) | 145,000 | 143,741 | ||||||
Time Warner Cable, Inc., 5.40%, 7/2/12(3) | 350,000 | 368,407 | ||||||
Time Warner Cable, Inc., 6.75%, 7/1/18(3) | 270,000 | 311,572 | ||||||
Time Warner, Inc., 3.15%, 7/15/15(3) | 140,000 | 143,573 | ||||||
Time Warner, Inc., 7.70%, 5/1/32(3) | 200,000 | 242,161 | ||||||
Virgin Media Secured Finance plc, 6.50%, 1/15/18(3) | 250,000 | 275,000 | ||||||
Virgin Media Secured Finance plc, 5.25%, 1/15/21(3)(4) | 100,000 | 102,568 | ||||||
4,416,306 | ||||||||
METALS & MINING — 0.3% | ||||||||
Anglo American Capital plc, 4.45%, 9/27/20(3)(4) | 130,000 | 132,265 | ||||||
AngloGold Ashanti Holdings plc, 5.375%, 4/15/20(3) | 180,000 | 185,563 | ||||||
ArcelorMittal, 9.85%, 6/1/19(3) | 240,000 | 309,811 | ||||||
ArcelorMittal, 5.25%, 8/5/20(3) | 120,000 | 120,926 | ||||||
ArcelorMittal, 5.50%, 3/1/21(3) | 140,000 | 142,294 | ||||||
Freeport-McMoRan Copper & Gold, Inc., 8.375%, 4/1/17(3) | 210,000 | 231,797 | ||||||
Newmont Mining Corp., 6.25%, 10/1/39(3) | 120,000 | 129,979 | ||||||
Rio Tinto Finance USA Ltd., 3.50%, 11/2/20(3) | 80,000 | 76,664 | ||||||
Teck Resources Ltd., 5.375%, 10/1/15(3) | 70,000 | 76,952 | ||||||
Vale Overseas Ltd., 5.625%, 9/15/19(3) | 210,000 | 224,672 | ||||||
Vale Overseas Ltd., 4.625%, 9/15/20 | 150,000 | 149,248 | ||||||
1,780,171 | ||||||||
MULTILINE RETAIL(2) | ||||||||
Macy’s Retail Holdings, Inc., 5.35%, 3/15/12(3) | 175,000 | 181,125 |
15
Shares/ Principal Amount | Value |
MULTI-UTILITIES — 0.2% | ||||||||
CMS Energy Corp., 4.25%, 9/30/15 | $ | 160,000 | $ | 164,473 | ||||
CMS Energy Corp., 8.75%, 6/15/19(3) | 180,000 | 220,237 | ||||||
Dominion Resources, Inc., 6.40%, 6/15/18(3) | 260,000 | 301,551 | ||||||
Pacific Gas & Electric Co., 5.80%, 3/1/37(3) | 133,000 | 137,876 | ||||||
PG&E Corp., 5.75%, 4/1/14(3) | 60,000 | 66,048 | ||||||
Sempra Energy, 8.90%, 11/15/13(3) | 170,000 | 197,893 | ||||||
Sempra Energy, 6.50%, 6/1/16(3) | 100,000 | 115,317 | ||||||
1,203,395 | ||||||||
OFFICE ELECTRONICS — 0.1% | ||||||||
Xerox Corp., 5.65%, 5/15/13(3) | 80,000 | 86,535 | ||||||
Xerox Corp., 4.25%, 2/15/15(3) | 200,000 | 212,359 | ||||||
298,894 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 1.1% | ||||||||
Anadarko Petroleum Corp., 5.95%, 9/15/16(3) | 50,000 | 55,940 | ||||||
Anadarko Petroleum Corp., 6.45%, 9/15/36(3) | 250,000 | 258,729 | ||||||
Apache Corp., 5.25%, 2/1/42(3) | 60,000 | 58,778 | ||||||
BP Capital Markets plc, 3.20%, 3/11/16(3) | 120,000 | 121,164 | ||||||
BP Capital Markets plc, 4.50%, 10/1/20(3) | 100,000 | 101,052 | ||||||
Cenovus Energy, Inc., 4.50%, 9/15/14(3) | 140,000 | 151,733 | ||||||
Chesapeake Energy Corp., 7.625%, 7/15/13(3) | 100,000 | 110,250 | ||||||
ConocoPhillips, 5.75%, 2/1/19(3) | 240,000 | 275,766 | ||||||
El Paso Corp., 7.25%, 6/1/18(3) | 200,000 | 226,412 | ||||||
Enbridge Energy Partners LP, 6.50%, 4/15/18(3) | 130,000 | 149,090 | ||||||
Enbridge Energy Partners LP, 5.20%, 3/15/20(3) | 100,000 | 106,320 | ||||||
Enbridge Energy Partners LP, 5.50%, 9/15/40(3) | 120,000 | 116,906 | ||||||
Enterprise Products Operating LLC, 3.70%, 6/1/15(3) | 150,000 | 156,014 | ||||||
Enterprise Products Operating LLC, 6.30%, 9/15/17(3) | 390,000 | 447,458 | ||||||
Enterprise Products Operating LLC, 5.20%, 9/1/20(3) | 100,000 | 105,706 | ||||||
Enterprise Products Operating LLC, 5.95%, 2/1/41(3) | 125,000 | 125,940 | ||||||
EOG Resources, Inc., 5.625%, 6/1/19(3) | 150,000 | 168,180 | ||||||
Hess Corp., 6.00%, 1/15/40(3) | 110,000 | 114,864 | ||||||
Kinder Morgan Energy Partners LP, 6.85%, 2/15/20(3) | 200,000 | 233,526 | ||||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39(3) | 130,000 | 138,696 | ||||||
Magellan Midstream Partners LP, 6.55%, 7/15/19(3) | 150,000 | 173,827 | ||||||
Marathon Petroleum Corp., 3.50%, 3/1/16(3)(4) | 50,000 | 50,741 | ||||||
Marathon Petroleum Corp., 6.50%, 3/1/41(3)(4) | 60,000 | 63,309 | ||||||
Newfield Exploration Co., 6.875%, 2/1/20(3) | 200,000 | 212,500 | ||||||
Noble Energy, Inc., 6.00%, 3/1/41(3) | 60,000 | 62,376 | ||||||
Peabody Energy Corp., 6.50%, 9/15/20(3) | 70,000 | 75,338 | ||||||
Pemex Project Funding Master Trust, 6.625%, 6/15/35(3) | 50,000 | 51,087 | ||||||
Petrobras International Finance Co. - Pifco, 5.75%, 1/20/20(3) | 120,000 | 125,353 | ||||||
Petrobras International Finance Co. - Pifco, 5.375%, 1/27/21 | 240,000 | 244,758 | ||||||
Petroleos Mexicanos, 6.00%, 3/5/20(3) | 120,000 | 128,940 | ||||||
Plains All American Pipeline LP/PAA Finance Corp., 3.95%, 9/15/15(3) | 60,000 | 62,526 | ||||||
Plains All American Pipeline LP/PAA Finance Corp., 8.75%, 5/1/19(3) | 190,000 | 240,848 | ||||||
Shell International Finance BV, 3.10%, 6/28/15(3) | 140,000 | 145,392 | ||||||
Shell International Finance BV, 6.375%, 12/15/38(3) | 50,000 | 58,304 | ||||||
Suncor Energy, Inc., 6.10%, 6/1/18(3) | 174,000 | 198,815 | ||||||
Talisman Energy, Inc., 7.75%, 6/1/19(3) | 350,000 | 433,165 | ||||||
TransCanada PipeLines Ltd., 3.80%, 10/1/20 | 80,000 | 78,366 | ||||||
Williams Partners LP, 5.25%, 3/15/20(3) | 120,000 | 127,930 | ||||||
Williams Partners LP, 4.125%, 11/15/20(3) | 80,000 | 78,040 | ||||||
5,834,139 |
16
Shares/ Principal Amount | Value |
PAPER & FOREST PRODUCTS — 0.1% | ||||||||
Georgia-Pacific LLC, 5.40%, 11/1/20(3)(4) | $ | 270,000 | $ | 273,096 | ||||
International Paper Co., 9.375%, 5/15/19(3) | 110,000 | 143,679 | ||||||
416,775 | ||||||||
PHARMACEUTICALS — 0.3% | ||||||||
Abbott Laboratories, 5.30%, 5/27/40(3) | 100,000 | 100,961 | ||||||
AstraZeneca plc, 5.40%, 9/15/12(3) | 295,000 | 314,170 | ||||||
AstraZeneca plc, 5.90%, 9/15/17(3) | 200,000 | 231,796 | ||||||
Pfizer, Inc., 7.20%, 3/15/39(3) | 170,000 | 215,708 | ||||||
Sanofi-Aventis SA, 4.00%, 3/29/21(3) | 95,000 | 94,820 | ||||||
Watson Pharmaceuticals, Inc., 5.00%, 8/15/14(3) | 410,000 | 444,565 | ||||||
1,402,020 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.3% | ||||||||
AMB Property LP, 6.625%, 12/1/19(3) | 160,000 | 178,341 | ||||||
Developers Diversified Realty Corp., 5.375%, 10/15/12(3) | 70,000 | 72,643 | ||||||
Developers Diversified Realty Corp., 4.75%, 4/15/18(3) | 230,000 | 227,984 | ||||||
Digital Realty Trust LP, 5.875%, 2/1/20(3) | 75,000 | 79,501 | ||||||
HCP, Inc., 3.75%, 2/1/16(3) | 160,000 | 163,302 | ||||||
HCP, Inc., 5.375%, 2/1/21 | 215,000 | 224,076 | ||||||
Host Hotels & Resorts LP, 6.00%, 11/1/20(3) | 20,000 | 19,950 | ||||||
Kimco Realty Corp., 6.875%, 10/1/19(3) | 90,000 | 104,671 | ||||||
Simon Property Group LP, 5.75%, 12/1/15(3) | 140,000 | 156,881 | ||||||
Ventas Realty LP/Ventas Capital Corp., 3.125%, 11/30/15(3) | 195,000 | 193,192 | ||||||
1,420,541 | ||||||||
ROAD & RAIL(2) | ||||||||
Burlington Northern Santa Fe LLC, 5.05%, 3/1/41(3) | 60,000 | 56,268 | ||||||
SOFTWARE — 0.1% | ||||||||
Intuit, Inc., 5.75%, 3/15/17(3) | 254,000 | 283,069 | ||||||
Oracle Corp., 5.375%, 7/15/40(3)(4) | 445,000 | 446,925 | ||||||
729,994 | ||||||||
SPECIALTY RETAIL — 0.1% | ||||||||
Gap, Inc. (The), 5.95%, 4/12/21(3) | 110,000 | 111,519 | ||||||
Home Depot, Inc. (The), 5.40%, 3/1/16(3) | 170,000 | 190,260 | ||||||
Home Depot, Inc. (The), 5.95%, 4/1/41(3) | 100,000 | 103,052 | ||||||
Staples, Inc., 9.75%, 1/15/14(3) | 145,000 | 174,496 | ||||||
579,327 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS(2) | ||||||||
Hanesbrands, Inc., 6.375%, 12/15/20(3) | 140,000 | 139,300 | ||||||
TOBACCO(2) | ||||||||
Altria Group, Inc., 10.20%, 2/6/39(3) | 50,000 | 73,499 | ||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.2% | ||||||||
America Movil SAB de CV, 5.00%, 10/16/19(3) | 200,000 | 209,559 | ||||||
America Movil SAB de CV, 5.00%, 3/30/20(3) | 110,000 | 115,382 | ||||||
American Tower Corp., 4.625%, 4/1/15(3) | 230,000 | 242,584 | ||||||
Rogers Communications, Inc., 6.25%, 6/15/13(3) | 180,000 | 198,803 | ||||||
SBA Telecommunications, Inc., 8.25%, 8/15/19(3) | 120,000 | 133,050 | ||||||
Vodafone Group plc, 5.625%, 2/27/17(3) | 210,000 | 236,159 | ||||||
1,135,537 | ||||||||
TOTAL CORPORATE BONDS (Cost $52,538,598) | 55,686,237 | |||||||
U.S. Treasury Securities — 9.5% | ||||||||
U.S. Treasury Bonds, 5.50%, 8/15/28(3) | 70,000 | 82,480 | ||||||
U.S. Treasury Bonds, 5.25%, 2/15/29(3) | 1,239,000 | 1,420,011 | ||||||
U.S. Treasury Bonds, 5.375%, 2/15/31(3) | 2,680,000 | 3,119,689 | ||||||
U.S. Treasury Bonds, 4.375%, 11/15/39(3) | 2,970,000 | 2,960,255 | ||||||
U.S. Treasury Notes, 1.375%, 9/15/12(3) | 4,200,000 | 4,259,556 | ||||||
U.S. Treasury Notes, 1.375%, 10/15/12(3) | 4,500,000 | 4,565,214 | ||||||
U.S. Treasury Notes, 0.50%, 11/30/12(3) | 2,960,000 | 2,963,700 | ||||||
U.S. Treasury Notes, 1.375%, 1/15/13(3) | 1,500,000 | 1,522,911 | ||||||
U.S. Treasury Notes, 1.375%, 5/15/13(3) | 1,000,000 | 1,015,317 |
17
Shares/ Principal Amount | Value |
U.S. Treasury Notes, 1.25%, 3/15/14(3) | $ | 6,120,000 | $ | 6,170,227 | ||||
U.S. Treasury Notes, 2.375%, 8/31/14(3) | 2,500,000 | 2,597,070 | ||||||
U.S. Treasury Notes, 2.125%, 12/31/15(3) | 8,150,000 | 8,260,155 | ||||||
U.S. Treasury Notes, 2.00%, 4/30/16(3)(5) | 5,000,000 | 5,008,180 | ||||||
U.S. Treasury Notes, 2.625%, 4/30/18(3)(5) | 375,000 | 374,121 | ||||||
U.S. Treasury Notes, 2.625%, 8/15/20(3) | 1,871,000 | 1,780,520 | ||||||
U.S. Treasury Notes, 2.625%, 11/15/20(3) | 4,000,000 | 3,787,812 | ||||||
U.S. Treasury Notes, 3.625%, 2/15/21 | 1,000,000 | 1,028,125 | ||||||
TOTAL U.S. TREASURY SECURITIES (Cost $50,427,692) | 50,915,343 | |||||||
U.S. Government Agency Securities and Equivalents — 2.7% | ||||||||
FIXED-RATE U.S. GOVERNMENT AGENCY SECURITIES — 2.0% | ||||||||
FHLMC, 2.875%, 2/9/15(3) | 2,900,000 | 3,038,762 | ||||||
FNMA, 2.75%, 3/13/14(3) | 4,000,000 | 4,189,456 | ||||||
FNMA, 5.00%, 2/13/17(3) | 2,200,000 | 2,499,627 | ||||||
FNMA, 6.625%, 11/15/30(3) | 761,000 | 971,098 | ||||||
10,698,943 | ||||||||
GOVERNMENT-BACKED CORPORATE BONDS(7) — 0.7% | ||||||||
Ally Financial, Inc., 1.75%, 10/30/12(3) | 2,000,000 | 2,039,820 | ||||||
Citigroup Funding, Inc., 1.875%, 11/15/12(3) | 1,800,000 | 1,838,388 | ||||||
3,878,208 | ||||||||
TOTAL U.S. GOVERNMENT AGENCY SECURITIES AND EQUIVALENTS (Cost $13,914,172) | 14,577,151 | |||||||
Commercial Mortgage-Backed Securities(6) — 2.2% | ||||||||
Banc of America Commercial Mortgage, Inc., Series 2004-1, Class A4 SEQ, 4.76%, 11/10/39(3) | 400,000 | 425,458 | ||||||
Banc of America Commercial Mortgage, Inc., Series 2004-6, Class A3 SEQ, 4.51%, 12/10/42(3) | 800,000 | 809,178 | ||||||
Commercial Mortgage Pass-Through Certificates, Series 2004 LB3A, Class A4 SEQ, VRN, 5.23%, 5/2/11(3) | 600,000 | 615,989 | ||||||
Credit Suisse Mortgage Capital Certificates, Series 2007 TF2A, Class A1, VRN, 0.40%, 5/16/11, resets monthly off the 1-month LIBOR plus 0.18% with no caps(3)(4) | 448,386 | 440,343 | ||||||
GE Capital Commercial Mortgage Corp., Series 2005 C3, Class A5, VRN, 4.98%, 5/2/11(3) | 200,000 | 202,565 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005 GG3, Class A4, VRN, 4.80%, 5/2/11(3) | 480,000 | 515,486 | ||||||
GS Mortgage Securities Corp. II, Series 2004 GG2, Class A6 SEQ, VRN, 5.40%, 5/2/11(3) | 675,000 | 732,783 | ||||||
GS Mortgage Securities Corp. II, Series 2005 GG4, Class A4 SEQ, 4.76%, 7/10/39(3) | 375,000 | 397,189 | ||||||
GS Mortgage Securities Corp. II, Series 2005 GG4, Class A4A SEQ, 4.75%, 7/10/39(3) | 675,000 | 723,002 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004 C1, Class A4 SEQ, 4.57%, 1/15/31(3) | 600,000 | 636,146 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004 C2, Class A4 SEQ, 4.37%, 3/15/36(3) | 1,000,000 | 1,056,678 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004 C4, Class A4, VRN, 5.32%, 5/11/11(3) | 300,000 | 323,045 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004 C8, Class AJ, VRN, 4.86%, 5/11/11(3) | 125,000 | 130,522 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005 C2, Class A2 SEQ, 4.82%, 4/15/30(3) | 130,859 | 130,974 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005 C5, Class AM, VRN, 5.02%, 5/11/11(3) | 400,000 | 424,022 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005 C7, Class A4 SEQ, VRN, 5.20%, 5/11/11(3) | 225,000 | 244,736 |
18
Shares/ Principal Amount | Value |
LB-UBS Commercial Mortgage Trust, Series 2005 C7, Class AM SEQ, VRN, 5.26%, 5/11/11(3) | $ | 400,000 | $ | 427,699 | ||||
Merrill Lynch Floating Trust, Series 2006-1, Class A1, VRN, 0.29%, 5/16/11, resets monthly off the 1-month LIBOR plus 0.07% with no caps(3)(4) | 309,245 | 303,009 | ||||||
Morgan Stanley Capital I, Series 2001 T5, Class A4 SEQ, 6.39%, 10/15/35(3) | 612,471 | 622,024 | ||||||
Morgan Stanley Capital I, Series 2003 T11, Class A3 SEQ, 4.85%, 6/13/41(3) | 195,670 | 198,497 | ||||||
Morgan Stanley Capital I, Series 2005 HQ6, Class A2A SEQ, 4.88%, 8/13/42(3) | 161,039 | 162,810 | ||||||
PNC Mortgage Acceptance Corp., Series 2001 C1, Class A2 SEQ, 6.36%, 3/12/34(3) | 4,776 | 4,775 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2003 C3, Class A2 SEQ, 4.87%, 2/15/35(3) | 300,000 | 313,942 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2004 C11, Class A3 SEQ, 4.72%, 1/15/41(3) | 76,147 | 76,945 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2004 C15, Class A3 SEQ, 4.50%, 10/15/41(3) | 200,000 | 206,114 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005 C20, Class A5, VRN, 5.09%, 5/2/11(3) | 272,783 | 276,474 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005 C20, Class A6A, VRN, 5.11%, 5/2/11(3) | 1,000,000 | 1,037,365 | ||||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $11,327,973) | 11,437,770 | |||||||
Collateralized Mortgage Obligations(6) — 1.5% | ||||||||
PRIVATE SPONSOR COLLATERALIZED MORTGAGE OBLIGATIONS — 1.2% | ||||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 279,224 | 289,835 | ||||||
Banc of America Alternative Loan Trust, Series 2007-2, Class 2A4, 5.75%, 6/25/37(3) | 650,516 | 496,522 | ||||||
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7A1, 5.00%, 8/25/19(3) | 218,020 | 219,930 | ||||||
Chase Mortgage Finance Corp., Series 2006 S4, Class A3, 6.00%, 12/25/36(3) | 336,285 | 344,070 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 5.35%, 5/2/11(3) | 426,617 | 422,707 | ||||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2003 J13, Class 1A1 SEQ, 5.25%, 1/25/34(3) | 48,033 | 47,983 | ||||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35(3) | 270,514 | 269,813 | ||||||
Credit Suisse First Boston Mortgage Securities Corp., Series 2003 AR28, Class 2A1, VRN, 2.78%, 5/2/11(3) | 608,696 | 568,048 | ||||||
MASTR Asset Securitization Trust, Series 2003-10, Class 3A1, 5.50%, 11/25/33(3) | 374,962 | 396,385 | ||||||
PHHMC Mortgage Pass Through Certificates, Series 2007-6, Class A1, VRN, 6.18%, 5/2/11 | 408,439 | 428,341 | ||||||
Residential Funding Mortgage Securities I, Series 2006 S10, Class 2A1 SEQ, 5.50%, 10/25/21(3) | 351,401 | 354,872 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-1, Class A10, 5.50%, 2/25/34(3) | 402,470 | 425,227 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-4, Class A9, 5.50%, 5/25/34 | 229,408 | 241,712 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005 AR16, Class 4A6, VRN, 2.86%, 5/2/11(3) | 223,827 | 222,399 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-2, Class 1A1, SEQ, 5.50%, 4/25/35 | 338,582 | 344,807 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-17, Class 1A1, 5.50%, 1/25/36 | 428,466 | 422,350 |
19
Shares/ Principal Amount | Value |
Wells Fargo Mortgage-Backed Securities Trust, Series 2005 AR14, Class A1, VRN, 5.37%, 5/2/11(3) | $ | 204,506 | $ | 205,347 | ||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-10, Class A4 SEQ, 6.00%, 8/25/36 | 450,000 | 435,120 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007 AR10, Class 1A1, VRN, 6.18%, 5/2/11 | 302,657 | 305,058 | ||||||
6,440,526 | ||||||||
U.S. GOVERNMENT AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS — 0.3% | ||||||||
FHLMC, Series 77, Class H, 8.50%, 9/15/20(3) | 120,705 | 136,480 | ||||||
FHLMC, Series 2926, Class EW SEQ, 5.00%, 1/15/25(3) | 1,200,000 | 1,316,051 | ||||||
1,452,531 | ||||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $7,831,364) | 7,893,057 | |||||||
Municipal Securities — 1.1% | ||||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 7.83%, 2/15/41(3) | 60,000 | 71,222 | ||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 5.94%, 2/15/47(3) | 50,000 | 46,758 | ||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 7.50%, 2/15/50(3) | 75,000 | 80,923 | ||||||
Bay Area Toll Auth. Toll Bridge Rev., Series 2010 S1, (Building Bonds), 6.92%, 4/1/40(3) | 270,000 | 291,303 | ||||||
California Educational Facilities Auth. Rev., Series 2009 A, (University of Southern California), 5.00%, 10/1/39(3) | 280,000 | 282,668 | ||||||
California Educational Facilities Auth. Rev., Series 2009 B, (University of Southern California), 5.00%, 10/1/38(3) | 140,000 | 141,421 | ||||||
California GO, (Building Bonds), 7.30%, 10/1/39(3) | 110,000 | 121,793 | ||||||
California GO, (Building Bonds), 7.60%, 11/1/40(3) | 30,000 | 34,308 | ||||||
Georgia Municipal Electric Auth. Rev., Series 2010 J, (Building Bonds), 6.64%, 4/1/57(3) | 210,000 | 200,521 | ||||||
Illinois GO, 5.88%, 3/1/19(3) | 240,000 | 249,238 | ||||||
Illinois GO, (Taxable Pension), 5.10%, 6/1/33(3) | 300,000 | 252,393 | ||||||
Illinois GO, Series 2010-3, (Building Bonds), 6.725%, 4/1/35 | 110,000 | 110,318 | ||||||
Los Angeles Community College District GO, Series 2010 D, (Election of 2008), 6.68%, 8/1/36(3) | 200,000 | 200,458 | ||||||
Los Angeles Department of Water & Power Rev., (Building Bonds), 5.72%, 7/1/39(3) | 60,000 | 58,648 | ||||||
Metropolitan Atlanta Rapid Transit Auth. Rev., Series 2009 A, (Third Indenture), 5.00%, 7/1/39(3) | 360,000 | 360,572 | ||||||
Metropolitan Transportation Auth. Rev., Series 2010 C1, (Building Bonds), 6.69%, 11/15/40(3) | 105,000 | 110,852 | ||||||
Metropolitan Transportation Auth. Rev., Series 2010 E, (Building Bonds), 6.81%, 11/15/40(3) | 150,000 | 161,760 | ||||||
Missouri Highways & Transportation Commission Rev., (Building Bonds), 5.45%, 5/1/33(3) | 130,000 | 130,748 | ||||||
New Jersey State Turnpike Auth. Rev., Series 2009 F, (Building Bonds), 7.41%, 1/1/40(3) | 100,000 | 116,619 | ||||||
New Jersey State Turnpike Auth. Rev., Series 2010 A, (Building Bonds), 7.10%, 1/1/41(3) | 145,000 | 163,708 | ||||||
New York GO, Series 2010 F1, (Building Bonds), 6.27%, 12/1/37(3) | 185,000 | 199,628 | ||||||
New York Municipal Water Finance Auth. Rev., Series 2011 GG, (Second General Resolution), 5.00%, 6/15/43(3) | 400,000 | 397,128 | ||||||
Ohio Water Development Auth. Pollution Control Rev., Series 2010 B2, (Building Bonds), 4.88%, 12/1/34(3) | 110,000 | 106,725 |
20
Shares/ Principal Amount | Value |
Oregon State Department of Transportation Highway User Tax Rev., Series 2010 A, (Building Bonds), 5.83%, 11/15/34(3) | $ | 70,000 | $ | 74,019 | ||||
Port Seattle Rev., Series 2010 B, (Intermediate Lien), 5.00%, 6/1/40(3) | 210,000 | 201,600 | ||||||
Rutgers State University Rev., Series 2010 H, (Building Bonds), 5.67%, 5/1/40(3) | 205,000 | 209,305 | ||||||
Sacramento Municipal Utility District Electric Rev., Series 2010 W, (Building Bonds), 6.16%, 5/15/36(3) | 210,000 | 209,884 | ||||||
Salt River Agricultural Improvement & Power District Electric Rev., Series 2010 A, (Building Bonds), 4.84%, 1/1/41(3) | 135,000 | 124,787 | ||||||
Salt River Agricultural Improvement & Power District Rev., Series 2008 A, (Electric System Distribution), 5.00%, 1/1/38(3) | 65,000 | 65,638 | ||||||
Salt River Agricultural Improvement & Power District Rev., Series 2009 A, (Electric System Distribution), 5.00%, 1/1/39(3) | 85,000 | 85,884 | ||||||
San Francisco City & County Public Utilities Water Commission Rev., Series 2010 B, (Building Bonds), 6.00%, 11/1/40(3) | 220,000 | 223,676 | ||||||
Santa Clara Valley Transportation Auth. Sales Tax Rev., Series 2010 A, (Building Bonds), 5.88%, 4/1/32(3) | 170,000 | 167,795 | ||||||
Texas GO, (Building Bonds), 5.52%, 4/1/39(3) | 100,000 | 105,399 | ||||||
Triborough Bridge & Tunnel Auth. Rev., Series 2008 C, 5.00%, 11/15/38(3) | 210,000 | 209,838 | ||||||
University Regiments Medical Center Rev., (Building Bonds), 6.55%, 5/15/48(3) | 90,000 | 88,483 | ||||||
Washington GO, Series 2010 F, (Building Bonds), 5.14%, 8/1/40(3) | 170,000 | 167,457 | ||||||
TOTAL MUNICIPAL SECURITIES (Cost $5,705,917) | 5,823,477 | |||||||
Sovereign Governments and Agencies — 0.6% | ||||||||
BRAZIL — 0.2% | ||||||||
Brazilian Government International Bond, 5.875%, 1/15/19(3) | 690,000 | 778,320 | ||||||
Brazilian Government International Bond, 5.625%, 1/7/41(3) | 130,000 | 130,650 | ||||||
908,970 | ||||||||
CANADA — 0.1% | ||||||||
Hydro Quebec, 8.40%, 1/15/22(3) | 145,000 | 197,589 | ||||||
Province of Ontario Canada, 5.45%, 4/27/16(3) | 150,000 | 172,000 | ||||||
369,589 | ||||||||
GERMANY — 0.1% | ||||||||
KfW, 4.125%, 10/15/14(3) | 240,000 | 263,534 | ||||||
ITALY(2) | ||||||||
Republic of Italy, 3.125%, 1/26/15(3) | 220,000 | 224,978 | ||||||
MEXICO — 0.1% | ||||||||
United Mexican States, 5.625%, 1/15/17(3) | 90,000 | 100,800 | ||||||
United Mexican States, 5.95%, 3/19/19(3) | 420,000 | 473,970 | ||||||
United Mexican States, 5.125%, 1/15/20(3) | 130,000 | 138,060 | ||||||
United Mexican States, 6.05%, 1/11/40(3) | 120,000 | 125,100 | ||||||
837,930 | ||||||||
POLAND — 0.1% | ||||||||
Republic of Poland, 5.125%, 4/21/21(3) | 280,000 | 281,820 | ||||||
SOUTH KOREA(2) | ||||||||
Export-Import Bank of Korea, 3.75%, 10/20/16 | 160,000 | 160,548 | ||||||
TOTAL SOVEREIGN GOVERNMENTS & AGENCIES (Cost $2,920,752) | 3,047,369 | |||||||
Temporary Cash Investments — 1.1% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares(3) (Cost $6,016,840) | 6,016,840 | 6,016,840 | ||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $457,607,333) | 534,519,426 | |||||||
OTHER ASSETS AND LIABILITIES(2) | 120,614 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 534,640,040 |
21
Futures Contracts | ||||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Gain (Loss) | |
52 | U.S. Long Bond | June 2011 | $6,363,500 | $125,883 |
Contracts Sold | Expiration Date | Underlying Face Amount at Value | Unrealized Gain (Loss) | |
162 | U.S. Treasury 2-Year Notes | June 2011 | $35,498,250 | $(178,031) |
Swap Agreements | |||
Notional Amount | Description of Agreement | Premiums Paid (Received) | Value |
CREDIT DEFAULT – BUY PROTECTION | |||
$4,400,000 | Pay quarterly a fixed rate equal to 1.00% per annum multiplied by the notional amount and receive from Bank of America N.A. upon each default event of one of the issues of CDX North America Investment Grade 16 Index, par value of the proportional notional amount. Expires June 2016. | $(6,314) | $(31,039) |
Notes to Schedule of Investments
CDX = Credit Derivative Indexes
Equivalent = Security whose principal payments are backed by the full faith and credit of the United States
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
GNMA = Government National Mortgage Association
GO = General Obligation
LB-UBS = Lehman Brothers, Inc. — UBS AG
LIBOR = London Interbank Offered Rate
MASTR = Mortgage Asset Securitization Transactions, Inc.
resets = The frequency with which a security’s coupon changes, based on current market conditions or an underlying index. The more frequently a security resets, the less risk the investor is taking that the coupon will vary significantly from current market rates.
SEQ = Sequential Payer
VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is effective at the period end.
(1) | Non-income producing. |
(2) | Category is less than 0.05% of total net assets. |
(3) | Security, or a portion thereof, has been segregated for when-issued securities, futures contracts and/or swap agreements. At the period end, the aggregate value of securities pledged was $47,276,000. |
(4) | Security was purchased under Rule 144A of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of these securities at the period end was $3,576,857 which represented 0.7% of total net assets. |
(5) | When-issued security. |
(6) | Final maturity indicated, unless otherwise noted. |
(7) | The debt is guaranteed under the Federal Deposit Insurance Corporation’s (FDIC) Temporary Liquidity Guarantee Program and is backed by the full faith and credit of the United States. The expiration date of the FDIC’s guarantee is the earlier of the maturity date of the debt or December 31, 2012. |
See Notes to Financial Statements.
22
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $457,607,333) | $ | 534,519,426 | ||
Cash | 40,984 | |||
Receivable for investments sold | 5,653,823 | |||
Receivable for capital shares sold | 74,767 | |||
Receivable for variation margin on futures contracts | 13,000 | |||
Dividends and interest receivable | 1,887,874 | |||
542,189,874 | ||||
Liabilities | ||||
Payable for investments purchased | 6,782,586 | |||
Payable for capital shares redeemed | 344,477 | |||
Payable for variation margin on futures contracts | 5,063 | |||
Accrued management fees | 386,669 | |||
Swap agreements, at value (including net premiums paid (received) of $(6,314)) | 31,039 | |||
7,549,834 | ||||
Net Assets | $ | 534,640,040 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 479,134,040 | ||
Undistributed net investment income | 715,040 | |||
Accumulated net realized loss | (22,044,260 | ) | ||
Net unrealized appreciation | 76,835,220 | |||
$ | 534,640,040 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $523,960,745 | 32,012,534 | $16.37 |
Institutional Class, $0.01 Par Value | $10,679,295 | 652,394 | $16.37 |
See Notes to Financial Statements.
23
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,577) | $ | 3,006,173 | ||
Interest (net of foreign taxes withheld of $188) | 3,961,302 | |||
6,967,475 | ||||
Expenses: | ||||
Management fees | 2,284,516 | |||
Directors’ fees and expenses | 12,432 | |||
2,296,948 | ||||
Net investment income (loss) | 4,670,527 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 25,469,084 | |||
Futures contract transactions | (249,699 | ) | ||
Swap agreement transactions | 502 | |||
25,219,887 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 19,188,366 | |||
Futures contracts | 111,273 | |||
Swap agreements | (24,725 | ) | ||
19,274,914 | ||||
Net realized and unrealized gain (loss) | 44,494,801 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 49,165,328 |
See Notes to Financial Statements.
24
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 4,670,527 | $ | 8,968,987 | ||||
Net realized gain (loss) | 25,219,887 | 33,534,651 | ||||||
Change in net unrealized appreciation (depreciation) | 19,274,914 | 14,794,715 | ||||||
Net increase (decrease) in net assets resulting from operations | 49,165,328 | 57,298,353 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (4,751,511 | ) | (9,006,369 | ) | ||||
Institutional Class | (91,243 | ) | (137,117 | ) | ||||
Decrease in net assets from distributions | (4,842,754 | ) | (9,143,486 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (3,286,400 | ) | (19,983,287 | ) | ||||
Net increase (decrease) in net assets | 41,036,174 | 28,171,580 | ||||||
Net Assets | ||||||||
Beginning of period | 493,603,866 | 465,432,286 | ||||||
End of period | $ | 534,640,040 | $ | 493,603,866 | ||||
Undistributed net investment income | $ | 715,040 | $ | 887,267 |
See Notes to Financial Statements.
25
APRIL 30, 2011 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Balanced Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth and current income. The fund pursues its objectives by investing approximately 60% of its assets in equity securities and the remainder in bonds and other fixed-income securities.
The fund is authorized to issue the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing in greater than 60 days at the time of purchase are valued at the evaluated mean as provided by independent pricing services or at the mean of the most recent bid and asked prices as provided by investment dealers. Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation. Swap agreements are valued at an evaluated price as provided by independent pricing services or investment dealers.
26
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income less foreign taxes withheld, if any, is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums.
When-Issued and Forward Commitments — The fund may engage in securities transactions on a when-issued or forward commitment basis. In these transactions, the securities’ prices and yields are fixed on the date of the commitment. In a when-issued transaction, the payment and delivery are scheduled for a future date and during this period, securities are subject to market fluctuations. In a forward commitment transaction, the fund may sell a 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 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 executed simultaneously in what are known as “roll” transactions. The fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet the purchase price. The fund accounts for “roll” transactions as purchases and sales.
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. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
27
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with American Century Investment Management, Inc. (ACIM) (the investment advisor), under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 0.900% for the Investor Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 0.90% for the Investor Class and 0.70% for the Institutional Class.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the six months ended April 30, 2011 totaled $241,513,628, of which $87,918,157 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 totaled $239,391,811, of which $70,988,715 represented U.S. Treasury and Government Agency obligations.
28
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 250,000,000 | 250,000,000 | ||||||||||||||
Sold | 1,342,123 | $ | 21,018,941 | 2,377,402 | $ | 34,180,361 | ||||||||||
Issued in reinvestment of distributions | 297,082 | 4,620,186 | 607,236 | 8,759,310 | ||||||||||||
Redeemed | (2,057,938 | ) | (32,149,718 | ) | (4,356,884 | ) | (62,587,920 | ) | ||||||||
(418,733 | ) | (6,510,591 | ) | (1,372,246 | ) | (19,648,249 | ) | |||||||||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||
Sold | 894,703 | 13,911,223 | 55,917 | 817,168 | ||||||||||||
Issued in reinvestment of distributions | 5,856 | 91,243 | 9,507 | 137,117 | ||||||||||||
Redeemed | (683,423 | ) | (10,778,275 | ) | (90,124 | ) | (1,289,323 | ) | ||||||||
217,136 | 3,224,191 | (24,700 | ) | (335,038 | ) | |||||||||||
Net increase (decrease) | (201,597 | ) | $ | (3,286,400 | ) | (1,396,946 | ) | $ | (19,983,287 | ) |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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.
29
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 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 323,116,557 | — | — | ||||||||
U.S. Government Agency Mortgage-Backed Securities | — | $ | 56,005,625 | — | ||||||||
Corporate Bonds | — | 55,686,237 | — | |||||||||
U.S. Treasury Securities | — | 50,915,343 | — | |||||||||
U.S. Government Agency Securities and Equivalents | — | 14,577,151 | — | |||||||||
Commercial Mortgage-Backed Securities | — | 11,437,770 | — | |||||||||
Collateralized Mortgage Obligations | — | 7,893,057 | — | |||||||||
Municipal Securities | — | 5,823,477 | — | |||||||||
Sovereign Governments and Agencies | — | 3,047,369 | — | |||||||||
Temporary Cash Investments | 6,016,840 | — | — | |||||||||
Total Value of Investment Securities | $ | 329,133,397 | $ | 205,386,029 | — | |||||||
Other Financial Instruments | ||||||||||||
Futures Contracts | $ | (52,148 | ) | — | — | |||||||
Swap Agreements | — | $ | (24,725 | ) | — | |||||||
Total Unrealized Gain (Loss) on Other Financial Instruments | $ | (52,148 | ) | $ | (24,725 | ) | — |
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. 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. 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 began investing in credit risk derivative instruments in March 2011. The credit risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume since March 2011.
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component
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of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. During the period, the fund infrequently purchased equity price risk derivative instruments for temporary investment purposes.
Interest Rate Risk — The fund is subject to interest rate risk in the normal course of pursuing its investment objectives. The value of bonds generally declines as interest rates rise. A fund may enter into futures contracts based on a bond index or a specific underlying security. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the futures contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The interest rate risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
Value of Derivative Instruments as of April 30, 2011 | ||||||||||
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 | Swap agreements | — | Swap agreements | $ | 31,039 | |||||
Interest Rate Risk | Receivable for variation margin on futures contracts | $ | 13,000 | Payable for variation margin on futures contracts | 5,063 | |||||
$ | 13,000 | $ | 36,102 | |||||||
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2011 | ||||||||||
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 | $ | 502 | Change in net unrealized appreciation (depreciation) on swap agreements | $ | (24,725 | ) | |||
Equity Price Risk | Net realized gain (loss) on futures contract transactions | 95,768 | Change in net unrealized appreciation (depreciation) on futures contracts | — | ||||||
Interest Rate Risk | Net realized gain (loss) on futures contract transactions | (345,467 | ) | Change in net unrealized appreciation (depreciation) on futures contracts | 111,273 | |||||
$ | (249,197 | ) | $ | 86,548 |
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8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 464,231,002 | ||
Gross tax appreciation of investments | $ | 72,488,663 | ||
Gross tax depreciation of investments | (2,200,239 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 70,288,424 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(39,619,923), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 15.02 | $ | 13.58 | $ | 12.66 | $ | 17.47 | $ | 17.03 | $ | 16.52 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.14 | 0.27 | 0.28 | 0.37 | 0.35 | 0.35 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.36 | 1.44 | 0.93 | (3.69 | ) | 1.11 | 1.40 | |||||||||||||||||
Total From Investment Operations | 1.50 | 1.71 | 1.21 | (3.32 | ) | 1.46 | 1.75 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.15 | ) | (0.27 | ) | (0.29 | ) | (0.37 | ) | (0.36 | ) | (0.35 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (1.12 | ) | (0.66 | ) | (0.89 | ) | |||||||||||||||
Total Distributions | (0.15 | ) | (0.27 | ) | (0.29 | ) | (1.49 | ) | (1.02 | ) | (1.24 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 16.37 | $ | 15.02 | $ | 13.58 | $ | 12.66 | $ | 17.47 | $ | 17.03 | ||||||||||||
Total Return(3) | 10.03 | % | 12.70 | % | 9.81 | % | (20.52 | )% | 8.92 | % | 11.04 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.90 | %(4) | 0.91 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.83 | %(4) | 1.85 | % | 2.21 | % | 2.42 | % | 2.08 | % | 2.13 | % | ||||||||||||
Portfolio Turnover Rate | 48 | % | 69 | % | 110 | % | 153 | % | 161 | % | 197 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 524 | $ | 487 | $ | 459 | $ | 440 | $ | 636 | $ | 637 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 15.02 | $ | 13.59 | $ | 12.66 | $ | 17.47 | $ | 17.04 | $ | 16.53 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.15 | 0.29 | 0.30 | 0.39 | 0.39 | 0.38 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.36 | 1.44 | 0.94 | (3.68 | ) | 1.09 | 1.40 | |||||||||||||||||
Total From Investment Operations | 1.51 | 1.73 | 1.24 | (3.29 | ) | 1.48 | 1.78 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.16 | ) | (0.30 | ) | (0.31 | ) | (0.40 | ) | (0.39 | ) | (0.38 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (1.12 | ) | (0.66 | ) | (0.89 | ) | |||||||||||||||
Total Distributions | (0.16 | ) | (0.30 | ) | (0.31 | ) | (1.52 | ) | (1.05 | ) | (1.27 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 16.37 | $ | 15.02 | $ | 13.59 | $ | 12.66 | $ | 17.47 | $ | 17.04 | ||||||||||||
Total Return(3) | 10.14 | % | 12.84 | % | 10.11 | % | (20.37 | )% | 9.07 | % | 11.26 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.70 | %(4) | 0.71 | % | 0.70 | % | 0.70 | % | 0.70 | % | 0.70 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.03 | %(4) | 2.05 | % | 2.41 | % | 2.62 | % | 2.28 | % | 2.33 | % | ||||||||||||
Portfolio Turnover Rate | 48 | % | 69 | % | 110 | % | 153 | % | 161 | % | 197 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 10,679 | $ | 6,538 | $ | 6,249 | $ | 5,927 | $ | 1,338 | $ | 1,228 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71831 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Capital Value Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 19 |
Additional Information | 22 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class Return After-Tax on Distributions(2) Return After-Tax on Distributions and Sale of Shares(2) | ACTIX | 15.42%(3) 15.15%(3) 10.34%(3) | 13.25%(3) 12.98%(3) 8.92%(3) | -0.06% -0.52% -0.07% | 3.38% 2.98% 2.85% | 4.37% 3.94% 3.69% | 3/31/99 |
Russell 1000 Value Index | — | 17.29% | 15.24% | 1.40% | 4.31% | 4.52% | — |
Institutional Class Return After-Tax on Distributions(2) Return After-Tax on Distributions and Sale of Shares(2) | ACPIX | 15.45%(3) 15.14%(3) 10.39%(3) | 13.47%(3) 13.17%(3) 9.10%(3) | 0.15% -0.35% 0.10% | — — — | 3.76% 3.33% 3.19% | 3/1/02 |
A Class(4) No sales charge* With sales charge* Return After-Tax on Distributions(2) Return After-Tax on Distributions and Sale of Shares(2) | ACCVX | 15.15%(3) 8.51%(3) 8.30%(3) 5.78%(3) | 12.79%(3) 6.24%(3) 6.03%(3) 4.30%(3) | -0.31% -1.49% -1.92% -1.28% | — — — — | 5.28% 4.49% 4.14% 3.88% | 5/14/03 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | After-tax returns are calculated with sales charge, as applicable, using the historical highest individual federal marginal income tax rates, and do not reflect the impact of state and local taxes. Actual after-tax returns depend on an investor’s tax situation and may differ from those shown. After-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts. |
(3) | Returns would have been lower if a portion of the management fee had not been waived. |
(4) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | ||
Investor Class | Institutional Class | A Class |
1.11% | 0.91% | 1.36% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Chevron Corp. | 4.3% |
JPMorgan Chase & Co. | 3.6% |
AT&T, Inc. | 3.5% |
Johnson & Johnson | 3.5% |
General Electric Co. | 3.4% |
Pfizer, Inc. | 3.3% |
Wells Fargo & Co. | 3.0% |
Procter & Gamble Co. (The) | 2.9% |
Merck & Co., Inc. | 2.7% |
Exxon Mobil Corp. | 2.4% |
Top Five Industries | % of net assets |
Oil, Gas & Consumable Fuels | 11.4% |
Pharmaceuticals | 10.4% |
Diversified Financial Services | 7.8% |
Insurance | 7.6% |
Diversified Telecommunication Services | 6.0% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.1% |
Temporary Cash Investments | 0.9% |
Other Assets and Liabilities | —* |
*Category is less than 0.05% of total net assets.
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period(1) 11/1/10 – 4/30/11 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,154.20 | $5.39 | 1.01% |
Investor Class (before waiver) | $1,000 | $1,154.20(2) | $5.93 | 1.11% |
Institutional Class (after waiver) | $1,000 | $1,154.50 | $4.33 | 0.81% |
Institutional Class (before waiver) | $1,000 | $1,154.50(2) | $4.86 | 0.91% |
A Class (after waiver) | $1,000 | $1,151.50 | $6.72 | 1.26% |
A Class (before waiver) | $1,000 | $1,151.50(2) | $7.25 | 1.36% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.79 | $5.06 | 1.01% |
Investor Class (before waiver) | $1,000 | $1,019.29 | $5.56 | 1.11% |
Institutional Class (after waiver) | $1,000 | $1,020.78 | $4.06 | 0.81% |
Institutional Class (before waiver) | $1,000 | $1,020.28 | $4.56 | 0.91% |
A Class (after waiver) | $1,000 | $1,018.55 | $6.31 | 1.26% |
A Class (before waiver) | $1,000 | $1,018.05 | $6.80 | 1.36% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
(2) | Ending account value assumes the return earned after waiver and would have been lower if a portion of the management fee had not been waived. |
7
APRIL 30, 2011 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 99.1% | ||||||||
AEROSPACE & DEFENSE — 1.7% | ||||||||
Honeywell International, Inc. | 4,900 | $ | 300,027 | |||||
Lockheed Martin Corp. | 10,100 | 800,425 | ||||||
Northrop Grumman Corp. | 21,000 | 1,335,810 | ||||||
2,436,262 | ||||||||
AIRLINES — 0.3% | ||||||||
Southwest Airlines Co. | 32,300 | 379,525 | ||||||
BEVERAGES — 1.4% | ||||||||
Coca-Cola Co. (The) | 5,800 | 391,268 | ||||||
PepsiCo, Inc. | 24,700 | 1,701,583 | ||||||
2,092,851 | ||||||||
BIOTECHNOLOGY — 2.3% | ||||||||
Amgen, Inc.(1) | 41,400 | 2,353,590 | ||||||
Gilead Sciences, Inc.(1) | 23,800 | 924,392 | ||||||
3,277,982 | ||||||||
CAPITAL MARKETS — 3.9% | ||||||||
Ameriprise Financial, Inc. | 12,900 | 800,574 | ||||||
Bank of New York Mellon Corp. (The) | 47,200 | 1,366,912 | ||||||
Goldman Sachs Group, Inc. (The) | 15,800 | 2,385,958 | ||||||
Morgan Stanley | 43,400 | 1,134,910 | ||||||
5,688,354 | ||||||||
CHEMICALS — 0.6% | ||||||||
E.I. du Pont de Nemours & Co. | 16,700 | 948,393 | ||||||
COMMERCIAL BANKS — 5.6% | ||||||||
PNC Financial Services Group, Inc. | 27,500 | 1,714,350 | ||||||
U.S. Bancorp. | 80,100 | 2,068,182 | ||||||
Wells Fargo & Co. | 151,300 | 4,404,343 | ||||||
8,186,875 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 0.5% | ||||||||
Avery Dennison Corp. | 16,600 | 692,884 | ||||||
COMMUNICATIONS EQUIPMENT — 1.0% | ||||||||
Cisco Systems, Inc. | 79,100 | 1,388,996 | ||||||
COMPUTERS & PERIPHERALS — 1.2% | ||||||||
Hewlett-Packard Co. | 37,800 | 1,525,986 | ||||||
Western Digital Corp.(1) | 6,700 | 266,660 | ||||||
1,792,646 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 7.8% | ||||||||
Bank of America Corp. | 264,000 | 3,241,920 | ||||||
Citigroup, Inc.(1) | 627,000 | 2,877,930 | ||||||
JPMorgan Chase & Co. | 114,200 | 5,210,946 | ||||||
11,330,796 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 6.0% | ||||||||
AT&T, Inc. | 165,100 | 5,137,912 | ||||||
CenturyLink, Inc. | 18,200 | 742,196 | ||||||
Verizon Communications, Inc. | 75,800 | 2,863,724 | ||||||
8,743,832 | ||||||||
ELECTRIC UTILITIES — 2.0% | ||||||||
American Electric Power Co., Inc. | 36,500 | 1,331,520 | ||||||
Exelon Corp. | 14,200 | 598,530 | ||||||
PPL Corp. | 35,800 | 981,994 | ||||||
2,912,044 | ||||||||
ENERGY EQUIPMENT & SERVICES — 1.1% | ||||||||
Baker Hughes, Inc. | 4,200 | 325,122 | ||||||
National Oilwell Varco, Inc. | 6,100 | 467,809 | ||||||
Transocean Ltd.(1) | 11,300 | 822,075 | ||||||
1,615,006 | ||||||||
FOOD & STAPLES RETAILING — 5.0% | ||||||||
CVS Caremark Corp. | 48,600 | 1,761,264 | ||||||
Kroger Co. (The) | 59,200 | 1,439,152 | ||||||
SYSCO Corp. | 28,900 | 835,499 | ||||||
Walgreen Co. | 18,600 | 794,592 | ||||||
Wal-Mart Stores, Inc. | 44,200 | 2,430,116 | ||||||
7,260,623 | ||||||||
FOOD PRODUCTS — 1.5% | ||||||||
Kraft Foods, Inc., Class A | 62,600 | 2,102,108 | ||||||
Unilever NV New York Shares | 4,000 | 132,000 | ||||||
2,234,108 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 0.8% | ||||||||
Medtronic, Inc. | 28,700 | 1,198,225 | ||||||
HEALTH CARE PROVIDERS & SERVICES — 1.9% | ||||||||
Aetna, Inc. | 21,000 | 868,980 | ||||||
HCA Holdings, Inc.(1) | 4,000 | 131,200 | ||||||
Quest Diagnostics, Inc. | 11,800 | 665,284 | ||||||
WellPoint, Inc. | 14,500 | 1,113,455 | ||||||
2,778,919 | ||||||||
HOUSEHOLD PRODUCTS — 3.7% | ||||||||
Clorox Co. | 5,200 | 362,232 | ||||||
Energizer Holdings, Inc.(1) | 9,668 | 730,224 | ||||||
Procter & Gamble Co. (The) | 65,300 | 4,237,970 | ||||||
5,330,426 | ||||||||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS — 0.3% | ||||||||
NRG Energy, Inc.(1) | 17,100 | 413,820 |
8
Shares | Value |
INDUSTRIAL CONGLOMERATES — 4.0% | ||||||||
General Electric Co. | 242,200 | $ | 4,952,990 | |||||
Tyco International Ltd. | 17,200 | 838,328 | ||||||
5,791,318 | ||||||||
INSURANCE — 7.6% | ||||||||
Allstate Corp. (The) | 54,600 | 1,847,664 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 16,400 | 1,366,120 | ||||||
Chubb Corp. (The) | 29,700 | 1,936,143 | ||||||
Loews Corp. | 35,500 | 1,571,230 | ||||||
MetLife, Inc. | 11,600 | 542,764 | ||||||
Principal Financial Group, Inc. | 29,500 | 995,625 | ||||||
Torchmark Corp. | 12,200 | 816,424 | ||||||
Travelers Cos., Inc. (The) | 32,200 | 2,037,616 | ||||||
11,113,586 | ||||||||
IT SERVICES — 1.2% | ||||||||
Fiserv, Inc.(1) | 9,800 | 600,838 | ||||||
International Business Machines Corp. | 6,600 | 1,125,828 | ||||||
1,726,666 | ||||||||
MACHINERY — 1.3% | ||||||||
Dover Corp. | 8,900 | 605,556 | ||||||
Ingersoll-Rand plc | 24,800 | 1,252,400 | ||||||
1,857,956 | ||||||||
MEDIA — 5.4% | ||||||||
CBS Corp., Class B | 37,700 | 950,794 | ||||||
Comcast Corp., Class A | 105,300 | 2,763,072 | ||||||
Time Warner Cable, Inc. | 10,600 | 828,178 | ||||||
Time Warner, Inc. | 48,900 | 1,851,354 | ||||||
Viacom, Inc., Class B | 27,800 | 1,422,248 | ||||||
7,815,646 | ||||||||
METALS & MINING — 0.7% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 4,000 | 220,120 | ||||||
Nucor Corp. | 18,000 | 845,280 | ||||||
1,065,400 | ||||||||
MULTILINE RETAIL — 1.4% | ||||||||
Kohl’s Corp. | 20,600 | 1,085,826 | ||||||
Macy’s, Inc. | 41,500 | 992,265 | ||||||
2,078,091 | ||||||||
MULTI-UTILITIES — 0.9% | ||||||||
PG&E Corp. | 28,400 | 1,308,672 | ||||||
OIL, GAS & CONSUMABLE FUELS — 11.4% | ||||||||
Apache Corp. | 12,400 | 1,653,788 | ||||||
Chevron Corp. | 56,600 | 6,194,304 | ||||||
ConocoPhillips | 33,700 | 2,659,941 | ||||||
Exxon Mobil Corp. | 39,000 | 3,432,000 | ||||||
Occidental Petroleum Corp. | 9,500 | 1,085,755 | ||||||
Total SA ADR | 14,400 | 924,912 | ||||||
Valero Energy Corp. | 20,500 | 580,150 | ||||||
16,530,850 | ||||||||
PAPER & FOREST PRODUCTS — 0.5% | ||||||||
International Paper Co. | 23,500 | 725,680 | ||||||
PHARMACEUTICALS — 10.4% | ||||||||
Abbott Laboratories | 26,100 | 1,358,244 | ||||||
Johnson & Johnson | 77,500 | 5,093,300 | ||||||
Merck & Co., Inc. | 109,000 | 3,918,550 | ||||||
Pfizer, Inc. | 229,600 | 4,812,416 | ||||||
15,182,510 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.6% | ||||||||
Applied Materials, Inc. | 31,900 | 500,511 | ||||||
Intel Corp. | 63,900 | 1,481,841 | ||||||
Marvell Technology Group Ltd.(1) | 26,500 | 408,895 | ||||||
2,391,247 | ||||||||
SOFTWARE — 2.8% | ||||||||
Activision Blizzard, Inc. | 56,200 | 640,118 | ||||||
Microsoft Corp. | 99,200 | 2,581,184 | ||||||
Oracle Corp. | 24,200 | 872,410 | ||||||
4,093,712 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 0.4% | ||||||||
VF Corp. | 5,500 | 553,080 | ||||||
TOBACCO — 0.9% | ||||||||
Altria Group, Inc. | 47,700 | 1,280,268 | ||||||
TOTAL COMMON STOCKS (Cost $108,319,874) | 144,217,249 | |||||||
Temporary Cash Investments — 0.9% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 50,637 | 50,637 | ||||||
Repurchase Agreement, Goldman Sachs Group, Inc., (collateralized by various U.S. Treasury obligations, 6.750%-7.625%, 11/15/22-8/15/26, valued at $1,327,696), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $1,300,001) | 1,300,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,350,637) | 1,350,637 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $109,670,511) | 145,567,886 | |||||||
OTHER ASSETS AND LIABILITIES(2) | 2,525 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 145,570,411 |
9
Notes to Schedule of Investments
ADR = American Depositary Receipt
(1) | Non-income producing. |
(2) | Category is less than 0.05% of total net assets. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $109,670,511) | $ | 145,567,886 | ||
Cash | 28,950 | |||
Receivable for investments sold | 427,361 | |||
Receivable for capital shares sold | 56,488 | |||
Dividends and interest receivable | 208,784 | |||
146,289,469 | ||||
Liabilities | ||||
Payable for investments purchased | 358,592 | |||
Payable for capital shares redeemed | 241,768 | |||
Accrued management fees | 117,803 | |||
Distribution and service fees payable | 895 | |||
719,058 | ||||
Net Assets | $ | 145,570,411 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 133,071,019 | ||
Undistributed net investment income | 624,116 | |||
Accumulated net realized loss | (24,022,099 | ) | ||
Net unrealized appreciation | 35,897,375 | |||
$ | 145,570,411 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $137,225,568 | 21,091,727 | $6.51 |
Institutional Class, $0.01 Par Value | $3,919,024 | 602,146 | $6.51 |
A Class, $0.01 Par Value | $4,425,819 | 680,929 | $6.50* |
*Maximum offering price $6.90 (net asset value divided by 0.9425)
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends | $ | 1,731,069 | ||
Interest | 232 | |||
1,731,301 | ||||
Expenses: | ||||
Management fees | 789,768 | |||
Distribution and service fees — A Class | 5,291 | |||
Directors’ fees and expenses | 3,651 | |||
798,710 | ||||
Fees waived | (72,167 | ) | ||
726,543 | ||||
Net investment income (loss) | 1,004,758 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 8,241,327 | |||
Change in net unrealized appreciation (depreciation) on investments | 11,546,077 | |||
Net realized and unrealized gain (loss) | 19,787,404 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 20,792,162 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 1,004,758 | $ | 2,559,390 | ||||
Net realized gain (loss) | 8,241,327 | 1,237,403 | ||||||
Change in net unrealized appreciation (depreciation) | 11,546,077 | 11,294,260 | ||||||
Net increase (decrease) in net assets resulting from operations | 20,792,162 | 15,091,053 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (2,149,583 | ) | (2,997,083 | ) | ||||
Institutional Class | (71,311 | ) | (160,186 | ) | ||||
A Class | (56,838 | ) | (74,678 | ) | ||||
Decrease in net assets from distributions | (2,277,732 | ) | (3,231,947 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (18,091,392 | ) | (38,059,437 | ) | ||||
Net increase (decrease) in net assets | 423,038 | (26,200,331 | ) | |||||
Net Assets | ||||||||
Beginning of period | 145,147,373 | 171,347,704 | ||||||
End of period | $ | 145,570,411 | $ | 145,147,373 | ||||
Undistributed net investment income | $ | 624,116 | $ | 1,897,090 |
See Notes to Financial Statements.
13
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Capital Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in common stocks of medium to large companies that management believes to be undervalued at the time of purchase. The fund also seeks to minimize the impact of federal income taxes on shareholder returns by attempting to minimize taxable distributions to shareholders.
The fund is authorized to issue the Investor Class, the Institutional Class and the A Class (formerly Advisor Class). The A Class may incur an initial sales charge. The A Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost.
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited
14
to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
15
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.90% to 1.10% for the Investor Class and A Class. The Institutional Class is 0.20% less at each point within the range. During the six months ended April 30, 2011, the investment advisor voluntarily agreed to waive 0.10% of its management fee. The investment advisor expects the fee waiver to continue through July 31, 2011, and cannot terminate it without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2011 was $68,017, $2,033 and $2,117 for the Investor Class, Institutional Class and A Class, respectively. The effective annual management fee before waiver for each class for the six months ended April 30, 2011 was 1.10% for the Investor Class and A Class and 0.90% for the Institutional Class. The effective annual management fee after waiver for each class for the six months ended April 30, 2011 was 1.00% for the Investor Class and A Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a Master Distribution and Individual Shareholder Services Plan for the A Class, pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The fees are computed and accrued daily based on A Class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $16,977,340 and $36,861,569, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 1,018,769 | $ | 6,235,843 | 1,955,169 | $ | 10,850,916 | ||||||||||
Issued in reinvestment of distributions | 325,518 | 1,927,066 | 451,737 | 2,507,145 | ||||||||||||
Redeemed | (4,174,878 | ) | (25,417,407 | ) | (8,285,413 | ) | (45,868,497 | ) | ||||||||
(2,830,591 | ) | (17,254,498 | ) | (5,878,507 | ) | (32,510,436 | ) | |||||||||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||
Sold | 177,260 | 1,079,360 | 390,590 | 2,170,864 | ||||||||||||
Issued in reinvestment of distributions | 7,940 | 47,007 | 8,418 | 46,637 | ||||||||||||
Redeemed | (276,956 | ) | (1,705,189 | ) | (1,214,410 | ) | (6,689,788 | ) | ||||||||
(91,756 | ) | (578,822 | ) | (815,402 | ) | (4,472,287 | ) | |||||||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 75,470 | 463,963 | 116,151 | 650,738 | ||||||||||||
Issued in reinvestment of distributions | 9,570 | 56,655 | 13,441 | 74,594 | ||||||||||||
Redeemed | (126,785 | ) | (778,690 | ) | (327,159 | ) | (1,802,046 | ) | ||||||||
(41,745 | ) | (258,072 | ) | (197,567 | ) | (1,076,714 | ) | |||||||||
Net increase (decrease) | (2,964,092 | ) | $ | (18,091,392 | ) | (6,891,476 | ) | $ | (38,059,437 | ) |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 144,217,249 | — | — | ||||||||
Temporary Cash Investments | 50,637 | $ | 1,300,000 | — | ||||||||
Total Value of Investment Securities | $ | 144,267,886 | $ | 1,300,000 | — |
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7. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 111,993,288 | ||
Gross tax appreciation of investments | $ | 37,142,810 | ||
Gross tax depreciation of investments | (3,568,212 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 33,574,598 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(30,135,109), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(5,984,250) and $(24,150,859) expire in 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.73 | $ | 5.32 | $ | 5.17 | $ | 8.78 | $ | 8.23 | $ | 7.15 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.09 | 0.11 | 0.14 | 0.13 | 0.12 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.83 | 0.42 | 0.21 | (3.28 | ) | 0.65 | 1.14 | |||||||||||||||||
Total From Investment Operations | 0.87 | 0.51 | 0.32 | (3.14 | ) | 0.78 | 1.26 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.09 | ) | (0.10 | ) | (0.17 | ) | (0.13 | ) | (0.12 | ) | (0.10 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.34 | ) | (0.11 | ) | (0.08 | ) | |||||||||||||||
Total Distributions | (0.09 | ) | (0.10 | ) | (0.17 | ) | (0.47 | ) | (0.23 | ) | (0.18 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 6.51 | $ | 5.73 | $ | 5.32 | $ | 5.17 | $ | 8.78 | $ | 8.23 | ||||||||||||
Total Return(3) | 15.42 | % | 9.69 | % | 6.85 | % | (37.52 | )% | 9.66 | % | 18.03 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(4) | 1.09 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | ||||||||||||
Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) | 1.11 | %(4) | 1.11 | % | 1.10 | % | 1.10 | % | 1.10 | % | 1.10 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.39 | %(4) | 1.56 | % | 2.33 | % | 1.98 | % | 1.52 | % | 1.55 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) | 1.29 | %(4) | 1.54 | % | 2.33 | % | 1.98 | % | 1.52 | % | 1.55 | % | ||||||||||||
Portfolio Turnover Rate | 12 | % | 27 | % | 19 | % | 26 | % | 15 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 137,226 | $ | 137,037 | $ | 158,431 | $ | 185,569 | $ | 461,413 | $ | 466,803 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.74 | $ | 5.32 | $ | 5.17 | $ | 8.79 | $ | 8.24 | $ | 7.16 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.05 | 0.10 | 0.12 | 0.15 | 0.15 | 0.13 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.83 | 0.43 | 0.21 | (3.28 | ) | 0.65 | 1.15 | |||||||||||||||||
Total From Investment Operations | 0.88 | 0.53 | 0.33 | (3.13 | ) | 0.80 | 1.28 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.11 | ) | (0.11 | ) | (0.18 | ) | (0.15 | ) | (0.14 | ) | (0.12 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.34 | ) | (0.11 | ) | (0.08 | ) | |||||||||||||||
Total Distributions | (0.11 | ) | (0.11 | ) | (0.18 | ) | (0.49 | ) | (0.25 | ) | (0.20 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 6.51 | $ | 5.74 | $ | 5.32 | $ | 5.17 | $ | 8.79 | $ | 8.24 | ||||||||||||
Total Return(3) | 15.45 | % | 10.11 | % | 7.07 | % | (37.46 | )% | 9.88 | % | 18.24 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(4) | 0.89 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) | 0.91 | %(4) | 0.91 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.59 | %(4) | 1.76 | % | 2.53 | % | 2.18 | % | 1.72 | % | 1.75 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) | 1.49 | %(4) | 1.74 | % | 2.53 | % | 2.18 | % | 1.72 | % | 1.75 | % | ||||||||||||
Portfolio Turnover Rate | 12 | % | 27 | % | 19 | % | 26 | % | 15 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 3,919 | $ | 3,980 | $ | 8,035 | $ | 12,030 | $ | 28,077 | $ | 31,141 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
20
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.72 | $ | 5.30 | $ | 5.15 | $ | 8.76 | $ | 8.21 | $ | 7.14 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.03 | 0.07 | 0.10 | 0.12 | 0.11 | 0.10 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.83 | 0.44 | 0.21 | (3.28 | ) | 0.65 | 1.13 | |||||||||||||||||
Total From Investment Operations | 0.86 | 0.51 | 0.31 | (3.16 | ) | 0.76 | 1.23 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.09 | ) | (0.16 | ) | (0.11 | ) | (0.10 | ) | (0.08 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.34 | ) | (0.11 | ) | (0.08 | ) | |||||||||||||||
Total Distributions | (0.08 | ) | (0.09 | ) | (0.16 | ) | (0.45 | ) | (0.21 | ) | (0.16 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 6.50 | $ | 5.72 | $ | 5.30 | $ | 5.15 | $ | 8.76 | $ | 8.21 | ||||||||||||
Total Return(4) | 15.15 | % | 9.64 | % | 6.59 | % | (37.78 | )% | 9.40 | % | 17.62 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(5) | 1.34 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | ||||||||||||
Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) | 1.36 | %(5) | 1.36 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.35 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.14 | %(5) | 1.31 | % | 2.08 | % | 1.73 | % | 1.27 | % | 1.30 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) | 1.04 | %(5) | 1.29 | % | 2.08 | % | 1.73 | % | 1.27 | % | 1.30 | % | ||||||||||||
Portfolio Turnover Rate | 12 | % | 27 | % | 19 | % | 26 | % | 15 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 4,426 | $ | 4,130 | $ | 4,881 | $ | 7,004 | $ | 16,059 | $ | 16,973 |
(1) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(2) | Six months ended April 30, 2011 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
See Notes to Financial Statements.
21
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
22
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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 Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71836 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Focused Growth Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 10 |
Statement of Operations | 11 |
Statement of Changes in Net Assets | 12 |
Notes to Financial Statements | 13 |
Financial Highlights | 19 |
Additional Information | 25 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Investor Class | AFSIX | 15.25% | 17.21% | 4.07% | 5.34% | 2/28/05 |
Russell 1000 Growth Index | — | 16.96% | 20.87% | 5.06% | 5.85% | — |
Institutional Class | AFGNX | 15.38% | 17.46% | — | 1.94% | 9/28/07 |
A Class No sales charge* With sales charge* | AFGAX | 15.19% 8.56% | 16.92% 10.20% | — — | 1.50% -0.17% | 9/28/07 |
B Class No sales charge* With sales charge* | AFGBX | 14.63% 9.63% | 16.01% 12.01% | — — | 0.71% -0.12% | 9/28/07 |
C Class No sales charge* With sales charge* | AFGCX | 14.73% 13.73% | 16.11% 16.11% | — — | 0.74% 0.74% | 9/28/07 |
R Class | AFGRX | 15.05% | 16.66% | — | 1.23% | 9/28/07 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.02% | 0.82% | 1.27% | 2.02% | 2.02% | 1.52% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
APRIL 30, 2011
Top Ten Holdings | % of net assets |
Apple, Inc. | 4.7% |
Schlumberger Ltd. | 4.1% |
Coca-Cola Co. (The) | 3.9% |
EMC Corp. | 3.6% |
Accenture plc, Class A | 3.3% |
Oracle Corp. | 3.1% |
Express Scripts, Inc. | 2.9% |
PPG Industries, Inc. | 2.7% |
Novo Nordisk A/S B Shares | 2.6% |
BorgWarner, Inc. | 2.6% |
Top Five Industries | % of net assets |
Computers & Peripherals | 9.9% |
Software | 6.6% |
Aerospace & Defense | 5.5% |
Machinery | 5.2% |
Pharmaceuticals | 4.6% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 90.4% |
Foreign Common Stocks* | 7.6% |
Total Common Stocks | 98.0% |
Temporary Cash Investments | 2.1% |
Other Assets and Liabilities | (0.1)% |
* | Includes depositary shares, dual listed securities and foreign ordinary shares. |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 - 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,152.50 | $5.39 | 1.01% |
Institutional Class | $1,000 | $1,153.80 | $4.33 | 0.81% |
A Class | $1,000 | $1,151.90 | $6.72 | 1.26% |
B Class | $1,000 | $1,146.30 | $10.70 | 2.01% |
C Class | $1,000 | $1,147.30 | $10.70 | 2.01% |
R Class | $1,000 | $1,150.50 | $8.05 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.79 | $5.06 | 1.01% |
Institutional Class | $1,000 | $1,020.78 | $4.06 | 0.81% |
A Class | $1,000 | $1,018.55 | $6.31 | 1.26% |
B Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
C Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
R Class | $1,000 | $1,017.31 | $7.55 | 1.51% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 98.0% | ||||||||
AEROSPACE & DEFENSE — 5.5% | ||||||||
Honeywell International, Inc. | 3,367 | $ | 206,162 | |||||
Rockwell Collins, Inc. | 7,124 | 449,524 | ||||||
Textron, Inc. | 20,480 | 534,528 | ||||||
1,190,214 | ||||||||
AIR FREIGHT & LOGISTICS — 2.0% | ||||||||
United Parcel Service, Inc., Class B | 5,618 | 421,181 | ||||||
AUTO COMPONENTS — 2.6% | ||||||||
BorgWarner, Inc.(1) | 7,366 | 568,950 | ||||||
AUTOMOBILES — 1.0% | ||||||||
Harley-Davidson, Inc. | 6,015 | 224,119 | ||||||
BEVERAGES — 3.9% | ||||||||
Coca-Cola Co. (The) | 12,354 | 833,401 | ||||||
BIOTECHNOLOGY — 2.3% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 432 | 41,856 | ||||||
Amgen, Inc.(1) | 8,142 | 462,873 | ||||||
504,729 | ||||||||
CAPITAL MARKETS — 0.4% | ||||||||
BlackRock, Inc. | 421 | 82,491 | ||||||
CHEMICALS — 2.7% | ||||||||
PPG Industries, Inc. | 6,106 | 578,055 | ||||||
COMMUNICATIONS EQUIPMENT — 0.5% | ||||||||
QUALCOMM, Inc. | 2,056 | 116,863 | ||||||
COMPUTERS & PERIPHERALS — 9.9% | ||||||||
Apple, Inc.(1) | 2,908 | 1,012,653 | ||||||
EMC Corp.(1) | 27,279 | 773,087 | ||||||
NetApp, Inc.(1) | 6,612 | 343,691 | ||||||
2,129,431 | ||||||||
CONSUMER FINANCE — 2.0% | ||||||||
American Express Co. | 8,749 | 429,401 | ||||||
DIVERSIFIED — 2.2% | ||||||||
iShares Russell 1000 Growth Index Fund | 7,452 | 465,377 | ||||||
ELECTRICAL EQUIPMENT — 2.6% | ||||||||
Rockwell Automation, Inc. | 6,347 | 553,014 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 1.7% | ||||||||
Jabil Circuit, Inc. | 18,199 | 361,068 | ||||||
ENERGY EQUIPMENT & SERVICES — 4.1% | ||||||||
Schlumberger Ltd. | 9,748 | 874,883 | ||||||
FOOD PRODUCTS — 1.4% | ||||||||
General Mills, Inc. | 2,913 | 112,383 | ||||||
Kellogg Co. | 3,392 | 194,260 | ||||||
306,643 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 1.7% | ||||||||
Covidien plc | 6,436 | 358,421 | ||||||
HEALTH CARE PROVIDERS & SERVICES — 2.9% | ||||||||
Express Scripts, Inc.(1) | 10,809 | 613,303 | ||||||
HOTELS, RESTAURANTS & LEISURE — 1.9% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 259 | 69,098 | ||||||
Las Vegas Sands Corp.(1) | 600 | 28,206 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 5,389 | 321,023 | ||||||
418,327 | ||||||||
HOUSEHOLD DURABLES — 1.5% | ||||||||
Whirlpool Corp. | 3,654 | 314,902 | ||||||
HOUSEHOLD PRODUCTS — 0.9% | ||||||||
Procter & Gamble Co. (The) | 3,014 | 195,609 | ||||||
INSURANCE — 1.4% | ||||||||
Aflac, Inc. | 5,520 | 310,169 | ||||||
INTERNET SOFTWARE & SERVICES — 0.4% | ||||||||
Google, Inc., Class A(1) | 162 | 88,144 | ||||||
IT SERVICES — 3.3% | ||||||||
Accenture plc, Class A | 12,295 | 702,413 | ||||||
MACHINERY — 5.2% | ||||||||
Eaton Corp. | 10,548 | 564,634 | ||||||
Illinois Tool Works, Inc. | 9,675 | 565,117 | ||||||
1,129,751 | ||||||||
MEDIA — 2.1% | ||||||||
Scripps Networks Interactive, Inc., Class A | 8,006 | 411,668 | ||||||
Walt Disney Co. (The) | 1,106 | 47,669 | ||||||
459,337 | ||||||||
METALS & MINING — 3.2% | ||||||||
Cliffs Natural Resources, Inc. | 3,514 | 329,332 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 4,045 | 222,596 | ||||||
Newmont Mining Corp. | 2,180 | 127,770 | ||||||
679,698 | ||||||||
MULTILINE RETAIL — 2.8% | ||||||||
Kohl’s Corp. | 5,317 | 280,259 | ||||||
Target Corp. | 6,655 | 326,761 | ||||||
607,020 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 4.0% | ||||||||
Cimarex Energy Co. | 3,740 | 413,607 | ||||||
ConocoPhillips | 401 | 31,651 | ||||||
Occidental Petroleum Corp. | 3,556 | 406,415 | ||||||
851,673 | ||||||||
PHARMACEUTICALS — 4.6% | ||||||||
Abbott Laboratories | 7,870 | 409,555 | ||||||
Novo Nordisk A/S B Shares | 4,511 | 570,247 | ||||||
979,802 |
8
Shares | Value | |||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 0.1% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 1,066 | $ | 28,473 | |||||
ROAD & RAIL — 1.5% | ||||||||
Union Pacific Corp. | 3,190 | 330,069 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 4.4% | ||||||||
Broadcom Corp., Class A(1) | 9,873 | 347,332 | ||||||
Linear Technology Corp. | 14,558 | 506,618 | ||||||
RF Micro Devices, Inc.(1) | 13,110 | 87,313 | ||||||
941,263 | ||||||||
SOFTWARE — 6.6% | ||||||||
Intuit, Inc.(1) | 5,243 | 291,301 | ||||||
Microsoft Corp. | 17,560 | 456,911 | ||||||
Oracle Corp. | 18,751 | 675,974 | ||||||
1,424,186 | ||||||||
SPECIALTY RETAIL — 4.1% | ||||||||
Home Depot, Inc. (The) | 14,768 | 548,484 | ||||||
Limited Brands, Inc. | 5,044 | 207,611 | ||||||
OfficeMax, Inc.(1) | 4,972 | 49,521 | ||||||
Williams-Sonoma, Inc. | 1,606 | 69,716 | ||||||
875,332 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.6% | ||||||||
Crown Castle International Corp.(1) | 3,250 | 139,295 | ||||||
TOTAL COMMON STOCKS (Cost $16,287,536) | 21,087,007 | |||||||
Temporary Cash Investments — 2.1% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 65,604 | $ | 65,604 | |||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 1.375%, 5/15/13, valued at $408,000), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $400,000) | 400,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $465,604) | 465,604 | |||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $16,753,140) | 21,552,611 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (27,608 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 21,525,003 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
1,907,364 | DKK for USD | UBS AG | 5/31/11 | $378,582 | $(4,281) |
(Value on Settlement Date $374,301) |
Notes to Schedule of Investments
DKK = Danish Krone
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
9
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $16,753,140) | $ | 21,552,611 | ||
Receivable for capital shares sold | 2,312 | |||
Dividends and interest receivable | 18,621 | |||
21,573,544 | ||||
Liabilities | ||||
Payable for capital shares redeemed | 25,697 | |||
Unrealized loss on forward foreign currency exchange contracts | 4,281 | |||
Accrued management fees | 17,413 | |||
Distribution and service fees payable | 1,150 | |||
48,541 | ||||
Net Assets | $ | 21,525,003 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 18,604,899 | ||
Undistributed net investment income | 20,673 | |||
Accumulated net realized loss | (1,895,814 | ) | ||
Net unrealized appreciation | 4,795,245 | |||
$ | 21,525,003 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $17,551,062 | 1,504,597 | $11.66 |
Institutional Class, $0.01 Par Value | $26,788 | 2,299 | $11.65 |
A Class, $0.01 Par Value | $3,034,937 | 260,257 | $11.66* |
B Class, $0.01 Par Value | $54,529 | 4,731 | $11.53 |
C Class, $0.01 Par Value | $407,833 | 35,379 | $11.53 |
R Class, $0.01 Par Value | $449,854 | 38,638 | $11.64 |
*Maximum offering price $12.37 (net asset value divided by 0.9425)
See Notes to Financial Statements.
10
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,269) | $ | 130,662 | ||
Interest | 192 | |||
130,854 | ||||
Expenses: | ||||
Management fees | 88,966 | |||
Distribution and service fees: | ||||
A Class | 1,951 | |||
B Class | 263 | |||
C Class | 1,310 | |||
R Class | 1,041 | |||
Directors’ fees and expenses | 490 | |||
94,021 | ||||
Net investment income (loss) | 36,833 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 176,623 | |||
Foreign currency transactions | (24,518 | ) | ||
152,105 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 2,113,277 | |||
Translation of assets and liabilities in foreign currencies | (3,702 | ) | ||
2,109,575 | ||||
Net realized and unrealized gain (loss) | 2,261,680 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,298,513 |
See Notes to Financial Statements.
11
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 36,833 | $ | 47,814 | ||||
Net realized gain (loss) | 152,105 | 505,068 | ||||||
Change in net unrealized appreciation (depreciation) | 2,109,575 | 1,440,996 | ||||||
Net increase (decrease) in net assets resulting from operations | 2,298,513 | 1,993,878 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (72,511 | ) | (5,153 | ) | ||||
Institutional Class | (180 | ) | (52 | ) | ||||
A Class | (1,550 | ) | — | |||||
R Class | (89 | ) | — | |||||
Decrease in net assets from distributions | (74,330 | ) | (5,205 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 5,828,338 | (1,608,018 | ) | |||||
Net increase (decrease) in net assets | 8,052,521 | 380,655 | ||||||
Net Assets | ||||||||
Beginning of period | 13,472,482 | 13,091,827 | ||||||
End of period | $ | 21,525,003 | $ | 13,472,482 | ||||
Undistributed net investment income | $ | 20,673 | $ | 58,170 |
See Notes to Financial Statements.
12
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Focused Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by purchasing stocks of larger-sized companies that management believes will increase in value over time.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
13
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Exchange-Traded Funds — The fund may invest in exchange-traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although a lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
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. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
14
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
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
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 1.00% for the Investor Class, A Class, B Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
15
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $9,378,447 and $3,794,586, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 411,516 | $ | 4,588,838 | 288,170 | $ | 2,753,240 | ||||||||||
Issued in reinvestment of distributions | 6,447 | 70,211 | 526 | 5,016 | ||||||||||||
Redeemed | (165,970 | ) | (1,840,059 | ) | (472,403 | ) | (4,453,387 | ) | ||||||||
251,993 | 2,818,990 | (183,707 | ) | (1,695,131 | ) | |||||||||||
Institutional Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Issued in reinvestment of distributions | 17 | 180 | 5 | 52 | ||||||||||||
A Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 214,943 | 2,436,072 | 16,805 | 159,354 | ||||||||||||
Issued in reinvestment of distributions | 141 | 1,540 | — | — | ||||||||||||
Redeemed | (4,211 | ) | (47,126 | ) | (10,141 | ) | (97,426 | ) | ||||||||
210,873 | 2,390,486 | 6,664 | 61,928 | |||||||||||||
B Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Redeemed | (624 | ) | (6,470 | ) | (94 | ) | (854 | ) | ||||||||
C Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 29,594 | 335,711 | 6,726 | 62,733 | ||||||||||||
Redeemed | (7,275 | ) | (80,420 | ) | (4,044 | ) | (37,545 | ) | ||||||||
22,319 | 255,291 | 2,682 | 25,188 | |||||||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 36,303 | 369,772 | 98 | 938 | ||||||||||||
Issued in reinvestment of distributions | 8 | 89 | — | — | ||||||||||||
Redeemed | — | — | (14 | ) | (139 | ) | ||||||||||
36,311 | 369,861 | 84 | 799 | |||||||||||||
Net increase (decrease) | 520,889 | $ | 5,828,338 | (174,366 | ) | $ | (1,608,018 | ) |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
16
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 19,455,926 | — | — | ||||||||
Foreign Common Stocks | 1,060,834 | $ | 570,247 | — | ||||||||
Temporary Cash Investments | 65,604 | 400,000 | — | |||||||||
Total Value of Investment Securities | $ | 20,582,364 | $ | 970,247 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (4,281 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as a liability of $4,281 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2011, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(24,571) in net realized gain (loss) on foreign currency transactions and $(3,637) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
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9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 16,851,728 | ||
Gross tax appreciation of investments | $ | 4,796,543 | ||
Gross tax depreciation of investments | (95,660 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 4,700,883 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(1,956,380), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(218,461) and $(1,737,919) expire in 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.17 | $ | 8.73 | $ | 7.73 | $ | 12.92 | $ | 11.42 | $ | 10.53 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.03 | 0.04 | 0.04 | 0.02 | 0.04 | 0.01 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.52 | 1.40 | 1.01 | (3.74 | ) | 1.73 | 0.95 | |||||||||||||||||
Total From Investment Operations | 1.55 | 1.44 | 1.05 | (3.72 | ) | 1.77 | 0.96 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.06 | ) | — | (3) | (0.05 | ) | (0.01 | ) | (0.04 | ) | — | (3) | ||||||||||||
From Net Realized Gains | — | — | — | (1.46 | ) | (0.23 | ) | (0.07 | ) | |||||||||||||||
Total Distributions | (0.06 | ) | — | (3) | (0.05 | ) | (1.47 | ) | (0.27 | ) | (0.07 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 11.66 | $ | 10.17 | $ | 8.73 | $ | 7.73 | $ | 12.92 | $ | 11.42 | ||||||||||||
Total Return(4) | 15.25 | % | 16.54 | % | 13.77 | % | (32.19 | )% | 15.78 | % | 9.13 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(5) | 1.02 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.46 | %(5) | 0.38 | % | 0.50 | % | 0.22 | % | 0.33 | % | 0.07 | % | ||||||||||||
Portfolio Turnover Rate | 22 | % | 66 | % | 125 | % | 130 | % | 275 | % | 313 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 17,551 | $ | 12,739 | $ | 12,541 | $ | 8,814 | $ | 13,381 | $ | 15,837 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.17 | $ | 8.73 | $ | 7.73 | $ | 12.93 | $ | 12.59 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.04 | 0.05 | 0.05 | 0.04 | — | (4) | ||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.52 | 1.41 | 1.01 | (3.75 | ) | 0.34 | ||||||||||||||
Total From Investment Operations | 1.56 | 1.46 | 1.06 | (3.71 | ) | 0.34 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.02 | ) | (0.06 | ) | (0.03 | ) | — | |||||||||||
From Net Realized Gains | — | — | — | (1.46 | ) | — | ||||||||||||||
Total Distributions | (0.08 | ) | (0.02 | ) | (0.06 | ) | (1.49 | ) | — | |||||||||||
Net Asset Value, End of Period | $ | 11.65 | $ | 10.17 | $ | 8.73 | $ | 7.73 | $ | 12.93 | ||||||||||
Total Return(5) | 15.38 | % | 16.77 | % | 14.00 | % | (32.09 | )% | 2.70 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(6) | 0.82 | % | 0.80 | % | 0.80 | % | 0.80 | %(6) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.66 | %(6) | 0.58 | % | 0.70 | % | 0.42 | % | (0.40 | )%(6) | ||||||||||
Portfolio Turnover Rate | 22 | % | 66 | % | 125 | % | 130 | % | 275 | %(7) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 27 | $ | 23 | $ | 20 | $ | 17 | $ | 26 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | 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. |
(6) | Annualized. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
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A Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.15 | $ | 8.74 | $ | 7.73 | $ | 12.92 | $ | 12.59 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.01 | 0.01 | 0.02 | — | (4) | (0.01 | ) | |||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.53 | 1.40 | 1.02 | (3.75 | ) | 0.34 | ||||||||||||||
Total From Investment Operations | 1.54 | 1.41 | 1.04 | (3.75 | ) | 0.33 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | (0.03 | ) | — | (0.03 | ) | — | — | |||||||||||||
From Net Realized Gains | — | — | — | (1.44 | ) | — | ||||||||||||||
Total Distributions | (0.03 | ) | — | (0.03 | ) | (1.44 | ) | — | ||||||||||||
Net Asset Value, End of Period | $ | 11.66 | $ | 10.15 | $ | 8.74 | $ | 7.73 | $ | 12.92 | ||||||||||
Total Return(5) | 15.19 | % | 16.27 | % | 13.48 | % | (32.37 | )% | 2.62 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(6) | 1.27 | % | 1.25 | % | 1.25 | % | 1.25 | %(6) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.21 | %(6) | 0.13 | % | 0.25 | % | (0.03 | )% | (0.85 | )%(6) | ||||||||||
Portfolio Turnover Rate | 22 | % | 66 | % | 125 | % | 130 | % | 275 | %(7) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 3,035 | $ | 501 | $ | 373 | $ | 241 | $ | 26 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
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B Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.05 | $ | 8.71 | $ | 7.73 | $ | 12.91 | $ | 12.59 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.03 | ) | (0.06 | ) | (0.04 | ) | (0.08 | ) | (0.02 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 1.51 | 1.40 | 1.02 | (3.75 | ) | 0.34 | ||||||||||||||
Total From Investment Operations | 1.48 | 1.34 | 0.98 | (3.83 | ) | 0.32 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Realized Gains | — | — | — | (1.35 | ) | — | ||||||||||||||
Net Asset Value, End of Period | $ | 11.53 | $ | 10.05 | $ | 8.71 | $ | 7.73 | $ | 12.91 | ||||||||||
Total Return(4) | 14.63 | % | 15.38 | % | 12.68 | % | (32.87 | )% | 2.54 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.02 | % | 2.00 | % | 2.00 | % | 2.00 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.54 | )%(5) | (0.62 | )% | (0.50 | )% | (0.78 | )% | (1.60 | )%(5) | ||||||||||
Portfolio Turnover Rate | 22 | % | 66 | % | 125 | % | 130 | % | 275 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 55 | $ | 54 | $ | 47 | $ | 30 | $ | 26 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
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C Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.05 | $ | 8.71 | $ | 7.73 | $ | 12.91 | $ | 12.59 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.03 | ) | (0.06 | ) | (0.04 | ) | (0.08 | ) | (0.02 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 1.51 | 1.40 | 1.02 | (3.75 | ) | 0.34 | ||||||||||||||
Total From Investment Operations | 1.48 | 1.34 | 0.98 | (3.83 | ) | 0.32 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Realized Gains | — | — | — | (1.35 | ) | — | ||||||||||||||
Net Asset Value, End of Period | $ | 11.53 | $ | 10.05 | $ | 8.71 | $ | 7.73 | $ | 12.91 | ||||||||||
Total Return(4) | 14.73 | % | 15.38 | % | 12.68 | % | (32.87 | )% | 2.54 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.02 | % | 2.00 | % | 2.00 | % | 2.00 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.54 | )%(5) | (0.62 | )% | (0.50 | )% | (0.78 | )% | (1.52 | )%(5) | ||||||||||
Portfolio Turnover Rate | 22 | % | 66 | % | 125 | % | 130 | % | 275 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 408 | $ | 131 | $ | 90 | $ | 73 | $ | 76 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
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R Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 10.12 | $ | 8.73 | $ | 7.73 | $ | 12.92 | $ | 12.59 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | — | (4) | (0.01 | ) | — | (4) | (0.02 | ) | (0.01 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 1.52 | 1.40 | 1.02 | (3.76 | ) | 0.34 | ||||||||||||||
Total From Investment Operations | 1.52 | 1.39 | 1.02 | (3.78 | ) | 0.33 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | — | (4) | — | (0.02 | ) | — | — | |||||||||||||
From Net Realized Gains | — | — | — | (1.41 | ) | — | ||||||||||||||
Total Distributions | — | (4) | — | (0.02 | ) | (1.41 | ) | — | ||||||||||||
Net Asset Value, End of Period | $ | 11.64 | $ | 10.12 | $ | 8.73 | $ | 7.73 | $ | 12.92 | ||||||||||
Total Return(5) | 15.05 | % | 15.92 | % | 13.19 | % | (32.56 | )% | 2.62 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.51 | %(6) | 1.52 | % | 1.50 | % | 1.50 | % | 1.50 | %(6) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.04 | )%(6) | (0.12 | )% | 0.00 | %(7) | (0.28 | )% | (1.10 | )%(6) | ||||||||||
Portfolio Turnover Rate | 22 | % | 66 | % | 125 | % | 130 | % | 275 | %(8) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 450 | $ | 24 | $ | 20 | $ | 17 | $ | 26 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | 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. |
(6) | Annualized. |
(7) | Ratio was less than 0.005%. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
24
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71835 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Fundamental Equity Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 12 |
Statement of Operations | 13 |
Statement of Changes in Net Assets | 14 |
Notes to Financial Statements | 15 |
Financial Highlights | 21 |
Additional Information | 27 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
A Class No sales charge* With sales charge* | AFDAX | 17.33% 10.56% | 17.52% 10.73% | 4.59% 3.36% | 7.06% 6.07% | 11/30/04 |
S&P 500 Index | — | 16.36% | 17.22% | 2.95% | 4.48% | — |
Investor Class | AFDIX | 17.42% | 17.82% | 4.84% | 6.58% | 7/29/05 |
Institutional Class | AFEIX | 17.64% | 18.04% | 5.06% | 6.79% | 7/29/05 |
B Class No sales charge* With sales charge* | AFDBX | 16.84% 11.84% | 16.54% 12.54% | 3.79% 3.61% | 6.23% 6.23% | 11/30/04 |
C Class No sales charge* With sales charge* | AFDCX | 16.93% 15.93% | 16.63% 16.63% | 3.80% 3.80% | 6.24% 6.24% | 11/30/04 |
R Class | AFDRX | 17.17% | 17.17% | 4.32% | 6.04% | 7/29/05 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.02% | 0.82% | 1.27% | 2.02% | 2.02% | 1.52% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects A Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
Fund Characteristics |
APRIL 30, 2011
Top Ten Holdings | % of net assets |
Exxon Mobil Corp. | 4.5% |
Apple, Inc. | 3.3% |
International Business Machines Corp. | 3.1% |
Wells Fargo & Co. | 2.2% |
Chevron Corp. | 2.2% |
Procter & Gamble Co. (The) | 2.0% |
JPMorgan Chase & Co. | 2.0% |
Microsoft Corp. | 2.0% |
EMC Corp. | 1.9% |
Honeywell International, Inc. | 1.7% |
Top Five Industries | % of net assets |
Oil, Gas & Consumable Fuels | 11.7% |
Computers & Peripherals | 6.1% |
Insurance | 5.6% |
Health Care Providers & Services | 4.7% |
Pharmaceuticals | 4.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks and Futures | 98.9% |
Temporary Cash Investments | 1.0% |
Other Assets and Liabilities | 0.1% |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 - 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,174.20 | $5.44 | 1.01% |
Institutional Class | $1,000 | $1,176.40 | $4.37 | 0.81% |
A Class | $1,000 | $1,173.30 | $6.79 | 1.26% |
B Class | $1,000 | $1,168.40 | $10.81 | 2.01% |
C Class | $1,000 | $1,169.30 | $10.81 | 2.01% |
R Class | $1,000 | $1,171.70 | $8.13 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.79 | $5.06 | 1.01% |
Institutional Class | $1,000 | $1,020.78 | $4.06 | 0.81% |
A Class | $1,000 | $1,018.55 | $6.31 | 1.26% |
B Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
C Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
R Class | $1,000 | $1,017.31 | $7.55 | 1.51% |
* Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 98.5% | ||||||||
AEROSPACE & DEFENSE — 3.1% | ||||||||
General Dynamics Corp. | 21,959 | $ | 1,599,054 | |||||
Honeywell International, Inc. | 57,302 | 3,508,602 | ||||||
United Technologies Corp. | 14,266 | 1,277,948 | ||||||
6,385,604 | ||||||||
AIR FREIGHT & LOGISTICS — 0.8% | ||||||||
United Parcel Service, Inc., Class B | 22,279 | 1,670,257 | ||||||
AIRLINES — 0.2% | ||||||||
Allegiant Travel Co. | 5,209 | 233,728 | ||||||
United Continental Holdings, Inc.(1) | 1,558 | 35,554 | ||||||
US Airways Group, Inc.(1) | 5,581 | 50,731 | ||||||
320,013 | ||||||||
AUTO COMPONENTS — 0.1% | ||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 9,927 | 127,066 | ||||||
AUTOMOBILES — 0.9% | ||||||||
Ford Motor Co.(1) | 116,979 | 1,809,665 | ||||||
BEVERAGES — 0.7% | ||||||||
Dr Pepper Snapple Group, Inc. | 38,159 | 1,495,833 | ||||||
BIOTECHNOLOGY — 1.7% | ||||||||
Amgen, Inc.(1) | 57,543 | 3,271,320 | ||||||
Gilead Sciences, Inc.(1) | 4,328 | 168,099 | ||||||
3,439,419 | ||||||||
CAPITAL MARKETS — 0.5% | ||||||||
Ameriprise Financial, Inc. | 4,487 | 278,463 | ||||||
Legg Mason, Inc. | 22,189 | 824,322 | ||||||
1,102,785 | ||||||||
CHEMICALS — 1.2% | ||||||||
Ashland, Inc. | 6,894 | 427,979 | ||||||
E.I. du Pont de Nemours & Co. | 8,735 | 496,061 | ||||||
Eastman Chemical Co. | 1,202 | 128,914 | ||||||
International Flavors & Fragrances, Inc. | 22,680 | 1,440,634 | ||||||
2,493,588 | ||||||||
COMMERCIAL BANKS — 3.2% | ||||||||
Bank of Hawaii Corp. | 13,143 | 641,247 | ||||||
PNC Financial Services Group, Inc. | 19,750 | 1,231,215 | ||||||
Wells Fargo & Co. | 156,377 | 4,552,134 | ||||||
6,424,596 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 0.2% | ||||||||
Knoll, Inc. | 23,562 | 462,522 | ||||||
COMMUNICATIONS EQUIPMENT — 1.1% | ||||||||
Cisco Systems, Inc. | 57,029 | 1,001,429 | ||||||
Motorola Mobility Holdings, Inc.(1) | 3,560 | 92,774 | ||||||
Motorola Solutions, Inc.(1) | 4,068 | 186,640 | ||||||
QUALCOMM, Inc. | 15,148 | 861,012 | ||||||
2,141,855 | ||||||||
COMPUTERS & PERIPHERALS — 6.1% | ||||||||
Apple, Inc.(1) | 19,315 | 6,726,062 | ||||||
EMC Corp.(1) | 138,570 | 3,927,074 | ||||||
Hewlett-Packard Co. | 14,907 | 601,796 | ||||||
SanDisk Corp.(1) | 21,460 | 1,054,544 | ||||||
12,309,476 | ||||||||
CONSTRUCTION & ENGINEERING — 0.2% | ||||||||
EMCOR Group, Inc.(1) | 9,938 | 307,780 | ||||||
Foster Wheeler AG(1) | 2,003 | 71,247 | ||||||
379,027 | ||||||||
CONSUMER FINANCE — 0.6% | ||||||||
American Express Co. | 23,082 | 1,132,865 | ||||||
CONTAINERS & PACKAGING — 0.2% | ||||||||
Sealed Air Corp. | 13,063 | 336,634 | ||||||
DIVERSIFIED CONSUMER SERVICES — 0.3% | ||||||||
Sotheby’s | 10,475 | 529,197 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 3.7% | ||||||||
Citigroup, Inc.(1) | 725,703 | 3,330,977 | ||||||
JPMorgan Chase & Co. | 90,612 | 4,134,626 | ||||||
NYSE Euronext | 3,045 | 121,952 | ||||||
7,587,555 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.0% | ||||||||
AT&T, Inc. | 98,576 | 3,067,685 | ||||||
CenturyLink, Inc. | 7,321 | 298,551 | ||||||
Frontier Communications Corp. | 3,875 | 32,046 | ||||||
Verizon Communications, Inc. | 19,303 | 729,267 | ||||||
4,127,549 | ||||||||
ELECTRIC UTILITIES — 0.5% | ||||||||
FirstEnergy Corp. | 23,802 | 951,128 | ||||||
ELECTRICAL EQUIPMENT — 1.4% | ||||||||
Belden, Inc. | 12,262 | 466,324 | ||||||
Emerson Electric Co. | 39,270 | 2,386,045 | ||||||
2,852,369 |
8
Shares | Value | |||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS(2) | ||||||||
Power-One, Inc.(1) | 6,997 | $ | 57,795 | |||||
ENERGY EQUIPMENT & SERVICES — 2.1% | ||||||||
Ensco plc ADR | 5,289 | 315,330 | ||||||
Nabors Industries Ltd.(1) | 43,920 | 1,345,709 | ||||||
National Oilwell Varco, Inc. | 14,801 | 1,135,089 | ||||||
Patterson-UTI Energy, Inc. | 44,159 | 1,373,786 | ||||||
Rowan Cos., Inc.(1) | 3,946 | 164,548 | ||||||
4,334,462 | ||||||||
FOOD & STAPLES RETAILING — 1.9% | ||||||||
Safeway, Inc. | 13,304 | 323,420 | ||||||
SYSCO Corp. | 9,858 | 284,995 | ||||||
Walgreen Co. | 18,834 | 804,588 | ||||||
Wal-Mart Stores, Inc. | 44,673 | 2,456,122 | ||||||
3,869,125 | ||||||||
FOOD PRODUCTS — 2.9% | ||||||||
Archer-Daniels-Midland Co. | 12,084 | 447,350 | ||||||
ConAgra Foods, Inc. | 7,234 | 176,871 | ||||||
H.J. Heinz Co. | 43,998 | 2,254,017 | ||||||
Kraft Foods, Inc., Class A | 8,722 | 292,885 | ||||||
Sara Lee Corp. | 10,274 | 197,261 | ||||||
Smithfield Foods, Inc.(1) | 33,522 | 789,778 | ||||||
Tyson Foods, Inc., Class A | 85,723 | 1,705,888 | ||||||
5,864,050 | ||||||||
GAS UTILITIES — 0.1% | ||||||||
Questar Corp. | 11,148 | 195,870 | ||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 0.3% | ||||||||
Covidien plc | 1,683 | 93,726 | ||||||
Medtronic, Inc. | 5,050 | 210,838 | ||||||
Stryker Corp. | 6,241 | 368,219 | ||||||
672,783 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 4.7% | ||||||||
Aetna, Inc. | 24,283 | 1,004,831 | ||||||
AmerisourceBergen Corp. | 61,897 | 2,515,494 | ||||||
Cardinal Health, Inc. | 50,056 | 2,186,947 | ||||||
Humana, Inc.(1) | 13,952 | 1,062,026 | ||||||
Medco Health Solutions, Inc.(1) | 7,204 | 427,413 | ||||||
UnitedHealth Group, Inc. | 47,188 | 2,323,065 | ||||||
9,519,776 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 0.9% | ||||||||
Bally Technologies, Inc.(1) | 4,648 | 181,226 | ||||||
Cheesecake Factory, Inc. (The)(1) | 3,445 | 101,352 | ||||||
Starbucks Corp. | 24,732 | 895,051 | ||||||
Wyndham Worldwide Corp. | 21,894 | 757,751 | ||||||
1,935,380 | ||||||||
HOUSEHOLD DURABLES — 0.4% | ||||||||
Tupperware Brands Corp. | 4,723 | 300,713 | ||||||
Whirlpool Corp. | 5,792 | 499,155 | ||||||
799,868 | ||||||||
HOUSEHOLD PRODUCTS — 2.3% | ||||||||
Kimberly-Clark Corp. | 7,855 | 518,901 | ||||||
Procter & Gamble Co. (The) | 64,116 | 4,161,129 | ||||||
4,680,030 | ||||||||
INDUSTRIAL CONGLOMERATES — 1.7% | ||||||||
General Electric Co. | 164,616 | 3,366,397 | ||||||
INSURANCE — 5.6% | ||||||||
ACE Ltd. | 12,584 | 846,274 | ||||||
Aflac, Inc. | 13,171 | 740,078 | ||||||
American Financial Group, Inc. | 6,410 | 229,286 | ||||||
Assurant, Inc. | 12,663 | 502,721 | ||||||
Chubb Corp. (The) | 7,614 | 496,357 | ||||||
Principal Financial Group, Inc. | 19,505 | 658,294 | ||||||
Prudential Financial, Inc. | 53,458 | 3,390,306 | ||||||
Travelers Cos., Inc. (The) | 39,752 | 2,515,506 | ||||||
Unum Group | 74,212 | 1,965,134 | ||||||
11,343,956 | ||||||||
INTERNET SOFTWARE & SERVICES — 1.4% | ||||||||
AOL, Inc.(1) | 5,450 | 111,071 | ||||||
eBay, Inc.(1) | 7,855 | 270,212 | ||||||
Google, Inc., Class A(1) | 4,399 | 2,393,496 | ||||||
2,774,779 | ||||||||
IT SERVICES — 4.4% | ||||||||
Accenture plc, Class A | 21,719 | 1,240,806 | ||||||
International Business Machines Corp. | 36,369 | 6,203,824 | ||||||
Western Union Co. (The) | 73,900 | 1,570,375 | ||||||
9,015,005 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 0.4% | ||||||||
Hasbro, Inc. | 16,751 | 784,617 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 0.1% | ||||||||
Thermo Fisher Scientific, Inc.(1) | 3,286 | 197,127 | ||||||
MACHINERY — 2.5% | ||||||||
Caterpillar, Inc. | 4,610 | 532,040 | ||||||
Deere & Co. | 11,747 | 1,145,332 | ||||||
Dover Corp. | 35,745 | 2,432,090 | ||||||
Oshkosh Corp.(1) | 14,826 | 469,391 | ||||||
Wabtec Corp. | 6,010 | 428,994 | ||||||
5,007,847 |
9
Shares | Value |
MEDIA — 3.7% | ||||||||
CBS Corp., Class B | 6,426 | $ | 162,064 | |||||
Comcast Corp., Class A | 112,041 | 2,939,956 | ||||||
DirecTV, Class A(1) | 2,058 | 99,998 | ||||||
Gannett Co., Inc. | 5,733 | 86,339 | ||||||
Omnicom Group, Inc. | 5,968 | 293,566 | ||||||
Time Warner Cable, Inc. | 15,148 | 1,183,513 | ||||||
Time Warner, Inc. | 60,109 | 2,275,727 | ||||||
Valassis Communications, Inc.(1) | 3,075 | 88,652 | ||||||
Viacom, Inc., Class B | 8,416 | 430,562 | ||||||
7,560,377 | ||||||||
METALS & MINING — 1.5% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 48,769 | 2,683,758 | ||||||
Reliance Steel & Aluminum Co. | 4,968 | 281,239 | ||||||
2,964,997 | ||||||||
MULTILINE RETAIL(2) | ||||||||
Big Lots, Inc.(1) | 1,382 | 56,814 | ||||||
MULTI-UTILITIES — 2.8% | ||||||||
CenterPoint Energy, Inc. | 69,805 | 1,298,373 | ||||||
DTE Energy Co. | 19,923 | 1,006,709 | ||||||
NSTAR | 36,304 | 1,680,875 | ||||||
Public Service Enterprise Group, Inc. | 2,643 | 85,026 | ||||||
Xcel Energy, Inc. | 65,316 | 1,589,138 | ||||||
5,660,121 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 11.7% | ||||||||
Anadarko Petroleum Corp. | 4,980 | 393,121 | ||||||
Chevron Corp. | 41,006 | 4,487,697 | ||||||
ConocoPhillips | 44,123 | 3,482,628 | ||||||
Exxon Mobil Corp. | 103,220 | 9,083,360 | ||||||
Hess Corp. | 7,149 | 614,528 | ||||||
Murphy Oil Corp. | 10,498 | 813,385 | ||||||
Occidental Petroleum Corp. | 24,283 | 2,775,304 | ||||||
Peabody Energy Corp. | 12,342 | 824,693 | ||||||
Sunoco, Inc. | 19,517 | 832,595 | ||||||
Valero Energy Corp. | 9,697 | 274,425 | ||||||
Williams Cos., Inc. (The) | 8,977 | 297,767 | ||||||
23,879,503 | ||||||||
PAPER & FOREST PRODUCTS — 0.8% | ||||||||
International Paper Co. | 51,340 | 1,585,379 | ||||||
PHARMACEUTICALS — 4.7% | ||||||||
Abbott Laboratories | 52,976 | 2,756,871 | ||||||
Bristol-Myers Squibb Co. | 88,919 | 2,498,624 | ||||||
Hospira, Inc.(1) | 14,290 | 810,672 | ||||||
Johnson & Johnson | 50,570 | 3,323,460 | ||||||
Merck & Co., Inc. | 3,565 | 128,162 | ||||||
9,517,789 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.8% | ||||||||
Annaly Capital Management, Inc. | 46,919 | 837,035 | ||||||
Public Storage | 7,453 | 874,311 | ||||||
1,711,346 | ||||||||
ROAD & RAIL — 1.1% | ||||||||
Avis Budget Group, Inc.(1) | 1,514 | 28,705 | ||||||
Ryder System, Inc. | 20,276 | 1,084,766 | ||||||
Union Pacific Corp. | 11,301 | 1,169,315 | ||||||
2,282,786 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.7% | ||||||||
Altera Corp. | 38,388 | 1,869,496 | ||||||
Intel Corp. | 72,890 | 1,690,319 | ||||||
Marvell Technology Group Ltd.(1) | 55,298 | 853,248 | ||||||
Micron Technology, Inc.(1) | 25,931 | 292,761 | ||||||
Texas Instruments, Inc. | 23,642 | 840,000 | ||||||
5,545,824 | ||||||||
SOFTWARE — 3.1% | ||||||||
Microsoft Corp. | 152,734 | 3,974,139 | ||||||
Oracle Corp. | 35,066 | 1,264,129 | ||||||
Red Hat, Inc.(1) | 5,843 | 277,367 | ||||||
Symantec Corp.(1) | 43,998 | 864,561 | ||||||
6,380,196 | ||||||||
SPECIALTY RETAIL — 2.0% | ||||||||
Gap, Inc. (The) | 77,098 | 1,791,757 | ||||||
Home Depot, Inc. (The) | 24,283 | 901,871 | ||||||
Lowe’s Cos., Inc. | 21,800 | 572,250 | ||||||
Pier 1 Imports, Inc.(1) | 64,915 | 790,665 | ||||||
4,056,543 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 0.3% | ||||||||
Coach, Inc. | 9,377 | 560,838 | ||||||
TOBACCO — 1.6% | ||||||||
Altria Group, Inc. | 34,395 | 923,162 | ||||||
Lorillard, Inc. | 2,226 | 237,069 | ||||||
Philip Morris International, Inc. | 30,216 | 2,098,199 | ||||||
3,258,430 | ||||||||
TRADING COMPANIES & DISTRIBUTORS — 0.6% | ||||||||
United Rentals, Inc.(1) | 38,315 | 1,127,227 | ||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.7% | ||||||||
American Tower Corp., Class A(1) | 28,370 | 1,484,035 | ||||||
TOTAL COMMON STOCKS (Cost $142,823,979) | 200,130,075 |
10
Shares | Value |
Temporary Cash Investments — 1.0% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 5,407 | $ | 5,407 | |||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 1.375%, 5/15/13, valued at $2,056,321), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $2,016,002) | 2,016,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $2,021,407) | 2,021,407 |
Value | ||||
Temporary Cash Investments — Segregated For Futures Contracts — 0.4% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 1.375%, 5/15/13, valued at $901,680), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $884,001) (Cost $884,000) | $ | 884,000 | ||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $145,729,386) | 203,035,482 | |||
OTHER ASSETS AND LIABILITIES — 0.1% | 160,999 | |||
TOTAL NET ASSETS — 100.0% | $ | 203,196,481 |
Futures Contracts | ||||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Gain (Loss) | |
13 | S&P 500 E-Mini Futures | June 2011 | $883,805 | $43,621 |
Notes to Schedule of Investments
ADR = American Depositary Receipt
(1) | Non-income producing. |
(2) | Category is less than 0.05% of total net assets. |
See Notes to Financial Statements.
11
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $145,729,386) | $ | 203,035,482 | ||
Cash | 22,653 | |||
Deposits with broker for futures contracts | 76,500 | |||
Receivable for capital shares sold | 303,759 | |||
Receivable for variation margin on futures contracts | 3,509 | |||
Dividends and interest receivable | 226,621 | |||
203,668,524 | ||||
Liabilities | ||||
Payable for capital shares redeemed | 264,492 | |||
Accrued management fees | 164,077 | |||
Distribution and service fees payable | 43,474 | |||
472,043 | ||||
Net Assets | $ | 203,196,481 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 266,333,532 | ||
Undistributed net investment income | 260,385 | |||
Accumulated net realized loss | (120,747,153 | ) | ||
Net unrealized appreciation | 57,349,717 | |||
$ | 203,196,481 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $50,419,840 | 3,631,972 | $13.88 |
Institutional Class, $0.01 Par Value | $148,875 | 10,719 | $13.89 |
A Class, $0.01 Par Value | $129,580,744 | 9,338,582 | $13.88* |
B Class, $0.01 Par Value | $4,053,669 | 294,906 | $13.75 |
C Class, $0.01 Par Value | $15,953,710 | 1,160,245 | $13.75 |
R Class, $0.01 Par Value | $3,039,643 | 219,520 | $13.85 |
*Maximum offering price $14.73 (net asset value divided by 0.9425)
See Notes to Financial Statements.
12
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends | $ | 2,009,509 | ||
Interest | 2,245 | |||
2,011,754 | ||||
Expenses: | ||||
Management fees | 985,450 | |||
Distribution and service fees: | ||||
A Class | 161,387 | |||
B Class | 19,599 | |||
C Class | 76,000 | |||
R Class | 7,093 | |||
Directors’ fees and expenses | 8,983 | |||
1,258,512 | ||||
Net investment income (loss) | 753,242 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 4,921,958 | |||
Futures contract transactions | 536,844 | |||
5,458,802 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 25,330,171 | |||
Futures contracts | 31,489 | |||
25,361,660 | ||||
Net realized and unrealized gain (loss) | 30,820,462 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 31,573,704 |
See Notes to Financial Statements.
13
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 753,242 | $ | 1,642,996 | ||||
Net realized gain (loss) | 5,458,802 | 4,940,106 | ||||||
Change in net unrealized appreciation (depreciation) | 25,361,660 | 21,008,718 | ||||||
Net increase (decrease) in net assets resulting from operations | 31,573,704 | 27,591,820 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (476,248 | ) | (497,306 | ) | ||||
Institutional Class | (1,525 | ) | (3,938 | ) | ||||
A Class | (1,090,905 | ) | (1,609,202 | ) | ||||
B Class | (3,497 | ) | (10,268 | ) | ||||
C Class | (13,721 | ) | (38,972 | ) | ||||
R Class | (16,038 | ) | (20,874 | ) | ||||
Decrease in net assets from distributions | (1,601,934 | ) | (2,180,560 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (19,830,544 | ) | (52,512,098 | ) | ||||
Net increase (decrease) in net assets | 10,141,226 | (27,100,838 | ) | |||||
Net Assets | ||||||||
Beginning of period | 193,055,255 | 220,156,093 | ||||||
End of period | $ | 203,196,481 | $ | 193,055,255 | ||||
Undistributed net investment income | $ | 260,385 | $ | 1,109,077 |
See Notes to Financial Statements.
14
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Fundamental Equity Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives using a quantitative model that combines fundamental measures of a stock’s value and growth potential. The fund generally invests in larger-sized companies, although it may invest in companies of any size.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation.
15
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. Additionally, non-U.S. tax returns filed by the fund due to investments in certain foreign securities remain subject to examination by the relevant taxing authority for seven years from the date of the filing. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
16
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 1.00% for the Investor Class, A Class, B Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
17
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $16,304,348 and $32,756,976, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 543,972 | $ | 7,097,587 | 795,645 | $ | 9,031,346 | ||||||||||
Issued in reinvestment of distributions | 36,152 | 451,179 | 41,430 | 466,086 | ||||||||||||
Redeemed | (438,867 | ) | (5,682,065 | ) | (932,491 | ) | (10,516,363 | ) | ||||||||
141,257 | 1,866,701 | (95,416 | ) | (1,018,931 | ) | |||||||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 1,162 | 15,636 | — | — | ||||||||||||
Issued in reinvestment of distributions | 122 | 1,525 | 261 | 2,933 | ||||||||||||
Redeemed | (563 | ) | (6,927 | ) | (16,120 | ) | (182,316 | ) | ||||||||
721 | 10,234 | (15,859 | ) | (179,383 | ) | |||||||||||
A Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||||
Sold | 541,740 | 7,009,689 | 1,427,524 | 16,144,781 | ||||||||||||
Issued in reinvestment of distributions | 84,114 | 1,049,738 | 138,149 | 1,555,561 | ||||||||||||
Redeemed | (2,183,793 | ) | (28,101,505 | ) | (5,821,242 | ) | (65,672,758 | ) | ||||||||
(1,557,939 | ) | (20,042,078 | ) | (4,255,569 | ) | (47,972,416 | ) | |||||||||
B Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 1,459 | 18,654 | 1,365 | 15,388 | ||||||||||||
Issued in reinvestment of distributions | 262 | 3,246 | 787 | 8,796 | ||||||||||||
Redeemed | (32,883 | ) | (417,685 | ) | (64,186 | ) | (716,061 | ) | ||||||||
(31,162 | ) | (395,785 | ) | (62,034 | ) | (691,877 | ) | |||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 122,809 | 1,571,127 | 296,361 | 3,339,002 | ||||||||||||
Issued in reinvestment of distributions | 729 | 9,037 | 2,442 | 27,326 | ||||||||||||
Redeemed | (221,617 | ) | (2,832,730 | ) | (509,599 | ) | (5,682,924 | ) | ||||||||
(98,079 | ) | (1,252,566 | ) | (210,796 | ) | (2,316,596 | ) | |||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 17,269 | 221,292 | 61,556 | 693,221 | ||||||||||||
Issued in reinvestment of distributions | 1,286 | 16,038 | 1,856 | 20,874 | ||||||||||||
Redeemed | (19,764 | ) | (254,380 | ) | (94,557 | ) | (1,046,990 | ) | ||||||||
(1,209 | ) | (17,050 | ) | (31,145 | ) | (332,895 | ) | |||||||||
Net increase (decrease) | (1,546,411 | ) | $ | (19,830,544 | ) | (4,670,819 | ) | $ | (52,512,098 | ) |
18
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 200,130,075 | — | — | ||||||||
Temporary Cash Investments | 5,407 | $ | 2,900,000 | — | ||||||||
Total Value of Investment Securities | $ | 200,135,482 | $ | 2,900,000 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Futures Contracts | $ | 43,621 | — | — |
7. Derivative Instruments
Equity Price Risk —The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The fund frequently utilized equity price risk derivative instruments throughout the reporting period, though the amounts held at period end as disclosed on the Schedule of Investments were lower than the fund’s typical volume during the period.
The value of equity price risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as an asset of $3,509 in receivable for variation margin on futures contracts. For the six months ended April 30, 2011, the effect of equity price risk derivative instruments on the Statement of Operations was $536,844 in net realized gain (loss) on futures contract transactions and $31,489 in change in net unrealized appreciation (depreciation) on futures contracts.
19
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 149,496,851 | ||
Gross tax appreciation of investments | $ | 55,245,821 | ||
Gross tax depreciation of investments | (1,707,190 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 53,538,631 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(122,432,287), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(48,801,060) and $(73,631,227) expire in 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
20
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.95 | $ | 10.57 | $ | 9.93 | $ | 15.68 | $ | 12.88 | $ | 11.04 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.07 | 0.12 | 0.12 | 0.15 | 0.14 | 0.08 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.00 | 1.40 | 0.66 | (5.42 | ) | 2.93 | 2.12 | |||||||||||||||||
Total From Investment Operations | 2.07 | 1.52 | 0.78 | (5.27 | ) | 3.07 | 2.20 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.14 | ) | (0.14 | ) | (0.14 | ) | (0.12 | ) | (0.08 | ) | — | |||||||||||||
From Net Realized Gains | — | — | — | (0.36 | ) | (0.19 | ) | (0.36 | ) | |||||||||||||||
Total Distributions | (0.14 | ) | (0.14 | ) | (0.14 | ) | (0.48 | ) | (0.27 | ) | (0.36 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 13.88 | $ | 11.95 | $ | 10.57 | $ | 9.93 | $ | 15.68 | $ | 12.88 | ||||||||||||
Total Return(3) | 17.42 | % | 14.47 | % | 8.16 | % | (34.56 | )% | 24.18 | % | 20.37 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(4) | 1.02 | % | 1.01 | % | 1.01 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.03 | %(4) | 1.06 | % | 1.37 | % | 1.15 | % | 0.99 | % | 0.74 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 29 | % | 64 | % | 97 | % | 82 | % | 174 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 50,420 | $ | 41,698 | $ | 37,918 | $ | 37,535 | $ | 53,908 | $ | 3,836 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
21
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.96 | $ | 10.59 | $ | 9.94 | $ | 15.70 | $ | 12.90 | $ | 11.05 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.08 | 0.15 | 0.16 | 0.19 | 0.19 | 0.12 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.01 | 1.38 | 0.65 | (5.44 | ) | 2.91 | 2.10 | |||||||||||||||||
Total From Investment Operations | 2.09 | 1.53 | 0.81 | (5.25 | ) | 3.10 | 2.22 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.16 | ) | (0.16 | ) | (0.16 | ) | (0.15 | ) | (0.11 | ) | — | |||||||||||||
From Net Realized Gains | — | — | — | (0.36 | ) | (0.19 | ) | (0.37 | ) | |||||||||||||||
Total Distributions | (0.16 | ) | (0.16 | ) | (0.16 | ) | (0.51 | ) | (0.30 | ) | (0.37 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 13.89 | $ | 11.96 | $ | 10.59 | $ | 9.94 | $ | 15.70 | $ | 12.90 | ||||||||||||
Total Return(3) | 17.64 | % | 14.57 | % | 8.47 | % | (34.45 | )% | 24.43 | % | 20.51 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(4) | 0.82 | % | 0.81 | % | 0.81 | % | 0.80 | % | 0.80 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.23 | %(4) | 1.26 | % | 1.57 | % | 1.35 | % | 1.19 | % | 0.94 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 29 | % | 64 | % | 97 | % | 82 | % | 174 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 149 | $ | 120 | $ | 274 | $ | 589 | $ | 286 | $ | 31 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
22
A Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.93 | $ | 10.56 | $ | 9.91 | $ | 15.65 | $ | 12.85 | $ | 11.03 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.05 | 0.09 | 0.11 | 0.12 | 0.11 | 0.06 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.01 | 1.39 | 0.66 | (5.41 | ) | 2.92 | 2.11 | |||||||||||||||||
Total From Investment Operations | 2.06 | 1.48 | 0.77 | (5.29 | ) | 3.03 | 2.17 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.11 | ) | (0.11 | ) | (0.12 | ) | (0.09 | ) | (0.04 | ) | — | |||||||||||||
From Net Realized Gains | — | — | — | (0.36 | ) | (0.19 | ) | (0.35 | ) | |||||||||||||||
Total Distributions | (0.11 | ) | (0.11 | ) | (0.12 | ) | (0.45 | ) | (0.23 | ) | (0.35 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 13.88 | $ | 11.93 | $ | 10.56 | $ | 9.91 | $ | 15.65 | $ | 12.85 | ||||||||||||
Total Return(3) | 17.33 | % | 14.10 | % | 8.00 | % | (34.73 | )% | 23.88 | % | 20.12 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(4) | 1.27 | % | 1.26 | % | 1.26 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.78 | %(4) | 0.81 | % | 1.12 | % | 0.90 | % | 0.74 | % | 0.49 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 29 | % | 64 | % | 97 | % | 82 | % | 174 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 129,581 | $ | 129,960 | $ | 159,959 | $ | 218,469 | $ | 246,322 | $ | 37,314 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
23
B Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.77 | $ | 10.42 | $ | 9.78 | $ | 15.45 | $ | 12.74 | $ | 10.96 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | — | (3) | 0.01 | 0.03 | 0.02 | 0.01 | (0.02 | ) | ||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.99 | 1.37 | 0.66 | (5.36 | ) | 2.89 | 2.07 | |||||||||||||||||
Total From Investment Operations | 1.99 | 1.38 | 0.69 | (5.34 | ) | 2.90 | 2.05 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.01 | ) | (0.03 | ) | (0.05 | ) | — | — | — | |||||||||||||||
From Net Realized Gains | — | — | — | (0.33 | ) | (0.19 | ) | (0.27 | ) | |||||||||||||||
Total Distributions | (0.01 | ) | (0.03 | ) | (0.05 | ) | (0.33 | ) | (0.19 | ) | (0.27 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 13.75 | $ | 11.77 | $ | 10.42 | $ | 9.78 | $ | 15.45 | $ | 12.74 | ||||||||||||
Total Return(4) | 16.84 | % | 13.23 | % | 7.17 | % | (35.23 | )% | 23.01 | % | 19.04 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.02 | % | 2.01 | % | 2.01 | % | 2.00 | % | 2.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.03 | %(5) | 0.06 | % | 0.37 | % | 0.15 | % | (0.01 | )% | (0.26 | )% | ||||||||||||
Portfolio Turnover Rate | 8 | % | 29 | % | 64 | % | 97 | % | 82 | % | 174 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 4,054 | $ | 3,838 | $ | 4,043 | $ | 4,195 | $ | 4,889 | $ | 1,498 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
See Notes to Financial Statements.
24
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.77 | $ | 10.42 | $ | 9.79 | $ | 15.46 | $ | 12.75 | $ | 10.96 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | — | (3) | 0.01 | 0.03 | 0.02 | — | (3) | (0.03 | ) | |||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.99 | 1.37 | 0.65 | (5.36 | ) | 2.90 | 2.09 | |||||||||||||||||
Total From Investment Operations | 1.99 | 1.38 | 0.68 | (5.34 | ) | 2.90 | 2.06 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.01 | ) | (0.03 | ) | (0.05 | ) | — | — | — | |||||||||||||||
From Net Realized Gains | — | — | — | (0.33 | ) | (0.19 | ) | (0.27 | ) | |||||||||||||||
Total Distributions | (0.01 | ) | (0.03 | ) | (0.05 | ) | (0.33 | ) | (0.19 | ) | (0.27 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 13.75 | $ | 11.77 | $ | 10.42 | $ | 9.79 | $ | 15.46 | $ | 12.75 | ||||||||||||
Total Return(4) | 16.93 | % | 13.23 | % | 7.06 | % | (35.20 | )% | 22.99 | % | 19.13 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.02 | % | 2.01 | % | 2.01 | % | 2.00 | % | 2.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.03 | %(5) | 0.06 | % | 0.37 | % | 0.15 | % | (0.01 | )% | (0.26 | )% | ||||||||||||
Portfolio Turnover Rate | 8 | % | 29 | % | 64 | % | 97 | % | 82 | % | 174 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 15,954 | $ | 14,816 | $ | 15,311 | $ | 18,919 | $ | 24,544 | $ | 4,530 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
See Notes to Financial Statements.
25
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.89 | $ | 10.52 | $ | 9.88 | $ | 15.61 | $ | 12.81 | $ | 11.03 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.03 | 0.06 | 0.06 | 0.09 | 0.09 | 0.04 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.00 | 1.39 | 0.68 | (5.41 | ) | 2.90 | 2.08 | |||||||||||||||||
Total From Investment Operations | 2.03 | 1.45 | 0.74 | (5.32 | ) | 2.99 | 2.12 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.07 | ) | (0.08 | ) | (0.10 | ) | (0.05 | ) | — | (3) | — | |||||||||||||
From Net Realized Gains | — | — | — | (0.36 | ) | (0.19 | ) | (0.34 | ) | |||||||||||||||
Total Distributions | (0.07 | ) | (0.08 | ) | (0.10 | ) | (0.41 | ) | (0.19 | ) | (0.34 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 13.85 | $ | 11.89 | $ | 10.52 | $ | 9.88 | $ | 15.61 | $ | 12.81 | ||||||||||||
Total Return(4) | 17.17 | % | 13.86 | % | 7.64 | % | (34.92 | )% | 23.60 | % | 19.67 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.51 | %(5) | 1.52 | % | 1.51 | % | 1.51 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.53 | %(5) | 0.56 | % | 0.87 | % | 0.65 | % | 0.49 | % | 0.24 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 29 | % | 64 | % | 97 | % | 82 | % | 174 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 3,040 | $ | 2,624 | $ | 2,650 | $ | 364 | $ | 438 | $ | 30 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
26
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
27
28
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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 Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71834 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Giftrust® Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 19 |
Additional Information | 20 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWGTX | 18.34% | 25.10% | 7.61% | 5.66%(2) | 11.74% | 11/25/83 |
Russell 3000 Growth Index | — | 17.77% | 21.62% | 5.05% | 2.38% | 9.51%(3) | — |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Returns would have been lower if a portion of the management fee had not been waived. |
(3) | Since 11/30/83, the date nearest the Investor Class’s inception for which data are available. |
Total Annual Fund Operating Expenses |
Investor Class 1.01% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
Fund Characteristics |
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 6.9% |
Oracle Corp. | 3.4% |
QUALCOMM, Inc. | 3.2% |
Exxon Mobil Corp. | 3.1% |
National Oilwell Varco, Inc. | 3.1% |
Caterpillar, Inc. | 3.0% |
Netflix, Inc. | 2.5% |
Express Scripts, Inc. | 2.3% |
Precision Castparts Corp. | 2.3% |
Cognizant Technology Solutions Corp., Class A | 2.2% |
Top Five Industries | % of net assets |
Machinery | 7.9% |
Computers & Peripherals | 7.4% |
Energy Equipment & Services | 6.9% |
Software | 6.5% |
Oil, Gas & Consumable Fuels | 4.9% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 91.1% |
Foreign Common Stocks(1) | 8.6% |
Total Common Stocks | 99.7% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities(2) | — |
(1) | Includes depositary shares, dual listed securities and foreign ordinary shares. |
(2) | Category is less than 0.05% of total net assets. |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,183.40 | $5.41 | 1.00% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 99.7% | ||||||||
AEROSPACE & DEFENSE — 4.4% | ||||||||
BE Aerospace, Inc.(1) | 445,325 | $ | 17,185,092 | |||||
Precision Castparts Corp. | 158,628 | 24,511,198 | ||||||
TransDigm Group, Inc.(1) | 72,639 | 6,050,829 | ||||||
47,747,119 | ||||||||
AUTOMOBILES — 0.8% | ||||||||
Hyundai Motor Co. | 38,162 | 8,777,990 | ||||||
BEVERAGES — 1.4% | ||||||||
Coca-Cola Co. (The) | 155,695 | 10,503,185 | ||||||
Hansen Natural Corp.(1) | 65,510 | 4,333,486 | ||||||
14,836,671 | ||||||||
BIOTECHNOLOGY — 1.2% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 81,845 | 7,929,962 | ||||||
United Therapeutics Corp.(1) | 47,020 | 3,148,459 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 42,817 | 2,355,792 | ||||||
13,434,213 | ||||||||
CAPITAL MARKETS — 1.8% | ||||||||
Charles Schwab Corp. (The) | 284,277 | 5,205,112 | ||||||
Goldman Sachs Group, Inc. (The) | 43,436 | 6,559,270 | ||||||
Lazard Ltd., Class A | 195,310 | 8,007,710 | ||||||
19,772,092 | ||||||||
CHEMICALS — 1.0% | ||||||||
Albemarle Corp. | 145,856 | 10,290,141 | ||||||
COMMUNICATIONS EQUIPMENT — 4.1% | ||||||||
Aruba Networks, Inc.(1) | 100,214 | 3,600,689 | ||||||
F5 Networks, Inc.(1) | 60,119 | 6,093,662 | ||||||
QUALCOMM, Inc. | 603,106 | 34,280,545 | ||||||
43,974,896 | ||||||||
COMPUTERS & PERIPHERALS — 7.4% | ||||||||
Apple, Inc.(1) | 214,489 | 74,691,504 | ||||||
EMC Corp.(1) | 193,305 | 5,478,264 | ||||||
80,169,768 | ||||||||
CONSTRUCTION & ENGINEERING — 0.4% | ||||||||
Foster Wheeler AG(1) | 107,561 | 3,825,945 | ||||||
CONSUMER FINANCE — 1.0% | ||||||||
Discover Financial Services | 444,617 | 11,044,286 | ||||||
CONTAINERS & PACKAGING — 0.3% | ||||||||
Rock-Tenn Co., Class A | 45,131 | 3,117,198 | ||||||
DIVERSIFIED CONSUMER SERVICES — 0.5% | ||||||||
Weight Watchers International, Inc. | 75,055 | 5,835,526 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 0.7% | ||||||||
JPMorgan Chase & Co. | 167,068 | 7,623,313 | ||||||
ELECTRICAL EQUIPMENT — 2.3% | ||||||||
Cooper Industries plc | 150,476 | 9,923,892 | ||||||
Polypore International, Inc.(1) | 55,459 | 3,425,703 | ||||||
Rockwell Automation, Inc. | 135,570 | 11,812,214 | ||||||
25,161,809 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.8% | ||||||||
Jabil Circuit, Inc. | 216,654 | 4,298,415 | ||||||
Trimble Navigation Ltd.(1) | 83,893 | 3,929,548 | ||||||
8,227,963 | ||||||||
ENERGY EQUIPMENT & SERVICES — 6.9% | ||||||||
Dril-Quip, Inc.(1) | 37,846 | 2,897,490 | ||||||
FMC Technologies, Inc.(1) | 143,859 | 6,686,566 | ||||||
Halliburton Co. | 350,721 | 17,704,396 | ||||||
National Oilwell Varco, Inc. | 436,851 | 33,502,103 | ||||||
Schlumberger Ltd. | 153,144 | 13,744,674 | ||||||
74,535,229 | ||||||||
FOOD & STAPLES RETAILING — 4.0% | ||||||||
Costco Wholesale Corp. | 226,923 | 18,362,609 | ||||||
Walgreen Co. | 120,922 | 5,165,788 | ||||||
Whole Foods Market, Inc. | 308,133 | 19,338,427 | ||||||
42,866,824 | ||||||||
FOOD PRODUCTS — 1.2% | ||||||||
Mead Johnson Nutrition Co. | 196,530 | 13,143,926 | ||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 2.7% | ||||||||
Baxter International, Inc. | 185,398 | 10,549,146 | ||||||
C.R. Bard, Inc. | 86,412 | 9,224,481 | ||||||
Cooper Cos., Inc. (The) | 40,889 | 3,062,586 | ||||||
Varian Medical Systems, Inc.(1) | 94,143 | 6,608,839 | ||||||
29,445,052 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 2.5% | ||||||||
Express Scripts, Inc.(1) | 433,688 | 24,607,457 | ||||||
Odontoprev SA | 171,800 | 2,745,393 | ||||||
27,352,850 | ||||||||
HEALTH CARE TECHNOLOGY — 1.7% | ||||||||
Allscripts Healthcare Solutions, Inc.(1) | 202,005 | 4,351,188 | ||||||
SXC Health Solutions Corp.(1) | 258,477 | 14,257,591 | ||||||
18,608,779 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 4.8% | ||||||||
Arcos Dorados Holdings, Inc., Class A(1) | 104,802 | 2,308,788 | ||||||
Chipotle Mexican Grill, Inc.(1) | 18,984 | 5,064,741 | ||||||
Las Vegas Sands Corp.(1) | 34,783 | 1,635,149 | ||||||
McDonald’s Corp. | 201,014 | 15,741,406 |
8
Shares | Value | |||||||
Royal Caribbean Cruises Ltd.(1) | 531,231 | $ | 21,153,619 | |||||
Yum! Brands, Inc. | 112,616 | 6,040,722 | ||||||
51,944,425 | ||||||||
HOUSEHOLD DURABLES — 0.1% | ||||||||
KB Home | 114,819 | 1,356,012 | ||||||
INDUSTRIAL CONGLOMERATES — 0.6% | ||||||||
General Electric Co. | 294,645 | 6,025,490 | ||||||
INTERNET & CATALOG RETAIL — 3.8% | ||||||||
Netflix, Inc.(1) | 114,717 | 26,691,204 | ||||||
priceline.com, Inc.(1) | 27,048 | 14,795,527 | ||||||
41,486,731 | ||||||||
INTERNET SOFTWARE & SERVICES — 4.1% | ||||||||
Baidu, Inc. ADR(1) | 93,735 | 13,921,522 | ||||||
Google, Inc., Class A(1) | 26,938 | 14,656,966 | ||||||
OpenTable, Inc.(1) | 36,813 | 4,096,919 | ||||||
SAVVIS, Inc.(1) | 41,104 | 1,617,853 | ||||||
VeriSign, Inc. | 264,111 | 9,761,543 | ||||||
44,054,803 | ||||||||
IT SERVICES — 3.9% | ||||||||
Cognizant Technology Solutions Corp., Class A(1) | 288,684 | 23,931,904 | ||||||
International Business Machines Corp. | 62,219 | 10,613,317 | ||||||
MasterCard, Inc., Class A | 13,590 | 3,749,345 | ||||||
VeriFone Systems, Inc.(1) | 70,434 | 3,861,192 | ||||||
42,155,758 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 0.3% | ||||||||
Brunswick Corp. | 133,667 | 3,123,798 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 1.7% | ||||||||
Agilent Technologies, Inc.(1) | 261,134 | 13,033,198 | ||||||
Illumina, Inc.(1) | 82,353 | 5,845,416 | ||||||
18,878,614 | ||||||||
MACHINERY — 7.9% | ||||||||
AGCO Corp.(1) | 191,820 | 11,044,996 | ||||||
Caterpillar, Inc. | 276,976 | 31,965,800 | ||||||
Chart Industries, Inc.(1) | 71,205 | 3,461,275 | ||||||
Cummins, Inc. | 127,800 | 15,359,004 | ||||||
Deere & Co. | 177,377 | 17,294,257 | ||||||
Harsco Corp. | 84,698 | 3,015,249 | ||||||
Titan International, Inc. | 115,606 | 3,571,069 | ||||||
85,711,650 | ||||||||
MEDIA — 1.8% | ||||||||
CBS Corp., Class B | 289,162 | 7,292,666 | ||||||
Focus Media Holding Ltd. ADR(1) | 35,536 | 1,249,090 | ||||||
Imax Corp.(1) | 325,499 | 11,418,505 | ||||||
19,960,261 | ||||||||
METALS & MINING — 0.2% | ||||||||
Cliffs Natural Resources, Inc. | 26,455 | 2,479,363 | ||||||
OIL, GAS & CONSUMABLE FUELS — 4.9% | ||||||||
Concho Resources, Inc.(1) | 82,736 | 8,840,342 | ||||||
Exxon Mobil Corp. | 382,325 | 33,644,600 | ||||||
Linn Energy LLC | 77,805 | 3,141,766 | ||||||
Pioneer Natural Resources Co. | 32,113 | 3,282,912 | ||||||
SandRidge Energy, Inc.(1) | 326,501 | 4,035,552 | ||||||
52,945,172 | ||||||||
PHARMACEUTICALS — 1.4% | ||||||||
Allergan, Inc. | 71,423 | 5,682,414 | ||||||
Shire plc | 88,829 | 2,750,917 | ||||||
Shire plc ADR | 68,456 | 6,380,784 | ||||||
14,814,115 | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 0.8% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 312,953 | 8,358,975 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.9% | ||||||||
ARM Holdings plc | 401,013 | 4,184,949 | ||||||
Broadcom Corp., Class A(1) | 155,426 | 5,467,887 | ||||||
Cavium Networks, Inc.(1) | 130,090 | 6,142,850 | ||||||
Cypress Semiconductor Corp.(1) | 49,240 | 1,071,462 | ||||||
Veeco Instruments, Inc.(1) | 65,804 | 3,364,558 | ||||||
20,231,706 | ||||||||
SOFTWARE — 6.5% | ||||||||
Check Point Software Technologies Ltd.(1) | 74,321 | 4,082,452 | ||||||
Citrix Systems, Inc.(1) | 93,014 | 7,844,801 | ||||||
Oracle Corp. | 1,017,351 | 36,675,504 | ||||||
salesforce.com, inc.(1) | 111,828 | 15,499,361 | ||||||
VMware, Inc., Class A(1) | 65,272 | 6,228,907 | ||||||
70,331,025 | ||||||||
SPECIALTY RETAIL — 2.1% | ||||||||
Dick’s Sporting Goods, Inc.(1) | 59,279 | 2,426,289 | ||||||
O’Reilly Automotive, Inc.(1) | 172,863 | 10,209,289 | ||||||
PetSmart, Inc. | 102,023 | 4,302,310 | ||||||
Williams-Sonoma, Inc. | 130,593 | 5,669,042 | ||||||
22,606,930 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 1.3% | ||||||||
Coach, Inc. | 96,950 | 5,798,580 | ||||||
Lululemon Athletica, Inc.(1) | 87,201 | 8,722,716 | ||||||
14,521,296 |
9
Shares | Value |
TOBACCO — 2.3% | ||||||||
Altria Group, Inc. | 228,314 | $ | 6,127,948 | |||||
Philip Morris International, Inc. | 275,702 | 19,144,747 | ||||||
25,272,695 | ||||||||
TRADING COMPANIES & DISTRIBUTORS — 1.2% | ||||||||
Fastenal Co. | 128,738 | 8,637,032 | ||||||
WESCO International, Inc.(1) | 66,448 | 4,116,454 | ||||||
12,753,486 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.0% | ||||||||
NII Holdings, Inc.(1) | 98,553 | 4,097,834 | ||||||
SBA Communications Corp., Class A(1) | 168,167 | 6,496,291 | ||||||
10,594,125 | ||||||||
TOTAL COMMON STOCKS (Cost $710,305,397) | 1,079,398,020 | |||||||
Temporary Cash Investments — 0.3% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 56,869 | 56,869 | ||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 1.375%, 5/15/13, valued at $3,366,002), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $3,300,003) | 3,300,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,356,869) | 3,356,869 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $713,662,266) | 1,082,754,889 | |||||||
OTHER ASSETS AND LIABILITIES(2) | 373,962 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 1,083,128,851 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
3,079,776 | GBP for USD | Bank of America | 5/31/11 | $5,142,579 | $(71,112) |
(Value on Settlement Date $5,071,467)
Notes to Schedule of Investments
ADR = American Depositary Receipt
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
(2) | Category is less than 0.05% of total net assets. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $713,662,266) | $ | 1,082,754,889 | ||
Cash | 41,767 | |||
Foreign currency holdings, at value (cost of $10,247) | 10,288 | |||
Receivable for investments sold | 9,823,902 | |||
Receivable for capital shares sold | 19,155 | |||
Dividends and interest receivable | 360,597 | |||
1,093,010,598 | ||||
Liabilities | ||||
Payable for investments purchased | 8,735,311 | |||
Payable for capital shares redeemed | 201,450 | |||
Unrealized loss on forward foreign currency exchange contracts | 71,112 | |||
Accrued management fees | 873,874 | |||
9,881,747 | ||||
Net Assets | $ | 1,083,128,851 | ||
Investor Class Capital Shares, $0.01 Par Value | ||||
Shares authorized | 200,000,000 | |||
Shares outstanding | 35,109,577 | |||
Net Asset Value Per Share | $ | 30.85 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 728,752,239 | ||
Accumulated net investment loss | (546,063 | ) | ||
Accumulated net realized loss | (14,099,046 | ) | ||
Net unrealized appreciation | 369,021,721 | |||
$ | 1,083,128,851 |
See Notes to Financial Statements
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $9,408) | $ | 4,495,140 | ||
Interest | 2,995 | |||
4,498,135 | ||||
Expenses: | ||||
Management fees | 5,119,239 | |||
Directors’ fees and expenses | 25,087 | |||
5,144,326 | ||||
Net investment income (loss) | (646,191 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 91,968,773 | |||
Foreign currency transactions (net of foreign tax expenses paid (refunded) of $59,456) | (95,487 | ) | ||
91,873,286 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 80,888,838 | |||
Translation of assets and liabilities in foreign currencies | 29,265 | |||
80,918,103 | ||||
Net realized and unrealized gain (loss) | 172,791,389 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 172,145,198 |
See Notes to Financial Statements
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (646,191 | ) | $ | (1,928,945 | ) | ||
Net realized gain (loss) | 91,873,286 | 88,509,606 | ||||||
Change in net unrealized appreciation (depreciation) | 80,918,103 | 113,572,450 | ||||||
Net increase (decrease) in net assets resulting from operations | 172,145,198 | 200,153,111 | ||||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 3,424,730 | 6,307,332 | ||||||
Payments for shares redeemed | (51,887,785 | ) | (84,853,156 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | (48,463,055 | ) | (78,545,824 | ) | ||||
Net increase (decrease) in net assets | 123,682,143 | 121,607,287 | ||||||
Net Assets | ||||||||
Beginning of period | 959,446,708 | 837,839,421 | ||||||
End of period | $ | 1,083,128,851 | $ | 959,446,708 | ||||
Accumulated undistributed net investment income (loss) | $ | (546,063 | ) | $ | 100,128 | |||
Transactions in Shares of the Fund | ||||||||
Sold | 119,414 | 271,644 | ||||||
Redeemed | (1,806,078 | ) | (3,644,275 | ) | ||||
Net increase (decrease) in shares of the fund | (1,686,664 | ) | (3,372,631 | ) |
See Notes to Financial Statements
13
APRIL 30, 2011 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Giftrust Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing in equity securities of companies of any size that management believes will increase in value over time.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
14
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. 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. Certain countries impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. Additionally, non-U.S. tax returns filed by the fund due to investments in certain foreign securities remain subject to examination by the relevant taxing authority for seven years from the date of filing. 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. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
15
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The annual management fee is 1.00%.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $367,016,278 and $409,044,344, respectively.
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
16
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 986,763,668 | — | — | ||||||||
Foreign Common Stocks | 74,175,103 | $ | 18,459,249 | — | ||||||||
Temporary Cash Investments | 56,869 | 3,300,000 | — | |||||||||
Total Value of Investment Securities | $ | 1,060,995,640 | $ | 21,759,249 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (71,112 | ) | — |
6. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as a liability of $71,112 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2011, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(49,994) in net realized gain (loss) on foreign currency transactions and $29,016 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
17
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 714,771,045 | ||
Gross tax appreciation of investments | $ | 369,491,502 | ||
Gross tax depreciation of investments | (1,507,658 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 367,983,844 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(104,553,393), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
18
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 26.07 | $ | 20.86 | $ | 19.08 | $ | 31.53 | $ | 20.13 | $ | 17.28 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.02 | ) | (0.05 | ) | 0.03 | (0.13 | ) | (0.14 | ) | (0.05 | ) | |||||||||||||
Net Realized and Unrealized Gain (Loss) | 4.80 | 5.26 | 1.81 | (12.32 | ) | 11.54 | 2.90 | |||||||||||||||||
Total From Investment Operations | 4.78 | 5.21 | 1.84 | (12.45 | ) | 11.40 | 2.85 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.06 | ) | — | — | — | |||||||||||||||||
Net Asset Value, End of Period | $ | 30.85 | $ | 26.07 | $ | 20.86 | $ | 19.08 | $ | 31.53 | $ | 20.13 | ||||||||||||
Total Return(3) | 18.34 | % | 24.98 | % | 9.72 | % | (39.49 | )% | 56.63 | % | 16.49 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.00 | %(4) | 1.01 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.13 | )%(4) | (0.22 | )% | 0.19 | % | (0.48 | )% | (0.57 | )% | (0.22 | )% | ||||||||||||
Portfolio Turnover Rate | 36 | % | 88 | % | 167 | % | 171 | % | 147 | % | 229 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 1,083 | $ | 959 | $ | 838 | $ | 804 | $ | 1,421 | $ | 985 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
19
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
20
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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 Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71837 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/frontpagebanner.jpg)
Growth Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 21 |
Additional Information | 26 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCGX | 17.06% | 19.55% | 6.17% | 2.97% | 13.67% | 6/30/71(2) |
Russell 1000 Growth Index | — | 16.96% | 20.87% | 5.06% | 2.11% | N/A(3) | — |
Institutional Class | TWGIX | 17.17% | 19.84% | 6.39% | 3.19% | 5.53% | 6/16/97 |
A Class(4) No sales charge* With sales charge* | TCRAX | 16.92% 10.20% | 19.30% 12.45% | 5.91% 4.67% | 2.70% 2.09% | 5.44% 4.99% | 6/4/97 |
C Class No sales charge* With sales charge* | TWRCX | 16.48% 15.48% | 18.41% 18.41% | — — | — — | 21.71% 21.71% | 3/1/10 |
R Class | AGWRX | 16.77% | 19.00% | 5.65% | — | 6.80% | 8/29/03 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Although the fund’s actual inception date was 10/31/58, this inception date corresponds with the investment advisor’s implementation of its current investment philosophy and practices. |
(3) | Index data not available prior to 12/29/78. |
(4) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.00% | 0.80% | 1.25% | 2.00% | 1.50% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Exxon Mobil Corp. | 5.0% |
Apple, Inc. | 4.7% |
Oracle Corp. | 2.8% |
Schlumberger Ltd. | 2.5% |
Coca-Cola Co. (The) | 2.3% |
QUALCOMM, Inc. | 2.2% |
Accenture plc, Class A | 1.8% |
United Parcel Service, Inc., Class B | 1.7% |
Express Scripts, Inc. | 1.7% |
Cisco Systems, Inc. | 1.7% |
Top Five Industries | % of net assets |
Computers & Peripherals | 8.2% |
Oil, Gas & Consumable Fuels | 7.9% |
Software | 6.7% |
Machinery | 5.1% |
IT Services | 5.0% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.8% |
Temporary Cash Investments | 1.5% |
Other Assets and Liabilities | (0.3)% |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,170.60 | $5.27 | 0.98% |
Institutional Class | $1,000 | $1,171.70 | $4.20 | 0.78% |
A Class | $1,000 | $1,169.20 | $6.62 | 1.23% |
C Class | $1,000 | $1,164.80 | $10.63 | 1.98% |
R Class | $1,000 | $1,167.70 | $7.95 | 1.48% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.93 | $4.91 | 0.98% |
Institutional Class | $1,000 | $1,020.93 | $3.91 | 0.78% |
A Class | $1,000 | $1,018.70 | $6.16 | 1.23% |
C Class | $1,000 | $1,014.98 | $9.89 | 1.98% |
R Class | $1,000 | $1,017.46 | $7.40 | 1.48% |
* Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 98.8% | ||||||||
AEROSPACE & DEFENSE — 2.3% | ||||||||
Honeywell International, Inc. | 1,826,000 | $ | 111,805,980 | |||||
Rockwell Collins, Inc. | 371,100 | 23,416,410 | ||||||
Textron, Inc. | 1,824,100 | 47,609,010 | ||||||
182,831,400 | ||||||||
AIR FREIGHT & LOGISTICS — 1.7% | ||||||||
United Parcel Service, Inc., Class B | 1,832,500 | 137,382,525 | ||||||
AUTO COMPONENTS — 2.1% | ||||||||
Autoliv, Inc. | 854,500 | 68,471,085 | ||||||
BorgWarner, Inc.(1) | 1,257,900 | 97,160,196 | ||||||
165,631,281 | ||||||||
AUTOMOBILES — 0.6% | ||||||||
Harley-Davidson, Inc. | 1,329,300 | 49,529,718 | ||||||
BEVERAGES — 3.2% | ||||||||
Coca-Cola Co. (The) | 2,772,700 | 187,046,342 | ||||||
Hansen Natural Corp.(1) | 362,800 | 23,999,220 | ||||||
PepsiCo, Inc. | 696,400 | 47,974,996 | ||||||
259,020,558 | ||||||||
BIOTECHNOLOGY — 1.6% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 101,600 | 9,844,024 | ||||||
Amgen, Inc.(1) | 892,500 | 50,738,625 | ||||||
Gilead Sciences, Inc.(1) | 1,220,000 | 47,384,800 | ||||||
Human Genome Sciences, Inc.(1) | 634,100 | 18,686,927 | ||||||
126,654,376 | ||||||||
CAPITAL MARKETS — 2.1% | ||||||||
BlackRock, Inc. | 378,300 | 74,124,102 | ||||||
Charles Schwab Corp. (The) | 3,316,200 | 60,719,622 | ||||||
T. Rowe Price Group, Inc. | 548,900 | 35,266,825 | ||||||
170,110,549 | ||||||||
CHEMICALS — 3.2% | ||||||||
E.I. du Pont de Nemours & Co. | 1,635,600 | 92,885,724 | ||||||
LyondellBasell Industries NV, Class A(1) | 942,800 | 41,954,600 | ||||||
PPG Industries, Inc. | 910,100 | 86,159,167 | ||||||
Sigma-Aldrich Corp. | 532,800 | 37,605,024 | ||||||
258,604,515 | ||||||||
COMMUNICATIONS EQUIPMENT — 4.8% | ||||||||
Cisco Systems, Inc. | 7,536,100 | 132,333,916 | ||||||
Juniper Networks, Inc.(1) | 1,442,800 | 55,302,524 | ||||||
QUALCOMM, Inc. | 3,161,300 | 179,688,292 | ||||||
Riverbed Technology, Inc.(1) | 576,500 | 20,258,210 | ||||||
387,582,942 | ||||||||
COMPUTERS & PERIPHERALS — 8.2% | ||||||||
Apple, Inc.(1) | 1,080,400 | 376,227,692 | ||||||
Dell, Inc.(1) | 4,507,300 | 69,908,223 | ||||||
EMC Corp.(1) | 4,564,200 | 129,349,428 | ||||||
NetApp, Inc.(1) | 1,545,700 | 80,345,486 | ||||||
655,830,829 | ||||||||
CONSUMER FINANCE — 1.2% | ||||||||
American Express Co. | 1,973,100 | 96,839,748 | ||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.5% | ||||||||
Verizon Communications, Inc. | 1,007,200 | 38,052,016 | ||||||
ELECTRICAL EQUIPMENT — 1.9% | ||||||||
Emerson Electric Co. | 823,200 | 50,017,632 | ||||||
Rockwell Automation, Inc. | 1,125,400 | 98,056,102 | ||||||
148,073,734 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.6% | ||||||||
Jabil Circuit, Inc. | 2,198,600 | 43,620,224 | ||||||
ENERGY EQUIPMENT & SERVICES — 3.4% | ||||||||
Core Laboratories NV | 272,500 | 26,154,550 | ||||||
Halliburton Co. | 894,100 | 45,134,168 | ||||||
Schlumberger Ltd. | 2,251,500 | 202,072,125 | ||||||
273,360,843 | ||||||||
FOOD & STAPLES RETAILING — 2.9% | ||||||||
Costco Wholesale Corp. | 1,449,200 | 117,269,264 | ||||||
Walgreen Co. | 1,963,100 | 83,863,632 | ||||||
Whole Foods Market, Inc. | 502,100 | 31,511,796 | ||||||
232,644,692 | ||||||||
FOOD PRODUCTS — 2.3% | ||||||||
General Mills, Inc. | 871,400 | 33,618,612 | ||||||
Hershey Co. (The) | 979,000 | 56,498,090 | ||||||
Kellogg Co. | 1,192,800 | 68,311,656 | ||||||
Mead Johnson Nutrition Co. | 429,100 | 28,698,208 | ||||||
187,126,566 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 4.0% | ||||||||
Cooper Cos., Inc. (The) | 246,100 | 18,432,890 | ||||||
Covidien plc | 1,368,000 | 76,183,920 | ||||||
DENTSPLY International, Inc. | 387,400 | 14,542,996 | ||||||
Edwards Lifesciences Corp.(1) | 327,900 | 28,314,165 | ||||||
Gen-Probe, Inc.(1) | 291,100 | 24,138,012 | ||||||
Intuitive Surgical, Inc.(1) | 87,800 | 30,703,660 | ||||||
Medtronic, Inc. | 1,505,100 | 62,837,925 | ||||||
St. Jude Medical, Inc. | 752,100 | 40,192,224 | ||||||
Zimmer Holdings, Inc.(1) | 428,200 | 27,940,050 | ||||||
323,285,842 |
8
Shares | Value |
HEALTH CARE PROVIDERS & SERVICES — 1.7% | ||||||||
Express Scripts, Inc.(1) | 2,380,800 | $ | 135,086,592 | |||||
HOTELS, RESTAURANTS & LEISURE — 3.3% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 40,700 | 10,858,353 | ||||||
Las Vegas Sands Corp.(1) | 640,700 | 30,119,307 | ||||||
McDonald’s Corp. | 1,429,000 | 111,904,990 | ||||||
Starbucks Corp. | 1,375,700 | 49,786,583 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 1,077,100 | 64,162,847 | ||||||
266,832,080 | ||||||||
HOUSEHOLD DURABLES — 0.4% | ||||||||
Whirlpool Corp. | 342,700 | 29,533,886 | ||||||
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
Church & Dwight Co., Inc. | 284,600 | 23,473,808 | ||||||
Procter & Gamble Co. (The) | 898,000 | 58,280,200 | ||||||
81,754,008 | ||||||||
INDUSTRIAL CONGLOMERATES — 1.3% | ||||||||
General Electric Co. | 5,050,800 | 103,288,860 | ||||||
INSURANCE — 0.8% | ||||||||
Aflac, Inc. | 1,199,500 | 67,399,905 | ||||||
INTERNET & CATALOG RETAIL — 0.4% | ||||||||
Netflix, Inc.(1) | 140,000 | 32,573,800 | ||||||
INTERNET SOFTWARE & SERVICES — 1.5% | ||||||||
Google, Inc., Class A(1) | 214,300 | 116,600,630 | ||||||
IT SERVICES — 5.0% | ||||||||
Accenture plc, Class A | 2,457,300 | 140,385,549 | ||||||
Automatic Data Processing, Inc. | 1,354,900 | 73,638,815 | ||||||
International Business Machines Corp. | 741,400 | 126,468,012 | ||||||
MasterCard, Inc., Class A | 216,900 | 59,840,541 | ||||||
400,332,917 | ||||||||
LIFE SCIENCES TOOLS & SERVICES — 0.5% | ||||||||
Bruker Corp.(1) | 396,700 | 7,830,858 | ||||||
Thermo Fisher Scientific, Inc.(1) | 517,700 | 31,056,823 | ||||||
38,887,681 | ||||||||
MACHINERY — 5.1% | ||||||||
Caterpillar, Inc. | 649,600 | 74,970,336 | ||||||
Deere & Co. | 902,700 | 88,013,250 | ||||||
Eaton Corp. | 1,877,600 | 100,507,928 | ||||||
Illinois Tool Works, Inc. | 1,676,900 | 97,947,729 | ||||||
Joy Global, Inc. | 492,600 | 49,727,970 | ||||||
411,167,213 | ||||||||
MEDIA — 1.7% | ||||||||
Scripps Networks Interactive, Inc., Class A | 1,030,000 | 52,962,600 | ||||||
Walt Disney Co. (The) | 1,899,700 | 81,877,070 | ||||||
134,839,670 | ||||||||
METALS & MINING — 2.2% | ||||||||
Cliffs Natural Resources, Inc. | 796,400 | 74,638,608 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 1,229,500 | 67,659,385 | ||||||
Newmont Mining Corp. | 503,000 | 29,480,830 | ||||||
171,778,823 | ||||||||
MULTILINE RETAIL — 1.5% | ||||||||
Kohl’s Corp. | 736,100 | 38,799,831 | ||||||
Target Corp. | 1,678,700 | 82,424,170 | ||||||
121,224,001 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 7.9% | ||||||||
Cimarex Energy Co. | 386,400 | 42,731,976 | ||||||
ConocoPhillips | 888,700 | 70,145,091 | ||||||
Exxon Mobil Corp. | 4,538,600 | 399,396,800 | ||||||
Occidental Petroleum Corp. | 584,300 | 66,779,647 | ||||||
Southwestern Energy Co.(1) | 1,263,000 | 55,395,180 | ||||||
634,448,694 | ||||||||
PERSONAL PRODUCTS — 0.4% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 327,500 | 31,767,500 | ||||||
PHARMACEUTICALS — 2.7% | ||||||||
Abbott Laboratories | 2,169,200 | 112,885,168 | ||||||
Allergan, Inc. | 950,300 | 75,605,868 | ||||||
Novo Nordisk A/S B Shares | 247,000 | 31,223,908 | ||||||
219,714,944 | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 0.6% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 1,646,500 | 43,978,015 | ||||||
ROAD & RAIL — 0.6% | ||||||||
Union Pacific Corp. | 465,500 | 48,165,285 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.8% | ||||||||
Altera Corp. | 1,134,700 | 55,259,890 | ||||||
Broadcom Corp., Class A(1) | 324,900 | 11,429,982 | ||||||
Linear Technology Corp. | 1,530,700 | 53,268,360 | ||||||
RF Micro Devices, Inc.(1) | 1,593,500 | 10,612,710 | ||||||
Texas Instruments, Inc. | 2,040,900 | 72,513,177 | ||||||
Xilinx, Inc. | 526,800 | 18,364,248 | ||||||
221,448,367 | ||||||||
SOFTWARE — 6.7% | ||||||||
Citrix Systems, Inc.(1) | 459,400 | 38,745,796 | ||||||
CommVault Systems, Inc.(1) | 234,300 | 9,229,077 | ||||||
Intuit, Inc.(1) | 745,300 | 41,408,868 | ||||||
Microsoft Corp. | 3,528,500 | 91,811,570 | ||||||
Oracle Corp. | 6,283,300 | 226,512,965 | ||||||
Red Hat, Inc.(1) | 1,076,600 | 51,106,202 | ||||||
salesforce.com, inc.(1) | 182,900 | 25,349,940 | ||||||
VMware, Inc., Class A(1) | 584,751 | 55,802,788 | ||||||
539,967,206 |
9
Shares | Value |
SPECIALTY RETAIL — 3.1% | ||||||||
American Eagle Outfitters, Inc. | 1,577,000 | $ | 24,538,120 | |||||
Home Depot, Inc. (The) | 3,276,000 | 121,670,640 | ||||||
Limited Brands, Inc. | 1,781,900 | 73,343,004 | ||||||
OfficeMax, Inc.(1) | 880,500 | 8,769,780 | ||||||
Williams-Sonoma, Inc. | 537,000 | 23,311,170 | ||||||
251,632,714 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.0% | ||||||||
Crown Castle International Corp.(1) | 1,886,400 | 80,851,104 | ||||||
TOTAL COMMON STOCKS (Cost $6,521,361,757) | 7,919,456,253 | |||||||
Temporary Cash Investments — 1.5% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 74,106 | 74,106 | ||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 1.375%, 5/15/13, valued at $122,604,062), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $120,200,100) | 120,200,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $120,274,106) | 120,274,106 | |||||||
TOTAL INVESTMENT SECURITIES — 100.3% (Cost $6,641,635,863) | 8,039,730,359 | |||||||
OTHER ASSETS AND LIABILITIES — (0.3)% | (20,554,941 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 8,019,175,418 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
101,868,975 | DKK for USD | UBS AG | 5/31/11 | $20,219,400 | $(270,633) |
(Value on Settlement Date $19,948,767)
Notes to Schedule of Investments
DKK = Danish Krone
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $6,641,635,863) | $ | 8,039,730,359 | ||
Foreign currency holdings, at value (cost of $403,392) | 403,392 | |||
Receivable for investments sold | 107,457,260 | |||
Receivable for capital shares sold | 12,203,979 | |||
Dividends and interest receivable | 5,971,623 | |||
8,165,766,613 | ||||
Liabilities | ||||
Payable for investments purchased | 133,545,177 | |||
Payable for capital shares redeemed | 6,712,382 | |||
Unrealized loss on forward foreign currency exchange contracts | 270,633 | |||
Accrued management fees | 5,940,543 | |||
Distribution and service fees payable | 122,460 | |||
146,591,195 | ||||
Net Assets | $ | 8,019,175,418 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 6,480,259,730 | ||
Undistributed net investment income | 23,683,144 | |||
Undistributed net realized gain | 117,406,637 | |||
Net unrealized appreciation | 1,397,825,907 | |||
$ | 8,019,175,418 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $5,570,604,692 | 198,916,400 | $28.00 |
Institutional Class, $0.01 Par Value | $1,905,136,323 | 67,462,252 | $28.24 |
A Class, $0.01 Par Value | $486,349,965 | 17,640,359 | $27.57* |
C Class, $0.01 Par Value | $12,903,852 | 464,491 | $27.78 |
R Class, $0.01 Par Value | $44,180,586 | 1,610,878 | $27.43 |
* Maximum offering price $29.25 (net asset value divided by 0.9425)
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $90,635) | $ | 56,914,132 | ||
Interest | 41,249 | |||
56,955,381 | ||||
Expenses: | ||||
Management fees | 32,414,975 | |||
Distribution and service fees: | ||||
A Class | 529,618 | |||
C Class | 44,482 | |||
R Class | 78,243 | |||
Directors’ fees and expenses | 172,206 | |||
33,239,524 | ||||
Net investment income (loss) | 23,715,857 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 356,762,830 | |||
Foreign currency transactions | (1,400,155 | ) | ||
355,362,675 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 686,413,810 | |||
Translation of assets and liabilities in foreign currencies | (218,167 | ) | ||
686,195,643 | ||||
Net realized and unrealized gain (loss) | 1,041,558,318 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,065,274,175 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 23,715,857 | $ | 21,711,027 | ||||
Net realized gain (loss) | 355,362,675 | 481,896,410 | ||||||
Change in net unrealized appreciation (depreciation) | 686,195,643 | 323,115,779 | ||||||
Net increase (decrease) in net assets resulting from operations | 1,065,274,175 | 826,723,216 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (16,085,104 | ) | (9,474,213 | ) | ||||
Institutional Class | (6,371,247 | ) | (2,809,220 | ) | ||||
A Class | (354,453 | ) | (22,537 | ) | ||||
Decrease in net assets from distributions | (22,810,804 | ) | (12,305,970 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 1,034,126,064 | 984,370,677 | ||||||
Net increase (decrease) in net assets | 2,076,589,435 | 1,798,787,923 | ||||||
Net Assets | ||||||||
Beginning of period | 5,942,585,983 | 4,143,798,060 | ||||||
End of period | $ | 8,019,175,418 | $ | 5,942,585,983 | ||||
Undistributed net investment income | $ | 23,683,144 | $ | 22,778,091 |
See Notes to Financial Statements.
13
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in equity securities of larger-sized companies that management believes will increase in value over time.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class (formerly Advisor Class), the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. Sale of the C Class commenced on March 1, 2010.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
14
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
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.
15
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The strategy assets of the fund include the assets of NT Growth Fund, one fund in a series issued by the corporation. The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, C Class and R Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 0.98% for the Investor Class, A Class, C Class and R Class and 0.78% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $2,846,320,172 and $1,864,843,814, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010(1) | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||||||||
Sold | 27,253,442 | $ | 720,592,453 | 42,868,834 | $ | 951,268,051 | ||||||||||
Issued in connection with reorganization (Note 9) | — | — | 1,023,911 | 24,573,857 | ||||||||||||
Issued in reinvestment of distributions | 592,046 | 15,180,061 | 384,127 | 8,458,476 | ||||||||||||
Redeemed | (13,902,889 | ) | (365,710,741 | ) | (25,562,853 | ) | (568,903,119 | ) | ||||||||
13,942,599 | 370,061,773 | 18,714,019 | 415,397,265 | |||||||||||||
Institutional Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||||
Sold | 24,905,887 | 669,732,365 | 25,469,004 | 591,790,668 | ||||||||||||
Issued in connection with reorganization (Note 9) | — | — | 53,875 | 1,305,390 | ||||||||||||
Issued in reinvestment of distributions | 238,680 | 6,165,100 | 122,616 | 2,720,853 | ||||||||||||
Redeemed | (3,361,055 | ) | (88,640,659 | ) | (6,807,256 | ) | (152,879,506 | ) | ||||||||
21,783,512 | 587,256,806 | 18,838,239 | 442,937,405 | |||||||||||||
A Class/Shares Authorized | 310,000,000 | 310,000,000 | ||||||||||||||
Sold | 4,776,556 | 124,926,547 | 5,917,194 | 128,488,284 | ||||||||||||
Issued in connection with reorganization (Note 9) | — | — | 1,719,102 | 40,570,799 | ||||||||||||
Issued in reinvestment of distributions | 12,885 | 325,465 | 964 | 20,921 | ||||||||||||
Redeemed | (2,789,238 | ) | (73,059,806 | ) | (2,746,133 | ) | (59,876,656 | ) | ||||||||
2,000,203 | 52,192,206 | 4,891,127 | 109,203,348 | |||||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 235,566 | 6,235,701 | 56,605 | 1,279,112 | ||||||||||||
Issued in connection with reorganization (Note 9) | — | — | 204,997 | 4,889,189 | ||||||||||||
Redeemed | (31,836 | ) | (830,583 | ) | (841 | ) | (17,696 | ) | ||||||||
203,730 | 5,405,118 | 260,761 | 6,150,605 | |||||||||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||||
Sold | 944,273 | 24,369,246 | 559,790 | 12,252,871 | ||||||||||||
Issued in connection with reorganization (Note 9) | — | — | 92,918 | 2,182,649 | ||||||||||||
Redeemed | (198,753 | ) | (5,159,085 | ) | (172,171 | ) | (3,753,466 | ) | ||||||||
745,520 | 19,210,161 | 480,537 | 10,682,054 | |||||||||||||
Net increase (decrease) | 38,675,564 | $ | 1,034,126,064 | 43,184,683 | $ | 984,370,677 |
(1) | March 1, 2010 (commencement of sale) through October 31, 2010 for the C Class. |
17
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 7,888,232,345 | $ | 31,223,908 | — | |||||||
Temporary Cash Investments | 74,106 | 120,200,000 | — | |||||||||
Total Value of Investment Securities | $ | 7,888,306,451 | $ | 151,423,908 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (270,633 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
18
The value of foreign currency risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as a liability of $270,633 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2011, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(1,421,305) in net realized gain (loss) on foreign currency transactions and $(220,111) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 6,654,199,382 | ||
Gross tax appreciation of investments | $ | 1,468,099,829 | ||
Gross tax depreciation of investments | (82,568,852 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 1,385,530,977 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(218,430,712), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(13,506,140), $(4,346,487) and $(200,578,085) expire in 2015, 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
19
9. Reorganization Plan
On June 10, 2010, the Board of Directors approved a plan of reorganization (the reorganization), pursuant to which Growth acquired all of the assets of Capital Growth Fund (Capital Growth), a fund in a series issued by the corporation, in exchange for shares of equal value of Growth and assumption by Growth of certain ordinary course liabilities of Capital Growth. The financial statements and performance history of Growth were carried over post-reorganization. The reorganization was effective at the close of business on October 29, 2010.
The reorganization was accomplished by a tax-free exchange of shares. On October 29, 2010, Capital Growth exchanged its shares for shares of Growth as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | |
Capital Growth — Investor Class | 2,077,088 | Growth — Investor Class | 1,023,911 | |
Capital Growth — Institutional Class | 109,789 | Growth — Institutional Class | 53,875 | |
Capital Growth — A Class | 3,382,474 | Growth — A Class | 1,681,204 | |
Capital Growth — B Class | 80,143 | Growth — A Class | 37,898 | |
Capital Growth — C Class | 438,099 | Growth — C Class | 204,997 | |
Capital Growth — R Class | 187,997 | Growth — R Class | 92,918 |
The net assets of Capital Growth and Growth immediately before the reorganization were $73,521,884 and $5,869,064,099, respectively. Capital Growth’s unrealized appreciation of $13,044,432 was combined with that of Growth. Immediately after the reorganization, the combined net assets were $5,942,585,983. Growth acquired capital loss carryovers of $(1,831,877) from Capital Growth.
Assuming the reorganization had been completed on November 1, 2009, the beginning of the annual reporting period, the pro forma results of operations for the year ended October 31, 2010, were as follows:
Net investment income (loss) | $ | 21,800,994 | ||
Net realized and unrealized gain (loss) | 813,269,412 | |||
Net increase (decrease) in net assets resulting from operations | $ | 835,070,406 |
Because the reorganization was completed at the close of business on the last business day of the period, no revenue and earnings of Capital Growth were included in the Statement of Operations.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 24.00 | $ | 20.28 | $ | 17.69 | $ | 26.78 | $ | 21.99 | $ | 19.80 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.09 | 0.10 | 0.09 | 0.04 | 0.04 | 0.02 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 4.00 | 3.68 | 2.58 | (9.10 | ) | 4.76 | 2.26 | |||||||||||||||||
Total From Investment Operations | 4.09 | 3.78 | 2.67 | (9.06 | ) | 4.80 | 2.28 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.09 | ) | (0.06 | ) | (0.08 | ) | (0.03 | ) | (0.01 | ) | (0.09 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 28.00 | $ | 24.00 | $ | 20.28 | $ | 17.69 | $ | 26.78 | $ | 21.99 | ||||||||||||
Total Return(3) | 17.06 | % | 18.65 | % | 15.25 | % | (33.86 | )% | 21.86 | % | 11.51 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.98 | %(4) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.66 | %(4) | 0.43 | % | 0.50 | % | 0.16 | % | 0.15 | % | 0.09 | % | ||||||||||||
Portfolio Turnover Rate | 27 | % | 86 | % | 114 | % | 129 | % | 112 | % | 127 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 5,571 | $ | 4,440 | $ | 3,372 | $ | 2,617 | $ | 4,133 | $ | 3,946 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
21
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 24.23 | $ | 20.47 | $ | 17.86 | $ | 27.03 | $ | 22.19 | $ | 19.98 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.11 | 0.14 | 0.12 | 0.08 | 0.09 | 0.06 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 4.04 | 3.72 | 2.61 | (9.17 | ) | 4.81 | 2.27 | |||||||||||||||||
Total From Investment Operations | 4.15 | 3.86 | 2.73 | (9.09 | ) | 4.90 | 2.33 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.14 | ) | (0.10 | ) | (0.12 | ) | (0.08 | ) | (0.06 | ) | (0.12 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 28.24 | $ | 24.23 | $ | 20.47 | $ | 17.86 | $ | 27.03 | $ | 22.19 | ||||||||||||
Total Return(3) | 17.17 | % | 18.90 | % | 15.45 | % | (33.71 | )% | 22.13 | % | 11.70 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.78 | %(4) | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.86 | %(4) | 0.63 | % | 0.70 | % | 0.36 | % | 0.35 | % | 0.29 | % | ||||||||||||
Portfolio Turnover Rate | 27 | % | 86 | % | 114 | % | 129 | % | 112 | % | 127 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 1,905,136 | $ | 1,106,748 | $ | 549,496 | $ | 286,262 | $ | 284,695 | $ | 759,816 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 23.60 | $ | 19.94 | $ | 17.40 | $ | 26.36 | $ | 21.68 | $ | 19.53 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.05 | 0.04 | 0.04 | (0.02 | ) | (0.04 | ) | (0.03 | ) | |||||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.94 | 3.62 | 2.54 | (8.94 | ) | 4.72 | 2.22 | |||||||||||||||||
Total From Investment Operations | 3.99 | 3.66 | 2.58 | (8.96 | ) | 4.68 | 2.19 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.02 | ) | — | (4) | (0.04 | ) | — | — | (0.04 | ) | ||||||||||||||
Net Asset Value, End of Period | $ | 27.57 | $ | 23.60 | $ | 19.94 | $ | 17.40 | $ | 26.36 | $ | 21.68 | ||||||||||||
Total Return(5) | 16.92 | % | 18.37 | % | 14.99 | % | (34.03 | )% | 21.59 | % | 11.23 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.23 | %(6) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.41 | %(6) | 0.18 | % | 0.25 | % | (0.09 | )% | (0.10 | )% | (0.16 | )% | ||||||||||||
Portfolio Turnover Rate | 27 | % | 86 | % | 114 | % | 129 | % | 112 | % | 127 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 486,350 | $ | 369,142 | $ | 214,371 | $ | 141,441 | $ | 206,837 | $ | 85,953 |
(1) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(2) | Six months ended April 30, 2011 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
See Notes to Financial Statements.
23
C Class | ||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||
2011(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $ | 23.85 | $ | 22.10 | ||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.05 | ) | (0.10 | ) | ||||
Net Realized and Unrealized Gain (Loss) | 3.98 | 1.85 | ||||||
Total From Investment Operations | 3.93 | 1.75 | ||||||
Net Asset Value, End of Period | $ | 27.78 | $ | 23.85 | ||||
Total Return(4) | 16.48 | % | 7.92 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 1.98 | %(5) | 2.00 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.34 | )%(5) | (0.66 | )%(5) | ||||
Portfolio Turnover Rate | 27 | % | 86 | %(6) | ||||
Net Assets, End of Period (in thousands) | $ | 12,904 | $ | 6,219 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
24
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 23.49 | $ | 19.90 | $ | 17.35 | $ | 26.37 | $ | 21.74 | $ | 19.59 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.01 | (0.02 | ) | (0.01 | ) | (0.08 | ) | (0.10 | ) | (0.11 | ) | |||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.93 | 3.61 | 2.56 | (8.94 | ) | 4.73 | 2.26 | |||||||||||||||||
Total From Investment Operations | 3.94 | 3.59 | 2.55 | (9.02 | ) | 4.63 | 2.15 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | — | (3) | — | — | — | |||||||||||||||||
Net Asset Value, End of Period | $ | 27.43 | $ | 23.49 | $ | 19.90 | $ | 17.35 | $ | 26.37 | $ | 21.74 | ||||||||||||
Total Return(4) | 16.77 | % | 18.10 | % | 14.67 | % | (34.21 | )% | 21.30 | % | 10.97 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.48 | %(5) | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.16 | %(5) | (0.07 | )% | 0.00 | %(6) | (0.34 | )% | (0.35 | )% | (0.41 | )% | ||||||||||||
Portfolio Turnover Rate | 27 | % | 86 | % | 114 | % | 129 | % | 112 | % | 127 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 44,181 | $ | 20,325 | $ | 7,656 | $ | 3,280 | $ | 2,383 | $ | 298 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
(6) | Ratio was less than 0.005%. |
See Notes to Financial Statements.
25
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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27
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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 Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71833 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Heritage Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 6 |
Shareholder Fee Example | 7 |
Schedule of Investments | 9 |
Statement of Assets and Liabilities | 12 |
Statement of Operations | 13 |
Statement of Changes in Net Assets | 14 |
Notes to Financial Statements | 15 |
Financial Highlights | 21 |
Additional Information | 27 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWHIX | 20.46% | 28.99% | 9.56% | 7.82% | 12.15% | 11/10/87 |
Russell Midcap Growth Index | — | 22.62% | 27.40% | 5.59% | 5.68% | 11.10%(2) | — |
Russell Midcap Index | — | 20.67% | 23.36% | 5.14% | 7.95% | 12.33%(2) | — |
Institutional Class | ATHIX | 20.59% | 29.29% | 9.78% | 8.05% | 9.46% | 6/16/97 |
A Class(3) No sales charge* With sales charge* | ATHAX | 20.37% 13.46% | 28.70% 21.28% | 9.29% 8.00% | 7.55% 6.91% | 8.65% 8.18% | 7/11/97 |
B Class No sales charge* With sales charge* | ATHBX | 19.88% 14.88% | 27.69% 23.69% | — — | — — | 2.73% 1.94% | 9/28/07 |
C Class No sales charge* With sales charge* | AHGCX | 19.89% 18.89% | 27.75% 27.75% | 8.48% 8.48% | — — | 6.88% 6.88% | 6/26/01 |
R Class | ATHWX | 20.20% | 28.37% | — | — | 3.25% | 9/28/07 |
*Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 10/31/87, the date nearest the Investor Class’s inception for which data are available. |
(3) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
4
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.01% | 0.81% | 1.26% | 2.01% | 2.01% | 1.51% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
5
Top Ten Holdings | % of net assets |
Netflix, Inc. | 2.8% |
priceline.com, Inc. | 2.2% |
Royal Caribbean Cruises Ltd. | 2.1% |
BE Aerospace, Inc. | 2.1% |
SXC Health Solutions Corp. | 2.0% |
Whole Foods Market, Inc. | 1.9% |
VeriSign, Inc. | 1.8% |
Apple, Inc. | 1.8% |
O’Reilly Automotive, Inc. | 1.8% |
National Oilwell Varco, Inc. | 1.7% |
Top Five Industries | % of net assets |
Machinery | 7.4% |
Internet & Catalog Retail | 5.0% |
Internet Software & Services | 4.5% |
Specialty Retail | 4.4% |
Energy Equipment & Services | 4.3% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.1% |
Foreign Common Stocks* | 9.7% |
Total Common Stocks | 98.8% |
Temporary Cash Investments | 1.3% |
Other Assets and Liabilities | (0.1)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
6
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. 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.
7
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 - 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,204.60 | $5.52 | 1.01% |
Institutional Class | $1,000 | $1,205.90 | $4.43 | 0.81% |
A Class | $1,000 | $1,203.70 | $6.88 | 1.26% |
B Class | $1,000 | $1,198.80 | $10.96 | 2.01% |
C Class | $1,000 | $1,198.90 | $10.96 | 2.01% |
R Class | $1,000 | $1,202.00 | $8.24 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.79 | $5.06 | 1.01% |
Institutional Class | $1,000 | $1,020.78 | $4.06 | 0.81% |
A Class | $1,000 | $1,018.55 | $6.31 | 1.26% |
B Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
C Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
R Class | $1,000 | $1,017.31 | $7.55 | 1.51% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
8
Shares | Value | |||||||
Common Stocks — 98.8% | ||||||||
AEROSPACE & DEFENSE — 3.2% | ||||||||
BE Aerospace, Inc.(1) | 2,329,184 | $ | 89,883,211 | |||||
TransDigm Group, Inc.(1) | 536,300 | 44,673,790 | ||||||
134,557,001 | ||||||||
AUTO COMPONENTS — 0.9% | ||||||||
BorgWarner, Inc.(1) | 485,900 | 37,530,916 | ||||||
AUTOMOBILES — 0.5% | ||||||||
Harley-Davidson, Inc. | 527,800 | 19,665,828 | ||||||
BEVERAGES — 0.7% | ||||||||
Hansen Natural Corp.(1) | 434,900 | 28,768,635 | ||||||
BIOTECHNOLOGY — 3.2% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 607,700 | 58,880,053 | ||||||
United Therapeutics Corp.(1) | 563,900 | 37,758,744 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 683,200 | 37,589,664 | ||||||
134,228,461 | ||||||||
CAPITAL MARKETS — 2.3% | ||||||||
KKR & Co. LP | 1,344,100 | 25,484,136 | ||||||
Lazard Ltd., Class A | 1,067,400 | 43,763,400 | ||||||
Raymond James Financial, Inc. | 705,900 | 26,471,250 | ||||||
95,718,786 | ||||||||
CHEMICALS — 1.6% | ||||||||
Albemarle Corp. | 965,400 | 68,108,970 | ||||||
COMMERCIAL BANKS — 0.5% | ||||||||
East West Bancorp., Inc. | 943,600 | 19,938,268 | ||||||
COMMERCIAL SERVICES & SUPPLIES — 1.0% | ||||||||
Stericycle, Inc.(1) | 463,500 | 42,308,280 | ||||||
COMMUNICATIONS EQUIPMENT — 1.9% | ||||||||
Aruba Networks, Inc.(1) | 653,600 | 23,483,848 | ||||||
F5 Networks, Inc.(1) | 355,900 | 36,074,024 | ||||||
Polycom, Inc.(1) | 371,600 | 22,232,828 | ||||||
81,790,700 | ||||||||
COMPUTERS & PERIPHERALS — 1.8% | ||||||||
Apple, Inc.(1) | 221,927 | 77,281,639 | ||||||
CONSTRUCTION & ENGINEERING — 1.1% | ||||||||
Foster Wheeler AG(1) | 692,500 | 24,632,225 | ||||||
KBR, Inc. | 607,400 | 23,305,938 | ||||||
47,938,163 | ||||||||
CONSUMER FINANCE — 0.8% | ||||||||
Discover Financial Services | 1,359,404 | 33,767,595 | ||||||
CONTAINERS & PACKAGING — 1.4% | ||||||||
Crown Holdings, Inc.(1) | 1,045,100 | 39,086,740 | ||||||
Rock-Tenn Co., Class A | 294,700 | 20,354,929 | ||||||
59,441,669 | ||||||||
DIVERSIFIED CONSUMER SERVICES — 0.6% | ||||||||
Weight Watchers International, Inc. | 334,566 | 26,012,507 | ||||||
ELECTRICAL EQUIPMENT — 2.9% | ||||||||
Cooper Industries plc | 743,300 | 49,020,635 | ||||||
Polypore International, Inc.(1) | 361,859 | 22,352,030 | ||||||
Rockwell Automation, Inc. | 596,900 | 52,007,897 | ||||||
123,380,562 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 2.0% | ||||||||
Jabil Circuit, Inc. | 2,225,800 | 44,159,872 | ||||||
Trimble Navigation Ltd.(1) | 853,700 | 39,987,308 | ||||||
84,147,180 | ||||||||
ENERGY EQUIPMENT & SERVICES — 4.3% | ||||||||
Atwood Oceanics, Inc.(1) | 482,700 | 21,687,711 | ||||||
Dril-Quip, Inc.(1) | 288,900 | 22,118,184 | ||||||
FMC Technologies, Inc.(1) | 763,600 | 35,492,128 | ||||||
McDermott International, Inc.(1) | 1,374,400 | 31,734,896 | ||||||
National Oilwell Varco, Inc. | 943,300 | 72,341,677 | ||||||
183,374,596 | ||||||||
FOOD & STAPLES RETAILING — 2.6% | ||||||||
Costco Wholesale Corp. | 358,000 | 28,969,360 | ||||||
Whole Foods Market, Inc. | 1,316,600 | 82,629,816 | ||||||
111,599,176 | ||||||||
FOOD PRODUCTS — 1.6% | ||||||||
J.M. Smucker Co. (The) | 327,500 | 24,585,425 | ||||||
Mead Johnson Nutrition Co. | 616,100 | 41,204,768 | ||||||
65,790,193 | ||||||||
GAS UTILITIES — 0.6% | ||||||||
National Fuel Gas Co. | 361,100 | 26,468,630 | ||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 3.9% | ||||||||
C.R. Bard, Inc. | 543,900 | 58,061,325 | ||||||
Cooper Cos., Inc. (The) | 276,688 | 20,723,931 | ||||||
Mettler-Toledo International, Inc.(1) | 182,200 | 34,144,280 | ||||||
Varian Medical Systems, Inc.(1) | 747,900 | 52,502,580 | ||||||
165,432,116 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 1.1% | ||||||||
Express Scripts, Inc.(1) | 854,500 | 48,484,330 | ||||||
HEALTH CARE TECHNOLOGY — 2.8% | ||||||||
Allscripts Healthcare Solutions, Inc.(1) | 1,534,800 | 33,059,592 | ||||||
SXC Health Solutions Corp.(1) | 1,533,577 | 84,592,107 | ||||||
117,651,699 |
9
Shares | Value |
HOTELS, RESTAURANTS & LEISURE — 4.3% | ||||||||
Arcos Dorados Holdings, Inc., Class A(1) | 672,855 | $ | 14,822,996 | |||||
Chipotle Mexican Grill, Inc.(1) | 170,700 | 45,541,053 | ||||||
Panera Bread Co., Class A(1) | 246,772 | 29,886,557 | ||||||
Royal Caribbean Cruises Ltd.(1) | 2,271,500 | 90,451,130 | ||||||
180,701,736 | ||||||||
HOUSEHOLD DURABLES — 0.1% | ||||||||
KB Home | 409,500 | 4,836,195 | ||||||
HOUSEHOLD PRODUCTS — 0.8% | ||||||||
Church & Dwight Co., Inc. | 408,700 | 33,709,576 | ||||||
INTERNET & CATALOG RETAIL — 5.0% | ||||||||
Netflix, Inc.(1) | 505,400 | 117,591,418 | ||||||
priceline.com, Inc.(1) | 171,711 | 93,927,634 | ||||||
211,519,052 | ||||||||
INTERNET SOFTWARE & SERVICES — 4.5% | ||||||||
Baidu, Inc. ADR(1) | 281,100 | 41,748,972 | ||||||
OpenTable, Inc.(1) | 246,400 | 27,421,856 | ||||||
SAVVIS, Inc.(1) | 607,700 | 23,919,072 | ||||||
VeriSign, Inc. | 2,097,000 | 77,505,120 | ||||||
WebMD Health Corp.(1) | 332,489 | 19,241,139 | ||||||
189,836,159 | ||||||||
IT SERVICES — 2.9% | ||||||||
Alliance Data Systems Corp.(1) | 395,100 | 37,534,500 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 791,800 | 65,640,220 | ||||||
VeriFone Systems, Inc.(1) | 392,400 | 21,511,368 | ||||||
124,686,088 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 0.5% | ||||||||
Brunswick Corp. | 869,200 | 20,313,204 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 2.1% | ||||||||
Agilent Technologies, Inc.(1) | 681,700 | 34,023,647 | ||||||
Illumina, Inc.(1) | 749,300 | 53,185,314 | ||||||
87,208,961 | ||||||||
MACHINERY — 7.4% | ||||||||
AGCO Corp.(1) | 950,000 | 54,701,000 | ||||||
Chart Industries, Inc.(1) | 456,800 | 22,205,048 | ||||||
Cummins, Inc. | 521,900 | 62,721,942 | ||||||
Deere & Co. | 175,400 | 17,101,500 | ||||||
Harsco Corp. | 553,778 | 19,714,497 | ||||||
Joy Global, Inc. | 482,400 | 48,698,280 | ||||||
Manitowoc Co., Inc. (The) | 1,270,600 | 28,194,614 | ||||||
Titan International, Inc. | 755,000 | 23,321,950 | ||||||
WABCO Holdings, Inc.(1) | 530,600 | 39,184,810 | ||||||
315,843,641 | ||||||||
MEDIA — 1.7% | ||||||||
Focus Media Holding Ltd. ADR(1) | 232,738 | 8,180,741 | ||||||
Imax Corp.(1) | 1,821,438 | 63,896,045 | ||||||
72,076,786 | ||||||||
METALS & MINING — 0.8% | ||||||||
Cliffs Natural Resources, Inc. | 377,800 | 35,407,416 | ||||||
OIL, GAS & CONSUMABLE FUELS — 3.3% | ||||||||
Concho Resources, Inc.(1) | 628,200 | 67,123,170 | ||||||
Linn Energy LLC | 627,700 | 25,346,526 | ||||||
Pioneer Natural Resources Co. | 158,700 | 16,223,901 | ||||||
SandRidge Energy, Inc.(1) | 2,667,000 | 32,964,120 | ||||||
141,657,717 | ||||||||
PHARMACEUTICALS — 0.7% | ||||||||
Shire plc ADR | 322,700 | 30,078,867 | ||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 2.0% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 2,383,400 | 63,660,614 | ||||||
Jones Lang LaSalle, Inc. | 215,400 | 22,052,652 | ||||||
85,713,266 | ||||||||
ROAD & RAIL — 1.3% | ||||||||
J.B. Hunt Transport Services, Inc. | 478,200 | 22,800,576 | ||||||
Kansas City Southern(1) | 540,600 | 31,414,266 | ||||||
54,214,842 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 4.2% | ||||||||
ARM Holdings plc | 2,614,500 | 27,284,775 | ||||||
Cavium Networks, Inc.(1) | 971,300 | 45,864,786 | ||||||
Cypress Semiconductor Corp.(1) | 1,934,300 | 42,090,368 | ||||||
OmniVision Technologies, Inc.(1) | 628,300 | 21,110,880 | ||||||
Skyworks Solutions, Inc.(1) | 732,000 | 23,028,720 | ||||||
Veeco Instruments, Inc.(1) | 388,400 | 19,858,892 | ||||||
179,238,421 | ||||||||
SOFTWARE — 3.3% | ||||||||
Check Point Software Technologies Ltd.(1) | 419,500 | 23,043,135 | ||||||
Citrix Systems, Inc.(1) | 582,692 | 49,144,243 | ||||||
salesforce.com, inc.(1) | 485,000 | 67,221,000 | ||||||
139,408,378 | ||||||||
SPECIALTY RETAIL — 4.4% | ||||||||
Dick’s Sporting Goods, Inc.(1) | 396,171 | 16,215,279 | ||||||
O’Reilly Automotive, Inc.(1) | 1,283,300 | 75,791,698 | ||||||
PetSmart, Inc. | 1,204,200 | 50,781,114 | ||||||
Williams-Sonoma, Inc. | 995,800 | 43,227,678 | ||||||
186,015,769 |
10
Shares | Value |
TEXTILES, APPAREL & LUXURY GOODS — 2.1% | ||||||||
Fossil, Inc.(1) | 436,600 | $ | 41,817,548 | |||||
Lululemon Athletica, Inc.(1) | 464,600 | 46,473,938 | ||||||
88,291,486 | ||||||||
TRADING COMPANIES & DISTRIBUTORS — 2.0% | ||||||||
Fastenal Co. | 921,100 | 61,796,599 | ||||||
WESCO International, Inc.(1) | 378,900 | 23,472,855 | ||||||
85,269,454 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 2.1% | ||||||||
NII Holdings, Inc.(1) | 754,000 | 31,351,320 | ||||||
SBA Communications Corp., Class A(1) | 1,541,832 | 59,560,970 | ||||||
90,912,290 | ||||||||
TOTAL COMMON STOCKS (Cost $2,985,828,582) | 4,190,325,204 | |||||||
Temporary Cash Investments — 1.3% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 69,585 | 69,585 | ||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 1.375%, 5/15/13, valued at $56,508,029), in a joint trading account at 0.01%, dated 4/29/11, due 5/2/11 (Delivery value $55,400,046) | 55,400,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $55,469,585) | 55,469,585 | |||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $3,041,298,167) | 4,245,794,789 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (2,940,881 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 4,242,853,908 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
12,265,273 | GBP for USD | Bank of America | 5/31/11 | $20,480,430 | $(280,398) |
(Value on Settlement Date $20,200,032)
Notes to Schedule of Investments
ADR = American Depositary Receipt
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
11
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $3,041,298,167) | $ | 4,245,794,789 | ||
Receivable for investments sold | 57,368,346 | |||
Receivable for capital shares sold | 15,192,630 | |||
Dividends and interest receivable | 701,497 | |||
4,319,057,262 | ||||
Liabilities | ||||
Payable for investments purchased | 67,684,593 | |||
Payable for capital shares redeemed | 4,664,823 | |||
Unrealized loss on forward foreign currency exchange contracts | 280,398 | |||
Accrued management fees | 3,240,045 | |||
Distribution and service fees payable | 333,495 | |||
76,203,354 | ||||
Net Assets | $ | 4,242,853,908 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 3,103,371,548 | ||
Accumulated net investment loss | (8,397,791 | ) | ||
Accumulated net realized loss | (56,337,575 | ) | ||
Net unrealized appreciation | 1,204,217,726 | |||
$ | 4,242,853,908 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $2,804,166,420 | 121,163,737 | $23.14 |
Institutional Class, $0.01 Par Value | $175,556,710 | 7,419,543 | $23.66 |
A Class, $0.01 Par Value | $1,100,754,634 | 48,903,901 | $22.51* |
B Class, $0.01 Par Value | $4,643,539 | 205,865 | $22.56 |
C Class, $0.01 Par Value | $125,636,351 | 5,971,274 | $21.04 |
R Class, $0.01 Par Value | $32,096,254 | 1,404,829 | $22.85 |
*Maximum offering price $23.88 (net asset value divided by 0.9425)
See Notes to Financial Statements.
12
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $4,459) | $ | 10,501,416 | ||
Interest | 19,475 | |||
10,520,891 | ||||
Expenses: | ||||
Management fees | 17,303,363 | |||
Distribution and service fees: | ||||
A Class | 1,194,274 | |||
B Class | 21,947 | |||
C Class | 524,330 | |||
R Class | 60,791 | |||
Directors’ fees and expenses | 114,091 | |||
Other expenses | 150 | |||
19,218,946 | ||||
Net investment income (loss) | (8,698,055 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 219,840,394 | |||
Foreign currency transactions | (733,521 | ) | ||
219,106,873 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 429,040,014 | |||
Translation of assets and liabilities in foreign currencies | 21,324 | |||
429,061,338 | ||||
Net realized and unrealized gain (loss) | 648,168,211 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 639,470,156 |
See Notes to Financial Statements.
13
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (8,698,055 | ) | $ | (13,068,160 | ) | ||
Net realized gain (loss) | 219,106,873 | 209,252,754 | ||||||
Change in net unrealized appreciation (depreciation) | 429,061,338 | 502,214,585 | ||||||
Net increase (decrease) in net assets resulting from operations | 639,470,156 | 698,399,179 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Institutional Class | — | (45,786 | ) | |||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 690,779,448 | 200,776,280 | ||||||
Net increase (decrease) in net assets | 1,330,249,604 | 899,129,673 | ||||||
Net Assets | ||||||||
Beginning of period | 2,912,604,304 | 2,013,474,631 | ||||||
End of period | $ | 4,242,853,908 | $ | 2,912,604,304 | ||||
Accumulated undistributed net investment income (loss) | $ | (8,397,791 | ) | $ | 300,264 |
See Notes to Financial Statements.
14
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Heritage Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing in companies that are medium-sized and smaller at the time of purchase that management believes will increase in value over time.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
15
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. Additionally, non-U.S. tax returns filed by the fund due to investments in certain foreign securities remain subject to examination by the relevant taxing authority for seven years from the date of the filing. 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. Accordingly, no provision has been made for federal or state income taxes.
16
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
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
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The annual management fee is 1.000% for the Investor Class, A Class, B Class, C Class and R Class and 0.800% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%.The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $2,141,773,992 and $1,441,869,260, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 400,000,000 | 400,000,000 | ||||||||||||||
Sold | 34,644,676 | $ | 753,803,344 | 24,446,309 | $ | 416,217,265 | ||||||||||
Redeemed | (11,715,911 | ) | (251,687,637 | ) | (19,973,254 | ) | (330,354,418 | ) | ||||||||
22,928,765 | 502,115,707 | 4,473,055 | 85,862,847 | |||||||||||||
Institutional Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||||
Sold | 2,378,642 | 51,530,923 | 1,592,345 | 27,658,160 | ||||||||||||
Issued in reinvestment of distributions | — | — | 2,804 | 45,786 | ||||||||||||
Redeemed | (834,797 | ) | (18,522,417 | ) | (2,044,059 | ) | (34,815,396 | ) | ||||||||
1,543,845 | 33,008,506 | (448,910 | ) | (7,111,450 | ) | |||||||||||
A Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 12,149,331 | 253,507,145 | 16,547,628 | 270,449,421 | ||||||||||||
Redeemed | (6,217,689 | ) | (129,705,449 | ) | (10,692,346 | ) | (173,010,082 | ) | ||||||||
5,931,642 | 123,801,696 | 5,855,282 | 97,439,339 | |||||||||||||
B Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||||||||
Sold | 11,358 | 234,275 | 17,058 | 265,517 | ||||||||||||
Redeemed | (17,969 | ) | (377,224 | ) | (46,411 | ) | (756,266 | ) | ||||||||
(6,611 | ) | (142,949 | ) | (29,353 | ) | (490,749 | ) | |||||||||
C Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||||||||
Sold | 1,670,795 | 32,789,808 | 2,174,035 | 33,791,342 | ||||||||||||
Redeemed | (565,270 | ) | (11,054,706 | ) | (1,225,116 | ) | (18,799,544 | ) | ||||||||
1,105,525 | 21,735,102 | 948,919 | 14,991,798 | |||||||||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||||
Sold | 695,681 | 14,835,970 | 873,774 | 14,881,532 | ||||||||||||
Redeemed | (213,891 | ) | (4,574,584 | ) | (286,027 | ) | (4,797,037 | ) | ||||||||
481,790 | 10,261,386 | 587,747 | 10,084,495 | |||||||||||||
Net increase (decrease) | 31,984,956 | $ | 690,779,448 | 11,386,740 | $ | 200,776,280 |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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.
18
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 3,781,808,003 | — | — | ||||||||
Foreign Common Stocks | 381,232,426 | $ | 27,284,775 | — | ||||||||
Temporary Cash Investments | 69,585 | 55,400,000 | — | |||||||||
Total Value of Investment Securities | $ | 4,163,110,014 | $ | 82,684,775 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (280,398 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as a liability of $280,398 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2011, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(780,600) in net realized gain (loss) on foreign currency transactions and $19,866 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
19
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 3,045,631,694 | ||
Gross tax appreciation of investments | $ | 1,207,668,786 | ||
Gross tax depreciation of investments | (7,505,691 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 1,200,163,095 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(274,256,289), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
20
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.21 | $ | 14.32 | $ | 13.15 | $ | 22.83 | $ | 15.58 | $ | 13.48 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.04 | ) | (0.07 | ) | (0.02 | ) | (0.09 | ) | (0.10 | ) | (0.03 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.97 | 4.96 | 1.32 | (8.53 | ) | 8.42 | 2.22 | |||||||||||||||||
Total From Investment Operations | 3.93 | 4.89 | 1.30 | (8.62 | ) | 8.32 | 2.19 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.13 | ) | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (1.06 | ) | (1.07 | ) | (0.09 | ) | |||||||||||||||
Total Distributions | — | — | (0.13 | ) | (1.06 | ) | (1.07 | ) | (0.09 | ) | ||||||||||||||
Net Asset Value, End of Period | $ | 23.14 | $ | 19.21 | $ | 14.32 | $ | 13.15 | $ | 22.83 | $ | 15.58 | ||||||||||||
Total Return(3) | 20.46 | % | 34.15 | % | 10.16 | % | (39.54 | )% | 56.41 | % | 16.26 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(4) | 1.01 | % | 1.01 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.41 | )%(4) | (0.45 | )% | (0.19 | )% | (0.47 | )% | (0.56 | )% | (0.22 | )% | ||||||||||||
Portfolio Turnover Rate | 41 | % | 114 | % | 155 | % | 172 | % | 128 | % | 230 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 2,804 | $ | 1,887 | $ | 1,342 | $ | 1,262 | $ | 2,478 | $ | 1,037 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
21
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.62 | $ | 14.60 | $ | 13.41 | $ | 23.21 | $ | 15.80 | $ | 13.63 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.02 | ) | (0.04 | ) | — | (3) | (0.05 | ) | (0.07 | ) | — | (3) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 4.06 | 5.07 | 1.34 | (8.69 | ) | 8.55 | 2.26 | |||||||||||||||||
Total From Investment Operations | 4.04 | 5.03 | 1.34 | (8.74 | ) | 8.48 | 2.26 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | (0.01 | ) | (0.15 | ) | — | — | — | ||||||||||||||||
From Net Realized Gains | — | — | — | (1.06 | ) | (1.07 | ) | (0.09 | ) | |||||||||||||||
Total Distributions | — | (0.01 | ) | (0.15 | ) | (1.06 | ) | (1.07 | ) | (0.09 | ) | |||||||||||||
Net Asset Value, End of Period | $ | 23.66 | $ | 19.62 | $ | 14.60 | $ | 13.41 | $ | 23.21 | $ | 15.80 | ||||||||||||
Total Return(4) | 20.59 | % | 34.44 | % | 10.33 | % | (39.41 | )% | 56.66 | % | 16.59 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(5) | 0.81 | % | 0.81 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.21 | )%(5) | (0.25 | )% | 0.01 | % | (0.27 | )% | (0.36 | )% | (0.02 | )% | ||||||||||||
Portfolio Turnover Rate | 41 | % | 114 | % | 155 | % | 172 | % | 128 | % | 230 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 175,557 | $ | 115,261 | $ | 92,343 | $ | 86,835 | $ | 155,885 | $ | 57,039 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
22
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 18.70 | $ | 13.98 | $ | 12.84 | $ | 22.37 | $ | 15.32 | $ | 13.29 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.07 | ) | (0.11 | ) | (0.06 | ) | (0.13 | ) | (0.15 | ) | (0.08 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.88 | 4.83 | 1.30 | (8.34 | ) | 8.27 | 2.20 | |||||||||||||||||
Total From Investment Operations | 3.81 | 4.72 | 1.24 | (8.47 | ) | 8.12 | 2.12 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.10 | ) | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (1.06 | ) | (1.07 | ) | (0.09 | ) | |||||||||||||||
Total Distributions | — | — | (0.10 | ) | (1.06 | ) | (1.07 | ) | (0.09 | ) | ||||||||||||||
Net Asset Value, End of Period | $ | 22.51 | $ | 18.70 | $ | 13.98 | $ | 12.84 | $ | 22.37 | $ | 15.32 | ||||||||||||
Total Return(4) | 20.37 | % | 33.76 | % | 9.89 | % | (39.69 | )% | 56.05 | % | 15.96 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(5) | 1.26 | % | 1.26 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.66 | )%(5) | (0.70 | )% | (0.44 | )% | (0.72 | )% | (0.81 | )% | (0.47 | )% | ||||||||||||
Portfolio Turnover Rate | 41 | % | 114 | % | 155 | % | 172 | % | 128 | % | 230 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 1,100,755 | $ | 803,692 | $ | 518,768 | $ | 351,962 | $ | 291,674 | $ | 57,995 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended April 30, 2011 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
See Notes to Financial Statements.
23
B Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 18.81 | $ | 14.16 | $ | 13.01 | $ | 22.82 | $ | 21.52 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.14 | ) | (0.24 | ) | (0.16 | ) | (0.26 | ) | (0.03 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 3.89 | 4.89 | 1.33 | (8.49 | ) | 1.33 | ||||||||||||||
Total From Investment Operations | 3.75 | 4.65 | 1.17 | (8.75 | ) | 1.30 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | — | — | (0.02 | ) | — | — | ||||||||||||||
From Net Realized Gains | — | — | — | (1.06 | ) | — | ||||||||||||||
Total Distributions | — | — | (0.02 | ) | (1.06 | ) | — | |||||||||||||
Net Asset Value, End of Period | $ | 22.56 | $ | 18.81 | $ | 14.16 | $ | 13.01 | $ | 22.82 | ||||||||||
Total Return(4) | 19.88 | % | 32.84 | % | 8.99 | % | (40.16 | )% | 6.04 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.01 | % | 2.01 | % | 2.00 | % | 2.00 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.41 | )%(5) | (1.45 | )% | (1.19 | )% | (1.47 | )% | (1.81 | )%(5) | ||||||||||
Portfolio Turnover Rate | 41 | % | 114 | % | 155 | % | 172 | % | 128 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 4,644 | $ | 3,997 | $ | 3,425 | $ | 1,770 | $ | 83 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
24
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 17.55 | $ | 13.21 | $ | 12.13 | $ | 21.35 | $ | 14.77 | $ | 12.91 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.14 | ) | (0.22 | ) | (0.14 | ) | (0.26 | ) | (0.29 | ) | (0.18 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.63 | 4.56 | 1.24 | (7.90 | ) | 7.94 | 2.13 | |||||||||||||||||
Total From Investment Operations | 3.49 | 4.34 | 1.10 | (8.16 | ) | 7.65 | 1.95 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.02 | ) | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (1.06 | ) | (1.07 | ) | (0.09 | ) | |||||||||||||||
Total Distributions | — | — | (0.02 | ) | (1.06 | ) | (1.07 | ) | (0.09 | ) | ||||||||||||||
Net Asset Value, End of Period | $ | 21.04 | $ | 17.55 | $ | 13.21 | $ | 12.13 | $ | 21.35 | $ | 14.77 | ||||||||||||
Total Return(3) | 19.89 | % | 32.85 | % | 9.07 | % | (40.16 | )% | 54.88 | % | 15.11 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(4) | 2.01 | % | 2.01 | % | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.41 | )%(4) | (1.45 | )% | (1.19 | )% | (1.47 | )% | (1.56 | )% | (1.22 | )% | ||||||||||||
Portfolio Turnover Rate | 41 | % | 114 | % | 155 | % | 172 | % | 128 | % | 230 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 125,636 | $ | 85,381 | $ | 51,745 | $ | 32,812 | $ | 21,692 | $ | 2,334 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
25
R Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.01 | $ | 14.24 | $ | 13.08 | $ | 22.83 | $ | 21.52 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.10 | ) | (0.16 | ) | (0.11 | ) | (0.17 | ) | (0.02 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 3.94 | 4.93 | 1.34 | (8.52 | ) | 1.33 | ||||||||||||||
Total From Investment Operations | 3.84 | 4.77 | 1.23 | (8.69 | ) | 1.31 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | — | — | (0.07 | ) | — | — | ||||||||||||||
From Net Realized Gains | — | — | — | (1.06 | ) | — | ||||||||||||||
Total Distributions | — | — | (0.07 | ) | (1.06 | ) | — | |||||||||||||
Net Asset Value, End of Period | $ | 22.85 | $ | 19.01 | $ | 14.24 | $ | 13.08 | $ | 22.83 | ||||||||||
Total Return(4) | 20.20 | % | 33.50 | % | 9.58 | % | (39.86 | )% | 6.09 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.51 | %(5) | 1.51 | % | 1.51 | % | 1.50 | % | 1.50 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.91 | )%(5) | (0.95 | )% | (0.69 | )% | (0.97 | )% | (1.22 | )%(5) | ||||||||||
Portfolio Turnover Rate | 41 | % | 114 | % | 155 | % | 172 | % | 128 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 32,096 | $ | 17,544 | $ | 4,775 | $ | 496 | $ | 27 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | 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. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
26
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
27
28
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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 Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71842 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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New Opportunities Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 13 |
Statement of Operations | 14 |
Statement of Changes in Net Assets | 15 |
Notes to Financial Statements | 16 |
Financial Highlights | 21 |
Additional Information | 26 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year(2) | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWNOX | 27.84% | 33.89% | 4.70% | 4.33% | 7.53% | 12/26/96 |
Russell 2500 Growth Index | — | 27.08% | 30.07% | 5.91% | 6.39% | 7.02%(3) | — |
Institutional Class | TWNIX | 27.80% | 34.05% | — | — | 37.30%(2) | 3/1/10 |
A Class No sales charge* With sales charge* | TWNAX | 27.59% 20.22% | 33.44% 25.76% | — — | — — | 36.76%(2) 29.99%(2) | 3/1/10 |
C Class No sales charge* With sales charge* | TWNCX | 27.17% 26.17% | 32.42% 32.42% | — — | — — | 35.69%(2) 35.69%(2) | 3/1/10 |
R Class | TWNRX | 27.34% | 32.98% | — | — | 36.36%(2) | 3/1/10 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future. |
(3) | Since 12/31/96, the date nearest the Investor Class’s inception for which data are available. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.51% | 1.31% | 1.76% | 2.51% | 2.01% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Tempur-Pedic International, Inc. | 2.0% |
Sauer-Danfoss, Inc. | 1.7% |
Titan International, Inc. | 1.7% |
Acme Packet, Inc. | 1.4% |
Sotheby’s | 1.3% |
Lindsay Corp. | 1.3% |
Iconix Brand Group, Inc. | 1.3% |
BorgWarner, Inc. | 1.2% |
Pioneer Drilling Co. | 1.1% |
United Rentals, Inc. | 1.0% |
Top Five Industries | % of net assets |
Machinery | 10.3% |
Software | 6.2% |
Semiconductors & Semiconductor Equipment | 5.0% |
Oil, Gas & Consumable Fuels | 4.7% |
Internet Software & Services | 4.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 96.6% |
Temporary Cash Investments | 3.0% |
Other Assets and Liabilities | 0.4% |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,278.40 | $8.47 | 1.50% |
Institutional Class | $1,000 | $1,278.00 | $7.34 | 1.30% |
A Class | $1,000 | $1,275.90 | $9.88 | 1.75% |
C Class | $1,000 | $1,271.70 | $14.08 | 2.50% |
R Class | $1,000 | $1,273.40 | $11.27 | 2.00% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
Institutional Class | $1,000 | $1,018.35 | $6.51 | 1.30% |
A Class | $1,000 | $1,016.12 | $8.75 | 1.75% |
C Class | $1,000 | $1,012.40 | $12.47 | 2.50% |
R Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 96.6% | ||||||||
AEROSPACE & DEFENSE — 1.2% | ||||||||
BE Aerospace, Inc.(1) | 5,862 | $ | 226,214 | |||||
TransDigm Group, Inc.(1) | 6,899 | 574,687 | ||||||
Triumph Group, Inc. | 17,034 | 1,466,968 | ||||||
2,267,869 | ||||||||
AIRLINES — 0.2% | ||||||||
United Continental Holdings, Inc.(1) | 19,307 | 440,586 | ||||||
AUTO COMPONENTS — 2.3% | ||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 103,021 | 1,318,669 | ||||||
Amerigon, Inc.(1) | 11,287 | 192,443 | ||||||
BorgWarner, Inc.(1) | 29,005 | 2,240,346 | ||||||
Goodyear Tire & Rubber Co. (The)(1) | 36,907 | 669,862 | ||||||
4,421,320 | ||||||||
BIOTECHNOLOGY — 2.8% | ||||||||
Acorda Therapeutics, Inc.(1) | 5,998 | 168,184 | ||||||
Alexion Pharmaceuticals, Inc.(1) | 11,920 | 1,154,929 | ||||||
Amylin Pharmaceuticals, Inc.(1) | 19,533 | 259,789 | ||||||
BioMarin Pharmaceutical, Inc.(1) | 13,569 | 364,870 | ||||||
Cepheid, Inc.(1) | 8,725 | 281,905 | ||||||
Cubist Pharmaceuticals, Inc.(1) | 8,416 | 284,882 | ||||||
Human Genome Sciences, Inc.(1) | 25,867 | 762,300 | ||||||
Incyte Corp. Ltd.(1) | 11,403 | 210,727 | ||||||
Isis Pharmaceuticals, Inc.(1) | 14,142 | 132,652 | ||||||
Onyx Pharmaceuticals, Inc.(1) | 8,489 | 318,932 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 9,839 | 502,871 | ||||||
Seattle Genetics, Inc.(1) | 13,937 | 231,494 | ||||||
Theravance, Inc.(1) | 8,928 | 247,752 | ||||||
United Therapeutics Corp.(1) | 6,913 | 462,894 | ||||||
5,384,181 | ||||||||
CAPITAL MARKETS — 1.0% | ||||||||
BGC Partners, Inc., Class A | 44,437 | 428,817 | ||||||
Eaton Vance Corp. | 14,242 | 480,953 | ||||||
Lazard Ltd., Class A | 11,834 | 485,194 | ||||||
SEI Investments Co. | 18,137 | 404,999 | ||||||
1,799,963 | ||||||||
CHEMICALS — 3.3% | ||||||||
Albemarle Corp. | 19,532 | 1,377,983 | ||||||
Balchem Corp. | 15,741 | 624,760 | ||||||
Flotek Industries, Inc.(1) | 36,985 | 354,316 | ||||||
International Flavors & Fragrances, Inc. | 10,741 | 682,268 | ||||||
Intrepid Potash, Inc.(1) | 38,743 | 1,327,335 | ||||||
Nalco Holding Co. | 13,361 | 390,275 | ||||||
OM Group, Inc.(1) | 530 | 19,207 | ||||||
Solutia, Inc.(1) | 54,801 | 1,444,007 | ||||||
6,220,151 | ||||||||
COMMERCIAL BANKS — 1.8% | ||||||||
Cathay General Bancorp. | 60,299 | 1,028,098 | ||||||
Nara Bancorp., Inc.(1) | 46,718 | 459,238 | ||||||
Pinnacle Financial Partners, Inc.(1) | 34,637 | 556,616 | ||||||
PrivateBancorp, Inc. | 26,442 | 416,197 | ||||||
Sandy Spring Bancorp, Inc. | 5,416 | 96,784 | ||||||
Texas Capital Bancshares, Inc.(1) | 20,769 | 535,840 | ||||||
West Coast Bancorp.(1) | 96,370 | 345,005 | ||||||
3,437,778 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 0.9% | ||||||||
Deluxe Corp. | 20,016 | 542,033 | ||||||
Steelcase, Inc., Class A | 60,422 | 697,874 | ||||||
Team, Inc.(1) | 19,574 | 488,372 | ||||||
1,728,279 | ||||||||
COMMUNICATIONS EQUIPMENT — 3.3% | ||||||||
Acme Packet, Inc.(1) | 32,903 | 2,718,117 | ||||||
F5 Networks, Inc.(1) | 3,110 | 315,229 | ||||||
Finisar Corp.(1) | 8,141 | 228,681 | ||||||
JDS Uniphase Corp.(1) | 24,702 | 514,790 | ||||||
Netgear, Inc.(1) | 18,022 | 752,418 | ||||||
Oplink Communications, Inc.(1) | 41,137 | 814,513 | ||||||
Opnext, Inc.(1) | 63,802 | 150,573 | ||||||
Riverbed Technology, Inc.(1) | 20,721 | 728,136 | ||||||
Sycamore Networks, Inc. | 3,129 | 76,660 | ||||||
6,299,117 | ||||||||
COMPUTERS & PERIPHERALS — 0.7% | ||||||||
Avid Technology, Inc.(1) | 16,332 | 303,449 | ||||||
Stratasys, Inc.(1) | 8,231 | 443,239 | ||||||
USA Technologies, Inc.(1) | 190,675 | 579,652 | ||||||
1,326,340 |
8
Shares | Value | |||||||
CONSTRUCTION MATERIALS — 0.5% | ||||||||
Headwaters, Inc.(1) | 71,847 | $ | 392,285 | |||||
Martin Marietta Materials, Inc. | 5,624 | 512,852 | ||||||
905,137 | ||||||||
CONSUMER FINANCE — 1.1% | ||||||||
EZCORP, Inc., Class A(1) | 26,191 | 824,755 | ||||||
World Acceptance Corp.(1) | 18,520 | 1,258,434 | ||||||
2,083,189 | ||||||||
CONTAINERS & PACKAGING — 0.4% | ||||||||
Crown Holdings, Inc.(1) | 20,138 | 753,161 | ||||||
DIVERSIFIED CONSUMER SERVICES — 2.0% | ||||||||
DeVry, Inc. | 5,243 | 277,355 | ||||||
ITT Educational Services, Inc.(1) | 2,274 | 163,114 | ||||||
K12, Inc.(1) | 5,809 | 228,700 | ||||||
Sotheby’s | 48,750 | 2,462,850 | ||||||
Steiner Leisure, Ltd.(1) | 12,728 | 617,817 | ||||||
3,749,836 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.4% | ||||||||
Encore Capital Group, Inc.(1) | 11,052 | 330,897 | ||||||
MSCI, Inc., Class A(1) | 14,241 | 505,128 | ||||||
836,025 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.2% | ||||||||
Vonage Holdings Corp.(1) | 80,193 | 413,796 | ||||||
ELECTRICAL EQUIPMENT — 0.7% | ||||||||
AMETEK, Inc. | 21,047 | 969,004 | ||||||
Franklin Electric Co., Inc. | 4,090 | 184,500 | ||||||
Valence Technology, Inc.(1) | 54,163 | 73,662 | ||||||
1,227,166 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 3.9% | ||||||||
Cognex Corp. | 38,168 | 1,193,895 | ||||||
FARO Technologies, Inc.(1) | 4,868 | 210,152 | ||||||
FLIR Systems, Inc. | 15,537 | 547,213 | ||||||
KEMET Corp.(1) | 85,333 | 1,342,288 | ||||||
Littelfuse, Inc. | 30,007 | 1,866,735 | ||||||
Measurement Specialties, Inc.(1) | 7,815 | 271,806 | ||||||
MTS Systems Corp. | 5,301 | 234,675 | ||||||
Trimble Navigation Ltd.(1) | 29,714 | 1,391,804 | ||||||
TTM Technologies, Inc.(1) | 17,172 | 328,329 | ||||||
7,386,897 | ||||||||
ENERGY EQUIPMENT & SERVICES — 3.6% | ||||||||
Basic Energy Services, Inc.(1) | 51,229 | 1,574,779 | ||||||
Complete Production Services, Inc.(1) | 39,417 | 1,337,813 | ||||||
Core Laboratories NV | 6,076 | 583,174 | ||||||
Dawson Geophysical Co.(1) | 7,166 | 319,604 | ||||||
Hornbeck Offshore Services, Inc.(1) | 10,292 | 300,835 | ||||||
Matrix Service Co.(1) | 33,860 | 489,616 | ||||||
North American Energy Partners, Inc.(1) | 6,564 | 74,830 | ||||||
OYO Geospace Corp.(1) | 1,792 | 167,158 | ||||||
Pioneer Drilling Co.(1) | 132,971 | 2,061,050 | ||||||
6,908,859 | ||||||||
FOOD & STAPLES RETAILING — 1.6% | ||||||||
Andersons, Inc. (The) | 31,141 | 1,546,150 | ||||||
PriceSmart, Inc. | 34,595 | 1,440,536 | ||||||
2,986,686 | ||||||||
FOOD PRODUCTS — 0.3% | ||||||||
B&G Foods, Inc. | 33,781 | 610,761 | ||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 3.0% | ||||||||
Align Technology, Inc.(1) | 8,648 | 208,763 | ||||||
American Medical Systems Holdings, Inc.(1) | 9,950 | 293,525 | ||||||
Gen-Probe, Inc.(1) | 6,963 | 577,372 | ||||||
Haemonetics Corp.(1) | 3,317 | 232,853 | ||||||
IDEXX Laboratories, Inc.(1) | 7,868 | 640,691 | ||||||
Immucor, Inc.(1) | 10,461 | 228,364 | ||||||
Integra LifeSciences Holdings Corp.(1) | 3,238 | 169,380 | ||||||
Masimo Corp. | 8,110 | 282,147 | ||||||
Mettler-Toledo International, Inc.(1) | 4,620 | 865,788 | ||||||
NuVasive, Inc.(1) | 6,683 | 206,438 | ||||||
ResMed, Inc.(1) | 20,972 | 668,797 | ||||||
Sirona Dental Systems, Inc.(1) | 5,082 | 290,030 | ||||||
STERIS Corp. | 7,602 | 273,976 | ||||||
Thoratec Corp.(1) | 7,605 | 233,473 | ||||||
Volcano Corp.(1) | 7,813 | 208,295 | ||||||
West Pharmaceutical Services, Inc. | 4,767 | 225,193 | ||||||
5,605,085 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 2.3% | ||||||||
Amedisys, Inc.(1) | 4,495 | 149,773 | ||||||
Catalyst Health Solutions, Inc.(1) | 5,348 | 318,527 | ||||||
Chemed Corp. | 3,258 | 226,855 | ||||||
Community Health Systems, Inc.(1) | 9,178 | 282,040 | ||||||
Emergency Medical Services Corp., Class A(1) | 3,992 | 254,690 | ||||||
Health Management Associates, Inc., Class A(1) | 34,084 | 384,467 | ||||||
HealthSouth Corp.(1) | 12,799 | 328,038 |
9
Shares | Value |
HMS Holdings Corp.(1) | 3,643 | $ | 286,741 | |||||
Lincare Holdings, Inc. | 13,758 | 432,276 | ||||||
Mednax, Inc.(1) | 6,167 | 437,364 | ||||||
Owens & Minor, Inc. | 7,161 | 246,696 | ||||||
Patterson Cos., Inc. | 14,327 | 497,290 | ||||||
PSS World Medical, Inc.(1) | 8,517 | 244,949 | ||||||
Tenet Healthcare Corp.(1) | 46,421 | 321,698 | ||||||
4,411,404 | ||||||||
HEALTH CARE TECHNOLOGY — 0.8% | ||||||||
Allscripts Healthcare Solutions, Inc.(1) | 16,896 | 363,940 | ||||||
athenahealth, Inc.(1) | 4,984 | 230,410 | ||||||
MedAssets, Inc.(1) | 7,054 | 113,005 | ||||||
Quality Systems, Inc. | 2,722 | 244,218 | ||||||
SXC Health Solutions Corp.(1) | 8,505 | 469,136 | ||||||
1,420,709 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 0.5% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 3,276 | 874,004 | ||||||
HOUSEHOLD DURABLES — 2.3% | ||||||||
NVR, Inc.(1) | 627 | 463,560 | ||||||
Tempur-Pedic International, Inc.(1) | 61,190 | 3,841,508 | ||||||
4,305,068 | ||||||||
INDUSTRIAL CONGLOMERATES — 0.8% | ||||||||
Raven Industries, Inc. | 27,535 | 1,496,803 | ||||||
INSURANCE — 0.5% | ||||||||
AMERISAFE, Inc.(1) | 24,754 | 552,757 | ||||||
Amtrust Financial Services, Inc. | 19,534 | 377,006 | ||||||
929,763 | ||||||||
INTERNET & CATALOG RETAIL — 0.9% | ||||||||
Netflix, Inc.(1) | 1,070 | 248,957 | ||||||
priceline.com, Inc.(1) | 2,031 | 1,110,977 | ||||||
Shutterfly, Inc.(1) | 5,685 | 349,969 | ||||||
1,709,903 | ||||||||
INTERNET SOFTWARE & SERVICES — 4.3% | ||||||||
Ancestry.com, Inc.(1) | 19,735 | 901,889 | ||||||
Dice Holdings, Inc.(1) | 94,492 | 1,732,038 | ||||||
Equinix, Inc.(1) | 6,024 | 606,376 | ||||||
Keynote Systems, Inc. | 41,511 | 885,845 | ||||||
KIT Digital, Inc.(1) | 4,724 | 54,373 | ||||||
Rackspace Hosting, Inc.(1) | 15,206 | 702,365 | ||||||
Travelzoo, Inc.(1) | 11,383 | 932,268 | ||||||
ValueClick, Inc.(1) | 44,813 | 750,618 | ||||||
Vocus, Inc.(1) | 42,919 | 1,271,690 | ||||||
WebMD Health Corp.(1) | 6,545 | 378,759 | ||||||
8,216,221 | ||||||||
IT SERVICES — 0.7% | ||||||||
Alliance Data Systems Corp.(1) | 7,561 | 718,295 | ||||||
Global Payments, Inc. | 10,327 | 549,809 | ||||||
MAXIMUS, Inc. | 1,644 | 131,504 | ||||||
1,399,608 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 1.0% | ||||||||
Polaris Industries, Inc. | 17,438 | 1,838,488 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 1.1% | ||||||||
Bruker Corp.(1) | 11,086 | 218,838 | ||||||
Covance, Inc.(1) | 8,501 | 532,162 | ||||||
Dionex Corp.(1) | 2,479 | 293,390 | ||||||
PAREXEL International Corp.(1) | 8,170 | 226,799 | ||||||
Pharmaceutical Product Development, Inc. | 14,340 | 442,389 | ||||||
TECHNE Corp. | 5,072 | 394,145 | ||||||
2,107,723 | ||||||||
MACHINERY — 10.3% | ||||||||
3D Systems Corp.(1) | 10,304 | 429,883 | ||||||
AGCO Corp.(1) | 19,571 | 1,126,898 | ||||||
Blount International, Inc.(1) | 25,397 | 421,590 | ||||||
Cascade Corp. | 15,653 | 716,907 | ||||||
CIRCOR International, Inc. | 3,388 | 153,917 | ||||||
Donaldson Co., Inc. | 9,763 | 597,788 | ||||||
EnPro Industries, Inc.(1) | 8,009 | 321,001 | ||||||
Graham Corp. | 6,361 | 145,540 | ||||||
Kadant, Inc.(1) | 11,375 | 350,919 | ||||||
Lindsay Corp. | 33,555 | 2,460,253 | ||||||
Manitowoc Co., Inc. (The) | 33,490 | 743,143 | ||||||
Middleby Corp.(1) | 11,824 | 1,060,258 | ||||||
NACCO Industries, Inc., Class A | 3,428 | 360,728 | ||||||
Navistar International Corp.(1) | 9,577 | 665,793 | ||||||
Pall Corp. | 18,974 | 1,108,840 | ||||||
Robbins & Myers, Inc. | 33,089 | 1,438,379 | ||||||
Sauer-Danfoss, Inc.(1) | 55,757 | 3,290,220 | ||||||
Titan International, Inc. | 104,194 | 3,218,553 | ||||||
Twin Disc, Inc. | 8,653 | 294,808 | ||||||
Wabash National Corp.(1) | 55,357 | 610,588 | ||||||
19,516,006 | ||||||||
MEDIA — 1.8% | ||||||||
Interpublic Group of Cos., Inc. (The) | 82,450 | 968,788 | ||||||
MDC Partners, Inc., Class A | 43,215 | 718,666 | ||||||
Sinclair Broadcast Group, Inc., Class A | 76,523 | 879,249 | ||||||
Sirius XM Radio, Inc.(1) | 455,276 | 905,999 | ||||||
3,472,702 |
10
Shares | Value |
METALS & MINING — 3.0% | ||||||||
Allied Nevada Gold Corp.(1) | 30,226 | $ | 1,301,532 | |||||
Compass Minerals International, Inc. | 10,640 | 1,038,570 | ||||||
Globe Specialty Metals, Inc. | 60,730 | 1,367,032 | ||||||
Materion Corp.(1) | 27,106 | 1,131,947 | ||||||
Walter Energy, Inc. | 5,824 | 804,993 | ||||||
5,644,074 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 4.7% | ||||||||
Alpha Natural Resources, Inc.(1) | 15,381 | 894,713 | ||||||
Concho Resources, Inc.(1) | 13,972 | 1,492,908 | ||||||
Crosstex Energy LP | 48,313 | 954,665 | ||||||
Forest Oil Corp.(1) | 11,093 | 398,350 | ||||||
Goodrich Petroleum Corp.(1) | 31,214 | 701,379 | ||||||
Gulfport Energy Corp.(1) | 34,957 | 1,189,936 | ||||||
Stone Energy Corp.(1) | 33,159 | 1,172,502 | ||||||
W&T Offshore, Inc. | 20,405 | 547,058 | ||||||
Western Refining, Inc.(1) | 90,092 | 1,527,960 | ||||||
8,879,471 | ||||||||
PAPER & FOREST PRODUCTS — 0.3% | ||||||||
Buckeye Technologies, Inc. | 21,433 | 603,553 | ||||||
PHARMACEUTICALS — 0.4% | ||||||||
Auxilium Pharmaceuticals, Inc.(1) | 6,242 | 152,055 | ||||||
Impax Laboratories, Inc.(1) | 7,803 | 213,646 | ||||||
Nektar Therapeutics(1) | 16,406 | 170,294 | ||||||
Salix Pharmaceuticals Ltd.(1) | 7,702 | 302,612 | ||||||
838,607 | ||||||||
PROFESSIONAL SERVICES — 1.1% | ||||||||
Kelly Services, Inc., Class A(1) | 73,369 | 1,402,082 | ||||||
Robert Half International, Inc. | 25,080 | 760,676 | ||||||
2,162,758 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.5% | ||||||||
Ashford Hospitality Trust, Inc. | 38,538 | 480,569 | ||||||
Digital Realty Trust, Inc. | 9,942 | 599,900 | ||||||
Lexington Realty Trust | 19,363 | 193,243 | ||||||
Medical Properties Trust, Inc. | 39,899 | 492,354 | ||||||
Post Properties, Inc. | 27,029 | 1,097,377 | ||||||
2,863,443 | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 1.1% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 50,383 | 1,345,730 | ||||||
Jones Lang LaSalle, Inc. | 6,591 | 674,787 | ||||||
2,020,517 | ||||||||
ROAD & RAIL — 0.5% | ||||||||
Kansas City Southern(1) | 14,614 | 849,220 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 5.0% | ||||||||
Atmel Corp.(1) | 72,448 | 1,108,454 | ||||||
Cavium Networks, Inc.(1) | 9,570 | 451,895 | ||||||
CEVA, Inc.(1) | 22,573 | 690,282 | ||||||
Cirrus Logic, Inc.(1) | 9,751 | 161,477 | ||||||
Cypress Semiconductor Corp.(1) | 28,877 | 628,363 | ||||||
Entegris, Inc.(1) | 89,904 | 775,871 | ||||||
GSI Technology, Inc.(1) | 32,403 | 288,711 | ||||||
GT Solar International, Inc.(1) | 69,500 | 776,315 | ||||||
ON Semiconductor Corp.(1) | 68,137 | 716,120 | ||||||
Photronics, Inc.(1) | 88,442 | 772,099 | ||||||
RF Micro Devices, Inc.(1) | 28,107 | 187,193 | ||||||
Silicon Image, Inc.(1) | 38,563 | 320,844 | ||||||
Skyworks Solutions, Inc.(1) | 39,219 | 1,233,830 | ||||||
Ultratech, Inc.(1) | 42,283 | 1,323,881 | ||||||
Veeco Instruments, Inc.(1) | 1,090 | 55,732 | ||||||
9,491,067 | ||||||||
SOFTWARE — 6.2% | ||||||||
ACI Worldwide, Inc.(1) | 20,721 | 684,622 | ||||||
Allot Communications Ltd.(1) | 22,897 | 374,366 | ||||||
ANSYS, Inc.(1) | 11,865 | 656,016 | ||||||
Ariba, Inc.(1) | 11,343 | 394,396 | ||||||
Callidus Software, Inc.(1) | 27,069 | 187,047 | ||||||
DemandTec, Inc.(1) | 29,927 | 331,292 | ||||||
FactSet Research Systems, Inc. | 5,082 | 556,022 | ||||||
Fortinet, Inc.(1) | 9,378 | 456,708 | ||||||
Informatica Corp.(1) | 10,822 | 606,140 | ||||||
Interactive Intelligence, Inc.(1) | 23,578 | 882,289 | ||||||
Kenexa Corp.(1) | 64,386 | 1,894,236 | ||||||
Motricity, Inc.(1) | 14,303 | 191,088 | ||||||
Nuance Communications, Inc.(1) | 29,189 | 604,212 | ||||||
Opnet Technologies, Inc. | 15,060 | 589,750 | ||||||
Progress Software Corp.(1) | 12,713 | 376,940 | ||||||
PROS Holdings, Inc.(1) | 26,253 | 411,647 | ||||||
Rovi Corp.(1) | 7,964 | 386,732 | ||||||
Taleo Corp., Class A(1) | 9,852 | 357,332 | ||||||
TIBCO Software, Inc.(1) | 25,367 | 760,756 | ||||||
VASCO Data Security International, Inc.(1) | 62,799 | 774,940 | ||||||
Websense, Inc.(1) | 8,903 | 229,608 | ||||||
11,706,139 |
11
Shares | Value |
SPECIALTY RETAIL — 3.0% | ||||||||
CarMax, Inc.(1) | 32,890 | $ | 1,141,283 | |||||
Charming Shoppes, Inc.(1) | 103,235 | 467,655 | ||||||
Lithia Motors, Inc., Class A | 90,528 | 1,646,704 | ||||||
PetSmart, Inc. | 16,279 | 686,485 | ||||||
Tractor Supply Co. | 25,504 | 1,577,933 | ||||||
Williams-Sonoma, Inc. | 5,576 | 242,054 | ||||||
5,762,114 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 3.4% | ||||||||
Crocs, Inc.(1) | 24,735 | 497,421 | ||||||
Deckers Outdoor Corp.(1) | 15,186 | 1,288,684 | ||||||
G-III Apparel Group Ltd.(1) | 29,181 | 1,309,060 | ||||||
Iconix Brand Group, Inc.(1) | 98,078 | 2,401,930 | ||||||
Lululemon Athletica, Inc.(1) | 1,252 | 125,237 | ||||||
Oxford Industries, Inc. | 19,717 | 677,279 | ||||||
Perry Ellis International, Inc.(1) | 3,629 | 102,265 | ||||||
6,401,876 | ||||||||
TRADING COMPANIES & DISTRIBUTORS — 3.3% | ||||||||
CAI International, Inc.(1) | 40,341 | 1,014,980 | ||||||
H&E Equipment Services, Inc.(1) | 27,468 | 546,613 | ||||||
RSC Holdings, Inc.(1) | 31,345 | 412,814 | ||||||
Rush Enterprises, Inc., Class A(1) | 30,113 | 634,481 | ||||||
Titan Machinery, Inc.(1) | 52,446 | 1,649,951 | ||||||
United Rentals, Inc.(1) | 67,543 | 1,987,115 | ||||||
6,245,954 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.6% | ||||||||
MetroPCS Communications, Inc.(1) | 35,823 | 602,901 | ||||||
SBA Communications Corp., Class A(1) | 14,621 | 564,809 | ||||||
1,167,710 | ||||||||
TOTAL COMMON STOCKS (Cost $134,279,587) | 183,127,087 |
Principal Amount/Shares | Value | |||||||
Temporary Cash Investments — 3.0% | ||||||||
FHLB Discount Notes, 0.001%, 5/2/11(2) | $ | 5,600,000 | $ | 5,600,000 | ||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 79,734 | 79,734 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $5,679,734) | 5,679,734 | |||||||
TOTAL INVESTMENT SECURITIES — 99.6% (Cost $139,959,321) | 188,806,821 | |||||||
OTHER ASSETS AND LIABILITIES — 0.4% | 844,459 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 189,651,280 |
Notes to Schedule of Investments
FHLB = Federal Home Loan Bank
(1) | Non-income producing. |
(2) | The rate indicated is the yield to maturity at purchase. |
See Notes to Financial Statements.
12
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $139,959,321) | $ | 188,806,821 | ||
Receivable for investments sold | 4,651,441 | |||
Receivable for capital shares sold | 112,651 | |||
Dividends and interest receivable | 39,984 | |||
193,610,897 | ||||
Liabilities | ||||
Payable for investments purchased | 3,714,563 | |||
Payable for capital shares redeemed | 20,000 | |||
Accrued management fees | 224,948 | |||
Distribution and service fees payable | 106 | |||
3,959,617 | ||||
Net Assets | $ | 189,651,280 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 192,308,584 | ||
Accumulated net investment loss | (768,307 | ) | ||
Accumulated net realized loss | (50,736,497 | ) | ||
Net unrealized appreciation | 48,847,500 | |||
$ | 189,651,280 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $189,280,142 | 21,591,388 | $8.77 |
Institutional Class, $0.01 Par Value | $36,178 | 4,119 | $8.78 |
A Class, $0.01 Par Value | $237,715 | 27,196 | $8.74* |
C Class, $0.01 Par Value | $59,402 | 6,857 | $8.66 |
R Class, $0.01 Par Value | $37,843 | 4,344 | $8.71 |
*Maximum offering price $9.27 (net asset value divided by 0.9425)
See Notes to Financial Statements.
13
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,010) | $ | 486,358 | ||
Interest | 1,246 | |||
487,604 | ||||
Expenses: | ||||
Management fees | 1,251,293 | |||
Distribution and service fees: | ||||
A Class | 204 | |||
C Class | 238 | |||
R Class | 84 | |||
Directors’ fees and expenses | 4,092 | |||
1,255,911 | ||||
Net investment income (loss) | (768,307 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 16,099,660 | |||
Change in net unrealized appreciation (depreciation) on investments | 25,380,268 | |||
Net realized and unrealized gain (loss) | 41,479,928 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 40,711,621 |
See Notes to Financial Statements.
14
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (768,307 | ) | $ | (794,456 | ) | ||
Net realized gain (loss) | 16,099,660 | 28,645,395 | ||||||
Change in net unrealized appreciation (depreciation) | 25,380,268 | 12,832,897 | ||||||
Net increase (decrease) in net assets resulting from operations | 40,711,621 | 40,683,836 | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 1,963,813 | (13,020,566 | ) | |||||
Redemption Fees | ||||||||
Increase in net assets from redemption fees | 10,078 | 15,637 | ||||||
Net increase (decrease) in net assets | 42,685,512 | 27,678,907 | ||||||
Net Assets | ||||||||
Beginning of period | 146,965,768 | 119,286,861 | ||||||
End of period | $ | 189,651,280 | $ | 146,965,768 | ||||
Accumulated net investment loss | $ | (768,307 | ) | — |
See Notes to Financial Statements.
15
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. New Opportunities Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in common stocks of small- and mid-sized companies that management believes will increase in value over time.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. Sale of the Institutional Class, A Class, C Class and R Class commenced on March 1, 2010.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost.
16
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption — The fund may impose a 2.00% redemption fee on shares held less than 180 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
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.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.10% to 1.50% for the Investor Class, A Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 1.50% for the Investor Class, A Class, C Class and R Class and 1.30% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $79,523,706 and $80,926,971, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010(1) | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 1,513,841 | $ | 12,052,301 | 1,028,023 | $ | 6,286,589 | ||||||||||
Redeemed | (1,310,778 | ) | (10,173,528 | ) | (3,220,394 | ) | (19,503,133 | ) | ||||||||
203,063 | 1,878,773 | (2,192,371 | ) | (13,216,544 | ) | |||||||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | — | — | 4,119 | 25,000 | ||||||||||||
A Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 9,472 | 76,145 | 19,550 | 120,712 | ||||||||||||
Redeemed | — | — | (1,826 | ) | (11,798 | ) | ||||||||||
9,472 | 76,145 | 17,724 | 108,914 | |||||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 1,012 | 8,441 | 5,845 | 36,000 | ||||||||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 57 | 454 | 4,287 | 26,064 | ||||||||||||
Net increase (decrease) | 213,604 | $ | 1,963,813 | (2,160,396 | ) | $ | (13,020,566 | ) |
(1) | March 1, 2010 (commencement of sale) through October 31, 2010 for the Institutional Class, A Class, C Class and R Class. |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | •Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | •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 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 183,127,087 | — | — | ||||||||
Temporary Cash Investments | 79,734 | $ | 5,600,000 | — | ||||||||
Total Value of Investment Securities | $ | 183,206,821 | $ | 5,600,000 | — |
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7. Risk Factors
The fund invests in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 140,141,596 | ||
Gross tax appreciation of investments | $ | 50,266,932 | ||
Gross tax depreciation of investments | (1,601,707 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 48,665,225 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(66,626,564), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(33,198,598) and $(33,427,966) expire in 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 6.86 | $ | 5.06 | $ | 5.12 | $ | 8.58 | $ | 6.44 | $ | 5.63 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss) | (0.04 | )(2) | (0.04 | )(2) | (0.02 | )(2) | (0.05 | )(2) | (0.07 | ) | (0.06 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.95 | 1.84 | (0.04 | ) | (3.41 | ) | 2.21 | 0.87 | ||||||||||||||||
Total From Investment Operations | 1.91 | 1.80 | (0.06 | ) | (3.46 | ) | 2.14 | 0.81 | ||||||||||||||||
Net Asset Value, End of Period | $ | 8.77 | $ | 6.86 | $ | 5.06 | $ | 5.12 | $ | 8.58 | $ | 6.44 | ||||||||||||
Total Return(3) | 27.84 | % | 33.57 | % | (1.17 | )% | (40.33 | )% | 33.23 | % | 14.39 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.50 | %(4) | 1.51 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.92 | )%(4) | (0.59 | )% | (0.51 | )% | (0.66 | )% | (0.83 | )% | (0.84 | )% | ||||||||||||
Portfolio Turnover Rate | 48 | % | 181 | % | 206 | % | 159 | % | 201 | % | 298 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 189,280 | $ | 146,747 | $ | 119,287 | $ | 146,932 | $ | 270,428 | $ | 247,876 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||
2011(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $ | 6.87 | $ | 6.07 | ||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.03 | ) | (0.01 | ) | ||||
Net Realized and Unrealized Gain (Loss) | 1.94 | 0.81 | ||||||
Total From Investment Operations | 1.91 | 0.80 | ||||||
Net Asset Value, End of Period | $ | 8.78 | $ | 6.87 | ||||
Total Return(4) | 27.80 | % | 13.18 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 1.30 | %(5) | 1.31 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.72 | )%(5) | (0.29 | )%(5) | ||||
Portfolio Turnover Rate | 48 | % | 181 | %(6) | ||||
Net Assets, End of Period (in thousands) | $ | 36 | $ | 28 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | 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. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
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A Class | ||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||
2011(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $ | 6.85 | $ | 6.07 | ||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.05 | ) | (0.03 | ) | ||||
Net Realized and Unrealized Gain (Loss) | 1.94 | 0.81 | ||||||
Total From Investment Operations | 1.89 | 0.78 | ||||||
Net Asset Value, End of Period | $ | 8.74 | $ | 6.85 | ||||
Total Return(4) | 27.59 | % | 12.85 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 1.75 | %(5) | 1.76 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.17 | )%(5) | (0.67 | )%(5) | ||||
Portfolio Turnover Rate | 48 | % | 181 | %(6) | ||||
Net Assets, End of Period (in thousands) | $ | 238 | $ | 121 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(3) | Computed using average shares outstanding throughout the period |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
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C Class | ||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||
2011(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $ | 6.81 | $ | 6.07 | ||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.07 | ) | (0.06 | ) | ||||
Net Realized and Unrealized Gain (Loss) | 1.92 | 0.80 | ||||||
Total From Investment Operations | 1.85 | 0.74 | ||||||
Net Asset Value, End of Period | $ | 8.66 | $ | 6.81 | ||||
Total Return(4) | 27.17 | % | 12.19 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 2.50 | %(5) | 2.51 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.92 | )%(5) | (1.46 | )%(5) | ||||
Portfolio Turnover Rate | 48 | % | 181 | %(6) | ||||
Net Assets, End of Period (in thousands) | $ | 59 | $ | 40 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
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R Class | ||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||
2011(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $ | 6.84 | $ | 6.07 | ||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.06 | ) | (0.04 | ) | ||||
Net Realized and Unrealized Gain (Loss) | 1.93 | 0.81 | ||||||
Total From Investment Operations | 1.87 | 0.77 | ||||||
Net Asset Value, End of Period | $ | 8.71 | $ | 6.84 | ||||
Total Return(4) | 27.34 | % | 12.69 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 2.00 | %(5) | 2.01 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.42 | )%(5) | (0.99 | )%(5) | ||||
Portfolio Turnover Rate | 48 | % | 181 | %(6) | ||||
Net Assets, End of Period (in thousands) | $ | 38 | $ | 29 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | 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. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
25
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71838 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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NT Growth Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 19 |
Additional Information | 20 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||
Average Annual Returns | |||||
Ticker Symbol | 6 months(1) | 1 year | Since Inception | Inception Date | |
Institutional Class | ACLTX | 17.12% | 19.83% | 6.73% | 5/12/06 |
Russell 1000 Growth Index | — | 16.96% | 20.87% | 5.06%(2) | — |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 4/30/06, the date nearest the Institutional Class’s inception for which data are available. |
Total Annual Fund Operating Expenses |
Institutional Class 0.79% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
Fund Characteristics |
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Exxon Mobil Corp. | 5.0% |
Apple, Inc. | 4.7% |
Oracle Corp. | 2.8% |
Schlumberger Ltd. | 2.5% |
Coca-Cola Co. (The) | 2.3% |
QUALCOMM, Inc. | 2.2% |
Accenture plc, Class A | 1.8% |
United Parcel Service, Inc., Class B | 1.7% |
Express Scripts, Inc. | 1.7% |
Cisco Systems, Inc. | 1.7% |
Top Five Industries | % of net assets |
Computers & Peripherals | 8.2% |
Oil, Gas & Consumable Fuels | 7.9% |
Software | 6.7% |
Machinery | 5.1% |
IT Services | 5.0% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.7% |
Temporary Cash Investments | 1.3% |
Other Assets and Liabilities | —* |
* Category is less than 0.05% of total net assets. |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Institutional Class | $1,000 | $1,171.20 | $4.20 | 0.78% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.93 | $3.91 | 0.78% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 98.7% | ||||||||
AEROSPACE & DEFENSE — 2.3% | ||||||||
Honeywell International, Inc. | 100,890 | $ | 6,177,495 | |||||
Rockwell Collins, Inc. | 20,489 | 1,292,856 | ||||||
Textron, Inc. | 99,922 | 2,607,964 | ||||||
10,078,315 | ||||||||
AIR FREIGHT & LOGISTICS — 1.7% | ||||||||
United Parcel Service, Inc., Class B | 100,979 | 7,570,396 | ||||||
AUTO COMPONENTS — 2.1% | ||||||||
Autoliv, Inc. | 46,791 | 3,749,363 | ||||||
BorgWarner, Inc.(1) | 69,536 | 5,370,960 | ||||||
9,120,323 | ||||||||
AUTOMOBILES — 0.6% | ||||||||
Harley-Davidson, Inc. | 73,394 | 2,734,660 | ||||||
BEVERAGES — 3.2% | ||||||||
Coca-Cola Co. (The) | 153,273 | 10,339,797 | ||||||
Hansen Natural Corp.(1) | 20,034 | 1,325,249 | ||||||
PepsiCo, Inc. | 38,143 | 2,627,671 | ||||||
14,292,717 | ||||||||
BIOTECHNOLOGY — 1.6% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 5,610 | 543,553 | ||||||
Amgen, Inc.(1) | 49,382 | 2,807,367 | ||||||
Gilead Sciences, Inc.(1) | 67,502 | 2,621,777 | ||||||
Human Genome Sciences, Inc.(1) | 34,891 | 1,028,238 | ||||||
7,000,935 | ||||||||
CAPITAL MARKETS — 2.1% | ||||||||
BlackRock, Inc. | 20,902 | 4,095,538 | ||||||
Charles Schwab Corp. (The) | 182,473 | 3,341,080 | ||||||
T. Rowe Price Group, Inc. | 30,247 | 1,943,370 | ||||||
9,379,988 | ||||||||
CHEMICALS — 3.2% | ||||||||
E.I. du Pont de Nemours & Co. | 89,647 | 5,091,053 | ||||||
LyondellBasell Industries NV, Class A(1) | 52,117 | 2,319,206 | ||||||
PPG Industries, Inc. | 50,078 | 4,740,884 | ||||||
Sigma-Aldrich Corp. | 29,401 | 2,075,123 | ||||||
14,226,266 | ||||||||
COMMUNICATIONS EQUIPMENT — 4.8% | ||||||||
Cisco Systems, Inc. | 416,591 | 7,315,338 | ||||||
Juniper Networks, Inc.(1) | 79,768 | 3,057,508 | ||||||
QUALCOMM, Inc. | 173,848 | 9,881,520 | ||||||
Riverbed Technology, Inc.(1) | 31,873 | 1,120,017 | ||||||
21,374,383 | ||||||||
COMPUTERS & PERIPHERALS — 8.2% | ||||||||
Apple, Inc.(1) | 59,724 | 20,797,688 | ||||||
Dell, Inc.(1) | 249,196 | 3,865,030 | ||||||
EMC Corp.(1) | 250,997 | 7,113,255 | ||||||
NetApp, Inc.(1) | 85,052 | 4,421,003 | ||||||
36,196,976 | ||||||||
CONSUMER FINANCE — 1.2% | ||||||||
American Express Co. | 108,070 | 5,304,076 | ||||||
DIVERSIFIED — 0.1% | ||||||||
iShares Russell 1000 Growth Index Fund | 8,471 | 529,014 | ||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.5% | ||||||||
Verizon Communications, Inc. | 55,173 | 2,084,436 | ||||||
ELECTRICAL EQUIPMENT — 1.9% | ||||||||
Emerson Electric Co. | 45,327 | 2,754,069 | ||||||
Rockwell Automation, Inc. | 62,101 | 5,410,860 | ||||||
8,164,929 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.5% | ||||||||
Jabil Circuit, Inc. | 120,978 | 2,400,204 | ||||||
ENERGY EQUIPMENT & SERVICES — 3.4% | ||||||||
Core Laboratories NV | 15,073 | 1,446,706 | ||||||
Halliburton Co. | 49,246 | 2,485,938 | ||||||
Schlumberger Ltd. | 124,009 | 11,129,808 | ||||||
15,062,452 | ||||||||
FOOD & STAPLES RETAILING — 2.9% | ||||||||
Costco Wholesale Corp. | 79,637 | 6,444,226 | ||||||
Walgreen Co. | 108,519 | 4,635,932 | ||||||
Whole Foods Market, Inc. | 27,756 | 1,741,966 | ||||||
12,822,124 | ||||||||
FOOD PRODUCTS — 2.3% | ||||||||
General Mills, Inc. | 48,044 | 1,853,537 | ||||||
Hershey Co. (The) | 53,622 | 3,094,526 | ||||||
Kellogg Co. | 65,979 | 3,778,617 | ||||||
Mead Johnson Nutrition Co. | 23,485 | 1,570,677 | ||||||
10,297,357 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 4.0% | ||||||||
Cooper Cos., Inc. (The) | 13,569 | 1,016,318 | ||||||
Covidien plc | 75,622 | 4,211,389 | ||||||
DENTSPLY International, Inc. | 21,393 | 803,093 | ||||||
Edwards Lifesciences Corp.(1) | 18,069 | 1,560,258 | ||||||
Gen-Probe, Inc.(1) | 16,092 | 1,334,349 | ||||||
Intuitive Surgical, Inc.(1) | 4,806 | 1,680,658 | ||||||
Medtronic, Inc. | 82,874 | 3,459,990 |
8
Shares | Value | |||||||
St. Jude Medical, Inc. | 41,554 | $ | 2,220,646 | |||||
Zimmer Holdings, Inc.(1) | 23,441 | 1,529,525 | ||||||
17,816,226 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 1.7% | ||||||||
Express Scripts, Inc.(1) | 131,193 | 7,443,891 | ||||||
HOTELS, RESTAURANTS & LEISURE — 3.3% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 2,238 | 597,076 | ||||||
Las Vegas Sands Corp.(1) | 34,300 | 1,612,443 | ||||||
McDonald’s Corp. | 78,898 | 6,178,502 | ||||||
Starbucks Corp. | 75,913 | 2,747,292 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 59,189 | 3,525,889 | ||||||
14,661,202 | ||||||||
HOUSEHOLD DURABLES — 0.4% | ||||||||
Whirlpool Corp. | 18,911 | 1,629,750 | ||||||
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
Church & Dwight Co., Inc. | 15,564 | 1,283,719 | ||||||
Procter & Gamble Co. (The) | 49,460 | 3,209,954 | ||||||
4,493,673 | ||||||||
INDUSTRIAL CONGLOMERATES — 1.3% | ||||||||
General Electric Co. | 276,677 | 5,658,045 | ||||||
INSURANCE — 0.8% | ||||||||
Aflac, Inc. | 66,192 | 3,719,329 | ||||||
INTERNET & CATALOG RETAIL — 0.4% | ||||||||
Netflix, Inc.(1) | 7,719 | 1,795,980 | ||||||
INTERNET SOFTWARE & SERVICES — 1.5% | ||||||||
Google, Inc., Class A(1) | 11,848 | 6,446,497 | ||||||
IT SERVICES — 5.0% | ||||||||
Accenture plc, Class A | 135,838 | 7,760,425 | ||||||
Automatic Data Processing, Inc. | 74,765 | 4,063,478 | ||||||
International Business Machines Corp. | 40,911 | 6,978,598 | ||||||
MasterCard, Inc., Class A | 11,888 | 3,279,780 | ||||||
22,082,281 | ||||||||
LIFE SCIENCES TOOLS & SERVICES — 0.5% | ||||||||
Bruker Corp.(1) | 21,906 | 432,425 | ||||||
Thermo Fisher Scientific, Inc.(1) | 28,375 | 1,702,216 | ||||||
2,134,641 | ||||||||
MACHINERY — 5.1% | ||||||||
Caterpillar, Inc. | 35,324 | 4,076,743 | ||||||
Deere & Co. | 49,901 | 4,865,348 | ||||||
Eaton Corp. | 103,793 | 5,556,039 | ||||||
Illinois Tool Works, Inc. | 91,847 | 5,364,783 | ||||||
Joy Global, Inc. | 26,999 | 2,725,549 | ||||||
22,588,462 | ||||||||
MEDIA — 1.7% | ||||||||
Scripps Networks Interactive, Inc., Class A | 56,797 | 2,920,502 | ||||||
Walt Disney Co. (The) | 104,531 | 4,505,286 | ||||||
7,425,788 | ||||||||
METALS & MINING — 2.1% | ||||||||
Cliffs Natural Resources, Inc. | 44,025 | 4,126,023 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 67,966 | 3,740,169 | ||||||
Newmont Mining Corp. | 27,550 | 1,614,706 | ||||||
9,480,898 | ||||||||
MULTILINE RETAIL — 1.5% | ||||||||
Kohl’s Corp. | 40,317 | 2,125,109 | ||||||
Target Corp. | 92,352 | 4,534,483 | ||||||
6,659,592 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 7.9% | ||||||||
Cimarex Energy Co. | 21,276 | 2,352,913 | ||||||
ConocoPhillips | 48,406 | 3,820,685 | ||||||
Exxon Mobil Corp. | 250,891 | 22,078,408 | ||||||
Occidental Petroleum Corp. | 32,182 | 3,678,081 | ||||||
Southwestern Energy Co.(1) | 68,777 | 3,016,559 | ||||||
34,946,646 | ||||||||
PERSONAL PRODUCTS — 0.4% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 17,538 | 1,701,186 | ||||||
PHARMACEUTICALS — 2.7% | ||||||||
Abbott Laboratories | 119,988 | 6,244,175 | ||||||
Allergan, Inc. | 52,477 | 4,175,070 | ||||||
Novo Nordisk A/S B Shares | 13,618 | 1,721,487 | ||||||
12,140,732 | ||||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 0.6% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 90,907 | 2,428,126 | ||||||
ROAD & RAIL — 0.6% | ||||||||
Union Pacific Corp. | 25,558 | 2,644,486 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.8% | ||||||||
Altera Corp. | 62,561 | 3,046,721 | ||||||
Broadcom Corp., Class A(1) | 17,913 | 630,179 | ||||||
Linear Technology Corp. | 84,628 | 2,945,054 | ||||||
RF Micro Devices, Inc.(1) | 87,857 | 585,128 | ||||||
Texas Instruments, Inc. | 111,784 | 3,971,685 | ||||||
Xilinx, Inc. | 29,045 | 1,012,509 | ||||||
12,191,276 |
9
Shares | Value |
SOFTWARE — 6.7% | ||||||||
Citrix Systems, Inc.(1) | 25,329 | $ | 2,136,248 | |||||
CommVault Systems, Inc.(1) | 12,543 | 494,069 | ||||||
Intuit, Inc.(1) | 40,500 | 2,250,180 | ||||||
Microsoft Corp. | 192,731 | 5,014,861 | ||||||
Oracle Corp. | 345,769 | 12,464,972 | ||||||
Red Hat, Inc.(1) | 59,522 | 2,825,509 | ||||||
salesforce.com, inc.(1) | 9,792 | 1,357,171 | ||||||
VMware, Inc., Class A(1) | 32,249 | 3,077,522 | ||||||
29,620,532 | ||||||||
SPECIALTY RETAIL — 3.1% | ||||||||
American Eagle Outfitters, Inc. | 87,176 | 1,356,459 | ||||||
Home Depot, Inc. (The) | 180,875 | 6,717,697 | ||||||
Limited Brands, Inc. | 98,049 | 4,035,697 | ||||||
OfficeMax, Inc.(1) | 48,546 | 483,518 | ||||||
Williams-Sonoma, Inc. | 28,739 | 1,247,560 | ||||||
13,840,931 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.0% | ||||||||
Crown Castle International Corp.(1) | 103,662 | 4,442,953 | ||||||
TOTAL COMMON STOCKS (Cost $328,043,392) | 436,632,674 |
Principal Amount/Shares | Value | |||||||
Temporary Cash Investments — 1.3% | ||||||||
FHLB Discount Notes, 0.001%, 5/2/11(2) | $ | 5,800,000 | $ | 5,800,000 | ||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 52,612 | 52,612 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $5,852,612) | 5,852,612 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $333,896,004) | 442,485,286 | |||||||
OTHER ASSETS AND LIABILITIES(3) | (8,147 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 442,477,139 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
5,616,404 | DKK for USD | UBS AG | 5/31/11 | $1,114,768 | $(14,834) |
(Value on Settlement Date $1,099,934)
Notes to Schedule of Investments
DKK = Danish Krone
FHLB = Federal Home Loan Bank
USD = United States Dollar
(1) | Non-income producing. |
(2) | The rate indicated is the yield to maturity at purchase. |
(3) | Category is less than 0.05% of total net assets. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $333,896,004) | $ | 442,485,286 | ||
Receivable for investments sold | 6,783,022 | |||
Receivable for capital shares sold | 637,976 | |||
Dividends and interest receivable | 331,411 | |||
450,237,695 | ||||
Liabilities | ||||
Payable for investments purchased | 7,472,883 | |||
Unrealized loss on forward foreign currency exchange contracts | 14,834 | |||
Accrued management fees | 272,839 | |||
7,760,556 | ||||
Net Assets | $ | 442,477,139 | ||
Institutional Class Capital Shares, $0.01 Par Value | ||||
Shares authorized | 150,000,000 | |||
Shares outstanding | 34,374,323 | |||
Net Asset Value Per Share | $ | 12.87 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 330,352,723 | ||
Undistributed net investment income | 750,616 | |||
Undistributed net realized gain | 2,797,950 | |||
Net unrealized appreciation | 108,575,850 | |||
$ | 442,477,139 |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $4,804) | $ | 3,156,516 | ||
Interest | 2,128 | |||
3,158,644 | ||||
Expenses: | ||||
Management fees | 1,489,770 | |||
Directors’ fees and expenses | 9,350 | |||
1,499,120 | ||||
Net investment income (loss) | 1,659,524 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 15,209,205 | |||
Futures contract transactions | 191,522 | |||
Foreign currency transactions | (68,065 | ) | ||
15,332,662 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 43,282,642 | |||
Translation of assets and liabilities in foreign currencies | (14,421 | ) | ||
43,268,221 | ||||
Net realized and unrealized gain (loss) | 58,600,883 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 60,260,407 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 1,659,524 | $ | 1,690,758 | ||||
Net realized gain (loss) | 15,332,662 | 11,144,590 | ||||||
Change in net unrealized appreciation (depreciation) | 43,268,221 | 35,098,212 | ||||||
Net increase (decrease) in net assets resulting from operations | 60,260,407 | 47,933,560 | ||||||
Distributions to Shareholders | ||||||||
From net investment income | (2,311,137 | ) | (996,841 | ) | ||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 54,359,046 | 100,015,427 | ||||||
Proceeds from reinvestment of distributions | 2,311,137 | — | ||||||
Payments for shares redeemed | (12,559,240 | ) | (14,872,070 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 44,110,943 | 85,143,357 | ||||||
Net increase (decrease) in net assets | 102,060,213 | 132,080,076 | ||||||
Net Assets | ||||||||
Beginning of period | 340,416,926 | 208,336,850 | ||||||
End of period | $ | 442,477,139 | $ | 340,416,926 | ||||
Undistributed net investment income | $ | 750,616 | $ | 1,402,229 | ||||
Transactions in Shares of the Fund | ||||||||
Sold | 4,473,125 | 9,964,567 | ||||||
Issued in reinvestment of distributions | 196,358 | — | ||||||
Redeemed | (1,083,251 | ) | (1,474,183 | ) | ||||
Net increase (decrease) in shares of the fund | 3,586,232 | 8,490,384 |
See Notes to Financial Statements.
13
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in equity securities of larger-sized companies that management believes will increase in value over time. The fund is not permitted to invest in any securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
14
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
15
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The strategy assets of the fund include the assets of Growth Fund, one fund in a series issued by the corporation. The annual management fee schedule ranges from 0.600% to 0.800%. The effective annual management fee for the six months ended April 30, 2011 was 0.78%.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC. The fund is wholly owned, in aggregate, by various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in the fund for the purpose of exercising management or control.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $176,477,589 and $136,137,619, respectively.
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
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The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 434,911,187 | $ | 1,721,487 | — | |||||||
Temporary Cash Investments | 52,612 | 5,800,000 | — | |||||||||
Total Value of Investment Securities | $ | 434,963,799 | $ | 7,521,487 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (14,834 | ) | — |
6. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. During the period, the fund infrequently purchased equity price risk derivative instruments for temporary investment purposes.
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
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Value of Derivative Instruments as of April 30, 2011 | ||||||||||
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 gain on forward foreign currency exchange contracts | — | Unrealized loss on forward foreign currency exchange contracts | $ | 14,834 | |||||
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2011 | ||||||||||
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 | $ | 191,522 | Change in net unrealized appreciation (depreciation) on futures contracts | — | |||||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | (72,216 | ) | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | (11,957 | ) | |||
$ | 119,306 | $ | (11,957 | ) |
7. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 338,885,052 | ||
Gross tax appreciation of investments | $ | 104,571,730 | ||
Gross tax depreciation of investments | (971,496 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 103,600,234 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(7,239,737), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006(2) | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 11.06 | $ | 9.34 | $ | 8.13 | $ | 12.87 | $ | 10.57 | $ | 10.00 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss) | 0.05 | (3) | 0.06 | (3) | 0.06 | (3) | 0.04 | (3) | 0.04 | 0.01 | ||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.84 | 1.71 | 1.21 | (4.19 | ) | 2.29 | 0.56 | |||||||||||||||||
Total From Investment Operations | 1.89 | 1.77 | 1.27 | (4.15 | ) | 2.33 | 0.57 | |||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.05 | ) | (0.06 | ) | (0.03 | ) | (0.03 | ) | — | |||||||||||||
From Net Realized Gains | — | — | — | (0.56 | ) | — | — | |||||||||||||||||
Total Distributions | (0.08 | ) | (0.05 | ) | (0.06 | ) | (0.59 | ) | (0.03 | ) | — | |||||||||||||
Net Asset Value, End of Period | $ | 12.87 | $ | 11.06 | $ | 9.34 | $ | 8.13 | $ | 12.87 | $ | 10.57 | ||||||||||||
Total Return(4) | 17.12 | % | 18.94 | % | 15.88 | % | (33.68 | )% | 22.12 | % | 5.70 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.78 | %(5) | 0.79 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | %(5) | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.86 | %(5) | 0.63 | % | 0.67 | % | 0.38 | % | 0.35 | % | 0.36 | %(5) | ||||||||||||
Portfolio Turnover Rate | 36 | % | 95 | % | 132 | % | 136 | % | 140 | % | 57 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 442,477 | $ | 340,417 | $ | 208,337 | $ | 83,440 | $ | 88,446 | $ | 58,983 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | May 12, 2006 (fund inception) through October 31, 2006. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
19
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71844 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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NT VistaSM Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 20 |
Additional Information | 21 |
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.
1
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12–18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||
Average Annual Returns | |||||
Ticker Symbol | 6 months(1) | 1 year | Since Inception | Inception Date | |
Institutional Class | ACLWX | 20.34% | 25.11% | 2.65% | 5/12/06 |
Russell Midcap Growth Index | — | 22.62% | 27.40% | 5.59%(2) | — |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 4/30/06, the date nearest the Institutional Class’s inception for which data are available. |
Total Annual Fund Operating Expenses |
Institutional Class 0.80% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Historically, small company stocks have been more volatile than the stocks of larger, more established companies.
Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
Fund Characteristics |
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Whole Foods Market, Inc. | 2.5% |
Netflix, Inc. | 2.4% |
SXC Health Solutions Corp. | 2.1% |
priceline.com, Inc. | 2.1% |
BE Aerospace, Inc. | 2.1% |
National Oilwell Varco, Inc. | 1.7% |
Albemarle Corp. | 1.5% |
Cognizant Technology Solutions Corp., Class A | 1.5% |
TransDigm Group, Inc. | 1.5% |
Concho Resources, Inc. | 1.5% |
Top Five Industries | % of net assets |
Machinery | 7.7% |
Semiconductors & Semiconductor Equipment | 6.0% |
Software | 4.9% |
Energy Equipment & Services | 4.7% |
Internet & Catalog Retail | 4.5% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 88.0% |
Foreign Common Stocks* | 10.4% |
Total Common Stocks | 98.4% |
Temporary Cash Investments | 1.1% |
Other Assets and Liabilities | 0.5% |
*Includes depositary shares, dual listed securities and foreign ordinary shares. |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Institutional Class | $1,000 | $1,203.40 | $4.37 | 0.80% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
Shares | Value | |||||||
Common Stocks — 98.4% | ||||||||
AEROSPACE & DEFENSE — 3.6% | ||||||||
BE Aerospace, Inc.(1) | 109,800 | $ | 4,237,182 | |||||
TransDigm Group, Inc.(1) | 36,300 | 3,023,790 | ||||||
7,260,972 | ||||||||
AIR FREIGHT & LOGISTICS — 0.5% | ||||||||
C.H. Robinson Worldwide, Inc. | 13,200 | 1,058,376 | ||||||
AIRLINES — 0.5% | ||||||||
Alaska Air Group, Inc.(1) | 16,000 | 1,053,920 | ||||||
AUTO COMPONENTS — 1.3% | ||||||||
BorgWarner, Inc.(1) | 35,200 | 2,718,848 | ||||||
AUTOMOBILES — 0.4% | ||||||||
Harley-Davidson, Inc. | 24,200 | 901,692 | ||||||
BIOTECHNOLOGY — 2.7% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 28,900 | 2,800,121 | ||||||
United Therapeutics Corp.(1) | 15,100 | 1,011,096 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 30,900 | 1,700,118 | ||||||
5,511,335 | ||||||||
CAPITAL MARKETS ��� 3.2% | ||||||||
Affiliated Managers Group, Inc.(1) | 11,600 | 1,265,328 | ||||||
American Capital Ltd.(1) | 89,100 | 915,057 | ||||||
KKR & Co. LP | 63,263 | 1,199,466 | ||||||
Lazard Ltd., Class A | 47,300 | 1,939,300 | ||||||
Raymond James Financial, Inc. | 34,100 | 1,278,750 | ||||||
6,597,901 | ||||||||
CHEMICALS — 2.9% | ||||||||
Albemarle Corp. | 44,100 | 3,111,255 | ||||||
CF Industries Holdings, Inc. | 12,400 | 1,755,220 | ||||||
International Flavors & Fragrances, Inc. | 17,700 | 1,124,304 | ||||||
5,990,779 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 1.1% | ||||||||
Stericycle, Inc.(1) | 25,000 | 2,282,000 | ||||||
COMMUNICATIONS EQUIPMENT — 1.2% | ||||||||
Aruba Networks, Inc.(1) | 33,600 | 1,207,248 | ||||||
F5 Networks, Inc.(1) | 11,600 | 1,175,776 | ||||||
2,383,024 | ||||||||
CONSTRUCTION & ENGINEERING — 1.1% | ||||||||
Foster Wheeler AG(1) | 29,500 | 1,049,315 | ||||||
KBR, Inc. | 30,800 | 1,181,796 | ||||||
2,231,111 | ||||||||
CONSUMER FINANCE — 1.1% | ||||||||
Discover Financial Services | 90,600 | 2,250,504 | ||||||
CONTAINERS & PACKAGING — 1.1% | ||||||||
Crown Holdings, Inc.(1) | 60,300 | 2,255,220 | ||||||
ELECTRICAL EQUIPMENT — 2.8% | ||||||||
Cooper Industries plc | 32,500 | 2,143,375 | ||||||
Polypore International, Inc.(1) | 17,882 | 1,104,571 | ||||||
Rockwell Automation, Inc. | 28,200 | 2,457,066 | ||||||
5,705,012 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 1.5% | ||||||||
Jabil Circuit, Inc. | 59,200 | 1,174,528 | ||||||
Trimble Navigation Ltd.(1) | 38,900 | 1,822,076 | ||||||
2,996,604 | ||||||||
ENERGY EQUIPMENT & SERVICES — 4.7% | ||||||||
Atwood Oceanics, Inc.(1) | 24,800 | 1,114,264 | ||||||
Core Laboratories NV | 10,700 | 1,026,986 | ||||||
Dril-Quip, Inc.(1) | 13,200 | 1,010,592 | ||||||
FMC Technologies, Inc.(1) | 31,550 | 1,466,444 | ||||||
McDermott International, Inc.(1) | 64,600 | 1,491,614 | ||||||
National Oilwell Varco, Inc. | 45,000 | 3,451,050 | ||||||
9,560,950 | ||||||||
FOOD & STAPLES RETAILING — 2.5% | ||||||||
Whole Foods Market, Inc. | 80,800 | 5,071,008 | ||||||
FOOD PRODUCTS — 1.3% | ||||||||
J.M. Smucker Co. (The) | 13,800 | 1,035,966 | ||||||
Mead Johnson Nutrition Co. | 25,200 | 1,685,376 | ||||||
2,721,342 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 3.7% | ||||||||
C.R. Bard, Inc. | 23,500 | 2,508,625 | ||||||
Hologic, Inc.(1) | 45,300 | 997,506 | ||||||
Mettler-Toledo International, Inc.(1) | 11,700 | 2,192,580 | ||||||
Varian Medical Systems, Inc.(1) | 25,000 | 1,755,000 | ||||||
7,453,711 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 0.8% | ||||||||
Express Scripts, Inc.(1) | 28,100 | 1,594,394 | ||||||
HEALTH CARE TECHNOLOGY — 2.1% | ||||||||
SXC Health Solutions Corp.(1) | 77,900 | 4,296,964 | ||||||
HOTELS, RESTAURANTS & LEISURE — 3.8% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 8,100 | 2,160,999 | ||||||
Panera Bread Co., Class A(1) | 15,500 | 1,877,205 | ||||||
Royal Caribbean Cruises Ltd.(1) | 42,600 | 1,696,332 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 33,000 | 1,965,810 | ||||||
7,700,346 |
8
Shares | Value |
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
Church & Dwight Co., Inc. | 25,600 | $ | 2,111,488 | |||||
INTERNET & CATALOG RETAIL — 4.5% | ||||||||
Netflix, Inc.(1) | 20,700 | 4,816,269 | ||||||
priceline.com, Inc.(1) | 7,800 | 4,266,678 | ||||||
9,082,947 | ||||||||
INTERNET SOFTWARE & SERVICES — 3.2% | ||||||||
Baidu, Inc. ADR(1) | 13,100 | 1,945,612 | ||||||
MercadoLibre, Inc. | 10,934 | 999,368 | ||||||
VeriSign, Inc. | 71,000 | 2,624,160 | ||||||
WebMD Health Corp.(1) | 16,100 | 931,707 | ||||||
6,500,847 | ||||||||
IT SERVICES — 2.7% | ||||||||
Alliance Data Systems Corp.(1) | 11,000 | 1,045,000 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 36,800 | 3,050,720 | ||||||
VeriFone Systems, Inc.(1) | 25,800 | 1,414,356 | ||||||
5,510,076 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 0.4% | ||||||||
Brunswick Corp. | 33,700 | 787,569 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 2.1% | ||||||||
Illumina, Inc.(1) | 32,800 | 2,328,144 | ||||||
Waters Corp.(1) | 20,600 | 2,018,800 | ||||||
4,346,944 | ||||||||
MACHINERY — 7.7% | ||||||||
AGCO Corp.(1) | 47,200 | 2,717,776 | ||||||
Cummins, Inc. | 20,500 | 2,463,690 | ||||||
Harsco Corp. | 27,400 | 975,440 | ||||||
Joy Global, Inc. | 23,500 | 2,372,325 | ||||||
Manitowoc Co., Inc. (The) | 20,862 | 462,928 | ||||||
Terex Corp.(1) | 27,811 | 967,267 | ||||||
Timken Co. | 20,694 | 1,166,935 | ||||||
Titan International, Inc. | 48,163 | 1,487,755 | ||||||
Trinity Industries, Inc. | 28,800 | 1,042,560 | ||||||
WABCO Holdings, Inc.(1) | 27,943 | 2,063,590 | ||||||
15,720,266 | ||||||||
MEDIA — 2.0% | ||||||||
CBS Corp., Class B | 81,300 | 2,050,386 | ||||||
Imax Corp.(1) | 59,077 | 2,072,421 | ||||||
4,122,807 | ||||||||
METALS & MINING — 2.1% | ||||||||
Cliffs Natural Resources, Inc. | 27,200 | 2,549,184 | ||||||
Walter Energy, Inc. | 12,600 | 1,741,572 | ||||||
4,290,756 | ||||||||
MULTILINE RETAIL — 1.0% | ||||||||
Dollar Tree, Inc.(1) | 33,650 | 1,934,875 | ||||||
OIL, GAS & CONSUMABLE FUELS — 3.6% | ||||||||
Brigham Exploration Co.(1) | 53,200 | 1,783,796 | ||||||
Concho Resources, Inc.(1) | 28,000 | 2,991,800 | ||||||
SandRidge Energy, Inc.(1) | 114,200 | 1,411,512 | ||||||
Whiting Petroleum Corp.(1) | 17,600 | 1,223,200 | ||||||
7,410,308 | ||||||||
PHARMACEUTICALS — 0.6% | ||||||||
Shire plc | 39,000 | 1,207,779 | ||||||
PROFESSIONAL SERVICES — 0.5% | ||||||||
Manpower, Inc. | 14,800 | 980,500 | ||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 2.2% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 90,500 | 2,417,255 | ||||||
Jones Lang LaSalle, Inc. | 20,600 | 2,109,028 | ||||||
4,526,283 | ||||||||
ROAD & RAIL — 0.8% | ||||||||
Kansas City Southern(1) | 28,100 | 1,632,891 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 6.0% | ||||||||
Altera Corp. | 31,800 | 1,548,660 | ||||||
ARM Holdings plc | 261,400 | 2,727,956 | ||||||
Atmel Corp.(1) | 74,900 | 1,145,970 | ||||||
Cavium Networks, Inc.(1) | 44,100 | 2,082,402 | ||||||
Cypress Semiconductor Corp.(1) | 47,200 | 1,027,072 | ||||||
NXP Semiconductor NV(1) | 27,700 | 925,180 | ||||||
Skyworks Solutions, Inc.(1) | 56,400 | 1,774,344 | ||||||
Veeco Instruments, Inc.(1) | 20,302 | 1,038,041 | ||||||
12,269,625 | ||||||||
SOFTWARE — 4.9% | ||||||||
Ariba, Inc.(1) | 32,100 | 1,116,117 | ||||||
Autodesk, Inc.(1) | 23,400 | 1,052,532 | ||||||
Check Point Software Technologies Ltd.(1) | 23,100 | 1,268,883 | ||||||
Citrix Systems, Inc.(1) | 32,200 | 2,715,748 | ||||||
Intuit, Inc.(1) | 17,500 | 972,300 | ||||||
salesforce.com, inc.(1) | 21,100 | 2,924,460 | ||||||
10,050,040 | ||||||||
SPECIALTY RETAIL — 3.7% | ||||||||
O’Reilly Automotive, Inc.(1) | 35,400 | 2,090,724 | ||||||
PetSmart, Inc. | 63,310 | 2,669,783 | ||||||
Williams-Sonoma, Inc. | 62,500 | 2,713,125 | ||||||
7,473,632 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 1.9% | ||||||||
Fossil, Inc.(1) | 22,400 | 2,145,472 | ||||||
Lululemon Athletica, Inc.(1) | 16,800 | 1,680,504 | ||||||
3,825,976 |
9
Shares | Value |
TRADING COMPANIES & DISTRIBUTORS — 1.7% | ||||||||
Fastenal Co. | 31,100 | $ | 2,086,499 | |||||
WESCO International, Inc.(1) | 23,000 | 1,424,850 | ||||||
3,511,349 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.9% | ||||||||
NII Holdings, Inc.(1) | 24,900 | 1,035,342 | ||||||
SBA Communications Corp., Class A(1) | 71,102 | 2,746,670 | ||||||
3,782,012 | ||||||||
TOTAL COMMON STOCKS (Cost $147,478,148) | 200,674,983 | |||||||
Temporary Cash Investments — 1.1% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 45,451 | 45,451 | ||||||
Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.375%, 11/15/39, valued at $2,236,815), in a joint trading account at 0.02%, dated 4/29/11, due 5/2/11 (Delivery value $2,200,004) | 2,200,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $2,245,451) | 2,245,451 | |||||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $149,723,599) | 202,920,434 | |||||||
OTHER ASSETS AND LIABILITIES — 0.5% | 946,104 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 203,866,538 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
1,509,126 | GBP for USD | Bank of America | 5/31/11 | $2,519,923 | $(34,846) |
(Value on Settlement Date $2,485,077)
Geographic Diversification | |
(as a % of net assets) | |
United States | 88.0% |
Canada | 3.9% |
United Kingdom | 1.3% |
Netherlands | 1.0% |
People’s Republic of China | 1.0% |
Bermuda | 1.0% |
Israel | 0.6% |
Ireland | 0.6% |
Switzerland | 0.5% |
Argentina | 0.5% |
Cash and Equivalents* | 1.6% |
*Includes temporary cash investments and other assets and liabilities. |
Notes to Schedule of Investments
ADR = American Depositary Receipt
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $149,723,599) | $ | 202,920,434 | ||
Receivable for investments sold | 4,565,528 | |||
Receivable for capital shares sold | 219,520 | |||
Dividends and interest receivable | 52,675 | |||
207,758,157 | ||||
Liabilities | ||||
Payable for investments purchased | 3,726,480 | |||
Unrealized loss on forward foreign currency exchange contracts | 34,846 | |||
Accrued management fees | 130,293 | |||
3,891,619 | ||||
Net Assets | $ | 203,866,538 | ||
Institutional Class Capital Shares, $0.01 Par Value | ||||
Shares authorized | 150,000,000 | |||
Shares outstanding | 17,950,409 | |||
Net Asset Value Per Share | $ | 11.36 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 146,982,350 | ||
Accumulated net investment loss | (190,261 | ) | ||
Undistributed net realized gain | 3,910,082 | |||
Net unrealized appreciation | 53,164,367 | |||
$ | 203,866,538 |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $953) | $ | 495,388 | ||
Interest | 1,688 | |||
497,076 | ||||
Expenses: | ||||
Management fees | 708,915 | |||
Directors’ fees and expenses | 4,327 | |||
713,242 | ||||
Net investment income (loss) | (216,166 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 12,679,637 | |||
Futures contract transactions | 293,119 | |||
Foreign currency transactions | (113,253 | ) | ||
12,859,503 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 20,104,891 | |||
Translation of assets and liabilities in foreign currencies | (6,040 | ) | ||
20,098,851 | ||||
Net realized and unrealized gain (loss) | 32,958,354 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 32,742,188 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (216,166 | ) | $ | (322,140 | ) | ||
Net realized gain (loss) | 12,859,503 | 8,492,963 | ||||||
Change in net unrealized appreciation (depreciation) | 20,098,851 | 21,735,147 | ||||||
Net increase (decrease) in net assets resulting from operations | 32,742,188 | 29,905,970 | ||||||
Distributions to Shareholders | ||||||||
From net investment income | — | (11,506 | ) | |||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 25,703,327 | 46,264,949 | ||||||
Payments for shares redeemed | (15,882,562 | ) | (6,092,543 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 9,820,765 | 40,172,406 | ||||||
Net increase (decrease) in net assets | 42,562,953 | 70,066,870 | ||||||
Net Assets | ||||||||
Beginning of period | 161,303,585 | 91,236,715 | ||||||
End of period | $ | 203,866,538 | $ | 161,303,585 | ||||
Accumulated undistributed net investment income (loss) | $ | (190,261 | ) | $ | 25,905 | |||
Transactions in Shares of the Fund | ||||||||
Sold | 2,442,695 | 5,628,784 | ||||||
Redeemed | (1,574,092 | ) | (719,862 | ) | ||||
Net increase (decrease) in shares of the fund | 868,603 | 4,908,922 |
See Notes to Financial Statements.
13
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Vista Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in equity securities of companies that are medium-sized and smaller at the time of purchase that management believes will increase in value. The fund is not permitted to invest in any securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
14
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. Additionally, non-U.S. tax returns filed by the fund due to investments in certain foreign securities remain subject to examination by the relevant taxing authority for seven years from the date of filing. 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. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
15
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The annual management fee is 0.80%.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC. The fund is wholly owned, in aggregate, by various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in the fund for the purpose of exercising management or control.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $104,580,114 and $95,920,467, respectively.
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
16
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 179,534,715 | — | — | ||||||||
Foreign Common Stocks | 17,204,533 | $ | 3,935,735 | — | ||||||||
Temporary Cash Investments | 45,451 | 2,200,000 | — | |||||||||
Total Value of Investment Securities | $ | 196,784,699 | $ | 6,135,735 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (34,846 | ) | — |
6. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. During the period, the fund infrequently purchased equity price risk derivative instruments for temporary investment purposes.
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
17
Value of Derivative Instruments as of April 30, 2011 | ||||||||||
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 gain on forward foreign currency exchange contracts | — | Unrealized loss on forward foreign currency exchange contracts | $ | 34,846 | |||||
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2011 | ||||||||||
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 | $ | 293,119 | Change in net unrealized appreciation (depreciation) on futures contracts | — | |||||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | (111,274 | ) | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | (7,445 | ) | |||
$ | 181,845 | $ | (7,445 | ) |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
The fund invests in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 150,270,635 | ||
Gross tax appreciation of investments | $ | 53,083,807 | ||
Gross tax depreciation of investments | (434,008 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 52,649,799 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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As of October 31, 2010, the fund had accumulated capital losses of $(8,458,343), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006(2) | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 9.44 | $ | 7.50 | �� | $ | 7.62 | $ | 13.42 | $ | 9.00 | $ | 10.00 | |||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss) | (0.01 | )(3) | (0.02 | )(3) | (0.02 | )(3) | (0.04 | )(3) | (0.04 | ) | (0.01 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.93 | 1.96 | (0.10 | ) | (5.73 | ) | 4.46 | (0.99 | ) | |||||||||||||||
Total From Investment Operations | 1.92 | 1.94 | (0.12 | ) | (5.77 | ) | 4.42 | (1.00 | ) | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (4) | — | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (0.03 | ) | — | — | |||||||||||||||||
Total Distributions | — | — | (4) | — | (0.03 | ) | — | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 11.36 | $ | 9.44 | $ | 7.50 | $ | 7.62 | $ | 13.42 | $ | 9.00 | ||||||||||||
Total Return(5) | 20.34 | % | 26.05 | % | (1.71 | )% | (43.09 | )% | 49.11 | % | (10.00 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.80 | %(6) | 0.80 | % | 0.80 | % | 0.81 | % | 0.80 | % | 0.80 | %(6) | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.24 | )%(6) | (0.26 | )% | (0.35 | )% | (0.35 | )% | (0.36 | )% | (0.27 | )%(6) | ||||||||||||
Portfolio Turnover Rate | 55 | % | 152 | % | 190 | % | 183 | % | 147 | % | 109 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 203,867 | $ | 161,304 | $ | 91,237 | $ | 40,136 | $ | 44,652 | $ | 25,678 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | May 12, 2006 (fund inception) through October 31, 2006. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | 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. |
(6) | Annualized. |
See Notes to Financial Statements.
20
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71845 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Select Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 10 |
Statement of Operations | 11 |
Statement of Changes in Net Assets | 12 |
Notes to Financial Statements | 13 |
Financial Highlights | 19 |
Additional Information | 25 |
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.
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Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12–18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCIX | 16.84% | 20.79% | 4.39% | 1.32% | 12.36% | 6/30/71(2) |
Russell 1000 Growth Index | — | 16.96% | 20.87% | 5.06% | 2.11% | N/A(3) | — |
Institutional Class | TWSIX | 16.99% | 21.03% | 4.60% | 1.54% | 5.16% | 3/13/97 |
A Class(4) No sales charge* With sales charge* | TWCAX | 16.73% 10.03% | 20.51% 13.58% | 4.14% 2.91% | 1.06% 0.47% | 3.34% 2.89% | 8/8/97 |
B Class No sales charge* With sales charge* | ABSLX | 16.29% 11.29% | 19.59% 15.59% | 3.35% 3.17% | — — | 5.52% 5.52% | 1/31/03 |
C Class No sales charge* With sales charge* | ACSLX | 16.27% 15.27% | 19.60% 19.60% | 3.35% 3.35% | — — | 5.53% 5.53% | 1/31/03 |
R Class | ASERX | 16.56% | 20.19% | 3.87% | — | 3.03% | 7/29/05 |
*Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Although the fund’s actual inception date was 10/31/58, this inception date corresponds with the investment advisor’s implementation of its current investment philosophy and practices. |
(3) | Benchmark began 12/29/78. |
(4) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.01% | 0.81% | 1.26% | 2.01% | 2.01% | 1.51% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
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APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 6.3% |
Google, Inc., Class A | 3.8% |
Exxon Mobil Corp. | 3.3% |
Teradata Corp. | 3.0% |
EMC Corp. | 2.7% |
Coach, Inc. | 2.5% |
Costco Wholesale Corp. | 2.5% |
Occidental Petroleum Corp. | 2.3% |
UnitedHealth Group, Inc. | 2.3% |
Microsoft Corp. | 2.3% |
Top Five Industries | % of net assets |
Computers & Peripherals | 9.0% |
Energy Equipment & Services | 6.0% |
Oil, Gas & Consumable Fuels | 5.6% |
Software | 5.4% |
Internet Software & Services | 5.2% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 90.9% |
Foreign Common Stocks* | 8.3% |
Total Common Stocks | 99.2% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.5% |
*Includes depositary shares, dual listed securities and foreign ordinary shares. |
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Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. 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.
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Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,168.40 | $5.38 | 1.00% |
Institutional Class | $1,000 | $1,169.90 | $4.30 | 0.80% |
A Class | $1,000 | $1,167.30 | $6.72 | 1.25% |
B Class | $1,000 | $1,162.90 | $10.73 | 2.00% |
C Class | $1,000 | $1,162.70 | $10.72 | 2.00% |
R Class | $1,000 | $1,165.60 | $8.05 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
A Class | $1,000 | $1,018.60 | $6.26 | 1.25% |
B Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
C Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
R Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 99.2% | ||||||||
AEROSPACE & DEFENSE — 3.7% | ||||||||
General Dynamics Corp. | 515,100 | $ | 37,509,582 | |||||
Rockwell Collins, Inc. | 570,000 | 35,967,000 | ||||||
73,476,582 | ||||||||
AIR FREIGHT & LOGISTICS — 1.4% | ||||||||
United Parcel Service, Inc., Class B | 376,700 | 28,241,199 | ||||||
AUTO COMPONENTS — 0.8% | ||||||||
Johnson Controls, Inc. | 364,500 | 14,944,500 | ||||||
BEVERAGES — 1.2% | ||||||||
Diageo plc | 1,199,400 | 24,413,659 | ||||||
BIOTECHNOLOGY — 2.2% | ||||||||
Gilead Sciences, Inc.(1) | 1,091,000 | 42,374,440 | ||||||
CAPITAL MARKETS — 2.3% | ||||||||
Bank of New York Mellon Corp. (The) | 567,100 | 16,423,216 | ||||||
Franklin Resources, Inc. | 221,300 | 28,574,256 | ||||||
44,997,472 | ||||||||
CHEMICALS — 3.1% | ||||||||
Monsanto Co. | 508,700 | 34,611,948 | ||||||
Potash Corp. of Saskatchewan, Inc. | 480,900 | 27,113,142 | ||||||
61,725,090 | ||||||||
COMMUNICATIONS EQUIPMENT — 2.9% | ||||||||
Cisco Systems, Inc. | 1,064,000 | 18,683,840 | ||||||
QUALCOMM, Inc. | 685,600 | 38,969,504 | ||||||
57,653,344 | ||||||||
COMPUTERS & PERIPHERALS — 9.0% | ||||||||
Apple, Inc.(1) | 352,000 | 122,576,960 | ||||||
EMC Corp.(1) | 1,880,700 | 53,299,038 | ||||||
175,875,998 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 2.8% | ||||||||
CME Group, Inc. | 71,400 | 21,117,978 | ||||||
Hong Kong Exchanges and Clearing Ltd. | 592,500 | 13,518,880 | ||||||
JPMorgan Chase & Co. | 430,900 | 19,661,967 | ||||||
54,298,825 | ||||||||
ELECTRICAL EQUIPMENT — 3.9% | ||||||||
ABB Ltd. ADR(1) | 1,178,400 | 32,394,216 | ||||||
Emerson Electric Co. | 712,700 | 43,303,652 | ||||||
75,697,868 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.5% | ||||||||
Dolby Laboratories, Inc., Class A(1) | 207,303 | 10,377,588 | ||||||
ENERGY EQUIPMENT & SERVICES — 6.0% | ||||||||
Diamond Offshore Drilling, Inc. | 217,000 | 16,463,790 | ||||||
Halliburton Co. | 710,100 | 35,845,848 | ||||||
National Oilwell Varco, Inc. | 356,800 | 27,362,992 | ||||||
Schlumberger Ltd. | 428,300 | 38,439,925 | ||||||
118,112,555 | ||||||||
FOOD & STAPLES RETAILING — 2.7% | ||||||||
Costco Wholesale Corp. | 596,500 | 48,268,780 | ||||||
Wal-Mart Stores, Inc. | 71,500 | 3,931,070 | ||||||
52,199,850 | ||||||||
FOOD PRODUCTS — 2.0% | ||||||||
Hershey Co. (The) | 301,700 | 17,411,107 | ||||||
Mead Johnson Nutrition Co. | 339,000 | 22,672,320 | ||||||
40,083,427 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 1.0% | ||||||||
Intuitive Surgical, Inc.(1) | 58,000 | 20,282,600 | ||||||
HEALTH CARE PROVIDERS & SERVICES — 4.4% | ||||||||
Medco Health Solutions, Inc.(1) | 700,115 | 41,537,823 | ||||||
UnitedHealth Group, Inc. | 915,700 | 45,079,911 | ||||||
86,617,734 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 2.1% | ||||||||
McDonald’s Corp. | 450,700 | 35,294,317 | ||||||
Peet’s Coffee & Tea, Inc.(1) | 138,400 | 6,432,832 | ||||||
41,727,149 | ||||||||
HOUSEHOLD DURABLES — 1.3% | ||||||||
Harman International Industries, Inc. | 515,400 | 25,012,362 | ||||||
INSURANCE — 0.9% | ||||||||
Travelers Cos., Inc. (The) | 263,300 | 16,661,624 | ||||||
INTERNET & CATALOG RETAIL — 3.1% | ||||||||
Amazon.com, Inc.(1) | 173,400 | 34,073,100 | ||||||
Netflix, Inc.(1) | 113,300 | 26,361,511 | ||||||
60,434,611 | ||||||||
INTERNET SOFTWARE & SERVICES — 5.2% | ||||||||
Baidu, Inc. ADR(1) | 195,100 | 28,976,252 | ||||||
Google, Inc., Class A(1) | 135,700 | 73,834,370 | ||||||
102,810,622 | ||||||||
IT SERVICES — 4.9% | ||||||||
Infosys Technologies Ltd. ADR | 74,600 | 4,862,428 | ||||||
MasterCard, Inc., Class A | 115,600 | 31,892,884 | ||||||
Teradata Corp.(1) | 1,042,500 | 58,296,600 | ||||||
95,051,912 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 1.7% | ||||||||
Hasbro, Inc. | 709,200 | 33,218,928 |
8
Shares | Value | |||||||
MACHINERY — 2.4% | ||||||||
Graco, Inc. | 161,700 | $ | 8,089,851 | |||||
Parker-Hannifin Corp. | 411,700 | 38,831,544 | ||||||
46,921,395 | ||||||||
METALS & MINING — 1.8% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 461,200 | 25,379,836 | ||||||
Walter Energy, Inc. | 78,100 | 10,794,982 | ||||||
36,174,818 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 5.6% | ||||||||
Exxon Mobil Corp. | 732,800 | 64,486,400 | ||||||
Occidental Petroleum Corp. | 395,500 | 45,201,695 | ||||||
109,688,095 | ||||||||
PHARMACEUTICALS — 3.2% | ||||||||
Allergan, Inc. | 483,800 | 38,491,128 | ||||||
Teva Pharmaceutical Industries Ltd. ADR | 509,800 | 23,313,154 | ||||||
61,804,282 | ||||||||
PROFESSIONAL SERVICES — 1.3% | ||||||||
IHS, Inc., Class A(1) | 80,000 | 7,059,200 | ||||||
Robert Half International, Inc. | 441,100 | 13,378,563 | ||||||
Verisk Analytics, Inc., Class A(1) | 175,300 | 5,767,370 | ||||||
26,205,133 | ||||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.4% | ||||||||
Linear Technology Corp. | 1,089,300 | 37,907,640 | ||||||
NXP Semiconductor NV(1) | 243,800 | 8,142,920 | ||||||
46,050,560 | ||||||||
SOFTWARE — 5.4% | ||||||||
Adobe Systems, Inc.(1) | 546,400 | 18,331,720 | ||||||
Microsoft Corp. | 1,728,700 | 44,980,774 | ||||||
Oracle Corp. | 1,204,200 | 43,411,410 | ||||||
106,723,904 | ||||||||
SPECIALTY RETAIL — 2.1% | ||||||||
TJX Cos., Inc. (The) | 749,500 | 40,188,190 | ||||||
TEXTILES, APPAREL & LUXURY GOODS — 4.0% | ||||||||
Coach, Inc. | 817,300 | 48,882,713 | ||||||
Fossil, Inc.(1) | 163,200 | 15,631,296 | ||||||
Hanesbrands, Inc.(1) | 427,400 | 13,894,774 | ||||||
78,408,783 | ||||||||
TOBACCO — 1.6% | ||||||||
Philip Morris International, Inc. | 452,200 | 31,400,768 | ||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.3% | ||||||||
American Tower Corp., Class A(1) | 101,300 | 5,299,003 | ||||||
TOTAL COMMON STOCKS (Cost $1,329,138,666) | 1,945,154,870 | |||||||
Temporary Cash Investments — 0.3% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 62,411 | 62,411 | ||||||
Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.375%, 11/15/39, valued at $5,185,344), in a joint trading account at 0.02%, dated 4/29/11, due 5/2/11 (Delivery value $5,100,008) | 5,100,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $5,162,411) | 5,162,411 | |||||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $1,334,301,077) | 1,950,317,281 | |||||||
OTHER ASSETS AND LIABILITIES — 0.5% | 10,013,711 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 1,960,330,992 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
11,581,406 | GBP for USD | Bank of America | 5/31/11 | $19,338,517 | $(267,415) |
(Value on Settlement Date $19,071,102)
Notes to Schedule of Investments
ADR = American Depositary Receipt
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
9
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $1,334,301,077) | $ | 1,950,317,281 | ||
Cash | 107,725 | |||
Foreign currency holdings, at value (cost of $342,180) | 350,818 | |||
Receivable for investments sold | 15,473,415 | |||
Receivable for capital shares sold | 133,059 | |||
Dividends and interest receivable | 1,249,918 | |||
1,967,632,216 | ||||
Liabilities | ||||
Payable for investments purchased | 4,870,183 | |||
Payable for capital shares redeemed | 581,175 | |||
Unrealized loss on forward foreign currency exchange contracts | 267,415 | |||
Accrued management fees | 1,576,070 | |||
Distribution and service fees payable | 6,381 | |||
7,301,224 | ||||
Net Assets | $ | 1,960,330,992 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 1,523,063,563 | ||
Undistributed net investment income | 1,739,448 | |||
Accumulated net realized loss | (180,231,064 | ) | ||
Net unrealized appreciation | 615,759,045 | |||
$ | 1,960,330,992 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $1,929,500,310 | 46,615,502 | $41.39 |
Institutional Class, $0.01 Par Value | $5,235,332 | 125,138 | $41.84 |
A Class, $0.01 Par Value | $23,486,597 | 575,527 | $40.81* |
B Class, $0.01 Par Value | $1,653,849 | 42,201 | $39.19 |
C Class, $0.01 Par Value | $388,869 | 9,912 | $39.23 |
R Class, $0.01 Par Value | $66,035 | 1,612 | $40.96 |
*Maximum offering price $43.30 (net asset value divided by 0.9425) |
See Notes to Financial Statements.
10
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $21,910) | $ | 10,795,143 | ||
Interest | 4,905 | |||
10,800,048 | ||||
Expenses: | ||||
Management fees | 9,263,893 | |||
Distribution and service fees: | ||||
A Class | 27,450 | |||
B Class | 8,596 | |||
C Class | 1,920 | |||
R Class | 94 | |||
Directors’ fees and expenses | 45,872 | |||
9,347,825 | ||||
Net investment income (loss) | 1,452,223 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 36,081,443 | |||
Foreign currency transactions | (676,980 | ) | ||
35,404,463 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 252,212,544 | |||
Translation of assets and liabilities in foreign currencies | 33,749 | |||
252,246,293 | ||||
Net realized and unrealized gain (loss) | 287,650,756 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 289,102,979 |
See Notes to Financial Statements.
11
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 1,452,223 | $ | 5,682,049 | ||||
Net realized gain (loss) | 35,404,463 | (20,615,057 | ) | |||||
Change in net unrealized appreciation (depreciation) | 252,246,293 | 275,739,559 | ||||||
Net increase (decrease) in net assets resulting from operations | 289,102,979 | 260,806,551 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (5,930,231 | ) | (8,227,971 | ) | ||||
Institutional Class | (25,646 | ) | (28,810 | ) | ||||
A Class | (17,175 | ) | (49,312 | ) | ||||
Decrease in net assets from distributions | (5,973,052 | ) | (8,306,093 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (72,360,667 | ) | (120,734,647 | ) | ||||
Net increase (decrease) in net assets | 210,769,260 | 131,765,811 | ||||||
Net Assets | ||||||||
Beginning of period | 1,749,561,732 | 1,617,795,921 | ||||||
End of period | $ | 1,960,330,992 | $ | 1,749,561,732 | ||||
Undistributed net investment income | $ | 1,739,448 | $ | 6,260,277 |
See Notes to Financial Statements.
12
APRIL 30, 2011 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Select Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by purchasing stocks of larger-sized companies that management believes will increase in value over time.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
13
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
14
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 1.00% for the Investor Class, A Class, B Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $148,961,131 and $217,382,815, respectively.
15
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||||||||
Sold | 738,366 | $ | 28,573,634 | 1,050,151 | $ | 34,737,773 | ||||||||||
Issued in reinvestment of distributions | 150,876 | 5,677,451 | 238,915 | 7,886,605 | ||||||||||||
Redeemed | (2,736,695 | ) | (105,572,010 | ) | (4,873,529 | ) | (160,602,909 | ) | ||||||||
(1,847,453 | ) | (71,320,925 | ) | (3,584,463 | ) | (117,978,531 | ) | |||||||||
Institutional Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||||
Sold | 13,016 | 516,492 | 22,888 | 771,300 | ||||||||||||
Issued in reinvestment of distributions | 670 | 25,466 | 851 | 28,366 | ||||||||||||
Redeemed | (15,478 | ) | (625,531 | ) | (24,480 | ) | (817,754 | ) | ||||||||
(1,792 | ) | (83,573 | ) | (741 | ) | (18,088 | ) | |||||||||
A Class/Shares Authorized | 75,000,000 | 75,000,000 | ||||||||||||||
Sold | 45,059 | 1,745,953 | 64,941 | 2,090,917 | ||||||||||||
Issued in reinvestment of distributions | 454 | 16,874 | 1,473 | 47,993 | ||||||||||||
Redeemed | (60,605 | ) | (2,305,707 | ) | (134,115 | ) | (4,336,286 | ) | ||||||||
(15,092 | ) | (542,880 | ) | (67,701 | ) | (2,197,376 | ) | |||||||||
B Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 1,073 | 40,615 | 925 | 27,964 | ||||||||||||
Redeemed | (11,572 | ) | (425,659 | ) | (18,364 | ) | (576,033 | ) | ||||||||
(10,499 | ) | (385,044 | ) | (17,439 | ) | (548,069 | ) | |||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 418 | 15,433 | 5,833 | 180,826 | ||||||||||||
Redeemed | (2,066 | ) | (75,242 | ) | (5,028 | ) | (153,876 | ) | ||||||||
(1,648 | ) | (59,809 | ) | 805 | 26,950 | |||||||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 882 | 34,696 | 72 | 2,323 | ||||||||||||
Redeemed | (82 | ) | (3,132 | ) | (676 | ) | (21,856 | ) | ||||||||
800 | 31,564 | (604 | ) | (19,533 | ) | |||||||||||
Net increase (decrease) | (1,875,684 | ) | $ | (72,360,667 | ) | (3,670,143 | ) | $ | (120,734,647 | ) |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
16
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
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 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 1,782,420,219 | — | — | ||||||||
Foreign Common Stocks | 124,802,112 | $ | 37,932,539 | — | ||||||||
Temporary Cash Investments | 62,411 | 5,100,000 | — | |||||||||
Total Value of Investment Securities | $ | 1,907,284,742 | $ | 43,032,539 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (267,415 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as a liability of $267,415 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2011, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(700,556) in net realized gain (loss) on foreign currency transactions and $25,251 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
17
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,338,322,101 | ||
Gross tax appreciation of investments | $ | 628,845,859 | ||
Gross tax depreciation of investments | (16,850,679 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 611,995,180 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(211,114,347), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(14,707,162), $(175,918,131) and $(20,489,054) expire in 2016, 2017 and 2018, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
18
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 35.54 | $ | 30.58 | $ | 26.25 | $ | 45.58 | $ | 36.22 | $ | 37.04 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.03 | 0.11 | 0.19 | 0.07 | 0.04 | 0.21 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 5.94 | 5.01 | 4.40 | (16.10 | ) | 10.06 | (0.77 | ) | ||||||||||||||||
Total From Investment Operations | 5.97 | 5.12 | 4.59 | (16.03 | ) | 10.10 | (0.56 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.12 | ) | (0.16 | ) | (0.26 | ) | — | (0.16 | ) | (0.26 | ) | |||||||||||||
From Net Realized Gains | — | — | — | (3.30 | ) | (0.58 | ) | — | ||||||||||||||||
Total Distributions | (0.12 | ) | (0.16 | ) | (0.26 | ) | (3.30 | ) | (0.74 | ) | (0.26 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 41.39 | $ | 35.54 | $ | 30.58 | $ | 26.25 | $ | 45.58 | $ | 36.22 | ||||||||||||
Total Return(3) | 16.84 | % | 16.78 | % | 17.77 | % | (37.71 | )% | 28.37 | % | (1.55 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.00 | %(4) | 1.01 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.16 | %(4) | 0.34 | % | 0.75 | % | 0.19 | % | 0.11 | % | 0.57 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 35 | % | 31 | % | 64 | % | 79 | % | 206 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 1,930 | $ | 1,722 | $ | 1,592 | $ | 1,449 | $ | 2,550 | $ | 2,576 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 35.95 | $ | 30.94 | $ | 26.56 | $ | 45.98 | $ | 36.53 | $ | 37.35 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.07 | 0.18 | 0.28 | 0.15 | 0.12 | 0.30 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 6.02 | 5.06 | 4.41 | (16.27 | ) | 10.15 | (0.78 | ) | ||||||||||||||||
Total From Investment Operations | 6.09 | 5.24 | 4.69 | (16.12 | ) | 10.27 | (0.48 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.20 | ) | (0.23 | ) | (0.31 | ) | — | (0.24 | ) | (0.34 | ) | |||||||||||||
From Net Realized Gains | — | — | — | (3.30 | ) | (0.58 | ) | — | ||||||||||||||||
Total Distributions | (0.20 | ) | (0.23 | ) | (0.31 | ) | (3.30 | ) | (0.82 | ) | (0.34 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 41.84 | $ | 35.95 | $ | 30.94 | $ | 26.56 | $ | 45.98 | $ | 36.53 | ||||||||||||
Total Return(3) | 16.99 | % | 17.02 | % | 18.00 | % | (37.60 | )% | 28.63 | % | (1.35 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.80 | %(4) | 0.81 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.36 | %(4) | 0.54 | % | 0.95 | % | 0.39 | % | 0.31 | % | 0.77 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 35 | % | 31 | % | 64 | % | 79 | % | 206 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 5,235 | $ | 4,563 | $ | 3,950 | $ | 94,419 | $ | 168,441 | $ | 148,717 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 34.99 | $ | 30.11 | $ | 25.85 | $ | 45.05 | $ | 35.80 | $ | 36.63 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.02 | ) | 0.03 | 0.13 | (0.02 | ) | (0.09 | ) | 0.12 | |||||||||||||||
Net Realized and Unrealized Gain (Loss) | 5.87 | 4.93 | 4.33 | (15.88 | ) | 9.99 | (0.76 | ) | ||||||||||||||||
Total From Investment Operations | 5.85 | 4.96 | 4.46 | (15.90 | ) | 9.90 | (0.64 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.03 | ) | (0.08 | ) | (0.20 | ) | — | (0.07 | ) | (0.19 | ) | |||||||||||||
From Net Realized Gains | — | — | — | (3.30 | ) | (0.58 | ) | — | ||||||||||||||||
Total Distributions | (0.03 | ) | (0.08 | ) | (0.20 | ) | (3.30 | ) | (0.65 | ) | (0.19 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 40.81 | $ | 34.99 | $ | 30.11 | $ | 25.85 | $ | 45.05 | $ | 35.80 | ||||||||||||
Total Return(4) | 16.73 | % | 16.48 | % | 17.47 | % | (37.88 | )% | 28.07 | % | (1.79 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.25 | %(5) | 1.26 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.09 | )%(5) | 0.09 | % | 0.50 | % | (0.06 | )% | (0.14 | )% | 0.32 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 35 | % | 31 | % | 64 | % | 79 | % | 206 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 23,487 | $ | 20,666 | $ | 19,824 | $ | 19,450 | $ | 42,770 | $ | 21,455 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended April 30, 2011 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
See Notes to Financial Statements.
21
B Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 33.70 | $ | 29.15 | $ | 25.03 | $ | 44.03 | $ | 35.21 | $ | 36.12 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.15 | ) | (0.21 | ) | (0.06 | ) | (0.29 | ) | (0.34 | ) | (0.12 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 5.64 | 4.76 | 4.20 | (15.41 | ) | 9.74 | (0.79 | ) | ||||||||||||||||
Total From Investment Operations | 5.49 | 4.55 | 4.14 | (15.70 | ) | 9.40 | (0.91 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.02 | ) | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (3.30 | ) | (0.58 | ) | — | ||||||||||||||||
Total Distributions | — | — | (0.02 | ) | (3.30 | ) | (0.58 | ) | — | |||||||||||||||
Net Asset Value, End of Period | $ | 39.19 | $ | 33.70 | $ | 29.15 | $ | 25.03 | $ | 44.03 | $ | 35.21 | ||||||||||||
Total Return(3) | 16.29 | % | 15.61 | % | 16.60 | % | (38.36 | )% | 27.07 | % | (2.52 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.00 | %(4) | 2.01 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.84 | )%(4) | (0.66 | )% | (0.25 | )% | (0.81 | )% | (0.89 | )% | (0.43 | )% | ||||||||||||
Portfolio Turnover Rate | 8 | % | 35 | % | 31 | % | 64 | % | 79 | % | 206 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 1,654 | $ | 1,776 | $ | 2,045 | $ | 2,605 | $ | 5,567 | $ | 5,880 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
22
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 33.74 | $ | 29.19 | $ | 25.05 | $ | 44.07 | $ | 35.24 | $ | 36.15 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.15 | ) | (0.20 | ) | (0.06 | ) | (0.29 | ) | (0.34 | ) | (0.16 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 5.64 | 4.75 | 4.22 | (15.43 | ) | 9.75 | (0.75 | ) | ||||||||||||||||
Total From Investment Operations | 5.49 | 4.55 | 4.16 | (15.72 | ) | 9.41 | (0.91 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.02 | ) | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (3.30 | ) | (0.58 | ) | — | ||||||||||||||||
Total Distributions | — | — | (0.02 | ) | (3.30 | ) | (0.58 | ) | — | |||||||||||||||
Net Asset Value, End of Period | $ | 39.23 | $ | 33.74 | $ | 29.19 | $ | 25.05 | $ | 44.07 | $ | 35.24 | ||||||||||||
Total Return(3) | 16.27 | % | 15.63 | % | 16.58 | % | (38.34 | )% | 27.07 | % | (2.52 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.00 | %(4) | 2.01 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.84 | )%(4) | (0.66 | )% | (0.25 | )% | (0.81 | )% | (0.89 | )% | (0.43 | )% | ||||||||||||
Portfolio Turnover Rate | 8 | % | 35 | % | 31 | % | 64 | % | 79 | % | 206 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 389 | $ | 390 | $ | 314 | $ | 394 | $ | 1,001 | $ | 1,540 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
23
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 35.14 | $ | 30.24 | $ | 25.96 | $ | 45.33 | $ | 36.05 | $ | 37.00 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.06 | ) | (0.05 | ) | 0.06 | (0.11 | ) | (0.15 | ) | 0.03 | ||||||||||||||
Net Realized and Unrealized Gain (Loss) | 5.88 | 4.95 | 4.36 | (15.96 | ) | 10.01 | (0.77 | ) | ||||||||||||||||
Total From Investment Operations | 5.82 | 4.90 | 4.42 | (16.07 | ) | 9.86 | (0.74 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.14 | ) | — | — | (0.21 | ) | ||||||||||||||||
From Net Realized Gains | — | — | — | (3.30 | ) | (0.58 | ) | — | ||||||||||||||||
Total Distributions | — | — | (0.14 | ) | (3.30 | ) | (0.58 | ) | (0.21 | ) | ||||||||||||||
Net Asset Value, End of Period | $ | 40.96 | $ | 35.14 | $ | 30.24 | $ | 25.96 | $ | 45.33 | $ | 36.05 | ||||||||||||
Total Return(3) | 16.56 | % | 16.20 | % | 17.17 | % | (38.03 | )% | 27.72 | % | (2.04 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.50 | %(4) | 1.51 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.34 | )%(4) | (0.16 | )% | 0.25 | % | (0.31 | )% | (0.39 | )% | 0.07 | % | ||||||||||||
Portfolio Turnover Rate | 8 | % | 35 | % | 31 | % | 64 | % | 79 | % | 206 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 66 | $ | 29 | $ | 43 | $ | 32 | $ | 32 | $ | 24 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
24
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71832 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/frontpagebanner.jpg)
Small Cap Growth Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 12 |
Statement of Operations | 13 |
Statement of Changes in Net Assets | 14 |
Notes to Financial Statements | 15 |
Financial Highlights | 20 |
Additional Information | 26 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year(2) | 5 years | Since Inception | Inception Date | |
Investor Class | ANOIX | 28.05% | 32.87% | 5.44% | 8.43% | 6/1/01 |
Russell 2000 Growth Index | — | 27.07% | 30.29% | 5.14% | 5.40%(3) | — |
Institutional Class | ANONX | 28.27% | 33.06% | — | 4.14% | 5/18/07 |
A Class No sales charge* With sales charge* | ANOAX | 28.03% 20.64% | 32.54% 24.97% | 5.18% 3.95% | 12.46% 11.66% | 1/31/03 |
B Class No sales charge* With sales charge* | ANOBX | 27.46% 22.46% | 31.54% 27.54% | 4.40% 4.23% | 11.63% 11.63% | 1/31/03 |
C Class No sales charge* With sales charge* | ANOCX | 27.35% 26.35% | 31.40% 31.40% | 4.38% 4.38% | 11.66%(4) 11.66%(4) | 1/31/03 |
R Class | ANORX | 27.83% | 32.16% | — | 1.32% | 9/28/07 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future. |
(3) | Since 5/31/01, the date nearest the Investor Class’s inception for which data are available. |
(4) | Returns would have been lower if a portion of the distribution and service fees had not been waived. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.42% | 1.22% | 1.67% | 2.42% | 2.42% | 1.92% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Tempur-Pedic International, Inc. | 2.2% |
Sauer-Danfoss, Inc. | 1.9% |
Titan International, Inc. | 1.8% |
Acme Packet, Inc. | 1.6% |
Sotheby’s | 1.5% |
Lindsay Corp. | 1.4% |
Iconix Brand Group, Inc. | 1.4% |
Pioneer Drilling Co. | 1.3% |
G-III Apparel Group Ltd. | 1.2% |
Polaris Industries, Inc. | 1.2% |
Top Five Industries | % of net assets |
Machinery | 10.5% |
Software | 6.8% |
Semiconductors & Semiconductor Equipment | 5.3% |
Internet Software & Services | 5.0% |
Textiles, Apparel & Luxury Goods | 4.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 96.5% |
Temporary Cash Investments | 3.0% |
Other Assets and Liabilities | 0.5% |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,280.50 | $7.86 | 1.39% |
Institutional Class | $1,000 | $1,282.70 | $6.74 | 1.19% |
A Class | $1,000 | $1,280.30 | $9.27 | 1.64% |
B Class | $1,000 | $1,274.60 | $13.48 | 2.39% |
C Class | $1,000 | $1,273.50 | $13.47 | 2.39% |
R Class | $1,000 | $1,278.30 | $10.68 | 1.89% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.90 | $6.95 | 1.39% |
Institutional Class | $1,000 | $1,018.89 | $5.96 | 1.19% |
A Class | $1,000 | $1,016.66 | $8.20 | 1.64% |
B Class | $1,000 | $1,012.94 | $11.93 | 2.39% |
C Class | $1,000 | $1,012.94 | $11.93 | 2.39% |
R Class | $1,000 | $1,015.42 | $9.44 | 1.89% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 96.5% | �� | |||||||
AEROSPACE & DEFENSE — 0.9% | ||||||||
Triumph Group, Inc. | 50,926 | $ | 4,385,747 | |||||
AIRLINES — 0.1% | ||||||||
United Continental Holdings, Inc.(1) | 22,782 | 519,885 | ||||||
AUTO COMPONENTS — 0.9% | ||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 312,188 | 3,996,006 | ||||||
Amerigon, Inc.(1) | 48,072 | 819,628 | ||||||
4,815,634 | ||||||||
BIOTECHNOLOGY — 3.9% | ||||||||
Acorda Therapeutics, Inc.(1) | 31,327 | 878,409 | ||||||
Alkermes, Inc.(1) | 27,662 | 398,886 | ||||||
AMAG Pharmaceuticals, Inc.(1) | 21,444 | 407,436 | ||||||
ARIAD Pharmaceuticals, Inc.(1) | 86,383 | 738,575 | ||||||
Cepheid, Inc.(1) | 45,973 | 1,485,388 | ||||||
Cubist Pharmaceuticals, Inc.(1) | 44,642 | 1,511,132 | ||||||
Geron Corp.(1) | 103,271 | 495,701 | ||||||
ImmunoGen, Inc.(1) | 55,559 | 742,268 | ||||||
Incyte Corp. Ltd.(1) | 69,754 | 1,289,054 | ||||||
InterMune, Inc.(1) | 37,321 | 1,666,009 | ||||||
Isis Pharmaceuticals, Inc.(1) | 76,878 | 721,116 | ||||||
Micromet, Inc.(1) | 80,091 | 541,415 | ||||||
Momenta Pharmaceuticals, Inc.(1) | 36,552 | 689,736 | ||||||
Onyx Pharmaceuticals, Inc.(1) | 47,642 | 1,789,910 | ||||||
PDL BioPharma, Inc. | 112,684 | 723,431 | ||||||
Pharmasset, Inc.(1) | 24,447 | 2,480,637 | ||||||
Savient Pharmaceuticals, Inc.(1) | 60,786 | 705,725 | ||||||
Seattle Genetics, Inc.(1) | 74,346 | 1,234,887 | ||||||
Theravance, Inc.(1) | 53,346 | 1,480,352 | ||||||
19,980,067 | ||||||||
CAPITAL MARKETS — 0.8% | ||||||||
BGC Partners, Inc., Class A | 162,311 | 1,566,301 | ||||||
HFF, Inc., Class A(1) | 151,381 | 2,266,174 | ||||||
3,832,475 | ||||||||
CHEMICALS — 2.5% | ||||||||
Balchem Corp. | 49,336 | 1,958,146 | ||||||
Flotek Industries, Inc.(1) | 192,759 | 1,846,631 | ||||||
Intrepid Potash, Inc.(1) | 115,363 | 3,952,336 | ||||||
OM Group, Inc.(1) | 17,033 | 617,276 | ||||||
Solutia, Inc.(1) | 174,030 | 4,585,691 | ||||||
12,960,080 | ||||||||
COMMERCIAL BANKS — 2.3% | ||||||||
Cathay General Bancorp. | 185,007 | 3,154,369 | ||||||
Nara Bancorp., Inc.(1) | 151,209 | 1,486,384 | ||||||
Pinnacle Financial Partners, Inc.(1) | 121,571 | 1,953,646 | ||||||
PrivateBancorp, Inc. | 88,534 | 1,393,525 | ||||||
Sandy Spring Bancorp, Inc. | 28,987 | 517,998 | ||||||
Texas Capital Bancshares, Inc.(1) | 70,977 | 1,831,207 | ||||||
West Coast Bancorp.(1) | 370,835 | 1,327,589 | ||||||
11,664,718 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 1.1% | ||||||||
Deluxe Corp. | 70,574 | 1,911,144 | ||||||
Steelcase, Inc., Class A | 191,010 | 2,206,165 | ||||||
Team, Inc.(1) | 65,664 | 1,638,317 | ||||||
5,755,626 | ||||||||
COMMUNICATIONS EQUIPMENT — 3.7% | ||||||||
Acme Packet, Inc.(1) | 96,649 | 7,984,174 | ||||||
Finisar Corp.(1) | 37,731 | 1,059,864 | ||||||
Netgear, Inc.(1) | 61,930 | 2,585,577 | ||||||
Oplink Communications, Inc.(1) | 126,146 | 2,497,691 | ||||||
Opnext, Inc.(1) | 213,762 | 504,478 | ||||||
Riverbed Technology, Inc.(1) | 99,492 | 3,496,149 | ||||||
Sycamore Networks, Inc. | 20,927 | 512,712 | ||||||
18,640,645 | ||||||||
COMPUTERS & PERIPHERALS — 0.9% | ||||||||
Avid Technology, Inc.(1) | 60,095 | 1,116,565 | ||||||
Stratasys, Inc.(1) | 31,656 | 1,704,675 | ||||||
USA Technologies, Inc.(1) | 544,046 | 1,653,900 | ||||||
4,475,140 | ||||||||
CONSTRUCTION MATERIALS — 0.3% | ||||||||
Headwaters, Inc.(1) | 232,969 | 1,272,011 | ||||||
CONSUMER FINANCE — 1.3% | ||||||||
EZCORP, Inc., Class A(1) | 78,177 | 2,461,794 | ||||||
World Acceptance Corp.(1) | 63,135 | 4,290,023 | ||||||
6,751,817 | ||||||||
DIVERSIFIED CONSUMER SERVICES — 2.0% | ||||||||
K12, Inc.(1) | 22,058 | 868,423 | ||||||
Sotheby’s | 147,703 | 7,461,956 | ||||||
Steiner Leisure, Ltd.(1) | 41,351 | 2,007,178 | ||||||
10,337,557 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.2% | ||||||||
Encore Capital Group, Inc.(1) | 38,855 | 1,163,319 |
8
Shares | Value | |||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.3% | ||||||||
Vonage Holdings Corp.(1) | 252,219 | $ | 1,301,450 | |||||
ELECTRICAL EQUIPMENT — 0.3% | ||||||||
Franklin Electric Co., Inc. | 16,413 | 740,390 | ||||||
Valence Technology, Inc.(1) | 399,228 | 542,950 | ||||||
1,283,340 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 3.6% | ||||||||
Cognex Corp. | 116,068 | 3,630,607 | ||||||
DDi Corp. | 42,258 | 406,099 | ||||||
FARO Technologies, Inc.(1) | 18,947 | 817,942 | ||||||
KEMET Corp.(1) | 276,808 | 4,354,190 | ||||||
LeCroy Corp.(1) | 87,500 | 1,142,750 | ||||||
Littelfuse, Inc. | 89,397 | 5,561,387 | ||||||
Measurement Specialties, Inc.(1) | 29,556 | 1,027,958 | ||||||
MTS Systems Corp. | 26,199 | 1,159,830 | ||||||
18,100,763 | ||||||||
ENERGY EQUIPMENT & SERVICES — 4.1% | ||||||||
Basic Energy Services, Inc.(1) | 156,572 | 4,813,023 | ||||||
Complete Production Services, Inc.(1) | 121,791 | 4,133,587 | ||||||
Dawson Geophysical Co.(1) | 27,116 | 1,209,374 | ||||||
Dril-Quip, Inc.(1) | 5,250 | 401,940 | ||||||
Hornbeck Offshore Services, Inc.(1) | 37,931 | 1,108,723 | ||||||
Matrix Service Co.(1) | 108,843 | 1,573,870 | ||||||
North American Energy Partners, Inc.(1) | 52,779 | 601,681 | ||||||
OYO Geospace Corp.(1) | 9,073 | 846,329 | ||||||
Pioneer Drilling Co.(1) | 414,729 | 6,428,299 | ||||||
21,116,826 | ||||||||
FOOD & STAPLES RETAILING — 1.7% | ||||||||
Andersons, Inc. (The) | 90,447 | 4,490,693 | ||||||
PriceSmart, Inc. | 101,489 | 4,226,002 | ||||||
8,716,695 | ||||||||
FOOD PRODUCTS — 0.6% | ||||||||
B&G Foods, Inc. | 104,774 | 1,894,314 | ||||||
Omega Protein Corp.(1) | 81,947 | 1,055,477 | ||||||
2,949,791 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 4.1% | ||||||||
Abaxis, Inc.(1) | 18,305 | 531,760 | ||||||
Align Technology, Inc.(1) | 46,791 | 1,129,535 | ||||||
American Medical Systems Holdings, Inc.(1) | 55,175 | 1,627,662 | ||||||
Arthrocare Corp.(1) | 22,776 | 804,676 | ||||||
Cyberonics, Inc.(1) | 23,956 | 852,115 | ||||||
DexCom, Inc.(1) | 51,354 | 855,044 | ||||||
Haemonetics Corp.(1) | 19,479 | 1,367,426 | ||||||
HeartWare International, Inc.(1) | 7,902 | 589,568 | ||||||
Immucor, Inc.(1) | 53,767 | 1,173,734 | ||||||
Insulet Corp.(1) | 37,543 | 806,799 | ||||||
Integra LifeSciences Holdings Corp.(1) | 17,163 | 897,797 | ||||||
Masimo Corp. | 40,579 | 1,411,743 | ||||||
Meridian Bioscience, Inc. | 32,684 | 807,622 | ||||||
Neogen Corp.(1) | 18,855 | 790,025 | ||||||
NuVasive, Inc.(1) | 32,568 | 1,006,026 | ||||||
Sirona Dental Systems, Inc.(1) | 26,070 | 1,487,815 | ||||||
STERIS Corp. | 43,261 | 1,559,126 | ||||||
Volcano Corp.(1) | 41,881 | 1,116,547 | ||||||
West Pharmaceutical Services, Inc. | 25,592 | 1,208,966 | ||||||
Zoll Medical Corp.(1) | 17,406 | 986,572 | ||||||
21,010,558 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 2.3% | ||||||||
Amedisys, Inc.(1) | 23,837 | 794,249 | ||||||
Bio-Reference Labs, Inc.(1) | 20,638 | 520,284 | ||||||
Catalyst Health Solutions, Inc.(1) | 28,980 | 1,726,049 | ||||||
Chemed Corp. | 17,285 | 1,203,555 | ||||||
HealthSouth Corp.(1) | 68,842 | 1,764,420 | ||||||
HMS Holdings Corp.(1) | 21,052 | 1,657,003 | ||||||
Landauer, Inc. | 8,381 | 504,285 | ||||||
MWI Veterinary Supply, Inc.(1) | 10,423 | 866,881 | ||||||
Owens & Minor, Inc. | 39,890 | 1,374,210 | ||||||
PSS World Medical, Inc.(1) | 43,894 | 1,262,391 | ||||||
11,673,327 | ||||||||
HEALTH CARE TECHNOLOGY — 0.6% | ||||||||
athenahealth, Inc.(1) | 26,023 | 1,203,043 | ||||||
MedAssets, Inc.(1) | 36,423 | 583,497 | ||||||
Quality Systems, Inc. | 14,692 | 1,318,166 | ||||||
3,104,706 | ||||||||
HOUSEHOLD DURABLES — 2.2% | ||||||||
Tempur-Pedic International, Inc.(1) | 180,061 | 11,304,230 | ||||||
INDUSTRIAL CONGLOMERATES — 0.9% | ||||||||
Raven Industries, Inc. | 83,146 | 4,519,817 | ||||||
INSURANCE — 0.7% | ||||||||
AMERISAFE, Inc.(1) | 82,364 | 1,839,188 | ||||||
Amtrust Financial Services, Inc. | 78,538 | 1,515,783 | ||||||
3,354,971 |
9
Shares | Value |
INTERNET & CATALOG RETAIL — 0.8% | ||||||||
priceline.com, Inc.(1) | 4,880 | $ | 2,669,409 | |||||
Shutterfly, Inc.(1) | 24,825 | 1,528,227 | ||||||
4,197,636 | ||||||||
INTERNET SOFTWARE & SERVICES — 5.0% | ||||||||
Ancestry.com, Inc.(1) | 65,547 | 2,995,498 | ||||||
Dice Holdings, Inc.(1) | 286,770 | 5,256,494 | ||||||
Keynote Systems, Inc. | 135,527 | 2,892,146 | ||||||
KIT Digital, Inc.(1) | 29,526 | 339,844 | ||||||
Limelight Networks, Inc.(1) | 71,198 | 453,531 | ||||||
Rackspace Hosting, Inc.(1) | 72,453 | 3,346,604 | ||||||
Travelzoo, Inc.(1) | 37,631 | 3,081,979 | ||||||
ValueClick, Inc.(1) | 144,137 | 2,414,295 | ||||||
Vocus, Inc.(1) | 137,183 | 4,064,732 | ||||||
Zix Corp.(1) | 209,308 | 690,717 | ||||||
25,535,840 | ||||||||
IT SERVICES — 0.2% | ||||||||
MAXIMUS, Inc. | 10,071 | 805,579 | ||||||
LEISURE EQUIPMENT & PRODUCTS — 1.2% | ||||||||
Polaris Industries, Inc. | 55,772 | 5,880,042 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 1.0% | ||||||||
Bruker Corp.(1) | 56,922 | 1,123,640 | ||||||
Dionex Corp.(1) | 13,870 | 1,641,515 | ||||||
Luminex Corp.(1) | 33,770 | 654,800 | ||||||
PAREXEL International Corp.(1) | 46,046 | 1,278,237 | ||||||
Sequenom, Inc.(1) | 81,696 | 575,957 | ||||||
5,274,149 | ||||||||
MACHINERY — 10.5% | ||||||||
3D Systems Corp.(1) | 38,426 | 1,603,133 | ||||||
Blount International, Inc.(1) | 94,823 | 1,574,062 | ||||||
Cascade Corp. | 51,810 | 2,372,898 | ||||||
CIRCOR International, Inc. | 21,687 | 985,240 | ||||||
Commercial Vehicle Group, Inc.(1) | 77,878 | 1,344,174 | ||||||
EnPro Industries, Inc.(1) | 34,095 | 1,366,528 | ||||||
Graham Corp. | 38,363 | 877,745 | ||||||
Kadant, Inc.(1) | 41,214 | 1,271,452 | ||||||
Lindsay Corp. | 96,117 | 7,047,299 | ||||||
Middleby Corp.(1) | 35,528 | 3,185,796 | ||||||
NACCO Industries, Inc., Class A | 14,024 | 1,475,746 | ||||||
NN, Inc.(1) | 149,105 | 2,613,811 | ||||||
Robbins & Myers, Inc. | 96,858 | 4,210,417 | ||||||
Sauer-Danfoss, Inc.(1) | 167,129 | 9,862,282 | ||||||
Titan International, Inc. | 297,134 | 9,178,469 | ||||||
Twin Disc, Inc. | 34,404 | 1,172,144 | ||||||
Wabash National Corp.(1) | 310,241 | 3,421,958 | ||||||
53,563,154 | ||||||||
MEDIA — 1.0% | ||||||||
MDC Partners, Inc., Class A | 137,169 | 2,281,121 | ||||||
Sinclair Broadcast Group, Inc., Class A | 222,564 | 2,557,260 | ||||||
4,838,381 | ||||||||
METALS & MINING — 2.7% | ||||||||
Allied Nevada Gold Corp.(1) | 97,945 | 4,217,512 | ||||||
Globe Specialty Metals, Inc. | 184,083 | 4,143,708 | ||||||
Materion Corp.(1) | 83,421 | 3,483,661 | ||||||
Mesabi Royalty Trust | 55,815 | 1,978,084 | ||||||
13,822,965 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 4.1% | ||||||||
Crosstex Energy LP | 155,381 | 3,070,328 | ||||||
Forest Oil Corp.(1) | 38,229 | 1,372,803 | ||||||
Goodrich Petroleum Corp.(1) | 99,494 | 2,235,630 | ||||||
Gulfport Energy Corp.(1) | 114,519 | 3,898,227 | ||||||
Stone Energy Corp.(1) | 104,394 | 3,691,372 | ||||||
W&T Offshore, Inc. | 77,322 | 2,073,003 | ||||||
Western Refining, Inc.(1) | 279,759 | 4,744,713 | ||||||
21,086,076 | ||||||||
PAPER & FOREST PRODUCTS — 1.6% | ||||||||
Buckeye Technologies, Inc. | 143,619 | 4,044,311 | ||||||
KapStone Paper and Packaging Corp.(1) | 230,296 | 4,002,544 | ||||||
8,046,855 | ||||||||
PHARMACEUTICALS — 1.2% | ||||||||
Auxilium Pharmaceuticals, Inc.(1) | 33,381 | 813,161 | ||||||
Impax Laboratories, Inc.(1) | 44,382 | 1,215,179 | ||||||
Nektar Therapeutics(1) | 90,112 | 935,363 | ||||||
Questcor Pharmaceuticals, Inc.(1) | 44,607 | 914,443 | ||||||
Salix Pharmaceuticals Ltd.(1) | 44,433 | 1,745,773 | ||||||
VIVUS, Inc.(1) | 70,092 | 545,316 | ||||||
6,169,235 | ||||||||
PROFESSIONAL SERVICES — 0.8% | ||||||||
Kelly Services, Inc., Class A(1) | 222,873 | 4,259,103 | ||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.6% | ||||||||
Ashford Hospitality Trust, Inc. | 218,843 | 2,728,972 | ||||||
Lexington Realty Trust | 88,171 | 879,947 | ||||||
Medical Properties Trust, Inc. | 113,580 | 1,401,577 | ||||||
Post Properties, Inc. | 82,573 | 3,352,464 | ||||||
8,362,960 |
10
Shares | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 5.3% | ||||||||
Amtech Systems, Inc.(1) | 84,499 | $ | 1,933,337 | |||||
Cavium Networks, Inc.(1) | 34,202 | 1,615,018 | ||||||
CEVA, Inc.(1) | 70,324 | 2,150,508 | ||||||
Cirrus Logic, Inc.(1) | 55,453 | 918,302 | ||||||
Entegris, Inc.(1) | 298,572 | 2,576,676 | ||||||
FSI International, Inc.(1) | 242,104 | 1,113,678 | ||||||
GSI Technology, Inc.(1) | 123,057 | 1,096,438 | ||||||
GT Solar International, Inc.(1) | 233,103 | 2,603,760 | ||||||
MIPS Technologies, Inc.(1) | 36,712 | 305,444 | ||||||
Photronics, Inc.(1) | 288,530 | 2,518,867 | ||||||
RF Micro Devices, Inc.(1) | 127,963 | 852,234 | ||||||
Silicon Image, Inc.(1) | 151,759 | 1,262,635 | ||||||
Skyworks Solutions, Inc.(1) | 112,194 | 3,529,623 | ||||||
Ultratech, Inc.(1) | 132,699 | 4,154,806 | ||||||
Veeco Instruments, Inc.(1) | 7,836 | 400,655 | ||||||
27,031,981 | ||||||||
SOFTWARE — 6.8% | ||||||||
ACI Worldwide, Inc.(1) | 64,795 | 2,140,827 | ||||||
Allot Communications Ltd.(1) | 93,298 | 1,525,422 | ||||||
Ariba, Inc.(1) | 50,671 | 1,761,831 | ||||||
Callidus Software, Inc.(1) | 171,744 | 1,186,751 | ||||||
DemandTec, Inc.(1) | 97,887 | 1,083,609 | ||||||
Fortinet, Inc.(1) | 38,269 | 1,863,700 | ||||||
Glu Mobile, Inc.(1) | 287,584 | 1,141,709 | ||||||
Interactive Intelligence, Inc.(1) | 75,333 | 2,818,961 | ||||||
Kenexa Corp.(1) | 190,530 | 5,605,393 | ||||||
Majesco Entertainment Co.(1) | 445,597 | 1,670,989 | ||||||
Motricity, Inc.(1) | 65,242 | 871,633 | ||||||
Opnet Technologies, Inc. | 40,339 | 1,579,675 | ||||||
Progress Software Corp.(1) | 63,733 | 1,889,683 | ||||||
PROS Holdings, Inc.(1) | 91,096 | 1,428,385 | ||||||
Taleo Corp., Class A(1) | 45,832 | 1,662,327 | ||||||
TIBCO Software, Inc.(1) | 106,967 | 3,207,940 | ||||||
VASCO Data Security International, Inc.(1) | 190,803 | 2,354,509 | ||||||
Websense, Inc.(1) | 33,804 | 871,805 | ||||||
34,665,149 | ||||||||
SPECIALTY RETAIL — 2.2% | ||||||||
Charming Shoppes, Inc.(1) | 331,419 | 1,501,328 | ||||||
Lithia Motors, Inc., Class A | 269,359 | 4,899,640 | ||||||
Tractor Supply Co. | 73,728 | 4,561,552 | ||||||
10,962,520 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 4.4% | ||||||||
Crocs, Inc.(1) | 90,806 | 1,826,109 | ||||||
Deckers Outdoor Corp.(1) | 53,615 | 4,549,769 | ||||||
G-III Apparel Group Ltd.(1) | 139,444 | 6,255,458 | ||||||
Iconix Brand Group, Inc.(1) | 286,538 | 7,017,315 | ||||||
Oxford Industries, Inc. | 60,284 | 2,070,755 | ||||||
Perry Ellis International, Inc.(1) | 21,193 | 597,219 | ||||||
22,316,625 | ||||||||
TRADING COMPANIES & DISTRIBUTORS — 3.8% | ||||||||
CAI International, Inc.(1) | 128,403 | 3,230,620 | ||||||
H&E Equipment Services, Inc.(1) | 92,751 | 1,845,745 | ||||||
RSC Holdings, Inc.(1) | 126,024 | 1,659,736 | ||||||
Rush Enterprises, Inc., Class A(1) | 104,386 | 2,199,413 | ||||||
Titan Machinery, Inc.(1) | 153,987 | 4,844,431 | ||||||
United Rentals, Inc.(1) | 196,024 | 5,767,026 | ||||||
19,546,971 | ||||||||
TOTAL COMMON STOCKS (Cost $331,600,152) | 491,356,416 | |||||||
Temporary Cash Investments — 3.0% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 70,104 | 70,104 | ||||||
Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.375%, 11/15/39, valued at $15,251,012), in a joint trading account at 0.02%, dated 4/29/11, due 5/2/11 (Delivery value $15,000,025) | 15,000,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $15,070,104) | 15,070,104 | |||||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $346,670,256) | 506,426,520 | |||||||
OTHER ASSETS AND LIABILITIES — 0.5% | 2,519,045 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 508,945,565 |
Notes to Schedule of Investments
(1) | Non-income producing. |
See Notes to Financial Statements.
11
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $346,670,256) | $ | 506,426,520 | ||
Receivable for investments sold | 12,981,654 | |||
Receivable for capital shares sold | 825,024 | |||
Dividends and interest receivable | 117,309 | |||
520,350,507 | ||||
Liabilities | ||||
Payable for investments purchased | 10,228,137 | |||
Payable for capital shares redeemed | 598,007 | |||
Accrued management fees | 532,189 | |||
Distribution and service fees payable | 46,609 | |||
11,404,942 | ||||
Net Assets | $ | 508,945,565 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 637,621,056 | ||
Accumulated net investment loss | (1,782,371 | ) | ||
Accumulated net realized loss | (286,649,384 | ) | ||
Net unrealized appreciation | 159,756,264 | |||
$ | 508,945,565 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $199,352,861 | 20,891,796 | $9.54 |
Institutional Class, $0.01 Par Value | $136,368,104 | 14,177,191 | $9.62 |
A Class, $0.01 Par Value | $151,460,899 | 16,097,951 | $9.41* |
B Class, $0.01 Par Value | $3,305,391 | 365,340 | $9.05 |
C Class, $0.01 Par Value | $16,971,541 | 1,868,415 | $9.08 |
R Class, $0.01 Par Value | $1,486,769 | 158,666 | $9.37 |
*Maximum offering price $9.98 (net asset value divided by 0.9425)
See Notes to Financial Statements.
12
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,922) | $ | 1,505,038 | ||
Interest | 3,843 | |||
1,508,881 | ||||
Expenses: | ||||
Management fees | 3,007,856 | |||
Distribution and service fees: | ||||
A Class | 173,401 | |||
B Class | 16,488 | |||
C Class | 75,139 | |||
R Class | 2,909 | |||
Directors’ fees and expenses | 15,459 | |||
3,291,252 | ||||
Net investment income (loss) | (1,782,371 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 39,835,072 | |||
Change in net unrealized appreciation (depreciation) on investments | 73,327,672 | |||
Net realized and unrealized gain (loss) | 113,162,744 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 111,380,373 |
See Notes to Financial Statements.
13
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (1,782,371 | ) | $ | (2,176,343 | ) | ||
Net realized gain (loss) | 39,835,072 | 94,629,181 | ||||||
Change in net unrealized appreciation (depreciation) | 73,327,672 | 36,489,688 | ||||||
Net increase (decrease) in net assets resulting from operations | 111,380,373 | 128,942,526 | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (4,140,733 | ) | (135,018,924 | ) | ||||
Redemption Fees | ||||||||
Increase in net assets from redemption fees | 55,395 | 185,421 | ||||||
Net increase (decrease) in net assets | 107,295,035 | (5,890,977 | ) | |||||
Net Assets | ||||||||
Beginning of period | 401,650,530 | 407,541,507 | ||||||
End of period | $ | 508,945,565 | $ | 401,650,530 | ||||
Accumulated net investment loss | $ | (1,782,371 | ) | — |
See Notes to Financial Statements.
14
APRIL 30, 2011 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Small Cap Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in small cap companies that management believes will increase in value over time.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost.
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during
15
the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption — The fund may impose a 2.00% redemption fee on shares held less than 180 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
16
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.10% to 1.50% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 1.39% for the Investor Class, A Class, B Class, C Class and R Class and 1.19% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $234,102,105 and $247,577,839, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 165,000,000 | 165,000,000 | ||||||||||||||
Sold | 5,415,453 | $ | 46,707,135 | 6,784,305 | $ | 43,916,604 | ||||||||||
Redeemed | (3,695,490 | ) | (31,607,345 | ) | (18,735,868 | ) | (122,423,452 | ) | ||||||||
1,719,963 | 15,099,790 | (11,951,563 | ) | (78,506,848 | ) | |||||||||||
Institutional Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||||
Sold | 1,242,880 | 10,781,722 | 2,660,213 | 17,212,447 | ||||||||||||
Redeemed | (2,333,000 | ) | (19,971,163 | ) | (7,096,717 | ) | (46,645,112 | ) | ||||||||
(1,090,120 | ) | (9,189,441 | ) | (4,436,504 | ) | (29,432,665 | ) | |||||||||
A Class/Shares Authorized | 110,000,000 | 110,000,000 | ||||||||||||||
Sold | 1,419,930 | 12,015,621 | 2,350,237 | 15,349,838 | ||||||||||||
Redeemed | (2,561,605 | ) | (21,506,875 | ) | (6,185,109 | ) | (39,950,252 | ) | ||||||||
(1,141,675 | ) | (9,491,254 | ) | (3,834,872 | ) | (24,600,414 | ) | |||||||||
B Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 9,487 | 76,265 | 4,481 | 27,688 | ||||||||||||
Redeemed | (81,905 | ) | (676,239 | ) | (132,247 | ) | (828,181 | ) | ||||||||
(72,418 | ) | (599,974 | ) | (127,766 | ) | (800,493 | ) | |||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 251,922 | 2,070,199 | 413,664 | 2,630,469 | ||||||||||||
Redeemed | (274,881 | ) | (2,234,437 | ) | (719,773 | ) | (4,536,633 | ) | ||||||||
(22,959 | ) | (164,238 | ) | (306,109 | ) | (1,906,164 | ) | |||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 41,534 | 365,317 | 68,676 | 446,713 | ||||||||||||
Redeemed | (18,993 | ) | (160,933 | ) | (33,289 | ) | (219,053 | ) | ||||||||
22,541 | 204,384 | 35,387 | 227,660 | |||||||||||||
Net increase (decrease) | (584,668 | ) | $ | (4,140,733 | ) | (20,621,427 | ) | $ | (135,018,924 | ) |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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.
18
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $ | 491,356,416 | — | — | ||||||||
Temporary Cash Investments | 70,104 | $ | 15,000,000 | — | ||||||||
Total Value of Investment Securities | $ | 491,426,520 | $ | 15,000,000 | — |
7. Risk Factors
The fund concentrates its investments in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 348,915,793 | ||
Gross tax appreciation of investments | $ | 161,309,191 | ||
Gross tax depreciation of investments | (3,798,464 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 157,510,727 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(324,687,779), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire as follows:
2014 | 2015 | 2016 | 2017 |
$(87,145,230) | — | $(125,173,360) | $(112,369,189) |
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
19
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 7.45 | $ | 5.47 | $ | 5.57 | $ | 9.42 | $ | 7.63 | $ | 6.75 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.03 | ) | (0.03 | ) | (0.02 | ) | (0.04 | ) | (0.05 | ) | (0.06 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.12 | 2.01 | (0.08 | ) | (3.73 | ) | 2.52 | 1.16 | ||||||||||||||||
Total From Investment Operations | 2.09 | 1.98 | (0.10 | ) | (3.77 | ) | 2.47 | 1.10 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (0.08 | ) | (0.68 | ) | (0.22 | ) | |||||||||||||||
Net Asset Value, End of Period | $ | 9.54 | $ | 7.45 | $ | 5.47 | $ | 5.57 | $ | 9.42 | $ | 7.63 | ||||||||||||
Total Return(3) | 28.05 | % | 36.20 | % | (1.80 | )% | (40.34 | )% | 35.22 | % | 16.52 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.39 | %(4) | 1.42 | % | 1.41 | % | 1.36 | % | 1.41 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.72 | )%(4) | (0.48 | )% | (0.40 | )% | (0.49 | )% | (0.70 | )% | (0.80 | )% | ||||||||||||
Portfolio Turnover Rate | 52 | % | 183 | % | 204 | % | 148 | % | 204 | % | 299 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 199,353 | $ | 142,793 | $ | 170,125 | $ | 222,017 | $ | 303,189 | $ | 51,336 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
20
Institutional Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 7.50 | $ | 5.49 | $ | 5.59 | $ | 9.43 | $ | 8.27 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.02 | ) | (0.02 | ) | (0.01 | ) | (0.02 | ) | (0.03 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 2.14 | 2.03 | (0.09 | ) | (3.74 | ) | 1.19 | |||||||||||||
Total From Investment Operations | 2.12 | 2.01 | (0.10 | ) | (3.76 | ) | 1.16 | |||||||||||||
Distributions | ||||||||||||||||||||
From Net Realized Gains | — | — | — | (0.08 | ) | — | ||||||||||||||
Net Asset Value, End of Period | $ | 9.62 | $ | 7.50 | $ | 5.49 | $ | 5.59 | $ | 9.43 | ||||||||||
Total Return(4) | 28.27 | % | 36.61 | % | (1.79 | )% | (40.19 | )% | 14.03 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.19 | %(5) | 1.22 | % | 1.21 | % | 1.16 | % | 1.21 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.52 | )%(5) | (0.28 | )% | (0.20 | )% | (0.29 | )% | (0.65 | )%(5) | ||||||||||
Portfolio Turnover Rate | 52 | % | 183 | % | 204 | % | 148 | % | 204 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 136,368 | $ | 114,513 | $ | 108,261 | $ | 91,791 | $ | 18,384 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | May 18, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | 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. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
21
A Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 7.35 | $ | 5.41 | $ | 5.53 | $ | 9.37 | $ | 7.59 | $ | 6.72 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.04 | ) | (0.05 | ) | (0.03 | ) | (0.06 | ) | (0.07 | ) | (0.08 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.10 | 1.99 | (0.09 | ) | (3.70 | ) | 2.51 | 1.16 | ||||||||||||||||
Total From Investment Operations | 2.06 | 1.94 | (0.12 | ) | (3.76 | ) | 2.44 | 1.08 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (0.08 | ) | (0.66 | ) | (0.21 | ) | |||||||||||||||
Net Asset Value, End of Period | $ | 9.41 | $ | 7.35 | $ | 5.41 | $ | 5.53 | $ | 9.37 | $ | 7.59 | ||||||||||||
Total Return(3) | 28.03 | % | 35.86 | % | (2.17 | )% | (40.45 | )% | 34.91 | % | 16.22 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.64 | %(4) | 1.67 | % | 1.66 | % | 1.61 | % | 1.66 | % | 1.75 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.97 | )%(4) | (0.73 | )% | (0.65 | )% | (0.74 | )% | (0.95 | )% | (1.05 | )% | ||||||||||||
Portfolio Turnover Rate | 52 | % | 183 | % | 204 | % | 148 | % | 204 | % | 299 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 151,461 | $ | 126,763 | $ | 114,026 | $ | 129,791 | $ | 202,515 | $ | 73,383 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
22
B Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 7.10 | $ | 5.26 | $ | 5.41 | $ | 9.25 | $ | 7.49 | $ | 6.63 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.07 | ) | (0.09 | ) | (0.07 | ) | (0.11 | ) | (0.13 | ) | (0.14 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.02 | 1.93 | (0.08 | ) | (3.65 | ) | 2.49 | 1.15 | ||||||||||||||||
Total From Investment Operations | 1.95 | 1.84 | (0.15 | ) | (3.76 | ) | 2.36 | 1.01 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (0.08 | ) | (0.60 | ) | (0.15 | ) | |||||||||||||||
Net Asset Value, End of Period | $ | 9.05 | $ | 7.10 | $ | 5.26 | $ | 5.41 | $ | 9.25 | $ | 7.49 | ||||||||||||
Total Return(3) | 27.46 | % | 34.98 | % | (2.77 | )% | (40.97 | )% | 33.84 | % | 15.46 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.39 | %(4) | 2.42 | % | 2.41 | % | 2.36 | % | 2.41 | % | 2.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.72 | )%(4) | (1.48 | )% | (1.40 | )% | (1.49 | )% | (1.70 | )% | (1.80 | )% | ||||||||||||
Portfolio Turnover Rate | 52 | % | 183 | % | 204 | % | 148 | % | 204 | % | 299 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 3,305 | $ | 3,107 | $ | 2,976 | $ | 2,846 | $ | 4,549 | $ | 3,383 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
23
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 7.13 | $ | 5.28 | $ | 5.44 | $ | 9.29 | $ | 7.52 | $ | 6.66 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.07 | ) | (0.09 | ) | (0.07 | ) | (0.11 | ) | (0.13 | ) | (0.14 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.02 | 1.94 | (0.09 | ) | (3.66 | ) | 2.50 | 1.15 | ||||||||||||||||
Total From Investment Operations | 1.95 | 1.85 | (0.16 | ) | (3.77 | ) | 2.37 | 1.01 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (0.08 | ) | (0.60 | ) | (0.15 | ) | |||||||||||||||
Net Asset Value, End of Period | $ | 9.08 | $ | 7.13 | $ | 5.28 | $ | 5.44 | $ | 9.29 | $ | 7.52 | ||||||||||||
Total Return(3) | 27.35 | % | 35.04 | % | (2.94 | )% | (40.91 | )% | 34.02 | % | 15.24 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.39 | %(4) | 2.42 | % | 2.41 | % | 2.36 | % | 2.41 | % | 2.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.72 | )%(4) | (1.48 | )% | (1.40 | )% | (1.49 | )% | (1.70 | )% | (1.80 | )% | ||||||||||||
Portfolio Turnover Rate | 52 | % | 183 | % | 204 | % | 148 | % | 204 | % | 299 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 16,972 | $ | 13,476 | $ | 11,608 | $ | 12,983 | $ | 16,406 | $ | 4,424 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
24
R Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 7.33 | $ | 5.41 | $ | 5.54 | $ | 9.42 | $ | 9.02 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.05 | ) | (0.06 | ) | (0.06 | ) | (0.06 | ) | (0.01 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 2.09 | 1.98 | (0.07 | ) | (3.74 | ) | 0.41 | |||||||||||||
Total From Investment Operations | 2.04 | 1.92 | (0.13 | ) | (3.80 | ) | 0.40 | |||||||||||||
Distributions | ||||||||||||||||||||
From Net Realized Gains | — | — | — | (0.08 | ) | — | ||||||||||||||
Net Asset Value, End of Period | $ | 9.37 | $ | 7.33 | $ | 5.41 | $ | 5.54 | $ | 9.42 | ||||||||||
Total Return(4) | 27.83 | % | 35.49 | % | (2.35 | )% | (40.66 | )% | 4.43 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.89 | %(5) | 1.92 | % | 1.91 | % | 1.86 | % | 1.91 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.22 | )%(5) | (0.98 | )% | (0.90 | )% | (0.99 | )% | (1.61 | )%(5) | ||||||||||
Portfolio Turnover Rate | 52 | % | 183 | % | 204 | % | 148 | % | 204 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 1,487 | $ | 998 | $ | 545 | $ | 108 | $ | 26 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | 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. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
25
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
26
27
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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 Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71843 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Ultra® Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 10 |
Statement of Operations | 11 |
Statement of Changes in Net Assets | 12 |
Notes to Financial Statements | 13 |
Financial Highlights | 19 |
Additional Information | 25 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCUX | 16.30% | 20.74% | 3.46% | 2.00% | 11.36% | 11/2/81 |
Russell 1000 Growth Index | — | 16.96% | 20.87% | 5.06% | 2.11% | 10.39%(2) | — |
S&P 500 Index | — | 16.36% | 17.22% | 2.95% | 2.82% | 11.48%(2) | — |
Institutional Class | TWUIX | 16.45% | 20.97% | 3.67% | 2.21% | 5.09% | 11/14/96 |
A Class(3) | TWUAX | 10/2/96 | |||||
No sales charge* | 16.20% | 20.46% | 3.20% | 1.73% | 4.88% | ||
With sales charge* | 9.51% | 13.55% | 1.99% | 1.14% | 4.45% | ||
B Class | AULBX | 9/28/07 | |||||
No sales charge* | 15.74% | 19.54% | — | — | 0.20% | ||
With sales charge* | 10.74% | 15.54% | — | — | -0.64% | ||
C Class | TWCCX | 10/29/01 | |||||
No sales charge* | 15.73% | 19.53% | 2.43% | — | 2.52% | ||
With sales charge* | 14.73% | 19.53% | 2.43% | — | 2.52% | ||
R Class | AULRX | 16.02% | 20.17% | 2.94% | — | 4.22% | 8/29/03 |
*Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 10/31/81, the date nearest the Investor Class’s inception for which data are available. |
(3) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.00% | 0.80% | 1.25% | 2.00% | 2.00% | 1.50% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
4
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 6.2% |
Google, Inc., Class A | 3.8% |
Exxon Mobil Corp. | 2.7% |
Amazon.com, Inc. | 2.6% |
Schlumberger Ltd. | 2.6% |
Microsoft Corp. | 2.3% |
Express Scripts, Inc. | 2.2% |
Oracle Corp. | 2.2% |
QUALCOMM, Inc. | 2.2% |
Philip Morris International, Inc. | 2.1% |
Top Five Industries | % of net assets |
Software | 8.0% |
Computers & Peripherals | 7.9% |
Oil, Gas & Consumable Fuels | 6.9% |
Machinery | 6.4% |
Electrical Equipment | 5.8% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 91.0% |
Foreign Common Stocks* | 8.5% |
Total Common Stocks | 99.5% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.2% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,163.00 | $5.36 | 1.00% |
Institutional Class | $1,000 | $1,164.50 | $4.29 | 0.80% |
A Class | $1,000 | $1,162.00 | $6.70 | 1.25% |
B Class | $1,000 | $1,157.40 | $10.70 | 2.00% |
C Class | $1,000 | $1,157.30 | $10.70 | 2.00% |
R Class | $1,000 | $1,160.20 | $8.03 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.01 | 1.00% |
Institutional Class | $1,000 | $1,020.83 | $4.01 | 0.80% |
A Class | $1,000 | $1,018.60 | $6.26 | 1.25% |
B Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
C Class | $1,000 | $1,014.88 | $9.99 | 2.00% |
R Class | $1,000 | $1,017.36 | $7.50 | 1.50% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 99.5% | ||||||||
AEROSPACE & DEFENSE — 1.7% | ||||||||
General Dynamics Corp. | 1,539,583 | $ | 112,112,434 | |||||
AUTO COMPONENTS — 0.5% | ||||||||
Gentex Corp. | 1,077,000 | 33,763,950 | ||||||
BEVERAGES — 0.3% | ||||||||
Coca-Cola Co. (The) | 306,000 | 20,642,760 | ||||||
BIOTECHNOLOGY — 3.6% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 337,000 | 32,651,930 | ||||||
Celgene Corp.(1) | 1,202,000 | 70,773,760 | ||||||
Gilead Sciences, Inc.(1) | 3,522,000 | 136,794,480 | ||||||
240,220,170 | ||||||||
CAPITAL MARKETS — 0.8% | ||||||||
Charles Schwab Corp. (The) | 2,932,000 | 53,684,920 | ||||||
CHEMICALS — 3.9% | ||||||||
Monsanto Co. | 1,503,000 | 102,264,120 | ||||||
Nalco Holding Co. | 2,020,000 | 59,004,200 | ||||||
Potash Corp. of Saskatchewan, Inc. | 1,356,000 | 76,451,280 | ||||||
RPM International, Inc. | 1,107,000 | 26,014,500 | ||||||
263,734,100 | ||||||||
COMMUNICATIONS EQUIPMENT — 3.2% | ||||||||
Cisco Systems, Inc. | 4,009,000 | 70,398,040 | ||||||
QUALCOMM, Inc. | 2,538,000 | 144,259,920 | ||||||
214,657,960 | ||||||||
COMPUTERS & PERIPHERALS — 7.9% | ||||||||
Apple, Inc.(1) | 1,201,000 | 418,224,230 | ||||||
EMC Corp.(1) | 3,843,000 | 108,910,620 | ||||||
527,134,850 | ||||||||
CONSUMER FINANCE — 1.0% | ||||||||
American Express Co. | 1,341,000 | 65,816,280 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 2.2% | ||||||||
CME Group, Inc. | 270,000 | 79,857,900 | ||||||
JPMorgan Chase & Co. | 1,500,000 | 68,445,000 | ||||||
148,302,900 | ||||||||
ELECTRICAL EQUIPMENT — 5.8% | ||||||||
ABB Ltd.(1) | 1,756,000 | 48,477,781 | ||||||
ABB Ltd. ADR(1) | 2,390,000 | 65,701,100 | ||||||
Cooper Industries plc | 1,317,000 | 86,856,150 | ||||||
Emerson Electric Co. | 2,221,000 | 134,947,960 | ||||||
Polypore International, Inc.(1) | 858,673 | 53,040,231 | ||||||
389,023,222 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.6% | ||||||||
Dolby Laboratories, Inc., Class A(1) | 813,000 | 40,698,780 | ||||||
ENERGY EQUIPMENT & SERVICES — 3.7% | ||||||||
Cameron International Corp.(1) | 1,079,000 | 56,884,880 | ||||||
Core Laboratories NV | 215,000 | 20,635,700 | ||||||
Schlumberger Ltd. | 1,911,000 | 171,512,250 | ||||||
249,032,830 | ||||||||
FOOD & STAPLES RETAILING — 2.2% | ||||||||
Costco Wholesale Corp. | 1,612,000 | 130,443,040 | ||||||
Wal-Mart Stores, Inc. | 244,000 | 13,415,120 | ||||||
143,858,160 | ||||||||
FOOD PRODUCTS — 2.6% | ||||||||
Hershey Co. (The) | 994,000 | 57,363,740 | ||||||
Mead Johnson Nutrition Co. | 630,763 | 42,185,430 | ||||||
Nestle SA | 1,207,000 | 74,931,676 | ||||||
174,480,846 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 2.3% | ||||||||
HeartWare International, Inc.(1) | 122,332 | 9,127,190 | ||||||
Intuitive Surgical, Inc.(1) | 275,000 | 96,167,500 | ||||||
Varian Medical Systems, Inc.(1) | 684,000 | 48,016,800 | ||||||
153,311,490 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 3.7% | ||||||||
Express Scripts, Inc.(1) | 2,643,000 | 149,963,820 | ||||||
Medco Health Solutions, Inc.(1) | 175,899 | 10,436,088 | ||||||
UnitedHealth Group, Inc. | 1,803,000 | 88,761,690 | ||||||
249,161,598 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 3.0% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 131,000 | 34,949,490 | ||||||
McDonald’s Corp. | 1,651,000 | 129,289,810 | ||||||
Starbucks Corp. | 1,067,000 | 38,614,730 | ||||||
202,854,030 | ||||||||
INSURANCE — 1.5% | ||||||||
MetLife, Inc. | 2,066,000 | 96,668,140 | ||||||
INTERNET & CATALOG RETAIL — 3.9% | ||||||||
Amazon.com, Inc.(1) | 883,000 | 173,509,500 | ||||||
Netflix, Inc.(1) | 368,000 | 85,622,560 | ||||||
259,132,060 | ||||||||
INTERNET SOFTWARE & SERVICES — 5.8% | ||||||||
Baidu, Inc. ADR(1) | 545,844 | 81,068,751 | ||||||
Google, Inc., Class A(1) | 469,000 | 255,182,900 | ||||||
Tencent Holdings Ltd. | 1,835,000 | 52,217,608 | ||||||
388,469,259 | ||||||||
IT SERVICES — 1.8% | ||||||||
MasterCard, Inc., Class A | 301,000 | 83,042,890 | ||||||
Teradata Corp.(1) | 628,000 | 35,117,760 | ||||||
118,160,650 |
8
Shares | Value | |||||||
LEISURE EQUIPMENT & PRODUCTS — 1.2% | ||||||||
Hasbro, Inc. | 1,655,000 | $ | 77,520,200 | |||||
MACHINERY — 6.4% | ||||||||
Cummins, Inc. | 575,000 | 69,103,500 | ||||||
Donaldson Co., Inc. | 513,000 | 31,410,990 | ||||||
Joy Global, Inc. | 1,253,000 | 126,490,350 | ||||||
Parker-Hannifin Corp. | 1,062,000 | 100,167,840 | ||||||
WABCO Holdings, Inc.(1) | 894,000 | 66,021,900 | ||||||
Wabtec Corp. | 441,000 | 31,478,580 | ||||||
424,673,160 | ||||||||
METALS & MINING — 2.1% | ||||||||
BHP Billiton Ltd. ADR | 520,000 | 52,644,800 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 1,638,000 | 90,139,140 | ||||||
142,783,940 | ||||||||
MULTILINE RETAIL — 0.9% | ||||||||
Kohl’s Corp. | 1,158,000 | 61,038,180 | ||||||
OIL, GAS & CONSUMABLE FUELS — 6.9% | ||||||||
EOG Resources, Inc. | 601,000 | 67,858,910 | ||||||
Exxon Mobil Corp. | 2,060,000 | 181,280,000 | ||||||
Newfield Exploration Co.(1) | 939,000 | 66,481,200 | ||||||
Occidental Petroleum Corp. | 1,058,000 | 120,918,820 | ||||||
Southwestern Energy Co.(1) | 639,000 | 28,026,540 | ||||||
464,565,470 | ||||||||
PHARMACEUTICALS — 1.4% | ||||||||
Teva Pharmaceutical Industries Ltd. ADR | 2,074,000 | 94,844,020 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 3.7% | ||||||||
Altera Corp. | 1,905,000 | 92,773,500 | ||||||
Linear Technology Corp. | 2,441,000 | 84,946,800 | ||||||
Microchip Technology, Inc. | 1,721,000 | 70,629,840 | ||||||
248,350,140 | ||||||||
SOFTWARE — 8.0% | ||||||||
Adobe Systems, Inc.(1) | 1,952,000 | 65,489,600 | ||||||
Electronic Arts, Inc.(1) | 4,199,000 | 84,735,820 | ||||||
Microsoft Corp. | 5,838,000 | 151,904,760 | ||||||
NetSuite, Inc.(1) | 500,000 | 17,305,000 | ||||||
Oracle Corp. | 4,052,000 | 146,074,600 | ||||||
salesforce.com, inc.(1) | 105,000 | 14,553,000 | ||||||
VMware, Inc., Class A(1) | 583,000 | 55,635,690 | ||||||
535,698,470 | ||||||||
SPECIALTY RETAIL — 3.6% | ||||||||
O’Reilly Automotive, Inc.(1) | 763,000 | 45,062,780 | ||||||
Tiffany & Co. | 1,455,000 | 101,035,200 | ||||||
TJX Cos., Inc. (The) | 1,733,000 | 92,923,460 | ||||||
239,021,440 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 1.2% | ||||||||
NIKE, Inc., Class B | 1,010,000 | 83,143,200 | ||||||
TOBACCO — 2.1% | ||||||||
Philip Morris International, Inc. | 2,055,000 | 142,699,200 | ||||||
TOTAL COMMON STOCKS (Cost $4,079,723,691) | 6,659,258,809 | |||||||
Temporary Cash Investments — 0.3% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 66,888 | 66,888 | ||||||
Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.375%, 11/15/39, valued at $22,774,845), in a joint trading account at 0.02%, dated 4/29/11, due 5/2/11 (Delivery value $22,400,037) | 22,400,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $22,466,888) | 22,466,888 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $4,102,190,579) | 6,681,725,697 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 13,053,633 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 6,694,779,330 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
85,274,688 | CHF for USD | Credit Suisse First Boston | 5/31/11 | $98,594,093 | $(1,361,326) |
(Value on Settlement Date $97,232,767)
Notes to Schedule of Investments
ADR = American Depositary Receipt
CHF = Swiss Franc
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
9
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $4,102,190,579) | $ | 6,681,725,697 | ||
Cash | 375,000 | |||
Foreign currency holdings, at value (cost of $1,639,372) | 1,677,939 | |||
Receivable for investments sold | 34,769,822 | |||
Receivable for capital shares sold | 1,467,227 | |||
Dividends and interest receivable | 3,777,403 | |||
6,723,793,088 | ||||
Liabilities | ||||
Payable for investments purchased | 17,627,561 | |||
Payable for capital shares redeemed | 4,682,702 | |||
Unrealized loss on forward foreign currency exchange contracts | 1,361,326 | |||
Accrued management fees | 5,325,168 | |||
Distribution and service fees payable | 17,001 | |||
29,013,758 | ||||
Net Assets | $ | 6,694,779,330 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 4,762,797,641 | ||
Undistributed net investment income | 4,816,584 | |||
Accumulated net realized loss | (651,252,121 | ) | ||
Net unrealized appreciation | 2,578,417,226 | |||
$ | 6,694,779,330 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $6,563,090,809 | 266,435,332 | $24.63 |
Institutional Class, $0.01 Par Value | $53,679,601 | 2,133,142 | $25.16 |
A Class, $0.01 Par Value | $72,824,338 | 3,039,224 | $23.96* |
B Class, $0.01 Par Value | $103,027 | 4,285 | $24.04 |
C Class, $0.01 Par Value | $847,699 | 38,145 | $22.22 |
R Class, $0.01 Par Value | $4,233,856 | 177,651 | $23.83 |
*Maximum offering price $25.42 (net asset value divided by 0.9425)
See Notes to Financial Statements.
10
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $410,692) | $ | 36,726,800 | ||
Interest | 18,745 | |||
36,745,545 | ||||
Expenses: | ||||
Management fees | 31,414,634 | |||
Distribution and service fees: | ||||
A Class | 87,078 | |||
B Class | 506 | |||
C Class | 4,065 | |||
R Class | 9,110 | |||
Directors’ fees and expenses | 157,257 | |||
31,672,650 | ||||
Net investment income (loss) | 5,072,895 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 202,045,556 | |||
Foreign currency transactions | (9,398,048 | ) | ||
192,647,508 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 766,830,868 | |||
Translation of assets and liabilities in foreign currencies | (1,478,270 | ) | ||
765,352,598 | ||||
Net realized and unrealized gain (loss) | 958,000,106 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 963,073,001 |
See Notes to Financial Statements.
11
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 5,072,895 | $ | 14,027,620 | ||||
Net realized gain (loss) | 192,647,508 | 188,141,888 | ||||||
Change in net unrealized appreciation (depreciation) | 765,352,598 | 836,699,181 | ||||||
Net increase (decrease) in net assets resulting from operations | 963,073,001 | 1,038,868,689 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (12,310,150 | ) | (26,725,188 | ) | ||||
Institutional Class | (189,254 | ) | (528,963 | ) | ||||
A Class | — | (172,872 | ) | |||||
Decrease in net assets from distributions | (12,499,404 | ) | (27,427,023 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (280,004,895 | ) | (577,726,077 | ) | ||||
Net increase (decrease) in net assets | 670,568,702 | 433,715,589 | ||||||
Net Assets | ||||||||
Beginning of period | 6,024,210,628 | 5,590,495,039 | ||||||
End of period | $ | 6,694,779,330 | $ | 6,024,210,628 | ||||
Undistributed net investment income | $ | 4,816,584 | $ | 12,243,093 |
See Notes to Financial Statements.
12
APRIL 30, 2011 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Ultra Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in equity securities of large companies, but may invest in companies of any size.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
13
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
14
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 1.000% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 0.99% for the Investor Class, A Class, B Class, C Class and R Class and 0.79% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and
C Class will each pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB) and a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $431,331,899 and $714,745,633, respectively.
15
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 3,500,000,000 | 3,500,000,000 | ||||||||||||||
Sold | 4,312,176 | $ | 99,744,820 | 8,040,692 | $ | 157,299,128 | ||||||||||
Issued in reinvestment of distributions | 530,036 | 11,936,500 | 1,335,312 | 25,958,465 | ||||||||||||
Redeemed | (16,793,612 | ) | (386,825,899 | ) | (35,922,123 | ) | (700,572,950 | ) | ||||||||
(11,951,400 | ) | (275,144,579 | ) | (26,546,119 | ) | (517,315,357 | ) | |||||||||
Institutional Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 268,405 | 6,374,910 | 729,074 | 14,762,326 | ||||||||||||
Issued in reinvestment of distributions | 8,231 | 189,232 | 25,921 | 514,529 | ||||||||||||
Redeemed | (254,307 | ) | (6,036,155 | ) | (2,701,567 | ) | (53,218,916 | ) | ||||||||
22,329 | 527,987 | (1,946,572 | ) | (37,942,061 | ) | |||||||||||
A Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||||||||
Sold | 311,255 | 7,023,669 | 534,148 | 10,123,675 | ||||||||||||
Issued in reinvestment of distributions | — | — | 8,809 | 166,840 | ||||||||||||
Redeemed | (574,798 | ) | (12,774,208 | ) | (1,712,426 | ) | (32,190,650 | ) | ||||||||
(263,543 | ) | (5,750,539 | ) | (1,169,469 | ) | (21,900,135 | ) | |||||||||
B Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | — | — | 6 | 112 | ||||||||||||
Redeemed | (686 | ) | (15,486 | ) | — | — | ||||||||||
(686 | ) | (15,486 | ) | 6 | 112 | |||||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 4,344 | 92,590 | 3,687 | 64,700 | ||||||||||||
Redeemed | (7,320 | ) | (151,240 | ) | (17,068 | ) | (301,317 | ) | ||||||||
(2,976 | ) | (58,650 | ) | (13,381 | ) | (236,617 | ) | |||||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 29,983 | 683,289 | 41,073 | 780,064 | ||||||||||||
Redeemed | (11,054 | ) | (246,917 | ) | (59,405 | ) | (1,112,083 | ) | ||||||||
18,929 | 436,372 | (18,332 | ) | (332,019 | ) | |||||||||||
Net increase (decrease) | (12,177,347 | ) | $ | (280,004,895 | ) | (29,693,867 | ) | $ | (577,726,077 | ) |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
16
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 6,092,286,093 | — | — | ||||||||
Foreign Common Stocks | 391,345,651 | $ | 175,627,065 | — | ||||||||
Temporary Cash Investments | 66,888 | 22,400,000 | — | |||||||||
Total Value of Investment Securities | $ | 6,483,698,632 | $ | 198,027,065 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (1,361,326 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of foreign currency risk derivative instruments as of April 30, 2011, is disclosed on the Statement of Assets and Liabilities as a liability of $1,361,326 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2011, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(9,475,781) in net realized gain (loss) on foreign currency transactions and $(1,595,410) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
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9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 4,161,380,052 | ||
Gross tax appreciation of investments | $ | 2,542,376,059 | ||
Gross tax depreciation of investments | (22,030,414 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 2,520,345,645 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2010, the fund had accumulated capital losses of $(782,228,557), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(35,695,674) and $(746,532,883) expire in 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 21.22 | $ | 17.82 | $ | 15.67 | $ | 33.48 | $ | 28.55 | $ | 29.02 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.02 | 0.05 | 0.11 | 0.08 | (0.01 | ) | (0.06 | ) | ||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.43 | 3.44 | 2.12 | (9.95 | ) | 6.95 | (0.37 | ) | ||||||||||||||||
Total From Investment Operations | 3.45 | 3.49 | 2.23 | (9.87 | ) | 6.94 | (0.43 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.04 | ) | (0.09 | ) | (0.08 | ) | — | — | (0.04 | ) | ||||||||||||||
From Net Realized Gains | — | — | — | (7.94 | ) | (2.01 | ) | — | ||||||||||||||||
Total Distributions | (0.04 | ) | (0.09 | ) | (0.08 | ) | (7.94 | ) | (2.01 | ) | (0.04 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 24.63 | $ | 21.22 | $ | 17.82 | $ | 15.67 | $ | 33.48 | $ | 28.55 | ||||||||||||
Total Return(3) | 16.30 | % | 19.63 | % | 14.35 | % | (38.02 | )% | 25.89 | % | (1.51 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.00 | %(4) | 1.00 | % | 1.00 | % | 0.99 | % | 0.99 | % | 0.99 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.16 | %(4) | 0.25 | % | 0.69 | % | 0.36 | % | (0.04 | )% | (0.15 | )% | ||||||||||||
Portfolio Turnover Rate | 7 | % | 24 | % | 53 | % | 152 | % | 93 | % | 62 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 6,563 | $ | 5,906 | $ | 5,435 | $ | 5,276 | $ | 10,066 | $ | 13,482 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 21.69 | $ | 18.22 | $ | 16.02 | $ | 33.98 | $ | 28.90 | $ | 29.38 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.09 | 0.14 | 0.15 | 0.05 | — | (3) | |||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.52 | 3.51 | 2.17 | (10.17 | ) | 7.04 | (0.38 | ) | ||||||||||||||||
Total From Investment Operations | 3.56 | 3.60 | 2.31 | (10.02 | ) | 7.09 | (0.38 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.09 | ) | (0.13 | ) | (0.11 | ) | — | — | (0.10 | ) | ||||||||||||||
From Net Realized Gains | — | — | — | (7.94 | ) | (2.01 | ) | — | ||||||||||||||||
Total Distributions | (0.09 | ) | (0.13 | ) | (0.11 | ) | (7.94 | ) | (2.01 | ) | (0.10 | ) | ||||||||||||
Net Asset Value, End of Period | $ | 25.16 | $ | 21.69 | $ | 18.22 | $ | 16.02 | $ | 33.98 | $ | 28.90 | ||||||||||||
Total Return(4) | 16.45 | % | 19.81 | % | 14.58 | % | (37.89 | )% | 26.14 | % | (1.33 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.80 | %(5) | 0.80 | % | 0.80 | % | 0.79 | % | 0.79 | % | 0.79 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.36 | %(5) | 0.45 | % | 0.89 | % | 0.56 | % | 0.16 | % | 0.05 | % | ||||||||||||
Portfolio Turnover Rate | 7 | % | 24 | % | 53 | % | 152 | % | 93 | % | 62 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 53,680 | $ | 45,791 | $ | 73,933 | $ | 76,339 | $ | 325,035 | $ | 1,073,767 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
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A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 20.62 | $ | 17.33 | $ | 15.23 | $ | 32.83 | $ | 28.11 | $ | 28.61 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.01 | ) | — | (4) | 0.07 | 0.03 | (0.08 | ) | (0.13 | ) | ||||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.35 | 3.33 | 2.07 | (9.69 | ) | 6.81 | (0.37 | ) | ||||||||||||||||
Total From Investment Operations | 3.34 | 3.33 | 2.14 | (9.66 | ) | 6.73 | (0.50 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | (0.04 | ) | (0.04 | ) | — | — | — | ||||||||||||||||
From Net Realized Gains | — | — | — | (7.94 | ) | (2.01 | ) | — | ||||||||||||||||
Total Distributions | — | (0.04 | ) | (0.04 | ) | (7.94 | ) | (2.01 | ) | — | ||||||||||||||
Net Asset Value, End of Period | $ | 23.96 | $ | 20.62 | $ | 17.33 | $ | 15.23 | $ | 32.83 | $ | 28.11 | ||||||||||||
Total Return(5) | 16.20 | % | 19.24 | % | 14.14 | % | (38.19 | )% | 25.56 | % | (1.75 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.25 | %(6) | 1.25 | % | 1.25 | % | 1.24 | % | 1.24 | % | 1.24 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.09 | )%(6) | 0.00 | %(7) | 0.44 | % | 0.11 | % | (0.29 | )% | (0.40 | )% | ||||||||||||
Portfolio Turnover Rate | 7 | % | 24 | % | 53 | % | 152 | % | 93 | % | 62 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 72,824 | $ | 68,109 | $ | 77,484 | $ | 85,723 | $ | 235,217 | $ | 405,173 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended April 30, 2011 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(6) | Annualized. |
(7) | Ratio was less than 0.005%. |
See Notes to Financial Statements.
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B Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 20.77 | $ | 17.54 | $ | 15.49 | $ | 33.45 | $ | 31.63 | ||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.09 | ) | (0.15 | ) | (0.06 | ) | (0.16 | ) | (0.04 | ) | ||||||||||
Net Realized and Unrealized Gain (Loss) | 3.36 | 3.38 | 2.11 | (9.86 | ) | 1.86 | ||||||||||||||
Total From Investment Operations | 3.27 | 3.23 | 2.05 | (10.02 | ) | 1.82 | ||||||||||||||
Distributions | ||||||||||||||||||||
From Net Realized Gains | — | — | — | (7.94 | ) | — | ||||||||||||||
Net Asset Value, End of Period | $ | 24.04 | $ | 20.77 | $ | 17.54 | $ | 15.49 | $ | 33.45 | ||||||||||
Total Return(4) | 15.74 | % | 18.42 | % | 13.23 | % | (38.64 | )% | 5.75 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.00 | %(5) | 2.00 | % | 2.00 | % | 1.99 | % | 1.99 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.84 | )%(5) | (0.75 | )% | (0.31 | )% | (0.64 | )% | (1.53 | )%(5) | ||||||||||
Portfolio Turnover Rate | 7 | % | 24 | % | 53 | % | 152 | % | 93 | %(6) | ||||||||||
Net Assets, End of Period (in thousands) | $ | 103 | $ | 103 | $ | 87 | $ | 41 | $ | 26 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
See Notes to Financial Statements.
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C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 19.20 | $ | 16.22 | $ | 14.32 | $ | 31.54 | $ | 27.26 | $ | 27.96 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.09 | ) | (0.13 | ) | (0.04 | ) | (0.13 | ) | (0.29 | ) | (0.34 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.11 | 3.11 | 1.94 | (9.15 | ) | 6.58 | (0.36 | ) | ||||||||||||||||
Total From Investment Operations | 3.02 | 2.98 | 1.90 | (9.28 | ) | 6.29 | (0.70 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (7.94 | ) | (2.01 | ) | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 22.22 | $ | 19.20 | $ | 16.22 | $ | 14.32 | $ | 31.54 | $ | 27.26 | ||||||||||||
Total Return(3) | 15.73 | % | 18.45 | % | 13.20 | % | (38.63 | )% | 24.64 | % | (2.50 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.00 | %(4) | 2.00 | % | 2.00 | % | 1.99 | % | 1.99 | % | 1.99 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.84 | )%(4) | (0.75 | )% | (0.31 | )% | (0.64 | )% | (1.04 | )% | (1.15 | )% | ||||||||||||
Portfolio Turnover Rate | 7 | % | 24 | % | 53 | % | 152 | % | 93 | % | 62 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 848 | $ | 789 | $ | 884 | $ | 891 | $ | 2,129 | $ | 3,342 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(4) | Annualized. |
See Notes to Financial Statements.
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R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 20.54 | $ | 17.26 | $ | 15.17 | $ | 32.80 | $ | 28.15 | $ | 28.72 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.04 | ) | (0.05 | ) | 0.03 | (0.03 | ) | (0.15 | ) | (0.21 | ) | |||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.33 | 3.33 | 2.07 | (9.66 | ) | 6.81 | (0.36 | ) | ||||||||||||||||
Total From Investment Operations | 3.29 | 3.28 | 2.10 | (9.69 | ) | 6.66 | (0.57 | ) | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | — | — | (0.01 | ) | — | — | — | |||||||||||||||||
From Net Realized Gains | — | — | — | (7.94 | ) | (2.01 | ) | — | ||||||||||||||||
Total Distributions | — | — | (0.01 | ) | (7.94 | ) | (2.01 | ) | — | |||||||||||||||
Net Asset Value, End of Period | $ | 23.83 | $ | 20.54 | $ | 17.26 | $ | 15.17 | $ | 32.80 | $ | 28.15 | ||||||||||||
Total Return(3) | 16.02 | % | 19.00 | % | 13.84 | % | (38.35 | )% | 25.26 | % | (1.98 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.50 | %(4) | 1.50 | % | 1.50 | % | 1.49 | % | 1.49 | % | 1.49 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.34 | )%(4) | (0.25 | )% | 0.19 | % | (0.14 | )% | (0.54 | )% | (0.65 | )% | ||||||||||||
Portfolio Turnover Rate | 7 | % | 24 | % | 53 | % | 152 | % | 93 | % | 62 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 4,234 | $ | 3,260 | $ | 3,056 | $ | 3,276 | $ | 5,971 | $ | 8,922 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
24
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71839 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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Veedot® Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 19 |
Additional Information | 21 |
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.
1
Jonathan Thomas
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12-18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | AMVIX | 17.74% | 16.11% | 0.71% | 2.98% | 2.58% | 11/30/99 |
Russell 3000 Index | — | 17.65% | 18.35% | 3.33% | 3.64% | 2.56% | — |
Institutional Class | AVDIX | 17.84% | 16.23% | 0.90% | 3.16% | 1.02% | 8/1/00 |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |
Investor Class | Institutional Class |
1.26% | 1.06% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
4
APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
CenterPoint Energy, Inc. | 2.4% |
Hormel Foods Corp. | 2.2% |
Pinnacle West Capital Corp. | 2.1% |
Wal-Mart Stores, Inc. | 2.0% |
United States Cellular Corp. | 2.0% |
NuStar Energy LP | 2.0% |
Endurance Specialty Holdings Ltd. | 1.9% |
UGI Corp. | 1.7% |
Alliance Resource Partners, LP | 1.6% |
Humana, Inc. | 1.5% |
Top Five Industries | % of net assets |
Oil, Gas & Consumable Fuels | 16.5% |
Insurance | 9.4% |
Food & Staples Retailing | 6.5% |
Health Care Providers & Services | 5.4% |
Media | 4.4% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.2% |
Foreign Common Stocks* | 10.9% |
Total Common Stocks | 100.1% |
Other Assets and Liabilities | (0.1)% |
* Includes depositary shares, dual listed securities and foreign ordinary shares. |
5
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,177.40 | $6.75 | 1.25% |
Institutional Class | $1,000 | $1,178.40 | $5.67 | 1.05% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.60 | $6.26 | 1.25% |
Institutional Class | $1,000 | $1,019.59 | $5.26 | 1.05% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 100.1% | ||||||||
AEROSPACE & DEFENSE — 2.0% | ||||||||
L-3 Communications Holdings, Inc. | 10,500 | $ | 841,995 | |||||
Lockheed Martin Corp. | 10,877 | 862,002 | ||||||
1,703,997 | ||||||||
AIR FREIGHT & LOGISTICS — 1.2% | ||||||||
Forward Air Corp. | 29,659 | 997,136 | ||||||
AIRLINES — 1.0% | ||||||||
SkyWest, Inc. | 50,049 | 827,310 | ||||||
AUTO COMPONENTS — 0.1% | ||||||||
Goodyear Tire & Rubber Co. (The)(1) | 3,150 | 57,172 | ||||||
BEVERAGES — 2.1% | ||||||||
Coca-Cola Co. (The) | 12,999 | 876,913 | ||||||
PepsiCo, Inc. | 13,132 | 904,663 | ||||||
1,781,576 | ||||||||
CAPITAL MARKETS — 0.2% | ||||||||
Fortress Investment Group LLC, Class A(1) | 21,665 | 133,673 | ||||||
CHEMICALS — 1.0% | ||||||||
Ecolab, Inc. | 16,695 | 880,828 | ||||||
COMMERCIAL SERVICES & SUPPLIES — 1.0% | ||||||||
Pitney Bowes, Inc. | 35,500 | 871,880 | ||||||
COMMUNICATIONS EQUIPMENT — 0.3% | ||||||||
Nokia Oyj ADR | 30,077 | 277,611 | ||||||
CONTAINERS & PACKAGING — 1.1% | ||||||||
Ball Corp. | 25,000 | 932,750 | ||||||
DISTRIBUTORS — 1.0% | ||||||||
Genuine Parts Co. | 15,500 | 832,350 | ||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.1% | ||||||||
Telecomunicacoes de Sao Paulo SA ADR | 34,500 | 935,295 | ||||||
ELECTRIC UTILITIES — 3.7% | ||||||||
Northeast Utilities | 13,215 | 470,454 | ||||||
Pinnacle West Capital Corp. | 42,000 | 1,822,380 | ||||||
UniSource Energy Corp. | 23,000 | 853,990 | ||||||
3,146,824 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 1.1% | ||||||||
National Instruments Corp. | 31,500 | 955,710 | ||||||
FOOD & STAPLES RETAILING — 6.5% | ||||||||
Costco Wholesale Corp. | 12,000 | 971,040 | ||||||
Kroger Co. (The) | 36,384 | 884,495 | ||||||
Safeway, Inc. | 37,500 | 911,625 | ||||||
Walgreen Co. | 24,000 | 1,025,280 | ||||||
Wal-Mart Stores, Inc. | 31,500 | 1,731,870 | ||||||
5,524,310 | ||||||||
FOOD PRODUCTS — 3.6% | ||||||||
B&G Foods, Inc. | 66,500 | 1,202,320 | ||||||
Hormel Foods Corp. | 65,000 | 1,911,650 | ||||||
3,113,970 | ||||||||
GAS UTILITIES — 3.7% | ||||||||
AGL Resources, Inc. | 1,089 | 45,204 | ||||||
Atmos Energy Corp. | 26,500 | 924,585 | ||||||
ONEOK, Inc. | 10,049 | 702,827 | ||||||
UGI Corp. | 44,000 | 1,465,200 | ||||||
3,137,816 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 2.1% | ||||||||
Baxter International, Inc. | 16,009 | 910,912 | ||||||
Immucor, Inc.(1) | 40,942 | 893,764 | ||||||
1,804,676 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 5.4% | ||||||||
Cardinal Health, Inc. | 20,758 | 906,917 | ||||||
Chemed Corp. | 12,742 | 887,225 | ||||||
Humana, Inc.(1) | 17,000 | 1,294,040 | ||||||
LifePoint Hospitals, Inc.(1) | 11,872 | 493,994 | ||||||
UnitedHealth Group, Inc. | 20,000 | 984,600 | ||||||
4,566,776 | ||||||||
HOTELS, RESTAURANTS & LEISURE — 2.5% | ||||||||
Cracker Barrel Old Country Store, Inc. | 18,100 | 927,263 | ||||||
McDonald’s Corp. | 5,095 | 398,990 | ||||||
Papa John’s International, Inc.(1) | 26,554 | 798,213 | ||||||
2,124,466 | ||||||||
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
WD-40 Co. | 21,107 | 875,941 | ||||||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS — 0.3% | ||||||||
AES Corp. (The)(1) | 22,370 | 296,179 | ||||||
INDUSTRIAL CONGLOMERATES — 1.0% | ||||||||
General Electric Co. | 42,431 | 867,714 | ||||||
INSURANCE — 9.4% | ||||||||
American Financial Group, Inc. | 25,500 | 912,135 | ||||||
Arthur J. Gallagher & Co. | 28,405 | 845,901 | ||||||
Axis Capital Holdings Ltd. | 23,000 | 813,280 | ||||||
Endurance Specialty Holdings Ltd. | 36,000 | 1,596,240 | ||||||
Montpelier Re Holdings Ltd. | 7,376 | 133,432 | ||||||
Principal Financial Group, Inc. | 26,802 | 904,567 | ||||||
Reinsurance Group of America, Inc. | 14,500 | 917,850 |
8
Shares | Value | |||||||
Safety Insurance Group, Inc. | 18,385 | $ | 860,786 | |||||
Torchmark Corp. | 15,000 | 1,003,800 | ||||||
7,987,991 | ||||||||
INTERNET SOFTWARE & SERVICES — 1.0% | ||||||||
j2 Global Communications, Inc.(1) | 30,000 | 883,800 | ||||||
IT SERVICES — 2.8% | ||||||||
Global Payments, Inc. | 11,484 | 611,408 | ||||||
International Business Machines Corp. | 5,330 | 909,191 | ||||||
ManTech International Corp., Class A(1) | 20,211 | 887,061 | ||||||
2,407,660 | ||||||||
MACHINERY — 1.8% | ||||||||
Dover Corp. | 15,500 | 1,054,620 | ||||||
IDEX Corp. | 11,006 | 516,402 | ||||||
1,571,022 | ||||||||
MEDIA — 4.4% | ||||||||
Charter Communications, Inc., Class A(1) | 15,538 | 915,810 | ||||||
John Wiley & Sons, Inc., Class A | 18,500 | 942,205 | ||||||
Sinclair Broadcast Group, Inc., Class A | 105,500 | 1,212,195 | ||||||
Washington Post Co. (The), Class B | 1,596 | 695,696 | ||||||
3,765,906 | ||||||||
METALS & MINING — 2.1% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 16,000 | 880,480 | ||||||
Rio Tinto plc ADR | 13,000 | 951,730 | ||||||
1,832,210 | ||||||||
MULTILINE RETAIL — 1.0% | ||||||||
Kohl’s Corp. | 15,965 | 841,515 | ||||||
MULTI-UTILITIES — 2.5% | ||||||||
CenterPoint Energy, Inc. | 110,000 | 2,046,000 | ||||||
SCANA Corp. | 1,500 | 62,280 | ||||||
2,108,280 | ||||||||
OIL, GAS & CONSUMABLE FUELS — 16.5% | ||||||||
Alliance Resource Partners, LP | 17,000 | 1,400,120 | ||||||
Buckeye Partners LP | 13,500 | 878,310 | ||||||
Calumet Specialty Products Partners LP | 40,280 | 889,382 | ||||||
ConocoPhillips | 2,224 | 175,540 | ||||||
Energy Transfer Partners LP | 16,567 | 899,920 | ||||||
Enterprise Products Partners LP | 20,500 | 887,035 | ||||||
Genesis Energy, LP | 40,000 | 1,116,800 | ||||||
Holly Energy Partners LP | 15,195 | 832,534 | ||||||
NuStar Energy LP | 24,500 | 1,661,345 | ||||||
Plains Exploration & Production Co.(1) | 24,417 | 928,823 | ||||||
Sunoco Logistics Partners LP | 10,000 | 900,300 | ||||||
Targa Resources Partners LP | 25,000 | 878,500 | ||||||
TC PipeLines LP | 16,782 | 811,913 | ||||||
Teekay Offshore Partners LP | 30,500 | 941,535 | ||||||
TransMontaigne Partners LP | 23,462 | 846,040 | ||||||
14,048,097 | ||||||||
PHARMACEUTICALS — 4.3% | ||||||||
Abbott Laboratories | 17,218 | 896,025 | ||||||
AstraZeneca plc ADR | 18,362 | 914,978 | ||||||
Eli Lilly & Co. | 25,000 | 925,250 | ||||||
Novo Nordisk A/S ADR | 7,500 | 955,425 | ||||||
3,691,678 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.2% | ||||||||
Rayonier, Inc. | 15,000 | 995,400 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 3.9% | ||||||||
Analog Devices, Inc. | 22,500 | 906,975 | ||||||
Intel Corp. | 25,620 | 594,128 | ||||||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 69,653 | 940,315 | ||||||
Texas Instruments, Inc. | 25,500 | 906,015 | ||||||
3,347,433 | ||||||||
SPECIALTY RETAIL — 1.0% | ||||||||
PetSmart, Inc. | 21,000 | 885,570 | ||||||
TOBACCO — 2.2% | ||||||||
Altria Group, Inc. | 32,648 | 876,272 | ||||||
Lorillard, Inc. | 9,307 | 991,196 | ||||||
1,867,468 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 3.0% | ||||||||
NTT DOCOMO, Inc. ADR | 47,739 | 883,649 | ||||||
United States Cellular Corp.(1) | 34,500 | 1,698,780 | ||||||
2,582,429 | ||||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $77,918,968) | 85,462,419 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (124,099 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 85,338,320 |
9
Geographic Diversification | |
(as a % of net assets) | |
United States | 89.2% |
Bermuda | 3.0% |
United Kingdom | 2.2% |
Denmark | 1.1% |
Bahamas | 1.1% |
Taiwan (Republic of China) | 1.1% |
Brazil | 1.1% |
Japan | 1.0% |
Finland | 0.3% |
Other Assets and Liabilities | (0.1)% |
Notes to Schedule of Investments
ADR = American Depositary Receipt
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $77,918,968) | $ | 85,462,419 | ||
Receivable for investments sold | 241,354 | |||
Receivable for capital shares sold | 5,698 | |||
Dividends and interest receivable | 237,767 | |||
85,947,238 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 468,019 | |||
Payable for capital shares redeemed | 53,664 | |||
Accrued management fees | 87,235 | |||
608,918 | ||||
Net Assets | $ | 85,338,320 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 108,737,384 | ||
Undistributed net investment income | 218,954 | |||
Accumulated net realized loss | (31,161,469 | ) | ||
Net unrealized appreciation | 7,543,451 | |||
$ | 85,338,320 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $82,790,417 | 12,402,077 | $6.68 |
Institutional Class, $0.01 Par Value | $2,547,903 | 375,130 | $6.79 |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends | $ | 846,627 | ||
Interest | 479 | |||
847,106 | ||||
Expenses: | ||||
Management fees | 520,213 | |||
Directors’ fees and expenses | 2,061 | |||
522,274 | ||||
Net investment income (loss) | 324,832 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 19,441,352 | |||
Change in net unrealized appreciation (depreciation) on investments | (6,038,213 | ) | ||
Net realized and unrealized gain (loss) | 13,403,139 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 13,727,971 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 324,832 | $ | (39,074 | ) | |||
Net realized gain (loss) | 19,441,352 | 8,472,692 | ||||||
Change in net unrealized appreciation (depreciation) | (6,038,213 | ) | 6,795,479 | |||||
Net increase (decrease) in net assets resulting from operations | 13,727,971 | 15,229,097 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (95,981 | ) | (48,886 | ) | ||||
Institutional Class | (9,897 | ) | (8,309 | ) | ||||
Decrease in net assets from distributions | (105,878 | ) | (57,195 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (9,706,894 | ) | (12,443,945 | ) | ||||
Redemption Fees | ||||||||
Increase in net assets from redemption fees | 1,059 | 2,579 | ||||||
Net increase (decrease) in net assets | 3,916,258 | 2,730,536 | ||||||
Net Assets | ||||||||
Beginning of period | 81,422,062 | 78,691,526 | ||||||
End of period | $ | 85,338,320 | $ | 81,422,062 | ||||
�� | ||||||||
Undistributed net investment income | $ | 218,954 | — |
See Notes to Financial Statements.
13
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Veedot Fund (the fund) is one fund in a series issued by the corporation. The fund is nondiversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in common stocks that management believes to have better than average prospects for appreciation. The fund uses an approach to common stock investing developed by American Century Investments. This approach relies heavily on quantitative tools to identify attractive investment opportunities, regardless of company size, industry type or geographic location, on a disciplined, consistent basis.
The fund is authorized to issue the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost.
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited
14
to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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 capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Redemption — The fund may impose a 2.00% redemption fee on shares held less than 180 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
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3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.000% to 1.250% for the Investor Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended April 30, 2011 was 1.25% and 1.05% for the Investor Class and Institutional Class, respectively.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $105,065,972 and $110,802,536, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 281,851 | $ | 1,715,948 | 394,054 | $ | 2,119,491 | ||||||||||
Issued in reinvestment of distributions | 15,435 | 93,224 | 8,820 | 47,717 | ||||||||||||
Redeemed | (1,710,428 | ) | (10,575,379 | ) | (2,645,725 | ) | (13,942,170 | ) | ||||||||
(1,413,142 | ) | (8,766,207 | ) | (2,242,851 | ) | (11,774,962 | ) | |||||||||
Institutional Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||||||||
Sold | 25,118 | 159,661 | 24,836 | 134,114 | ||||||||||||
Issued in reinvestment of distributions | 1,612 | 9,897 | 1,511 | 8,309 | ||||||||||||
Redeemed | (167,120 | ) | (1,110,245 | ) | (155,132 | ) | (811,406 | ) | ||||||||
(140,390 | ) | (940,687 | ) | (128,785 | ) | (668,983 | ) | |||||||||
Net increase (decrease) | (1,553,532 | ) | $ | (9,706,894 | ) | (2,371,636 | ) | $ | (12,443,945 | ) |
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6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | 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 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 76,118,929 | — | — | ||||||||
Foreign Common Stocks | 9,343,490 | — | — | |||||||||
Total Value of Investment Securities | $ | 85,462,419 | — | — |
7. Risk Factors
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
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8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 77,918,968 | ||
Gross tax appreciation of investments | $ | 7,839,785 | ||
Gross tax depreciation of investments | (296,334 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 7,543,451 |
The cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes.
As of October 31, 2010, the fund had accumulated capital losses of $(50,661,212), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(27,976,449) and $(22,684,763) expire in 2016 and 2017, respectively.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
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Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.68 | $ | 4.71 | $ | 5.34 | $ | 9.25 | $ | 6.17 | $ | 5.57 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.02 | — | (3) | — | (3) | (0.02 | ) | (0.01 | ) | (0.02 | ) | |||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.99 | 0.97 | (0.63 | ) | (3.89 | ) | 3.09 | 0.62 | ||||||||||||||||
Total From Investment Operations | 1.01 | 0.97 | (0.63 | ) | (3.91 | ) | 3.08 | 0.60 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.01 | ) | — | (3) | — | — | — | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 6.68 | $ | 5.68 | $ | 4.71 | $ | 5.34 | $ | 9.25 | $ | 6.17 | ||||||||||||
Total Return(4) | 17.74 | % | 20.66 | % | (11.80 | )% | (42.27 | )% | 49.92 | % | 10.77 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.25 | %(5) | 1.26 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.45 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.77 | %(5) | (0.06 | )% | (0.03 | )% | (0.27 | )% | (0.18 | )% | (0.39 | )% | ||||||||||||
Portfolio Turnover Rate | 126 | % | 260 | % | 320 | % | 257 | % | 207 | % | 330 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 82,790 | $ | 78,441 | $ | 75,603 | $ | 98,991 | $ | 195,105 | $ | 154,374 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
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Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 5.78 | $ | 4.79 | $ | 5.43 | $ | 9.38 | $ | 6.25 | $ | 5.63 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.03 | 0.01 | 0.01 | (0.01 | ) | — | (3) | (0.01 | ) | |||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.00 | 0.99 | (0.65 | ) | (3.94 | ) | 3.13 | 0.63 | ||||||||||||||||
Total From Investment Operations | 1.03 | 1.00 | (0.64 | ) | (3.95 | ) | 3.13 | 0.62 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.02 | ) | (0.01 | ) | — | — | — | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 6.79 | $ | 5.78 | $ | 4.79 | $ | 5.43 | $ | 9.38 | $ | 6.25 | ||||||||||||
Total Return(4) | 17.84 | % | 20.97 | % | (11.79 | )% | (42.11 | )% | 50.08 | % | 11.01 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.05 | %(5) | 1.06 | % | 1.05 | % | 1.05 | % | 1.05 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.97 | %(5) | 0.14 | % | 0.17 | % | (0.07 | )% | 0.02 | % | (0.19 | )% | ||||||||||||
Portfolio Turnover Rate | 126 | % | 260 | % | 320 | % | 257 | % | 207 | % | 330 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 2,548 | $ | 2,981 | $ | 3,089 | $ | 4,864 | $ | 9,188 | $ | 11,237 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | 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. |
(5) | Annualized. |
See Notes to Financial Statements.
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Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71840 1106
SEMIANNUAL REPORT | APRIL 30, 2011
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VistaSM Fund |
President’s Letter | 2 |
Independent Chairman’s Letter | 3 |
Performance | 4 |
Fund Characteristics | 5 |
Shareholder Fee Example | 6 |
Schedule of Investments | 8 |
Statement of Assets and Liabilities | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 21 |
Additional Information | 26 |
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.
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Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2011. This report offers a macroeconomic and U.S. financial market overview of the period (below), followed by fund performance, a schedule of fund investments, and other financial information.
For additional, updated information on fund performance, portfolio strategy, and the investment markets, we encourage you to visit our website, americancentury.com. Click on the “Fund Performance” and “Insights & News” headings at the top of our Individual Investors site. Also, the fund’s annual report, dated October 31, 2011, will provide additional market perspective and portfolio commentary from our portfolio management team.
Macroeconomic and U.S. Financial Market Overview
Benefitting from favorable conditions that may be difficult to replicate in coming months, the U.S. stock market produced significantly higher than average returns for the six months ended April 30, 2011. Most broad U.S. stock indices gained 15–20% during the period as the Federal Reserve’s and the U.S. government’s monetary and fiscal intervention in 2010 stimulated growth and fueled investor optimism about economic and financial market conditions in 2011 and 2012. Robust corporate earnings growth also supported the stock rally.
In the fourth quarter of 2010, the Federal Reserve launched its second round of quantitative easing (QE2), a form of monetary intervention involving the purchase of U.S. government securities to increase the money supply and encourage investors to purchase potentially higher-risk/higher-return assets, such as stocks. Small-cap growth stocks benefited most from the resulting rally, though their larger-cap and value counterparts also posted sizeable gains.
As the period came to a close, we saw increasing signs that—while still sustainable—the U.S. economic recovery had lost momentum due to a combination of higher fuel prices, disruptions caused by the Japanese earthquake, bad weather, and other headwinds. As a result, economic growth forecasts were reduced, and broad U.S. stock indices declined in May. We appreciate your continued trust in us during these uncertain times. The stock experts who manage our U.S. Growth Equity portfolios will continue to diligently apply their knowledge and skills as they make daily investment decisions for you.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Don Pratt
Dear Fellow Shareholders,
With an existing vacancy and several directors approaching retirement age over the next few years, your American Century Investments Kansas City-based mutual fund board of directors recently addressed board succession planning. The board developed a succession plan and conducted an extensive search that yielded two new members who will join the board in 2011.
As part of the planning process, the board referred to the criteria for potential new directors set forth in its director nomination policy adopted in 2009. A nomination process generated more than 20 candidates whose credentials were reviewed by the board’s Governance Committee. Six candidates were selected by the committee for telephone interviews. Three were then chosen for in person interviews.
The committee recommended, and the full board approved, the addition of Jan Lewis, currently the President and Chief Executive Officer of Catholic Charities of Northeast Kansas, to fill the vacant board seat and the addition as an advisory director of Stephen E. Yates, who recently retired as Executive Vice President, Technology and Operations at Keycorp of Cleveland, Ohio. Mr. Yates will serve in an advisory capacity for 12–18 months before becoming an active director. Both of these additions bring operating management experience and unique perspectives to our various tasks.
We look forward to the contributions of our new directors to our efforts as shareholder representatives and thank the Governance Committee for their thorough search process.
If you have comments, suggestions or questions send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-11-004601/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2011 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCVX | 20.00% | 24.49% | 2.63% | 4.30% | 9.54% | 11/25/83 |
Russell Midcap Growth Index | — | 22.62% | 27.40% | 5.59% | 5.68% | N/A(2) | — |
Institutional Class | TWVIX | 20.17% | 24.78% | 2.83% | 4.52% | 5.96% | 11/14/96 |
A Class(3) No sales charge* With sales charge* | TWVAX | 19.85% 12.96% | 24.23% 17.07% | 2.38% 1.17% | 4.02% 3.41% | 4.95% 4.52% | 10/2/96 |
C Class No sales charge* With sales charge* | AVNCX | 19.41% 18.41% | 23.23% 23.23% | — — | — — | 26.72% 26.72% | 3/1/10 |
R Class | AVTRX | 19.74% | 23.92% | 2.13% | — | 4.49% | 7/29/05 |
*Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | Index data not available prior to 12/31/85. |
(3) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.01% | 0.81% | 1.26% | 2.01% | 1.51% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Historically, small company stocks have been more volatile than the stocks of larger, more established companies.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
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APRIL 30, 2011 | |
Top Ten Holdings | % of net assets |
Whole Foods Market, Inc. | 2.5% |
Netflix, Inc. | 2.4% |
SXC Health Solutions Corp. | 2.1% |
priceline.com, Inc. | 2.1% |
BE Aerospace, Inc. | 2.1% |
National Oilwell Varco, Inc. | 1.7% |
Albemarle Corp. | 1.5% |
Cognizant Technology Solutions Corp., Class A | 1.5% |
TransDigm Group, Inc. | 1.5% |
Concho Resources, Inc. | 1.5% |
Top Five Industries | % of net assets |
Machinery | 7.8% |
Semiconductors & Semiconductor Equipment | 6.1% |
Software | 5.0% |
Energy Equipment & Services | 4.7% |
Internet & Catalog Retail | 4.5% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 88.8% |
Foreign Common Stocks* | 10.5% |
Total Common Stocks | 99.3% |
Temporary Cash Investments | 0.8% |
Other Assets and Liabilities | (0.1)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares. |
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Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2010 to April 30, 2011.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
6
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 11/1/10 | Ending Account Value 4/30/11 | Expenses Paid During Period* 11/1/10 – 4/30/11 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,200.00 | $5.51 | 1.01% |
Institutional Class | $1,000 | $1,201.70 | $4.42 | 0.81% |
A Class | $1,000 | $1,198.50 | $6.87 | 1.26% |
C Class | $1,000 | $1,194.10 | $10.93 | 2.01% |
R Class | $1,000 | $1,197.40 | $8.23 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.79 | $5.06 | 1.01% |
Institutional Class | $1,000 | $1,020.78 | $4.06 | 0.81% |
A Class | $1,000 | $1,018.55 | $6.31 | 1.26% |
C Class | $1,000 | $1,014.83 | $10.04 | 2.01% |
R Class | $1,000 | $1,017.31 | $7.55 | 1.51% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 181, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
7
Shares | Value | |||||||
Common Stocks — 99.3% | ||||||||
AEROSPACE & DEFENSE — 3.6% | ||||||||
BE Aerospace, Inc.(1) | 1,099,000 | $ | 42,410,410 | |||||
TransDigm Group, Inc.(1) | 363,000 | 30,237,900 | ||||||
72,648,310 | ||||||||
AIR FREIGHT & LOGISTICS — 0.5% | ||||||||
C.H. Robinson Worldwide, Inc. | 127,000 | 10,182,860 | ||||||
AIRLINES — 0.5% | ||||||||
Alaska Air Group, Inc.(1) | 161,000 | 10,605,070 | ||||||
AUTO COMPONENTS — 1.3% | ||||||||
BorgWarner, Inc.(1) | 352,000 | 27,188,480 | ||||||
AUTOMOBILES — 0.5% | ||||||||
Harley-Davidson, Inc. | 242,000 | 9,016,920 | ||||||
BIOTECHNOLOGY — 2.7% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 289,000 | 28,001,210 | ||||||
United Therapeutics Corp.(1) | 151,000 | 10,110,960 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 309,000 | 17,001,180 | ||||||
55,113,350 | ||||||||
CAPITAL MARKETS — 3.3% | ||||||||
Affiliated Managers Group, Inc.(1) | 116,000 | 12,653,280 | ||||||
American Capital Ltd.(1) | 889,000 | 9,130,030 | ||||||
KKR & Co. LP | 633,000 | 12,001,680 | ||||||
Lazard Ltd., Class A | 473,000 | 19,393,000 | ||||||
Raymond James Financial, Inc. | 341,000 | 12,787,500 | ||||||
65,965,490 | ||||||||
CHEMICALS — 3.0% | ||||||||
Albemarle Corp. | 441,000 | 31,112,550 | ||||||
CF Industries Holdings, Inc. | 124,000 | 17,552,200 | ||||||
International Flavors & Fragrances, Inc. | 177,000 | 11,243,040 | ||||||
59,907,790 | ||||||||
COMMERCIAL SERVICES & SUPPLIES — 1.1% | ||||||||
Stericycle, Inc.(1) | 250,000 | 22,820,000 | ||||||
COMMUNICATIONS EQUIPMENT — 1.2% | ||||||||
Aruba Networks, Inc.(1) | 336,000 | 12,072,480 | ||||||
F5 Networks, Inc.(1) | 116,000 | 11,757,760 | ||||||
23,830,240 | ||||||||
CONSTRUCTION & ENGINEERING — 1.1% | ||||||||
Foster Wheeler AG(1) | 295,000 | 10,493,150 | ||||||
KBR, Inc. | 308,000 | 11,817,960 | ||||||
22,311,110 | ||||||||
CONSUMER FINANCE — 1.1% | ||||||||
Discover Financial Services | 906,000 | 22,505,040 | ||||||
CONTAINERS & PACKAGING — 1.1% | ||||||||
Crown Holdings, Inc.(1) | 603,000 | 22,552,200 | ||||||
ELECTRICAL EQUIPMENT — 2.8% | ||||||||
Cooper Industries plc | 325,000 | 21,433,750 | ||||||
Polypore International, Inc.(1) | 179,000 | 11,056,830 | ||||||
Rockwell Automation, Inc. | 282,000 | 24,570,660 | ||||||
57,061,240 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 1.5% | ||||||||
Jabil Circuit, Inc. | 592,000 | 11,745,280 | ||||||
Trimble Navigation Ltd.(1) | 389,000 | 18,220,760 | ||||||
29,966,040 | ||||||||
ENERGY EQUIPMENT & SERVICES — 4.7% | ||||||||
Atwood Oceanics, Inc.(1) | 248,000 | 11,142,640 | ||||||
Core Laboratories NV | 107,000 | 10,269,860 | ||||||
Dril-Quip, Inc.(1) | 132,000 | 10,105,920 | ||||||
FMC Technologies, Inc.(1) | 316,000 | 14,687,680 | ||||||
McDermott International, Inc.(1) | 646,000 | 14,916,140 | ||||||
National Oilwell Varco, Inc. | 450,000 | 34,510,500 | ||||||
95,632,740 | ||||||||
FOOD & STAPLES RETAILING — 2.5% | ||||||||
Whole Foods Market, Inc. | 808,000 | 50,710,080 | ||||||
FOOD PRODUCTS — 1.4% | ||||||||
J.M. Smucker Co. (The) | 138,000 | 10,359,660 | ||||||
Mead Johnson Nutrition Co. | 252,000 | 16,853,760 | ||||||
27,213,420 | ||||||||
HEALTH CARE EQUIPMENT & SUPPLIES — 3.7% | ||||||||
C.R. Bard, Inc. | 235,000 | 25,086,250 | ||||||
Hologic, Inc.(1) | 453,000 | 9,975,060 | ||||||
Mettler-Toledo International, Inc.(1) | 117,000 | 21,925,800 | ||||||
Varian Medical Systems, Inc.(1) | 250,000 | 17,550,000 | ||||||
74,537,110 | ||||||||
HEALTH CARE PROVIDERS & SERVICES — 0.8% | ||||||||
Express Scripts, Inc.(1) | 281,000 | 15,943,940 | ||||||
HEALTH CARE TECHNOLOGY — 2.1% | ||||||||
SXC Health Solutions Corp.(1) | 778,000 | 42,914,480 | ||||||
HOTELS, RESTAURANTS & LEISURE — 3.8% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 81,000 | 21,609,990 | ||||||
Panera Bread Co., Class A(1) | 155,000 | 18,772,050 | ||||||
Royal Caribbean Cruises Ltd.(1) | 425,000 | 16,923,500 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 330,000 | 19,658,100 | ||||||
76,963,640 |
8
Shares | Value | |||||||
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
Church & Dwight Co., Inc. | 256,000 | $ | 21,114,880 | |||||
INTERNET & CATALOG RETAIL — 4.5% | ||||||||
Netflix, Inc.(1) | 207,000 | 48,162,690 | ||||||
priceline.com, Inc.(1) | 78,000 | 42,666,780 | ||||||
90,829,470 | ||||||||
INTERNET SOFTWARE & SERVICES — 3.2% | ||||||||
Baidu, Inc. ADR(1) | 131,000 | 19,456,120 | ||||||
MercadoLibre, Inc. | 109,000 | 9,962,600 | ||||||
VeriSign, Inc. | 710,000 | 26,241,600 | ||||||
WebMD Health Corp.(1) | 161,000 | 9,317,070 | ||||||
64,977,390 | ||||||||
IT SERVICES — 2.7% | ||||||||
Alliance Data Systems Corp.(1) | 110,000 | 10,450,000 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 368,000 | 30,507,200 | ||||||
VeriFone Systems, Inc.(1) | 258,000 | 14,143,560 | ||||||
55,100,760 | ||||||||
LEISURE EQUIPMENT & PRODUCTS — 0.4% | ||||||||
Brunswick Corp. | 336,000 | 7,852,320 | ||||||
LIFE SCIENCES TOOLS & SERVICES — 2.2% | ||||||||
Illumina, Inc.(1) | 328,000 | 23,281,440 | ||||||
Waters Corp.(1) | 206,000 | 20,188,000 | ||||||
43,469,440 | ||||||||
MACHINERY — 7.8% | ||||||||
AGCO Corp.(1) | 472,000 | 27,177,760 | ||||||
Cummins, Inc. | 204,000 | 24,516,720 | ||||||
Harsco Corp. | 274,000 | 9,754,400 | ||||||
Joy Global, Inc. | 235,000 | 23,723,250 | ||||||
Manitowoc Co., Inc. (The) | 208,167 | 4,619,226 | ||||||
Terex Corp.(1) | 279,644 | 9,726,018 | ||||||
Timken Co. | 207,000 | 11,672,730 | ||||||
Titan International, Inc. | 481,000 | 14,858,090 | ||||||
Trinity Industries, Inc. | 288,000 | 10,425,600 | ||||||
WABCO Holdings, Inc.(1) | 279,000 | 20,604,150 | ||||||
157,077,944 | ||||||||
MEDIA — 2.0% | ||||||||
CBS Corp., Class B | 813,000 | 20,503,860 | ||||||
Imax Corp.(1) | 589,884 | 20,693,131 | ||||||
41,196,991 | ||||||||
METALS & MINING — 2.1% | ||||||||
Cliffs Natural Resources, Inc. | 272,000 | 25,491,840 | ||||||
Walter Energy, Inc. | 127,000 | 17,553,940 | ||||||
43,045,780 | ||||||||
MULTILINE RETAIL — 1.0% | ||||||||
Dollar Tree, Inc.(1) | 337,000 | 19,377,500 | ||||||
OIL, GAS & CONSUMABLE FUELS — 3.7% | ||||||||
Brigham Exploration Co.(1) | 532,000 | 17,837,960 | ||||||
Concho Resources, Inc.(1) | 280,000 | 29,918,000 | ||||||
SandRidge Energy, Inc.(1) | 1,140,000 | 14,090,400 | ||||||
Whiting Petroleum Corp.(1) | 176,000 | 12,232,000 | ||||||
74,078,360 | ||||||||
PHARMACEUTICALS — 0.6% | ||||||||
Shire plc | 390,000 | 12,077,787 | ||||||
PROFESSIONAL SERVICES — 0.5% | ||||||||
Manpower, Inc. | 149,000 | 9,871,250 | ||||||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 2.2% | ||||||||
CB Richard Ellis Group, Inc., Class A(1) | 905,000 | 24,172,550 | ||||||
Jones Lang LaSalle, Inc. | 206,000 | 21,090,280 | ||||||
45,262,830 | ||||||||
ROAD & RAIL — 0.8% | ||||||||
Kansas City Southern(1) | 280,000 | 16,270,800 | ||||||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 6.1% | ||||||||
Altera Corp. | 318,000 | 15,486,600 | ||||||
ARM Holdings plc | 2,615,000 | 27,289,993 | ||||||
Atmel Corp.(1) | 749,000 | 11,459,700 | ||||||
Cavium Networks, Inc.(1) | 441,000 | 20,824,020 | ||||||
Cypress Semiconductor Corp.(1) | 471,000 | 10,248,960 | ||||||
NXP Semiconductor NV(1) | 276,000 | 9,218,400 | ||||||
Skyworks Solutions, Inc.(1) | 564,000 | 17,743,440 | ||||||
Veeco Instruments, Inc.(1) | 203,000 | 10,379,390 | ||||||
122,650,503 | ||||||||
SOFTWARE — 5.0% | ||||||||
Ariba, Inc.(1) | 321,000 | 11,161,170 | ||||||
Autodesk, Inc.(1) | 234,000 | 10,525,320 | ||||||
Check Point Software Technologies Ltd.(1) | 231,000 | 12,688,830 | ||||||
Citrix Systems, Inc.(1) | 322,000 | 27,157,480 | ||||||
Intuit, Inc.(1) | 175,000 | 9,723,000 | ||||||
salesforce.com, inc.(1) | 211,000 | 29,244,600 | ||||||
100,500,400 | ||||||||
SPECIALTY RETAIL — 3.7% | ||||||||
O’Reilly Automotive, Inc.(1) | 354,000 | 20,907,240 | ||||||
PetSmart, Inc. | 633,000 | 26,693,610 | ||||||
Williams-Sonoma, Inc. | 625,000 | 27,131,250 | ||||||
74,732,100 | ||||||||
TEXTILES, APPAREL & LUXURY GOODS — 1.9% | ||||||||
Fossil, Inc.(1) | 224,000 | 21,454,720 | ||||||
Lululemon Athletica, Inc.(1) | 168,000 | 16,805,040 | ||||||
38,259,760 |
9
Shares | Value |
TRADING COMPANIES & DISTRIBUTORS — 1.7% | ||||||||
Fastenal Co. | 311,000 | $ | 20,864,990 | |||||
WESCO International, Inc.(1) | 230,000 | 14,248,500 | ||||||
35,113,490 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.9% | ||||||||
NII Holdings, Inc.(1) | 249,000 | 10,353,420 | ||||||
SBA Communications Corp., Class A(1) | 709,000 | 27,388,670 | ||||||
37,742,090 | ||||||||
TOTAL COMMON STOCKS (Cost $1,406,256,675) | 2,006,191,395 | |||||||
Temporary Cash Investments — 0.8% | ||||||||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 58,816 | 58,816 | ||||||
Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.375%, 11/15/39, valued at $17,386,154), in a joint trading account at 0.02%, dated 4/29/11, due 5/2/11 (Delivery value $17,100,029) | 17,100,000 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $17,158,816) | 17,158,816 | |||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $1,423,415,491) | 2,023,350,211 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (2,272,375 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 2,021,077,836 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
15,095,210 | GBP for USD | Bank of America | 5/31/11 | $25,205,830 | $(348,548) |
(Value on Settlement Date $24,857,282) |
Geographic Diversification | |
(as a % of net assets) | |
United States | 88.8% |
Canada | 4.0% |
United Kingdom | 1.3% |
Netherlands | 1.0% |
People’s Republic of China | 1.0% |
Bermuda | 1.0% |
Israel | 0.6% |
Ireland | 0.6% |
Switzerland | 0.5% |
Argentina | 0.5% |
Cash and Equivalents* | 0.7% |
*Includes temporary cash investments and other assets and liabilities.
Notes to Schedule of Investments
ADR = American Depositary Receipt
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2011 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $1,423,415,491) | $ | 2,023,350,211 | ||
Foreign currency holdings, at value (cost of $49,164) | 49,687 | |||
Receivable for investments sold | 45,926,917 | |||
Receivable for capital shares sold | 334,974 | |||
Dividends and interest receivable | 666,882 | |||
2,070,328,671 | ||||
Liabilities | ||||
Payable for investments purchased | 36,922,399 | |||
Payable for capital shares redeemed | 10,182,036 | |||
Unrealized loss on forward foreign currency exchange contracts | 348,548 | |||
Accrued management fees | 1,751,946 | |||
Distribution and service fees payable | 45,906 | |||
49,250,835 | ||||
Net Assets | $ | 2,021,077,836 | ||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $ | 1,675,988,927 | ||
Accumulated net investment loss | (4,500,005 | ) | ||
Accumulated net realized loss | (250,055,604 | ) | ||
Net unrealized appreciation | 599,644,518 | |||
$ | 2,021,077,836 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $1,709,234,072 | 93,398,235 | $18.30 |
Institutional Class, $0.01 Par Value | $114,340,220 | 6,071,044 | $18.83 |
A Class, $0.01 Par Value | $171,272,394 | 9,680,085 | $17.69* |
C Class, $0.01 Par Value | $73,782 | 4,077 | $18.10 |
R Class, $0.01 Par Value | $26,157,368 | 1,472,040 | $17.77 |
*Maximum offering price $18.77 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $11,250) | $ | 6,413,101 | ||
Interest | 14,764 | |||
6,427,865 | ||||
Expenses: | ||||
Management fees | 10,923,686 | |||
Distribution and service fees: | ||||
A Class | 226,229 | |||
C Class | 231 | |||
R Class | 64,339 | |||
Directors’ fees and expenses | 60,235 | |||
11,274,720 | ||||
Net investment income (loss) | (4,846,855 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 273,341,845 | |||
Futures contract transactions | 306,293 | |||
Foreign currency transactions | (1,330,161 | ) | ||
272,317,977 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 130,601,037 | |||
Translation of assets and liabilities in foreign currencies | 47,241 | |||
130,648,278 | ||||
Net realized and unrealized gain (loss) | 402,966,255 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 398,119,400 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2011 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | 2011 | 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (4,846,855 | ) | $ | (9,950,529 | ) | ||
Net realized gain (loss) | 272,317,977 | 354,965,987 | ||||||
Change in net unrealized appreciation (depreciation) | 130,648,278 | 156,009,051 | ||||||
Net increase (decrease) in net assets resulting from operations | 398,119,400 | 501,024,509 | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (504,717,277 | ) | (553,319,017 | ) | ||||
Net increase (decrease) in net assets | (106,597,877 | ) | (52,294,508 | ) | ||||
Net Assets | ||||||||
Beginning of period | 2,127,675,713 | 2,179,970,221 | ||||||
End of period | $ | 2,021,077,836 | $ | 2,127,675,713 | ||||
Accumulated undistributed net investment income (loss) | $ | (4,500,005 | ) | $ | 346,850 |
See Notes to Financial Statements.
13
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. Vista Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified as defined under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by investing primarily in equity securities of companies that are medium-sized and smaller at the time of purchase that management believes will increase in value.
The fund is authorized to issue the Investor Class, the Institutional Class, the A Class (formerly Advisor Class), the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. Sale of the C Class commenced on March 1, 2010.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share as of 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.
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 typically valued at the closing price on the exchange where primarily traded or as of 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 is used. Depending on local convention or regulation, 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. In its determination of fair value, the fund may review several factors including: market information specific to a security; news developments in U.S. and foreign markets; the performance of particular U.S. and foreign securities, indices, comparable securities, American Depositary Receipts, Exchange-Traded Funds, and other relevant market indicators.
Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium or at the evaluated mean as provided by an independent pricing service. Evaluated mean prices are commonly derived through utilization of market models, which may consider, among other factors, trade data, quotations from dealers and active market makers, relevant yield curve and spread data, related sector levels, creditworthiness, and other relevant market information on the same or comparable securities.
Investments in open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate clearing corporation. Forward foreign currency exchange contracts are valued at the mean of the latest bid and asked prices of the forward currency rates as provided by an independent pricing service.
14
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
If the fund determines that the market price for a portfolio security is not readily available or the valuation methods mentioned above do not reflect a security’s fair value, such security is valued as determined in good faith by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors. Circumstances that may cause the fund to use these procedures to value a security include, but are not limited to: a security has been declared in default; trading in a security has been halted during the trading day; there is a foreign market holiday and no trading occurred; or an event occurred between the close of a foreign exchange and the NYSE that may affect the value of a security.
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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. 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. Accordingly, no provision has been made for federal or state income taxes.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
15
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The annual management fee is 1.000% for the Investor Class, A Class, C Class and R Class and 0.800% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2011 are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC. Various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP) own, in aggregate, 10% of the shares of the fund. ACAAP does not invest in the fund for the purpose of exercising management or control.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a mutual funds services agreement with J.P. Morgan Investor Services Co. (JPMIS). JPMorgan Chase Bank (JPMCB) is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2011 were $865,652,510 and $1,363,627,492, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2011 | Year ended October 31, 2010(1) | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 750,000,000 | 750,000,000 | ||||||||||||||
Sold | 5,054,026 | $ | 85,508,422 | 8,630,658 | $ | 117,497,322 | ||||||||||
Redeemed | (27,170,927 | ) | (472,830,482 | ) | (32,468,753 | ) | (444,901,904 | ) | ||||||||
(22,116,901 | ) | (387,322,060 | ) | (23,838,095 | ) | (327,404,582 | ) | |||||||||
Institutional Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||||
Sold | 1,269,375 | 21,828,283 | 4,712,353 | 65,500,385 | ||||||||||||
Redeemed | (4,966,452 | ) | (85,814,529 | ) | (11,923,548 | ) | (169,469,691 | ) | ||||||||
(3,697,077 | ) | (63,986,246 | ) | (7,211,195 | ) | (103,969,306 | ) | |||||||||
A Class/Shares Authorized | 310,000,000 | 310,000,000 | ||||||||||||||
Sold | 1,394,054 | 22,780,252 | 2,682,180 | 35,631,591 | ||||||||||||
Redeemed | (4,351,908 | ) | (71,060,058 | ) | (11,741,693 | ) | (156,158,675 | ) | ||||||||
(2,957,854 | ) | (48,279,806 | ) | (9,059,513 | ) | (120,527,084 | ) | |||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 2,088 | 35,410 | 1,989 | 27,200 | ||||||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 169,692 | 2,807,140 | 506,557 | 6,818,706 | ||||||||||||
Redeemed | (495,752 | ) | (7,971,715 | ) | (614,404 | ) | (8,263,951 | ) | ||||||||
(326,060 | ) | (5,164,575 | ) | (107,847 | ) | (1,445,245 | ) | |||||||||
Net increase (decrease) | (29,095,804 | ) | $ | (504,717,277 | ) | (40,214,661 | ) | $ | (553,319,017 | ) |
(1) | March 1, 2010 (commencement of sale) through October 31, 2010 for the C Class. |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions 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 as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
17
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $ | 1,794,929,004 | — | — | ||||||||
Foreign Common Stocks | 171,894,611 | $ | 39,367,780 | — | ||||||||
Temporary Cash Investments | 58,816 | 17,100,000 | — | |||||||||
Total Value of Investment Securities | $ | 1,966,882,431 | $ | 56,467,780 | — | |||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $ | (348,548 | ) | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. During the period, the fund infrequently purchased equity price risk derivative instruments for temporary investment purposes.
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
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Value of Derivative Instruments as of April 30, 2011 | ||||||||||
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 gain on forward foreign currency exchange contracts | — | Unrealized loss on forward foreign currency exchange contracts | $ | 348,548 | |||||
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2011 | ||||||||||
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 | $ | 306,293 | Change in net unrealized appreciation (depreciation) on futures contracts | — | |||||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | (1,313,488 | ) | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $ | 16,718 | ||||
$ | (1,007,195 | ) | $ | 16,718 |
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
The fund invests in common stocks of small companies. Because of this, it may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2011, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,427,689,533 | ||
Gross tax appreciation of investments | $ | 599,589,003 | ||
Gross tax depreciation of investments | (3,928,325 | ) | ||
Net tax appreciation (depreciation) of investments | $ | 595,660,678 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
19
As of October 31, 2010, the fund had accumulated capital losses of $(519,773,871), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. Under the Act, the fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused.
20
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 15.25 | $ | 12.13 | $ | 12.43 | $ | 24.24 | $ | 16.35 | $ | 14.99 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.04 | ) | (0.06 | ) | (0.05 | ) | (0.11 | ) | (0.12 | ) | (0.04 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.09 | 3.18 | (0.25 | ) | (9.61 | ) | 8.14 | 1.40 | ||||||||||||||||
Total From Investment Operations | 3.05 | 3.12 | (0.30 | ) | (9.72 | ) | 8.02 | 1.36 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (2.09 | ) | (0.13 | ) | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 18.30 | $ | 15.25 | $ | 12.13 | $ | 12.43 | $ | 24.24 | $ | 16.35 | ||||||||||||
Total Return(3) | 20.00 | % | 25.72 | % | (2.41 | )% | (43.58 | )% | 49.39 | % | 9.07 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(4) | 1.01 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.43 | )%(4) | (0.45 | )% | (0.48 | )% | (0.56 | )% | (0.60 | )% | (0.23 | )% | ||||||||||||
Portfolio Turnover Rate | 40 | % | 132 | % | 183 | % | 167 | % | 121 | % | 234 | % | ||||||||||||
Net Assets, End of Period (in millions) | $ | 1,709 | $ | 1,761 | $ | 1,691 | $ | 1,801 | $ | 2,921 | $ | 1,965 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
21
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 15.67 | $ | 12.45 | $ | 12.73 | $ | 24.72 | $ | 16.64 | $ | 15.22 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.07 | ) | (0.08 | ) | (0.01 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.18 | 3.25 | (0.25 | ) | (9.83 | ) | 8.29 | 1.43 | ||||||||||||||||
Total From Investment Operations | 3.16 | 3.22 | (0.28 | ) | (9.90 | ) | 8.21 | 1.42 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (2.09 | ) | (0.13 | ) | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 18.83 | $ | 15.67 | $ | 12.45 | $ | 12.73 | $ | 24.72 | $ | 16.64 | ||||||||||||
Total Return(3) | 20.17 | % | 25.86 | % | (2.12 | )% | (43.50 | )% | 49.68 | % | 9.33 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(4) | 0.81 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.23 | )%(4) | (0.25 | )% | (0.28 | )% | (0.36 | )% | (0.40 | )% | (0.03 | )% | ||||||||||||
Portfolio Turnover Rate | 40 | % | 132 | % | 183 | % | 167 | % | 121 | % | 234 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 114,340 | $ | 153,112 | $ | 211,357 | $ | 238,727 | $ | 254,528 | $ | 132,325 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
22
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 14.76 | $ | 11.77 | $ | 12.09 | $ | 23.69 | $ | 16.03 | $ | 14.73 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | (0.05 | ) | (0.09 | ) | (0.08 | ) | (0.15 | ) | (0.16 | ) | (0.08 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 2.98 | 3.08 | (0.24 | ) | (9.36 | ) | 7.95 | 1.38 | ||||||||||||||||
Total From Investment Operations | 2.93 | 2.99 | (0.32 | ) | (9.51 | ) | 7.79 | 1.30 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (2.09 | ) | (0.13 | ) | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 17.69 | $ | 14.76 | $ | 11.77 | $ | 12.09 | $ | 23.69 | $ | 16.03 | ||||||||||||
Total Return(4) | 19.85 | % | 25.40 | % | (2.65 | )% | (43.72 | )% | 48.94 | % | 8.83 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(5) | 1.26 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.68 | )%(5) | (0.70 | )% | (0.73 | )% | (0.81 | )% | (0.85 | )% | (0.48 | )% | ||||||||||||
Portfolio Turnover Rate | 40 | % | 132 | % | 183 | % | 167 | % | 121 | % | 234 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 171,272 | $ | 186,529 | $ | 255,419 | $ | 257,057 | $ | 380,555 | $ | 210,576 |
(1) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(2) | Six months ended April 30, 2011 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
See Notes to Financial Statements.
23
C Class | ||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||
2011(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $ | 15.15 | $ | 13.73 | ||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.13 | ) | (0.14 | ) | ||||
Net Realized and Unrealized Gain (Loss) | 3.08 | 1.56 | ||||||
Total From Investment Operations | 2.95 | 1.42 | ||||||
Net Asset Value, End of Period | $ | 18.10 | $ | 15.15 | ||||
Total Return(4) | 19.41 | % | 10.34 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.01 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (1.43 | )%(5) | (1.51 | )%(5) | ||||
Portfolio Turnover Rate | 40 | % | 132 | %(6) | ||||
Net Assets, End of Period (in thousands) | $ | 74 | $ | 30 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges. Total returns for periods less than one year are not annualized. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
See Notes to Financial Statements.
24
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||||||||||||||||
2011(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $ | 14.84 | $ | 11.87 | $ | 12.22 | $ | 23.98 | $ | 16.25 | $ | 14.97 | ||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | (0.08 | ) | (0.13 | ) | (0.12 | ) | (0.18 | ) | (0.21 | ) | (0.16 | ) | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 3.01 | 3.10 | (0.23 | ) | (9.49 | ) | 8.07 | 1.44 | ||||||||||||||||
Total From Investment Operations | 2.93 | 2.97 | (0.35 | ) | (9.67 | ) | 7.86 | 1.28 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Realized Gains | — | — | — | (2.09 | ) | (0.13 | ) | — | ||||||||||||||||
Net Asset Value, End of Period | $ | 17.77 | $ | 14.84 | $ | 11.87 | $ | 12.22 | $ | 23.98 | $ | 16.25 | ||||||||||||
Total Return(3) | 19.74 | % | 25.02 | % | (2.86 | )% | (43.87 | )% | 48.71 | % | 8.55 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.51 | %(4) | 1.51 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.93 | )%(4) | (0.95 | )% | (0.98 | )% | (1.06 | )% | (1.10 | )% | (0.73 | )% | ||||||||||||
Portfolio Turnover Rate | 40 | % | 132 | % | 183 | % | 167 | % | 121 | % | 234 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $ | 26,157 | $ | 26,686 | $ | 22,618 | $ | 11,423 | $ | 2,398 | $ | 337 |
(1) | Six months ended April 30, 2011 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | 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. |
(4) | Annualized. |
See Notes to Financial Statements.
25
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may 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 if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
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.
©2011 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-71841 1106
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) | The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. |
(b) | Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. |
(b) | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
ITEM 12. EXHIBITS.
(a)(1) | Not applicable for semiannual report filings. |
(a)(2) | Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT. |
(a)(3) | Not applicable. |
(b) | A certification by the registrant’s chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as EX- 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | AMERICAN CENTURY MUTUAL FUNDS, INC. | |||
By: | /s/ Jonathan S. Thomas | |||
Name: | Jonathan S. Thomas | |||
Title: | President | |||
Date: | June 29, 2011 | |||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jonathan S. Thomas | ||
Name: | Jonathan S. Thomas | ||
Title: | President | ||
(principal executive officer) | |||
Date: | June 29, 2011 |
By: | /s/ Robert J. Leach | ||
Name: | Robert J. Leach | ||
Title: | Vice President, Treasurer, and | ||
Chief Financial Officer | |||
(principal financial officer) | |||
Date: | June 29, 2011 |