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: | 4-30-2012 |
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMIANNUAL REPORT APRIL 30, 2012
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All 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 | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 20 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWGTX | 15.32% | 4.89% | 5.44% | 7.82%(2) | 11.49% | 11/25/83 |
Russell 3000 Growth Index | — | 13.86% | 6.26% | 4.04% | 5.23% | 9.40%(3) | — |
Institutional Class | ACAJX | 15.42% | — | — | — | 27.91%(1) | 9/30/11 |
A Class No sales charge* With sales charge* | ACAQX | 15.18% 8.56% | — — | — — | — — | 27.59%(1) 20.28%(1) | 9/30/11 |
C Class No sales charge* With sales charge* | ACAHX | 14.75% 13.75% | — — | — — | — — | 27.03%(1) 26.03%(1) | 9/30/11 |
R Class | ACAWX | 15.07% | — | — | — | 27.43%(1) | 9/30/11 |
* | 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) | 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 | 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. 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
APRIL 30, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 9.0% |
Philip Morris International, Inc. | 3.4% |
QUALCOMM, Inc. | 3.3% |
National Oilwell Varco, Inc. | 2.9% |
Precision Castparts Corp. | 2.8% |
Mead Johnson Nutrition Co. | 2.3% |
priceline.com, Inc. | 2.2% |
Caterpillar, Inc. | 2.1% |
Costco Wholesale Corp. | 1.9% |
Google, Inc. Class A | 1.9% |
Top Five Industries | % of net assets |
Computers and Peripherals | 10.3% |
Energy Equipment and Services | 5.8% |
IT Services | 5.4% |
Hotels, Restaurants and Leisure | 5.4% |
Software | 5.3% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.6% |
Foreign Common Stocks* | 9.2% |
Total Common Stocks | 98.8% |
Temporary Cash Investments | 1.1% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,153.20 | $5.35 | 1.00% |
Institutional Class | $1,000 | $1,154.20 | $4.28 | 0.80% |
A Class | $1,000 | $1,151.80 | $6.69 | 1.25% |
C Class | $1,000 | $1,147.50 | $10.68 | 2.00% |
R Class | $1,000 | $1,150.70 | $8.02 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 98.8% | ||||||||
AEROSPACE AND DEFENSE — 4.6% | ||||||||
BE Aerospace, Inc.(1) | 187,251 | $8,806,414 | ||||||
Precision Castparts Corp. | 165,843 | 29,249,730 | ||||||
TransDigm Group, Inc.(1) | 80,422 | 10,142,823 | ||||||
48,198,967 | ||||||||
AUTOMOBILES — 0.8% | ||||||||
Hyundai Motor Co. | 37,731 | 8,964,295 | ||||||
BEVERAGES — 2.0% | ||||||||
Coca-Cola Co. (The) | 215,185 | 16,422,919 | ||||||
Monster Beverage Corp.(1) | 68,892 | 4,475,225 | ||||||
20,898,144 | ||||||||
BIOTECHNOLOGY — 1.3% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 96,924 | 8,754,176 | ||||||
Grifols SA(1) | 195,771 | 4,930,179 | ||||||
13,684,355 | ||||||||
CAPITAL MARKETS — 1.0% | ||||||||
Lazard Ltd., Class A | 165,598 | 4,555,601 | ||||||
Morgan Stanley | 375,023 | 6,480,397 | ||||||
11,035,998 | ||||||||
CHEMICALS — 1.3% | ||||||||
Monsanto Co. | 175,803 | 13,392,673 | ||||||
COMMERCIAL BANKS — 0.6% | ||||||||
East West Bancorp., Inc. | 129,140 | 2,940,518 | ||||||
SVB Financial Group(1) | 49,782 | 3,190,528 | ||||||
6,131,046 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 1.0% | ||||||||
Cintas Corp. | 80,151 | 3,139,515 | ||||||
Clean Harbors, Inc.(1) | 103,047 | 7,031,927 | ||||||
10,171,442 | ||||||||
COMMUNICATIONS EQUIPMENT — 4.6% | ||||||||
Cisco Systems, Inc. | 521,114 | 10,500,447 | ||||||
F5 Networks, Inc.(1) | 24,127 | 3,231,329 | ||||||
QUALCOMM, Inc. | 533,167 | 34,037,381 | ||||||
47,769,157 | ||||||||
COMPUTERS AND PERIPHERALS — 10.3% | ||||||||
Apple, Inc.(1) | 161,267 | 94,218,632 | ||||||
EMC Corp.(1) | 464,310 | 13,098,185 | ||||||
107,316,817 | ||||||||
CONSTRUCTION AND ENGINEERING — 1.0% | ||||||||
Chicago Bridge & Iron Co. NV New York Shares | 117,492 | 5,218,995 | ||||||
KBR, Inc. | 86,239 | 2,920,052 | ||||||
Quanta Services, Inc.(1) | 132,741 | 2,936,231 | ||||||
11,075,278 | ||||||||
CONSUMER FINANCE — 1.9% | ||||||||
American Express Co. | 64,107 | $3,859,883 | ||||||
Discover Financial Services | 471,047 | 15,968,493 | ||||||
19,828,376 | ||||||||
CONTAINERS AND PACKAGING — 0.5% | ||||||||
Rock-Tenn Co., Class A | 90,306 | 5,628,773 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.6% | ||||||||
Jabil Circuit, Inc. | 279,522 | 6,554,791 | ||||||
ENERGY EQUIPMENT AND SERVICES — 5.8% | ||||||||
Cameron International Corp.(1) | 117,863 | 6,040,479 | ||||||
National Oilwell Varco, Inc. | 403,969 | 30,604,691 | ||||||
Oceaneering International, Inc. | 73,532 | 3,796,457 | ||||||
Oil States International, Inc.(1) | 76,265 | 6,069,169 | ||||||
Schlumberger Ltd. | 192,910 | 14,302,347 | ||||||
60,813,143 | ||||||||
FOOD AND STAPLES RETAILING — 3.8% | ||||||||
Costco Wholesale Corp. | 226,890 | 20,004,891 | ||||||
Whole Foods Market, Inc. | 236,052 | 19,608,840 | ||||||
39,613,731 | ||||||||
FOOD PRODUCTS — 2.3% | ||||||||
Mead Johnson Nutrition Co. | 287,171 | 24,570,351 | ||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 3.0% | ||||||||
Baxter International, Inc. | 241,444 | 13,378,412 | ||||||
Cooper Cos., Inc. (The) | 40,256 | 3,549,371 | ||||||
Covidien plc | 139,535 | 7,706,518 | ||||||
MAKO Surgical Corp.(1) | 89,487 | 3,696,708 | ||||||
Sirona Dental Systems, Inc.(1) | 65,621 | 3,314,517 | ||||||
31,645,526 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 2.6% | ||||||||
Catalyst Health Solutions, Inc.(1) | 94,591 | 8,169,825 | ||||||
Centene Corp.(1) | 67,042 | 2,654,193 | ||||||
Express Scripts Holding Co.(1) | 288,173 | 16,077,171 | ||||||
26,901,189 | ||||||||
HEALTH CARE TECHNOLOGY — 1.9% | ||||||||
SXC Health Solutions Corp.(1) | 215,274 | 19,499,519 | ||||||
HOTELS, RESTAURANTS AND LEISURE — 5.4% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 15,136 | 6,268,575 | ||||||
Las Vegas Sands Corp. | 179,064 | 9,936,261 | ||||||
McDonald’s Corp. | 163,551 | 15,938,045 | ||||||
Starbucks Corp. | 208,882 | 11,985,649 | ||||||
Yum! Brands, Inc. | 171,596 | 12,480,177 | ||||||
56,608,707 |
8
Shares | Value | |||||||
INTERNET AND CATALOG RETAIL — 3.4% | ||||||||
Amazon.com, Inc.(1) | 46,174 | $10,707,750 | ||||||
Netflix, Inc.(1) | 27,262 | 2,184,777 | ||||||
priceline.com, Inc.(1) | 29,813 | 22,682,327 | ||||||
35,574,854 | ||||||||
INTERNET SOFTWARE AND SERVICES — 4.2% | ||||||||
Baidu, Inc. ADR(1) | 111,835 | 14,840,505 | ||||||
Google, Inc. Class A(1) | 32,788 | 19,844,281 | ||||||
LinkedIn Corp., Class A(1) | 43,593 | 4,727,661 | ||||||
Rackspace Hosting, Inc.(1) | 75,425 | 4,381,438 | ||||||
43,793,885 | ||||||||
IT SERVICES — 5.4% | ||||||||
Accenture plc, Class A | 165,103 | 10,723,440 | ||||||
Alliance Data Systems Corp.(1) | 40,713 | 5,231,214 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 98,663 | 7,233,971 | ||||||
International Business Machines Corp. | 78,500 | 16,255,780 | ||||||
MasterCard, Inc., Class A | 20,129 | 9,103,743 | ||||||
Teradata Corp.(1) | 117,962 | 8,231,388 | ||||||
56,779,536 | ||||||||
MACHINERY — 4.7% | ||||||||
Caterpillar, Inc. | 211,131 | 21,697,933 | ||||||
Chart Industries, Inc.(1) | 82,255 | 6,286,750 | ||||||
Cummins, Inc. | 70,596 | 8,177,135 | ||||||
Joy Global, Inc. | 60,020 | 4,247,615 | ||||||
Titan International, Inc. | 127,942 | 3,696,244 | ||||||
Trinity Industries, Inc. | 156,427 | 4,630,239 | ||||||
48,735,916 | ||||||||
MARINE — 0.4% | ||||||||
Kirby Corp.(1) | 57,018 | 3,784,285 | ||||||
MEDIA — 1.0% | ||||||||
CBS Corp., Class B | 309,469 | 10,320,791 | ||||||
METALS AND MINING — 1.6% | ||||||||
Carpenter Technology Corp. | 102,822 | 5,723,073 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 276,744 | 10,599,295 | ||||||
16,322,368 | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 2.5% | ||||||||
Concho Resources, Inc.(1) | 45,885 | 4,917,954 | ||||||
Exxon Mobil Corp. | 217,545 | 18,782,835 | ||||||
Linn Energy LLC | 62,794 | 2,527,459 | ||||||
26,228,248 | ||||||||
PHARMACEUTICALS — 4.2% | ||||||||
Allergan, Inc. | 187,325 | $17,983,200 | ||||||
Elan Corp. plc ADR(1) | 178,764 | 2,465,156 | ||||||
Perrigo Co. | 49,685 | 5,211,956 | ||||||
Questcor Pharmaceuticals, Inc.(1) | 97,734 | 4,388,257 | ||||||
Shire plc ADR | 120,444 | 11,750,517 | ||||||
Shire plc | 83,801 | 2,733,612 | ||||||
44,532,698 | ||||||||
ROAD AND RAIL — 0.6% | ||||||||
Kansas City Southern | 82,064 | 6,320,569 | ||||||
SOFTWARE — 5.3% | ||||||||
Cerner Corp.(1) | 94,322 | 7,648,571 | ||||||
Check Point Software Technologies Ltd.(1) | 221,437 | 12,872,133 | ||||||
Citrix Systems, Inc.(1) | 51,551 | 4,413,281 | ||||||
CommVault Systems, Inc.(1) | 92,165 | 4,799,031 | ||||||
Microsoft Corp. | 80,639 | 2,582,061 | ||||||
NetSuite, Inc.(1) | 182,152 | 8,083,906 | ||||||
Nuance Communications, Inc.(1) | 110,019 | 2,688,864 | ||||||
Salesforce.com, Inc.(1) | 59,496 | 9,265,312 | ||||||
Sourcefire, Inc.(1) | 53,620 | 2,734,084 | ||||||
Splunk, Inc.(1) | 3,824 | 129,825 | ||||||
55,217,068 | ||||||||
SPECIALTY RETAIL — 4.4% | ||||||||
GNC Holdings, Inc. Class A | 136,124 | 5,317,003 | ||||||
Lowe’s Cos., Inc. | 367,579 | 11,567,711 | ||||||
O’Reilly Automotive, Inc.(1) | 129,769 | 13,685,439 | ||||||
PetSmart, Inc. | 83,902 | 4,888,131 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc. | 117,701 | 10,378,874 | ||||||
45,837,158 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.4% | ||||||||
Coach, Inc. | 80,217 | 5,868,676 | ||||||
Lululemon Athletica, Inc.(1) | 43,217 | 3,204,108 | ||||||
Michael Kors Holdings Ltd.(1) | 127,936 | 5,842,837 | ||||||
14,915,621 | ||||||||
TOBACCO — 3.4% | ||||||||
Philip Morris International, Inc. | 393,736 | 35,243,309 | ||||||
TOTAL COMMON STOCKS (Cost $682,270,688) | 1,033,908,584 |
9
Shares | Value | |||||||
Temporary Cash Investments — 1.1% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $4,726,281), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $4,633,780) | $4,633,761 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $2,952,426), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $2,896,110) | 2,896,100 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $3,874,523), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $3,795,594) | $3,795,583 | |||||||
SSgA U.S. Government Money Market Fund | 30,999 | 30,999 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $11,356,443) | 11,356,443 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $693,627,131) | 1,045,265,027 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 740,621 | |||||||
TOTAL NET ASSETS — 100.0% | $1,046,005,648 |
Forward Foreign Currency Exchange Contracts | ||||||||||||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
2,726,601 | EUR for USD | UBS AG | 5/31/12 | $3,609,584 | $(8,071 | ) | ||||||||
1,285,298 | GBP for USD | Credit Suisse AG | 5/31/12 | 2,085,537 | (12,416 | ) | ||||||||
$5,695,121 | $(20,487 | ) |
(Value on Settlement Date $5,674,634)
Notes to Schedule of Investments
ADR = American Depositary Receipt
EUR = Euro
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $693,627,131) | $1,045,265,027 | |||
Foreign currency holdings, at value (cost of $41,771) | 42,735 | |||
Receivable for investments sold | 1,164,996 | |||
Receivable for capital shares sold | 492,110 | |||
Dividends and interest receivable | 614,957 | |||
1,047,579,825 | ||||
Liabilities | ||||
Payable for investments purchased | 75,754 | |||
Payable for capital shares redeemed | 622,402 | |||
Unrealized loss on forward foreign currency exchange contracts | 20,487 | |||
Accrued management fees | 854,727 | |||
Distribution and service fees payable | 807 | |||
1,574,177 | ||||
Net Assets | $1,046,005,648 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $670,995,661 | |||
Accumulated net investment loss | (282,417 | ) | ||
Undistributed net realized gain | 23,674,031 | |||
Net unrealized appreciation | 351,618,373 | |||
$1,046,005,648 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $1,043,685,115 | 33,115,798 | $31.52 | |||
Institutional Class, $0.01 Par Value | $41,961 | 1,330 | $31.55 | |||
A Class, $0.01 Par Value | $1,542,777 | 49,026 | $31.47 | * | ||
C Class, $0.01 Par Value | $670,514 | 21,403 | $31.33 | |||
R Class, $0.01 Par Value | $65,281 | 2,078 | $31.42 |
* | Maximum offering price $33.39 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $13,455) | $4,515,315 | |||
Interest | 2,085 | |||
4,517,400 | ||||
Expenses: | ||||
Management fees | 4,809,460 | |||
Distribution and service fees: | ||||
A Class | 439 | |||
C Class | 1,076 | |||
R Class | 112 | |||
Directors’ fees and expenses | 14,799 | |||
4,825,886 | ||||
Net investment income (loss) | (308,486 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 26,651,461 | |||
Foreign currency transactions | 116,923 | |||
26,768,384 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 113,335,622 | |||
Translation of assets and liabilities in foreign currencies | 6,092 | |||
113,341,714 | ||||
Net realized and unrealized gain (loss) | 140,110,098 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $139,801,612 |
See Notes to Financial Statements.
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SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $(308,486 | ) | $(846,286 | ) | ||||
Net realized gain (loss) | 26,768,384 | 126,248,283 | ||||||
Change in net unrealized appreciation (depreciation) | 113,341,714 | (49,826,959 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 139,801,612 | 75,575,038 | ||||||
Distributions to Shareholders | ||||||||
From net realized gains: | ||||||||
Investor Class | (23,595,114 | ) | — | |||||
Institutional Class | (705 | ) | — | |||||
A Class | (705 | ) | — | |||||
C Class | (1,880 | ) | — | |||||
R Class | (705 | ) | — | |||||
Decrease in net assets from distributions | (23,599,109 | ) | — | |||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (6,058,924 | ) | (99,159,677 | ) | ||||
Net increase (decrease) in net assets | 110,143,579 | (23,584,639 | ) | |||||
Net Assets | ||||||||
Beginning of period | 935,862,069 | 959,446,708 | ||||||
End of period | $1,046,005,648 | $935,862,069 | ||||||
Accumulated undistributed net investment income (loss) | $(282,417 | ) | $26,069 |
See Notes to Financial Statements.
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APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. All Cap Growth Fund (the fund) is one fund in a series issued by the corporation. The fund 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 stocks of companies of all sizes that management believes will increase in value over time.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. Sale of the Institutional Class, A Class, C Class and R Class commenced on September 30, 2011.
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.
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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 2008. 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.
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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 1.00% for the Investor Class, A Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay 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, 2012 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., 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.
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4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $226,458,076 and $266,004,558, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011(1) | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 713,045 | $21,526,603 | 229,937 | $6,555,442 | ||||||||||||
Issued in reinvestment of distributions | 873,776 | 23,207,496 | — | — | ||||||||||||
Redeemed | (1,822,027 | ) | (52,940,984 | ) | (3,675,174 | ) | (105,815,119 | ) | ||||||||
(235,206 | ) | (8,206,885 | ) | (3,445,237 | ) | (99,259,677 | ) | |||||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 316 | 10,000 | 987 | 25,000 | ||||||||||||
Issued in reinvestment of distributions | 27 | 705 | — | — | ||||||||||||
343 | 10,705 | 987 | 25,000 | |||||||||||||
A Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 49,050 | 1,515,759 | 987 | 25,000 | ||||||||||||
Issued in reinvestment of distributions | 27 | 705 | — | — | ||||||||||||
Redeemed | (1,038 | ) | (32,200 | ) | — | — | ||||||||||
48,039 | 1,484,264 | 987 | 25,000 | |||||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 21,359 | 651,368 | 987 | 25,000 | ||||||||||||
Issued in reinvestment of distributions | 71 | 1,880 | — | — | ||||||||||||
Redeemed | (1,014 | ) | (31,342 | ) | — | — | ||||||||||
20,416 | 621,906 | 987 | 25,000 | |||||||||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 1,110 | 31,781 | 987 | 25,000 | ||||||||||||
Issued in reinvestment of distributions | 27 | 705 | — | — | ||||||||||||
Redeemed | (46 | ) | (1,400 | ) | — | — | ||||||||||
1,091 | 31,086 | 987 | 25,000 | |||||||||||||
Net increase (decrease) | (165,317 | ) | $(6,058,924 | ) | (3,441,289 | ) | $(99,159,677 | ) |
(1) | September 30, 2011 (commencement of sale) through October 31, 2011 for the Institutional Class, A Class, C Class and R Class. |
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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 | $938,100,688 | — | — | |||||||||
Foreign Common Stocks | 79,179,810 | $16,628,086 | — | |||||||||
Temporary Cash Investments | 30,999 | 11,325,444 | — | |||||||||
Total Value of Investment Securities | $1,017,311,497 | $27,953,530 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(20,487 | ) | — |
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 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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The value of foreign currency risk derivative instruments as of April 30, 2012, is disclosed on the Statement of Assets and Liabilities as a liability of $20,487 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2012, the effect of foreign currency risk derivative instruments on the Statement of Operations was $154,183 in net realized gain (loss) on foreign currency transactions and $5,582 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $695,103,647 | |||
Gross tax appreciation of investments | $356,467,247 | |||
Gross tax depreciation of investments | (6,305,867 | ) | ||
Net tax appreciation (depreciation) of investments | $350,161,380 |
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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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||
2012(3) | $28.06 | (0.01) | 4.18 | 4.17 | — | (0.71) | (0.71) | $31.52 | 15.32% | 1.00%(4) | (0.06)%(4) | 23% | $1,043,685 |
2011 | $26.07 | (0.02) | 2.01 | 1.99 | — | — | — | $28.06 | 7.63% | 1.00% | (0.08)% | 75% | $935,751 |
2010 | $20.86 | (0.05) | 5.26 | 5.21 | — | — | — | $26.07 | 24.98% | 1.01% | (0.22)% | 88% | $959,447 |
2009 | $19.08 | 0.03 | 1.81 | 1.84 | (0.06) | — | (0.06) | $20.86 | 9.72% | 1.00% | 0.19% | 167% | $837,839 |
2008 | $31.53 | (0.13) | (12.32) | (12.45) | — | — | — | $19.08 | (39.49)% | 1.00% | (0.48)% | 171% | $803,771 |
2007 | $20.13 | (0.14) | 11.54 | 11.40 | — | — | — | $31.53 | 56.63% | 1.00% | (0.57)% | 147% | $1,421,214 |
Institutional Class | |||||||||||||
2012(3) | $28.06 | 0.02 | 4.18 | 4.20 | — | (0.71) | (0.71) | $31.55 | 15.42% | 0.80%(4) | 0.14%(4) | 23% | $42 |
2011(5) | $25.32 | (0.01) | 2.75 | 2.74 | — | — | — | $28.06 | 10.82% | 0.80%(4) | (0.28)%(4) | 75%(6) | $28 |
A Class | |||||||||||||
2012(3) | $28.05 | (0.06) | 4.19 | 4.13 | — | (0.71) | (0.71) | $31.47 | 15.18% | 1.25%(4) | (0.31)%(4) | 23% | $1,543 |
2011(5) | $25.32 | (0.02) | 2.75 | 2.73 | — | — | — | $28.05 | 10.78% | 1.25%(4) | (0.73)%(4) | 75%(6) | $28 |
C Class | |||||||||||||
2012(3) | $28.03 | (0.16) | 4.17 | 4.01 | — | (0.71) | (0.71) | $31.33 | 14.75% | 2.00%(4) | (1.06)%(4) | 23% | $671 |
2011(5) | $25.32 | (0.03) | 2.74 | 2.71 | — | — | — | $28.03 | 10.70% | 2.00%(4) | (1.48)%(4) | 75%(6) | $28 |
R Class | |||||||||||||
2012(3) | $28.04 | (0.08) | 4.17 | 4.09 | — | (0.71) | (0.71) | $31.42 | 15.07% | 1.50%(4) | (0.56)%(4) | 23% | $65 |
2011(5) | $25.32 | (0.02) | 2.74 | 2.72 | — | — | — | $28.04 | 10.74% | 1.50%(4) | (0.98)%(4) | 75%(6) | $28 |
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Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | September 30, 2011 (commencement of sale) through October 31, 2011. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2011. |
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75359 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2012 | |||||||
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 | 12.50%(3) 12.18%(3) 8.48%(3) | 2.99%(3) 2.71%(3) 2.27%(3) | -2.58%(3) -3.01%(3) -2.21%(3) | 3.67% 3.27% 3.12% | 4.26% 3.85% 3.61% | 3/31/99 |
Russell 1000 Value Index | — | 11.62% | 1.03% | -1.73% | 4.83% | 4.25% | — |
Institutional Class Return After-Tax on Distributions(2) Return After-Tax on Distributions and Sale of Shares(2) | ACPIX | 12.53%(3) 12.18%(3) 8.53%(3) | 3.19%(3) 2.88%(3) 2.43%(3) | -2.38%(3) -2.84%(3) -2.05%(3) | 3.87% 3.44% 3.29% | 3.70% 3.28% 3.14% | 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 | 12.24%(3) 5.84%(3) 5.58%(3) 4.08%(3) | 2.75%(3) -3.21%(3) -3.45%(3) -1.82%(3) | -2.83%(3) -3.97%(3) -4.36%(3) -3.36%(3) | — — — — | 4.99% 4.30% 3.95% 3.71% | 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 |
1.10% | 0.90% | 1.35% |
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, 2012 | |
Top Ten Holdings | % of net assets |
Chevron Corp. | 4.4% |
Pfizer, Inc. | 3.8% |
General Electric Co. | 3.7% |
JPMorgan Chase & Co. | 3.5% |
Wells Fargo & Co. | 3.4% |
Exxon Mobil Corp. | 3.2% |
AT&T, Inc. | 3.2% |
Procter & Gamble Co. (The) | 3.0% |
Johnson & Johnson | 2.7% |
Merck & Co., Inc. | 2.7% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 10.9% |
Pharmaceuticals | 10.1% |
Insurance | 8.6% |
Commercial Banks | 6.6% |
Diversified Telecommunication Services | 5.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.6% |
Temporary Cash Investments | 1.3% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | ||
Actual | |||||
Investor Class (after waiver) | $1,000 | $1,125.00 | $5.28 | 1.00% | |
Investor Class (before waiver) | $1,000 | $1,125.00 | (2) | $5.81 | 1.10% |
Institutional Class (after waiver) | $1,000 | $1,125.30 | $4.23 | 0.80% | |
Institutional Class (before waiver) | $1,000 | $1,125.30 | (2) | $4.76 | 0.90% |
A Class (after waiver) | $1,000 | $1,122.40 | $6.60 | 1.25% | |
A Class (before waiver) | $1,000 | $1,122.40 | (2) | $7.12 | 1.35% |
Hypothetical | |||||
Investor Class (after waiver) | $1,000 | $1,019.89 | $5.02 | 1.00% | |
Investor Class (before waiver) | $1,000 | $1,019.39 | $5.52 | 1.10% | |
Institutional Class (after waiver) | $1,000 | $1,020.89 | $4.02 | 0.80% | |
Institutional Class (before waiver) | $1,000 | $1,020.39 | $4.52 | 0.90% | |
A Class (after waiver) | $1,000 | $1,018.65 | $6.27 | 1.25% | |
A Class (before waiver) | $1,000 | $1,018.15 | $6.77 | 1.35% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
(2) | Ending account value assumes the return earned after waiver and would have been lower if a portion of the management fee had not been waived. |
7
APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 98.6% | ||||||||
AEROSPACE AND DEFENSE — 1.6% | ||||||||
Honeywell International, Inc. | 8,700 | $527,742 | ||||||
Northrop Grumman Corp. | 6,630 | 419,546 | ||||||
Raytheon Co. | 18,540 | 1,003,756 | ||||||
1,951,044 | ||||||||
AIRLINES — 0.5% | ||||||||
Southwest Airlines Co. | 81,740 | 676,807 | ||||||
AUTOMOBILES — 1.0% | ||||||||
Ford Motor Co. | 106,450 | 1,200,756 | ||||||
BEVERAGES — 0.9% | ||||||||
PepsiCo, Inc. | 16,930 | 1,117,380 | ||||||
BIOTECHNOLOGY — 1.6% | ||||||||
Amgen, Inc. | 23,240 | 1,652,596 | ||||||
Gilead Sciences, Inc.(1) | 5,910 | 307,379 | ||||||
1,959,975 | ||||||||
CAPITAL MARKETS — 3.7% | ||||||||
Ameriprise Financial, Inc. | 21,840 | 1,183,947 | ||||||
Bank of New York Mellon Corp. (The) | 43,640 | 1,032,086 | ||||||
BlackRock, Inc. | 4,130 | 791,225 | ||||||
Goldman Sachs Group, Inc. (The) | 12,040 | 1,386,406 | ||||||
Morgan Stanley | 13,730 | 237,254 | ||||||
4,630,918 | ||||||||
CHEMICALS — 0.5% | ||||||||
E.I. du Pont de Nemours & Co. | 12,410 | 663,439 | ||||||
COMMERCIAL BANKS — 6.6% | ||||||||
PNC Financial Services Group, Inc. | 28,290 | 1,876,193 | ||||||
U.S. Bancorp | 66,380 | 2,135,445 | ||||||
Wells Fargo & Co. | 125,940 | 4,210,174 | ||||||
8,221,812 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.3% | ||||||||
Avery Dennison Corp. | 11,660 | 372,887 | ||||||
COMMUNICATIONS EQUIPMENT — 2.5% | ||||||||
Cisco Systems, Inc. | 157,880 | 3,181,282 | ||||||
COMPUTERS AND PERIPHERALS — 1.2% | ||||||||
Hewlett-Packard Co. | 62,160 | 1,539,082 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 5.7% | ||||||||
Bank of America Corp. | 79,310 | 643,204 | ||||||
Citigroup, Inc. | 65,840 | 2,175,353 | ||||||
JPMorgan Chase & Co. | 101,610 | 4,367,198 | ||||||
7,185,755 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 5.9% | ||||||||
AT&T, Inc. | 122,300 | $4,024,893 | ||||||
CenturyLink, Inc. | 36,050 | 1,390,088 | ||||||
Verizon Communications, Inc. | 49,300 | 1,990,734 | ||||||
7,405,715 | ||||||||
ELECTRIC UTILITIES — 3.0% | ||||||||
American Electric Power Co., Inc. | 24,500 | 951,580 | ||||||
Exelon Corp. | 16,480 | 642,885 | ||||||
NV Energy, Inc. | 31,790 | 529,303 | ||||||
Pinnacle West Capital Corp. | 16,700 | 807,445 | ||||||
PPL Corp. | 28,480 | 778,928 | ||||||
3,710,141 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 1.3% | ||||||||
Baker Hughes, Inc. | 19,120 | 843,383 | ||||||
Schlumberger Ltd. | 11,020 | 817,023 | ||||||
1,660,406 | ||||||||
FOOD AND STAPLES RETAILING — 2.9% | ||||||||
CVS Caremark Corp. | 35,160 | 1,568,839 | ||||||
Kroger Co. (The) | 37,970 | 883,562 | ||||||
Wal-Mart Stores, Inc. | 20,460 | 1,205,299 | ||||||
3,657,700 | ||||||||
FOOD PRODUCTS — 0.6% | ||||||||
Kraft Foods, Inc., Class A | 20,110 | 801,786 | ||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 0.9% | ||||||||
Medtronic, Inc. | 30,540 | 1,166,628 | ||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.6% | ||||||||
Aetna, Inc. | 16,140 | 710,805 | ||||||
Quest Diagnostics, Inc. | 5,140 | 296,527 | ||||||
WellPoint, Inc. | 13,950 | 946,089 | ||||||
1,953,421 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 0.3% | ||||||||
Carnival Corp. | 10,610 | 344,719 | ||||||
HOUSEHOLD PRODUCTS — 3.0% | ||||||||
Procter & Gamble Co. (The) | 59,220 | 3,768,761 | ||||||
INDUSTRIAL CONGLOMERATES — 4.4% | ||||||||
General Electric Co. | 236,970 | 4,639,872 | ||||||
Tyco International Ltd. | 14,560 | 817,253 | ||||||
5,457,125 | ||||||||
INSURANCE — 8.6% | ||||||||
Allstate Corp. (The) | 33,740 | 1,124,554 | ||||||
American International Group, Inc.(1) | 10,600 | 360,718 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 16,390 | 1,318,576 | ||||||
Chubb Corp. (The) | 11,470 | 838,113 | ||||||
Loews Corp. | 30,500 | 1,254,465 |
8
Shares | Value | |||||||
MetLife, Inc. | 44,550 | $1,605,136 | ||||||
Principal Financial Group, Inc. | 29,010 | 802,707 | ||||||
Prudential Financial, Inc. | 21,970 | 1,330,064 | ||||||
Torchmark Corp. | 6,910 | 336,586 | ||||||
Travelers Cos., Inc. (The) | 26,700 | 1,717,344 | ||||||
10,688,263 | ||||||||
IT SERVICES — 0.5% | ||||||||
Fiserv, Inc.(1) | 9,400 | 660,726 | ||||||
MACHINERY — 1.0% | ||||||||
Dover Corp. | 10,000 | 626,600 | ||||||
Ingersoll-Rand plc | 14,100 | 599,532 | ||||||
1,226,132 | ||||||||
MEDIA — 4.0% | ||||||||
CBS Corp., Class B | 18,690 | 623,312 | ||||||
Comcast Corp., Class A | 71,310 | 2,162,832 | ||||||
Time Warner, Inc. | 50,070 | 1,875,622 | ||||||
Viacom, Inc., Class B | 6,600 | 306,174 | ||||||
4,967,940 | ||||||||
METALS AND MINING — 0.8% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 4,750 | 181,925 | ||||||
Nucor Corp. | 20,930 | 820,665 | ||||||
1,002,590 | ||||||||
MULTI-UTILITIES — 1.0% | ||||||||
PG&E Corp. | 27,200 | 1,201,696 | ||||||
MULTILINE RETAIL — 2.8% | ||||||||
Kohl’s Corp. | 16,320 | 818,122 | ||||||
Macy’s, Inc. | 18,700 | 767,074 | ||||||
Target Corp. | 33,250 | 1,926,505 | ||||||
3,511,701 | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 10.9% | ||||||||
Apache Corp. | 11,900 | 1,141,686 | ||||||
Chevron Corp. | 51,090 | 5,444,150 | ||||||
ConocoPhillips | 5,540 | 396,830 | ||||||
Exxon Mobil Corp. | 46,850 | 4,045,029 | ||||||
Occidental Petroleum Corp. | 5,280 | 481,642 | ||||||
Total SA ADR | 25,700 | 1,236,427 | ||||||
Ultra Petroleum Corp.(1) | 19,990 | 395,002 | ||||||
Valero Energy Corp. | 17,010 | 420,147 | ||||||
13,560,913 | ||||||||
PAPER AND FOREST PRODUCTS — 0.6% | ||||||||
International Paper Co. | 22,030 | 733,819 | ||||||
PHARMACEUTICALS — 10.1% | ||||||||
Abbott Laboratories | 17,840 | 1,107,150 | ||||||
Johnson & Johnson | 52,420 | 3,412,018 | ||||||
Merck & Co., Inc. | 85,070 | 3,338,147 | ||||||
Pfizer, Inc. | 205,800 | 4,718,994 | ||||||
12,576,309 | ||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 3.4% | ||||||||
Applied Materials, Inc. | 70,630 | $846,853 | ||||||
Intel Corp. | 116,500 | 3,308,600 | ||||||
Marvell Technology Group Ltd.(1) | 8,070 | 121,131 | ||||||
4,276,584 | ||||||||
SOFTWARE — 2.3% | ||||||||
Adobe Systems, Inc.(1) | 16,260 | 545,686 | ||||||
Microsoft Corp. | 35,820 | 1,146,956 | ||||||
Oracle Corp. | 42,230 | 1,241,140 | ||||||
2,933,782 | ||||||||
SPECIALTY RETAIL — 1.8% | ||||||||
Lowe’s Cos., Inc. | 38,240 | 1,203,413 | ||||||
Staples, Inc. | 64,480 | 992,992 | ||||||
2,196,405 | ||||||||
TOBACCO — 0.8% | ||||||||
Altria Group, Inc. | 32,290 | 1,040,061 | ||||||
TOTAL COMMON STOCKS (Cost $93,889,777) | 123,204,460 | |||||||
Temporary Cash Investments — 1.3% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $604,481), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $592,650) | 592,648 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $377,609), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $370,406) | 370,405 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $495,543), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $485,448) | 485,447 | |||||||
SSgA U.S. Government Money Market Fund | 115,754 | 115,754 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,564,254) | 1,564,254 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $95,454,031) | 124,768,714 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 143,237 | |||||||
TOTAL NET ASSETS — 100.0% | $124,911,951 |
9
Forward Foreign Currency Exchange Contracts | ||||||||||||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
824,991 | EUR for USD | UBS AG | 5/31/12 | $1,092,156 | $(2,442 | ) | ||||||||
20,150 | EUR for USD | UBS AG | 5/31/12 | 26,676 | 46 | |||||||||
$1,118,832 | $(2,396 | ) |
(Value on Settlement Date $1,116,436)
Notes to Schedule of Investments
ADR = American Depositary Receipt
EUR = Euro
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $95,454,031) | $124,768,714 | |||
Foreign currency holdings, at value (cost of $26) | 26 | |||
Receivable for investments sold | 242,742 | |||
Receivable for capital shares sold | 69,762 | |||
Unrealized gain on forward foreign currency exchange contracts | 46 | |||
Dividends and interest receivable | 195,548 | |||
125,276,838 | ||||
Liabilities | ||||
Payable for investments purchased | 173,171 | |||
Payable for capital shares redeemed | 87,572 | |||
Unrealized loss on forward foreign currency exchange contracts | 2,442 | |||
Accrued management fees | 101,113 | |||
Distribution and service fees payable | 589 | |||
364,887 | ||||
Net Assets | $124,911,951 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $112,590,650 | |||
Undistributed net investment income | 645,231 | |||
Accumulated net realized loss | (17,636,217 | ) | ||
Net unrealized appreciation | 29,312,287 | |||
$124,911,951 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $116,841,419 | 17,760,909 | $6.58 | |||
Institutional Class, $0.01 Par Value | $5,060,819 | 768,892 | $6.58 | |||
A Class, $0.01 Par Value | $3,009,713 | 457,899 | $6.57 | * |
* | Maximum offering price $6.97 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $2,593) | $1,726,449 | |||
Interest | 405 | |||
1,726,854 | ||||
Expenses: | ||||
Management fees | 655,932 | |||
Distribution and service fees — A Class | 3,582 | |||
Directors’ fees and expenses | 1,918 | |||
Other expenses | 289 | |||
661,721 | ||||
Fees waived | (60,034 | ) | ||
601,687 | ||||
Net investment income (loss) | 1,125,167 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 2,548,791 | |||
Foreign currency transactions | 21,049 | |||
2,569,840 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 10,396,876 | |||
Translation of assets and liabilities in foreign currencies | (2,396 | ) | ||
10,394,480 | ||||
Net realized and unrealized gain (loss) | 12,964,320 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $14,089,487 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $1,125,167 | $2,071,772 | ||||||
Net realized gain (loss) | 2,569,840 | 12,040,029 | ||||||
Change in net unrealized appreciation (depreciation) | 10,394,480 | (5,433,491 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 14,089,487 | 8,678,310 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (2,040,255 | ) | (2,149,583 | ) | ||||
Institutional Class | (69,034 | ) | (71,311 | ) | ||||
A Class | (44,437 | ) | (56,838 | ) | ||||
Decrease in net assets from distributions | (2,153,726 | ) | (2,277,732 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (5,156,297 | ) | (33,415,464 | ) | ||||
Net increase (decrease) in net assets | 6,779,464 | (27,014,886 | ) | |||||
Net Assets | ||||||||
Beginning of period | 118,132,487 | 145,147,373 | ||||||
End of period | $124,911,951 | $118,132,487 | ||||||
Undistributed net investment income | $645,231 | $1,673,790 |
See Notes to Financial Statements.
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APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Capital Value Fund (the fund) is one fund in a series issued by the corporation. The fund 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 will attempt to minimize the impact of federal income taxes on shareholder returns by attempting to minimize taxable distributions to shareholders.
The fund offers the Investor Class, the Institutional Class and the A 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. 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.
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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 2008. 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.
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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 0.90% 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, 2012, the investment advisor voluntarily agreed to waive 0.100% of its management fee. The investment advisor expects the fee waiver to continue through July 31, 2012, 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, 2012 was $56,379, $2,222 and $1,433 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, 2012 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, 2012 was 1.00% for the Investor Class and A Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a Master Distribution and Individual Shareholder Services Plan (the plan) for the A Class, pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The fees are computed and accrued daily based on the A Class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $13,868,931 and $19,943,119, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 789,470 | $4,992,974 | 1,861,396 | $11,169,225 | ||||||||||||
Issued in reinvestment of distributions | 332,121 | 1,949,551 | 325,518 | 1,927,066 | ||||||||||||
Redeemed | (2,004,233 | ) | (12,512,656 | ) | (7,465,681 | ) | (44,959,583 | ) | ||||||||
(882,642 | ) | (5,570,131 | ) | (5,278,767 | ) | (31,863,292 | ) | |||||||||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||
Sold | 301,107 | 1,865,694 | 273,829 | 1,635,705 | ||||||||||||
Issued in reinvestment of distributions | 11,445 | 67,183 | 7,940 | 47,007 | ||||||||||||
Redeemed | (149,470 | ) | (925,194 | ) | (369,861 | ) | (2,257,450 | ) | ||||||||
163,082 | 1,007,683 | (88,092 | ) | (574,738 | ) | |||||||||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 72,461 | 461,752 | 105,439 | 642,697 | ||||||||||||
Issued in reinvestment of distributions | 7,540 | 44,259 | 9,570 | 56,655 | ||||||||||||
Redeemed | (181,104 | ) | (1,099,860 | ) | (278,681 | ) | (1,676,786 | ) | ||||||||
(101,103 | ) | (593,849 | ) | (163,672 | ) | (977,434 | ) | |||||||||
Net increase (decrease) | (820,663 | ) | $(5,156,297 | ) | (5,530,531 | ) | $(33,415,464 | ) |
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 | $123,204,460 | — | — | |||||||||
Temporary Cash Investments | 115,754 | $1,448,500 | — | |||||||||
Total Value of Investment Securities | $123,320,214 | $1,448,500 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(2,396 | ) | — |
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7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund began investing in foreign currency risk derivatives in March 2012. The foreign currency risk derivative instruments held at period end on the fund’s Schedule of Investments are indicative of the fund’s typical volume since March 2012.
The value of foreign currency risk derivative instruments as of April 30, 2012, is disclosed on the Statement of Assets and Liabilities as an asset of $46 in unrealized gain on forward foreign currency exchange contracts and a liability of $2,442 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2012, the effect of foreign currency risk derivative instruments on the Statement of Operations was $21,049 in net realized gain (loss) on foreign currency transactions and $(2,396) 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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $97,687,553 | |||
Gross tax appreciation of investments | $30,259,699 | |||
Gross tax depreciation of investments | (3,178,538 | ) | ||
Net tax appreciation (depreciation) of investments | $27,081,161 |
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, 2011, the fund had accumulated capital losses of $(18,022,087), 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. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||||
2012(3) | $5.96 | 0.06 | 0.67 | 0.73 | (0.11) | — | (0.11) | $6.58 | 12.50% | 1.00%(4) | 1.10%(4) | 1.88%(4) | 1.78%(4) | 12% | $116,841 |
2011 | $5.73 | 0.09 | 0.23 | 0.32 | (0.09) | — | (0.09) | $5.96 | 5.67% | 1.00% | 1.10% | 1.53% | 1.43% | 37% | $111,188 |
2010 | $5.32 | 0.09 | 0.42 | 0.51 | (0.10) | — | (0.10) | $5.73 | 9.69% | 1.09% | 1.11% | 1.56% | 1.54% | 27% | $137,037 |
2009 | $5.17 | 0.11 | 0.21 | 0.32 | (0.17) | — | (0.17) | $5.32 | 6.85% | 1.10% | 1.10% | 2.33% | 2.33% | 19% | $158,431 |
2008 | $8.78 | 0.14 | (3.28) | (3.14) | (0.13) | (0.34) | (0.47) | $5.17 | (37.52)% | 1.10% | 1.10% | 1.98% | 1.98% | 26% | $185,569 |
2007 | $8.23 | 0.13 | 0.65 | 0.78 | (0.12) | (0.11) | (0.23) | $8.78 | 9.66% | 1.10% | 1.10% | 1.52% | 1.52% | 15% | $461,413 |
Institutional Class | |||||||||||||||
2012(3) | $5.97 | 0.06 | 0.67 | 0.73 | (0.12) | — | (0.12) | $6.58 | 12.53% | 0.80%(4) | 0.90%(4) | 2.08%(4) | 1.98%(4) | 12% | $5,061 |
2011 | $5.74 | 0.10 | 0.24 | 0.34 | (0.11) | — | (0.11) | $5.97 | 5.87% | 0.80% | 0.90% | 1.73% | 1.63% | 37% | $3,618 |
2010 | $5.32 | 0.10 | 0.43 | 0.53 | (0.11) | — | (0.11) | $5.74 | 10.11% | 0.89% | 0.91% | 1.76% | 1.74% | 27% | $3,980 |
2009 | $5.17 | 0.12 | 0.21 | 0.33 | (0.18) | — | (0.18) | $5.32 | 7.07% | 0.90% | 0.90% | 2.53% | 2.53% | 19% | $8,035 |
2008 | $8.79 | 0.15 | (3.28) | (3.13) | (0.15) | (0.34) | (0.49) | $5.17 | (37.46)% | 0.90% | 0.90% | 2.18% | 2.18% | 26% | $12,030 |
2007 | $8.24 | 0.15 | 0.65 | 0.80 | (0.14) | (0.11) | (0.25) | $8.79 | 9.88% | 0.90% | 0.90% | 1.72% | 1.72% | 15% | $28,077 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class(5) | |||||||||||||||
2012(3) | $5.95 | 0.05 | 0.67 | 0.72 | (0.10) | — | (0.10) | $6.57 | 12.24% | 1.25%(4) | 1.35%(4) | 1.63%(4) | 1.53%(4) | 12% | $3,010 |
2011 | $5.72 | 0.08 | 0.23 | 0.31 | (0.08) | — | (0.08) | $5.95 | 5.41% | 1.25% | 1.35% | 1.28% | 1.18% | 37% | $3,326 |
2010 | $5.30 | 0.07 | 0.44 | 0.51 | (0.09) | — | (0.09) | $5.72 | 9.64% | 1.34% | 1.36% | 1.31% | 1.29% | 27% | $4,130 |
2009 | $5.15 | 0.10 | 0.21 | 0.31 | (0.16) | — | (0.16) | $5.30 | 6.59% | 1.35% | 1.35% | 2.08% | 2.08% | 19% | $4,881 |
2008 | $8.76 | 0.12 | (3.28) | (3.16) | (0.11) | (0.34) | (0.45) | $5.15 | (37.78)% | 1.35% | 1.35% | 1.73% | 1.73% | 26% | $7,004 |
2007 | $8.21 | 0.11 | 0.65 | 0.76 | (0.10) | (0.11) | (0.21) | $8.76 | 9.40% | 1.35% | 1.35% | 1.27% | 1.27% | 15% | $16,059 |
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75362 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 24 |
Statement of Operations | 25 |
Statement of Changes in Net Assets | 26 |
Notes to Financial Statements | 27 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWBIX | 8.79% | 7.04% | 3.51% | 5.63% | 7.94% | 10/20/88 |
Blended index(2) | — | 8.58% | 6.23% | 3.57% | 5.45% | 8.88%(3) | — |
S&P 500 Index | — | 12.77% | 4.76% | 1.01% | 4.71% | 9.48%(3) | — |
Barclays U.S. Aggregate Bond Index | — | 2.44% | 7.54% | 6.37% | 5.71% | 7.20%(3) | — |
Institutional Class | ABINX | 8.89% | 7.25% | 3.72% | 5.84% | 3.98% | 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 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 |
0.90% | 0.70% |
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. 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, 2012 | |
Top Ten Stock Holdings | % of net assets |
Apple, Inc. | 2.1% |
Exxon Mobil Corp. | 1.6% |
International Business Machines Corp. | 1.5% |
Chevron Corp. | 1.4% |
Microsoft Corp. | 1.2% |
Pfizer, Inc. | 1.2% |
JPMorgan Chase & Co. | 1.2% |
Philip Morris International, Inc. | 1.1% |
Johnson & Johnson | 1.1% |
Intel Corp. | 1.1% |
Top Five Stock Industries | % of net assets |
Oil, Gas and Consumable Fuels | 6.4% |
Pharmaceuticals | 4.2% |
Computers and Peripherals | 3.3% |
Insurance | 3.3% |
IT Services | 3.2% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 54.4% |
Foreign Common Stocks | 5.1% |
U.S. Government Agency Mortgage-Backed Securities | 12.8% |
U.S. Treasury Securities | 10.8% |
Corporate Bonds | 9.8% |
Commercial Mortgage-Backed Securities | 1.8% |
U.S. Government Agency Securities | 1.4% |
Collateralized Mortgage Obligations | 1.2% |
Municipal Securities | 0.6% |
Sovereign Governments and Agencies | 0.6% |
Temporary Cash Investments | 2.6% |
Other Assets and Liabilities | (1.1)% |
Key Fixed-Income Portfolio Statistics | |
Weighted Average Life | 6.8 years |
Average Duration (effective) | 5.0 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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,087.90 | $4.67 | 0.90% |
Institutional Class | $1,000 | $1,088.90 | $3.64 | 0.70% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.39 | $4.52 | 0.90% |
Institutional Class | $1,000 | $1,021.38 | $3.52 | 0.70% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
Shares/ Principal Amount | Value | |||||||
Common Stocks — 59.5% | ||||||||
AEROSPACE AND DEFENSE — 1.2% | ||||||||
Northrop Grumman Corp. | 44,984 | $2,846,588 | ||||||
United Technologies Corp. | 52,214 | 4,262,751 | ||||||
7,109,339 | ||||||||
AIR FREIGHT AND LOGISTICS — 1.2% | ||||||||
FedEx Corp. | 33,812 | 2,983,571 | ||||||
United Parcel Service, Inc., Class B | 56,696 | 4,430,225 | ||||||
7,413,796 | ||||||||
AUTOMOBILES — 0.3% | ||||||||
Ford Motor Co. | 167,657 | 1,891,171 | ||||||
BEVERAGES — 1.1% | ||||||||
Coca-Cola Co. (The) | 28,835 | 2,200,687 | ||||||
Coca-Cola Enterprises, Inc. | 57,949 | 1,745,424 | ||||||
Constellation Brands, Inc., Class A(1) | 100,478 | 2,170,325 | ||||||
PepsiCo, Inc. | 7,595 | 501,270 | ||||||
6,617,706 | ||||||||
BIOTECHNOLOGY — 1.2% | ||||||||
Amgen, Inc. | 56,745 | 4,035,137 | ||||||
Biogen Idec, Inc.(1) | 9,836 | 1,318,122 | ||||||
United Therapeutics Corp.(1) | 48,242 | 2,110,588 | ||||||
7,463,847 | ||||||||
CHEMICALS — 1.6% | ||||||||
CF Industries Holdings, Inc. | 16,705 | 3,225,067 | ||||||
LyondellBasell Industries NV, Class A | 36,099 | 1,508,216 | ||||||
Monsanto Co. | 45,758 | 3,485,845 | ||||||
PPG Industries, Inc. | 15,349 | 1,615,329 | ||||||
9,834,457 | ||||||||
COMMERCIAL BANKS — 1.6% | ||||||||
Bank of Montreal | 39,604 | 2,351,290 | ||||||
U.S. Bancorp | 128,985 | 4,149,447 | ||||||
Wells Fargo & Co. | 99,499 | 3,326,252 | ||||||
9,826,989 | ||||||||
COMMUNICATIONS EQUIPMENT — 0.7% | ||||||||
Cisco Systems, Inc. | 61,164 | 1,232,455 | ||||||
Motorola Solutions, Inc. | 41,484 | 2,116,928 | ||||||
QUALCOMM, Inc. | 13,276 | 847,540 | ||||||
4,196,923 | ||||||||
COMPUTERS AND PERIPHERALS — 3.3% | ||||||||
Apple, Inc.(1) | 21,991 | 12,848,022 | ||||||
Dell, Inc.(1) | 96,332 | 1,576,955 | ||||||
Seagate Technology plc | 100,413 | $3,088,704 | ||||||
Western Digital Corp.(1) | 69,222 | 2,686,505 | ||||||
20,200,186 | ||||||||
CONSTRUCTION AND ENGINEERING — 0.7% | ||||||||
Chicago Bridge & Iron Co. NV New York Shares | 54,217 | 2,408,319 | ||||||
KBR, Inc. | 6,651 | 225,203 | ||||||
URS Corp. | 32,778 | 1,354,059 | ||||||
3,987,581 | ||||||||
CONSUMER FINANCE — 1.0% | ||||||||
American Express Co. | 70,403 | 4,238,965 | ||||||
Cash America International, Inc. | 33,222 | 1,553,128 | ||||||
5,792,093 | ||||||||
DIVERSIFIED CONSUMER SERVICES — 0.7% | ||||||||
Coinstar, Inc.(1) | 36,921 | 2,318,269 | ||||||
ITT Educational Services, Inc.(1) | 32,140 | 2,121,883 | ||||||
4,440,152 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 1.8% | ||||||||
Bank of America Corp. | 396,379 | 3,214,634 | ||||||
Citigroup, Inc. | 8,485 | 280,344 | ||||||
JPMorgan Chase & Co. | 164,397 | 7,065,783 | ||||||
10,560,761 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.5% | ||||||||
AT&T, Inc. | 91,567 | 3,013,470 | ||||||
Verizon Communications, Inc. | 141,949 | 5,731,901 | ||||||
8,745,371 | ||||||||
ELECTRIC UTILITIES — 0.2% | ||||||||
American Electric Power Co., Inc. | 37,808 | 1,468,463 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.2% | ||||||||
Tech Data Corp.(1) | 26,290 | 1,414,139 | ||||||
ENERGY EQUIPMENT AND SERVICES — 0.5% | ||||||||
Helix Energy Solutions Group, Inc.(1) | 128,871 | 2,630,257 | ||||||
Schlumberger Ltd. | 2,692 | 199,585 | ||||||
2,829,842 | ||||||||
FOOD AND STAPLES RETAILING — 0.3% | ||||||||
CVS Caremark Corp. | 25,804 | 1,151,374 | ||||||
SUPERVALU, Inc. | 8,020 | 47,639 | ||||||
Wal-Mart Stores, Inc. | 9,459 | 557,230 | ||||||
1,756,243 |
8
Shares/ Principal Amount | Value | |||||||
FOOD PRODUCTS — 1.9% | ||||||||
Archer-Daniels-Midland Co. | 95,392 | $2,940,935 | ||||||
Bunge Ltd. | 35,067 | 2,261,821 | ||||||
Campbell Soup Co. | 65,290 | 2,208,761 | ||||||
ConAgra Foods, Inc. | 96,033 | 2,479,572 | ||||||
Darling International, Inc.(1) | 11,292 | 184,963 | ||||||
Tyson Foods, Inc., Class A | 85,554 | 1,561,361 | ||||||
11,637,413 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 0.6% | ||||||||
Covidien plc | 14,593 | 805,972 | ||||||
Medtronic, Inc. | 59,766 | 2,283,061 | ||||||
St. Jude Medical, Inc. | 6,878 | 266,316 | ||||||
3,355,349 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.5% | ||||||||
Humana, Inc. | 31,645 | 2,553,119 | ||||||
McKesson Corp. | 25,019 | 2,286,987 | ||||||
UnitedHealth Group, Inc. | 72,283 | 4,058,690 | ||||||
8,898,796 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 0.9% | ||||||||
Brinker International, Inc. | 37,299 | 1,173,799 | ||||||
Domino’s Pizza, Inc. | 5,947 | 224,856 | ||||||
McDonald’s Corp. | 4,128 | 402,274 | ||||||
Yum! Brands, Inc. | 46,644 | 3,392,418 | ||||||
5,193,347 | ||||||||
HOUSEHOLD DURABLES — 0.4% | ||||||||
Garmin Ltd. | 45,319 | 2,135,885 | ||||||
Tempur-Pedic International, Inc.(1) | 7,837 | 461,129 | ||||||
2,597,014 | ||||||||
HOUSEHOLD PRODUCTS — 0.4% | ||||||||
Procter & Gamble Co. (The) | 40,124 | 2,553,491 | ||||||
INDUSTRIAL CONGLOMERATES — 0.6% | ||||||||
3M Co. | 4,334 | 387,286 | ||||||
Danaher Corp. | 2,687 | 145,689 | ||||||
General Electric Co. | 162,012 | 3,172,195 | ||||||
3,705,170 | ||||||||
INSURANCE — 3.3% | ||||||||
ACE Ltd. | 31,822 | 2,417,517 | ||||||
Allied World Assurance Co. Holdings AG | 33,338 | 2,399,003 | ||||||
American Financial Group, Inc. | 26,591 | 1,034,922 | ||||||
Assurant, Inc. | 59,400 | 2,396,196 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 18,193 | 1,463,627 | ||||||
Everest Re Group Ltd. | 8,074 | 800,133 | ||||||
Loews Corp. | 68,047 | 2,798,773 | ||||||
Principal Financial Group, Inc. | 91,245 | 2,524,749 | ||||||
ProAssurance Corp. | 6,542 | $576,285 | ||||||
Prudential Financial, Inc. | 59,158 | 3,581,425 | ||||||
19,992,630 | ||||||||
INTERNET SOFTWARE AND SERVICES — 1.0% | ||||||||
eBay, Inc.(1) | 30,017 | 1,232,198 | ||||||
Google, Inc., Class A(1) | 8,237 | 4,985,279 | ||||||
6,217,477 | ||||||||
IT SERVICES — 3.2% | ||||||||
Accenture plc, Class A | 53,360 | 3,465,732 | ||||||
CACI International, Inc., Class A(1) | 3,155 | 192,865 | ||||||
Computer Sciences Corp. | 35,788 | 1,004,211 | ||||||
International Business Machines Corp. | 44,885 | 9,294,786 | ||||||
SAIC, Inc. | 72,775 | 884,944 | ||||||
Visa, Inc., Class A | 34,633 | 4,259,167 | ||||||
19,101,705 | ||||||||
MACHINERY — 1.3% | ||||||||
Actuant Corp., Class A | 31,098 | 848,042 | ||||||
AGCO Corp.(1) | 9,037 | 420,853 | ||||||
Cummins, Inc. | 26,132 | 3,026,869 | ||||||
Parker-Hannifin Corp. | 12,259 | 1,074,992 | ||||||
Sauer-Danfoss, Inc. | 53,489 | 2,316,609 | ||||||
7,687,365 | ||||||||
MEDIA — 1.7% | ||||||||
CBS Corp., Class B | 102,479 | 3,417,675 | ||||||
DISH Network Corp., Class A | 83,820 | 2,679,725 | ||||||
Time Warner, Inc. | 88,188 | 3,303,522 | ||||||
Viacom, Inc., Class B | 6,359 | 294,994 | ||||||
Walt Disney Co. (The) | 5,608 | 241,761 | ||||||
9,937,677 | ||||||||
METALS AND MINING — 0.8% | ||||||||
Coeur d’Alene Mines Corp.(1) | 108,665 | 2,341,731 | ||||||
Teck Resources Ltd. | 62,172 | 2,320,881 | ||||||
4,662,612 | ||||||||
MULTI-UTILITIES — 1.2% | ||||||||
Ameren Corp. | 65,715 | 2,154,795 | ||||||
Consolidated Edison, Inc. | 44,349 | 2,636,548 | ||||||
Public Service Enterprise Group, Inc. | 85,818 | 2,673,231 | ||||||
7,464,574 | ||||||||
MULTILINE RETAIL — 1.1% | ||||||||
Dillard’s, Inc., Class A | 47,941 | 3,095,071 | ||||||
Macy’s, Inc. | 81,245 | 3,332,670 | ||||||
6,427,741 |
9
Shares/ Principal Amount | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 6.4% | ||||||||
Apache Corp. | 29,477 | $2,828,023 | ||||||
Chevron Corp. | 79,782 | 8,501,570 | ||||||
ConocoPhillips | 69,143 | 4,952,713 | ||||||
Energy XXI Bermuda Ltd.(1) | 67,089 | 2,527,914 | ||||||
Exxon Mobil Corp. | 113,983 | 9,841,292 | ||||||
Marathon Oil Corp. | 88,653 | 2,601,079 | ||||||
Marathon Petroleum Corp. | 69,114 | 2,875,834 | ||||||
Suncor Energy, Inc. | 72,732 | 2,403,065 | ||||||
Tesoro Corp.(1) | 29,888 | 694,896 | ||||||
Valero Energy Corp. | 36,911 | 911,702 | ||||||
W&T Offshore, Inc. | 22,885 | 452,436 | ||||||
38,590,524 | ||||||||
PAPER AND FOREST PRODUCTS — 0.4% | ||||||||
Domtar Corp. | 24,689 | 2,159,794 | ||||||
PERSONAL PRODUCTS — 0.3% | ||||||||
Nu Skin Enterprises, Inc., Class A | 39,161 | 2,087,281 | ||||||
PHARMACEUTICALS — 4.2% | ||||||||
Abbott Laboratories | 84,141 | 5,221,790 | ||||||
Eli Lilly & Co. | 86,123 | 3,564,631 | ||||||
Johnson & Johnson | 99,008 | 6,444,431 | ||||||
Merck & Co., Inc. | 73,810 | 2,896,304 | ||||||
Pfizer, Inc. | 319,733 | 7,331,478 | ||||||
25,458,634 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.6% | ||||||||
Entertainment Properties Trust | 3,980 | 191,000 | ||||||
Simon Property Group, Inc. | 23,572 | 3,667,803 | ||||||
3,858,803 | ||||||||
ROAD AND RAIL — 0.6% | ||||||||
Union Pacific Corp. | 33,529 | 3,770,001 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.0% | ||||||||
Advanced Micro Devices, Inc.(1) | 245,716 | 1,808,470 | ||||||
Applied Materials, Inc. | 97,599 | 1,170,212 | ||||||
Intel Corp. | 224,747 | 6,382,815 | ||||||
KLA-Tencor Corp. | 51,871 | 2,705,072 | ||||||
12,066,569 | ||||||||
SOFTWARE — 2.8% | ||||||||
CA, Inc. | 14,278 | 377,225 | ||||||
Cadence Design Systems, Inc.(1) | 55,179 | 643,939 | ||||||
Intuit, Inc. | 2,173 | 125,969 | ||||||
Microsoft Corp. | 229,326 | 7,343,018 | ||||||
Oracle Corp. | 193,833 | 5,696,752 | ||||||
Symantec Corp.(1) | 165,651 | 2,736,554 | ||||||
16,923,457 | ||||||||
SPECIALTY RETAIL — 2.1% | ||||||||
Best Buy Co., Inc. | 114,497 | $2,526,949 | ||||||
Foot Locker, Inc. | 64,609 | 1,976,389 | ||||||
GameStop Corp., Class A | 29,959 | 681,867 | ||||||
Home Depot, Inc. (The) | 95,995 | 4,971,581 | ||||||
PetSmart, Inc. | 40,689 | 2,370,541 | ||||||
12,527,327 | ||||||||
TOBACCO — 1.1% | ||||||||
Philip Morris International, Inc. | 75,768 | 6,781,994 | ||||||
TOTAL COMMON STOCKS (Cost $284,776,255) | 359,205,804 | |||||||
U.S. Government Agency Mortgage-Backed Securities(2) — 12.8% | ||||||||
FIXED-RATE U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES — 12.2% | ||||||||
FHLMC, 7.00%, 10/1/12 | $6,503 | 6,573 | ||||||
FHLMC, 4.50%, 1/1/19 | 682,560 | 733,993 | ||||||
FHLMC, 6.50%, 1/1/28 | 54,156 | 62,264 | ||||||
FHLMC, 5.50%, 12/1/33 | 530,441 | 588,562 | ||||||
FHLMC, 5.00%, 7/1/35 | 6,005,920 | 6,506,453 | ||||||
FHLMC, 5.50%, 1/1/38 | 1,098,209 | 1,199,322 | ||||||
FHLMC, 6.00%, 8/1/38 | 193,261 | 214,316 | ||||||
FHLMC, 4.00%, 4/1/41 | 1,417,446 | 1,517,802 | ||||||
FHLMC, 6.50%, 7/1/47 | 40,809 | 45,714 | ||||||
FNMA, 6.50%, 5/1/13 | 1,040 | 1,065 | ||||||
FNMA, 6.50%, 5/1/13 | 614 | 634 | ||||||
FNMA, 6.50%, 6/1/13 | 1,924 | 1,986 | ||||||
FNMA, 6.50%, 6/1/13 | 3,771 | 3,893 | ||||||
FNMA, 6.50%, 6/1/13 | 2,035 | 2,100 | ||||||
FNMA, 6.00%, 1/1/14 | 13,982 | 15,085 | ||||||
FNMA, 6.00%, 4/1/14 | 53,656 | 57,888 | ||||||
FNMA, 4.50%, 5/1/19 | 229,050 | 247,071 | ||||||
FNMA, 4.50%, 5/1/19 | 579,485 | 625,078 | ||||||
FNMA, 5.00%, 9/1/20 | 1,253,663 | 1,364,469 | ||||||
FNMA, 6.50%, 1/1/28 | 23,439 | 26,975 | ||||||
FNMA, 6.50%, 1/1/29 | 71,684 | 82,497 | ||||||
FNMA, 7.50%, 7/1/29 | 118,664 | 144,804 | ||||||
FNMA, 7.50%, 9/1/30 | 37,295 | 45,491 | ||||||
FNMA, 5.00%, 7/1/31 | 1,960,885 | 2,131,658 | ||||||
FNMA, 6.50%, 9/1/31 | 59,345 | 68,297 | ||||||
FNMA, 7.00%, 9/1/31 | 17,992 | 21,319 | ||||||
FNMA, 6.50%, 1/1/32 | 107,379 | 123,039 | ||||||
FNMA, 7.00%, 6/1/32 | 256,129 | 301,881 | ||||||
FNMA, 6.50%, 8/1/32 | 89,294 | 102,316 | ||||||
FNMA, 5.50%, 6/1/33 | 411,764 | 454,286 | ||||||
FNMA, 5.50%, 7/1/33 | 630,540 | 695,195 |
10
Shares/ Principal Amount | Value | |||||||
FNMA, 5.50%, 8/1/33 | $764,870 | $843,299 | ||||||
FNMA, 5.50%, 9/1/33 | 529,401 | 589,807 | ||||||
FNMA, 5.00%, 11/1/33 | 1,972,740 | 2,146,087 | ||||||
FNMA, 4.50%, 9/1/35 | 1,652,812 | 1,771,963 | ||||||
FNMA, 5.00%, 2/1/36 | 2,116,804 | 2,302,149 | ||||||
FNMA, 5.50%, 4/1/36 | 858,777 | 944,151 | ||||||
FNMA, 5.50%, 5/1/36 | 1,704,338 | 1,873,773 | ||||||
FNMA, 5.50%, 2/1/37 | 537,243 | 588,135 | ||||||
FNMA, 6.00%, 7/1/37 | 3,804,227 | 4,231,757 | ||||||
FNMA, 6.50%, 8/1/37 | 464,314 | 520,784 | ||||||
FNMA, 4.50%, 9/1/40 | 6,546,746 | 7,095,420 | ||||||
FNMA, 4.00%, 1/1/41 | 2,182,827 | 2,342,489 | ||||||
FNMA, 4.50%, 1/1/41 | 1,934,252 | 2,098,777 | ||||||
FNMA, 4.50%, 2/1/41 | 1,718,725 | 1,845,850 | ||||||
FNMA, 4.00%, 5/1/41 | 4,019,513 | 4,257,622 | ||||||
FNMA, 4.50%, 7/1/41 | 1,174,490 | 1,272,922 | ||||||
FNMA, 4.50%, 9/1/41 | 1,553,960 | 1,683,174 | ||||||
FNMA, 4.00%, 12/1/41 | 2,451,252 | 2,619,823 | ||||||
FNMA, 4.00%, 1/1/42 | 1,726,838 | 1,840,644 | ||||||
FNMA, 4.00%, 1/1/42 | 2,442,764 | 2,588,615 | ||||||
FNMA, 6.50%, 6/1/47 | 57,542 | 64,199 | ||||||
FNMA, 6.50%, 8/1/47 | 122,424 | 136,586 | ||||||
FNMA, 6.50%, 8/1/47 | 197,135 | 219,941 | ||||||
FNMA, 6.50%, 9/1/47 | 261,158 | 291,370 | ||||||
FNMA, 6.50%, 9/1/47 | 12,864 | 14,352 | ||||||
FNMA, 6.50%, 9/1/47 | 121,620 | 135,689 | ||||||
FNMA, 6.50%, 9/1/47 | 67,763 | 75,602 | ||||||
FNMA, 6.50%, 9/1/47 | 93,053 | 103,817 | ||||||
GNMA, 7.00%, 4/20/26 | 106,791 | 125,451 | ||||||
GNMA, 7.50%, 8/15/26 | 61,502 | 71,852 | ||||||
GNMA, 7.00%, 2/15/28 | 15,675 | 18,668 | ||||||
GNMA, 7.50%, 2/15/28 | 19,609 | 20,253 | ||||||
GNMA, 7.00%, 12/15/28 | 36,210 | 43,123 | ||||||
GNMA, 7.00%, 5/15/31 | 122,122 | 144,688 | ||||||
GNMA, 5.50%, 11/15/32 | 581,611 | 653,938 | ||||||
GNMA, 4.00%, 1/20/41 | 2,908,347 | 3,157,885 | ||||||
GNMA, 4.50%, 5/20/41 | 2,004,755 | 2,202,900 | ||||||
GNMA, 4.50%, 6/15/41 | 1,215,348 | 1,348,384 | ||||||
GNMA, 4.00%, 12/15/41 | 3,381,047 | 3,667,644 | ||||||
73,345,609 | ||||||||
ADJUSTABLE-RATE U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES — 0.6% | ||||||||
FHLMC, VRN, 2.60%, 5/15/12 | 314,912 | 327,982 | ||||||
FHLMC, VRN, 2.90%, 5/15/12 | 250,000 | 260,509 | ||||||
FHLMC, VRN, 4.03%, 5/15/12 | 749,190 | 792,858 | ||||||
FHLMC, VRN, 6.10%, 5/15/12 | 721,620 | 782,630 | ||||||
FNMA, VRN, 2.73%, 5/25/12 | 550,000 | 568,393 | ||||||
FNMA, VRN, 3.35%, 5/25/12 | $389,778 | $409,527 | ||||||
FNMA, VRN, 3.38%, 5/25/12 | 332,812 | 348,239 | ||||||
FNMA, VRN, 3.97%, 5/25/12 | 220,516 | 233,688 | ||||||
3,723,826 | ||||||||
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (Cost $72,935,294) | 77,069,435 | |||||||
U.S. Treasury Securities — 10.8% | ||||||||
U.S. Treasury Bonds, 5.50%, 8/15/28 | 420,000 | 581,963 | ||||||
U.S. Treasury Bonds, 5.25%, 2/15/29 | 489,000 | 663,130 | ||||||
U.S. Treasury Bonds, 5.375%, 2/15/31 | 1,500,000 | 2,092,500 | ||||||
U.S. Treasury Bonds, 4.375%, 11/15/39 | 2,000,000 | 2,503,438 | ||||||
U.S. Treasury Bonds, 4.375%, 5/15/41 | 2,000,000 | 2,505,312 | ||||||
U.S. Treasury Bonds, 3.75%, 8/15/41 | 400,000 | 451,000 | ||||||
U.S. Treasury Bonds, 3.125%, 11/15/41 | 1,500,000 | 1,502,578 | ||||||
U.S. Treasury Notes, 1.375%, 5/15/13 | 5,000,000 | 5,060,940 | ||||||
U.S. Treasury Notes, 0.75%, 9/15/13 | 6,000,000 | 6,043,128 | ||||||
U.S. Treasury Notes, 1.25%, 3/15/14 | 2,420,000 | 2,465,281 | ||||||
U.S. Treasury Notes, 0.50%, 8/15/14 | 6,000,000 | 6,027,186 | ||||||
U.S. Treasury Notes, 2.375%, 8/31/14 | 2,500,000 | 2,619,337 | ||||||
U.S. Treasury Notes, 0.50%, 10/15/14 | 2,000,000 | 2,008,594 | ||||||
U.S. Treasury Notes, 2.625%, 12/31/14 | 5,000,000 | 5,300,780 | ||||||
U.S. Treasury Notes, 0.375%, 3/15/15 | 1,700,000 | 1,700,265 | ||||||
U.S. Treasury Notes, 2.125%, 12/31/15 | 2,900,000 | 3,068,789 | ||||||
U.S. Treasury Notes, 0.875%, 1/31/17 | 3,000,000 | 3,015,939 | ||||||
U.S. Treasury Notes, 2.625%, 4/30/18 | 875,000 | 955,049 | ||||||
U.S. Treasury Notes, 1.375%, 11/30/18 | 200,000 | 202,031 | ||||||
U.S. Treasury Notes, 2.625%, 8/15/20 | 1,871,000 | 2,018,633 | ||||||
U.S. Treasury Notes, 3.125%, 5/15/21 | 3,300,000 | 3,676,923 | ||||||
U.S. Treasury Notes, 2.125%, 8/15/21 | 2,600,000 | 2,665,406 |
11
Shares/ Principal Amount | Value | |||||||
U.S. Treasury Notes, 2.00%, 11/15/21 | $750,000 | $757,793 | ||||||
U.S. Treasury Notes, 2.00%, 2/15/22 | 7,050,000 | 7,099,569 | ||||||
TOTAL U.S. TREASURY SECURITIES (Cost $62,969,401) | 64,985,564 | |||||||
Corporate Bonds — 9.8% | ||||||||
AEROSPACE AND DEFENSE — 0.1% | ||||||||
L-3 Communications Corp., 4.75%, 7/15/20 | 90,000 | 95,723 | ||||||
Lockheed Martin Corp., 4.25%, 11/15/19 | 250,000 | 276,648 | ||||||
Raytheon Co., 4.40%, 2/15/20 | 110,000 | 123,718 | ||||||
United Technologies Corp., 6.05%, 6/1/36 | 250,000 | 309,921 | ||||||
806,010 | ||||||||
AUTOMOBILES — 0.1% | ||||||||
American Honda Finance Corp., 2.375%, 3/18/13(3) | 170,000 | 172,662 | ||||||
American Honda Finance Corp., 2.50%, 9/21/15(3) | 220,000 | 228,168 | ||||||
Daimler Finance North America LLC, 2.625%, 9/15/16(3) | 210,000 | 217,322 | ||||||
Nissan Motor Acceptance Corp., 3.25%, 1/30/13(3) | 50,000 | 50,637 | ||||||
668,789 | ||||||||
BEVERAGES — 0.3% | ||||||||
Anheuser-Busch InBev Worldwide, Inc., 7.75%, 1/15/19 | 510,000 | 675,388 | ||||||
Coca-Cola Co. (The), 1.80%, 9/1/16 | 180,000 | 184,994 | ||||||
Dr Pepper Snapple Group, Inc., 2.90%, 1/15/16 | 60,000 | 62,766 | ||||||
PepsiCo, Inc., 4.875%, 11/1/40 | 50,000 | 56,097 | ||||||
Pernod-Ricard SA, 2.95%, 1/15/17(3) | 150,000 | 152,765 | ||||||
SABMiller Holdings, Inc., 2.45%, 1/15/17(3) | 330,000 | 338,254 | ||||||
SABMiller Holdings, Inc., 3.75%, 1/15/22(3) | 200,000 | 208,290 | ||||||
1,678,554 | ||||||||
BIOTECHNOLOGY† | ||||||||
Gilead Sciences, Inc., 4.40%, 12/1/21 | 140,000 | 152,303 | ||||||
CAPITAL MARKETS — 0.1% | ||||||||
Bear Stearns Cos. LLC (The), 6.40%, 10/2/17 | 330,000 | 385,475 | ||||||
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 3.375%, 1/19/17 | $90,000 | $92,946 | ||||||
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, 3.875%, 2/8/22 | 150,000 | 148,394 | ||||||
Jefferies Group, Inc., 5.125%, 4/13/18 | 110,000 | 108,488 | ||||||
735,303 | ||||||||
CHEMICALS — 0.1% | ||||||||
CF Industries, Inc., 6.875%, 5/1/18 | 210,000 | 244,650 | ||||||
Dow Chemical Co. (The), 5.90%, 2/15/15 | 110,000 | 123,711 | ||||||
Dow Chemical Co. (The), 2.50%, 2/15/16 | 110,000 | 113,841 | ||||||
Ecolab, Inc., 4.35%, 12/8/21 | 240,000 | 262,065 | ||||||
744,267 | ||||||||
COMMERCIAL BANKS — 0.9% | ||||||||
Bank of America N.A., 5.30%, 3/15/17 | 720,000 | 751,565 | ||||||
Bank of Nova Scotia, 2.55%, 1/12/17 | 150,000 | 155,993 | ||||||
BB&T Corp., 5.70%, 4/30/14 | 60,000 | 65,563 | ||||||
BB&T Corp., 3.20%, 3/15/16 | 190,000 | 201,693 | ||||||
Capital One Financial Corp., 4.75%, 7/15/21 | 90,000 | 97,176 | ||||||
Fifth Third Bancorp, 6.25%, 5/1/13 | 170,000 | 178,843 | ||||||
HSBC Bank plc, 3.50%, 6/28/15(3) | 140,000 | 146,195 | ||||||
Huntington Bancshares, Inc., 7.00%, 12/15/20 | 30,000 | 34,845 | ||||||
JPMorgan Chase Bank N.A., 5.875%, 6/13/16 | 250,000 | 280,258 | ||||||
Kreditanstalt fuer Wiederaufbau, 4.125%, 10/15/14 | 240,000 | 260,284 | ||||||
Kreditanstalt fuer Wiederaufbau, 2.00%, 6/1/16 | 260,000 | 269,168 | ||||||
National Australia Bank Ltd., 2.75%, 9/28/15(3) | 100,000 | 102,944 | ||||||
PNC Funding Corp., 4.25%, 9/21/15 | 50,000 | 54,739 | ||||||
Royal Bank of Scotland plc (The), 3.95%, 9/21/15 | 220,000 | 223,105 | ||||||
Royal Bank of Scotland plc (The), 4.375%, 3/16/16 | 210,000 | 214,394 | ||||||
SunTrust Bank, 7.25%, 3/15/18 | 110,000 | 127,954 | ||||||
SunTrust Banks, Inc., 3.60%, 4/15/16 | 50,000 | 52,009 |
12
Shares/ Principal Amount | Value | |||||||
Toronto-Dominion Bank (The), 2.375%, 10/19/16 | $210,000 | $216,604 | ||||||
U.S. Bancorp., 3.44%, 2/1/16 | 120,000 | 124,576 | ||||||
U.S. Bancorp., MTN, 3.00%, 3/15/22 | 110,000 | 111,794 | ||||||
Wachovia Bank N.A., 4.80%, 11/1/14 | 373,000 | 401,437 | ||||||
Wachovia Bank N.A., 4.875%, 2/1/15 | 123,000 | 132,692 | ||||||
Wells Fargo & Co., 3.68%, 9/15/12 | 140,000 | 150,313 | ||||||
Wells Fargo & Co., 2.10%, 5/8/17 | 230,000 | 229,816 | ||||||
Wells Fargo & Co., 5.625%, 12/11/17 | 20,000 | 23,489 | ||||||
Wells Fargo & Co., 4.60%, 4/1/21 | 110,000 | 120,978 | ||||||
Wells Fargo & Co., MTN, 3.50%, 3/8/22 | 100,000 | 101,431 | ||||||
Wells Fargo Bank N.A., 5.75%, 5/16/16 | 250,000 | 284,188 | ||||||
5,114,046 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.1% | ||||||||
Corrections Corp. of America, 7.75%, 6/1/17 | 90,000 | 98,100 | ||||||
Republic Services, Inc., 3.80%, 5/15/18 | 70,000 | 76,043 | ||||||
Republic Services, Inc., 5.50%, 9/15/19 | 300,000 | 353,395 | ||||||
Republic Services, Inc., 6.20%, 3/1/40 | — | — | ||||||
Waste Management, Inc., 6.125%, 11/30/39 | 120,000 | 149,917 | ||||||
677,455 | ||||||||
COMMUNICATIONS EQUIPMENT† | ||||||||
Cisco Systems, Inc., 5.90%, 2/15/39 | 130,000 | 162,113 | ||||||
COMPUTERS AND PERIPHERALS — 0.1% | ||||||||
Hewlett-Packard Co., 2.60%, 9/15/17 | 320,000 | 320,776 | ||||||
CONSUMER FINANCE — 0.3% | ||||||||
American Express Centurion Bank, 6.00%, 9/13/17 | 250,000 | 295,276 | ||||||
American Express Credit Corp., 2.80%, 9/19/16 | 130,000 | 134,830 | ||||||
American Express Credit Corp., MTN, 2.75%, 9/15/15 | 200,000 | 207,687 | ||||||
American Express Credit Corp., MTN, 2.375%, 3/24/17 | 150,000 | 153,093 | ||||||
Credit Suisse (New York), 6.00%, 2/15/18 | 100,000 | 108,132 | ||||||
Credit Suisse (New York), 5.30%, 8/13/19 | $230,000 | $256,884 | ||||||
PNC Bank N.A., 6.00%, 12/7/17 | 290,000 | 336,256 | ||||||
SLM Corp., 6.25%, 1/25/16 | 130,000 | 134,550 | ||||||
SLM Corp., MTN, 5.00%, 10/1/13 | 180,000 | 184,950 | ||||||
1,811,658 | ||||||||
CONTAINERS AND PACKAGING† | ||||||||
Ball Corp., 7.125%, 9/1/16 | 130,000 | 143,000 | ||||||
Ball Corp., 6.75%, 9/15/20 | 120,000 | 133,200 | ||||||
276,200 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 1.4% | ||||||||
Bank of America Corp., 4.50%, 4/1/15 | 190,000 | 196,525 | ||||||
Bank of America Corp., 3.75%, 7/12/16 | 100,000 | 99,646 | ||||||
Bank of America Corp., 6.50%, 8/1/16 | 480,000 | 525,185 | ||||||
Bank of America Corp., 3.875%, 3/22/17 | 170,000 | 169,725 | ||||||
Bank of America Corp., 5.75%, 12/1/17 | 150,000 | 159,221 | ||||||
Citigroup, Inc., 6.01%, 1/15/15 | 520,000 | 563,070 | ||||||
Citigroup, Inc., 4.75%, 5/19/15 | 70,000 | 73,594 | ||||||
Citigroup, Inc., 4.45%, 1/10/17 | 100,000 | 104,548 | ||||||
Citigroup, Inc., 6.125%, 5/15/18 | 660,000 | 733,354 | ||||||
Deutsche Bank AG (London), 3.875%, 8/18/14 | 190,000 | 199,040 | ||||||
General Electric Capital Corp., 3.75%, 11/14/14 | 200,000 | 211,711 | ||||||
General Electric Capital Corp., 2.25%, 11/9/15 | 200,000 | 204,822 | ||||||
General Electric Capital Corp., 5.625%, 9/15/17 | 450,000 | 517,493 | ||||||
General Electric Capital Corp., 4.375%, 9/16/20 | 320,000 | 343,321 | ||||||
General Electric Capital Corp., 5.30%, 2/11/21 | 80,000 | 88,198 | ||||||
General Electric Capital Corp., MTN, 2.30%, 4/27/17 | 250,000 | 250,574 | ||||||
General Electric Capital Corp., MTN, 6.00%, 8/7/19 | 350,000 | 414,074 | ||||||
Goldman Sachs Group, Inc. (The), 3.30%, 5/3/15 | 40,000 | 39,972 | ||||||
Goldman Sachs Group, Inc. (The), 3.625%, 2/7/16 | 465,000 | 467,813 |
13
Shares/ Principal Amount | Value | |||||||
Goldman Sachs Group, Inc. (The), 5.75%, 1/24/22 | $360,000 | $376,386 | ||||||
Goldman Sachs Group, Inc. (The), 6.25%, 2/1/41 | 100,000 | 101,846 | ||||||
HSBC Holdings plc, 5.10%, 4/5/21 | 120,000 | 132,300 | ||||||
HSBC Holdings plc, 6.80%, 6/1/38 | 80,000 | 90,542 | ||||||
JPMorgan Chase & Co., 3.45%, 3/1/16 | 190,000 | 199,090 | ||||||
JPMorgan Chase & Co., 6.00%, 1/15/18 | 840,000 | 971,514 | ||||||
Morgan Stanley, 6.625%, 4/1/18 | 410,000 | 428,968 | ||||||
Morgan Stanley, 5.625%, 9/23/19 | 150,000 | 148,359 | ||||||
UBS AG (Stamford Branch), 2.25%, 8/12/13 | 70,000 | 70,450 | ||||||
UBS AG (Stamford Branch), 5.875%, 12/20/17 | 380,000 | 421,623 | ||||||
8,302,964 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.5% | ||||||||
AT&T, Inc., 6.80%, 5/15/36 | 350,000 | 440,294 | ||||||
AT&T, Inc., 6.55%, 2/15/39 | 470,000 | 583,958 | ||||||
British Telecommunications plc, 5.95%, 1/15/18 | 270,000 | 315,577 | ||||||
CenturyLink, Inc., 6.15%, 9/15/19 | 140,000 | 146,319 | ||||||
CenturyLink, Inc., 5.80%, 3/15/22 | 120,000 | 119,118 | ||||||
CenturyLink, Inc., Series P, 7.60%, 9/15/39 | 60,000 | 57,075 | ||||||
Deutsche Telekom International Finance BV, 2.25%, 3/6/17(3) | 50,000 | 49,679 | ||||||
Deutsche Telekom International Finance BV, 6.75%, 8/20/18 | 210,000 | 253,651 | ||||||
Telecom Italia Capital SA, 7.00%, 6/4/18 | 30,000 | 31,575 | ||||||
Telefonica Emisiones SAU, 5.88%, 7/15/19 | 220,000 | 217,177 | ||||||
Telefonica Emisiones SAU, 5.46%, 2/16/21 | 100,000 | 94,092 | ||||||
Verizon Communications, Inc., 8.75%, 11/1/18 | 100,000 | 136,741 | ||||||
Verizon Communications, Inc., 3.50%, 11/1/21 | 100,000 | 104,796 | ||||||
Verizon Communications, Inc., 7.35%, 4/1/39 | 160,000 | 219,995 | ||||||
Windstream Corp., 7.875%, 11/1/17 | 60,000 | 66,600 | ||||||
2,836,647 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.1% | ||||||||
Jabil Circuit, Inc., 7.75%, 7/15/16 | $200,000 | $228,250 | ||||||
Jabil Circuit, Inc., 5.625%, 12/15/20 | 80,000 | 84,400 | ||||||
312,650 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 0.1% | ||||||||
Ensco plc, 3.25%, 3/15/16 | 120,000 | 126,235 | ||||||
Noble Holding International Ltd., 3.95%, 3/15/22 | 50,000 | 50,863 | ||||||
Transocean, Inc., 6.50%, 11/15/20 | 100,000 | 114,973 | ||||||
Transocean, Inc., 6.375%, 12/15/21 | 50,000 | 58,623 | ||||||
Weatherford International Ltd., 9.625%, 3/1/19 | 150,000 | 198,611 | ||||||
549,305 | ||||||||
FOOD AND STAPLES RETAILING — 0.3% | ||||||||
CVS Caremark Corp., 6.60%, 3/15/19 | 350,000 | 435,068 | ||||||
Kroger Co. (The), 6.40%, 8/15/17 | 200,000 | 242,329 | ||||||
Safeway, Inc., 4.75%, 12/1/21 | 70,000 | 70,115 | ||||||
Wal-Mart Stores, Inc., 5.875%, 4/5/27 | 468,000 | 580,970 | ||||||
Wal-Mart Stores, Inc., 6.20%, 4/15/38 | 220,000 | 288,626 | ||||||
Wal-Mart Stores, Inc., 5.625%, 4/15/41 | 60,000 | 73,412 | ||||||
1,690,520 | ||||||||
FOOD PRODUCTS — 0.2% | ||||||||
General Mills, Inc., 3.15%, 12/15/21 | 130,000 | 132,349 | ||||||
Kellogg Co., 4.45%, 5/30/16 | 200,000 | 223,312 | ||||||
Kraft Foods, Inc., 6.125%, 2/1/18 | 110,000 | 132,575 | ||||||
Kraft Foods, Inc., 6.50%, 2/9/40 | 250,000 | 315,157 | ||||||
Mead Johnson Nutrition Co., 3.50%, 11/1/14 | 120,000 | 125,394 | ||||||
928,787 | ||||||||
GAS UTILITIES — 0.5% | ||||||||
CenterPoint Energy Resources Corp., 6.25%, 2/1/37 | 330,000 | 389,630 | ||||||
El Paso Corp., 7.25%, 6/1/18 | 150,000 | 172,328 | ||||||
El Paso Pipeline Partners Operating Co. LLC, 6.50%, 4/1/20 | 140,000 | 161,436 |
14
Shares/ Principal Amount | Value | |||||||
Enbridge Energy Partners LP, 6.50%, 4/15/18 | $130,000 | $158,975 | ||||||
Enbridge Energy Partners LP, 5.20%, 3/15/20 | 100,000 | 113,081 | ||||||
Enbridge Energy Partners LP, 5.50%, 9/15/40 | 80,000 | 86,895 | ||||||
Energy Transfer Partners LP, 6.50%, 2/1/42 | 90,000 | 95,612 | ||||||
Enterprise Products Operating LLC, 3.70%, 6/1/15 | 150,000 | 160,812 | ||||||
Enterprise Products Operating LLC, 6.30%, 9/15/17 | 390,000 | 467,429 | ||||||
Enterprise Products Operating LLC, 5.95%, 2/1/41 | 125,000 | 143,163 | ||||||
Kinder Morgan Energy Partners LP, 6.85%, 2/15/20 | 200,000 | 242,134 | ||||||
Kinder Morgan Energy Partners LP, 6.50%, 9/1/39 | 130,000 | 146,816 | ||||||
Magellan Midstream Partners LP, 6.55%, 7/15/19 | 150,000 | 180,497 | ||||||
Plains All American Pipeline LP/PAA Finance Corp., 3.95%, 9/15/15 | 60,000 | 64,351 | ||||||
Plains All American Pipeline LP/PAA Finance Corp., 8.75%, 5/1/19 | 70,000 | 92,431 | ||||||
Plains All American Pipeline LP/PAA Finance Corp., 3.65%, 6/1/22 | 270,000 | 271,799 | ||||||
Williams Partners LP, 4.125%, 11/15/20 | 200,000 | 209,181 | ||||||
3,156,570 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES† | ||||||||
Covidien International Finance SA, 1.875%, 6/15/13 | 170,000 | 171,919 | ||||||
HEALTH CARE PROVIDERS AND SERVICES — 0.2% | ||||||||
Express Scripts, Inc., 2.65%, 2/15/17(3) | 400,000 | 407,555 | ||||||
Express Scripts, Inc., 7.25%, 6/15/19 | 360,000 | 450,871 | ||||||
Medco Health Solutions, Inc., 7.25%, 8/15/13 | 270,000 | 292,416 | ||||||
Universal Health Services, Inc., 7.125%, 6/30/16 | 160,000 | 182,000 | ||||||
WellPoint, Inc., 5.80%, 8/15/40 | 60,000 | 72,493 | ||||||
1,405,335 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 0.1% | ||||||||
McDonald’s Corp., 5.35%, 3/1/18 | 370,000 | 445,281 | ||||||
Wyndham Worldwide Corp., 6.00%, 12/1/16 | 1,000 | 1,123 | ||||||
Wyndham Worldwide Corp., 2.95%, 3/1/17 | $110,000 | $110,042 | ||||||
556,446 | ||||||||
HOUSEHOLD DURABLES† | ||||||||
Toll Brothers Finance Corp., 6.75%, 11/1/19 | 100,000 | 110,118 | ||||||
HOUSEHOLD PRODUCTS† | ||||||||
Jarden Corp., 8.00%, 5/1/16 | 230,000 | 252,856 | ||||||
INDUSTRIAL CONGLOMERATES — 0.1% | ||||||||
Bombardier, Inc., 5.75%, 3/15/22(3) | 80,000 | 79,300 | ||||||
General Electric Co., 5.25%, 12/6/17 | 230,000 | 268,679 | ||||||
347,979 | ||||||||
INSURANCE — 0.4% | ||||||||
Allstate Corp. (The), 7.45%, 5/16/19 | 150,000 | 192,077 | ||||||
Allstate Corp. (The), 5.20%, 1/15/42 | 90,000 | 97,737 | ||||||
American International Group, Inc., 3.65%, 1/15/14 | 70,000 | 71,539 | ||||||
American International Group, Inc., 5.85%, 1/16/18 | 380,000 | 418,843 | ||||||
Berkshire Hathaway Finance Corp., 4.25%, 1/15/21 | 120,000 | 131,908 | ||||||
CNA Financial Corp., 5.875%, 8/15/20 | 60,000 | 65,656 | ||||||
CNA Financial Corp., 5.75%, 8/15/21 | 50,000 | 54,784 | ||||||
Dolphin Subsidiary II, Inc., 6.50%, 10/15/16(3) | 250,000 | 272,500 | ||||||
Genworth Financial, Inc., 7.20%, 2/15/21 | 70,000 | 67,341 | ||||||
Hartford Financial Services Group, Inc., 4.00%, 3/30/15 | 180,000 | 186,842 | ||||||
Hartford Financial Services Group, Inc., 6.30%, 3/15/18 | 110,000 | 121,408 | ||||||
International Lease Finance Corp., 5.75%, 5/15/16 | 80,000 | 81,432 | ||||||
Liberty Mutual Group, Inc., 5.00%, 6/1/21(3) | 93,000 | 94,161 | ||||||
Lincoln National Corp., 6.25%, 2/15/20 | 160,000 | 183,310 | ||||||
MetLife, Inc., 6.75%, 6/1/16 | 150,000 | 178,147 | ||||||
Prudential Financial, Inc., 7.375%, 6/15/19 | 100,000 | 124,590 | ||||||
Prudential Financial, Inc., 5.375%, 6/21/20 | 70,000 | 78,753 | ||||||
Prudential Financial, Inc., 5.625%, 5/12/41 | 70,000 | 73,436 | ||||||
2,494,464 |
15
Shares/ Principal Amount | Value | |||||||
INTERNET SOFTWARE AND SERVICES† | ||||||||
Google, Inc., 2.125%, 5/19/16 | $120,000 | $125,723 | ||||||
IT SERVICES — 0.1% | ||||||||
Fidelity National Information Services, Inc., 5.00%, 3/15/22(3) | 100,000 | 100,500 | ||||||
International Business Machines Corp., 1.95%, 7/22/16 | 410,000 | 423,623 | ||||||
524,123 | ||||||||
MACHINERY† | ||||||||
Deere & Co., 5.375%, 10/16/29 | 200,000 | 247,712 | ||||||
MEDIA — 0.9% | ||||||||
Comcast Corp., 5.90%, 3/15/16 | 339,000 | 393,562 | ||||||
Comcast Corp., 6.50%, 11/15/35 | 90,000 | 109,951 | ||||||
Comcast Corp., 6.40%, 5/15/38 | 290,000 | 352,518 | ||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 4.75%, 10/1/14 | 155,000 | 168,010 | ||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 3.55%, 3/15/15 | 190,000 | 201,145 | ||||||
DirecTV Holdings LLC/DirecTV Financing Co., Inc., 5.00%, 3/1/21 | 330,000 | 361,312 | ||||||
Discovery Communications LLC, 5.625%, 8/15/19 | 90,000 | 105,813 | ||||||
DISH DBS Corp., 6.75%, 6/1/21 | 170,000 | 187,000 | ||||||
Interpublic Group of Cos., Inc. (The), 10.00%, 7/15/17 | 300,000 | 343,125 | ||||||
Interpublic Group of Cos., Inc. (The), 4.00%, 3/15/22 | 140,000 | 140,128 | ||||||
Lamar Media Corp., 9.75%, 4/1/14 | 150,000 | 170,438 | ||||||
NBCUniversal Media LLC, 5.15%, 4/30/20 | 90,000 | 103,673 | ||||||
NBCUniversal Media LLC, 4.375%, 4/1/21 | 380,000 | 414,741 | ||||||
News America, Inc., 4.50%, 2/15/21 | 40,000 | 43,258 | ||||||
News America, Inc., 6.90%, 8/15/39 | 150,000 | 177,277 | ||||||
Omnicom Group, Inc., 3.625%, 5/1/22 | 120,000 | 120,268 | ||||||
Qwest Corp., 7.50%, 10/1/14 | 200,000 | 226,000 | ||||||
SBA Telecommunications, Inc., 8.25%, 8/15/19 | 78,000 | 86,385 | ||||||
Time Warner Cable, Inc., 6.75%, 7/1/18 | $180,000 | $219,959 | ||||||
Time Warner Cable, Inc., 4.00%, 9/1/21 | 80,000 | 83,170 | ||||||
Time Warner, Inc., 3.15%, 7/15/15 | 140,000 | 148,303 | ||||||
Time Warner, Inc., 7.70%, 5/1/32 | 200,000 | 262,539 | ||||||
Viacom, Inc., 4.375%, 9/15/14 | 150,000 | 161,674 | ||||||
Viacom, Inc., 4.50%, 3/1/21 | 230,000 | 253,795 | ||||||
Virgin Media Secured Finance plc, 6.50%, 1/15/18 | 320,000 | 350,400 | ||||||
5,184,444 | ||||||||
METALS AND MINING — 0.3% | ||||||||
AngloGold Ashanti Holdings plc, 5.375%, 4/15/20 | 180,000 | 188,610 | ||||||
ArcelorMittal, 9.85%, 6/1/19 | 120,000 | 145,175 | ||||||
ArcelorMittal, 5.25%, 8/5/20 | 120,000 | 118,583 | ||||||
Barrick North America Finance LLC, 4.40%, 5/30/21 | 130,000 | 140,201 | ||||||
Newmont Mining Corp., 3.50%, 3/15/22 | 100,000 | 99,600 | ||||||
Newmont Mining Corp., 6.25%, 10/1/39 | 120,000 | 138,446 | ||||||
Rio Tinto Finance USA Ltd., 3.50%, 11/2/20 | 80,000 | 83,115 | ||||||
Teck Resources Ltd., 5.375%, 10/1/15 | 70,000 | 77,257 | ||||||
Teck Resources Ltd., 3.15%, 1/15/17 | 110,000 | 114,285 | ||||||
Vale Overseas Ltd., 5.625%, 9/15/19 | 310,000 | 350,281 | ||||||
Vale Overseas Ltd., 4.625%, 9/15/20 | 150,000 | 159,509 | ||||||
1,615,062 | ||||||||
MULTI-UTILITIES — 0.5% | ||||||||
Carolina Power & Light Co., 5.15%, 4/1/15 | 100,000 | 112,021 | ||||||
Cleveland Electric Illuminating Co. (The), 5.70%, 4/1/17 | 81,000 | 90,754 | ||||||
CMS Energy Corp., 4.25%, 9/30/15 | 160,000 | 166,820 | ||||||
CMS Energy Corp., 8.75%, 6/15/19 | 180,000 | 221,821 | ||||||
Dominion Resources, Inc., 6.40%, 6/15/18 | 190,000 | 234,927 | ||||||
Dominion Resources, Inc., 4.90%, 8/1/41 | 130,000 | 141,941 | ||||||
Duke Energy Corp., 6.30%, 2/1/14 | 100,000 | 109,348 |
16
Shares/ Principal Amount | Value | |||||||
Duke Energy Corp., 3.95%, 9/15/14 | $130,000 | $139,146 | ||||||
Edison International, 3.75%, 9/15/17 | 130,000 | 138,171 | ||||||
Exelon Generation Co. LLC, 5.20%, 10/1/19 | 150,000 | 169,144 | ||||||
FirstEnergy Solutions Corp., 6.05%, 8/15/21 | 300,000 | 339,863 | ||||||
Florida Power Corp., 6.35%, 9/15/37 | 230,000 | 305,741 | ||||||
Ipalco Enterprises, Inc., 5.00%, 5/1/18 | 50,000 | 50,000 | ||||||
Nisource Finance Corp., 4.45%, 12/1/21 | 70,000 | 74,065 | ||||||
Pacific Gas & Electric Co., 5.80%, 3/1/37 | 80,000 | 96,920 | ||||||
Pacific Gas & Electric Co., 4.45%, 4/15/42 | 50,000 | 50,984 | ||||||
PG&E Corp., 5.75%, 4/1/14 | 60,000 | 65,277 | ||||||
Progress Energy, Inc., 3.15%, 4/1/22 | 90,000 | 90,011 | ||||||
Public Service Company of Colorado, 4.75%, 8/15/41 | 50,000 | 56,227 | ||||||
Sempra Energy, 8.90%, 11/15/13 | 170,000 | 189,725 | ||||||
Sempra Energy, 6.50%, 6/1/16 | 200,000 | 238,176 | ||||||
Southern California Edison Co., 5.625%, 2/1/36 | 60,000 | 74,619 | ||||||
Southern Power Co., 5.15%, 9/15/41 | 40,000 | 43,373 | ||||||
3,199,074 | ||||||||
OFFICE ELECTRONICS† | ||||||||
Xerox Corp., 5.65%, 5/15/13 | 80,000 | 83,529 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 0.8% | ||||||||
Anadarko Petroleum Corp., 5.95%, 9/15/16 | 50,000 | 57,852 | ||||||
Anadarko Petroleum Corp., 6.45%, 9/15/36 | 150,000 | 178,243 | ||||||
Apache Corp., 4.75%, 4/15/43 | 210,000 | 224,390 | ||||||
Arch Western Finance LLC, 6.75%, 7/1/13 | 47,000 | 47,118 | ||||||
BP Capital Markets plc, 3.20%, 3/11/16 | 120,000 | 127,934 | ||||||
BP Capital Markets plc, 2.25%, 11/1/16 | 180,000 | 185,347 | ||||||
BP Capital Markets plc, 4.50%, 10/1/20 | 100,000 | 111,248 | ||||||
Cenovus Energy, Inc., 4.50%, 9/15/14 | 140,000 | 151,373 | ||||||
Chesapeake Energy Corp., 7.625%, 7/15/13 | $100,000 | $104,500 | ||||||
ConocoPhillips, 5.75%, 2/1/19 | 240,000 | 296,035 | ||||||
ConocoPhillips Holding Co., 6.95%, 4/15/29 | 70,000 | 95,429 | ||||||
Devon Energy Corp., 5.60%, 7/15/41 | 180,000 | 207,181 | ||||||
EOG Resources, Inc., 5.625%, 6/1/19 | 150,000 | 179,930 | ||||||
Hess Corp., 6.00%, 1/15/40 | 110,000 | 123,847 | ||||||
Marathon Petroleum Corp., 3.50%, 3/1/16 | 210,000 | 220,431 | ||||||
Marathon Petroleum Corp., 5.125%, 3/1/21 | 110,000 | 122,163 | ||||||
Newfield Exploration Co., 6.875%, 2/1/20 | 200,000 | 213,500 | ||||||
Nexen, Inc., 5.875%, 3/10/35 | 130,000 | 136,427 | ||||||
Noble Energy, Inc., 4.15%, 12/15/21 | 190,000 | 199,047 | ||||||
Peabody Energy Corp., 7.375%, 11/1/16 | 40,000 | 44,500 | ||||||
Peabody Energy Corp., 6.50%, 9/15/20 | 70,000 | 72,275 | ||||||
Pemex Project Funding Master Trust, 6.625%, 6/15/35 | 50,000 | 59,125 | ||||||
Petrobras International Finance Co. - Pifco, 5.75%, 1/20/20 | 200,000 | 224,119 | ||||||
Petrobras International Finance Co. - Pifco, 5.375%, 1/27/21 | 310,000 | 340,942 | ||||||
Petroleos Mexicanos, 6.00%, 3/5/20 | 120,000 | 138,300 | ||||||
Phillips 66, 4.30%, 4/1/22(3) | 120,000 | 125,333 | ||||||
Shell International Finance BV, 6.375%, 12/15/38 | 50,000 | 68,402 | ||||||
Suncor Energy, Inc., 6.10%, 6/1/18 | 174,000 | 208,993 | ||||||
Suncor Energy, Inc., 6.85%, 6/1/39 | 70,000 | 90,951 | ||||||
Talisman Energy, Inc., 7.75%, 6/1/19 | 170,000 | 211,347 | ||||||
4,566,282 | ||||||||
PAPER AND FOREST PRODUCTS — 0.1% | ||||||||
Georgia-Pacific LLC, 5.40%, 11/1/20(3) | 270,000 | 308,096 | ||||||
International Paper Co., 4.75%, 2/15/22 | 140,000 | 149,650 | ||||||
International Paper Co., 6.00%, 11/15/41 | 70,000 | 75,774 | ||||||
533,520 |
17
Shares/ Principal Amount | Value | |||||||
PHARMACEUTICALS — 0.3% | ||||||||
Abbott Laboratories, 5.30%, 5/27/40 | $70,000 | $82,725 | ||||||
AstraZeneca plc, 5.40%, 9/15/12 | 295,000 | 300,434 | ||||||
AstraZeneca plc, 5.90%, 9/15/17 | 200,000 | 240,730 | ||||||
Roche Holdings, Inc., 6.00%, 3/1/19(3) | 350,000 | 435,435 | ||||||
Roche Holdings, Inc., 7.00%, 3/1/39(3) | 160,000 | 227,645 | ||||||
Sanofi, 4.00%, 3/29/21 | 95,000 | 105,527 | ||||||
Watson Pharmaceuticals, Inc., 5.00%, 8/15/14 | 260,000 | 278,300 | ||||||
1,670,796 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.3% | ||||||||
American Tower Corp., 4.625%, 4/1/15 | 230,000 | 245,285 | ||||||
American Tower Corp., 4.70%, 3/15/22 | 170,000 | 174,750 | ||||||
Developers Diversified Realty Corp., 5.375%, 10/15/12 | 70,000 | 70,608 | ||||||
Developers Diversified Realty Corp., 4.75%, 4/15/18 | 290,000 | 300,772 | ||||||
HCP, Inc., 3.75%, 2/1/16 | 160,000 | 167,213 | ||||||
Simon Property Group LP, 5.75%, 12/1/15 | 140,000 | 158,077 | ||||||
UDR, Inc., 4.25%, 6/1/18 | 110,000 | 117,013 | ||||||
Ventas Realty LP/Ventas Capital Corp., 3.125%, 11/30/15 | 195,000 | 200,915 | ||||||
Ventas Realty LP/Ventas Capital Corp., 4.00%, 4/30/19 | 100,000 | 101,788 | ||||||
Ventas Realty LP/Ventas Capital Corp., 4.75%, 6/1/21 | 60,000 | 61,935 | ||||||
WEA Finance LLC, 4.625%, 5/10/21(3) | 210,000 | 217,952 | ||||||
1,816,308 | ||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT† | ||||||||
ProLogis LP, 6.625%, 12/1/19 | 160,000 | 183,633 | ||||||
ROAD AND RAIL — 0.1% | ||||||||
Burlington Northern Santa Fe LLC, 3.60%, 9/1/20 | 176,000 | 186,416 | ||||||
Burlington Northern Santa Fe LLC, 5.05%, 3/1/41 | 60,000 | 64,464 | ||||||
CSX Corp., 4.25%, 6/1/21 | $110,000 | $119,777 | ||||||
CSX Corp., 4.75%, 5/30/42 | 110,000 | 110,658 | ||||||
Union Pacific Corp., 4.75%, 9/15/41 | 150,000 | 160,524 | ||||||
641,839 | ||||||||
SOFTWARE — 0.1% | ||||||||
Intuit, Inc., 5.75%, 3/15/17 | 254,000 | 294,235 | ||||||
Oracle Corp., 6.125%, 7/8/39 | 240,000 | 307,872 | ||||||
Oracle Corp., 5.375%, 7/15/40 | 205,000 | 242,978 | ||||||
845,085 | ||||||||
SPECIALTY RETAIL — 0.1% | ||||||||
Home Depot, Inc. (The), 5.95%, 4/1/41 | 200,000 | 246,559 | ||||||
Lowe’s Cos., Inc., 1.625%, 4/15/17 | 100,000 | 100,159 | ||||||
Lowe’s Cos., Inc., 4.65%, 4/15/42 | 100,000 | 101,581 | ||||||
448,299 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.1% | ||||||||
Gap, Inc. (The), 5.95%, 4/12/21 | 120,000 | 124,215 | ||||||
Hanesbrands, Inc., 6.375%, 12/15/20 | 100,000 | 103,750 | ||||||
Ltd. Brands, Inc., 6.90%, 7/15/17 | 100,000 | 112,375 | ||||||
340,340 | ||||||||
TOBACCO† | ||||||||
Altria Group, Inc., 9.25%, 8/6/19 | 50,000 | 68,291 | ||||||
Philip Morris International, Inc., 4.125%, 5/17/21 | 180,000 | 198,958 | ||||||
267,249 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.1% | ||||||||
Alltel Corp., 7.875%, 7/1/32 | 100,000 | 146,265 | ||||||
America Movil SAB de CV, 5.00%, 3/30/20 | 110,000 | 124,752 | ||||||
Cellco Partnership/Verizon Wireless Capital LLC, 8.50%, 11/15/18 | 330,000 | 454,877 | ||||||
Vodafone Group plc, 5.625%, 2/27/17 | 110,000 | 129,376 | ||||||
855,270 | ||||||||
TOTAL CORPORATE BONDS (Cost $54,906,971) | 59,412,322 |
18
Shares/ Principal Amount | Value | |||||||
Commercial Mortgage-Backed Securities(2) — 1.8% | ||||||||
Banc of America Commercial Mortgage, Inc., Series 2004-1, Class A4 SEQ, 4.76%, 11/10/39 | $400,000 | $420,507 | ||||||
Banc of America Commercial Mortgage, Inc., Series 2004-6, Class A3 SEQ, 4.51%, 12/10/42 | 326,869 | 331,875 | ||||||
Banc of America Commercial Mortgage, Inc., Series 2005-5, Class A4, VRN, 5.12%, 5/1/12 | 350,000 | 391,250 | ||||||
Banc of America Commercial Mortgage, Inc., Series 2005-5, Class AM, VRN, 5.18%, 5/1/12 | 300,000 | 322,452 | ||||||
CenterPoint Energy Transition Bond Co. LLC, Series 2012-1, Class A2 SEQ, 2.16%, 10/15/21 | 240,000 | 244,910 | ||||||
Commercial Mortgage Pass-Through Certificates, Series 2004-LB3A, Class A4 SEQ, VRN, 5.23%, 5/1/12 | 180,787 | 186,053 | ||||||
Credit Suisse First Boston Mortgage Securities Corp., Series 2004-C2, Class A2, VRN, 5.42%, 5/1/12 | 575,000 | 613,540 | ||||||
Credit Suisse Mortgage Capital Certificates, Series 2007-TF2A, Class A1, VRN, 0.42%, 5/15/12(3) | 340,080 | 306,290 | ||||||
GE Capital Commercial Mortgage Corp., Series 2005-C3, Class A5, VRN, 4.98%, 5/1/12 | 200,000 | 199,964 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG3, Class A4, VRN, 4.80%, 5/1/12 | 480,000 | 518,569 | ||||||
Greenwich Capital Commercial Funding Corp., Series 2005-GG3, Class AJ, VRN, 4.86%, 5/1/12 | 158,000 | 164,004 | ||||||
GS Mortgage Securities Corp. II, Series 2004-GG2, Class A6 SEQ, VRN, 5.40%, 5/1/12 | 600,000 | 647,835 | ||||||
GS Mortgage Securities Corp. II, Series 2005-GG4, Class A4 SEQ, 4.76%, 7/10/39 | 345,000 | 368,105 | ||||||
GS Mortgage Securities Corp. II, Series 2005-GG4, Class A4A SEQ, 4.75%, 7/10/39 | $850,000 | $926,131 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C1, Class A4 SEQ, 4.57%, 1/15/31 | 400,000 | 420,341 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C2, Class A4 SEQ, 4.37%, 3/15/36 | 1,000,000 | 1,053,062 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C4, Class A4, VRN, 5.45%, 5/11/12 | 300,000 | 322,234 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2004-C8, Class AJ, VRN, 4.86%, 5/11/12 | 125,000 | 128,047 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C3, Class AJ SEQ, 4.84%, 7/15/40 | 150,000 | 149,147 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C5, Class AM, VRN, 5.02%, 5/11/12 | 400,000 | 426,901 | ||||||
LB-UBS Commercial Mortgage Trust, Series 2005-C7, Class AM SEQ, VRN, 5.26%, 5/11/12 | 425,000 | 458,137 | ||||||
Morgan Stanley Capital I, Series 2005-HQ6, Class A2A SEQ, 4.88%, 8/13/42 | 52,332 | 52,994 | ||||||
Morgan Stanley Capital I, Series 2005-T17, Class A5 SEQ, 4.78%, 12/13/41 | 600,000 | 646,380 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2004-C15, Class A3 SEQ, 4.50%, 10/15/41 | 90,156 | 91,327 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2004-C15, Class A4 SEQ, 4.80%, 10/15/41 | 1,100,000 | 1,177,008 | ||||||
Wachovia Bank Commercial Mortgage Trust, Series 2005-C20, Class A6A, VRN, 5.11%, 5/1/12 | 533,153 | 536,202 | ||||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $10,963,565) | 11,103,265 |
19
Shares/ Principal Amount | Value | |||||||
U.S. Government Agency Securities — 1.4% | ||||||||
FIXED-RATE U.S. GOVERNMENT AGENCY SECURITIES — 0.8% | ||||||||
FHLMC, 1.25%, 5/12/17 | $2,400,000 | $2,419,493 | ||||||
FHLMC, 1.75%, 5/30/19 | 1,200,000 | 1,209,579 | ||||||
FHLMC, 2.375%, 1/13/22 | 990,000 | 997,439 | ||||||
4,626,511 | ||||||||
GOVERNMENT-BACKED CORPORATE BONDS(4) — 0.6% | ||||||||
Ally Financial, Inc., 1.75%, 10/30/12 | 2,000,000 | 2,015,968 | ||||||
Citigroup Funding, Inc., 1.875%, 11/15/12 | 1,800,000 | 1,816,189 | ||||||
3,832,157 | ||||||||
TOTAL U.S. GOVERNMENT AGENCY SECURITIES (Cost $8,369,760) | 8,458,668 | |||||||
Collateralized Mortgage Obligations(2) — 1.2% | ||||||||
PRIVATE SPONSOR COLLATERALIZED MORTGAGE OBLIGATIONS — 1.0% | ||||||||
ABN Amro Mortgage Corp., Series 2003-4, Class A4, 5.50%, 3/25/33 | 194,185 | 200,103 | ||||||
Banc of America Alternative Loan Trust, Series 2007-2, Class 2A4, 5.75%, 6/25/37 | 582,654 | 363,366 | ||||||
Banc of America Mortgage Securities, Inc., Series 2004-7, Class 7A1, 5.00%, 8/25/19 | 140,483 | 144,267 | ||||||
Chase Mortgage Finance Corp., Series 2006-S4, Class A3, 6.00%, 12/25/36 | 184,568 | 182,666 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 5.33%, 5/1/12 | 335,491 | 316,763 | ||||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2005-17, Class 1A11, 5.50%, 9/25/35 | 126,077 | 127,019 | ||||||
Credit Suisse First Boston Mortgage Securities Corp., Series 2003-AR28, Class 2A1, VRN, 2.65%, 5/1/12 | 485,579 | 445,764 | ||||||
MASTR Adjustable Rate Mortgages Trust, Series 2004-13, Class 3A7, VRN, 2.72%, 5/1/12 | 600,000 | 583,326 | ||||||
MASTR Asset Securitization Trust, Series 2003-10, Class 3A1, 5.50%, 11/25/33 | $243,635 | $254,986 | ||||||
PHHMC Mortgage Pass-Through Certificates, Series 2007-6, Class A1, VRN, 6.00%, 5/1/12 | 294,837 | 308,156 | ||||||
Sequoia Mortgage Trust, Series 2012-1, Class 1A1, VRN, 2.87%, 5/1/12 | 390,800 | 394,900 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-1, Class A10, 5.50%, 2/25/34 | 333,860 | 351,645 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2004-4, Class A9, 5.50%, 5/25/34 | 194,179 | 200,358 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-17, Class 1A1, 5.50%, 1/25/36 | 359,462 | 347,659 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-2, Class 1A1 SEQ, 5.50%, 4/25/35 | 118,579 | 118,821 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR14, Class A1, VRN, 5.35%, 5/1/12 | 162,089 | 164,024 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR16, Class 4A6, VRN, 2.70%, 5/1/12 | 28,056 | 27,962 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-10, Class A4 SEQ, 6.00%, 8/25/36 | 415,521 | 413,022 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-13, Class A5, 6.00%, 10/25/36 | 383,327 | 377,093 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-13, Class A1, 6.00%, 9/25/37 | 298,596 | 299,147 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2007-AR10, Class 1A1, VRN, 6.06%, 5/1/12 | 264,012 | 267,086 | ||||||
5,888,133 |
20
Shares/ Principal Amount | Value | |||||||
U.S. GOVERNMENT AGENCY COLLATERALIZED MORTGAGE OBLIGATIONS — 0.2% | ||||||||
FHLMC, Series 77, Class H, 8.50%, 9/15/20 | $81,772 | $91,416 | ||||||
FHLMC, Series 2926, Class EW SEQ, 5.00%, 1/15/25 | 1,039,490 | 1,150,292 | ||||||
1,241,708 | ||||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $7,187,617) | 7,129,841 | |||||||
Municipal Securities — 0.6% | ||||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 5.94%, 2/15/47 | 50,000 | 54,530 | ||||||
American Municipal Power-Ohio, Inc., Rev., (Building Bonds), 7.50%, 2/15/50 | 75,000 | 99,206 | ||||||
Bay Area Toll Authority Toll Bridge Rev., Series 2010 S1, (Building Bonds), 6.92%, 4/1/40 | 135,000 | 182,960 | ||||||
California GO, (Building Bonds), 7.30%, 10/1/39 | 110,000 | 142,380 | ||||||
California GO, (Building Bonds), 7.60%, 11/1/40 | 30,000 | 40,142 | ||||||
Illinois GO, 5.88%, 3/1/19 | 240,000 | 269,549 | ||||||
Illinois GO, (Taxable Pension), 5.10%, 6/1/33 | 300,000 | 285,477 | ||||||
Illinois GO, Series 2010-3, (Building Bonds), 6.73%, 4/1/35 | 55,000 | 59,352 | ||||||
Los Angeles Community College District GO, Series 2010 D, (Election of 2008), 6.68%, 8/1/36 | 200,000 | 259,354 | ||||||
Los Angeles Department of Water & Power Rev., (Building Bonds), 5.72%, 7/1/39 | 60,000 | 73,535 | ||||||
Metropolitan Transportation Authority Rev., Series 2010 C1, (Building Bonds), 6.69%, 11/15/40 | 105,000 | 134,058 | ||||||
Metropolitan Transportation Authority Rev., Series 2010 E, (Building Bonds), 6.81%, 11/15/40 | 60,000 | 77,327 | ||||||
Missouri Highways & Transportation Commission Rev., (Building Bonds), 5.45%, 5/1/33 | 130,000 | 158,829 | ||||||
New Jersey State Turnpike Authority Rev., Series 2009 F, (Building Bonds), 7.41%, 1/1/40 | $200,000 | $291,272 | ||||||
New Jersey State Turnpike Authority Rev., Series 2010 A, (Building Bonds), 7.10%, 1/1/41 | 95,000 | 133,410 | ||||||
New York GO, Series 2010 F1, (Building Bonds), 6.27%, 12/1/37 | 95,000 | 123,173 | ||||||
Ohio State University (The) Rev., Series 2011 A, 4.80%, 6/1/2111 | 100,000 | 105,656 | ||||||
Ohio Water Development Authority Pollution Control Rev., Series 2010 B2, (Building Bonds), 4.88%, 12/1/34 | 110,000 | 124,199 | ||||||
Oregon State Department of Transportation Highway User Tax Rev., Series 2010 A, (Building Bonds), 5.83%, 11/15/34 | 70,000 | 87,864 | ||||||
Port Authority of New York & New Jersey Rev., 4.93%, 10/1/51 | 50,000 | 55,762 | ||||||
Rutgers State University Rev., Series 2010 H, (Building Bonds), 5.67%, 5/1/40 | 205,000 | 255,988 | ||||||
Sacramento Municipal Utility District Electric Rev., Series 2010 W, (Building Bonds), 6.16%, 5/15/36 | 210,000 | 250,354 | ||||||
Salt River Agricultural Improvement & Power District Electric Rev., Series 2010 A, (Building Bonds), 4.84%, 1/1/41 | 95,000 | 110,492 | ||||||
San Francisco City & County Public Utilities Water Commission Rev., Series 2010 B, (Building Bonds), 6.00%, 11/1/40 | 155,000 | 187,860 | ||||||
Santa Clara Valley Transportation Authority Sales Tax Rev., Series 2010 A, (Building Bonds), 5.88%, 4/1/32 | 120,000 | 146,040 | ||||||
Texas GO, (Building Bonds), 5.52%, 4/1/39 | 50,000 | 64,189 | ||||||
Washington GO, Series 2010 F, (Building Bonds), 5.14%, 8/1/40 | 170,000 | 205,559 | ||||||
TOTAL MUNICIPAL SECURITIES (Cost $3,323,266) | 3,978,517 |
21
Shares/ Principal Amount | Value | |||||||
Sovereign Governments and Agencies — 0.6% | ||||||||
BRAZIL — 0.2% | ||||||||
Brazilian Government International Bond, 5.875%, 1/15/19 | $690,000 | $835,590 | ||||||
Brazilian Government International Bond, 4.875%, 1/22/21 | 40,000 | 46,120 | ||||||
Brazilian Government International Bond, 5.625%, 1/7/41 | 130,000 | 155,350 | ||||||
1,037,060 | ||||||||
CANADA — 0.1% | ||||||||
Hydro-Quebec, 8.40%, 1/15/22 | 145,000 | 208,221 | ||||||
Province of Ontario Canada, 5.45%, 4/27/16 | 150,000 | 174,597 | ||||||
Province of Ontario Canada, 1.60%, 9/21/16 | 110,000 | 111,397 | ||||||
494,215 | ||||||||
CHILE† | ||||||||
Chile Government International Bond, 3.25%, 9/14/21 | 100,000 | 104,500 | ||||||
COLOMBIA† | ||||||||
Colombia Government International Bond, 4.375%, 7/12/21 | 100,000 | 111,000 | ||||||
ITALY† | ||||||||
Republic of Italy, 6.875%, 9/27/23 | 80,000 | 82,208 | ||||||
MEXICO — 0.2% | ||||||||
United Mexican States, 5.625%, 1/15/17 | 90,000 | 105,525 | ||||||
United Mexican States, 5.95%, 3/19/19 | 420,000 | 513,870 | ||||||
United Mexican States, 5.125%, 1/15/20 | $330,000 | $387,420 | ||||||
United Mexican States, 6.05%, 1/11/40 | 120,000 | 150,300 | ||||||
United Mexican States, MTN, 4.75%, 3/8/44 | 100,000 | 103,050 | ||||||
1,260,165 | ||||||||
PERU† | ||||||||
Republic of Peru, 6.55%, 3/14/37 | 70,000 | 92,295 | ||||||
Republic of Peru, 5.625%, 11/18/50 | 120,000 | 139,500 | ||||||
231,795 | ||||||||
POLAND† | ||||||||
Poland Government International Bond, 5.125%, 4/21/21 | 140,000 | 151,690 | ||||||
SOUTH KOREA — 0.1% | ||||||||
Export-Import Bank of Korea, 3.75%, 10/20/16 | 160,000 | 166,822 | ||||||
Korea Development Bank, 3.25%, 3/9/16 | 130,000 | 132,549 | ||||||
Korea Development Bank, 4.00%, 9/9/16 | 110,000 | 115,706 | ||||||
415,077 | ||||||||
TOTAL SOVEREIGN GOVERNMENTS AND AGENCIES (Cost $3,501,676) | 3,887,710 | |||||||
Temporary Cash Investments — 2.6% | ||||||||
SSgA U.S. Government Money Market Fund (Cost $15,490,222) | 15,490,222 | 15,490,222 | ||||||
TOTAL INVESTMENT SECURITIES — 101.1% (Cost $524,424,027) | 610,721,348 | |||||||
OTHER ASSETS AND LIABILITIES — (1.1)% | (6,855,169 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $603,866,179 |
Credit Default Swap Agreements | |||||||
Counterparty/ Reference Entity | Notional Amount | Buy/Sell Protection | Interest Rate | Termination Date | Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | Value |
Bank of America N.A./CDX | $4,400,000 | Buy | 1.00% | 6/20/16 | $(5,086) | $(26,109) | $(31,195) |
North America Investment Grade 16 Index |
22
Notes to Schedule of Investments
CDX = Credit Derivatives Indexes
FDIC = Federal Deposit Insurance Corporation
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
MASTR = Mortgage Asset Securitization Transactions, Inc.
MTN = Medium Term Note
PHHMC = PHH Mortgage Corporation
SEQ = Sequential Payer
VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is effective at the period end.
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
(2) | Final maturity date indicated, unless otherwise noted. |
(3) | 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 $4,241,683, which represented 0.7% of total net assets. |
(4) | The debt is guaranteed under the 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.
23
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $524,424,027) | $610,721,348 | |||
Receivable for investments sold | 12,301,988 | |||
Receivable for capital shares sold | 387,833 | |||
Dividends and interest receivable | 1,970,483 | |||
625,381,652 | ||||
Liabilities | ||||
Payable for investments purchased | 20,488,314 | |||
Payable for capital shares redeemed | 557,950 | |||
Swap agreements, at value (including net premiums paid (received) of $(5,086)) | 31,195 | |||
Accrued management fees | 438,014 | |||
21,515,473 | ||||
Net Assets | $603,866,179 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $519,742,539 | |||
Undistributed net investment income | 979,360 | |||
Accumulated net realized loss | (3,126,764 | ) | ||
Net unrealized appreciation | 86,271,044 | |||
$603,866,179 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $583,192,097 | 33,904,416 | $17.20 | |||
Institutional Class, $0.01 Par Value | $20,674,082 | 1,201,649 | $17.20 |
See Notes to Financial Statements.
24
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $7,033) | $3,902,162 | |||
Interest | 3,837,660 | |||
7,739,822 | ||||
Expenses: | ||||
Management fees | 2,484,333 | |||
Directors’ fees and expenses | 8,524 | |||
2,492,857 | ||||
Net investment income (loss) | 5,246,965 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment and foreign currency transactions | 13,276,688 | |||
Swap agreement transactions | (21,241 | ) | ||
13,255,447 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments and translation of assets and liabilities in foreign currencies | 28,675,077 | |||
Swap agreements | (57,547 | ) | ||
28,617,530 | ||||
Net realized and unrealized gain (loss) | 41,872,977 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $47,119,942 |
See Notes to Financial Statements.
25
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $5,246,965 | $9,458,465 | ||||||
Net realized gain (loss) | 13,255,447 | 31,035,682 | ||||||
Change in net unrealized appreciation (depreciation) | 28,617,530 | 93,208 | ||||||
Net increase (decrease) in net assets resulting from operations | 47,119,942 | 40,587,355 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (5,071,748 | ) | (9,350,204 | ) | ||||
Institutional Class | (150,751 | ) | (194,380 | ) | ||||
Decrease in net assets from distributions | (5,222,499 | ) | (9,544,584 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 40,403,107 | (3,081,008 | ) | |||||
Net increase (decrease) in net assets | 82,300,550 | 27,961,763 | ||||||
Net Assets | ||||||||
Beginning of period | 521,565,629 | 493,603,866 | ||||||
End of period | $603,866,179 | $521,565,629 | ||||||
�� | ||||||||
Undistributed net investment income | $979,360 | $954,894 |
See Notes to Financial Statements.
26
APRIL 30, 2012 (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 offers the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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. Swap agreements are valued at an evaluated price as provided by independent pricing services or investment dealers.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
27
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 paydown gain (loss) and 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.
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 to-be-announced (TBA) security and at the same time make a commitment to purchase the same security at a future date at a specified price. Conversely, the fund may purchase a TBA security and at the same time make a commitment to sell the same security at a future date at a specified price. These types of transactions are known as “TBA roll” transactions and are accounted for as purchases and sales. The fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet the purchase price.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investments, including, but not limited to, futures contracts, forward commitments, when-issued securities, swap agreements and certain forward foreign currency exchange contracts. American Century Investment Management, Inc. (ACIM) (the investment advisor) monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on futures contracts and swap agreements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2008. 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.
28
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.800% to 0.900% for the Investor Class. The 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, 2012 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., 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.
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the six months ended April 30, 2012 totaled $258,129,660, of which $87,976,298 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 totaled $215,886,337, of which $46,229,821 represented U.S. Treasury and Government Agency obligations.
29
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 250,000,000 | 250,000,000 | ||||||||||||||
Sold | 3,994,828 | $66,279,596 | 3,223,460 | $50,423,973 | ||||||||||||
Issued in reinvestment of distributions | 300,289 | 4,944,183 | 582,740 | 9,098,277 | ||||||||||||
Redeemed | (2,455,809 | ) | (40,605,752 | ) | (4,172,359 | ) | (65,140,298 | ) | ||||||||
1,839,308 | 30,618,027 | (366,159 | ) | (5,618,048 | ) | |||||||||||
Institutional Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||
Sold | 732,157 | 12,136,201 | 1,093,989 | 17,073,594 | ||||||||||||
Issued in reinvestment of distributions | 9,088 | 150,751 | 12,431 | 194,380 | ||||||||||||
Redeemed | (149,459 | ) | (2,501,872 | ) | (931,815 | ) | (14,730,934 | ) | ||||||||
591,786 | 9,785,080 | 174,605 | 2,537,040 | |||||||||||||
Net increase (decrease) | 2,431,094 | $40,403,107 | (191,554 | ) | $(3,081,008 | ) |
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.
30
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 | $328,413,379 | — | — | |||||||||
Foreign Common Stocks | 30,792,425 | — | — | |||||||||
U.S. Government Agency Mortgage-Backed Securities | — | $77,069,435 | — | |||||||||
U.S. Treasury Securities | — | 64,985,564 | — | |||||||||
Corporate Bonds | — | 59,412,322 | — | |||||||||
Commercial Mortgage-Backed Securities | — | 11,103,265 | — | |||||||||
U.S. Government Agency Securities | — | 8,458,668 | — | |||||||||
Collateralized Mortgage Obligations | — | 7,129,841 | — | |||||||||
Municipal Securities | — | 3,978,517 | — | |||||||||
Sovereign Governments and Agencies | — | 3,887,710 | — | |||||||||
Temporary Cash Investments | 15,490,222 | — | — | |||||||||
Total Value of Investment Securities | $374,696,026 | $236,025,322 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Swap Agreements | — | $(26,109 | ) | — |
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 credit 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 credit risk derivative instruments as of April 30, 2012, is disclosed on the Statement of Assets and Liabilities as a liability of $31,195 in swap agreements. For the six months ended April 30, 2012, the effect of credit risk derivative instruments on the Statement of Operations was $(21,241) in net realized gain (loss) on swap agreement transactions and $(57,547) in change in net unrealized appreciation (depreciation) on swap agreements.
31
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $528,967,471 | |||
Gross tax appreciation of investments | $84,736,798 | |||
Gross tax depreciation of investments | (2,982,921 | ) | ||
Net tax appreciation (depreciation) of investments | $81,753,877 |
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, 2011, the fund had accumulated capital losses of $(10,894,148), 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. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
32
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Total Return(2) | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||
Investor Class | |||||||||||||
2012(3) | $15.96 | 0.15 | 1.25 | 1.40 | (0.16) | — | (0.16) | $17.20 | 8.79% | 0.90%(4) | 1.89%(4) | 39% | $583,192 |
2011 | $15.02 | 0.29 | 0.94 | 1.23 | (0.29) | — | (0.29) | $15.96 | 8.26% | 0.90% | 1.84% | 87% | $511,829 |
2010 | $13.58 | 0.27 | 1.44 | 1.71 | (0.27) | — | (0.27) | $15.02 | 12.70% | 0.91% | 1.85% | 69% | $487,066 |
2009 | $12.66 | 0.28 | 0.93 | 1.21 | (0.29) | — | (0.29) | $13.58 | 9.81% | 0.90% | 2.21% | 110% | $459,183 |
2008 | $17.47 | 0.37 | (3.69) | (3.32) | (0.37) | (1.12) | (1.49) | $12.66 | (20.52)% | 0.90% | 2.42% | 153% | $439,969 |
2007 | $17.03 | 0.35 | 1.11 | 1.46 | (0.36) | (0.66) | (1.02) | $17.47 | 8.92% | 0.90% | 2.08% | 161% | $636,276 |
Institutional Class | |||||||||||||
2012(3) | $15.96 | 0.17 | 1.24 | 1.41 | (0.17) | — | (0.17) | $17.20 | 8.89% | 0.70%(4) | 2.09%(4) | 39% | $20,674 |
2011 | $15.02 | 0.32 | 0.94 | 1.26 | (0.32) | — | (0.32) | $15.96 | 8.48% | 0.70% | 2.04% | 87% | $9,736 |
2010 | $13.59 | 0.29 | 1.44 | 1.73 | (0.30) | — | (0.30) | $15.02 | 12.84% | 0.71% | 2.05% | 69% | $6,538 |
2009 | $12.66 | 0.30 | 0.94 | 1.24 | (0.31) | — | (0.31) | $13.59 | 10.11% | 0.70% | 2.41% | 110% | $6,249 |
2008 | $17.47 | 0.39 | (3.68) | (3.29) | (0.40) | (1.12) | (1.52) | $12.66 | (20.37)% | 0.70% | 2.62% | 153% | $5,927 |
2007 | $17.04 | 0.39 | 1.09 | 1.48 | (0.39) | (0.66) | (1.05) | $17.47 | 9.07% | 0.70% | 2.28% | 161% | $1,338 |
33
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
See Notes to Financial Statements.
34
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.
35
36
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Contact Us | americancentury.com |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications 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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75356 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 18 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2012 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Investor Class | AFSIX | 15.60% | 6.08% | 3.68% | 5.44% | 2/28/05 |
Russell 1000 Growth Index | — | 14.13% | 7.26% | 4.11% | 6.04% | — |
Institutional Class | AFGNX | 15.73% | 6.29% | — | 2.87% | 9/28/07 |
A Class No sales charge* With sales charge* | AFGAX | 15.44% 8.82% | 5.74% -0.33% | — — | 2.40% 1.09% | 9/28/07 |
C Class No sales charge* With sales charge* | AFGCX | 15.02% 14.02% | 4.94% 4.94% | — — | 1.64% 1.64% | 9/28/07 |
R Class | AFGRX | 15.30% | 5.49% | — | 2.14% | 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%. 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 | 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.
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, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 8.3% |
Coca-Cola Co. (The) | 4.2% |
Schlumberger Ltd. | 3.7% |
Abbott Laboratories | 3.6% |
Home Depot, Inc. (The) | 3.4% |
MasterCard, Inc., Class A | 3.4% |
EMC Corp. | 3.4% |
QUALCOMM, Inc. | 3.2% |
Accenture plc, Class A | 3.1% |
Crown Castle International Corp. | 3.1% |
Top Five Industries | % of net assets |
Computers and Peripherals | 11.6% |
IT Services | 6.6% |
Communications Equipment | 5.8% |
Semiconductors and Semiconductor Equipment | 4.6% |
Oil, Gas and Consumable Fuels | 4.4% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.8% |
Foreign Common Stocks** | 7.3% |
Exchange-Traded Funds | 1.2% |
Total Equity Exposure | 98.3% |
Temporary Cash Investments | 1.7% |
Other Assets and Liabilities | —* |
* | Category is less than 0.05% of total net assets. |
** | 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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,156.00 | $5.36 | 1.00% |
Institutional Class | $1,000 | $1,157.30 | $4.29 | 0.80% |
A Class | $1,000 | $1,154.40 | $6.70 | 1.25% |
C Class | $1,000 | $1,150.20 | $10.69 | 2.00% |
R Class | $1,000 | $1,153.00 | $8.03 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 97.1% | ||||||||
AEROSPACE AND DEFENSE — 3.1% | ||||||||
Honeywell International, Inc. | 2,627 | $159,354 | ||||||
Textron, Inc. | 7,202 | 191,861 | ||||||
United Technologies Corp. | 2,268 | 185,160 | ||||||
536,375 | ||||||||
AIR FREIGHT AND LOGISTICS — 2.5% | ||||||||
United Parcel Service, Inc., Class B | 5,454 | 426,176 | ||||||
AUTO COMPONENTS — 2.5% | ||||||||
BorgWarner, Inc.(1) | 5,560 | 439,462 | ||||||
AUTOMOBILES — 1.4% | ||||||||
Harley-Davidson, Inc. | 4,693 | 245,585 | ||||||
BEVERAGES — 4.2% | ||||||||
Coca-Cola Co. (The) | 9,640 | 735,725 | ||||||
BIOTECHNOLOGY — 0.9% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 1,778 | 160,589 | ||||||
CAPITAL MARKETS — 1.8% | ||||||||
BlackRock, Inc. | 1,652 | 316,490 | ||||||
CHEMICALS — 2.6% | ||||||||
E.I. du Pont de Nemours & Co. | 7,883 | 421,425 | ||||||
Rockwood Holdings, Inc.(1) | 408 | 22,579 | ||||||
444,004 | ||||||||
COMMERCIAL BANKS — 0.1% | ||||||||
Wells Fargo & Co. | 460 | 15,378 | ||||||
COMMUNICATIONS EQUIPMENT — 5.8% | ||||||||
Cisco Systems, Inc. | 22,473 | 452,831 | ||||||
QUALCOMM, Inc. | 8,822 | 563,196 | ||||||
1,016,027 | ||||||||
COMPUTERS AND PERIPHERALS — 11.6% | ||||||||
Apple, Inc.(1) | 2,461 | 1,437,815 | ||||||
EMC Corp.(1) | 20,735 | 584,934 | ||||||
2,022,749 | ||||||||
ELECTRICAL EQUIPMENT — 2.2% | ||||||||
Rockwell Automation, Inc. | 4,953 | 383,065 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 2.1% | ||||||||
Jabil Circuit, Inc. | 15,258 | 357,800 | ||||||
ENERGY EQUIPMENT AND SERVICES — 3.7% | ||||||||
Schlumberger Ltd. | 8,704 | 645,314 | ||||||
FOOD AND STAPLES RETAILING — 0.6% | ||||||||
CVS Caremark Corp. | 2,199 | 98,119 | ||||||
FOOD PRODUCTS — 1.6% | ||||||||
Hershey Co. (The) | 2,071 | 138,778 | ||||||
Kellogg Co. | 2,646 | 133,808 | ||||||
272,586 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.3% | ||||||||
Covidien plc | 5,816 | $321,218 | ||||||
Edwards Lifesciences Corp.(1) | 865 | 71,769 | ||||||
392,987 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 2.7% | ||||||||
Express Scripts Holding Co.(1) | 8,433 | 470,477 | ||||||
HOTELS, RESTAURANTS AND LEISURE — 2.9% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 203 | 84,072 | ||||||
Marriott International, Inc. Class A | 3,204 | 125,244 | ||||||
Starbucks Corp. | 5,170 | 296,655 | ||||||
505,971 | ||||||||
HOUSEHOLD DURABLES — 0.1% | ||||||||
Tempur-Pedic International, Inc.(1) | 375 | 22,065 | ||||||
HOUSEHOLD PRODUCTS — 2.2% | ||||||||
Colgate-Palmolive Co. | 3,924 | 388,241 | ||||||
INTERNET SOFTWARE AND SERVICES — 0.8% | ||||||||
Google, Inc., Class A(1) | 216 | 130,730 | ||||||
IT SERVICES — 6.6% | ||||||||
Accenture plc, Class A | 8,388 | 544,801 | ||||||
MasterCard, Inc., Class A | 1,313 | 593,830 | ||||||
1,138,631 | ||||||||
MACHINERY — 1.8% | ||||||||
Cummins, Inc. | 1,226 | 142,007 | ||||||
Illinois Tool Works, Inc. | 2,934 | 168,353 | ||||||
310,360 | ||||||||
MEDIA — 2.3% | ||||||||
CBS Corp., Class B | 7,601 | 253,493 | ||||||
Time Warner Cable, Inc. | 1,893 | 152,292 | ||||||
405,785 | ||||||||
METALS AND MINING — 0.5% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 2,361 | 90,426 | ||||||
MULTILINE RETAIL — 2.4% | ||||||||
Macy’s, Inc. | 10,031 | 411,472 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 4.4% | ||||||||
Exxon Mobil Corp. | 2,687 | 231,995 | ||||||
Noble Energy, Inc. | 352 | 34,961 | ||||||
Occidental Petroleum Corp. | 5,540 | 505,359 | ||||||
772,315 | ||||||||
PHARMACEUTICALS — 3.8% | ||||||||
Abbott Laboratories | 10,052 | 623,827 | ||||||
Johnson & Johnson | 630 | 41,007 | ||||||
664,834 |
8
Shares | Value | |||||||
ROAD AND RAIL — 1.6% | ||||||||
Union Pacific Corp. | 2,488 | $279,751 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 4.6% | ||||||||
Broadcom Corp., Class A(1) | 739 | 27,047 | ||||||
Linear Technology Corp. | 11,358 | 371,520 | ||||||
Xilinx, Inc. | 11,223 | 408,293 | ||||||
806,860 | ||||||||
SOFTWARE — 4.0% | ||||||||
Check Point Software Technologies Ltd.(1) | 6,970 | 405,166 | ||||||
Microsoft Corp. | 8,929 | 285,907 | ||||||
691,073 | ||||||||
SPECIALTY RETAIL — 4.3% | ||||||||
Home Depot, Inc. (The) | 11,522 | 596,724 | ||||||
O’Reilly Automotive, Inc.(1) | 1,506 | 158,823 | ||||||
755,547 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 3.1% | ||||||||
Crown Castle International Corp.(1) | 9,398 | 532,021 | ||||||
TOTAL COMMON STOCKS (Cost $12,329,741) | 16,884,990 | |||||||
Exchange-Traded Funds — 1.2% | ||||||||
iShares Russell 1000 Growth Index Fund (Cost $210,849) | 3,252 | 214,632 |
Value | ||||
Temporary Cash Investments — 1.7% | ||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $121,231), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $118,858) | $118,858 | |||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $75,731), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $74,286) | 74,286 | |||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $99,383), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $97,358) | 97,358 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $290,502) | 290,502 | |||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $12,831,092) | 17,390,124 | |||
OTHER ASSETS AND LIABILITIES† | 6,289 | |||
TOTAL NET ASSETS — 100.0% | $17,396,413 |
Notes to Schedule of Investments
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
9
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $12,831,092) | $17,390,124 | |||
Receivable for capital shares sold | 4,998 | |||
Dividends and interest receivable | 16,225 | |||
17,411,347 | ||||
Liabilities | ||||
Accrued management fees | 14,254 | |||
Distribution and service fees payable | 680 | |||
14,934 | ||||
Net Assets | $17,396,413 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $13,907,256 | |||
Undistributed net investment income | 21,644 | |||
Accumulated net realized loss | (1,091,519 | ) | ||
Net unrealized appreciation | 4,559,032 | |||
$17,396,413 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $15,495,484 | 1,259,853 | $12.30 | |||
Institutional Class, $0.01 Par Value | $28,461 | 2,316 | $12.29 | |||
A Class, $0.01 Par Value | $1,014,014 | 82,477 | $12.29 | * | ||
C Class, $0.01 Par Value | $302,916 | 25,034 | $12.10 | |||
R Class, $0.01 Par Value | $555,538 | 45,259 | $12.27 |
* | Maximum offering price $13.04 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
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FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends | $143,020 | |||
Interest | 75 | |||
143,095 | ||||
Expenses: | ||||
Management fees | 83,150 | |||
Distribution and service fees: | ||||
A Class | 1,272 | |||
C Class | 1,621 | |||
R Class | 1,279 | |||
Directors’ fees and expenses | 293 | |||
87,615 | ||||
Net investment income (loss) | 55,480 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment and foreign currency transactions | 424,141 | |||
Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | 1,960,859 | |||
Net realized and unrealized gain (loss) | 2,385,000 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $2,440,480 |
See Notes to Financial Statements.
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SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $55,480 | $86,095 | ||||||
Net realized gain (loss) | 424,141 | 510,907 | ||||||
Change in net unrealized appreciation (depreciation) | 1,960,859 | (87,497 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 2,440,480 | 509,505 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (78,796 | ) | (72,511 | ) | ||||
Institutional Class | (183 | ) | (180 | ) | ||||
A Class | (3,082 | ) | (1,550 | ) | ||||
R Class | (358 | ) | (89 | ) | ||||
Decrease in net assets from distributions | (82,419 | ) | (74,330 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (1,188,350 | ) | 2,319,045 | |||||
Net increase (decrease) in net assets | 1,169,711 | 2,754,220 | ||||||
Net Assets | ||||||||
Beginning of period | 16,226,702 | 13,472,482 | ||||||
End of period | $17,396,413 | $16,226,702 | ||||||
Undistributed net investment income | $21,644 | $48,583 |
See Notes to Financial Statements.
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APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Focused Growth Fund (the fund) is one fund in a series issued by the corporation. The fund 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 offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. On October 21, 2011, all outstanding B Class shares were converted to A Class shares and the fund discontinued offering the B Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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.
The value of investments initially expressed in foreign currencies is translated into U.S. dollars at prevailing exchange rates.
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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 2008. 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.
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Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
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, 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, 2012 was 1.00% for the Investor Class, A Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay 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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $4,000,788 and $5,178,635, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 47,269 | $541,111 | 499,144 | $5,526,676 | ||||||||||||
Issued in reinvestment of distributions | 7,272 | 76,575 | 6,447 | 70,211 | ||||||||||||
Redeemed | (134,709 | ) | (1,546,916 | ) | (418,174 | ) | (4,547,799 | ) | ||||||||
(80,168 | ) | (929,230 | ) | 87,417 | 1,049,088 | |||||||||||
Institutional Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Issued in reinvestment of distributions | 17 | 183 | 17 | 180 | ||||||||||||
A Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 449 | 4,993 | 288,494 | 3,258,421 | ||||||||||||
Issued in reinvestment of distributions | 272 | 2,868 | 141 | 1,540 | ||||||||||||
Redeemed | (15,652 | ) | (178,844 | ) | (240,611 | ) | (2,597,762 | ) | ||||||||
(14,931 | ) | (170,983 | ) | 48,024 | 662,199 | |||||||||||
B Class/Shares Authorized | N/A | 10,000,000 | ||||||||||||||
Redeemed | (5,355 | ) | (55,166 | ) | ||||||||||||
C Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 1,714 | 19,017 | 32,076 | 362,261 | ||||||||||||
Redeemed | (9,599 | ) | (108,841 | ) | (12,217 | ) | (133,745 | ) | ||||||||
(7,885 | ) | (89,824 | ) | 19,859 | 228,516 | |||||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 1,012 | 11,389 | 42,927 | 435,823 | ||||||||||||
Issued in reinvestment of distributions | 34 | 358 | 8 | 89 | ||||||||||||
Redeemed | (879 | ) | (10,243 | ) | (170 | ) | (1,684 | ) | ||||||||
167 | 1,504 | 42,765 | 434,228 | |||||||||||||
Net increase (decrease) | (102,800 | ) | $(1,188,350 | ) | 192,727 | $2,319,045 |
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.
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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 | ||||||||||||
Domestic Common Stocks | $15,613,805 | — | — | |||||||||
Foreign Common Stocks | 1,271,185 | — | — | |||||||||
Exchange-Traded Funds | 214,632 | — | — | |||||||||
Temporary Cash Investments | — | $290,502 | — | |||||||||
Total Value of Investment Securities | $17,099,622 | $290,502 | — |
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.
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $12,903,724 | |||
Gross tax appreciation of investments | $4,529,934 | |||
Gross tax depreciation of investments | (43,534 | ) | ||
Net tax appreciation (depreciation) of investments | $4,486,400 |
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, 2011, the fund had accumulated capital losses of $(1,437,981), 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. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||
2012(3) | $10.70 | 0.04 | 1.62 | 1.66 | (0.06) | — | (0.06) | $12.30 | 15.60% | 1.00%(4) | 0.72%(4) | 24% | $15,495 |
2011 | $10.17 | 0.06 | 0.53 | 0.59 | (0.06) | — | (0.06) | $10.70 | 5.76% | 1.00% | 0.54% | 91% | $14,335 |
2010 | $8.73 | 0.04 | 1.40 | 1.44 | —(5) | — | —(5) | $10.17 | 16.54% | 1.02% | 0.38% | 66% | $12,739 |
2009 | $7.73 | 0.04 | 1.01 | 1.05 | (0.05) | — | (0.05) | $8.73 | 13.77% | 1.00% | 0.50% | 125% | $12,541 |
2008 | $12.92 | 0.02 | (3.74) | (3.72) | (0.01) | (1.46) | (1.47) | $7.73 | (32.19)% | 1.00% | 0.22% | 130% | $8,814 |
2007 | $11.42 | 0.04 | 1.73 | 1.77 | (0.04) | (0.23) | (0.27) | $12.92 | 15.78% | 1.00% | 0.33% | 275% | $13,381 |
Institutional Class | |||||||||||||
2012(3) | $10.70 | 0.05 | 1.62 | 1.67 | (0.08) | — | (0.08) | $12.29 | 15.73% | 0.80%(4) | 0.92%(4) | 24% | $28 |
2011 | $10.17 | 0.08 | 0.53 | 0.61 | (0.08) | — | (0.08) | $10.70 | 5.98% | 0.80% | 0.74% | 91% | $25 |
2010 | $8.73 | 0.05 | 1.41 | 1.46 | (0.02) | — | (0.02) | $10.17 | 16.77% | 0.82% | 0.58% | 66% | $23 |
2009 | $7.73 | 0.05 | 1.01 | 1.06 | (0.06) | — | (0.06) | $8.73 | 14.00% | 0.80% | 0.70% | 125% | $20 |
2008 | $12.93 | 0.04 | (3.75) | (3.71) | (0.03) | (1.46) | (1.49) | $7.73 | (32.09)% | 0.80% | 0.42% | 130% | $17 |
2007(6) | $12.59 | —(5) | 0.34 | 0.34 | — | — | — | $12.93 | 2.70% | 0.80%(4) | (0.40)%(4) | 275%(7) | $26 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class | |||||||||||||
2012(3) | $10.68 | 0.03 | 1.61 | 1.64 | (0.03) | — | (0.03) | $12.29 | 15.44% | 1.25%(4) | 0.47%(4) | 24% | $1,014 |
2011 | $10.15 | 0.04 | 0.52 | 0.56 | (0.03) | — | (0.03) | $10.68 | 5.51% | 1.25% | 0.29% | 91% | $1,040 |
2010 | $8.74 | 0.01 | 1.40 | 1.41 | — | — | — | $10.15 | 16.27% | 1.27% | 0.13% | 66% | $501 |
2009 | $7.73 | 0.02 | 1.02 | 1.04 | (0.03) | — | (0.03) | $8.74 | 13.48% | 1.25% | 0.25% | 125% | $373 |
2008 | $12.92 | —(5) | (3.75) | (3.75) | — | (1.44) | (1.44) | $7.73 | (32.37)% | 1.25% | (0.03)% | 130% | $241 |
2007(6) | $12.59 | (0.01) | 0.34 | 0.33 | — | — | — | $12.92 | 2.62% | 1.25%(4) | (0.85)%(4) | 275%(7) | $26 |
C Class | |||||||||||||
2012(3) | $10.52 | (0.01) | 1.59 | 1.58 | — | — | — | $12.10 | 15.02% | 2.00%(4) | (0.28)%(4) | 24% | $303 |
2011 | $10.05 | (0.05) | 0.52 | 0.47 | — | — | — | $10.52 | 4.68% | 2.00% | (0.46)% | 91% | $346 |
2010 | $8.71 | (0.06) | 1.40 | 1.34 | — | — | — | $10.05 | 15.38% | 2.02% | (0.62)% | 66% | $131 |
2009 | $7.73 | (0.04) | 1.02 | 0.98 | — | — | — | $8.71 | 12.68% | 2.00% | (0.50)% | 125% | $90 |
2008 | $12.91 | (0.08) | (3.75) | (3.83) | — | (1.35) | (1.35) | $7.73 | (32.87)% | 2.00% | (0.78)% | 130% | $73 |
2007(6) | $12.59 | (0.02) | 0.34 | 0.32 | — | — | — | $12.91 | 2.54% | 2.00%(4) | (1.52)%(4) | 275%(7) | $76 |
R Class | |||||||||||||
2012(3) | $10.65 | 0.01 | 1.62 | 1.63 | (0.01) | — | (0.01) | $12.27 | 15.30% | 1.50%(4) | 0.22%(4) | 24% | $556 |
2011 | $10.12 | 0.01 | 0.52 | 0.53 | —(5) | — | —(5) | $10.65 | 5.26% | 1.50% | 0.04% | 91% | $480 |
2010 | $8.73 | (0.01) | 1.40 | 1.39 | — | — | — | $10.12 | 15.92% | 1.52% | (0.12)% | 66% | $24 |
2009 | $7.73 | —(5) | 1.02 | 1.02 | (0.02) | — | (0.02) | $8.73 | 13.19% | 1.50% | 0.00%(8) | 125% | $20 |
2008 | $12.92 | (0.02) | (3.76) | (3.78) | — | (1.41) | (1.41) | $7.73 | (32.56)% | 1.50% | (0.28)% | 130% | $17 |
2007(6) | $12.59 | (0.01) | 0.34 | 0.33 | — | — | — | $12.92 | 2.62% | 1.50%(4) | (1.10)%(4) | 275%(7) | $26 |
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Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
(8) | Ratio was less than 0.005%. |
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75361 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCGX | 14.33% | 5.68% | 5.04% | 5.24% | 13.47% | 6/30/71(2) |
Russell 1000 Growth Index | — | 14.13% | 7.26% | 4.11% | 5.16% | N/A(3) | — |
Institutional Class | TWGIX | 14.42% | 5.87% | 5.25% | 5.45% | 5.55% | 6/16/97 |
A Class(4) No Sales Charge* With Sales Charge* | TCRAX | 14.17% 7.61% | 5.39% -0.66% | 4.78% 3.54% | 4.98% 4.36% | 5.44% 5.02% | 6/4/97 |
C Class No Sales Charge* With Sales Charge* | TWRCX | 13.73% 12.73% | 4.60% 4.60% | — — | — — | 13.46% 13.46% | 3/1/10 |
R Class | AGWRX | 14.06% | 5.12% | 4.52% | — | 6.60% | 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 |
0.98% | 0.78% | 1.23% | 1.98% | 1.48% |
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, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 7.4% |
Microsoft Corp. | 3.5% |
Exxon Mobil Corp. | 3.3% |
Google, Inc., Class A | 2.5% |
Schlumberger Ltd. | 2.5% |
Coca-Cola Co. (The) | 2.5% |
International Business Machines Corp. | 2.0% |
Philip Morris International, Inc. | 2.0% |
EMC Corp. | 1.8% |
Abbott Laboratories | 1.8% |
Top Five Industries | % of net assets |
Computers and Peripherals | 10.2% |
Oil, Gas and Consumable Fuels | 7.0% |
Software | 6.8% |
Beverages | 4.8% |
Aerospace and Defense | 4.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.6% |
Temporary Cash Investments | 0.8% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,143.30 | $5.17 | 0.97% |
Institutional Class | $1,000 | $1,144.20 | $4.11 | 0.77% |
A Class | $1,000 | $1,141.70 | $6.50 | 1.22% |
C Class | $1,000 | $1,137.30 | $10.47 | 1.97% |
R Class | $1,000 | $1,140.60 | $7.82 | 1.47% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.04 | $4.87 | 0.97% |
Institutional Class | $1,000 | $1,021.03 | $3.87 | 0.77% |
A Class | $1,000 | $1,018.80 | $6.12 | 1.22% |
C Class | $1,000 | $1,015.07 | $9.87 | 1.97% |
R Class | $1,000 | $1,017.55 | $7.37 | 1.47% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
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Shares | Value | |||||||
Common Stocks — 99.6% | ||||||||
AEROSPACE AND DEFENSE — 4.7% | ||||||||
Hexcel Corp.(1) | 1,095,300 | $29,989,314 | ||||||
Honeywell International, Inc. | 2,340,000 | 141,944,400 | ||||||
Precision Castparts Corp. | 348,600 | 61,482,582 | ||||||
Textron, Inc. | 1,740,900 | 46,377,576 | ||||||
United Technologies Corp. | 1,986,600 | 162,186,024 | ||||||
441,979,896 | ||||||||
AIR FREIGHT AND LOGISTICS — 1.3% | ||||||||
United Parcel Service, Inc., Class B | 1,538,600 | 120,226,204 | ||||||
AUTO COMPONENTS — 1.7% | ||||||||
Autoliv, Inc. | 1,007,700 | 63,223,098 | ||||||
BorgWarner, Inc.(1) | 1,234,000 | 97,535,360 | ||||||
160,758,458 | ||||||||
AUTOMOBILES — 0.8% | ||||||||
Harley-Davidson, Inc. | 1,360,800 | 71,210,664 | ||||||
BEVERAGES — 4.8% | ||||||||
Boston Beer Co., Inc., Class A(1) | 119,221 | 12,317,914 | ||||||
Brown-Forman Corp., Class B | 291,600 | 25,179,660 | ||||||
Coca-Cola Co. (The) | 3,038,200 | 231,875,424 | ||||||
Monster Beverage Corp.(1) | 277,000 | 17,993,920 | ||||||
PepsiCo, Inc. | 2,421,600 | 159,825,600 | ||||||
447,192,518 | ||||||||
BIOTECHNOLOGY — 1.5% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 470,100 | 42,459,432 | ||||||
Cepheid, Inc.(1) | 528,700 | 20,307,367 | ||||||
Gilead Sciences, Inc.(1) | 1,192,000 | 61,995,920 | ||||||
Medivation, Inc.(1) | 177,000 | 14,315,760 | ||||||
139,078,479 | ||||||||
CAPITAL MARKETS — 0.9% | ||||||||
BlackRock, Inc. | 434,800 | 83,298,984 | ||||||
CHEMICALS — 2.1% | ||||||||
E.I. du Pont de Nemours & Co. | 1,651,900 | 88,310,574 | ||||||
Monsanto Co. | 811,600 | 61,827,688 | ||||||
Rockwood Holdings, Inc.(1) | 849,800 | 47,027,932 | ||||||
197,166,194 | ||||||||
COMMERCIAL BANKS — 1.1% | ||||||||
Wells Fargo & Co. | 3,207,800 | 107,236,754 | ||||||
COMMUNICATIONS EQUIPMENT — 3.2% | ||||||||
Cisco Systems, Inc. | 4,801,100 | 96,742,165 | ||||||
F5 Networks, Inc.(1) | 368,700 | 49,379,991 | ||||||
QUALCOMM, Inc. | 2,470,200 | 157,697,568 | ||||||
303,819,724 | ||||||||
COMPUTERS AND PERIPHERALS — 10.2% | ||||||||
Apple, Inc.(1) | 1,192,000 | $696,414,080 | ||||||
Dell, Inc.(1) | 3,004,300 | 49,180,391 | ||||||
EMC Corp.(1) | 6,099,500 | 172,066,895 | ||||||
NetApp, Inc.(1) | 1,066,400 | 41,408,312 | ||||||
959,069,678 | ||||||||
ELECTRICAL EQUIPMENT — 0.4% | ||||||||
Rockwell Automation, Inc. | 486,100 | 37,594,974 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.6% | ||||||||
Jabil Circuit, Inc. | 1,567,400 | 36,755,530 | ||||||
Trimble Navigation Ltd.(1) | 443,900 | 24,032,746 | ||||||
60,788,276 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 3.8% | ||||||||
Core Laboratories NV | 314,500 | 43,080,210 | ||||||
Hornbeck Offshore Services, Inc.(1) | 524,900 | 21,851,587 | ||||||
Oceaneering International, Inc. | 1,152,500 | 59,503,575 | ||||||
Schlumberger Ltd. | 3,129,600 | 232,028,544 | ||||||
356,463,916 | ||||||||
FOOD AND STAPLES RETAILING — 2.2% | ||||||||
Costco Wholesale Corp. | 1,029,200 | 90,744,564 | ||||||
CVS Caremark Corp. | 1,580,600 | 70,526,372 | ||||||
Whole Foods Market, Inc. | 594,900 | 49,418,343 | ||||||
210,689,279 | ||||||||
FOOD PRODUCTS — 1.5% | ||||||||
Hershey Co. (The) | 1,038,000 | 69,556,380 | ||||||
Kellogg Co. | 994,500 | 50,291,865 | ||||||
Mead Johnson Nutrition Co. | 239,600 | 20,500,176 | ||||||
140,348,421 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 3.7% | ||||||||
Cooper Cos., Inc. (The) | 316,600 | 27,914,622 | ||||||
Covidien plc | 1,297,500 | 71,660,925 | ||||||
DENTSPLY International, Inc. | 474,900 | 19,499,394 | ||||||
Edwards Lifesciences Corp.(1) | 474,300 | 39,352,671 | ||||||
Gen-Probe, Inc.(1) | 247,800 | 20,208,090 | ||||||
Hill-Rom Holdings, Inc. | 736,000 | 23,883,200 | ||||||
IDEXX Laboratories, Inc.(1) | 244,100 | 21,463,713 | ||||||
Intuitive Surgical, Inc.(1) | 75,300 | 43,538,460 | ||||||
ResMed, Inc.(1) | 979,900 | 33,326,399 | ||||||
Zimmer Holdings, Inc. | 737,600 | 46,417,168 | ||||||
347,264,642 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.1% | ||||||||
Express Scripts Holding Co.(1) | 1,784,200 | 99,540,518 |
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Shares | Value | |||||||
HOTELS, RESTAURANTS AND LEISURE — 4.2% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 83,000 | $34,374,450 | ||||||
Marriott International, Inc. Class A | 2,721,100 | 106,367,799 | ||||||
McDonald’s Corp. | 1,216,700 | 118,567,415 | ||||||
Starbucks Corp. | 2,350,200 | 134,854,476 | ||||||
394,164,140 | ||||||||
HOUSEHOLD DURABLES — 0.6% | ||||||||
Mohawk Industries, Inc.(1) | 516,500 | 34,615,830 | ||||||
Tempur-Pedic International, Inc.(1) | 431,300 | 25,377,692 | ||||||
59,993,522 | ||||||||
HOUSEHOLD PRODUCTS — 1.1% | ||||||||
Church & Dwight Co., Inc. | 428,800 | 21,783,040 | ||||||
Colgate-Palmolive Co. | 859,700 | 85,058,718 | ||||||
106,841,758 | ||||||||
INDUSTRIAL CONGLOMERATES — 0.8% | ||||||||
Danaher Corp. | 1,385,800 | 75,138,076 | ||||||
INSURANCE — 0.4% | ||||||||
Brown & Brown, Inc. | 1,302,100 | 35,117,637 | ||||||
INTERNET AND CATALOG RETAIL — 1.7% | ||||||||
Amazon.com, Inc.(1) | 709,600 | 164,556,240 | ||||||
INTERNET SOFTWARE AND SERVICES — 2.5% | ||||||||
Google, Inc., Class A(1) | 387,900 | 234,768,717 | ||||||
IT SERVICES — 4.6% | ||||||||
Accenture plc, Class A | 1,183,600 | 76,874,820 | ||||||
Automatic Data Processing, Inc. | 1,317,200 | 73,262,664 | ||||||
International Business Machines Corp. | 927,500 | 192,066,700 | ||||||
MasterCard, Inc., Class A | 197,100 | 89,142,417 | ||||||
431,346,601 | ||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.6% | ||||||||
Agilent Technologies, Inc. | 1,367,900 | 57,698,022 | ||||||
MACHINERY — 2.8% | ||||||||
Cummins, Inc. | 563,400 | 65,258,622 | ||||||
Deere & Co. | 524,400 | 43,189,584 | ||||||
Illinois Tool Works, Inc. | 1,849,400 | 106,118,572 | ||||||
Terex Corp.(1) | 2,302,000 | 52,117,280 | ||||||
266,684,058 | ||||||||
MARINE — 0.3% | ||||||||
Kirby Corp.(1) | 474,800 | 31,512,476 | ||||||
MEDIA — 2.2% | ||||||||
CBS Corp., Class B | 1,690,200 | 56,368,170 | ||||||
Time Warner Cable, Inc. | 1,286,500 | 103,498,925 | ||||||
Viacom, Inc., Class B | 1,090,800 | 50,602,212 | ||||||
210,469,307 | ||||||||
METALS AND MINING — 1.3% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 2,123,800 | $81,341,540 | ||||||
Nucor Corp. | 1,050,600 | 41,194,026 | ||||||
122,535,566 | ||||||||
MULTILINE RETAIL — 1.6% | ||||||||
Dollar General Corp.(1) | 1,092,300 | 51,840,558 | ||||||
JC Penney Co., Inc. | 702,000 | 25,314,120 | ||||||
Macy’s, Inc. | 1,891,500 | 77,589,330 | ||||||
154,744,008 | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 7.0% | ||||||||
Devon Energy Corp. | 896,000 | 62,585,600 | ||||||
EOG Resources, Inc. | 776,200 | 85,234,522 | ||||||
Exxon Mobil Corp. | 3,580,800 | 309,166,272 | ||||||
Noble Energy, Inc. | 897,400 | 89,129,768 | ||||||
Occidental Petroleum Corp. | 1,198,100 | 109,290,682 | ||||||
655,406,844 | ||||||||
PERSONAL PRODUCTS — 0.6% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 793,400 | 51,848,690 | ||||||
PHARMACEUTICALS — 3.5% | ||||||||
Abbott Laboratories | 2,680,500 | 166,351,830 | ||||||
Allergan, Inc. | 547,200 | 52,531,200 | ||||||
Johnson & Johnson | 1,650,800 | 107,450,572 | ||||||
326,333,602 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.1% | ||||||||
American Campus Communities, Inc. | 638,500 | 28,381,325 | ||||||
AvalonBay Communities, Inc. | 169,400 | 24,630,760 | ||||||
Simon Property Group, Inc. | 315,600 | 49,107,360 | ||||||
102,119,445 | ||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.4% | ||||||||
CBRE Group, Inc.(1) | 1,845,600 | 34,715,736 | ||||||
ROAD AND RAIL — 0.7% | ||||||||
Union Pacific Corp. | 562,600 | 63,258,744 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.9% | ||||||||
Avago Technologies Ltd. | 777,200 | 26,797,856 | ||||||
Broadcom Corp., Class A(1) | 1,545,900 | 56,579,940 | ||||||
Linear Technology Corp. | 1,694,700 | 55,433,637 | ||||||
Marvell Technology Group Ltd.(1) | 3,907,700 | 58,654,577 | ||||||
Xilinx, Inc. | 2,044,600 | 74,382,548 | ||||||
271,848,558 |
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Shares | Value | |||||||
SOFTWARE — 6.8% | ||||||||
Cerner Corp.(1) | 464,800 | $37,690,632 | ||||||
Check Point Software Technologies Ltd.(1) | 520,300 | 30,245,039 | ||||||
Citrix Systems, Inc.(1) | 606,300 | 51,905,343 | ||||||
CommVault Systems, Inc.(1) | 258,100 | 13,439,267 | ||||||
Fortinet, Inc.(1) | 569,800 | 14,883,176 | ||||||
Microsoft Corp. | 10,155,800 | 325,188,716 | ||||||
Oracle Corp. | 4,142,100 | 121,736,319 | ||||||
QLIK Technologies, Inc.(1) | 670,933 | 19,329,580 | ||||||
Red Hat, Inc.(1) | 429,300 | 25,590,573 | ||||||
640,008,645 | ||||||||
SPECIALTY RETAIL — 2.3% | ||||||||
Home Depot, Inc. (The) | 1,946,800 | 100,824,772 | ||||||
O’Reilly Automotive, Inc.(1) | 540,700 | 57,022,222 | ||||||
Tractor Supply Co. | 244,400 | 24,051,404 | ||||||
Urban Outfitters, Inc.(1) | 1,149,800 | 33,298,208 | ||||||
215,196,606 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.9% | ||||||||
Coach, Inc. | 940,700 | 68,821,612 | ||||||
Lululemon Athletica, Inc.(1) | 245,200 | 18,179,128 | ||||||
87,000,740 | ||||||||
TOBACCO — 2.0% | ||||||||
Philip Morris International, Inc. | 2,063,600 | 184,712,836 | ||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.1% | ||||||||
Crown Castle International Corp.(1) | 1,896,400 | 107,355,204 | ||||||
TOTAL COMMON STOCKS (Cost $7,796,903,540) | 9,369,103,357 |
Principal Amount | Value | |||||||
Temporary Cash Investments — 0.8% | ||||||||
FHLB, Discount Notes, 0.00%, 5/1/12(2) | $40,000,000 | $40,000,000 | ||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at $15,356,362), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $15,055,814) | 15,055,751 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $9,592,854), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $9,409,876) | 9,409,845 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $12,588,878), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $12,332,426) | 12,332,392 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $76,797,988) | 76,797,988 | |||||||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $7,873,701,528) | 9,445,901,345 | |||||||
OTHER ASSETS AND LIABILITIES — (0.4)% | (40,815,216 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $9,405,086,129 |
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.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $7,873,701,528) | $9,445,901,345 | |||
Receivable for investments sold | 27,334,204 | |||
Receivable for capital shares sold | 4,599,376 | |||
Dividends and interest receivable | 5,139,591 | |||
9,482,974,516 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 89,523 | |||
Payable for investments purchased | 61,941,072 | |||
Payable for capital shares redeemed | 8,677,191 | |||
Accrued management fees | 6,974,920 | |||
Distribution and service fees payable | 205,681 | |||
77,888,387 | ||||
Net Assets | $9,405,086,129 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $7,615,272,521 | |||
Undistributed net investment income | 22,138,978 | |||
Undistributed net realized gain | 195,474,768 | |||
Net unrealized appreciation | 1,572,199,862 | |||
$9,405,086,129 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $5,928,675,969 | 208,856,666 | $28.39 | |||
Institutional Class, $0.01 Par Value | $2,619,070,619 | 91,459,724 | $28.64 | |||
A Class, $0.01 Par Value | $731,184,008 | 26,178,475 | $27.93 | * | ||
C Class, $0.01 Par Value | $16,058,817 | 573,356 | $28.01 | |||
R Class, $0.01 Par Value | $110,096,716 | 3,963,731 | $27.78 |
* | Maximum offering price $29.63 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $26,418) | $63,505,824 | |||
Interest | 24,102 | |||
63,529,926 | ||||
Expenses: | ||||
Management fees | 40,065,812 | |||
Distribution and service fees: | ||||
A Class | 853,064 | |||
C Class | 76,011 | |||
R Class | 228,624 | |||
Directors’ fees and expenses | 146,501 | |||
Other expenses | 360 | |||
41,370,372 | ||||
Net investment income (loss) | 22,159,554 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 202,012,573 | |||
Futures contract transactions | 4,660,631 | |||
Foreign currency transactions | (41,270 | ) | ||
206,631,934 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 976,784,659 | |||
Translation of assets and liabilities in foreign currencies | 18,285 | |||
976,802,944 | ||||
Net realized and unrealized gain (loss) | 1,183,434,878 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $1,205,594,432 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $22,159,554 | $45,354,297 | ||||||
Net realized gain (loss) | 206,631,934 | 516,322,848 | ||||||
Change in net unrealized appreciation (depreciation) | 976,802,944 | (116,233,346 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 1,205,594,432 | 445,443,799 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (26,416,678 | ) | (16,085,104 | ) | ||||
Institutional Class | (14,792,971 | ) | (6,371,247 | ) | ||||
A Class | (1,716,972 | ) | (354,453 | ) | ||||
R Class | (11,579 | ) | — | |||||
From net realized gains: | ||||||||
Investor Class | (188,116,335 | ) | — | |||||
Institutional Class | (75,859,024 | ) | — | |||||
A Class | (23,798,326 | ) | — | |||||
C Class | (518,181 | ) | — | |||||
R Class | (2,911,202 | ) | — | |||||
Decrease in net assets from distributions | (334,141,268 | ) | (22,810,804 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 352,805,794 | 1,815,608,193 | ||||||
Net increase (decrease) in net assets | 1,224,258,958 | 2,238,241,188 | ||||||
Net Assets | ||||||||
Beginning of period | 8,180,827,171 | 5,942,585,983 | ||||||
End of period | $9,405,086,129 | $8,180,827,171 | ||||||
Undistributed net investment income | $22,138,978 | $42,917,624 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Growth Fund (the fund) is one fund in a series issued by the corporation. The fund 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 stocks of larger-sized companies that management believes will increase in value over time.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover futures contracts. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on futures contracts.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2008. 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.
15
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 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, 2012 was 0.97% for the Investor Class, A Class, C Class and R Class and 0.77% 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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $2,654,307,773 and $2,522,331,250, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||||||||
Sold | 18,563,025 | $485,052,496 | 57,583,802 | $1,507,849,223 | ||||||||||||
Issued in reinvestment of distributions | 8,543,449 | 208,801,900 | 592,046 | 15,180,062 | ||||||||||||
Redeemed | (26,005,756 | ) | (699,790,233 | ) | (35,393,701 | ) | (920,453,919 | ) | ||||||||
1,100,718 | (5,935,837 | ) | 22,782,147 | 602,575,366 | ||||||||||||
Institutional Class/Shares Authorized | 250,000,000 | 250,000,000 | ||||||||||||||
Sold | 17,149,104 | 452,913,557 | 47,037,732 | 1,238,818,648 | ||||||||||||
Issued in reinvestment of distributions | 3,536,090 | 87,129,253 | 238,680 | 6,165,100 | ||||||||||||
Redeemed | (8,853,497 | ) | (237,231,376 | ) | (13,327,125 | ) | (338,969,351 | ) | ||||||||
11,831,697 | 302,811,434 | 33,949,287 | 906,014,397 | |||||||||||||
A Class/Shares Authorized | 310,000,000 | 310,000,000 | ||||||||||||||
Sold | 5,162,672 | 132,274,392 | 18,959,093 | 495,200,696 | ||||||||||||
Issued in reinvestment of distributions | 969,672 | 23,340,001 | 12,885 | 325,465 | ||||||||||||
Redeemed | (4,652,046 | ) | (120,795,026 | ) | (9,913,957 | ) | (255,065,676 | ) | ||||||||
1,480,298 | 34,819,367 | 9,058,021 | 240,460,485 | |||||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 61,041 | 1,580,320 | 422,812 | 11,102,799 | ||||||||||||
Issued in reinvestment of distributions | 14,143 | 342,255 | — | — | ||||||||||||
Redeemed | (78,393 | ) | (2,035,846 | ) | (107,008 | ) | (2,723,977 | ) | ||||||||
(3,209 | ) | (113,271 | ) | 315,804 | 8,378,822 | |||||||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||||
Sold | 1,233,920 | 32,130,330 | 3,010,975 | 76,296,991 | ||||||||||||
Issued in reinvestment of distributions | 111,295 | 2,666,644 | — | — | ||||||||||||
Redeemed | (528,394 | ) | (13,572,873 | ) | (729,423 | ) | (18,117,868 | ) | ||||||||
816,821 | 21,224,101 | 2,281,552 | 58,179,123 | |||||||||||||
Net increase (decrease) | 15,226,325 | $352,805,794 | 68,386,811 | $1,815,608,193 |
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 | ||||||||||||
Common Stocks | $9,369,103,357 | — | — | |||||||||
Temporary Cash Investments | — | $76,797,988 | — | |||||||||
Total Value of Investment Securities | $9,369,103,357 | $76,797,988 | — |
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.
At period end, the fund did not have any equity price risk derivative instruments disclosed on the Statement of Assets and Liabilities. For the six months ended April 30, 2012, the effect of equity price risk derivative instruments on the Statement of Operations was $4,660,631 in net realized gain (loss) on futures contract transactions.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $7,886,633,457 | |||
Gross tax appreciation of investments | $1,627,495,587 | |||
Gross tax depreciation of investments | (68,227,699 | ) | ||
Net tax appreciation (depreciation) of investments | $1,559,267,888 |
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.
18
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||
2012(3) | $25.88 | 0.06 | 3.49 | 3.55 | (0.13) | (0.91) | (1.04) | $28.39 | 14.33% | 0.97%(4) | 0.48%(4) | 29% | $5,928,676 |
2011 | $24.00 | 0.16 | 1.81 | 1.97 | (0.09) | — | (0.09) | $25.88 | 8.20% | 0.98% | 0.58% | 79% | $5,377,431 |
2010 | $20.28 | 0.10 | 3.68 | 3.78 | (0.06) | — | (0.06) | $24.00 | 18.65% | 1.00% | 0.43% | 86% | $4,440,152 |
2009 | $17.69 | 0.09 | 2.58 | 2.67 | (0.08) | — | (0.08) | $20.28 | 15.25% | 1.00% | 0.50% | 114% | $3,372,274 |
2008 | $26.78 | 0.04 | (9.10) | (9.06) | (0.03) | — | (0.03) | $17.69 | (33.86)% | 1.00% | 0.16% | 129% | $2,617,302 |
2007 | $21.99 | 0.04 | 4.76 | 4.80 | (0.01) | — | (0.01) | $26.78 | 21.86% | 1.00% | 0.15% | 112% | $4,132,570 |
Institutional Class | |||||||||||||
2012(3) | $26.13 | 0.09 | 3.51 | 3.60 | (0.18) | (0.91) | (1.09) | $28.64 | 14.42% | 0.77%(4) | 0.68%(4) | 29% | $2,619,071 |
2011 | $24.23 | 0.20 | 1.84 | 2.04 | (0.14) | — | (0.14) | $26.13 | 8.42% | 0.78% | 0.78% | 79% | $2,080,463 |
2010 | $20.47 | 0.14 | 3.72 | 3.86 | (0.10) | — | (0.10) | $24.23 | 18.90% | 0.80% | 0.63% | 86% | $1,106,748 |
2009 | $17.86 | 0.12 | 2.61 | 2.73 | (0.12) | — | (0.12) | $20.47 | 15.45% | 0.80% | 0.70% | 114% | $549,496 |
2008 | $27.03 | 0.08 | (9.17) | (9.09) | (0.08) | — | (0.08) | $17.86 | (33.71)% | 0.80% | 0.36% | 129% | $286,262 |
2007 | $22.19 | 0.09 | 4.81 | 4.90 | (0.06) | — | (0.06) | $27.03 | 22.13% | 0.80% | 0.35% | 112% | $284,695 |
19
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class(5) | |||||||||||||
2012(3) | $25.45 | 0.03 | 3.43 | 3.46 | (0.07) | (0.91) | (0.98) | $27.93 | 14.17% | 1.22%(4) | 0.23%(4) | 29% | $731,184 |
2011 | $23.60 | 0.08 | 1.79 | 1.87 | (0.02) | — | (0.02) | $25.45 | 7.93% | 1.23% | 0.33% | 79% | $628,634 |
2010 | $19.94 | 0.04 | 3.62 | 3.66 | —(6) | — | —(6) | $23.60 | 18.37% | 1.25% | 0.18% | 86% | $369,142 |
2009 | $17.40 | 0.04 | 2.54 | 2.58 | (0.04) | — | (0.04) | $19.94 | 14.99% | 1.25% | 0.25% | 114% | $214,371 |
2008 | $26.36 | (0.02) | (8.94) | (8.96) | — | — | — | $17.40 | (34.03)% | 1.25% | (0.09)% | 129% | $141,441 |
2007 | $21.68 | (0.04) | 4.72 | 4.68 | — | — | — | $26.36 | 21.59% | 1.25% | (0.10)% | 112% | $206,837 |
C Class | |||||||||||||
2012(3) | $25.55 | (0.07) | 3.44 | 3.37 | — | (0.91) | (0.91) | $28.01 | 13.73% | 1.97%(4) | (0.52)%(4) | 29% | $16,059 |
2011 | $23.85 | (0.12) | 1.82 | 1.70 | — | — | — | $25.55 | 7.13% | 1.98% | (0.42)% | 79% | $14,730 |
2010(7) | $22.10 | (0.10) | 1.85 | 1.75 | — | — | — | $23.85 | 7.92% | 2.00%(4) | (0.66)%(4) | 86%(8) | $6,219 |
R Class | |||||||||||||
2012(3) | $25.28 | (0.01) | 3.42 | 3.41 | —(6) | (0.91) | (0.91) | $27.78 | 14.06% | 1.47%(4) | (0.02)%(4) | 29% | $110,097 |
2011 | $23.49 | —(6) | 1.79 | 1.79 | — | — | — | $25.28 | 7.62% | 1.48% | 0.08% | 79% | $79,569 |
2010 | $19.90 | (0.02) | 3.61 | 3.59 | — | — | — | $23.49 | 18.10% | 1.50% | (0.07)% | 86% | $20,325 |
2009 | $17.35 | (0.01) | 2.56 | 2.55 | —(6) | — | —(6) | $19.90 | 14.67% | 1.50% | 0.00%(9) | 114% | $7,656 |
2008 | $26.37 | (0.08) | (8.94) | (9.02) | — | — | — | $17.35 | (34.21)% | 1.50% | (0.34)% | 129% | $3,280 |
2007 | $21.74 | (0.10) | 4.73 | 4.63 | — | — | — | $26.37 | 21.30% | 1.50% | (0.35)% | 112% | $2,383 |
20
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(6) | Per-share amount was less than $0.005. |
(7) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2010. |
(9) | Ratio was less than 0.005%. |
See Notes to Financial Statements.
21
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75358 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 20 |
Additional Information | 23 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2012 | ||||||
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 | 13.06% 6.56% | 5.41% -0.67% | 1.50% 0.31% | 6.83% 5.98% | 11/30/04 |
S&P 500 Index | — | 12.77% | 4.76% | 1.01% | 4.52% | — |
Investor Class | AFDIX | 13.08% | 5.66% | 1.74% | 6.44% | 7/29/05 |
Institutional Class | AFEIX | 13.20% | 5.87% | 1.95% | 6.65% | 7/29/05 |
B Class No sales charge* With sales charge* | AFDBX | 12.64% 7.64% | 4.68% 0.68% | 0.73% 0.54% | 6.02% 6.02% | 11/30/04 |
C Class No sales charge* With sales charge* | AFDCX | 12.55% 11.55% | 4.61% 4.61% | 0.73% 0.73% | 6.02% 6.02% | 11/30/04 |
R Class | AFDRX | 12.83% | 5.09% | 1.22% | 5.90% | 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 |
1.01% | 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.
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
APRIL 30, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 4.9% |
Exxon Mobil Corp. | 4.5% |
International Business Machines Corp. | 3.2% |
Microsoft Corp. | 2.3% |
Chevron Corp. | 2.1% |
Wells Fargo & Co. | 2.0% |
Procter & Gamble Co. (The) | 1.9% |
Honeywell International, Inc. | 1.6% |
Home Depot, Inc. (The) | 1.6% |
Comcast Corp., Class A | 1.6% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 10.5% |
Computers and Peripherals | 6.4% |
Pharmaceuticals | 5.6% |
IT Services | 5.4% |
Health Care Providers and Services | 4.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.3% |
Exchange-Traded Funds | 1.0% |
Total Equity Exposure | 99.3% |
Temporary Cash Investments | 0.7% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 - 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,130.80 | $5.35 | 1.01% |
Institutional Class | $1,000 | $1,132.00 | $4.29 | 0.81% |
A Class | $1,000 | $1,130.60 | $6.67 | 1.26% |
B Class | $1,000 | $1,126.40 | $10.63 | 2.01% |
C Class | $1,000 | $1,125.50 | $10.62 | 2.01% |
R Class | $1,000 | $1,128.30 | $7.99 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.07 | 1.01% |
Institutional Class | $1,000 | $1,020.84 | $4.07 | 0.81% |
A Class | $1,000 | $1,018.60 | $6.32 | 1.26% |
B Class | $1,000 | $1,014.87 | $10.07 | 2.01% |
C Class | $1,000 | $1,014.87 | $10.07 | 2.01% |
R Class | $1,000 | $1,017.36 | $7.57 | 1.51% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
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APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 98.3% | ||||||||
AEROSPACE AND DEFENSE — 3.0% | ||||||||
General Dynamics Corp. | 19,552 | $1,319,760 | ||||||
Honeywell International, Inc. | 51,019 | 3,094,813 | ||||||
Lockheed Martin Corp. | 2,924 | 264,739 | ||||||
United Technologies Corp. | 12,702 | 1,036,991 | ||||||
5,716,303 | ||||||||
AIR FREIGHT AND LOGISTICS — 0.8% | ||||||||
United Parcel Service, Inc., Class B | 19,835 | 1,549,907 | ||||||
AIRLINES — 0.2% | ||||||||
Allegiant Travel Co.(1) | 4,637 | 272,470 | ||||||
AUTOMOBILES — 0.6% | ||||||||
Ford Motor Co. | 96,951 | 1,093,607 | ||||||
BEVERAGES — 0.7% | ||||||||
Dr Pepper Snapple Group, Inc. | 33,976 | 1,378,746 | ||||||
BIOTECHNOLOGY — 1.5% | ||||||||
Amgen, Inc. | 37,656 | 2,677,718 | ||||||
Gilead Sciences, Inc.(1) | 3,853 | 200,395 | ||||||
2,878,113 | ||||||||
CAPITAL MARKETS — 0.4% | ||||||||
Ameriprise Financial, Inc. | 3,995 | 216,569 | ||||||
Legg Mason, Inc. | 19,756 | 515,039 | ||||||
731,608 | ||||||||
CHEMICALS — 0.9% | ||||||||
Ashland, Inc. | 2,597 | 171,065 | ||||||
CF Industries Holdings, Inc. | 1,072 | 206,960 | ||||||
E.I. du Pont de Nemours & Co. | 7,778 | 415,812 | ||||||
Eastman Chemical Co. | 2,141 | 115,550 | ||||||
LyondellBasell Industries NV, Class A | 19,667 | 821,687 | ||||||
Monsanto Co. | 473 | 36,033 | ||||||
1,767,107 | ||||||||
COMMERCIAL BANKS — 2.8% | ||||||||
Bank of Hawaii Corp. | 7,909 | 386,671 | ||||||
PNC Financial Services Group, Inc. | 17,586 | 1,166,304 | ||||||
Wells Fargo & Co. | 113,047 | 3,779,161 | ||||||
5,332,136 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.2% | ||||||||
Knoll, Inc. | 20,978 | 310,265 | ||||||
COMMUNICATIONS EQUIPMENT — 1.5% | ||||||||
Cisco Systems, Inc. | 88,416 | $1,781,582 | ||||||
Motorola Solutions, Inc. | 3,622 | 184,831 | ||||||
QUALCOMM, Inc. | 13,487 | 861,010 | ||||||
2,827,423 | ||||||||
COMPUTERS AND PERIPHERALS — 6.4% | ||||||||
Apple, Inc.(1) | 15,839 | 9,253,777 | ||||||
EMC Corp.(1) | 75,677 | 2,134,848 | ||||||
Hewlett-Packard Co. | 13,273 | 328,640 | ||||||
SanDisk Corp.(1) | 8,803 | 325,799 | ||||||
12,043,064 | ||||||||
CONSTRUCTION AND ENGINEERING — 0.2% | ||||||||
EMCOR Group, Inc. | 8,849 | 259,453 | ||||||
Fluor Corp. | 2,440 | 140,910 | ||||||
Foster Wheeler AG(1) | 1,783 | 41,009 | ||||||
441,372 | ||||||||
CONSUMER FINANCE — 2.0% | ||||||||
American Express Co. | 20,551 | 1,237,376 | ||||||
Capital One Financial Corp. | 30,986 | 1,719,103 | ||||||
Discover Financial Services | 23,499 | 796,616 | ||||||
3,753,095 | ||||||||
CONTAINERS AND PACKAGING — 0.1% | ||||||||
Sealed Air Corp. | 11,632 | 223,102 | ||||||
DIVERSIFIED CONSUMER SERVICES — 0.2% | ||||||||
Sotheby’s | 9,327 | 366,738 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 2.4% | ||||||||
Citigroup, Inc. | 51,860 | 1,713,454 | ||||||
JPMorgan Chase & Co. | 67,372 | 2,895,649 | ||||||
4,609,103 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.9% | ||||||||
AT&T, Inc. | 88,788 | 2,922,013 | ||||||
Verizon Communications, Inc. | 15,359 | 620,196 | ||||||
3,542,209 | ||||||||
ELECTRIC UTILITIES — 1.3% | ||||||||
FirstEnergy Corp. | 20,180 | 944,827 | ||||||
Northeast Utilities | 42,410 | 1,559,416 | ||||||
2,504,243 | ||||||||
ELECTRICAL EQUIPMENT — 1.2% | ||||||||
Belden, Inc. | 10,918 | 379,728 | ||||||
Emerson Electric Co. | 34,965 | 1,837,061 | ||||||
2,216,789 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.1% | ||||||||
Jabil Circuit, Inc. | 9,870 | 231,451 |
8
Shares | Value | |||||||
ENERGY EQUIPMENT AND SERVICES — 1.0% | ||||||||
Halliburton Co. | 15,199 | $520,110 | ||||||
National Oilwell Varco, Inc. | 13,178 | 998,365 | ||||||
Patterson-UTI Energy, Inc. | 23,872 | 386,010 | ||||||
1,904,485 | ||||||||
FOOD AND STAPLES RETAILING — 1.7% | ||||||||
Kroger Co. (The) | 2,416 | 56,220 | ||||||
Safeway, Inc. | 11,845 | 240,809 | ||||||
SYSCO Corp. | 1,711 | 49,448 | ||||||
Wal-Mart Stores, Inc. | 37,075 | 2,184,088 | ||||||
Walgreen Co. | 21,375 | 749,408 | ||||||
3,279,973 | ||||||||
FOOD PRODUCTS — 2.8% | ||||||||
Bunge Ltd. | 3,846 | 248,067 | ||||||
ConAgra Foods, Inc. | 17,990 | 464,502 | ||||||
H.J. Heinz Co. | 39,174 | 2,088,366 | ||||||
Kraft Foods, Inc., Class A | 4,621 | 184,239 | ||||||
Sara Lee Corp. | 9,148 | 201,622 | ||||||
Smithfield Foods, Inc.(1) | 29,848 | 625,614 | ||||||
Tyson Foods, Inc., Class A | 76,327 | 1,392,968 | ||||||
5,205,378 | ||||||||
GAS UTILITIES — 0.1% | ||||||||
Questar Corp. | 9,926 | 196,038 | ||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 0.4% | ||||||||
Baxter International, Inc. | 2,223 | 123,177 | ||||||
Covidien plc | 1,499 | 82,790 | ||||||
Medtronic, Inc. | �� | 4,497 | 171,785 | |||||
Stryker Corp. | 5,558 | 303,300 | ||||||
681,052 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 4.5% | ||||||||
Aetna, Inc. | 21,620 | 952,145 | ||||||
AmerisourceBergen Corp. | 55,112 | 2,050,718 | ||||||
Cardinal Health, Inc. | 44,568 | 1,883,889 | ||||||
Express Scripts Holding Co.(1) | 5,196 | 289,885 | ||||||
Humana, Inc. | 12,422 | 1,002,207 | ||||||
UnitedHealth Group, Inc. | 42,014 | 2,359,086 | ||||||
8,537,930 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 1.8% | ||||||||
Bally Technologies, Inc.(1) | 4,138 | 200,900 | ||||||
Cheesecake Factory, Inc. (The)(1) | 3,068 | 96,642 | ||||||
Starbucks Corp. | 22,022 | 1,263,622 | ||||||
Wyndham Worldwide Corp. | 19,493 | 981,278 | ||||||
Wynn Resorts Ltd. | 5,982 | 797,999 | ||||||
3,340,441 | ||||||||
HOUSEHOLD DURABLES — 0.2% | ||||||||
Tempur-Pedic International, Inc.(1) | 3,383 | $199,056 | ||||||
Tupperware Brands Corp. | 4,204 | 261,867 | ||||||
460,923 | ||||||||
HOUSEHOLD PRODUCTS — 2.3% | ||||||||
Colgate-Palmolive Co. | 1,880 | 186,007 | ||||||
Kimberly-Clark Corp. | 6,994 | 548,819 | ||||||
Procter & Gamble Co. (The) | 55,222 | 3,514,328 | ||||||
4,249,154 | ||||||||
INDUSTRIAL CONGLOMERATES — 1.5% | ||||||||
General Electric Co. | 146,571 | 2,869,860 | ||||||
INSURANCE — 4.3% | ||||||||
ACE Ltd. | 11,206 | 851,320 | ||||||
Aflac, Inc. | 11,727 | 528,184 | ||||||
American Financial Group, Inc. | 5,707 | 222,116 | ||||||
Assurant, Inc. | 11,275 | 454,834 | ||||||
Chubb Corp. (The) | 6,780 | 495,415 | ||||||
Principal Financial Group, Inc. | 17,367 | 480,545 | ||||||
Prudential Financial, Inc. | 47,597 | 2,881,522 | ||||||
Travelers Cos., Inc. (The) | 8,235 | 529,675 | ||||||
Unum Group | 66,077 | 1,568,668 | ||||||
8,012,279 | ||||||||
INTERNET AND CATALOG RETAIL — 0.7% | ||||||||
Amazon.com, Inc.(1) | 3,728 | 864,523 | ||||||
Expedia, Inc. | 3,642 | 155,259 | ||||||
priceline.com, Inc.(1) | 206 | 156,729 | ||||||
TripAdvisor, Inc.(1) | 3,642 | 136,611 | ||||||
1,313,122 | ||||||||
INTERNET SOFTWARE AND SERVICES — 1.5% | ||||||||
AOL, Inc.(1) | 4,853 | 121,519 | ||||||
eBay, Inc.(1) | 6,994 | 287,104 | ||||||
Google, Inc., Class A(1) | 4,122 | 2,494,758 | ||||||
2,903,381 | ||||||||
IT SERVICES — 5.4% | ||||||||
Accenture plc, Class A | 19,338 | 1,256,003 | ||||||
International Business Machines Corp. | 28,961 | 5,997,244 | ||||||
Visa, Inc., Class A | 14,621 | 1,798,090 | ||||||
Western Union Co. (The) | 65,799 | 1,209,386 | ||||||
10,260,723 | ||||||||
LEISURE EQUIPMENT AND PRODUCTS — 0.3% | ||||||||
Hasbro, Inc. | 14,915 | 547,977 |
9
Shares | Value | |||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.2% | ||||||||
Agilent Technologies, Inc. | 5,317 | $224,271 | ||||||
Thermo Fisher Scientific, Inc. | 2,926 | 162,832 | ||||||
387,103 | ||||||||
MACHINERY — 2.2% | ||||||||
AGCO Corp.(1) | 3,452 | 160,760 | ||||||
Caterpillar, Inc. | 10,335 | 1,062,128 | ||||||
Cummins, Inc. | 3,517 | 407,374 | ||||||
Dover Corp. | 31,827 | 1,994,280 | ||||||
Oshkosh Corp.(1) | 1,682 | 38,400 | ||||||
Wabtec Corp. | 5,352 | 416,278 | ||||||
4,079,220 | ||||||||
MEDIA — 4.4% | ||||||||
CBS Corp., Class B | 45,533 | 1,518,526 | ||||||
Comcast Corp., Class A | 96,921 | 2,939,614 | ||||||
Gannett Co., Inc. | 5,104 | 70,537 | ||||||
Omnicom Group, Inc. | 5,314 | 272,661 | ||||||
Time Warner Cable, Inc. | 13,487 | 1,085,029 | ||||||
Time Warner, Inc. | 53,520 | 2,004,859 | ||||||
Viacom, Inc., Class B | 7,492 | 347,554 | ||||||
8,238,780 | ||||||||
METALS AND MINING — 1.3% | ||||||||
Cliffs Natural Resources, Inc. | 9,886 | 615,503 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 43,423 | 1,663,101 | ||||||
Reliance Steel & Aluminum Co. | 4,424 | 247,257 | ||||||
2,525,861 | ||||||||
MULTI-UTILITIES — 2.1% | ||||||||
Ameren Corp. | 4,071 | 133,488 | ||||||
CenterPoint Energy, Inc. | 62,153 | 1,256,112 | ||||||
DTE Energy Co. | 17,739 | 1,000,125 | ||||||
Public Service Enterprise Group, Inc. | 2,353 | 73,296 | ||||||
Xcel Energy, Inc. | 54,622 | 1,478,071 | ||||||
3,941,092 | ||||||||
MULTILINE RETAIL — 0.5% | ||||||||
Dillard’s, Inc., Class A | 3,232 | 208,658 | ||||||
Macy’s, Inc. | 15,845 | 649,962 | ||||||
858,620 | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 10.5% | ||||||||
Chevron Corp. | 36,510 | 3,890,506 | ||||||
ConocoPhillips | 39,284 | 2,813,913 | ||||||
Exxon Mobil Corp. | 99,423 | 8,584,182 | ||||||
Hess Corp. | 6,365 | 331,871 | ||||||
HollyFrontier Corp. | 30,337 | $934,986 | ||||||
Murphy Oil Corp. | 9,348 | 513,860 | ||||||
Occidental Petroleum Corp. | 20,084 | 1,832,062 | ||||||
Peabody Energy Corp. | 10,989 | 341,868 | ||||||
Valero Energy Corp. | 8,634 | 213,260 | ||||||
Williams Cos., Inc. (The) | 7,992 | 271,968 | ||||||
WPX Energy, Inc.(1) | 2,664 | 46,806 | ||||||
19,775,282 | ||||||||
PAPER AND FOREST PRODUCTS — 0.8% | ||||||||
International Paper Co. | 45,711 | 1,522,633 | ||||||
PHARMACEUTICALS — 5.6% | ||||||||
Abbott Laboratories | 47,169 | 2,927,308 | ||||||
Bristol-Myers Squibb Co. | 79,171 | 2,641,936 | ||||||
Hospira, Inc.(1) | 9,433 | 331,287 | ||||||
Johnson & Johnson | 42,755 | 2,782,923 | ||||||
Merck & Co., Inc. | 3,173 | 124,509 | ||||||
Pfizer, Inc. | 78,240 | 1,794,043 | ||||||
10,602,006 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.2% | ||||||||
American Tower Corp. | 16,717 | 1,096,301 | ||||||
Public Storage | 6,635 | 950,530 | ||||||
Simon Property Group, Inc. | 1,584 | 246,470 | ||||||
2,293,301 | ||||||||
ROAD AND RAIL — 1.3% | ||||||||
CSX Corp. | 9,149 | 204,114 | ||||||
Norfolk Southern Corp. | 1,980 | 144,401 | ||||||
Ryder System, Inc. | 18,054 | 879,591 | ||||||
Union Pacific Corp. | 10,063 | 1,131,484 | ||||||
2,359,590 | ||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.4% | ||||||||
Altera Corp. | 34,178 | 1,215,711 | ||||||
Intel Corp. | 64,900 | 1,843,160 | ||||||
Marvell Technology Group Ltd.(1) | 49,236 | 739,032 | ||||||
Texas Instruments, Inc. | 20,006 | 638,992 | ||||||
4,436,895 | ||||||||
SOFTWARE — 3.2% | ||||||||
Microsoft Corp. | 135,991 | 4,354,432 | ||||||
Oracle Corp. | 31,222 | 917,615 | ||||||
Red Hat, Inc.(1) | 849 | 50,609 | ||||||
Symantec Corp.(1) | 39,174 | 647,154 | ||||||
5,969,810 |
10
Shares | Value | |||||||
SPECIALTY RETAIL — 3.2% | ||||||||
AutoZone, Inc.(1) | 846 | $335,151 | ||||||
Chico’s FAS, Inc. | 14,604 | 224,318 | ||||||
Gap, Inc. (The) | 30,311 | 863,864 | ||||||
Home Depot, Inc. (The) | 56,923 | 2,948,042 | ||||||
Limited Brands, Inc. | 2,450 | 121,765 | ||||||
Lowe’s Cos., Inc. | 19,409 | 610,801 | ||||||
Pier 1 Imports, Inc. | 57,800 | 993,004 | ||||||
6,096,945 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.3% | ||||||||
Coach, Inc. | 8,349 | 610,813 | ||||||
TOBACCO — 1.5% | ||||||||
Altria Group, Inc. | 9,505 | 306,156 | ||||||
Lorillard, Inc. | 1,981 | 268,010 | ||||||
Philip Morris International, Inc. | 25,824 | 2,311,506 | ||||||
2,885,672 | ||||||||
TRADING COMPANIES AND DISTRIBUTORS — 0.7% | ||||||||
United Rentals, Inc.(1) | 28,395 | 1,325,479 | ||||||
TOTAL COMMON STOCKS (Cost $128,676,894) | 185,460,669 | |||||||
Exchange-Traded Funds — 1.0% | ||||||||
SPDR S&P 500 ETF Trust (Cost $1,763,789) | 13,405 | 1,873,617 |
Value | ||||
Temporary Cash Investments — 0.7% | ||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at $597,790), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $586,090) | $586,088 | |||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $373,429), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $366,306) | 366,305 | |||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $490,058), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $480,074) | 480,073 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,432,466) | 1,432,466 | |||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $131,873,149) | 188,766,752 | |||
OTHER ASSETS AND LIABILITIES† | (71,528 | ) | ||
TOTAL NET ASSETS — 100.0% | $188,695,224 |
Notes to Schedule of Investments
ETF = Exchange-Traded Fund
SPDR = Standard & Poor’s Depositary Receipts
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
See Notes to Financial Statements.
11
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $131,873,149) | $188,766,752 | |||
Receivable for investments sold | 235,553 | |||
Receivable for capital shares sold | 188,480 | |||
Dividends and interest receivable | 220,873 | |||
189,411,658 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 46,896 | |||
Payable for capital shares redeemed | 476,783 | |||
Accrued management fees | 153,666 | |||
Distribution and service fees payable | 39,089 | |||
716,434 | ||||
Net Assets | $188,695,224 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $245,206,298 | |||
Undistributed net investment income | 459,761 | |||
Accumulated net realized loss | (113,864,438 | ) | ||
Net unrealized appreciation | 56,893,603 | |||
$188,695,224 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $47,709,625 | 3,291,673 | $14.49 | |||
Institutional Class, $0.01 Par Value | $8,654,212 | 596,725 | $14.50 | |||
A Class, $0.01 Par Value | $111,146,155 | 7,671,987 | $14.49 | * | ||
B Class, $0.01 Par Value | $3,281,992 | 228,740 | $14.35 | |||
C Class, $0.01 Par Value | $15,416,267 | 1,074,082 | $14.35 | |||
R Class, $0.01 Par Value | $2,486,973 | 172,053 | $14.45 |
* | Maximum offering price $15.37 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
12
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $14,974) | $2,139,382 | |||
Interest | 379 | |||
2,139,761 | ||||
Expenses: | ||||
Management fees | 881,915 | |||
Distribution and service fees: | ||||
A Class | 133,132 | |||
B Class | 15,888 | |||
C Class | 73,015 | |||
R Class | 5,508 | |||
Directors’ fees and expenses | 5,006 | |||
1,114,464 | ||||
Net investment income (loss) | 1,025,297 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 2,231,514 | |||
Change in net unrealized appreciation (depreciation) on investments | 18,486,395 | |||
Net realized and unrealized gain (loss) | 20,717,909 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $21,743,206 |
See Notes to Financial Statements.
13
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $1,025,297 | $1,583,623 | ||||||
Net realized gain (loss) | 2,231,514 | 10,077,638 | ||||||
Change in net unrealized appreciation (depreciation) | 18,486,395 | 6,419,151 | ||||||
Net increase (decrease) in net assets resulting from operations | 21,743,206 | 18,080,412 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (478,590 | ) | (476,248 | ) | ||||
Institutional Class | (111,278 | ) | (1,525 | ) | ||||
A Class | (981,254 | ) | (1,090,905 | ) | ||||
B Class | (7,176 | ) | (3,497 | ) | ||||
C Class | (32,405 | ) | (13,721 | ) | ||||
R Class | (13,234 | ) | (16,038 | ) | ||||
Decrease in net assets from distributions | (1,623,937 | ) | (1,601,934 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (3,255,041 | ) | (37,702,737 | ) | ||||
Net increase (decrease) in net assets | 16,864,228 | (21,224,259 | ) | |||||
Net Assets | ||||||||
Beginning of period | 171,830,996 | 193,055,255 | ||||||
End of period | $188,695,224 | $171,830,996 | ||||||
Undistributed net investment income | $459,761 | $1,058,401 |
See Notes to Financial Statements.
14
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Fundamental Equity Fund (the fund) is one fund in a series issued by the corporation. The fund 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 offers 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.
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 2008. 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.
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.
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 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, 2012 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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $19,581,859 and $22,902,597, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 800,783 | $10,964,451 | 1,087,184 | $13,925,436 | ||||||||||||
Issued in reinvestment of distributions | 35,466 | 454,676 | 36,152 | 451,179 | ||||||||||||
Redeemed | (1,091,427 | ) | (14,475,034 | ) | (1,067,200 | ) | (13,854,962 | ) | ||||||||
(255,178 | ) | (3,055,907 | ) | 56,136 | 521,653 | |||||||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 634,000 | 8,146,049 | 1,571 | 20,636 | ||||||||||||
Issued in reinvestment of distributions | 8,687 | 111,278 | 122 | 1,525 | ||||||||||||
Redeemed | (53,866 | ) | (734,866 | ) | (3,787 | ) | (50,840 | ) | ||||||||
588,821 | 7,522,461 | (2,094 | ) | (28,679 | ) | |||||||||||
A Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||||
Sold | 592,985 | 8,231,922 | 1,054,724 | 13,579,202 | ||||||||||||
Issued in reinvestment of distributions | 71,129 | 911,874 | 84,114 | 1,049,738 | ||||||||||||
Redeemed | (1,193,261 | ) | (16,164,848 | ) | (3,834,225 | ) | (49,366,679 | ) | ||||||||
(529,147 | ) | (7,021,052 | ) | (2,695,387 | ) | (34,737,739 | ) | |||||||||
B Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 919 | 12,724 | 2,834 | 36,606 | ||||||||||||
Issued in reinvestment of distributions | 521 | 6,630 | 262 | 3,246 | ||||||||||||
Redeemed | (17,935 | ) | (242,761 | ) | (83,929 | ) | (1,056,396 | ) | ||||||||
(16,495 | ) | (223,407 | ) | (80,833 | ) | (1,016,544 | ) | |||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 92,399 | 1,251,414 | 171,419 | 2,193,034 | ||||||||||||
Issued in reinvestment of distributions | 1,594 | 20,313 | 729 | 9,037 | ||||||||||||
Redeemed | (114,665 | ) | (1,558,380 | ) | (335,718 | ) | (4,280,843 | ) | ||||||||
(20,672 | ) | (286,653 | ) | (163,570 | ) | (2,078,772 | ) | |||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 37,941 | 532,849 | 36,394 | 467,960 | ||||||||||||
Issued in reinvestment of distributions | 1,034 | 13,234 | 1,286 | 16,038 | ||||||||||||
Redeemed | (57,303 | ) | (736,566 | ) | (68,028 | ) | (846,654 | ) | ||||||||
(18,328 | ) | (190,483 | ) | (30,348 | ) | (362,656 | ) | |||||||||
Net increase (decrease) | (250,999 | ) | $(3,255,041 | ) | (2,916,096 | ) | $(37,702,737 | ) |
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). |
18
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
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 | $185,460,669 | — | — | |||||||||
Exchange-Traded Funds | 1,873,617 | — | — | |||||||||
Temporary Cash Investments | — | $1,432,466 | — | |||||||||
Total Value of Investment Securities | $187,334,286 | $1,432,466 | — |
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, 2012, the components of investments for federal income tax purposes
were as follows:
Federal tax cost of investments | $135,940,647 | |||
Gross tax appreciation of investments | $55,156,885 | |||
Gross tax depreciation of investments | (2,330,780 | ) | ||
Net tax appreciation (depreciation) of investments | $52,826,105 |
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, 2011, the fund had accumulated capital losses of $(112,216,360), 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 $(38,585,133) and $(73,631,227) expire in 2016 and 2017, respectively. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||
2012(3) | $12.97 | 0.10 | 1.58 | 1.68 | (0.16) | — | (0.16) | $14.49 | 13.08% | 1.01%(4) | 1.40%(4) | 11% | $47,710 |
2011 | $11.95 | 0.14 | 1.02 | 1.16 | (0.14) | — | (0.14) | $12.97 | 9.72% | 1.01% | 1.11% | 18% | $45,991 |
2010 | $10.57 | 0.12 | 1.40 | 1.52 | (0.14) | — | (0.14) | $11.95 | 14.47% | 1.02% | 1.06% | 29% | $41,698 |
2009 | $9.93 | 0.12 | 0.66 | 0.78 | (0.14) | — | (0.14) | $10.57 | 8.16% | 1.01% | 1.37% | 64% | $37,918 |
2008 | $15.68 | 0.15 | (5.42) | (5.27) | (0.12) | (0.36) | (0.48) | $9.93 | (34.56)% | 1.01% | 1.15% | 97% | $37,535 |
2007 | $12.88 | 0.14 | 2.93 | 3.07 | (0.08) | (0.19) | (0.27) | $15.68 | 24.18% | 1.00% | 0.99% | 82% | $53,908 |
Institutional Class | |||||||||||||
2012(3) | $12.99 | 0.10 | 1.59 | 1.69 | (0.18) | — | (0.18) | $14.50 | 13.20% | 0.81%(4) | 1.60%(4) | 11% | $8,654 |
2011 | $11.96 | 0.17 | 1.02 | 1.19 | (0.16) | — | (0.16) | $12.99 | 10.02% | 0.81% | 1.31% | 18% | $103 |
2010 | $10.59 | 0.15 | 1.38 | 1.53 | (0.16) | — | (0.16) | $11.96 | 14.57% | 0.82% | 1.26% | 29% | $120 |
2009 | $9.94 | 0.16 | 0.65 | 0.81 | (0.16) | — | (0.16) | $10.59 | 8.47% | 0.81% | 1.57% | 64% | $274 |
2008 | $15.70 | 0.19 | (5.44) | (5.25) | (0.15) | (0.36) | (0.51) | $9.94 | (34.45)% | 0.81% | 1.35% | 97% | $589 |
2007 | $12.90 | 0.19 | 2.91 | 3.10 | (0.11) | (0.19) | (0.30) | $15.70 | 24.43% | 0.80% | 1.19% | 82% | $286 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class | |||||||||||||
2012(3) | $12.94 | 0.08 | 1.59 | 1.67 | (0.12) | — | (0.12) | $14.49 | 13.06% | 1.26%(4) | 1.15%(4) | 11% | $111,146 |
2011 | $11.93 | 0.11 | 1.01 | 1.12 | (0.11) | — | (0.11) | $12.94 | 9.38% | 1.26% | 0.86% | 18% | $106,159 |
2010 | $10.56 | 0.09 | 1.39 | 1.48 | (0.11) | — | (0.11) | $11.93 | 14.10% | 1.27% | 0.81% | 29% | $129,960 |
2009 | $9.91 | 0.11 | 0.66 | 0.77 | (0.12) | — | (0.12) | $10.56 | 8.00% | 1.26% | 1.12% | 64% | $159,959 |
2008 | $15.65 | 0.12 | (5.41) | (5.29) | (0.09) | (0.36) | (0.45) | $9.91 | (34.73)% | 1.26% | 0.90% | 97% | $218,469 |
2007 | $12.85 | 0.11 | 2.92 | 3.03 | (0.04) | (0.19) | (0.23) | $15.65 | 23.88% | 1.25% | 0.74% | 82% | $246,322 |
B Class | |||||||||||||
2012(3) | $12.77 | 0.03 | 1.58 | 1.61 | (0.03) | — | (0.03) | $14.35 | 12.64% | 2.01%(4) | 0.40%(4) | 11% | $3,282 |
2011 | $11.77 | 0.01 | 1.00 | 1.01 | (0.01) | — | (0.01) | $12.77 | 8.59% | 2.01% | 0.11% | 18% | $3,133 |
2010 | $10.42 | 0.01 | 1.37 | 1.38 | (0.03) | — | (0.03) | $11.77 | 13.23% | 2.02% | 0.06% | 29% | $3,838 |
2009 | $9.78 | 0.03 | 0.66 | 0.69 | (0.05) | — | (0.05) | $10.42 | 7.17% | 2.01% | 0.37% | 64% | $4,043 |
2008 | $15.45 | 0.02 | (5.36) | (5.34) | — | (0.33) | (0.33) | $9.78 | (35.23)% | 2.01% | 0.15% | 97% | $4,195 |
2007 | $12.74 | 0.01 | 2.89 | 2.90 | — | (0.19) | (0.19) | $15.45 | 23.01% | 2.00% | (0.01)% | 82% | $4,889 |
C Class | |||||||||||||
2012(3) | $12.78 | 0.03 | 1.57 | 1.60 | (0.03) | — | (0.03) | $14.35 | 12.55% | 2.01%(4) | 0.40%(4) | 11% | $15,416 |
2011 | $11.77 | 0.01 | 1.01 | 1.02 | (0.01) | — | (0.01) | $12.78 | 8.68% | 2.01% | 0.11% | 18% | $13,990 |
2010 | $10.42 | 0.01 | 1.37 | 1.38 | (0.03) | — | (0.03) | $11.77 | 13.23% | 2.02% | 0.06% | 29% | $14,816 |
2009 | $9.79 | 0.03 | 0.65 | 0.68 | (0.05) | — | (0.05) | $10.42 | 7.06% | 2.01% | 0.37% | 64% | $15,311 |
2008 | $15.46 | 0.02 | (5.36) | (5.34) | — | (0.33) | (0.33) | $9.79 | (35.20)% | 2.01% | 0.15% | 97% | $18,919 |
2007 | $12.75 | —(5) | 2.90 | 2.90 | — | (0.19) | (0.19) | $15.46 | 22.99% | 2.00% | (0.01)% | 82% | $24,544 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
R Class | |||||||||||||
2012(3) | $12.90 | 0.06 | 1.58 | 1.64 | (0.09) | — | (0.09) | $14.45 | 12.83% | 1.51%(4) | 0.90%(4) | 11% | $2,487 |
2011 | $11.89 | 0.08 | 1.00 | 1.08 | (0.07) | — | (0.07) | $12.90 | 9.14% | 1.51% | 0.61% | 18% | $2,456 |
2010 | $10.52 | 0.06 | 1.39 | 1.45 | (0.08) | — | (0.08) | $11.89 | 13.86% | 1.52% | 0.56% | 29% | $2,624 |
2009 | $9.88 | 0.06 | 0.68 | 0.74 | (0.10) | — | (0.10) | $10.52 | 7.64% | 1.51% | 0.87% | 64% | $2,650 |
2008 | $15.61 | 0.09 | (5.41) | (5.32) | (0.05) | (0.36) | (0.41) | $9.88 | (34.92)% | 1.51% | 0.65% | 97% | $364 |
2007 | $12.81 | 0.09 | 2.90 | 2.99 | —(5) | (0.19) | (0.19) | $15.61 | 23.60% | 1.50% | 0.49% | 82% | $438 |
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75360 1206
SEMIANNUAL REPORT APRIL 30, 2012
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Heritage 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 | 23 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWHIX | 14.09% | 1.12% | 6.58% | 9.00% | 11.68% | 11/10/87 |
Russell Midcap Growth Index | — | 12.26% | 0.78% | 3.55% | 7.50% | 10.66%(2) | — |
Russell Midcap Index | — | 11.87% | -0.03% | 2.19% | 8.03% | 11.80%(2) | — |
Institutional Class | ATHIX | 14.20% | 1.31% | 6.79% | 9.22% | 8.89% | 6/16/97 |
A Class(3) No sales charge* With sales charge* | ATHAX | 13.90% 7.33% | 0.84% -4.94% | 6.32% 5.07% | 8.74% 8.10% | 8.10% 7.67% | 7/11/97 |
B Class No sales charge* With sales charge* | ATHBX | 13.52% 8.52% | 0.13% -3.87% | — — | — — | 2.16% 1.75% | 9/28/07 |
C Class No sales charge* With sales charge* | AHGCX | 13.47% 12.47% | 0.10% 0.10% | 5.53% 5.53% | 7.93% 7.93% | 6.23% 6.23% | 6/26/01 |
R Class | ATHWX | 13.81% | 0.61% | — | — | 2.67% | 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. |
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. 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 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, 2012 | |
Top Ten Holdings | % of net assets |
O’Reilly Automotive, Inc. | 2.8% |
SXC Health Solutions Corp. | 2.7% |
National Oilwell Varco, Inc. | 2.4% |
Alliance Data Systems Corp. | 2.4% |
Whole Foods Market, Inc. | 2.0% |
TransDigm Group, Inc. | 1.9% |
priceline.com, Inc. | 1.8% |
PetSmart, Inc. | 1.7% |
Alexion Pharmaceuticals, Inc. | 1.7% |
Apple, Inc. | 1.7% |
Top Five Industries | % of net assets |
Specialty Retail | 8.2% |
Software | 6.6% |
Hotels, Restaurants and Leisure | 5.1% |
IT Services | 4.9% |
Energy Equipment and Services | 4.8% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.2% |
Foreign Common Stocks* | 8.5% |
Total Common Stocks | 97.7% |
Temporary Cash Investments | 1.6% |
Other Assets and Liabilities | 0.7% |
* | 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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 - 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,140.90 | $5.38 | 1.01% |
Institutional Class | $1,000 | $1,142.00 | $4.31 | 0.81% |
A Class | $1,000 | $1,139.00 | $6.70 | 1.26% |
B Class | $1,000 | $1,135.20 | $10.67 | 2.01% |
C Class | $1,000 | $1,134.70 | $10.67 | 2.01% |
R Class | $1,000 | $1,138.10 | $8.03 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.84 | $5.07 | 1.01% |
Institutional Class | $1,000 | $1,020.84 | $4.07 | 0.81% |
A Class | $1,000 | $1,018.60 | $6.32 | 1.26% |
B Class | $1,000 | $1,014.87 | $10.07 | 2.01% |
C Class | $1,000 | $1,014.87 | $10.07 | 2.01% |
R Class | $1,000 | $1,017.36 | $7.57 | 1.51% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 97.7% | ||||||||
AEROSPACE AND DEFENSE — 4.0% | ||||||||
BE Aerospace, Inc.(1) | 1,084,784 | $51,017,391 | ||||||
Spirit Aerosystems Holdings, Inc. Class A(1) | 1,315,600 | 32,890,000 | ||||||
TransDigm Group, Inc.(1) | 632,700 | 79,796,124 | ||||||
163,703,515 | ||||||||
AUTO COMPONENTS — 0.9% | ||||||||
BorgWarner, Inc.(1) | 477,537 | 37,744,524 | ||||||
BEVERAGES — 0.9% | ||||||||
Monster Beverage Corp.(1) | 542,300 | 35,227,808 | ||||||
BIOTECHNOLOGY — 3.7% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 795,300 | 71,831,496 | ||||||
Cepheid, Inc.(1) | 496,000 | 19,051,360 | ||||||
Grifols SA(1) | 1,450,500 | 36,528,520 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 173,900 | 23,521,714 | ||||||
150,933,090 | ||||||||
BUILDING PRODUCTS — 0.6% | ||||||||
Fortune Brands Home & Security, Inc.(1) | 1,006,300 | 22,883,262 | ||||||
CAPITAL MARKETS — 2.2% | ||||||||
Jefferies Group, Inc. | 1,070,900 | 17,059,437 | ||||||
KKR & Co. LP | 1,328,500 | 18,758,420 | ||||||
Lazard Ltd. Class A | 919,900 | 25,306,449 | ||||||
Raymond James Financial, Inc. | 817,700 | 29,944,174 | ||||||
91,068,480 | ||||||||
CHEMICALS — 3.2% | ||||||||
Airgas, Inc. | 646,200 | 59,217,768 | ||||||
Albemarle Corp. | 505,800 | 33,028,740 | ||||||
FMC Corp. | 344,700 | 38,072,115 | ||||||
130,318,623 | ||||||||
COMMERCIAL BANKS — 1.1% | ||||||||
East West Bancorp., Inc. | 1,018,100 | 23,182,137 | ||||||
SVB Financial Group(1) | 333,500 | 21,374,015 | ||||||
44,556,152 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 2.5% | ||||||||
Cintas Corp. | 529,500 | 20,740,515 | ||||||
Clean Harbors, Inc.(1) | 653,000 | 44,560,720 | ||||||
Stericycle, Inc.(1) | 422,700 | 36,605,820 | ||||||
101,907,055 | ||||||||
COMMUNICATIONS EQUIPMENT — 0.7% | ||||||||
F5 Networks, Inc.(1) | 220,100 | 29,477,993 | ||||||
COMPUTERS AND PERIPHERALS — 1.7% | ||||||||
Apple, Inc.(1) | 117,527 | $68,663,974 | ||||||
CONSTRUCTION AND ENGINEERING — 1.8% | ||||||||
Chicago Bridge & Iron Co. NV New York Shares | 773,200 | 34,345,544 | ||||||
KBR, Inc. | 604,300 | 20,461,598 | ||||||
Quanta Services, Inc.(1) | 930,000 | 20,571,600 | ||||||
75,378,742 | ||||||||
CONSUMER FINANCE — 1.2% | ||||||||
Discover Financial Services | 1,512,204 | 51,263,716 | ||||||
CONTAINERS AND PACKAGING — 1.1% | ||||||||
Rock-Tenn Co., Class A | 695,900 | 43,375,447 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 2.2% | ||||||||
Jabil Circuit, Inc. | 1,950,300 | 45,734,535 | ||||||
Trimble Navigation Ltd.(1) | 849,200 | 45,975,688 | ||||||
91,710,223 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 4.8% | ||||||||
Atwood Oceanics, Inc.(1) | 479,700 | 21,265,101 | ||||||
National Oilwell Varco, Inc. | 1,315,400 | 99,654,704 | ||||||
Oceaneering International, Inc. | 587,600 | 30,337,788 | ||||||
Oil States International, Inc.(1) | 584,200 | 46,490,636 | ||||||
197,748,229 | ||||||||
FOOD AND STAPLES RETAILING — 3.6% | ||||||||
Costco Wholesale Corp. | 502,400 | 44,296,608 | ||||||
Fresh Market, Inc. (The)(1) | 445,200 | 22,780,884 | ||||||
Whole Foods Market, Inc. | 966,500 | 80,287,155 | ||||||
147,364,647 | ||||||||
FOOD PRODUCTS — 1.6% | ||||||||
Mead Johnson Nutrition Co. | 776,000 | 66,394,560 | ||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.7% | ||||||||
Cooper Cos., Inc. (The) | 287,600 | 25,357,692 | ||||||
Intuitive Surgical, Inc.(1) | 66,900 | 38,681,580 | ||||||
MAKO Surgical Corp.(1) | 479,300 | 19,799,883 | ||||||
Sirona Dental Systems, Inc.(1) | 502,000 | 25,356,020 | ||||||
109,195,175 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.5% | ||||||||
Catalyst Health Solutions, Inc.(1) | 509,700 | 44,022,789 | ||||||
Centene Corp.(1) | 442,300 | 17,510,657 | ||||||
61,533,446 | ||||||||
HEALTH CARE TECHNOLOGY — 2.7% | ||||||||
SXC Health Solutions Corp.(1) | 1,229,977 | 111,411,317 |
8
Shares | Value | |||||||
HOTELS, RESTAURANTS AND LEISURE — 5.1% | ||||||||
Bally Technologies, Inc.(1) | 347,148 | $16,854,036 | ||||||
Chipotle Mexican Grill, Inc.(1) | 147,700 | 61,169,955 | ||||||
Las Vegas Sands Corp. | 585,000 | 32,461,650 | ||||||
Panera Bread Co., Class A(1) | 180,072 | 28,436,970 | ||||||
Peet’s Coffee & Tea, Inc.(1) | 294,600 | 22,631,172 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 837,000 | 49,550,400 | ||||||
211,104,183 | ||||||||
HOUSEHOLD PRODUCTS — 0.9% | ||||||||
Church & Dwight Co., Inc. | 725,000 | 36,830,000 | ||||||
INTERNET AND CATALOG RETAIL — 2.1% | ||||||||
Netflix, Inc.(1) | 179,100 | 14,353,074 | ||||||
priceline.com, Inc.(1) | 96,611 | 73,503,581 | ||||||
87,856,655 | ||||||||
INTERNET SOFTWARE AND SERVICES — 3.0% | ||||||||
Baidu, Inc. ADR(1) | 351,400 | 46,630,780 | ||||||
LinkedIn Corp., Class A(1) | 275,229 | 29,848,585 | ||||||
Rackspace Hosting, Inc.(1) | 589,200 | 34,226,628 | ||||||
ValueClick, Inc.(1) | 501,200 | 10,615,416 | ||||||
121,321,409 | ||||||||
IT SERVICES — 4.9% | ||||||||
Alliance Data Systems Corp.(1) | 759,300 | 97,562,457 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 268,700 | 19,701,084 | ||||||
Teradata Corp.(1) | 842,300 | 58,775,694 | ||||||
VeriFone Systems, Inc.(1) | 554,600 | 26,421,144 | ||||||
202,460,379 | ||||||||
MACHINERY — 4.0% | ||||||||
Chart Industries, Inc.(1) | 546,600 | 41,776,638 | ||||||
Joy Global, Inc. | 451,600 | 31,959,732 | ||||||
Terex Corp.(1) | 919,800 | 20,824,272 | ||||||
Titan International, Inc. | 790,600 | 22,840,434 | ||||||
Trinity Industries, Inc. | 953,700 | 28,229,520 | ||||||
Woodward, Inc. | 489,400 | 20,354,146 | ||||||
165,984,742 | ||||||||
MARINE — 0.7% | ||||||||
Kirby Corp.(1) | 424,300 | 28,160,791 | ||||||
MEDIA — 0.5% | ||||||||
Sirius XM Radio, Inc.(1) | 9,063,600 | 20,483,736 | ||||||
METALS AND MINING — 1.7% | ||||||||
Carpenter Technology Corp. | 704,800 | 39,229,168 | ||||||
Cliffs Natural Resources, Inc. | 506,400 | 31,528,464 | ||||||
70,757,632 | ||||||||
MULTILINE RETAIL — 0.6% | ||||||||
Family Dollar Stores, Inc. | 363,300 | 24,540,915 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 3.4% | ||||||||
Cabot Oil & Gas Corp. | 201,100 | $7,066,654 | ||||||
Concho Resources, Inc.(1) | 628,000 | 67,309,040 | ||||||
Linn Energy LLC | 755,700 | 30,416,925 | ||||||
SandRidge Energy, Inc.(1) | 2,394,200 | 19,129,658 | ||||||
SM Energy Co. | 254,100 | 16,798,551 | ||||||
140,720,828 | ||||||||
PHARMACEUTICALS — 2.0% | ||||||||
Elan Corp. plc ADR(1) | 1,347,900 | 18,587,541 | ||||||
Perrigo Co. | 368,200 | 38,624,180 | ||||||
Questcor Pharmaceuticals, Inc.(1) | 532,800 | 23,922,720 | ||||||
81,134,441 | ||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.7% | ||||||||
CBRE Group, Inc.(1) | 1,520,800 | 28,606,248 | ||||||
ROAD AND RAIL — 1.7% | ||||||||
Kansas City Southern | 890,400 | 68,578,608 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 3.2% | ||||||||
ARM Holdings plc | 2,217,200 | 18,855,057 | ||||||
Avago Technologies Ltd. | 1,116,000 | 38,479,680 | ||||||
NXP Semiconductor NV(1) | 849,500 | 21,959,575 | ||||||
Xilinx, Inc. | 1,421,700 | 51,721,446 | ||||||
131,015,758 | ||||||||
SOFTWARE — 6.6% | ||||||||
Cerner Corp.(1) | 752,500 | 61,020,225 | ||||||
Check Point Software Technologies Ltd.(1) | 781,200 | 45,411,156 | ||||||
Citrix Systems, Inc.(1) | 365,300 | 31,273,333 | ||||||
CommVault Systems, Inc.(1) | 541,400 | 28,190,698 | ||||||
NetSuite, Inc.(1) | 934,619 | 41,478,391 | ||||||
Nuance Communications, Inc.(1) | 921,000 | 22,509,240 | ||||||
Salesforce.com, Inc.(1) | 147,500 | 22,970,175 | ||||||
Sourcefire, Inc.(1) | 384,200 | 19,590,358 | ||||||
Splunk, Inc.(1) | 24,761 | 840,636 | ||||||
273,284,212 | ||||||||
SPECIALTY RETAIL — 8.2% | ||||||||
GNC Holdings, Inc. Class A | 879,200 | 34,341,552 | ||||||
O’Reilly Automotive, Inc.(1) | 1,100,900 | 116,100,914 | ||||||
PetSmart, Inc. | 1,233,700 | 71,875,362 | ||||||
Tractor Supply Co. | 466,100 | 45,868,901 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc. | 770,000 | 67,898,600 | ||||||
336,085,329 |
9
Shares | Value | |||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.9% | ||||||||
Fossil, Inc.(1) | 145,900 | $19,064,753 | ||||||
Lululemon Athletica, Inc.(1) | 301,700 | 22,368,038 | ||||||
Michael Kors Holdings Ltd.(1) | 846,504 | 38,659,838 | ||||||
80,092,629 | ||||||||
TRADING COMPANIES AND DISTRIBUTORS — 0.7% | ||||||||
United Rentals, Inc.(1) | 638,500 | 29,805,180 | ||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.1% | ||||||||
SBA Communications Corp., Class A(1) | 809,632 | 43,509,624 | ||||||
TOTAL COMMON STOCKS (Cost $2,837,832,004) | 4,014,193,277 | |||||||
Temporary Cash Investments — 1.6% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at $28,075,586), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $27,526,104) | 27,525,989 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $17,538,333), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $17,203,800) | $17,203,743 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $23,015,877), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $22,547,013) | 22,546,950 | |||||||
SSgA U.S. Government Money Market Fund | 319,438 | 319,438 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $67,596,120) | 67,596,120 | |||||||
TOTAL INVESTMENT SECURITIES — 99.3% (Cost $2,905,428,124) | 4,081,789,397 | |||||||
OTHER ASSETS AND LIABILITIES — 0.7% | 28,019,730 | |||||||
TOTAL NET ASSETS — 100.0% | $4,109,809,127 |
Forward Foreign Currency Exchange Contracts | ||||||||||||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
20,201,839 | EUR for USD | UBS AG | 5/31/12 | $26,744,009 | $(59,804 | ) | ||||||||
8,838,314 | GBP for USD | Credit Suisse AG | 5/31/12 | 14,341,133 | (85,376 | ) | ||||||||
$41,085,142 | $(145,180 | ) |
(Value on Settlement Date $40,939,962)
Notes to Schedule of Investments
ADR = American Depositary Receipt
EUR = Euro
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $2,905,428,124) | $4,081,789,397 | |||
Receivable for investments sold | 50,620,591 | |||
Receivable for capital shares sold | 3,518,068 | |||
Dividends and interest receivable | 1,663,921 | |||
4,137,591,977 | ||||
Liabilities | ||||
Payable for investments purchased | 17,901,717 | |||
Payable for capital shares redeemed | 6,101,708 | |||
Unrealized loss on forward foreign currency exchange contracts | 145,180 | |||
Accrued management fees | 3,295,225 | |||
Distribution and service fees payable | 339,020 | |||
27,782,850 | ||||
Net Assets | $4,109,809,127 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $2,942,670,440 | |||
Accumulated net investment loss | (11,453,116 | ) | ||
Undistributed net realized gain | 2,376,543 | |||
Net unrealized appreciation | 1,176,215,260 | |||
$4,109,809,127 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $2,691,678,543 | 114,983,319 | $23.41 | |||
Institutional Class, $0.01 Par Value | $181,299,746 | 7,560,163 | $23.98 | |||
A Class, $0.01 Par Value | $1,065,654,000 | 46,924,236 | $22.71 | * | ||
B Class, $0.01 Par Value | $3,511,940 | 155,478 | $22.59 | |||
C Class, $0.01 Par Value | $128,385,168 | 6,093,445 | $21.07 | |||
R Class, $0.01 Par Value | $39,279,730 | 1,708,289 | $22.99 |
* | Maximum offering price $24.10 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $11,370) | $9,083,728 | |||
Interest | 18,237 | |||
9,101,965 | ||||
Expenses: | ||||
Management fees | 18,595,767 | |||
Distribution and service fees: | ||||
A Class | 1,234,318 | |||
B Class | 17,380 | |||
C Class | 592,042 | |||
R Class | 87,176 | |||
Directors’ fees and expenses | 77,391 | |||
Other expenses | 27 | |||
20,604,101 | ||||
Net investment income (loss) | (11,502,136 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 36,749,449 | |||
Foreign currency transactions | 983,801 | |||
37,733,250 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 479,094,528 | |||
Translation of assets and liabilities in foreign currencies | (96,934 | ) | ||
478,997,594 | ||||
Net realized and unrealized gain (loss) | 516,730,844 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $505,228,708 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $(11,502,136 | ) | $(16,186,409 | ) | ||||
Net realized gain (loss) | 37,733,250 | 237,705,159 | ||||||
Change in net unrealized appreciation (depreciation) | 478,997,594 | (77,938,722 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 505,228,708 | 143,580,028 | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (72,271,264 | ) | 620,667,351 | |||||
Net increase (decrease) in net assets | 432,957,444 | 764,247,379 | ||||||
Net Assets | ||||||||
Beginning of period | 3,676,851,683 | 2,912,604,304 | ||||||
End of period | $4,109,809,127 | $3,676,851,683 | ||||||
Accumulated undistributed net investment income (loss) | $(11,453,116 | ) | $49,020 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Heritage Fund (the fund) is one fund in a series issued by the corporation. The fund 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 offers 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.
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. 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.
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 2008. 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.
15
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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $1,330,080,234 and $1,445,419,156, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 400,000,000 | 400,000,000 | ||||||||||||||
Sold | 10,904,882 | $235,675,677 | 48,523,754 | $1,050,372,668 | ||||||||||||
Redeemed | (12,720,968 | ) | (269,474,318 | ) | (29,959,321 | ) | (630,455,954 | ) | ||||||||
(1,816,086 | ) | (33,798,641 | ) | 18,564,433 | 419,916,714 | |||||||||||
Institutional Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||||
Sold | 1,125,394 | 24,592,520 | 3,643,181 | 79,017,867 | ||||||||||||
Redeemed | (1,028,786 | ) | (22,723,740 | ) | (2,055,324 | ) | (44,025,654 | ) | ||||||||
96,608 | 1,868,780 | 1,587,857 | 34,992,213 | |||||||||||||
A Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 6,027,077 | 124,553,003 | 19,843,309 | 411,532,985 | ||||||||||||
Redeemed | (7,939,008 | ) | (164,283,786 | ) | (13,979,401 | ) | (286,376,262 | ) | ||||||||
(1,911,931 | ) | (39,730,783 | ) | 5,863,908 | 125,156,723 | |||||||||||
B Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||||||||
Sold | 567 | 12,522 | 16,596 | 339,707 | ||||||||||||
Redeemed | (24,742 | ) | (527,705 | ) | (49,419 | ) | (1,021,747 | ) | ||||||||
(24,175 | ) | (515,183 | ) | (32,823 | ) | (682,040 | ) | |||||||||
C Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||||||||
Sold | 665,116 | 12,899,704 | 2,703,485 | 52,590,539 | ||||||||||||
Redeemed | (804,184 | ) | (15,541,535 | ) | (1,336,721 | ) | (25,564,825 | ) | ||||||||
(139,068 | ) | (2,641,831 | ) | 1,366,764 | 27,025,714 | |||||||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||||
Sold | 522,565 | 10,920,931 | 1,116,361 | 23,766,845 | ||||||||||||
Redeemed | (399,699 | ) | (8,374,537 | ) | (453,977 | ) | (9,508,818 | ) | ||||||||
122,866 | 2,546,394 | 662,384 | 14,258,027 | |||||||||||||
Net increase (decrease) | (3,671,786 | ) | $(72,271,264 | ) | 28,012,523 | $620,667,351 |
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.
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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 | ||||||||||||
Domestic Common Stocks | $3,667,061,099 | — | — | |||||||||
Foreign Common Stocks | 291,748,601 | $55,383,577 | — | |||||||||
Temporary Cash Investments | 319,438 | 67,276,682 | — | |||||||||
Total Value of Investment Securities | $3,959,129,138 | $122,660,259 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(145,180 | ) | — |
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 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, 2012, is disclosed on the Statement of Assets and Liabilities as a liability of $145,180 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2012, the effect of foreign currency risk derivative instruments on the Statement of Operations was $972,893 in net realized gain (loss) on foreign currency transactions and $(96,160) 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.
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.
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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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $2,913,674,973 | |||
Gross tax appreciation of investments | $1,216,432,796 | |||
Gross tax depreciation of investments | (48,318,372 | ) | ||
Net tax appreciation (depreciation) of investments | $1,168,114,424 |
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, 2011, the fund had accumulated capital losses of $(14,823,700), 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. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||
2012(3) | $20.51 | (0.06) | 2.96 | 2.90 | — | — | — | $23.41 | 14.09% | 1.01%(4) | (0.53)%(4) | 36% | $2,691,679 |
2011 | $19.21 | (0.07) | 1.37 | 1.30 | — | — | — | $20.51 | 6.77% | 1.01% | (0.35)% | 95% | $2,395,881 |
2010 | $14.32 | (0.07) | 4.96 | 4.89 | — | — | — | $19.21 | 34.15% | 1.01% | (0.45)% | 114% | $1,886,729 |
2009 | $13.15 | (0.02) | 1.32 | 1.30 | (0.13) | — | (0.13) | $14.32 | 10.16% | 1.01% | (0.19)% | 155% | $1,342,418 |
2008 | $22.83 | (0.09) | (8.53) | (8.62) | — | (1.06) | (1.06) | $13.15 | (39.54)% | 1.00% | (0.47)% | 172% | $1,261,784 |
2007 | $15.58 | (0.10) | 8.42 | 8.32 | — | (1.07) | (1.07) | $22.83 | 56.41% | 1.00% | (0.56)% | 128% | $2,478,452 |
Institutional Class | |||||||||||||
2012(3) | $20.99 | (0.03) | 3.02 | 2.99 | — | — | — | $23.98 | 14.20% | 0.81%(4) | (0.33)%(4) | 36% | $181,300 |
2011 | $19.62 | (0.03) | 1.40 | 1.37 | — | — | — | $20.99 | 6.98% | 0.81% | (0.15)% | 95% | $156,681 |
2010 | $14.60 | (0.04) | 5.07 | 5.03 | (0.01) | — | (0.01) | $19.62 | 34.44% | 0.81% | (0.25)% | 114% | $115,261 |
2009 | $13.41 | —(5) | 1.34 | 1.34 | (0.15) | — | (0.15) | $14.60 | 10.33% | 0.81% | 0.01% | 155% | $92,343 |
2008 | $23.21 | (0.05) | (8.69) | (8.74) | — | (1.06) | (1.06) | $13.41 | (39.41)% | 0.80% | (0.27)% | 172% | $86,835 |
2007 | $15.80 | (0.07) | 8.55 | 8.48 | — | (1.07) | (1.07) | $23.21 | 56.66% | 0.80% | (0.36)% | 128% | $155,885 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class(6) | |||||||||||||
2012(3) | $19.92 | (0.08) | 2.87 | 2.79 | — | — | — | $22.71 | 13.90% | 1.26%(4) | (0.78)%(4) | 36% | $1,065,654 |
2011 | $18.70 | (0.12) | 1.34 | 1.22 | — | — | — | $19.92 | 6.58% | 1.26% | (0.60)% | 95% | $973,051 |
2010 | $13.98 | (0.11) | 4.83 | 4.72 | — | — | — | $18.70 | 33.76% | 1.26% | (0.70)% | 114% | $803,692 |
2009 | $12.84 | (0.06) | 1.30 | 1.24 | (0.10) | — | (0.10) | $13.98 | 9.89% | 1.26% | (0.44)% | 155% | $518,768 |
2008 | $22.37 | (0.13) | (8.34) | (8.47) | — | (1.06) | (1.06) | $12.84 | (39.69)% | 1.25% | (0.72)% | 172% | $351,962 |
2007 | $15.32 | (0.15) | 8.27 | 8.12 | — | (1.07) | (1.07) | $22.37 | 56.05% | 1.25% | (0.81)% | 128% | $291,674 |
B Class | |||||||||||||
2012(3) | $19.89 | (0.16) | 2.86 | 2.70 | — | — | — | $22.59 | 13.52% | 2.01%(4) | (1.53)%(4) | 36% | $3,512 |
2011 | $18.81 | (0.28) | 1.36 | 1.08 | — | — | — | $19.89 | 5.74% | 2.01% | (1.35)% | 95% | $3,574 |
2010 | $14.16 | (0.24) | 4.89 | 4.65 | — | — | — | $18.81 | 32.84% | 2.01% | (1.45)% | 114% | $3,997 |
2009 | $13.01 | (0.16) | 1.33 | 1.17 | (0.02) | — | (0.02) | $14.16 | 8.99% | 2.01% | (1.19)% | 155% | $3,425 |
2008 | $22.82 | (0.26) | (8.49) | (8.75) | — | (1.06) | (1.06) | $13.01 | (40.16)% | 2.00% | (1.47)% | 172% | $1,770 |
2007(7) | $21.52 | (0.03) | 1.33 | 1.30 | — | — | — | $22.82 | 6.04% | 2.00%(4) | (1.81)%(4) | 128%(8) | $83 |
C Class | |||||||||||||
2012(3) | $18.55 | (0.15) | 2.67 | 2.52 | — | — | — | $21.07 | 13.47% | 2.01%(4) | (1.53)%(4) | 36% | $128,385 |
2011 | $17.55 | (0.26) | 1.26 | 1.00 | — | — | — | $18.55 | 5.75% | 2.01% | (1.35)% | 95% | $115,641 |
2010 | $13.21 | (0.22) | 4.56 | 4.34 | — | — | — | $17.55 | 32.85% | 2.01% | (1.45)% | 114% | $85,381 |
2009 | $12.13 | (0.14) | 1.24 | 1.10 | (0.02) | — | (0.02) | $13.21 | 9.07% | 2.01% | (1.19)% | 155% | $51,745 |
2008 | $21.35 | (0.26) | (7.90) | (8.16) | — | (1.06) | (1.06) | $12.13 | (40.16)% | 2.00% | (1.47)% | 172% | $32,812 |
2007 | $14.77 | (0.29) | 7.94 | 7.65 | — | (1.07) | (1.07) | $21.35 | 54.88% | 2.00% | (1.56)% | 128% | $21,692 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
R Class | |||||||||||||
2012(3) | $20.20 | (0.11) | 2.90 | 2.79 | — | — | — | $22.99 | 13.81% | 1.51%(4) | (1.03)%(4) | 36% | $39,280 |
2011 | $19.01 | (0.18) | 1.37 | 1.19 | — | — | — | $20.20 | 6.26% | 1.51% | (0.85)% | 95% | $32,023 |
2010 | $14.24 | (0.16) | 4.93 | 4.77 | — | — | — | $19.01 | 33.50% | 1.51% | (0.95)% | 114% | $17,544 |
2009 | $13.08 | (0.11) | 1.34 | 1.23 | (0.07) | — | (0.07) | $14.24 | 9.58% | 1.51% | (0.69)% | 155% | $4,775 |
2008 | $22.83 | (0.17) | (8.52) | (8.69) | — | (1.06) | (1.06) | $13.08 | (39.86)% | 1.50% | (0.97)% | 172% | $496 |
2007(7) | $21.52 | (0.02) | 1.33 | 1.31 | — | — | — | $22.83 | 6.09% | 1.50%(4) | (1.22)%(4) | 128%(8) | $27 |
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
(6) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(7) | September 28, 2007 (commencement of sale) through October 31, 2007. |
(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.
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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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75367 1206
SEMIANNUAL REPORT APRIL 30, 2012
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![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/frontpagebanner.jpg)
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 | 18 |
Additional Information | 19 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2012 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Institutional Class | ACLTX | 13.88% | 5.48% | 5.25% | 6.51% | 5/12/06 |
Russell 1000 Growth Index | — | 14.13% | 7.26% | 4.11% | 5.42%(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 0.78% |
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
APRIL 30, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 7.4% |
Microsoft Corp. | 3.5% |
Exxon Mobil Corp. | 3.3% |
Coca-Cola Co. (The) | 3.0% |
Google, Inc., Class A | 2.5% |
Schlumberger Ltd. | 2.5% |
PepsiCo, Inc. | 2.2% |
International Business Machines Corp. | 2.1% |
EMC Corp. | 1.8% |
Abbott Laboratories | 1.8% |
Top Five Industries | % of net assets |
Computers and Peripherals | 10.2% |
Oil, Gas and Consumable Fuels | 7.0% |
Software | 6.8% |
Beverages | 5.7% |
Aerospace and Defense | 4.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.6% |
Exchange-Traded Funds | 0.5% |
Total Equity Exposure | 100.1% |
Temporary Cash Investments | 1.0% |
Other Assets and Liabilities | (1.1)% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $1,138.80 | $4.09 | 0.77% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,021.03 | $3.87 | 0.77% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
Shares | Value | |||||||
Common Stocks — 99.6% | ||||||||
AEROSPACE AND DEFENSE — 4.7% | ||||||||
Hexcel Corp.(1) | 69,141 | $1,893,081 | ||||||
Honeywell International, Inc. | 147,829 | 8,967,307 | ||||||
Precision Castparts Corp. | 22,096 | 3,897,071 | ||||||
Textron, Inc. | 109,093 | 2,906,238 | ||||||
United Technologies Corp. | 126,185 | 10,301,743 | ||||||
27,965,440 | ||||||||
AIR FREIGHT AND LOGISTICS — 1.3% | ||||||||
United Parcel Service, Inc., Class B | 97,729 | 7,636,544 | ||||||
AUTO COMPONENTS — 1.7% | ||||||||
Autoliv, Inc. | 63,997 | 4,015,172 | ||||||
BorgWarner, Inc.(1) | 77,896 | 6,156,900 | ||||||
10,172,072 | ||||||||
AUTOMOBILES — 0.8% | ||||||||
Harley-Davidson, Inc. | 85,269 | 4,462,127 | ||||||
BEVERAGES — 5.7% | ||||||||
Boston Beer Co., Inc., Class A(1) | 7,566 | 781,719 | ||||||
Brown-Forman Corp., Class B | 18,267 | 1,577,356 | ||||||
Coca-Cola Co. (The) | 231,404 | 17,660,753 | ||||||
Monster Beverage Corp.(1) | 17,499 | 1,136,735 | ||||||
PepsiCo, Inc. | 196,999 | 13,001,934 | ||||||
34,158,497 | ||||||||
BIOTECHNOLOGY — 1.5% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 29,860 | 2,696,955 | ||||||
Cepheid, Inc.(1) | 33,507 | 1,287,004 | ||||||
Gilead Sciences, Inc.(1) | 75,713 | 3,937,833 | ||||||
Medivation, Inc.(1) | 10,813 | 874,556 | ||||||
8,796,348 | ||||||||
CAPITAL MARKETS — 0.9% | ||||||||
BlackRock, Inc. | 27,447 | 5,258,296 | ||||||
CHEMICALS — 2.1% | ||||||||
E.I. du Pont de Nemours & Co. | 104,706 | 5,597,583 | ||||||
Monsanto Co. | 51,443 | 3,918,928 | ||||||
Rockwood Holdings, Inc.(1) | 53,253 | 2,947,021 | ||||||
12,463,532 | ||||||||
COMMERCIAL BANKS — 1.1% | ||||||||
Wells Fargo & Co. | 203,753 | 6,811,463 | ||||||
COMMUNICATIONS EQUIPMENT — 3.2% | ||||||||
Cisco Systems, Inc. | 304,273 | 6,131,101 | ||||||
F5 Networks, Inc.(1) | 23,292 | 3,119,497 | ||||||
QUALCOMM, Inc. | 155,932 | 9,954,699 | ||||||
19,205,297 | ||||||||
COMPUTERS AND PERIPHERALS — 10.2% | ||||||||
Apple, Inc.(1) | 75,713 | $44,234,563 | ||||||
Dell, Inc.(1) | 188,958 | 3,093,243 | ||||||
EMC Corp.(1) | 385,333 | 10,870,244 | ||||||
NetApp, Inc.(1) | 67,369 | 2,615,938 | ||||||
60,813,988 | ||||||||
ELECTRICAL EQUIPMENT — 0.4% | ||||||||
Rockwell Automation, Inc. | 30,871 | 2,387,563 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 0.6% | ||||||||
Jabil Circuit, Inc. | 98,030 | 2,298,804 | ||||||
Trimble Navigation Ltd.(1) | 27,731 | 1,501,356 | ||||||
3,800,160 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 3.8% | ||||||||
Core Laboratories NV | 19,599 | 2,684,671 | ||||||
Hornbeck Offshore Services, Inc.(1) | 32,415 | 1,349,437 | ||||||
Oceaneering International, Inc. | 72,499 | 3,743,123 | ||||||
Schlumberger Ltd. | 198,786 | 14,737,994 | ||||||
22,515,225 | ||||||||
FOOD AND STAPLES RETAILING — 2.2% | ||||||||
Costco Wholesale Corp. | 65,236 | 5,751,858 | ||||||
CVS Caremark Corp. | 100,186 | 4,470,299 | ||||||
Whole Foods Market, Inc. | 37,423 | 3,108,729 | ||||||
13,330,886 | ||||||||
FOOD PRODUCTS — 2.0% | ||||||||
Hershey Co. (The) | 65,524 | 4,390,763 | ||||||
Kellogg Co. | 120,419 | 6,089,589 | ||||||
Mead Johnson Nutrition Co. | 14,650 | 1,253,454 | ||||||
11,733,806 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 3.7% | ||||||||
Cooper Cos., Inc. (The) | 19,500 | 1,719,315 | ||||||
Covidien plc | 82,372 | 4,549,405 | ||||||
DENTSPLY International, Inc. | 29,143 | 1,196,612 | ||||||
Edwards Lifesciences Corp.(1) | 29,836 | 2,475,493 | ||||||
Gen-Probe, Inc.(1) | 15,732 | 1,282,945 | ||||||
Hill-Rom Holdings, Inc. | 46,299 | 1,502,402 | ||||||
IDEXX Laboratories, Inc.(1) | 15,355 | 1,350,165 | ||||||
Intuitive Surgical, Inc.(1) | 4,783 | 2,765,531 | ||||||
ResMed, Inc.(1) | 61,514 | 2,092,091 | ||||||
Zimmer Holdings, Inc. | 46,746 | 2,941,726 | ||||||
21,875,685 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.1% | ||||||||
Express Scripts Holding Co.(1) | 112,628 | 6,283,516 |
8
Shares | Value | |||||||
HOTELS, RESTAURANTS AND LEISURE — 4.2% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 5,221 | $2,162,277 | ||||||
Marriott International, Inc. Class A | 171,904 | 6,719,727 | ||||||
McDonald’s Corp. | 77,120 | 7,515,344 | ||||||
Starbucks Corp. | 148,357 | 8,512,725 | ||||||
24,910,073 | ||||||||
HOUSEHOLD DURABLES — 0.6% | ||||||||
Mohawk Industries, Inc.(1) | 32,179 | 2,156,636 | ||||||
Tempur-Pedic International, Inc.(1) | 27,026 | 1,590,210 | ||||||
3,746,846 | ||||||||
HOUSEHOLD PRODUCTS — 1.6% | ||||||||
Church & Dwight Co., Inc. | 27,232 | 1,383,385 | ||||||
Colgate-Palmolive Co. | 84,287 | 8,339,356 | ||||||
9,722,741 | ||||||||
INDUSTRIAL CONGLOMERATES — 0.8% | ||||||||
Danaher Corp. | 87,839 | 4,762,631 | ||||||
INSURANCE — 0.4% | ||||||||
Brown & Brown, Inc. | 81,250 | 2,191,313 | ||||||
INTERNET AND CATALOG RETAIL — 1.8% | ||||||||
Amazon.com, Inc.(1) | 44,978 | 10,430,398 | ||||||
INTERNET SOFTWARE AND SERVICES — 2.5% | ||||||||
Google, Inc., Class A(1) | 24,587 | 14,880,790 | ||||||
IT SERVICES — 4.6% | ||||||||
Accenture plc, Class A | 75,022 | 4,872,679 | ||||||
Automatic Data Processing, Inc. | 83,491 | 4,643,769 | ||||||
International Business Machines Corp. | 58,913 | 12,199,704 | ||||||
MasterCard, Inc., Class A | 12,493 | 5,650,209 | ||||||
27,366,361 | ||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.6% | ||||||||
Agilent Technologies, Inc. | 86,349 | 3,642,201 | ||||||
MACHINERY — 2.8% | ||||||||
Cummins, Inc. | 35,711 | 4,136,405 | ||||||
Deere & Co. | 32,615 | 2,686,171 | ||||||
Illinois Tool Works, Inc. | 116,744 | 6,698,771 | ||||||
Terex Corp.(1) | 143,643 | 3,252,078 | ||||||
16,773,425 | ||||||||
MARINE — 0.3% | ||||||||
Kirby Corp.(1) | 29,627 | 1,966,344 | ||||||
MEDIA — 2.2% | ||||||||
CBS Corp., Class B | 107,133 | 3,572,886 | ||||||
Time Warner Cable, Inc. | 81,211 | 6,533,425 | ||||||
Viacom, Inc., Class B | 68,065 | 3,157,535 | ||||||
13,263,846 | ||||||||
METALS AND MINING — 1.3% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 134,899 | $5,166,632 | ||||||
Nucor Corp. | 65,197 | 2,556,374 | ||||||
7,723,006 | ||||||||
MULTILINE RETAIL — 1.6% | ||||||||
Dollar General Corp.(1) | 69,235 | 3,285,893 | ||||||
JC Penney Co., Inc. | 43,354 | 1,563,345 | ||||||
Macy’s, Inc. | 120,144 | 4,928,307 | ||||||
9,777,545 | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 7.0% | ||||||||
Devon Energy Corp. | 56,912 | 3,975,303 | ||||||
EOG Resources, Inc. | 48,998 | 5,380,470 | ||||||
Exxon Mobil Corp. | 226,969 | 19,596,504 | ||||||
Noble Energy, Inc. | 56,992 | 5,660,446 | ||||||
Occidental Petroleum Corp. | 76,101 | 6,941,933 | ||||||
41,554,656 | ||||||||
PERSONAL PRODUCTS — 0.6% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 50,387 | 3,292,790 | ||||||
PHARMACEUTICALS — 3.5% | ||||||||
Abbott Laboratories | 169,903 | 10,544,180 | ||||||
Allergan, Inc. | 34,684 | 3,329,664 | ||||||
Johnson & Johnson | 104,855 | 6,825,012 | ||||||
20,698,856 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.1% | ||||||||
American Campus Communities, Inc. | 39,825 | 1,770,221 | ||||||
AvalonBay Communities, Inc. | 10,737 | 1,561,160 | ||||||
Simon Property Group, Inc. | 20,043 | 3,118,691 | ||||||
6,450,072 | ||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.4% | ||||||||
CBRE Group, Inc.(1) | 115,164 | 2,166,235 | ||||||
ROAD AND RAIL — 0.7% | ||||||||
Union Pacific Corp. | 35,244 | 3,962,835 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.9% | ||||||||
Avago Technologies Ltd. | 48,548 | 1,673,935 | ||||||
Broadcom Corp., Class A(1) | 97,987 | 3,586,324 | ||||||
Linear Technology Corp. | 107,644 | 3,521,035 | ||||||
Marvell Technology Group Ltd.(1) | 244,529 | 3,670,380 | ||||||
Xilinx, Inc. | 129,578 | 4,714,048 | ||||||
17,165,722 | ||||||||
SOFTWARE — 6.8% | ||||||||
Cerner Corp.(1) | 29,127 | 2,361,908 | ||||||
Check Point Software Technologies Ltd.(1) | 32,602 | 1,895,154 | ||||||
Citrix Systems, Inc.(1) | 38,425 | 3,289,564 |
9
Shares | Value | |||||||
CommVault Systems, Inc.(1) | 16,236 | $845,409 | ||||||
Fortinet, Inc.(1) | 35,997 | 940,242 | ||||||
Microsoft Corp. | 643,725 | 20,612,074 | ||||||
Oracle Corp. | 261,471 | 7,684,633 | ||||||
QLIK Technologies, Inc.(1) | 42,969 | 1,237,937 | ||||||
Red Hat, Inc.(1) | 26,507 | 1,580,082 | ||||||
40,447,003 | ||||||||
SPECIALTY RETAIL — 2.3% | ||||||||
Home Depot, Inc. (The) | 122,892 | 6,364,577 | ||||||
O’Reilly Automotive, Inc.(1) | 33,739 | 3,558,115 | ||||||
Tractor Supply Co. | 15,074 | 1,483,432 | ||||||
Urban Outfitters, Inc.(1) | 71,006 | 2,056,334 | ||||||
13,462,458 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 0.9% | ||||||||
Coach, Inc. | 59,626 | 4,362,238 | ||||||
Lululemon Athletica, Inc.(1) | 15,005 | 1,112,471 | ||||||
5,474,709 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 1.1% | ||||||||
Crown Castle International Corp.(1) | 119,711 | 6,776,840 | ||||||
TOTAL COMMON STOCKS (Cost $464,567,975) | 592,280,141 | |||||||
Exchange-Traded Funds — 0.5% | ||||||||
iShares Russell 1000 Growth Index Fund (Cost $2,791,519) | 42,412 | 2,799,192 | ||||||
Temporary Cash Investments — 1.0% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at $2,571,157), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $2,520,836) | 2,520,825 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $1,606,157), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $1,575,520) | $1,575,515 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $2,107,789), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $2,064,851) | 2,064,845 | |||||||
SSgA U.S. Government Money Market Fund | 6 | 6 | ||||||
TOTAL TEMPORARYCASH INVESTMENTS (Cost $6,161,191) | 6,161,191 | |||||||
TOTAL INVESTMENT SECURITIES — 101.1% (Cost $473,520,685) | 601,240,524 | |||||||
OTHER ASSETS AND LIABILITIES — (1.1)% | (6,622,359 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $594,618,165 |
Notes to Schedule of Investments
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $473,520,685) | $601,240,524 | |||
Receivable for investments sold | 1,778,514 | |||
Dividends and interest receivable | 335,146 | |||
603,354,184 | ||||
Liabilities | ||||
Payable for investments purchased | 5,611,784 | |||
Payable for capital shares redeemed | 2,759,810 | |||
Accrued management fees | 364,425 | |||
8,736,019 | ||||
Net Assets | $594,618,165 | |||
Institutional Class Capital Shares, $0.01 Par Value | ||||
Shares authorized | 150,000,000 | |||
Shares outstanding | 45,276,265 | |||
Net Asset Value Per Share | $13.13 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $460,512,482 | |||
Undistributed net investment income | 767,161 | |||
Undistributed net realized gain | 5,617,612 | |||
Net unrealized appreciation | 127,720,910 | |||
$594,618,165 |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,575) | $3,624,377 | |||
Interest | 2,458 | |||
3,626,835 | ||||
Expenses: | ||||
Management fees | 1,958,119 | |||
Directors’ fees and expenses | 7,682 | |||
1,965,801 | ||||
Net investment income (loss) | 1,661,034 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 11,039,534 | |||
Futures contract transactions | 200,576 | |||
Foreign currency transactions | (245 | ) | ||
11,239,865 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 55,681,792 | |||
Translation of assets and liabilities in foreign currencies | (88 | ) | ||
55,681,704 | ||||
Net realized and unrealized gain (loss) | 66,921,569 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $68,582,603 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $1,661,034 | $3,241,841 | ||||||
Net realized gain (loss) | 11,239,865 | 18,719,430 | ||||||
Change in net unrealized appreciation (depreciation) | 55,681,704 | 6,731,577 | ||||||
Net increase (decrease) in net assets resulting from operations | 68,582,603 | 28,692,848 | ||||||
Distributions to Shareholders | ||||||||
From net investment income | (3,102,332 | ) | (2,311,137 | ) | ||||
From net realized gains | (11,931,445 | ) | — | |||||
Decrease in net assets from distributions | (15,033,777 | ) | (2,311,137 | ) | ||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 77,351,218 | 112,894,557 | ||||||
Proceeds from reinvestment of distributions | 15,033,777 | 2,311,137 | ||||||
Payments for shares redeemed | (13,160,507 | ) | (20,159,480 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 79,224,488 | 95,046,214 | ||||||
Net increase (decrease) in net assets | 132,773,314 | 121,427,925 | ||||||
Net Assets | ||||||||
Beginning of period | 461,844,851 | 340,416,926 | ||||||
End of period | $594,618,165 | $461,844,851 | ||||||
Undistributed net investment income | $767,161 | $2,208,459 | ||||||
Transactions in Shares of the Fund | ||||||||
Sold | 6,275,838 | 9,513,850 | ||||||
Issued in reinvestment of distributions | 1,326,900 | 196,358 | ||||||
Redeemed | (1,073,586 | ) | (1,751,186 | ) | ||||
Net increase (decrease) in shares of the fund | 6,529,152 | 7,959,022 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Growth Fund (the fund) is one fund in a series issued by the corporation. The fund 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 stocks 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.
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.
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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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover futures contracts. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on futures contracts.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2008. 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.
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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). 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, 2012 was 0.77%.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $235,946,346 and $162,525,900, 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.
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 | $592,280,141 | — | — | |||||||||
Exchange-Traded Funds | 2,799,192 | — | — | |||||||||
Temporary Cash Investments | 6 | $6,161,185 | — | |||||||||
Total Value of Investment Securities | $595,079,339 | $6,161,185 | — |
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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.
At period end, the fund did not have any equity risk derivative instruments disclosed on the Statement of Assets and Liabilities. For the six months ended April 30, 2012, the effect of equity price risk derivative instruments on the Statement of Operations was $200,576 in net realized gain (loss) on futures contract transactions.
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $479,290,273 | |||
Gross tax appreciation of investments | $123,985,369 | |||
Gross tax depreciation of investments | (2,035,118 | ) | ||
Net tax appreciation (depreciation) of investments | $121,950,251 |
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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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(1) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Institutional Class | |||||||||||||
2012(2) | $11.92 | 0.04(3) | 1.55 | 1.59 | (0.08) | (0.30) | (0.38) | $13.13 | 13.88% | 0.77%(4) | 0.65%(4) | 32% | $594,618 |
2011 | $11.06 | 0.09(3) | 0.85 | 0.94 | (0.08) | — | (0.08) | $11.92 | 8.48% | 0.78% | 0.78% | 95% | $461,845 |
2010 | $9.34 | 0.06(3) | 1.71 | 1.77 | (0.05) | — | (0.05) | $11.06 | 18.94% | 0.79% | 0.63% | 95% | $340,417 |
2009 | $8.13 | 0.06(3) | 1.21 | 1.27 | (0.06) | — | (0.06) | $9.34 | 15.88% | 0.80% | 0.67% | 132% | $208,337 |
2008 | $12.87 | 0.04(3) | (4.19) | (4.15) | (0.03) | (0.56) | (0.59) | $8.13 | (33.68)% | 0.80% | 0.38% | 136% | $83,440 |
2007 | $10.57 | 0.04 | 2.29 | 2.33 | (0.03) | — | (0.03) | $12.87 | 22.12% | 0.80% | 0.35% | 140% | $88,446 |
Notes to Financial Highlights
(1) | 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. |
(2) | Six months ended April 30, 2012 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75369 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 23 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWNOX | 12.18% | -4.45% | 2.77% | 4.64% | 6.70% | 12/26/96 |
Russell 2500 Growth Index | — | 11.72% | -1.61% | 4.08% | 7.26% | 6.44%(2) | — |
Institutional Class | TWNIX | 12.42% | -4.10% | — | — | 16.30% | 3/1/10 |
A Class No sales charge* With sales charge* | TWNAX | 12.10% 5.70% | -4.58% -10.03% | — — | — — | 15.79% 12.67% | 3/1/10 |
C Class No sales charge* With sales charge* | TWNCX | 11.72% 10.72% | -5.31% -5.31% | — — | — — | 14.89% 14.89% | 3/1/10 |
R Class | TWNRX | 12.03% | -4.82% | — | — | 15.47% | 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) | 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 |
1.52% | 1.32% | 1.77% | 2.52% | 2.02% |
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.
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APRIL 30, 2012 | |
Top Ten Holdings | % of net assets |
Lithia Motors, Inc., Class A | 1.9% |
Titan International, Inc. | 1.8% |
Polaris Industries, Inc. | 1.6% |
United Rentals, Inc. | 1.4% |
Triumph Group, Inc. | 1.3% |
Titan Machinery, Inc. | 1.2% |
Kenexa Corp. | 1.2% |
Tempur-Pedic International, Inc. | 1.1% |
Tractor Supply Co. | 1.0% |
ValueClick, Inc. | 1.0% |
Top Five Industries | % of net assets |
Machinery | 7.3% |
Software | 7.2% |
Specialty Retail | 6.6% |
Oil, Gas and Consumable Fuels | 5.1% |
Trading Companies and Distributors | 4.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.0% |
Temporary Cash Investments | 1.5% |
Other Assets and Liabilities | (0.5)% |
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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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,121.80 | $7.91 | 1.50% |
Institutional Class | $1,000 | $1,124.20 | $6.87 | 1.30% |
A Class | $1,000 | $1,121.00 | $9.23 | 1.75% |
C Class | $1,000 | $1,117.20 | $13.16 | 2.50% |
R Class | $1,000 | $1,120.30 | $10.54 | 2.00% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
Institutional Class | $1,000 | $1,018.40 | $6.52 | 1.30% |
A Class | $1,000 | $1,016.16 | $8.77 | 1.75% |
C Class | $1,000 | $1,012.43 | $12.51 | 2.50% |
R Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
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Shares | Value | |||||||
Common Stocks — 99.0% | ||||||||
AEROSPACE AND DEFENSE — 2.7% | ||||||||
Astronics Corp.(1) | 3,322 | $105,474 | ||||||
BE Aerospace, Inc.(1) | 19,966 | 939,001 | ||||||
TransDigm Group, Inc.(1) | 10,145 | 1,279,487 | ||||||
Triumph Group, Inc. | 35,722 | 2,244,056 | ||||||
4,568,018 | ||||||||
AUTO COMPONENTS — 1.1% | ||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 129,425 | 1,254,128 | ||||||
Goodyear Tire & Rubber Co. (The)(1) | 38,777 | 425,772 | ||||||
Tenneco, Inc.(1) | 7,662 | 236,219 | ||||||
1,916,119 | ||||||||
BEVERAGES — 0.6% | ||||||||
Boston Beer Co., Inc., Class A(1) | 2,744 | 283,510 | ||||||
Monster Beverage Corp.(1) | 12,291 | 798,423 | ||||||
1,081,933 | ||||||||
BIOTECHNOLOGY — 3.5% | ||||||||
Acorda Therapeutics, Inc.(1) | 5,643 | 142,429 | ||||||
Alkermes plc(1) | 12,702 | 219,745 | ||||||
Amylin Pharmaceuticals, Inc.(1) | 18,388 | 476,433 | ||||||
ARIAD Pharmaceuticals, Inc.(1) | 19,600 | 319,480 | ||||||
BioMarin Pharmaceutical, Inc.(1) | 14,582 | 505,995 | ||||||
Cepheid, Inc.(1) | 8,309 | 319,149 | ||||||
Cubist Pharmaceuticals, Inc.(1) | 8,329 | 352,150 | ||||||
Human Genome Sciences, Inc.(1) | 25,375 | 373,266 | ||||||
Incyte Corp. Ltd.(1) | 12,283 | 278,578 | ||||||
Medivation, Inc.(1) | 4,217 | 341,071 | ||||||
Myriad Genetics, Inc.(1) | 11,552 | 300,468 | ||||||
Onyx Pharmaceuticals, Inc.(1) | 8,678 | 394,936 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 9,516 | 1,287,134 | ||||||
Seattle Genetics, Inc.(1) | 12,158 | 240,364 | ||||||
Theravance, Inc.(1) | 7,702 | 166,671 | ||||||
United Therapeutics Corp.(1) | 6,642 | 290,588 | ||||||
6,008,457 | ||||||||
BUILDING PRODUCTS — 0.3% | ||||||||
Apogee Enterprises, Inc. | 28,077 | 431,263 | ||||||
CAPITAL MARKETS — 1.0% | ||||||||
Eaton Vance Corp. | 15,185 | 399,365 | ||||||
Lazard Ltd. Class A | 13,643 | 375,319 | ||||||
SEI Investments Co. | 17,041 | 344,058 | ||||||
Triangle Capital Corp. | 23,153 | 467,922 | ||||||
WisdomTree Investments, Inc.(1) | 21,454 | 183,432 | ||||||
1,770,096 | ||||||||
CHEMICALS — 2.5% | ||||||||
Airgas, Inc. | 11,263 | $1,032,141 | ||||||
Albemarle Corp. | 15,138 | 988,512 | ||||||
H.B. Fuller Co. | 19,412 | 638,655 | ||||||
International Flavors & Fragrances, Inc. | 9,780 | 588,854 | ||||||
Koppers Holdings, Inc. | 4,539 | 176,476 | ||||||
Kraton Performance Polymers, Inc.(1) | 12,414 | 322,764 | ||||||
TPC Group, Inc.(1) | 11,286 | 473,786 | ||||||
4,221,188 | ||||||||
COMMERCIAL BANKS — 2.5% | ||||||||
Banco Latinoamericano de Comercio Exterior SA E Shares | 19,536 | 407,326 | ||||||
Cathay General Bancorp. | 31,175 | 536,834 | ||||||
City National Corp. | 12,617 | 671,981 | ||||||
Columbia Banking System, Inc. | 10,870 | 222,726 | ||||||
Home Bancshares, Inc. | 27,727 | 807,965 | ||||||
Pinnacle Financial Partners, Inc.(1) | 16,318 | 298,619 | ||||||
Signature Bank(1) | 5,434 | 356,960 | ||||||
Texas Capital Bancshares, Inc.(1) | 23,902 | 901,344 | ||||||
4,203,755 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 0.8% | ||||||||
Deluxe Corp. | 26,893 | 640,322 | ||||||
G&K Services, Inc., Class A | 17,996 | 591,348 | ||||||
Team, Inc.(1) | 4,066 | 120,476 | ||||||
1,352,146 | ||||||||
COMMUNICATIONS EQUIPMENT — 1.7% | ||||||||
Aruba Networks, Inc.(1) | 20,348 | 429,750 | ||||||
InterDigital, Inc. | 5,387 | 149,328 | ||||||
JDS Uniphase Corp.(1) | 35,037 | 425,700 | ||||||
Netgear, Inc.(1) | 16,466 | 633,941 | ||||||
Polycom, Inc.(1) | 20,515 | 272,234 | ||||||
Procera Networks, Inc.(1) | 11,219 | 232,906 | ||||||
Riverbed Technology, Inc.(1) | 19,037 | 375,600 | ||||||
Sycamore Networks, Inc.(1) | 20,867 | 325,316 | ||||||
2,844,775 | ||||||||
COMPUTERS AND PERIPHERALS — 0.2% | ||||||||
Electronics for Imaging, Inc.(1) | 23,454 | 418,654 | ||||||
CONSTRUCTION AND ENGINEERING — 0.2% | ||||||||
Dycom Industries, Inc.(1) | 16,829 | 393,630 | ||||||
CONSTRUCTION MATERIALS — 0.4% | ||||||||
Eagle Materials, Inc. | 17,975 | 633,080 |
8
Shares | Value | |||||||
CONTAINERS AND PACKAGING — 1.4% | ||||||||
Ball Corp. | 22,073 | $921,768 | ||||||
Crown Holdings, Inc.(1) | 22,992 | 850,244 | ||||||
Rock-Tenn Co., Class A | 10,063 | 627,227 | ||||||
2,399,239 | ||||||||
DIVERSIFIED CONSUMER SERVICES — 0.9% | ||||||||
DeVry, Inc. | 7,402 | 237,974 | ||||||
Hillenbrand, Inc. | 7,979 | 167,080 | ||||||
ITT Educational Services, Inc.(1) | 3,743 | 247,113 | ||||||
Sotheby’s | 13,181 | 518,277 | ||||||
Steiner Leisure, Ltd.(1) | 4,978 | 233,767 | ||||||
Strayer Education, Inc. | 1,892 | 186,703 | ||||||
1,590,914 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.9% | ||||||||
MarketAxess Holdings, Inc. | 30,077 | 1,031,942 | ||||||
MSCI, Inc., Class A(1) | 15,609 | 571,133 | ||||||
1,603,075 | ||||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.2% | ||||||||
Premiere Global Services, Inc.(1) | 41,084 | 367,702 | ||||||
ELECTRICAL EQUIPMENT — 0.9% | ||||||||
AMETEK, Inc. | 22,992 | 1,157,187 | ||||||
Franklin Electric Co., Inc. | 6,317 | 316,798 | ||||||
1,473,985 | ||||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 2.8% | ||||||||
Badger Meter, Inc. | 4,601 | 169,961 | ||||||
Cognex Corp. | 33,353 | 1,342,458 | ||||||
FARO Technologies, Inc.(1) | 4,586 | 256,724 | ||||||
FLIR Systems, Inc. | 13,921 | 312,666 | ||||||
Key Tronic Corp.(1) | 11,498 | 132,802 | ||||||
Littelfuse, Inc. | 11,282 | 707,043 | ||||||
OSI Systems, Inc.(1) | 12,008 | 802,855 | ||||||
Trimble Navigation Ltd.(1) | 20,545 | 1,112,306 | ||||||
4,836,815 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 3.4% | ||||||||
Basic Energy Services, Inc.(1) | 16,693 | 240,379 | ||||||
Cal Dive International, Inc.(1) | 141,127 | 546,161 | ||||||
Core Laboratories NV | 6,270 | 858,865 | ||||||
Dresser-Rand Group, Inc.(1) | 10,666 | 519,221 | ||||||
Helmerich & Payne, Inc. | 15,063 | 774,088 | ||||||
Hornbeck Offshore Services, Inc.(1) | 32,257 | 1,342,859 | ||||||
Oceaneering International, Inc. | 18,631 | 961,918 | ||||||
Pioneer Drilling Co.(1) | 49,858 | 392,881 | ||||||
Superior Energy Services, Inc.(1) | 8,315 | 223,840 | ||||||
5,860,212 | ||||||||
FOOD AND STAPLES RETAILING — 1.0% | ||||||||
Andersons, Inc. (The) | 28,379 | $1,430,301 | ||||||
Chefs’ Warehouse, Inc. (The)(1) | 12,237 | 295,891 | ||||||
1,726,192 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.9% | ||||||||
Align Technology, Inc.(1) | 8,635 | 273,816 | ||||||
Gen-Probe, Inc.(1) | 6,381 | 520,370 | ||||||
Haemonetics Corp.(1) | 3,545 | 253,716 | ||||||
Hill-Rom Holdings, Inc. | 7,946 | 257,848 | ||||||
IDEXX Laboratories, Inc.(1) | 7,588 | 667,213 | ||||||
Integra LifeSciences Holdings Corp.(1) | 2,859 | 106,440 | ||||||
Masimo Corp.(1) | 7,437 | 164,581 | ||||||
Mettler-Toledo International, Inc.(1) | 4,160 | 745,971 | ||||||
NuVasive, Inc.(1) | 6,643 | 110,074 | ||||||
ResMed, Inc.(1) | 19,173 | 652,074 | ||||||
Sirona Dental Systems, Inc.(1) | 7,460 | 376,804 | ||||||
STERIS Corp. | 8,092 | 254,170 | ||||||
Thoratec Corp.(1) | 7,870 | 273,955 | ||||||
Volcano Corp.(1) | 7,245 | 196,702 | ||||||
4,853,734 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 2.4% | ||||||||
Accretive Health, Inc.(1) | 5,466 | 54,988 | ||||||
AMERIGROUP Corp.(1) | 3,976 | 245,558 | ||||||
Brookdale Senior Living, Inc.(1) | 12,252 | 232,910 | ||||||
Catalyst Health Solutions, Inc.(1) | 5,658 | 488,681 | ||||||
Centene Corp.(1) | 4,253 | 168,376 | ||||||
Chemed Corp. | 2,826 | 170,521 | ||||||
Health Management Associates, Inc., Class A(1) | 34,183 | 246,118 | ||||||
HMS Holdings Corp.(1) | 10,844 | 260,907 | ||||||
Lincare Holdings, Inc. | 12,061 | 294,288 | ||||||
Mednax, Inc.(1) | 6,384 | 448,412 | ||||||
Owens & Minor, Inc. | 6,986 | 204,271 | ||||||
Patterson Cos., Inc. | 5,278 | 179,927 | ||||||
PSS World Medical, Inc.(1) | 7,630 | 182,586 | ||||||
Universal Health Services, Inc., Class B | 11,880 | 507,395 | ||||||
WellCare Health Plans, Inc.(1) | 5,731 | 350,623 | ||||||
4,035,561 | ||||||||
HEALTH CARE TECHNOLOGY — 0.9% | ||||||||
Allscripts Healthcare Solutions, Inc.(1) | 20,114 | 222,863 | ||||||
athenahealth, Inc.(1) | 4,641 | 336,240 | ||||||
Quality Systems, Inc. | 5,322 | 199,043 | ||||||
SXC Health Solutions Corp.(1) | 8,203 | 743,028 | ||||||
1,501,174 |
9
Shares | Value | |||||||
HOTELS, RESTAURANTS AND LEISURE — 2.1% | ||||||||
AFC Enterprises, Inc.(1) | 15,718 | $268,463 | ||||||
Bally Technologies, Inc.(1) | 9,935 | 482,344 | ||||||
Cedar Fair LP | 31,472 | 979,094 | ||||||
Marcus Corp. | 5,540 | 69,305 | ||||||
Papa John’s International, Inc.(1) | 13,198 | 531,616 | ||||||
Red Robin Gourmet Burgers, Inc.(1) | 12,068 | 430,345 | ||||||
Shuffle Master, Inc.(1) | 41,043 | 725,230 | ||||||
3,486,397 | ||||||||
HOUSEHOLD DURABLES — 1.6% | ||||||||
Tempur-Pedic International, Inc.(1) | 30,799 | 1,812,213 | ||||||
Tupperware Brands Corp. | 7,940 | 494,582 | ||||||
Zagg, Inc.(1) | 29,155 | 379,890 | ||||||
2,686,685 | ||||||||
HOUSEHOLD PRODUCTS — 0.2% | ||||||||
Church & Dwight Co., Inc. | 5,088 | 258,470 | ||||||
INDUSTRIAL CONGLOMERATES — 1.0% | ||||||||
Raven Industries, Inc. | 23,273 | 1,401,267 | ||||||
Standex International Corp. | 5,681 | 250,305 | ||||||
1,651,572 | ||||||||
INSURANCE — 0.8% | ||||||||
AMERISAFE, Inc.(1) | 19,026 | 508,375 | ||||||
Amtrust Financial Services, Inc. | 29,031 | 790,805 | ||||||
Employers Holdings, Inc. | 7,920 | 137,174 | ||||||
1,436,354 | ||||||||
INTERNET AND CATALOG RETAIL — 0.2% | ||||||||
priceline.com, Inc.(1) | 383 | 291,394 | ||||||
INTERNET SOFTWARE AND SERVICES — 4.7% | ||||||||
Constant Contact, Inc.(1) | 10,641 | 257,193 | ||||||
Dice Holdings, Inc.(1) | 97,260 | 1,048,463 | ||||||
Equinix, Inc.(1) | 6,309 | 1,035,938 | ||||||
Infospace, Inc.(1) | 53,389 | 594,220 | ||||||
j2 Global, Inc. | 6,601 | 170,504 | ||||||
Keynote Systems, Inc. | 26,393 | 485,631 | ||||||
Liquidity Services, Inc.(1) | 4,568 | 243,611 | ||||||
Perficient, Inc.(1) | 47,688 | 572,733 | ||||||
Rackspace Hosting, Inc.(1) | 12,505 | 726,415 | ||||||
Stamps.com, Inc.(1) | 30,783 | 893,630 | ||||||
ValueClick, Inc.(1) | 76,681 | 1,624,104 | ||||||
Web.com Group, Inc.(1) | 28,485 | 368,881 | ||||||
8,021,323 | ||||||||
IT SERVICES — 2.9% | ||||||||
Alliance Data Systems Corp.(1) | 9,532 | 1,224,767 | ||||||
Broadridge Financial Solutions, Inc. | 15,314 | 355,438 | ||||||
Cardtronics, Inc.(1) | 18,201 | 479,778 | ||||||
Global Payments, Inc. | 10,380 | $481,943 | ||||||
Heartland Payment Systems, Inc. | 44,481 | 1,355,336 | ||||||
MAXIMUS, Inc. | 6,698 | 296,387 | ||||||
VeriFone Systems, Inc.(1) | 14,174 | 675,249 | ||||||
4,868,898 | ||||||||
LEISURE EQUIPMENT AND PRODUCTS — 2.4% | ||||||||
Polaris Industries, Inc. | 34,773 | 2,762,367 | ||||||
Smith & Wesson Holding Corp.(1) | 69,272 | 571,494 | ||||||
Sturm Ruger & Co., Inc. | 14,498 | 827,401 | ||||||
4,161,262 | ||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.8% | ||||||||
Bruker Corp.(1) | 12,122 | 182,194 | ||||||
Charles River Laboratories International, Inc.(1) | 6,627 | 235,457 | ||||||
Covance, Inc.(1) | 8,210 | 383,900 | ||||||
PAREXEL International Corp.(1) | 7,518 | 202,535 | ||||||
Techne Corp. | 4,979 | 333,294 | ||||||
1,337,380 | ||||||||
MACHINERY — 7.3% | ||||||||
AGCO Corp.(1) | 17,112 | 796,906 | ||||||
Altra Holdings, Inc.(1) | 4,841 | 88,493 | ||||||
Blount International, Inc.(1) | 36,570 | 591,337 | ||||||
CLARCOR, Inc. | 15,669 | 752,425 | ||||||
Donaldson Co., Inc. | 20,012 | 693,616 | ||||||
Gardner Denver, Inc. | 8,024 | 522,683 | ||||||
Greenbrier Cos., Inc.(1) | 25,858 | 446,051 | ||||||
Lindsay Corp. | 16,452 | 1,098,829 | ||||||
Middleby Corp.(1) | 5,650 | 573,306 | ||||||
Pall Corp. | 16,705 | 995,785 | ||||||
Robbins & Myers, Inc. | 18,175 | 885,304 | ||||||
Sauer-Danfoss, Inc. | 28,879 | 1,250,749 | ||||||
Titan International, Inc. | 106,141 | 3,066,414 | ||||||
WABCO Holdings, Inc.(1) | 10,488 | 661,059 | ||||||
12,422,957 | ||||||||
MEDIA — 0.2% | ||||||||
Sinclair Broadcast Group, Inc., Class A | 35,118 | 361,013 | ||||||
METALS AND MINING — 1.1% | ||||||||
AK Steel Holding Corp. | 20,896 | 155,048 | ||||||
Compass Minerals International, Inc. | 4,836 | 370,051 | ||||||
Haynes International, Inc. | 9,306 | 580,415 | ||||||
Noranda Aluminum Holding Corp. | 64,500 | 684,990 | ||||||
1,790,504 | ||||||||
MULTILINE RETAIL — 0.2% | ||||||||
Gordmans Stores, Inc.(1) | 16,961 | 360,252 |
10
Shares | Value | |||||||
OIL, GAS AND CONSUMABLE FUELS — 5.1% | ||||||||
Berry Petroleum Co., Class A | 8,320 | $378,976 | ||||||
Cabot Oil & Gas Corp. | 36,863 | 1,295,366 | ||||||
CVR Energy, Inc.(1) | 21,762 | 660,694 | ||||||
Goodrich Petroleum Corp.(1) | 13,792 | 231,292 | ||||||
Gulfport Energy Corp.(1) | 32,411 | 849,492 | ||||||
Kodiak Oil & Gas Corp.(1) | 62,391 | 552,160 | ||||||
Rosetta Resources, Inc.(1) | 27,082 | 1,361,412 | ||||||
SandRidge Energy, Inc.(1) | 57,114 | 456,341 | ||||||
Stone Energy Corp.(1) | 38,742 | 1,086,713 | ||||||
Tesoro Logistics LP | 5,282 | 186,719 | ||||||
Vaalco Energy, Inc.(1) | 30,800 | 279,356 | ||||||
W&T Offshore, Inc. | 19,093 | 377,469 | ||||||
Western Refining, Inc. | 46,079 | 877,805 | ||||||
8,593,795 | ||||||||
PAPER AND FOREST PRODUCTS — 0.6% | ||||||||
Buckeye Technologies, Inc. | 18,999 | 615,758 | ||||||
Neenah Paper, Inc. | 11,291 | 322,471 | ||||||
938,229 | ||||||||
PERSONAL PRODUCTS — 0.7% | ||||||||
Herbalife Ltd. | 14,821 | 1,042,213 | ||||||
Nu Skin Enterprises, Inc., Class A | 3,932 | 209,575 | ||||||
1,251,788 | ||||||||
PHARMACEUTICALS — 0.8% | ||||||||
Endo Pharmaceuticals Holdings, Inc.(1) | 15,344 | 539,188 | ||||||
Impax Laboratories, Inc.(1) | 8,494 | 209,207 | ||||||
Medicis Pharmaceutical Corp., Class A | 6,987 | 268,790 | ||||||
Salix Pharmaceuticals Ltd.(1) | 7,868 | 388,679 | ||||||
1,405,864 | ||||||||
PROFESSIONAL SERVICES — 1.5% | ||||||||
Advisory Board Co. (The)(1) | 5,948 | 542,220 | ||||||
On Assignment, Inc.(1) | 50,088 | 937,146 | ||||||
Robert Half International, Inc. | 23,607 | 703,489 | ||||||
TrueBlue, Inc.(1) | 24,047 | 415,051 | ||||||
2,597,906 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.9% | ||||||||
Digital Realty Trust, Inc. | 12,615 | 947,260 | ||||||
Federal Realty Investment Trust | 5,834 | 587,251 | ||||||
Post Properties, Inc. | 6,163 | 300,138 | ||||||
Rayonier, Inc. | 15,791 | 716,122 | ||||||
Sovran Self Storage, Inc. | 12,216 | 643,783 | ||||||
3,194,554 | ||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.2% | ||||||||
Jones Lang LaSalle, Inc. | 4,705 | 376,118 | ||||||
ROAD AND RAIL — 1.7% | ||||||||
Hertz Global Holdings, Inc.(1) | 52,910 | $815,343 | ||||||
J.B. Hunt Transport Services, Inc. | 11,972 | 662,411 | ||||||
Kansas City Southern | 15,012 | 1,156,224 | ||||||
Quality Distribution, Inc.(1) | 24,985 | 279,083 | ||||||
2,913,061 | ||||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 4.0% | ||||||||
Atmel Corp.(1) | 58,485 | 518,762 | ||||||
CEVA, Inc.(1) | 19,409 | 428,745 | ||||||
Cirrus Logic, Inc.(1) | 29,346 | 803,493 | ||||||
Cypress Semiconductor Corp.(1) | 22,538 | 349,339 | ||||||
Entegris, Inc.(1) | 25,232 | 223,303 | ||||||
ON Semiconductor Corp.(1) | 64,859 | 535,735 | ||||||
Photronics, Inc.(1) | 52,228 | 323,291 | ||||||
Rudolph Technologies, Inc.(1) | 30,761 | 332,219 | ||||||
Semtech Corp.(1) | 20,807 | 567,199 | ||||||
Silicon Motion Technology Corp. ADR(1) | 31,545 | 536,896 | ||||||
Skyworks Solutions, Inc.(1) | 43,304 | 1,175,271 | ||||||
Ultratech, Inc.(1) | 31,771 | 1,014,766 | ||||||
6,809,019 | ||||||||
SOFTWARE — 7.2% | ||||||||
Allot Communications Ltd.(1) | 45,768 | 1,123,147 | ||||||
ANSYS, Inc.(1) | 13,187 | 884,452 | ||||||
Ariba, Inc.(1) | 13,512 | 516,158 | ||||||
Bottomline Technologies, Inc.(1) | 7,270 | 171,063 | ||||||
BroadSoft, Inc.(1) | 11,009 | 471,295 | ||||||
Clicksoftware Technologies Ltd. | 25,209 | 273,013 | ||||||
FactSet Research Systems, Inc. | 5,008 | 525,139 | ||||||
Fortinet, Inc.(1) | 20,480 | 534,938 | ||||||
Guidance Software, Inc.(1) | 52,745 | 500,550 | ||||||
Informatica Corp.(1) | 14,849 | 683,351 | ||||||
Kenexa Corp.(1) | 60,458 | 1,975,163 | ||||||
MICROS Systems, Inc.(1) | 10,682 | 607,058 | ||||||
NetScout Systems, Inc.(1) | 20,124 | 416,365 | ||||||
Nuance Communications, Inc.(1) | 47,273 | 1,155,352 | ||||||
PROS Holdings, Inc.(1) | 36,733 | 723,273 | ||||||
Rovi Corp.(1) | 11,953 | 341,856 | ||||||
Solera Holdings, Inc. | 8,682 | 390,169 | ||||||
TIBCO Software, Inc.(1) | 16,613 | 546,568 | ||||||
Ultimate Software Group, Inc.(1) | 6,104 | 470,985 | ||||||
12,309,895 |
11
Shares | Value | |||||||
SPECIALTY RETAIL — 6.6% | ||||||||
Abercrombie & Fitch Co., Class A | 9,442 | $473,705 | ||||||
America’s Car-Mart, Inc.(1) | 11,503 | 528,448 | ||||||
Body Central Corp.(1) | 8,794 | 267,074 | ||||||
Buckle, Inc. (The) | 10,568 | 488,030 | ||||||
Cabela’s, Inc.(1) | 8,526 | 322,368 | ||||||
CarMax, Inc.(1) | 19,730 | 609,065 | ||||||
Collective Brands, Inc.(1) | 9,314 | 193,452 | ||||||
Francesca’s Holdings Corp.(1) | 12,603 | 395,104 | ||||||
Genesco, Inc.(1) | 15,627 | 1,172,025 | ||||||
GNC Holdings, Inc. Class A | 15,768 | 615,898 | ||||||
Lithia Motors, Inc., Class A | 118,027 | 3,166,664 | ||||||
PetSmart, Inc. | 15,958 | 929,713 | ||||||
Select Comfort Corp.(1) | 11,870 | 342,806 | ||||||
Tractor Supply Co. | 16,531 | 1,626,816 | ||||||
11,131,168 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 2.4% | ||||||||
Carter’s, Inc.(1) | 10,159 | 551,634 | ||||||
Fossil, Inc.(1) | 7,251 | 947,488 | ||||||
G-III Apparel Group Ltd.(1) | 13,833 | 371,416 | ||||||
Iconix Brand Group, Inc.(1) | 51,383 | 788,215 | ||||||
Movado Group, Inc. | 23,869 | 676,686 | ||||||
Oxford Industries, Inc. | 15,051 | 722,298 | ||||||
4,057,737 | ||||||||
THRIFTS AND MORTGAGE FINANCE — 0.1% | ||||||||
Berkshire Hills Bancorp, Inc. | 5,204 | 118,079 | ||||||
TRADING COMPANIES AND DISTRIBUTORS — 4.9% | ||||||||
Applied Industrial Technologies, Inc. | 12,171 | 478,320 | ||||||
Beacon Roofing Supply, Inc.(1) | 39,032 | 1,041,764 | ||||||
DXP Enterprises, Inc.(1) | 8,444 | 366,216 | ||||||
H&E Equipment Services, Inc.(1) | 40,970 | 790,721 | ||||||
Rush Enterprises, Inc., Class A(1) | 13,420 | 242,634 | ||||||
SeaCube Container Leasing Ltd. | 23,804 | 441,564 | ||||||
TAL International Group, Inc. | 10,282 | 424,750 | ||||||
Titan Machinery, Inc.(1) | 57,411 | 2,045,554 | ||||||
United Rentals, Inc.(1) | 52,587 | 2,454,761 | ||||||
8,286,284 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 0.6% | ||||||||
MetroPCS Communications, Inc.(1) | 24,199 | 176,653 | ||||||
SBA Communications Corp., Class A(1) | 14,922 | 801,908 | ||||||
978,561 | ||||||||
TOTAL COMMON STOCKS (Cost $139,394,764) | 168,188,236 | |||||||
Temporary Cash Investments — 1.5% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at $1,029,466), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $1,009,318) | $1,009,314 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $643,090), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $630,823) | 630,821 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $843,938), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $826,746) | 826,744 | |||||||
SSgA U.S. Government Money Market Fund | 214 | 214 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $2,467,093) | 2,467,093 | |||||||
TOTAL INVESTMENT SECURITIES — 100.5% (Cost $141,861,857) | 170,655,329 | |||||||
OTHER ASSETS AND LIABILITIES — (0.5)% | (792,555 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $169,862,774 |
Notes to Schedule of Investments
ADR = American Depositary Receipt
(1) | Non-income producing. |
See Notes to Financial Statements.
12
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $141,861,857) | $170,655,329 | |||
Receivable for investments sold | 1,511,669 | |||
Receivable for capital shares sold | 9,595 | |||
Dividends and interest receivable | 33,440 | |||
172,210,033 | ||||
Liabilities | ||||
Payable for investments purchased | 2,058,321 | |||
Payable for capital shares redeemed | 81,704 | |||
Accrued management fees | 207,098 | |||
Distribution and service fees payable | 136 | |||
2,347,259 | ||||
Net Assets | $169,862,774 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $180,276,213 | |||
Accumulated net investment loss | (659,247 | ) | ||
Accumulated net realized loss | (38,547,664 | ) | ||
Net unrealized appreciation | 28,793,472 | |||
$169,862,774 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $169,410,175 | 20,204,065 | $8.38 | |||
Institutional Class, $0.01 Par Value | $34,676 | 4,119 | $8.42 | |||
A Class, $0.01 Par Value | $291,143 | 34,909 | $8.34 | * | ||
C Class, $0.01 Par Value | $63,993 | 7,800 | $8.20 | |||
R Class, $0.01 Par Value | $62,787 | 7,573 | $8.29 |
* | Maximum offering price $8.85 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
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FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,680) | $776,613 | |||
Interest | 355 | |||
776,968 | ||||
Expenses: | ||||
Management fees | 1,212,519 | |||
Distribution and service fees: | ||||
A Class | 357 | |||
C Class | 296 | |||
R Class | 142 | |||
Directors’ fees and expenses | 2,518 | |||
1,215,832 | ||||
Net investment income (loss) | (438,864 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 3,134,326 | |||
Change in net unrealized appreciation (depreciation) on investments | 16,164,853 | |||
Net realized and unrealized gain (loss) | 19,299,179 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $18,860,315 |
See Notes to Financial Statements.
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SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $(438,864 | ) | $(1,589,679 | ) | ||||
Net realized gain (loss) | 3,134,326 | 24,987,553 | ||||||
Change in net unrealized appreciation (depreciation) | 16,164,853 | (10,838,613 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 18,860,315 | 12,559,261 | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (7,533,294 | ) | (1,032,579 | ) | ||||
Redemption Fees | ||||||||
Increase in net assets from redemption fees | 735 | 42,568 | ||||||
Net increase (decrease) in net assets | 11,327,756 | 11,569,250 | ||||||
Net Assets | ||||||||
Beginning of period | 158,535,018 | 146,965,768 | ||||||
End of period | $169,862,774 | $158,535,018 | ||||||
Accumulated net investment loss | $(659,247 | ) | $(220,383 | ) |
See Notes to Financial Statements.
15
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. New Opportunities Fund (the fund) is one fund in a series issued by the corporation. The fund 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 offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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.
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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. 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.
Business Development Companies — The fund may invest in securities of closed-end investment companies that have elected to be treated as a business development company under the 1940 Act. A business development company operates similar to an exchange-traded fund and represents a portfolio of securities. The fund may purchase a business development company to gain exposure to the securities in the underlying portfolio. The risks of owning a business development company generally reflect the risks of owning the underlying securities. Business development companies have expenses that reduce their value.
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 2008. 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.
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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 60 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions. Prior to November 14, 2011, the redemption fee applied to shares held less than 180 days.
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, 2012 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, 2012 are detailed in the Statement of Operations.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund’s assets but are reflected in the return realized by the fund on its investment in the acquired funds.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc., 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.
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4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $35,483,359 and $43,945,766, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 411,170 | $3,258,018 | 2,261,585 | $17,909,206 | ||||||||||||
Redeemed | (1,374,402 | ) | (10,775,993 | ) | (2,482,613 | ) | (19,139,301 | ) | ||||||||
(963,232 | ) | (7,517,975 | ) | (221,028 | ) | (1,230,095 | ) | |||||||||
Institutional Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
A Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 2,193 | 16,809 | 27,185 | 214,828 | ||||||||||||
Redeemed | (5,203 | ) | (40,776 | ) | (6,990 | ) | (48,162 | ) | ||||||||
(3,010 | ) | (23,967 | ) | 20,195 | 166,666 | |||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 196 | 1,500 | 2,299 | 18,257 | ||||||||||||
Redeemed | (130 | ) | (992 | ) | (410 | ) | (3,383 | ) | ||||||||
66 | 508 | 1,889 | 14,874 | |||||||||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 1,130 | 8,398 | 2,191 | 15,976 | ||||||||||||
Redeemed | (35 | ) | (258 | ) | — | — | ||||||||||
1,095 | 8,140 | 2,191 | 15,976 | |||||||||||||
Net increase (decrease) | (965,081 | ) | $(7,533,294 | ) | (196,753 | ) | $(1,032,579 | ) |
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.
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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 | $168,188,236 | — | — | |||||||||
Temporary Cash Investments | 214 | $2,466,879 | — | |||||||||
Total Value of Investment Securities | $168,188,450 | $2,466,879 | — |
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $142,063,677 | |||
Gross tax appreciation of investments | $35,878,995 | |||
Gross tax depreciation of investments | (7,287,343 | ) | ||
Net tax appreciation (depreciation) of investments | $28,591,652 |
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, 2011, the fund had accumulated capital losses of $(41,459,198), 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 $(8,031,232) and $(33,427,966) expire in 2016 and 2017, respectively. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Asset Value, End of Period | Total Return(1) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | ||||||||||
2012(2) | $7.47 | (0.02)(3) | 0.93 | 0.91 | $8.38 | 12.18% | 1.50%(4) | (0.54)%(4) | 22% | $169,410 |
2011 | $6.86 | (0.07)(3) | 0.68 | 0.61 | $7.47 | 8.89% | 1.50% | (0.95)% | 107% | $158,117 |
2010 | $5.06 | (0.04)(3) | 1.84 | 1.80 | $6.86 | 33.57% | 1.51% | (0.59)% | 181% | $146,747 |
2009 | $5.12 | (0.02)(3) | (0.04) | (0.06) | $5.06 | (1.17)% | 1.50% | (0.51)% | 206% | $119,287 |
2008 | $8.58 | (0.05)(3) | (3.41) | (3.46) | $5.12 | (40.33)% | 1.50% | (0.66)% | 159% | $146,932 |
2007 | $6.44 | (0.07) | 2.21 | 2.14 | $8.58 | 33.23% | 1.50% | (0.83)% | 201% | $270,428 |
Institutional Class | ||||||||||
2012(2) | $7.49 | (0.01)(3) | 0.94 | 0.93 | $8.42 | 12.42% | 1.30%(4) | (0.34)%(4) | 22% | $35 |
2011 | $6.87 | (0.06)(3) | 0.68 | 0.62 | $7.49 | 9.02% | 1.30% | (0.75)% | 107% | $31 |
2010(5) | $6.07 | (0.01)(3) | 0.81 | 0.80 | $6.87 | 13.18% | 1.31%(4) | (0.29)%(4) | 181%(6) | $28 |
A Class | ||||||||||
2012(2) | $7.44 | (0.03)(3) | 0.93 | 0.90 | $8.34 | 12.10% | 1.75%(4) | (0.79)%(4) | 22% | $291 |
2011 | $6.85 | (0.09)(3) | 0.68 | 0.59 | $7.44 | 8.61% | 1.75% | (1.20)% | 107% | $282 |
2010(5) | $6.07 | (0.03)(3) | 0.81 | 0.78 | $6.85 | 12.85% | 1.76%(4) | (0.67)%(4) | 181%(6) | $121 |
C Class | ||||||||||
2012(2) | $7.34 | (0.06)(3) | 0.92 | 0.86 | $8.20 | 11.72% | 2.50%(4) | (1.54)%(4) | 22% | $64 |
2011 | $6.81 | (0.15)(3) | 0.68 | 0.53 | $7.34 | 7.78% | 2.50% | (1.95)% | 107% | $57 |
2010(5) | $6.07 | (0.06)(3) | 0.80 | 0.74 | $6.81 | 12.19% | 2.51%(4) | (1.46)%(4) | 181%(6) | $40 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | ||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Asset Value, End of Period | Total Return(1) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
R Class | ||||||||||
2012(2) | $7.40 | (0.04)(3) | 0.93 | 0.89 | $8.29 | 12.03% | 2.00%(4) | (1.04)%(4) | 22% | $63 |
2011 | $6.84 | (0.11)(3) | 0.67 | 0.56 | $7.40 | 8.19% | 2.00% | (1.45)% | 107% | $48 |
2010(5) | $6.07 | (0.04)(3) | 0.81 | 0.77 | $6.84 | 12.69% | 2.01%(4) | (0.99)%(4) | 181%(6) | $29 |
Notes to Financial Highlights
(1) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(2) | Six months ended April 30, 2012 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Annualized. |
(5) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(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.
22
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75363 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
3
Total Returns as of April 30, 2012 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Institutional Class | ACLWX | 12.76% | -0.44% | 1.37% | 2.12% | 5/12/06 |
Russell Midcap Growth Index | — | 12.26% | 0.78% | 3.55% | 4.77%(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 0.83% |
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. 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.
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, 2012 | |
Top Ten Holdings | % of net assets |
Alliance Data Systems Corp. | 2.8% |
SXC Health Solutions Corp. | 2.5% |
National Oilwell Varco, Inc. | 2.2% |
Teradata Corp. | 2.1% |
Whole Foods Market, Inc. | 2.0% |
SBA Communications Corp., Class A | 2.0% |
Kansas City Southern | 1.9% |
TransDigm Group, Inc. | 1.8% |
PetSmart, Inc. | 1.8% |
O’Reilly Automotive, Inc. | 1.8% |
Top Five Industries | % of net assets |
Specialty Retail | 8.1% |
IT Services | 5.4% |
Energy Equipment and Services | 5.1% |
Software | 4.9% |
Chemicals | 4.8% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.5% |
Foreign Common Stocks* | 9.6% |
Total Common Stocks | 99.1% |
Temporary Cash Investments | 2.2% |
Other Assets and Liabilities | (1.3)% |
* | 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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Institutional Class | $1,000 | $1,127.60 | $4.23 | 0.80% |
Hypothetical | ||||
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
Shares | Value | |||||||
Common Stocks — 99.1% | ||||||||
AEROSPACE AND DEFENSE — 4.1% | ||||||||
BE Aerospace, Inc.(1) | 93,000 | $4,373,790 | ||||||
Spirit Aerosystems Holdings, Inc. Class A(1) | 77,000 | 1,925,000 | ||||||
TransDigm Group, Inc.(1) | 40,000 | 5,044,800 | ||||||
11,343,590 | ||||||||
AUTO COMPONENTS — 1.6% | ||||||||
BorgWarner, Inc.(1) | 38,702 | 3,059,006 | ||||||
Delphi Automotive plc(1) | 42,500 | 1,304,325 | ||||||
4,363,331 | ||||||||
BEVERAGES — 0.5% | ||||||||
Monster Beverage Corp.(1) | 20,000 | 1,299,200 | ||||||
BIOTECHNOLOGY — 2.2% | ||||||||
AlexionPharmaceuticals, Inc.(1) | 51,365 | 4,639,287 | ||||||
Cepheid, Inc.(1) | 36,400 | 1,398,124 | ||||||
6,037,411 | ||||||||
BUILDING PRODUCTS — 0.5% | ||||||||
Fortune Brands Home& Security, Inc.(1) | 64,000 | 1,455,360 | ||||||
CAPITAL MARKETS — 2.1% | ||||||||
Affiliated Managers Group, Inc.(1) | 21,900 | 2,488,278 | ||||||
Jefferies Group, Inc. | 82,700 | 1,317,411 | ||||||
KKR & Co. LP | 147,700 | 2,085,524 | ||||||
5,891,213 | ||||||||
CHEMICALS — 4.8% | ||||||||
Airgas, Inc. | 44,600 | 4,087,144 | ||||||
Albemarle Corp. | 42,300 | 2,762,190 | ||||||
Celanese Corp. | 26,500 | 1,284,190 | ||||||
Eastman Chemical Co. | 20,500 | 1,106,385 | ||||||
FMC Corp. | 23,300 | 2,573,485 | ||||||
Rockwood Holdings, Inc.(1) | 25,600 | 1,416,704 | ||||||
13,230,098 | ||||||||
COMMERCIAL BANKS — 1.0% | ||||||||
Comerica, Inc. | 43,500 | 1,392,870 | ||||||
East West Bancorp., Inc. | 60,875 | 1,386,124 | ||||||
2,778,994 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 2.0% | ||||||||
Clean Harbors, Inc.(1) | 40,600 | 2,770,544 | ||||||
Stericycle, Inc.(1) | 31,300 | 2,710,580 | ||||||
5,481,124 | ||||||||
COMMUNICATIONS EQUIPMENT — 0.6% | ||||||||
F5 Networks, Inc.(1) | 11,900 | 1,593,767 | ||||||
COMPUTERS AND PERIPHERALS — 0.6% | ||||||||
Seagate Technology plc | 58,200 | $1,790,232 | ||||||
CONSTRUCTION AND ENGINEERING — 1.7% | ||||||||
Chicago Bridge & Iron Co. NV New York Shares | 42,000 | 1,865,640 | ||||||
KBR, Inc. | 40,700 | 1,378,102 | ||||||
Quanta Services, Inc.(1) | 60,900 | 1,347,108 | ||||||
4,590,850 | ||||||||
CONSUMER FINANCE — 1.2% | ||||||||
Discover Financial Services | 98,900 | 3,352,710 | ||||||
CONTAINERS AND PACKAGING — 0.7% | ||||||||
Rock-Tenn Co., Class A | 29,200 | 1,820,036 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 0.6% | ||||||||
McGraw-Hill Cos., Inc. (The) | 32,000 | 1,573,440 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 1.3% | ||||||||
Trimble Navigation Ltd.(1) | 67,900 | 3,676,106 | ||||||
ENERGY EQUIPMENT AND SERVICES — 5.1% | ||||||||
Atwood Oceanics, Inc.(1) | 28,500 | 1,263,405 | ||||||
Core Laboratories NV | 16,500 | 2,260,170 | ||||||
National Oilwell Varco, Inc. | 81,800 | 6,197,168 | ||||||
Oceaneering International, Inc. | 44,100 | 2,276,883 | ||||||
Oil States International, Inc.(1) | 26,500 | 2,108,870 | ||||||
14,106,496 | ||||||||
FOOD AND STAPLES RETAILING — 2.0% | ||||||||
Whole Foods Market, Inc. | 66,700 | 5,540,769 | ||||||
FOOD PRODUCTS — 2.1% | ||||||||
McCormick & Co., Inc. | 25,200 | 1,408,932 | ||||||
Mead Johnson Nutrition Co. | 52,800 | 4,517,568 | ||||||
5,926,500 | ||||||||
GAS UTILITIES — 0.8% | ||||||||
ONEOK, Inc. | 24,700 | 2,121,483 | ||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.5% | ||||||||
Cooper Cos., Inc. (The) | 16,400 | 1,445,988 | ||||||
Intuitive Surgical, Inc.(1) | 1,800 | 1,040,760 | ||||||
MAKO Surgical Corp.(1) | 45,000 | 1,858,950 | ||||||
Mettler-Toledo International, Inc.(1) | 15,200 | 2,725,664 | ||||||
7,071,362 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.0% | ||||||||
Catalyst Health Solutions, Inc.(1) | 18,300 | 1,580,571 | ||||||
Centene Corp.(1) | 27,900 | 1,104,561 | ||||||
2,685,132 |
8
Shares | Value | |||||||
HEALTH CARE TECHNOLOGY — 2.5% | ||||||||
SXC Health Solutions Corp.(1) | 75,200 | $6,811,616 | ||||||
HOTELS, RESTAURANTS AND LEISURE — 4.6% | ||||||||
Bally Technologies, Inc.(1) | 34,700 | 1,684,685 | ||||||
Chipotle Mexican Grill, Inc.(1) | 9,100 | 3,768,765 | ||||||
Domino’s Pizza, Inc. | 33,600 | 1,270,416 | ||||||
Las Vegas Sands Corp. | 36,500 | 2,025,385 | ||||||
Panera Bread Co., Class A(1) | 12,800 | 2,021,376 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 34,900 | 2,066,080 | ||||||
12,836,707 | ||||||||
HOUSEHOLD DURABLES — 0.6% | ||||||||
Toll Brothers, Inc.(1) | 70,500 | 1,790,700 | ||||||
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
Church & Dwight Co., Inc. | 53,900 | 2,738,120 | ||||||
INTERNET AND CATALOG RETAIL — 1.4% | ||||||||
priceline.com, Inc.(1) | 5,200 | 3,956,264 | ||||||
INTERNET SOFTWARE AND SERVICES — 2.4% | ||||||||
Baidu, Inc. ADR(1) | 25,000 | 3,317,500 | ||||||
Rackspace Hosting, Inc.(1) | 58,100 | 3,375,029 | ||||||
6,692,529 | ||||||||
IT SERVICES — 5.4% | ||||||||
Alliance Data Systems Corp.(1) | 60,500 | 7,773,645 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 18,400 | 1,349,088 | ||||||
Teradata Corp.(1) | 82,600 | 5,763,828 | ||||||
14,886,561 | ||||||||
MACHINERY — 3.6% | ||||||||
Chart Industries, Inc.(1) | 35,700 | 2,728,551 | ||||||
Joy Global, Inc. | 43,900 | 3,106,803 | ||||||
Terex Corp.(1) | 63,900 | 1,446,696 | ||||||
Titan International, Inc. | 51,763 | 1,495,433 | ||||||
Trinity Industries, Inc. | 38,700 | 1,145,520 | ||||||
9,923,003 | ||||||||
MARINE — 0.8% | ||||||||
Kirby Corp.(1) | 32,000 | 2,123,840 | ||||||
MEDIA — 1.4% | ||||||||
CBS Corp., Class B | 120,500 | 4,018,675 | ||||||
METALS AND MINING — 1.7% | ||||||||
Carpenter Technology Corp. | 43,500 | 2,421,210 | ||||||
Cliffs Natural Resources, Inc. | 36,500 | 2,272,490 | ||||||
4,693,700 | ||||||||
MULTILINE RETAIL — 1.6% | ||||||||
Dollar Tree, Inc.(1) | 43,450 | 4,417,127 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 4.3% | ||||||||
Cabot Oil & Gas Corp. | 71,200 | $2,501,968 | ||||||
Concho Resources, Inc.(1) | 39,600 | 4,244,328 | ||||||
Kodiak Oil & Gas Corp.(1) | 152,000 | 1,345,200 | ||||||
Peabody Energy Corp. | 34,600 | 1,076,406 | ||||||
SandRidge Energy, Inc.(1) | 165,600 | 1,323,144 | ||||||
SM Energy Co. | 21,900 | 1,447,809 | ||||||
11,938,855 | ||||||||
PHARMACEUTICALS — 3.0% | ||||||||
Elan Corp. plc ADR(1) | 93,500 | 1,289,365 | ||||||
Perrigo Co. | 26,900 | 2,821,810 | ||||||
Questcor Pharmaceuticals, Inc.(1) | 47,300 | 2,123,770 | ||||||
Shire plc | 60,900 | 1,986,576 | ||||||
8,221,521 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.5% | ||||||||
Ventas, Inc. | 23,200 | 1,363,928 | ||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.8% | ||||||||
CBRE Group, Inc.(1) | 119,500 | 2,247,795 | ||||||
ROAD AND RAIL — 1.9% | ||||||||
Kansas City Southern | 69,400 | 5,345,188 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 4.0% | ||||||||
ARM Holdings plc | 397,600 | 3,381,188 | ||||||
Avago Technologies Ltd. | 88,700 | 3,058,376 | ||||||
KLA-Tencor Corp. | 27,800 | 1,449,770 | ||||||
Xilinx, Inc. | 92,000 | 3,346,960 | ||||||
11,236,294 | ||||||||
SOFTWARE — 4.9% | ||||||||
Cerner Corp.(1) | 17,700 | 1,435,293 | ||||||
Check Point Software Technologies Ltd.(1) | 65,300 | 3,795,889 | ||||||
Citrix Systems, Inc.(1) | 53,400 | 4,571,574 | ||||||
NetSuite, Inc.(1) | 60,400 | 2,680,552 | ||||||
Sourcefire, Inc.(1) | 23,700 | 1,208,463 | ||||||
13,691,771 | ||||||||
SPECIALTY RETAIL — 8.1% | ||||||||
DSW, Inc., Class A | 32,700 | 1,839,702 | ||||||
GNC Holdings, Inc. Class A | 57,779 | 2,256,848 | ||||||
O’Reilly Automotive, Inc.(1) | 46,600 | 4,914,436 | ||||||
PetSmart, Inc. | 86,110 | 5,016,768 | ||||||
Tractor Supply Co. | 45,700 | 4,497,337 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc. | 44,500 | 3,924,010 | ||||||
22,449,101 |
9
Shares | Value | |||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.9% | ||||||||
Fossil, Inc.(1) | 10,400 | $1,358,968 | ||||||
Michael Kors Holdings Ltd.(1) | 55,860 | 2,551,126 | ||||||
VF Corp. | 9,900 | 1,505,295 | ||||||
5,415,389 | ||||||||
TRADING COMPANIES AND DISTRIBUTORS — 1.7% | ||||||||
Fastenal Co. | 28,400 | 1,329,688 | ||||||
United Rentals, Inc.(1) | 72,800 | 3,398,304 | ||||||
4,727,992 | ||||||||
WIRELESS TELECOMMUNICATION SERVICES — 2.0% | ||||||||
SBA Communications Corp., Class A(1) | 102,602 | 5,513,832 | ||||||
TOTAL COMMON STOCKS (Cost $207,438,855) | 274,769,712 | |||||||
Temporary Cash Investments — 2.2% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at 2,596,944), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $2,546,118) | 2,546,107 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $1,622,266), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $1,591,322) | $1,591,317 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $2,128,930), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $2,085,561) | 2,085,555 | |||||||
SSgA U.S. Government Money Market Fund | 6 | 6 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $6,222,985) | 6,222,985 | |||||||
TOTAL INVESTMENT SECURITIES — 101.3% (Cost $213,661,840) | 280,992,697 | |||||||
OTHER ASSETS AND LIABILITIES — (1.3)% | (3,575,974 | ) | ||||||
TOTAL NET ASSETS — 100.0% | $277,416,723 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Buy | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
93,969 | GBP for USD | Credit Suisse AG | 5/31/12 | $152,475 | $868 |
(Value on Settlement Date $151,607)
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
2,764,811 | GBP for USD | Credit Suisse AG | 5/31/12 | $4,486,209 | $(26,707) |
(Value on Settlement Date $4,459,502)
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, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $213,661,840) | $280,992,697 | |||
Receivable for investments sold | 2,188,613 | |||
Unrealized gain on forward foreign currency exchange contracts | 868 | |||
Dividends and interest receivable | 143,884 | |||
283,326,062 | ||||
Liabilities | ||||
Payable for investments purchased | 4,557,546 | |||
Payable for capital shares redeemed | 1,147,899 | |||
Unrealized loss on forward foreign currency exchange contracts | 26,707 | |||
Accrued management fees | 177,187 | |||
5,909,339 | ||||
Net Assets | $277,416,723 | |||
Institutional Class Capital Shares, $0.01 Par Value | ||||
Shares authorized | 150,000,000 | |||
Shares outstanding | 24,952,005 | |||
Net Asset Value Per Share | $11.12 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $215,507,385 | |||
Accumulated net investment loss | (146,680 | ) | ||
Accumulated net realized loss | (5,250,843 | ) | ||
Net unrealized appreciation | 67,306,861 | |||
$277,416,723 |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $1,594) | $771,129 | |||
Interest | 1,406 | |||
772,535 | ||||
Expenses: | ||||
Management fees | 946,989 | |||
Directors’ fees and expenses | 3,562 | |||
950,551 | ||||
Net investment income (loss) | (178,016 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (2,629,962 | ) | ||
Foreign currency transactions | (37,296 | ) | ||
(2,667,258 | ) | |||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 33,604,484 | |||
Translation of assets and liabilities in foreign currencies | 1,904 | |||
33,606,388 | ||||
Net realized and unrealized gain (loss) | 30,939,130 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $30,761,114 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $(178,016 | ) | $(508,657 | ) | ||||
Net realized gain (loss) | (2,667,258 | ) | 9,902,344 | |||||
Change in net unrealized appreciation (depreciation) | 33,606,388 | 634,957 | ||||||
Net increase (decrease) in net assets resulting from operations | 30,761,114 | 10,028,644 | ||||||
Distributions to Shareholders | ||||||||
From net realized gains | (3,557,528 | ) | — | |||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 36,163,798 | 65,778,540 | ||||||
Proceeds from reinvestment of distributions | 3,557,528 | — | ||||||
Payments for shares redeemed | (4,568,248 | ) | (22,050,710 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 35,153,078 | 43,727,830 | ||||||
Net increase (decrease) in net assets | 62,356,664 | 53,756,474 | ||||||
Net Assets | ||||||||
Beginning of period | 215,060,059 | 161,303,585 | ||||||
End of period | $277,416,723 | $215,060,059 | ||||||
Accumulated undistributed net investment income (loss) | $(146,680 | ) | $31,336 | |||||
Transactions in Shares of the Fund | ||||||||
Sold | 3,573,729 | 6,541,903 | ||||||
Issued in reinvestment of distributions | 375,663 | — | ||||||
Redeemed | (443,966 | ) | (2,177,130 | ) | ||||
Net increase (decrease) in shares of the fund | 3,505,426 | 4,364,773 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT 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 stocks of medium-sized and smaller 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. 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.
Business Development Companies — The fund may invest in securities of closed-end investment companies that have elected to be treated as a business development company under the 1940 Act. A business development company operates similar to an exchange-traded fund and represents a portfolio of securities. The fund may purchase a business development company to gain exposure to the securities in the underlying portfolio. The risks of owning a business development company generally reflect the risks of owning the underlying securities. Business development companies have expenses that reduce their value.
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 2008. 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.
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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). 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%.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund’s assets but are reflected in the return realized by the fund on its investment in the acquired funds.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $122,994,482 and $91,934,805, 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 | ||||||||||||
Domestic Common Stocks | $248,169,325 | — | — | |||||||||
Foreign Common Stocks | 21,232,623 | $5,367,764 | — | |||||||||
Temporary Cash Investments | 6 | 6,222,979 | — | |||||||||
Total Value of Investment Securities | $269,401,954 | $11,590,743 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(25,839 | ) | — |
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 fund participated in foreign currency risk derivative instruments during the period consistent with its exposure to foreign denominated securities.
The value of foreign currency risk derivative instruments as of April 30, 2012, is disclosed on the Statement of Assets and Liabilities as an asset of $868 in unrealized gain on forward foreign currency exchange contracts and a liability of $26,707 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2012, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(37,799) in net realized gain (loss) on foreign currency transactions and $3,558 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.
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.
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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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $216,080,916 | |||
Gross tax appreciation of investments | $66,837,390 | |||
Gross tax depreciation of investments | (1,925,609 | ) | ||
Net tax appreciation (depreciation) of investments | $64,911,781 |
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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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(1) | Operating Expenses(2) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Institutional Class | |||||||||||||
2012(3) | $10.03 | (0.01)(4) | 1.26 | 1.25 | — | (0.16) | (0.16) | $11.12 | 12.76% | 0.80%(5) | (0.15)%(5) | 39% | $277,417 |
2011 | $9.44 | (0.03)(4) | 0.62 | 0.59 | — | — | — | $10.03 | 6.25% | 0.80% | (0.27)% | 115% | $215,060 |
2010 | $7.50 | (0.02)(4) | 1.96 | 1.94 | —(6) | — | —(6) | $9.44 | 26.05% | 0.80% | (0.26)% | 152% | $161,304 |
2009 | $7.62 | (0.02)(4) | (0.10) | (0.12) | — | — | — | $7.50 | (1.71)% | 0.80% | (0.35)% | 190% | $91,237 |
2008 | $13.42 | (0.04)(4) | (5.73) | (5.77) | — | (0.03) | (0.03) | $7.62 | (43.09)% | 0.81% | (0.35)% | 183% | $40,136 |
2007 | $9.00 | (0.04) | 4.46 | 4.42 | — | — | — | $13.42 | 49.11% | 0.80% | (0.36)% | 147% | $44,652 |
Notes to Financial Highlights
(1) | 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. |
(2) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Computed using average shares outstanding throughout the period. |
(5) | Annualized. |
(6) | Per-share amount was less than $0.005. |
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75370 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 13 |
Statement of Operations | 14 |
Statement of Changes in Net Assets | 15 |
Notes to Financial Statements | 16 |
Financial Highlights | 21 |
Additional Information | 24 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ANOIX | 12.03% | -5.35% | 2.63% | 7.13% | 7.08% | 6/1/01 |
Russell 2000 Growth Index | — | 10.58% | -4.42% | 3.27% | 6.06% | 4.46%(2) | — |
Institutional Class | ANONX | 12.18% | -5.20% | — | — | 2.18% | 5/18/07 |
A Class No sales charge* With sales charge* | ANOAX | 11.84% 5.46% | -5.63% -11.02% | 2.39% 1.18% | — — | 10.34% 9.65% | 1/31/03 |
B Class No sales charge* With sales charge* | ANOBX | 11.58% 6.58% | -6.30% -10.30% | 1.64% 1.45% | — — | 9.53% 9.53% | 1/31/03 |
C Class No sales charge* With sales charge* | ANOCX | 11.53% 10.53% | -6.28% -6.28% | 1.63% 1.63% | — — | 9.57%(3) 9.57%(3) | 1/31/03 |
R Class | ANORX | 11.91% | -5.76% | — | — | -0.27% | 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 5/31/01, the date nearest the Investor Class’s inception for which data are available. |
(3) | 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 |
1.41% | 1.21% | 1.66% | 2.41% | 2.41% | 1.91% |
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, 2012 | |
Top Ten Holdings | % of net assets |
Titan International, Inc. | 2.1% |
Polaris Industries, Inc. | 2.1% |
Lithia Motors, Inc., Class A | 2.1% |
United Rentals, Inc. | 1.6% |
Triumph Group, Inc. | 1.6% |
Titan Machinery, Inc. | 1.4% |
Kenexa Corp. | 1.3% |
ValueClick, Inc. | 1.2% |
Tempur-Pedic International, Inc. | 1.1% |
Tractor Supply Co. | 1.1% |
Top Five Industries | % of net assets |
Machinery | 6.9% |
Specialty Retail | 6.8% |
Software | 6.1% |
Trading Companies and Distributors | 6.0% |
Internet Software and Services | 5.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.0% |
Temporary Cash Investments | 1.6% |
Other Assets and Liabilities | (0.6)% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,120.30 | $7.43 | 1.41% |
Institutional Class | $1,000 | $1,121.80 | $6.38 | 1.21% |
A Class | $1,000 | $1,118.40 | $8.74 | 1.66% |
B Class | $1,000 | $1,115.80 | $12.68 | 2.41% |
C Class | $1,000 | $1,115.30 | $12.68 | 2.41% |
R Class | $1,000 | $1,119.10 | $10.06 | 1.91% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.85 | $7.07 | 1.41% |
Institutional Class | $1,000 | $1,018.85 | $6.07 | 1.21% |
A Class | $1,000 | $1,016.61 | $8.32 | 1.66% |
B Class | $1,000 | $1,012.88 | $12.06 | 2.41% |
C Class | $1,000 | $1,012.88 | $12.06 | 2.41% |
R Class | $1,000 | $1,015.37 | $9.57 | 1.91% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
Shares | Value | |||||||
Common Stocks — 99.0% | ||||||||
AEROSPACE AND DEFENSE — 1.7% | ||||||||
Astronics Corp.(1) | 15,792 | $501,396 | ||||||
Triumph Group, Inc. | 100,961 | 6,342,370 | ||||||
6,843,766 | ||||||||
AIR FREIGHT AND LOGISTICS — 0.1% | ||||||||
Forward Air Corp. | 15,062 | 508,794 | ||||||
AUTO COMPONENTS — 1.1% | ||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 344,530 | 3,338,496 | ||||||
Tenneco, Inc.(1) | 33,581 | 1,035,302 | ||||||
4,373,798 | ||||||||
BEVERAGES — 0.2% | ||||||||
Boston Beer Co., Inc., Class A(1) | 8,473 | 875,430 | ||||||
BIOTECHNOLOGY — 4.7% | ||||||||
Achillion Pharmaceuticals, Inc.(1) | 32,477 | 215,972 | ||||||
Acorda Therapeutics, Inc.(1) | 26,496 | 668,759 | ||||||
Alkermes plc(1) | 66,565 | 1,151,575 | ||||||
ARIAD Pharmaceuticals, Inc.(1) | 105,449 | 1,718,819 | ||||||
Cepheid, Inc.(1) | 44,069 | 1,692,690 | ||||||
Cubist Pharmaceuticals, Inc.(1) | 41,836 | 1,768,826 | ||||||
Exelixis, Inc.(1) | 108,658 | 521,558 | ||||||
Halozyme Therapeutics, Inc.(1) | 60,166 | 486,743 | ||||||
ImmunoGen, Inc.(1) | 39,531 | 504,020 | ||||||
Incyte Corp. Ltd.(1) | 59,233 | 1,343,405 | ||||||
InterMune, Inc.(1) | 18,013 | 188,056 | ||||||
Ironwood Pharmaceuticals, Inc.(1) | 37,887 | 500,487 | ||||||
Isis Pharmaceuticals, Inc.(1) | 70,309 | 562,472 | ||||||
Medivation, Inc.(1) | 21,750 | 1,759,140 | ||||||
Momenta Pharmaceuticals, Inc.(1) | 30,572 | 485,483 | ||||||
NPS Pharmaceuticals, Inc.(1) | 65,910 | 471,916 | ||||||
Onyx Pharmaceuticals, Inc.(1) | 44,290 | 2,015,638 | ||||||
PDL BioPharma, Inc. | 86,776 | 545,821 | ||||||
Seattle Genetics, Inc.(1) | 67,205 | 1,328,643 | ||||||
Theravance, Inc.(1) | 39,286 | 850,149 | ||||||
18,780,172 | ||||||||
BUILDING PRODUCTS — 0.4% | ||||||||
Apogee Enterprises, Inc. | 95,816 | 1,471,734 | ||||||
CAPITAL MARKETS — 0.9% | ||||||||
HFF, Inc., Class A(1) | 107,034 | $1,748,935 | ||||||
Triangle Capital Corp. | 69,237 | 1,399,280 | ||||||
WisdomTree Investments, Inc.(1) | 71,076 | 607,700 | ||||||
3,755,915 | ||||||||
CHEMICALS — 1.8% | ||||||||
Flotek Industries, Inc.(1) | 152,886 | 2,085,365 | ||||||
H.B. Fuller Co. | 54,156 | 1,781,732 | ||||||
Koppers Holdings, Inc. | 17,260 | 671,069 | ||||||
Kraton Performance Polymers, Inc.(1) | 41,779 | 1,086,254 | ||||||
TPC Group, Inc.(1) | 34,953 | 1,467,327 | ||||||
7,091,747 | ||||||||
COMMERCIAL BANKS — 3.2% | ||||||||
Banco Latinoamericano de Comercio Exterior SA E Shares | 63,093 | 1,315,489 | ||||||
Cathay General Bancorp. | 96,543 | 1,662,471 | ||||||
City National Corp. | 33,682 | 1,793,903 | ||||||
Columbia Banking System, Inc. | 41,673 | 853,880 | ||||||
Home Bancshares, Inc. | 79,852 | 2,326,887 | ||||||
Pinnacle Financial Partners, Inc.(1) | 59,264 | 1,084,531 | ||||||
Signature Bank(1) | 21,452 | 1,409,182 | ||||||
Texas Capital Bancshares, Inc.(1) | 69,552 | 2,622,806 | ||||||
13,069,149 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 1.2% | ||||||||
Deluxe Corp. | 83,803 | 1,995,350 | ||||||
G&K Services, Inc., Class A | 60,197 | 1,978,073 | ||||||
Team, Inc.(1) | 27,570 | 816,899 | ||||||
4,790,322 | ||||||||
COMMUNICATIONS EQUIPMENT — 2.0% | ||||||||
Aruba Networks, Inc.(1) | 65,679 | 1,387,140 | ||||||
InterDigital, Inc. | 19,403 | 537,851 | ||||||
Netgear, Inc.(1) | 56,441 | 2,172,978 | ||||||
Procera Networks, Inc.(1) | 102,347 | 2,124,724 | ||||||
Sycamore Networks, Inc.(1) | 71,401 | 1,113,142 | ||||||
Tessco Technologies, Inc. | 27,404 | 548,080 | ||||||
7,883,915 | ||||||||
COMPUTERS AND PERIPHERALS — 0.4% | ||||||||
Electronics for Imaging, Inc.(1) | 68,377 | 1,220,529 | ||||||
Synaptics, Inc.(1) | 17,428 | 535,214 | ||||||
1,755,743 |
8
Shares | Value | |||||||
CONSTRUCTION AND ENGINEERING — 0.3% | ||||||||
Dycom Industries, Inc.(1) | 54,539 | $1,275,667 | ||||||
CONSTRUCTION MATERIALS — 0.5% | ||||||||
Eagle Materials, Inc. | 55,165 | 1,942,911 | ||||||
DIVERSIFIED CONSUMER SERVICES — 0.7% | ||||||||
Sotheby’s | 48,508 | 1,907,335 | ||||||
Steiner Leisure, Ltd.(1) | 19,589 | 919,899 | ||||||
2,827,234 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 0.7% | ||||||||
MarketAxess Holdings, Inc. | 82,585 | 2,833,491 | ||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.3% | ||||||||
Premiere Global Services, Inc.(1) | 149,949 | 1,342,044 | ||||||
ELECTRICAL EQUIPMENT — 0.3% | ||||||||
Franklin Electric Co., Inc. | 23,822 | 1,194,673 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 2.7% | ||||||||
Badger Meter, Inc. | 16,390 | 605,447 | ||||||
Cognex Corp. | 92,316 | 3,715,719 | ||||||
FARO Technologies, Inc.(1) | 21,768 | 1,218,573 | ||||||
Key Tronic Corp.(1) | 40,988 | 473,411 | ||||||
Littelfuse, Inc. | 38,650 | 2,422,195 | ||||||
OSI Systems, Inc.(1) | 34,489 | 2,305,935 | ||||||
10,741,280 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 2.9% | ||||||||
Basic Energy Services, Inc.(1) | 56,596 | 814,982 | ||||||
Cal Dive International, Inc.(1) | 553,935 | 2,143,728 | ||||||
Hornbeck Offshore Services, Inc.(1) | 87,293 | 3,634,008 | ||||||
Mitcham Industries, Inc.(1) | 127,719 | 3,034,603 | ||||||
Pioneer Drilling Co.(1) | 164,633 | 1,297,308 | ||||||
Superior Energy Services, Inc.(1) | 27,319 | 735,428 | ||||||
11,660,057 | ||||||||
FOOD AND STAPLES RETAILING — 1.2% | ||||||||
Andersons, Inc. (The) | 79,135 | 3,988,404 | ||||||
Chefs’ Warehouse, Inc. (The)(1) | 39,400 | 952,692 | ||||||
4,941,096 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 3.5% | ||||||||
Abaxis, Inc.(1) | 16,424 | 585,023 | ||||||
Align Technology, Inc.(1) | 41,461 | 1,314,728 | ||||||
Arthrocare Corp.(1) | 19,671 | 490,988 | ||||||
Cyberonics, Inc.(1) | 19,787 | 757,842 | ||||||
DexCom, Inc.(1) | 49,554 | 485,134 | ||||||
Haemonetics Corp.(1) | 17,442 | 1,248,324 | ||||||
HeartWare International, Inc.(1) | 8,846 | 689,634 | ||||||
Insulet Corp.(1) | 33,579 | $599,721 | ||||||
Integra LifeSciences Holdings Corp.(1) | 15,468 | 575,874 | ||||||
MAKO Surgical Corp.(1) | 22,547 | 931,417 | ||||||
Masimo Corp.(1) | 36,659 | 811,264 | ||||||
Meridian Bioscience, Inc. | 29,397 | 604,108 | ||||||
Neogen Corp.(1) | 16,085 | 627,154 | ||||||
NuVasive, Inc.(1) | 29,620 | 490,803 | ||||||
NxStage Medical, Inc.(1) | 29,650 | 504,050 | ||||||
Orthofix International NV(1) | 13,343 | 549,998 | ||||||
STERIS Corp. | 40,774 | 1,280,711 | ||||||
Volcano Corp.(1) | 35,398 | 961,056 | ||||||
West Pharmaceutical Services, Inc. | 13,382 | 600,852 | ||||||
14,108,681 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 2.4% | ||||||||
Accretive Health, Inc.(1) | 27,524 | 276,891 | ||||||
Air Methods Corp.(1) | 7,837 | 659,170 | ||||||
Bio-Reference Labs, Inc.(1) | 19,701 | 420,025 | ||||||
Centene Corp.(1) | 21,962 | 869,476 | ||||||
Chemed Corp. | 13,532 | 816,521 | ||||||
HMS Holdings Corp.(1) | 57,556 | 1,384,797 | ||||||
IPC The Hospitalist Co., Inc.(1) | 12,058 | 463,148 | ||||||
Landauer, Inc. | 6,939 | 365,824 | ||||||
MWI Veterinary Supply, Inc.(1) | 8,654 | 816,938 | ||||||
Owens & Minor, Inc. | 35,698 | 1,043,810 | ||||||
PSS World Medical, Inc.(1) | 37,585 | 899,409 | ||||||
WellCare Health Plans, Inc.(1) | 29,211 | 1,787,129 | ||||||
9,803,138 | ||||||||
HEALTH CARE TECHNOLOGY — 0.9% | ||||||||
athenahealth, Inc.(1) | 23,245 | 1,684,100 | ||||||
Computer Programs & Systems, Inc. | 8,155 | 485,957 | ||||||
MedAssets, Inc.(1) | 28,454 | 358,805 | ||||||
Quality Systems, Inc. | 26,408 | 987,659 | ||||||
3,516,521 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 2.9% | ||||||||
AFC Enterprises, Inc.(1) | 55,158 | 942,099 | ||||||
Bally Technologies, Inc.(1) | 24,882 | 1,208,021 | ||||||
Cedar Fair LP | 92,210 | 2,868,653 | ||||||
Marcus Corp. | 29,600 | 370,296 | ||||||
Papa John’s International, Inc.(1) | 45,470 | 1,831,531 | ||||||
Red Robin Gourmet Burgers, Inc.(1) | 34,761 | 1,239,577 | ||||||
Ruth’s Hospitality Group, Inc.(1) | 185,026 | 1,280,380 |
9
Shares | Value | |||||||
Shuffle Master, Inc.(1) | 118,698 | $2,097,394 | ||||||
11,837,951 | ||||||||
HOUSEHOLD DURABLES — 1.7% | ||||||||
M/I Homes, Inc.(1) | 101,504 | 1,350,003 | ||||||
Tempur-Pedic International, Inc.(1) | 72,408 | 4,260,487 | ||||||
Zagg, Inc.(1) | 86,916 | 1,132,515 | ||||||
6,743,005 | ||||||||
INDUSTRIAL CONGLOMERATES — 1.3% | ||||||||
Raven Industries, Inc. | 69,887 | 4,207,896 | ||||||
Standex International Corp. | 19,048 | 839,255 | ||||||
5,047,151 | ||||||||
INSURANCE — 1.1% | ||||||||
AMERISAFE, Inc.(1) | 64,761 | 1,730,414 | ||||||
Amtrust Financial Services, Inc. | 83,594 | 2,277,100 | ||||||
Employers Holdings, Inc. | 35,246 | 610,461 | ||||||
4,617,975 | ||||||||
INTERNET AND CATALOG RETAIL — 0.1% | ||||||||
priceline.com, Inc.(1) | 726 | 552,355 | ||||||
INTERNET SOFTWARE AND SERVICES — 5.3% | ||||||||
Constant Contact, Inc.(1) | 31,991 | 773,223 | ||||||
Dice Holdings, Inc.(1) | 268,730 | 2,896,909 | ||||||
Infospace, Inc.(1) | 143,865 | 1,601,217 | ||||||
Internap Network Services Corp.(1) | 57,024 | 401,449 | ||||||
j2 Global, Inc. | 25,062 | 647,352 | ||||||
Keynote Systems, Inc. | 78,050 | 1,436,120 | ||||||
Liquidity Services, Inc.(1) | 16,684 | 889,758 | ||||||
Perficient, Inc.(1) | 141,405 | 1,698,274 | ||||||
Rackspace Hosting, Inc.(1) | 35,881 | 2,084,327 | ||||||
SPS Commerce, Inc.(1) | 11,162 | 310,527 | ||||||
Stamps.com, Inc.(1) | 86,657 | 2,515,653 | ||||||
ValueClick, Inc.(1) | 229,215 | 4,854,774 | ||||||
Web.com Group, Inc.(1) | 84,292 | 1,091,581 | ||||||
21,201,164 | ||||||||
IT SERVICES — 1.6% | ||||||||
Cardtronics, Inc.(1) | 55,539 | 1,464,008 | ||||||
Heartland Payment Systems, Inc. | 129,085 | 3,933,220 | ||||||
MAXIMUS, Inc. | 22,058 | 976,067 | ||||||
6,373,295 | ||||||||
LEISURE EQUIPMENT AND PRODUCTS — 3.1% | ||||||||
Polaris Industries, Inc. | 104,227 | 8,279,793 | ||||||
Smith & Wesson Holding Corp.(1) | 200,483 | 1,653,985 | ||||||
Sturm Ruger & Co., Inc. | 44,278 | 2,526,945 | ||||||
12,460,723 | ||||||||
LIFE SCIENCES TOOLS AND SERVICES — 0.5% | ||||||||
Luminex Corp.(1) | 26,937 | $674,503 | ||||||
PAREXEL International Corp.(1) | 37,826 | 1,019,032 | ||||||
Sequenom, Inc.(1) | 53,755 | 275,226 | ||||||
1,968,761 | ||||||||
MACHINERY — 6.9% | ||||||||
Altra Holdings, Inc.(1) | 20,693 | 378,268 | ||||||
Blount International, Inc.(1) | 122,319 | 1,977,898 | ||||||
CLARCOR, Inc. | 43,104 | 2,069,854 | ||||||
Flow International Corp.(1) | 204,204 | 839,279 | ||||||
Greenbrier Cos., Inc.(1) | 78,452 | 1,353,297 | ||||||
Lindsay Corp. | 42,751 | 2,855,340 | ||||||
Middleby Corp.(1) | 19,460 | 1,974,606 | ||||||
NN, Inc.(1) | 227,631 | 1,800,561 | ||||||
Robbins & Myers, Inc. | 57,020 | 2,777,444 | ||||||
Sauer-Danfoss, Inc. | 76,052 | 3,293,812 | ||||||
Titan International, Inc. | 296,053 | 8,552,971 | ||||||
27,873,330 | ||||||||
MEDIA — 0.3% | ||||||||
Sinclair Broadcast Group, Inc., Class A | 127,005 | 1,305,611 | ||||||
METALS AND MINING — 1.0% | ||||||||
AK Steel Holding Corp. | 93,675 | 695,069 | ||||||
Haynes International, Inc. | 23,480 | 1,464,448 | ||||||
Noranda Aluminum Holding Corp. | 185,299 | 1,967,875 | ||||||
4,127,392 | ||||||||
MULTILINE RETAIL — 0.3% | ||||||||
Gordmans Stores, Inc.(1) | 51,058 | 1,084,472 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 5.2% | ||||||||
Berry Petroleum Co., Class A | 26,028 | 1,185,575 | ||||||
CVR Energy, Inc.(1) | 65,107 | 1,976,648 | ||||||
Goodrich Petroleum Corp.(1) | 51,913 | 870,581 | ||||||
Gulfport Energy Corp.(1) | 109,292 | 2,864,543 | ||||||
Kodiak Oil & Gas Corp.(1) | 194,350 | 1,719,997 | ||||||
Rosetta Resources, Inc.(1) | 75,128 | 3,776,685 | ||||||
Stone Energy Corp.(1) | 106,637 | 2,991,168 | ||||||
Tesoro Logistics LP | 17,351 | 613,358 | ||||||
Vaalco Energy, Inc.(1) | 96,523 | 875,464 | ||||||
W&T Offshore, Inc. | 67,971 | 1,343,787 | ||||||
Western Refining, Inc. | 131,743 | 2,509,704 | ||||||
20,727,510 | ||||||||
PAPER AND FOREST PRODUCTS — 1.9% | ||||||||
Buckeye Technologies, Inc. | 97,700 | 3,166,457 | ||||||
KapStone Paper and Packaging Corp.(1) | 190,042 | 3,432,159 | ||||||
Neenah Paper, Inc. | 42,247 | 1,206,574 | ||||||
7,805,190 |
10
Shares | Value | |||||||
PERSONAL PRODUCTS — 0.3% | ||||||||
Nu Skin Enterprises, Inc., Class A | 21,322 | $1,136,463 | ||||||
PHARMACEUTICALS — 2.6% | ||||||||
Auxilium Pharmaceuticals, Inc.(1) | 33,763 | 605,033 | ||||||
Impax Laboratories, Inc.(1) | 39,891 | 982,516 | ||||||
Jazz Pharmaceuticals plc(1) | 15,235 | 777,442 | ||||||
Medicis Pharmaceutical Corp., Class A | 35,562 | 1,368,070 | ||||||
Nektar Therapeutics(1) | 53,650 | 408,813 | ||||||
Optimer Pharmaceuticals, Inc.(1) | 32,589 | 482,317 | ||||||
Par Pharmaceutical Cos., Inc.(1) | 16,685 | 706,443 | ||||||
Questcor Pharmaceuticals, Inc.(1) | 35,497 | 1,593,815 | ||||||
Salix Pharmaceuticals Ltd.(1) | 39,682 | 1,960,291 | ||||||
VIVUS, Inc.(1) | 64,415 | 1,560,131 | ||||||
10,444,871 | ||||||||
PROFESSIONAL SERVICES — 1.6% | ||||||||
Advisory Board Co. (The)(1) | 18,858 | 1,719,095 | ||||||
Kelly Services, Inc., Class A | 66,129 | 925,145 | ||||||
On Assignment, Inc.(1) | 134,290 | 2,512,566 | ||||||
TrueBlue, Inc.(1) | 73,142 | 1,262,431 | ||||||
6,419,237 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.8% | ||||||||
Cedar Realty Trust, Inc. | 101,671 | 530,723 | ||||||
Post Properties, Inc. | 19,415 | 945,511 | ||||||
Sovran Self Storage, Inc. | 34,662 | 1,826,687 | ||||||
3,302,921 | ||||||||
ROAD AND RAIL — 0.2% | ||||||||
Quality Distribution, Inc.(1) | 77,720 | 868,132 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 4.5% | ||||||||
Cavium Networks, Inc.(1) | 27,600 | 807,576 | ||||||
CEVA, Inc.(1) | 64,490 | 1,424,584 | ||||||
Cirrus Logic, Inc.(1) | 88,322 | 2,418,256 | ||||||
Entegris, Inc.(1) | 138,193 | 1,223,008 | ||||||
Photronics, Inc.(1) | 174,754 | 1,081,727 | ||||||
Rudolph Technologies, Inc.(1) | 98,832 | 1,067,386 | ||||||
Semtech Corp.(1) | 66,320 | 1,807,883 | ||||||
Silicon Motion Technology Corp. ADR(1) | 97,142 | 1,653,357 | ||||||
Skyworks Solutions, Inc.(1) | 126,361 | 3,429,438 | ||||||
Ultratech, Inc.(1) | 99,351 | 3,173,271 | ||||||
18,086,486 | ||||||||
SOFTWARE — 6.1% | ||||||||
ACI Worldwide, Inc.(1) | 7,920 | $315,691 | ||||||
Actuate Corp.(1) | 161,807 | 1,148,830 | ||||||
Allot Communications Ltd.(1) | 147,544 | 3,620,730 | ||||||
Bottomline Technologies, Inc.(1) | 24,156 | 568,391 | ||||||
BroadSoft, Inc.(1) | 33,439 | 1,431,523 | ||||||
Clicksoftware Technologies Ltd. | 97,222 | 1,052,914 | ||||||
Fortinet, Inc.(1) | 50,122 | 1,309,187 | ||||||
Glu Mobile, Inc.(1) | 98,673 | 448,962 | ||||||
Guidance Software, Inc.(1) | 124,941 | 1,185,690 | ||||||
Kenexa Corp.(1) | 163,198 | 5,331,679 | ||||||
NetScout Systems, Inc.(1) | 67,303 | 1,392,499 | ||||||
PROS Holdings, Inc.(1) | 127,719 | 2,514,787 | ||||||
TIBCO Software, Inc.(1) | 78,091 | 2,569,194 | ||||||
Ultimate Software Group, Inc.(1) | 19,500 | 1,504,620 | ||||||
24,394,697 | ||||||||
SPECIALTY RETAIL — 6.8% | ||||||||
America’s Car-Mart, Inc.(1) | 34,395 | 1,580,106 | ||||||
Body Central Corp.(1) | 29,536 | 897,008 | ||||||
Buckle, Inc. (The) | 33,478 | 1,546,014 | ||||||
Cabela’s, Inc.(1) | 27,631 | 1,044,728 | ||||||
Collective Brands, Inc.(1) | 33,463 | 695,027 | ||||||
Cost Plus, Inc.(1) | 94,547 | 1,831,375 | ||||||
Francesca’s Holdings Corp.(1) | 38,274 | 1,199,890 | ||||||
Genesco, Inc.(1) | 44,607 | 3,345,525 | ||||||
GNC Holdings, Inc. Class A | 42,431 | 1,657,355 | ||||||
Lithia Motors, Inc., Class A | 308,423 | 8,274,989 | ||||||
Select Comfort Corp.(1) | 35,214 | 1,016,980 | ||||||
Tractor Supply Co. | 42,977 | 4,229,367 | ||||||
27,318,364 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 2.4% | ||||||||
Carter’s, Inc.(1) | 30,620 | 1,662,666 | ||||||
G-III Apparel Group Ltd.(1) | 58,119 | 1,560,495 | ||||||
Iconix Brand Group, Inc.(1) | 140,508 | 2,155,393 | ||||||
Movado Group, Inc. | 72,318 | 2,050,215 | ||||||
Oxford Industries, Inc. | 46,343 | 2,224,001 | ||||||
9,652,770 | ||||||||
THRIFTS AND MORTGAGE FINANCE — 0.4% | ||||||||
Berkshire Hills Bancorp, Inc. | 23,176 | 525,863 | ||||||
Rockville Financial, Inc. | 75,026 | 878,555 | ||||||
1,404,418 |
11
Shares | Value | |||||||
TRADING COMPANIES AND DISTRIBUTORS — 6.0% | ||||||||
Applied Industrial Technologies, Inc. | 36,127 | $1,419,791 | ||||||
Beacon Roofing Supply, Inc.(1) | 107,522 | 2,869,762 | ||||||
DXP Enterprises, Inc.(1) | 43,281 | 1,877,097 | ||||||
H&E Equipment Services, Inc.(1) | 116,980 | 2,257,714 | ||||||
Rush Enterprises, Inc., Class A(1) | 48,866 | 883,497 | ||||||
SeaCube Container Leasing Ltd. | 76,161 | 1,412,787 | ||||||
TAL International Group, Inc. | 33,767 | 1,394,915 | ||||||
Titan Machinery, Inc.(1) | 158,011 | 5,629,932 | ||||||
United Rentals, Inc.(1) | 138,622 | 6,470,875 | ||||||
24,216,370 | ||||||||
TOTAL COMMON STOCKS (Cost $295,060,427) | 398,357,892 |
Value | ||||
Temporary Cash Investments — 1.6% | ||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $2,761,374), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $2,707,329) | $2,707,318 | |||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $1,724,982), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $1,692,080) | 1,692,074 | |||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $2,263,726), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $2,217,611) | 2,217,605 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $6,616,997) | 6,616,997 | |||
TOTAL INVESTMENT SECURITIES — 100.6% (Cost $301,677,424) | 404,974,889 | |||
OTHER ASSETS AND LIABILITIES — (0.6)% | (2,570,264 | ) | ||
TOTAL NET ASSETS — 100.0% | $402,404,625 |
Notes to Schedule of Investments
ADR = American Depositary Receipt
(1) | Non-income producing. |
See Notes to Financial Statements.
12
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $301,677,424) | $404,974,889 | |||
Receivable for investments sold | 3,159,134 | |||
Receivable for capital shares sold | 205,627 | |||
Dividends and interest receivable | 89,995 | |||
408,429,645 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 28,963 | |||
Payable for investments purchased | 4,907,847 | |||
Payable for capital shares redeemed | 607,855 | |||
Accrued management fees | 444,306 | |||
Distribution and service fees payable | 36,049 | |||
6,025,020 | ||||
Net Assets | $402,404,625 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $560,844,827 | |||
Accumulated net investment loss | (1,164,805 | ) | ||
Accumulated net realized loss | (260,572,862 | ) | ||
Net unrealized appreciation | 103,297,465 | |||
$402,404,625 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $160,101,981 | 17,722,530 | $9.03 | |||
Institutional Class, $0.01 Par Value | $112,367,446 | 12,318,843 | $9.12 | |||
A Class, $0.01 Par Value | $113,686,599 | 12,796,612 | $8.88 | * | ||
B Class, $0.01 Par Value | $2,069,913 | 244,117 | $8.48 | |||
C Class, $0.01 Par Value | $12,974,377 | 1,524,201 | $8.51 | |||
R Class, $0.01 Par Value | $1,204,309 | 136,438 | $8.83 |
* | Maximum offering price $9.42 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
13
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $4,276) | $2,063,582 | |||
Interest | 802 | |||
2,064,384 | ||||
Expenses: | ||||
Management fees | 2,668,572 | |||
Distribution and service fees: | ||||
A Class | 141,014 | |||
B Class | 10,358 | |||
C Class | 62,906 | |||
R Class | 3,040 | |||
Directors’ fees and expenses | 8,441 | |||
Other expenses | 139 | |||
2,894,470 | ||||
Net investment income (loss) | (830,086 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions | 13,031,000 | |||
Change in net unrealized appreciation (depreciation) on investments | 32,719,991 | |||
Net realized and unrealized gain (loss) | 45,750,991 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $44,920,905 |
See Notes to Financial Statements.
14
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $(830,086 | ) | $(3,984,277 | ) | ||||
Net realized gain (loss) | 13,031,000 | 51,226,321 | ||||||
Change in net unrealized appreciation (depreciation) | 32,719,991 | (15,851,118 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 44,920,905 | 31,390,926 | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (46,184,202 | ) | (29,540,806 | ) | ||||
Redemption Fees | ||||||||
Increase in net assets from redemption fees | 9,635 | 157,637 | ||||||
Net increase (decrease) in net assets | (1,253,662 | ) | 2,007,757 | |||||
Net Assets | ||||||||
Beginning of period | 403,658,287 | 401,650,530 | ||||||
End of period | $402,404,625 | $403,658,287 | ||||||
Accumulated net investment loss | $(1,164,805 | ) | $(334,719 | ) |
See Notes to Financial Statements.
15
APRIL 30, 2012 (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 offers 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 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.
16
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.
Business Development Companies — The fund may invest in securities of closed-end investment companies that have elected to be treated as a business development company under the 1940 Act. A business development company operates similar to an exchange-traded fund and represents a portfolio of securities. The fund may purchase a business development company to gain exposure to the securities in the underlying portfolio. The risks of owning a business development company generally reflect the risks of owning the underlying securities. Business development companies have expenses that reduce their value.
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 2008. 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 60 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions. Prior to November 14, 2011, the redemption fee applied to shares held less than 180 days.
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, 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, 2012 was 1.41% for the Investor Class, A Class, B Class, C Class and R Class and 1.21% 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 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, 2012 are detailed in the Statement of Operations.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund’s assets but are reflected in the return realized by the fund on its investment in the acquired funds.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $98,092,647 and $145,837,390, respectively.
18
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 165,000,000 | 165,000,000 | ||||||||||||||
Sold | 1,054,435 | $9,261,825 | 8,803,517 | $75,368,241 | ||||||||||||
Redeemed | (3,960,890 | ) | (33,473,766 | ) | (7,346,365 | ) | (61,075,419 | ) | ||||||||
(2,906,455 | ) | (24,211,941 | ) | 1,457,152 | 14,292,822 | |||||||||||
Institutional Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||||
Sold | 1,181,517 | 10,017,952 | 2,202,843 | 18,437,124 | ||||||||||||
Redeemed | (1,840,016 | ) | (15,560,310 | ) | (4,492,812 | ) | (37,796,193 | ) | ||||||||
(658,499 | ) | (5,542,358 | ) | (2,289,969 | ) | (19,359,069 | ) | |||||||||
A Class/Shares Authorized | 110,000,000 | 110,000,000 | ||||||||||||||
Sold | 532,912 | 4,468,710 | 2,317,591 | 19,344,137 | ||||||||||||
Redeemed | (2,320,890 | ) | (19,245,845 | ) | (4,972,627 | ) | (41,162,124 | ) | ||||||||
(1,787,978 | ) | (14,777,135 | ) | (2,655,036 | ) | (21,817,987 | ) | |||||||||
B Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 2,663 | 22,559 | 11,789 | 88,253 | ||||||||||||
Redeemed | (47,554 | ) | (373,375 | ) | (160,539 | ) | (1,294,643 | ) | ||||||||
(44,891 | ) | (350,816 | ) | (148,750 | ) | (1,206,390 | ) | |||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 84,744 | 683,146 | 496,741 | 4,074,090 | ||||||||||||
Redeemed | (223,402 | ) | (1,794,638 | ) | (725,256 | ) | (5,727,473 | ) | ||||||||
(138,658 | ) | (1,111,492 | ) | (228,515 | ) | (1,653,383 | ) | |||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||
Sold | 24,933 | 206,086 | 79,880 | 673,191 | ||||||||||||
Redeemed | (48,817 | ) | (396,546 | ) | (55,683 | ) | (469,990 | ) | ||||||||
(23,884 | ) | (190,460 | ) | 24,197 | 203,201 | |||||||||||
Net increase (decrease) | (5,560,365 | ) | $(46,184,202 | ) | (3,840,921 | ) | $(29,540,806 | ) |
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.
19
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 | $398,357,892 | — | — | |||||||||
Temporary Cash Investments | — | $6,616,997 | — | |||||||||
Total Value of Investment Securities | $398,357,892 | $6,616,997 | — |
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $305,109,155 | |||
Gross tax appreciation of investments | $107,366,180 | |||
Gross tax depreciation of investments | (7,500,446 | ) | ||
Net tax appreciation (depreciation) of investments | $99,865,734 |
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, 2011, the fund had accumulated capital losses of $(269,876,160), 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 |
$(32,333,611) | — | $(125,173,360) | $(112,369,189) |
The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
20
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||
2012(4) | $8.06 | (0.02) | 0.99 | 0.97 | — | $9.03 | 12.03% | 1.41%(5) | (0.36)%(5) | 25% | $160,102 |
2011 | $7.45 | (0.07) | 0.68 | 0.61 | — | $8.06 | 8.19% | 1.40% | (0.84)% | 108% | $166,243 |
2010 | $5.47 | (0.03) | 2.01 | 1.98 | — | $7.45 | 36.20% | 1.42% | (0.48)% | 183% | $142,793 |
2009 | $5.57 | (0.02) | (0.08) | (0.10) | — | $5.47 | (1.80)% | 1.41% | (0.40)% | 204% | $170,125 |
2008 | $9.42 | (0.04) | (3.73) | (3.77) | (0.08) | $5.57 | (40.34)% | 1.36% | (0.49)% | 148% | $222,017 |
2007 | $7.63 | (0.05) | 2.52 | 2.47 | (0.68) | $9.42 | 35.22% | 1.41% | (0.70)% | 204% | $303,189 |
Institutional Class | |||||||||||
2012(4) | $8.13 | (0.01) | 1.00 | 0.99 | — | $9.12 | 12.18% | 1.21%(5) | (0.16)%(5) | 25% | $112,367 |
2011 | $7.50 | (0.05) | 0.68 | 0.63 | — | $8.13 | 8.40% | 1.20% | (0.64)% | 108% | $105,520 |
2010 | $5.49 | (0.02) | 2.03 | 2.01 | — | $7.50 | 36.61% | 1.22% | (0.28)% | 183% | $114,513 |
2009 | $5.59 | (0.01) | (0.09) | (0.10) | — | $5.49 | (1.79)% | 1.21% | (0.20)% | 204% | $108,261 |
2008 | $9.43 | (0.02) | (3.74) | (3.76) | (0.08) | $5.59 | (40.19)% | 1.16% | (0.29)% | 148% | $91,791 |
2007(6) | $8.27 | (0.03) | 1.19 | 1.16 | — | $9.43 | 14.03% | 1.21%(5) | (0.65)%(5) | 204%(7) | $18,384 |
21
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class | |||||||||||
2012(4) | $7.94 | (0.03) | 0.97 | 0.94 | — | $8.88 | 11.84% | 1.66%(5) | (0.61)%(5) | 25% | $113,687 |
2011 | $7.35 | (0.09) | 0.68 | 0.59 | — | $7.94 | 8.03% | 1.65% | (1.09)% | 108% | $115,741 |
2010 | $5.41 | (0.05) | 1.99 | 1.94 | — | $7.35 | 35.86% | 1.67% | (0.73)% | 183% | $126,763 |
2009 | $5.53 | (0.03) | (0.09) | (0.12) | — | $5.41 | (2.17)% | 1.66% | (0.65)% | 204% | $114,026 |
2008 | $9.37 | (0.06) | (3.70) | (3.76) | (0.08) | $5.53 | (40.45)% | 1.61% | (0.74)% | 148% | $129,791 |
2007 | $7.59 | (0.07) | 2.51 | 2.44 | (0.66) | $9.37 | 34.91% | 1.66% | (0.95)% | 204% | $202,515 |
B Class | |||||||||||
2012(4) | $7.60 | (0.06) | 0.94 | 0.88 | — | $8.48 | 11.58% | 2.41%(5) | (1.36)%(5) | 25% | $2,070 |
2011 | $7.10 | (0.15) | 0.65 | 0.50 | — | $7.60 | 7.04% | 2.40% | (1.84)% | 108% | $2,197 |
2010 | $5.26 | (0.09) | 1.93 | 1.84 | — | $7.10 | 34.98% | 2.42% | (1.48)% | 183% | $3,107 |
2009 | $5.41 | (0.07) | (0.08) | (0.15) | — | $5.26 | (2.77)% | 2.41% | (1.40)% | 204% | $2,976 |
2008 | $9.25 | (0.11) | (3.65) | (3.76) | (0.08) | $5.41 | (40.97)% | 2.36% | (1.49)% | 148% | $2,846 |
2007 | $7.49 | (0.13) | 2.49 | 2.36 | (0.60) | $9.25 | 33.84% | 2.41% | (1.70)% | 204% | $4,549 |
C Class | |||||||||||
2012(4) | $7.63 | (0.06) | 0.94 | 0.88 | — | $8.51 | 11.53% | 2.41%(5) | (1.36)%(5) | 25% | $12,974 |
2011 | $7.13 | (0.15) | 0.65 | 0.50 | — | $7.63 | 7.01% | 2.40% | (1.84)% | 108% | $12,691 |
2010 | $5.28 | (0.09) | 1.94 | 1.85 | — | $7.13 | 35.04% | 2.42% | (1.48)% | 183% | $13,476 |
2009 | $5.44 | (0.07) | (0.09) | (0.16) | — | $5.28 | (2.94)% | 2.41% | (1.40)% | 204% | $11,608 |
2008 | $9.29 | (0.11) | (3.66) | (3.77) | (0.08) | $5.44 | (40.91)% | 2.36% | (1.49)% | 148% | $12,983 |
2007 | $7.52 | (0.13) | 2.50 | 2.37 | (0.60) | $9.29 | 34.02% | 2.41% | (1.70)% | 204% | $16,406 |
22
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
R Class | |||||||||||
2012(4) | $7.89 | (0.04) | 0.98 | 0.94 | — | $8.83 | 11.91% | 1.91%(5) | (0.86)%(5) | 25% | $1,204 |
2011 | $7.33 | (0.11) | 0.67 | 0.56 | — | $7.89 | 7.64% | 1.90% | (1.34)% | 108% | $1,266 |
2010 | $5.41 | (0.06) | 1.98 | 1.92 | — | $7.33 | 35.49% | 1.92% | (0.98)% | 183% | $998 |
2009 | $5.54 | (0.06) | (0.07) | (0.13) | — | $5.41 | (2.35)% | 1.91% | (0.90)% | 204% | $545 |
2008 | $9.42 | (0.06) | (3.74) | (3.80) | (0.08) | $5.54 | (40.66)% | 1.86% | (0.99)% | 148% | $108 |
2007(8) | $9.02 | (0.01) | 0.41 | 0.40 | — | $9.42 | 4.43% | 1.91%(5) | (1.61)%(5) | 204%(7) | $26 |
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2012 (unaudited). |
(5) | Annualized. |
(6) | May 18, 2007 (commencement of sale) through October 31, 2007. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2007. |
(8) | September 28, 2007 (commencement of sale) through October 31, 2007. |
See Notes to Financial Statements.
23
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.
24
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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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75368 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 20 |
Additional Information | 23 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
3
Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCIX | 13.98% | 7.78% | 4.53% | 3.83% | 12.24% | 6/30/71(2) |
Russell 1000 Growth Index | — | 14.13% | 7.26% | 4.11% | 5.16% | N/A(3) | — |
Institutional Class | TWSIX | 14.11% | 8.00% | 4.74% | 4.04% | 5.34% | 3/13/97 |
A Class(4) No sales charge* With sales charge* | TWCAX | 13.84% 7.30% | 7.51% 1.33% | 4.27% 3.04% | 3.57% 2.96% | 3.62% 3.20% | 8/8/97 |
C Class No sales charge* With sales charge* | ACSLX | 13.41% 12.41% | 6.73% 6.73% | 3.49% 3.49% | — — | 5.66% 5.66% | 1/31/03 |
R Class | ASERX | 13.69% | 7.25% | 4.01% | — | 3.64% | 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) | 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 | 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. 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, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 9.2% |
Google, Inc., Class A | 4.1% |
Exxon Mobil Corp. | 3.1% |
EMC Corp. | 2.6% |
Costco Wholesale Corp. | 2.6% |
MasterCard, Inc., Class A | 2.6% |
Teradata Corp. | 2.6% |
Philip Morris International, Inc. | 2.5% |
TJX Cos., Inc. (The) | 2.2% |
UnitedHealth Group, Inc. | 2.2% |
Top Five Industries | % of net assets |
Computers and Peripherals | 11.8% |
Internet Software and Services | 5.5% |
IT Services | 5.2% |
Oil, Gas and Consumable Fuels | 5.0% |
Energy Equipment and Services | 4.5% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 92.5% |
Foreign Common Stocks* | 6.3% |
Total Common Stocks | 98.8% |
Temporary Cash Investments | 1.1% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,139.80 | $5.32 | 1.00% |
Institutional Class | $1,000 | $1,141.10 | $4.26 | 0.80% |
A Class | $1,000 | $1,138.40 | $6.65 | 1.25% |
C Class | $1,000 | $1,134.10 | $10.61 | 2.00% |
R Class | $1,000 | $1,136.90 | $7.97 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 98.8% | ||||||||
AEROSPACE AND DEFENSE — 3.3% | ||||||||
General Dynamics Corp. | 523,100 | $35,309,250 | ||||||
Rockwell Collins, Inc. | 570,000 | 31,857,300 | ||||||
67,166,550 | ||||||||
AIR FREIGHT AND LOGISTICS — 1.5% | ||||||||
United Parcel Service, Inc., Class B | 391,000 | 30,552,740 | ||||||
BEVERAGES — 1.6% | ||||||||
Diageo plc | 1,309,695 | 32,966,562 | ||||||
BIOTECHNOLOGY — 4.1% | ||||||||
Biogen Idec, Inc.(1) | 293,600 | 39,345,336 | ||||||
Gilead Sciences, Inc.(1) | 831,101 | 43,225,563 | ||||||
82,570,899 | ||||||||
CAPITAL MARKETS — 1.7% | ||||||||
Franklin Resources, Inc. | 272,800 | 34,239,128 | ||||||
CHEMICALS — 3.3% | ||||||||
Monsanto Co. | 548,000 | 41,746,640 | ||||||
Potash Corp. of Saskatchewan, Inc. | 576,200 | 24,476,976 | ||||||
66,223,616 | ||||||||
COMMUNICATIONS EQUIPMENT — 2.2% | ||||||||
QUALCOMM, Inc. | 685,600 | 43,768,704 | ||||||
COMPUTERS AND PERIPHERALS — 11.8% | ||||||||
Apple, Inc.(1) | 316,600 | 184,970,384 | ||||||
EMC Corp.(1) | 1,880,700 | 53,054,547 | ||||||
238,024,931 | ||||||||
DIVERSIFIED FINANCIAL SERVICES — 2.2% | ||||||||
CME Group, Inc. | 65,300 | 17,358,046 | ||||||
Hong Kong Exchanges and Clearing Ltd. | 601,508 | 9,621,151 | ||||||
JPMorgan Chase & Co. | 393,900 | 16,929,822 | ||||||
43,909,019 | ||||||||
ELECTRICAL EQUIPMENT — 3.2% | ||||||||
ABB Ltd. ADR(1) | 1,392,400 | 26,274,588 | ||||||
Emerson Electric Co. | 728,100 | 38,254,374 | ||||||
64,528,962 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 4.5% | ||||||||
Diamond Offshore Drilling, Inc. | 293,400 | 20,112,570 | ||||||
Halliburton Co. | 720,100 | 24,641,822 | ||||||
National Oilwell Varco, Inc. | 192,900 | 14,614,104 | ||||||
Schlumberger Ltd. | 428,300 | 31,754,162 | ||||||
91,122,658 | ||||||||
FOOD AND STAPLES RETAILING — 2.6% | ||||||||
Costco Wholesale Corp. | 596,500 | 52,593,405 | ||||||
FOOD PRODUCTS — 2.2% | ||||||||
Hershey Co. (The) | 225,300 | $15,097,353 | ||||||
Mead Johnson Nutrition Co. | 339,000 | 29,004,840 | ||||||
44,102,193 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 1.3% | ||||||||
Intuitive Surgical, Inc.(1) | 46,400 | 26,828,480 | ||||||
HEALTH CARE PROVIDERS AND SERVICES — 3.1% | ||||||||
Express Scripts Holding Co.(1) | 315,009 | 17,574,352 | ||||||
UnitedHealth Group, Inc. | 781,200 | 43,864,380 | ||||||
61,438,732 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 2.0% | ||||||||
McDonald’s Corp. | 346,400 | 33,756,680 | ||||||
Peet’s Coffee & Tea, Inc.(1) | 85,500 | 6,568,110 | ||||||
40,324,790 | ||||||||
HOUSEHOLD DURABLES — 1.2% | ||||||||
Harman International Industries, Inc. | 465,400 | 23,074,532 | ||||||
INSURANCE — 0.8% | ||||||||
Travelers Cos., Inc. (The) | 242,400 | 15,591,168 | ||||||
INTERNET AND CATALOG RETAIL — 2.8% | ||||||||
Amazon.com, Inc.(1) | 173,400 | 40,211,460 | ||||||
Netflix, Inc.(1) | 193,100 | 15,475,034 | ||||||
55,686,494 | ||||||||
INTERNET SOFTWARE AND SERVICES — 5.5% | ||||||||
Baidu, Inc. ADR(1) | 195,100 | 25,889,770 | ||||||
Google, Inc., Class A(1) | 135,700 | 82,129,711 | ||||||
Responsys, Inc.(1) | 125,200 | 1,600,056 | ||||||
109,619,537 | ||||||||
IT SERVICES — 5.2% | ||||||||
MasterCard, Inc., Class A | 115,600 | 52,282,412 | ||||||
Teradata Corp.(1) | 743,700 | 51,895,386 | ||||||
104,177,798 | ||||||||
LEISURE EQUIPMENT AND PRODUCTS — 0.9% | ||||||||
Hasbro, Inc. | 498,900 | 18,329,586 | ||||||
MACHINERY — 3.5% | ||||||||
Graco, Inc. | 278,600 | 14,852,166 | ||||||
Nordson Corp. | 339,400 | 18,293,660 | ||||||
Parker-Hannifin Corp. | 411,700 | 36,101,973 | ||||||
69,247,799 | ||||||||
MEDIA — 1.4% | ||||||||
Walt Disney Co. (The) | 663,500 | 28,603,485 | ||||||
METALS AND MINING — 1.3% | ||||||||
Freeport-McMoRan Copper & Gold, Inc. | 660,500 | 25,297,150 | ||||||
MULTILINE RETAIL — 1.2% | ||||||||
J.C. Penney Co., Inc. | 686,000 | 24,737,160 |
8
Shares | Value | |||||||
OIL, GAS AND CONSUMABLE FUELS — 5.0% | ||||||||
Exxon Mobil Corp. | 732,800 | $63,269,952 | ||||||
Occidental Petroleum Corp. | 414,100 | 37,774,202 | ||||||
101,044,154 | ||||||||
PERSONAL PRODUCTS — 1.4% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 443,400 | 28,976,190 | ||||||
PHARMACEUTICALS — 1.9% | ||||||||
Allergan, Inc. | 332,300 | 31,900,800 | ||||||
Teva Pharmaceutical Industries Ltd. ADR | 148,400 | 6,787,816 | ||||||
38,688,616 | ||||||||
PROFESSIONAL SERVICES — 1.0% | ||||||||
IHS, Inc. Class A(1) | 119,200 | 12,047,544 | ||||||
Verisk Analytics, Inc. Class A(1) | 175,300 | 8,580,935 | ||||||
20,628,479 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.3% | ||||||||
American Tower Corp. | 101,300 | 6,643,254 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 3.0% | ||||||||
Broadcom Corp., Class A(1) | 675,600 | 24,726,960 | ||||||
Linear Technology Corp. | 1,089,300 | 35,631,003 | ||||||
60,357,963 | ||||||||
SOFTWARE — 3.0% | ||||||||
Adobe Systems, Inc.(1) | 546,400 | 18,337,184 | ||||||
Microsoft Corp. | 292,000 | 9,349,840 | ||||||
Oracle Corp. | 1,109,200 | 32,599,388 | ||||||
60,286,412 | ||||||||
SPECIALTY RETAIL — 2.8% | ||||||||
Limited Brands, Inc. | 222,600 | 11,063,220 | ||||||
TJX Cos., Inc. (The) | 1,076,800 | 44,913,328 | ||||||
55,976,548 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 3.5% | ||||||||
Coach, Inc. | 578,700 | $42,337,692 | ||||||
Fossil, Inc.(1) | 196,600 | 25,689,722 | ||||||
Tumi Holdings, Inc.(1) | 75,000 | 1,910,250 | ||||||
69,937,664 | ||||||||
TOBACCO — 2.5% | ||||||||
Philip Morris International, Inc. | 559,700 | 50,098,747 | ||||||
TOTAL COMMON STOCKS (Cost $1,276,561,996) | 1,987,364,105 | |||||||
Temporary Cash Investments — 1.1% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $9,706,828), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $9,516,850) | 9,516,811 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $6,063,688), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $5,948,027) | 5,948,007 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $7,957,489), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $7,795,384) | 7,795,362 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $23,260,180) | 23,260,180 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $1,299,822,176) | 2,010,624,285 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 1,225,963 | |||||||
TOTAL NET ASSETS — 100.0% | $2,011,850,248 |
Forward Foreign Currency Exchange Contracts | ||||||||||||||
Contracts to Buy | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
663,852 | CHF for USD | Credit Suisse AG | 5/31/12 | $731,616 | $(72 | ) | ||||||||
616,572 | CHF for USD | Credit Suisse AG | 5/31/12 | 679,509 | 316 | |||||||||
$1,411,125 | $244 |
(Value on Settlement Date $1,410,881)
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
21,481,315 | CHF for USD | Credit Suisse AG | 5/31/12 | $23,674,034 | $(22,710 | ) | ||||||||
17,333,158 | GBP for USD | Credit Suisse AG | 5/31/12 | 28,124,952 | (167,434 | ) | ||||||||
$51,798,986 | $(190,144 | ) |
(Value on Settlement Date $51,608,842)
9
Notes to Schedule of Investments
ADR = American Depositary Receipt
CHF = Swiss Franc
GBP = British Pound
USD = United States Dollar
(1) | Non-income producing. |
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $1,299,822,176) | $2,010,624,285 | |||
Foreign currency holdings, at value (cost of $639,774) | 650,721 | |||
Receivable for capital shares sold | 1,750,260 | |||
Unrealized gain on forward foreign currency exchange contracts | 316 | |||
Dividends and interest receivable | 1,434,646 | |||
2,014,460,228 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 10,187 | |||
Payable for capital shares redeemed | 761,214 | |||
Unrealized loss on forward foreign currency exchange contracts | 190,216 | |||
Accrued management fees | 1,638,625 | |||
Distribution and service fees payable | 9,738 | |||
2,609,980 | ||||
Net Assets | $2,011,850,248 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $1,439,658,843 | |||
Undistributed net investment income | 3,224,968 | |||
Accumulated net realized loss | (141,656,744 | ) | ||
Net unrealized appreciation | 710,623,181 | |||
$2,011,850,248 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $1,960,214,075 | 44,057,512 | $44.49 | |||
Institutional Class, $0.01 Par Value | $7,002,068 | 155,683 | $44.98 | |||
A Class, $0.01 Par Value | $41,156,751 | 938,331 | $43.86 | * | ||
C Class, $0.01 Par Value | $2,797,801 | 66,823 | $41.87 | |||
R Class, $0.01 Par Value | $679,553 | 15,469 | $43.93 |
* | Maximum offering price $46.54 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $40,642) | $12,402,540 | |||
Interest | 5,134 | |||
12,407,674 | ||||
Expenses: | ||||
Management fees | 9,286,516 | |||
Distribution and service fees: | ||||
A Class | 37,400 | |||
C Class | 6,195 | |||
R Class | 891 | |||
Directors’ fees and expenses | 29,111 | |||
Other expenses | 124 | |||
9,360,237 | ||||
Net investment income (loss) | 3,047,437 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 34,820,897 | |||
Foreign currency transactions | (79,703 | ) | ||
34,741,194 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 208,223,389 | |||
Translation of assets and liabilities in foreign currencies | (4,638 | ) | ||
208,218,751 | ||||
Net realized and unrealized gain (loss) | 242,959,945 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $246,007,382 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $3,047,437 | $4,688,472 | ||||||
Net realized gain (loss) | 34,741,194 | 39,129,701 | ||||||
Change in net unrealized appreciation (depreciation) | 208,218,751 | 138,891,678 | ||||||
Net increase (decrease) in net assets resulting from operations | 246,007,382 | 182,709,851 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (4,659,009 | ) | (5,930,534 | ) | ||||
Institutional Class | (23,035 | ) | (25,646 | ) | ||||
A Class | (7,931 | ) | (17,175 | ) | ||||
Decrease in net assets from distributions | (4,689,975 | ) | (5,973,355 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (25,520,828 | ) | (130,244,559 | ) | ||||
Net increase (decrease) in net assets | 215,796,579 | 46,491,937 | ||||||
Net Assets | ||||||||
Beginning of period | 1,796,053,669 | 1,749,561,732 | ||||||
End of period | $2,011,850,248 | $1,796,053,669 | ||||||
Undistributed net investment income | $3,224,968 | $4,867,506 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (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 investing primarily in stocks of larger-sized companies that management believes will increase in value over time.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. On October 21, 2011, all outstanding B Class shares were converted to A Class shares and the fund discontinued offering the B Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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 2008. 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 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, 2012 was 1.00% for the Investor Class, A Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay 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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $104,649,059 and $121,489,046, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||||||||
Sold | 1,128,551 | $47,830,473 | 1,326,866 | $51,400,404 | ||||||||||||
Issued in reinvestment of distributions | 117,261 | 4,458,282 | 150,928 | 5,679,445 | ||||||||||||
Redeemed | (2,297,900 | ) | (94,111,878 | ) | (4,831,149 | ) | (187,400,425 | ) | ||||||||
(1,052,088 | ) | (41,823,123 | ) | (3,353,355 | ) | (130,320,576 | ) | |||||||||
Institutional Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||||
Sold | 37,473 | 1,595,903 | 32,761 | 1,267,331 | ||||||||||||
Issued in reinvestment of distributions | 596 | 22,905 | 670 | 25,466 | ||||||||||||
Redeemed | (11,993 | ) | (495,153 | ) | (30,754 | ) | (1,223,056 | ) | ||||||||
26,076 | 1,123,655 | 2,677 | 69,741 | |||||||||||||
A Class/Shares Authorized | 75,000,000 | 75,000,000 | ||||||||||||||
Sold | 377,444 | 15,663,836 | 163,231 | 6,203,697 | ||||||||||||
Issued in reinvestment of distributions | 209 | 7,821 | 454 | 16,873 | ||||||||||||
Redeemed | (76,881 | ) | (3,107,358 | ) | (116,745 | ) | (4,454,011 | ) | ||||||||
300,772 | 12,564,299 | 46,940 | 1,766,559 | |||||||||||||
B Class/Shares Authorized | N/A | 25,000,000 | ||||||||||||||
Sold | 1,180 | 44,854 | ||||||||||||||
Redeemed | (53,880 | ) | (1,958,733 | ) | ||||||||||||
(52,700 | ) | (1,913,879 | ) | |||||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||
Sold | 53,245 | 2,132,400 | 9,157 | 319,498 | ||||||||||||
Redeemed | (1,886 | ) | (77,213 | ) | (5,253 | ) | (194,203 | ) | ||||||||
51,359 | 2,055,187 | 3,904 | 125,295 | |||||||||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 15,193 | 614,428 | 1,023 | 40,053 | ||||||||||||
Redeemed | (1,256 | ) | (55,274 | ) | (303 | ) | (11,752 | ) | ||||||||
13,937 | 559,154 | 720 | 28,301 | |||||||||||||
Net increase (decrease) | (659,944 | ) | $(25,520,828 | ) | (3,351,814 | ) | $(130,244,559 | ) |
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 | $1,861,347,242 | — | — | |||||||||
Foreign Common Stocks | 83,429,150 | $42,587,713 | — | |||||||||
Temporary Cash Investments | — | 23,260,180 | — | |||||||||
Total Value of Investment Securities | $1,944,776,392 | $65,847,893 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(189,900 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund participated in foreign currency risk derivative instruments during the period consistent with its exposure to foreign denominated securities.
The value of foreign currency risk derivative instruments as of April 30, 2012, is disclosed on the Statement of Assets and Liabilities as an asset of $316 in unrealized gain on forward foreign currency exchange contracts and as a liability of $190,216 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2012, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(78,182) in net realized gain (loss) on foreign currency transactions and $(9,369) 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.
18
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $1,303,172,570 | |||
Gross tax appreciation of investments | $724,840,120 | |||
Gross tax depreciation of investments | (17,388,405 | ) | ||
Net tax appreciation (depreciation) of investments | $707,451,715 |
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, 2011, the fund had accumulated capital losses of $(173,047,544), 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 $(152,558,490) and $(20,489,054) expire in 2017 and 2018, respectively. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
19
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Net Asset Value, Beginning of Period | Income From Investment Operations: | Distributions From: | Total Return(2) | Ratio to Average Net Assets of: | |||||||||
Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2012(3) | $39.14 | 0.07 | 5.38 | 5.45 | (0.10) | — | (0.10) | $44.49 | 13.98% | 1.00%(4) | 0.34%(4) | 6% | $1,960,214 |
2011 | $35.54 | 0.10 | 3.62 | 3.72 | (0.12) | — | (0.12) | $39.14 | 10.49% | 1.00% | 0.26% | 17% | $1,765,718 |
2010 | $30.58 | 0.11 | 5.01 | 5.12 | (0.16) | — | (0.16) | $35.54 | 16.78% | 1.01% | 0.34% | 35% | $1,722,138 |
2009 | $26.25 | 0.19 | 4.40 | 4.59 | (0.26) | — | (0.26) | $30.58 | 17.77% | 1.00% | 0.75% | 31% | $1,591,621 |
2008 | $45.58 | 0.07 | (16.10) | (16.03) | — | (3.30) | (3.30) | $26.25 | (37.71)% | 1.00% | 0.19% | 64% | $1,448,954 |
2007 | $36.22 | 0.04 | 10.06 | 10.10 | (0.16) | (0.58) | (0.74) | $45.58 | 28.37% | 1.00% | 0.11% | 79% | $2,550,254 |
Institutional Class | |||||||||||||
2012(3) | $39.60 | 0.11 | 5.45 | 5.56 | (0.18) | — | (0.18) | $44.98 | 14.11% | 0.80%(4) | 0.54%(4) | 6% | $7,002 |
2011 | $35.95 | 0.18 | 3.67 | 3.85 | (0.20) | — | (0.20) | $39.60 | 10.73% | 0.80% | 0.46% | 17% | $5,133 |
2010 | $30.94 | 0.18 | 5.06 | 5.24 | (0.23) | — | (0.23) | $35.95 | 17.02% | 0.81% | 0.54% | 35% | $4,563 |
2009 | $26.56 | 0.28 | 4.41 | 4.69 | (0.31) | — | (0.31) | $30.94 | 18.00% | 0.80% | 0.95% | 31% | $3,950 |
2008 | $45.98 | 0.15 | (16.27) | (16.12) | — | (3.30) | (3.30) | $26.56 | (37.60)% | 0.80% | 0.39% | 64% | $94,419 |
2007 | $36.53 | 0.12 | 10.15 | 10.27 | (0.24) | (0.58) | (0.82) | $45.98 | 28.63% | 0.80% | 0.31% | 79% | $168,441 |
20
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Net Asset Value, Beginning of Period | Income From Investment Operations: | Distributions From: | Total Return(2) | Ratio to Average Net Assets of: | |||||||||
Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class(5) | |||||||||||||
2012(3) | $38.54 | 0.01 | 5.32 | 5.33 | (0.01) | — | (0.01) | $43.86 | 13.84% | 1.25%(4) | 0.09%(4) | 6% | $41,157 |
2011 | $34.99 | —(6) | 3.58 | 3.58 | (0.03) | — | (0.03) | $38.54 | 10.23% | 1.25% | 0.01% | 17% | $24,573 |
2010 | $30.11 | 0.03 | 4.93 | 4.96 | (0.08) | — | (0.08) | $34.99 | 16.48% | 1.26% | 0.09% | 35% | $20,666 |
2009 | $25.85 | 0.13 | 4.33 | 4.46 | (0.20) | — | (0.20) | $30.11 | 17.47% | 1.25% | 0.50% | 31% | $19,824 |
2008 | $45.05 | (0.02) | (15.88) | (15.90) | — | (3.30) | (3.30) | $25.85 | (37.88)% | 1.25% | (0.06)% | 64% | $19,450 |
2007 | $35.80 | (0.09) | 9.99 | 9.90 | (0.07) | (0.58) | (0.65) | $45.05 | 28.07% | 1.25% | (0.14)% | 79% | $42,770 |
C Class | |||||||||||||
2012(3) | $36.92 | (0.15) | 5.10 | 4.95 | — | — | — | $41.87 | 13.41% | 2.00%(4) | (0.66)%(4) | 6% | $2,798 |
2011 | $33.74 | (0.28) | 3.46 | 3.18 | — | — | — | $36.92 | 9.43% | 2.00% | (0.74)% | 17% | $571 |
2010 | $29.19 | (0.20) | 4.75 | 4.55 | — | — | — | $33.74 | 15.63% | 2.01% | (0.66)% | 35% | $390 |
2009 | $25.05 | (0.06) | 4.22 | 4.16 | (0.02) | — | (0.02) | $29.19 | 16.58% | 2.00% | (0.25)% | 31% | $314 |
2008 | $44.07 | (0.29) | (15.43) | (15.72) | — | (3.30) | (3.30) | $25.05 | (38.34)% | 2.00% | (0.81)% | 64% | $394 |
2007 | $35.24 | (0.34) | 9.75 | 9.41 | — | (0.58) | (0.58) | $44.07 | 27.07% | 2.00% | (0.89)% | 79% | $1,001 |
R Class | |||||||||||||
2012(3) | $38.64 | (0.07) | 5.36 | 5.29 | — | — | — | $43.93 | 13.69% | 1.50%(4) | (0.16)%(4) | 6% | $680 |
2011 | $35.14 | (0.08) | 3.58 | 3.50 | — | — | — | $38.64 | 9.96% | 1.50% | (0.24)% | 17% | $59 |
2010 | $30.24 | (0.05) | 4.95 | 4.90 | — | — | — | $35.14 | 16.20% | 1.51% | (0.16)% | 35% | $29 |
2009 | $25.96 | 0.06 | 4.36 | 4.42 | (0.14) | — | (0.14) | $30.24 | 17.17% | 1.50% | 0.25% | 31% | $43 |
2008 | $45.33 | (0.11) | (15.96) | (16.07) | — | (3.30) | (3.30) | $25.96 | (38.03)% | 1.50% | (0.31)% | 64% | $32 |
2007 | $36.05 | (0.15) | 10.01 | 9.86 | — | (0.58) | (0.58) | $45.33 | 27.72% | 1.50% | (0.39)% | 79% | $32 |
21
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(6) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
22
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.
23
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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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75357 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 11 |
Statement of Operations | 12 |
Statement of Changes in Net Assets | 13 |
Notes to Financial Statements | 14 |
Financial Highlights | 20 |
Additional Information | 23 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCUX | 12.17% | 6.66% | 4.54% | 3.72% | 11.20% | 11/2/81 |
Russell 1000 Growth Index | — | 14.13% | 7.26% | 4.11% | 5.16% | 10.28%(2) | — |
S&P 500 Index | — | 12.77% | 4.76% | 1.01% | 4.71% | 11.25%(2) | — |
Institutional Class | TWUIX | 12.28% | 6.88% | 4.74% | 3.93% | 5.20% | 11/14/96 |
A Class(3) No sales charge* With sales charge* | TWUAX | 12.04% 5.59% | 6.39% 0.28% | 4.28% 3.05% | 3.46% 2.85% | 4.97% 4.58% | 10/2/96 |
C Class No sales charge* With sales charge* | TWCCX | 11.61% 10.61% | 5.58% 5.58% | 3.50% 3.50% | 2.69% 2.69% | 2.81% 2.81% | 10/29/01 |
R Class | AULRX | 11.90% | 6.13% | 4.02% | — | 4.44% | 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) | 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 | C Class | R Class |
0.99% | 0.79% | 1.24% | 1.99% | 1.49% |
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, 2012 | |
Top Ten Holdings | % of net assets |
Apple, Inc. | 9.6% |
Google, Inc., Class A | 4.3% |
Amazon.com, Inc. | 3.0% |
Philip Morris International, Inc. | 2.8% |
Exxon Mobil Corp. | 2.7% |
QUALCOMM, Inc. | 2.5% |
Express Scripts Holding Co. | 2.2% |
Gilead Sciences, Inc. | 2.2% |
Costco Wholesale Corp. | 2.2% |
Schlumberger Ltd. | 2.1% |
Top Five Industries | % of net assets |
Computers and Peripherals | 11.2% |
Internet Software and Services | 6.7% |
Software | 5.8% |
Oil, Gas and Consumable Fuels | 5.8% |
Machinery | 5.7% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 93.2% |
Foreign Common Stocks** | 6.4% |
Total Common Stocks | 99.6% |
Temporary Cash Investments | 0.4% |
Other Assets and Liabilities | —* |
* | Category is less than 0.05% of total net assets. |
** | 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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,121.70 | $5.22 | 0.99% |
Institutional Class | $1,000 | $1,122.80 | $4.17 | 0.79% |
A Class | $1,000 | $1,120.40 | $6.54 | 1.24% |
C Class | $1,000 | $1,116.10 | $10.47 | 1.99% |
R Class | $1,000 | $1,119.00 | $7.85 | 1.49% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.94 | $4.97 | 0.99% |
Institutional Class | $1,000 | $1,020.94 | $3.97 | 0.79% |
A Class | $1,000 | $1,018.70 | $6.22 | 1.24% |
C Class | $1,000 | $1,014.97 | $9.97 | 1.99% |
R Class | $1,000 | $1,017.45 | $7.47 | 1.49% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
Shares | Value | |||||||
Common Stocks — 99.6% | ||||||||
AEROSPACE AND DEFENSE — 1.6% | ||||||||
General Dynamics Corp. | 1,539,583 | $103,921,852 | ||||||
AUTO COMPONENTS — 0.4% | ||||||||
Gentex Corp. | 1,077,000 | 23,661,690 | ||||||
BEVERAGES — 1.1% | ||||||||
Coca-Cola Co. (The) | 949,000 | 72,427,680 | ||||||
BIOTECHNOLOGY — 4.0% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 615,000 | 55,546,800 | ||||||
Celgene Corp.(1) | 863,000 | 62,929,960 | ||||||
Gilead Sciences, Inc.(1) | 2,827,056 | 147,035,183 | ||||||
265,511,943 | ||||||||
CHEMICALS — 3.7% | ||||||||
Ecolab, Inc. | 1,034,167 | 65,866,096 | ||||||
Monsanto Co. | 1,550,000 | 118,079,000 | ||||||
Potash Corp. of Saskatchewan, Inc. | 1,411,000 | 59,939,280 | ||||||
243,884,376 | ||||||||
COMMUNICATIONS EQUIPMENT — 2.8% | ||||||||
Cisco Systems, Inc. | 1,036,000 | 20,875,400 | ||||||
QUALCOMM, Inc. | 2,538,000 | 162,025,920 | ||||||
182,901,320 | ||||||||
COMPUTERS AND PERIPHERALS — 11.2% | ||||||||
Apple, Inc.(1) | 1,085,000 | 633,900,400 | ||||||
EMC Corp.(1) | 3,843,000 | 108,411,030 | ||||||
742,311,430 | ||||||||
CONSUMER FINANCE — 0.8% | ||||||||
American Express Co. | 910,000 | 54,791,100 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 1.9% | ||||||||
CME Group, Inc. | 270,000 | 71,771,400 | ||||||
JPMorgan Chase & Co. | 1,282,000 | 55,100,360 | ||||||
126,871,760 | ||||||||
ELECTRICAL EQUIPMENT — 4.4% | ||||||||
ABB Ltd.(1) | 1,756,000 | 31,999,383 | ||||||
ABB Ltd. ADR(1) | 2,431,000 | 45,872,970 | ||||||
Cooper Industries plc | 1,070,000 | 66,949,900 | ||||||
Emerson Electric Co. | 2,221,000 | 116,691,340 | ||||||
Polypore International, Inc.(1) | 747,000 | 27,900,450 | ||||||
289,414,043 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 2.6% | ||||||||
Core Laboratories NV | 215,000 | 29,450,700 | ||||||
Schlumberger Ltd. | 1,911,000 | 141,681,540 | ||||||
171,132,240 | ||||||||
FOOD AND STAPLES RETAILING — 2.2% | ||||||||
Costco Wholesale Corp. | 1,612,000 | 142,130,040 | ||||||
FOOD PRODUCTS — 2.9% | ||||||||
Hershey Co. (The) | 864,000 | $57,896,640 | ||||||
Mead Johnson Nutrition Co. | 731,000 | 62,544,360 | ||||||
Nestle SA | 1,207,000 | 73,937,311 | ||||||
194,378,311 | ||||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 4.3% | ||||||||
HeartWare International, Inc.(1) | 146,000 | 11,382,160 | ||||||
Intuitive Surgical, Inc.(1) | 244,000 | 141,080,800 | ||||||
MAKO Surgical Corp.(1) | 685,000 | 28,297,350 | ||||||
St. Jude Medical, Inc. | 1,492,000 | 57,770,240 | ||||||
Varian Medical Systems, Inc.(1) | 684,000 | 43,379,280 | ||||||
281,909,830 | ||||||||
HEALTH CARE PROVIDERS AND SERVICES — 3.6% | ||||||||
Express Scripts Holding Co.(1) | 2,643,000 | 147,452,970 | ||||||
UnitedHealth Group, Inc. | 1,600,000 | 89,840,000 | ||||||
237,292,970 | ||||||||
HOTELS, RESTAURANTS AND LEISURE — 4.0% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 82,000 | 33,960,300 | ||||||
McDonald’s Corp. | 1,179,000 | 114,893,550 | ||||||
Starbucks Corp. | 2,064,000 | 118,432,320 | ||||||
267,286,170 | ||||||||
HOUSEHOLD PRODUCTS — 0.6% | ||||||||
Colgate-Palmolive Co. | 391,000 | 38,685,540 | ||||||
INSURANCE — 1.1% | ||||||||
MetLife, Inc. | 1,967,000 | 70,871,010 | ||||||
INTERNET AND CATALOG RETAIL — 3.8% | ||||||||
Amazon.com, Inc.(1) | 846,000 | 196,187,400 | ||||||
Netflix, Inc.(1) | 648,000 | 51,930,720 | ||||||
248,118,120 | ||||||||
INTERNET SOFTWARE AND SERVICES — 6.7% | ||||||||
Baidu, Inc. ADR(1) | 505,000 | 67,013,500 | ||||||
Google, Inc., Class A(1) | 469,000 | 283,852,870 | ||||||
LinkedIn Corp., Class A(1) | 364,000 | 39,475,800 | ||||||
Tencent Holdings Ltd. | 1,649,000 | 51,816,514 | ||||||
442,158,684 | ||||||||
IT SERVICES — 2.8% | ||||||||
MasterCard, Inc., Class A | 301,000 | 136,133,270 | ||||||
Teradata Corp.(1) | 748,000 | 52,195,440 | ||||||
188,328,710 | ||||||||
LEISURE EQUIPMENT AND PRODUCTS — 0.8% | ||||||||
Hasbro, Inc. | 1,363,000 | 50,076,620 |
8
Shares | Value | |||||||
MACHINERY — 5.7% | ||||||||
Cummins, Inc. | 523,000 | $60,579,090 | ||||||
Donaldson Co., Inc. | 1,026,000 | 35,561,160 | ||||||
Joy Global, Inc. | 1,343,000 | 95,044,110 | ||||||
Parker-Hannifin Corp. | 1,062,000 | 93,126,780 | ||||||
WABCO Holdings, Inc.(1) | 940,000 | 59,248,200 | ||||||
Wabtec Corp. | 441,000 | 34,300,980 | ||||||
377,860,320 | ||||||||
METALS AND MINING — 1.5% | ||||||||
BHP Billiton Ltd. ADR | 479,000 | 35,589,700 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 1,713,000 | 65,607,900 | ||||||
101,197,600 | ||||||||
OIL, GAS AND CONSUMABLE FUELS — 5.8% | ||||||||
Cimarex Energy Co. | 538,000 | 37,181,180 | ||||||
EOG Resources, Inc. | 356,000 | 39,092,360 | ||||||
Exxon Mobil Corp. | 2,060,000 | 177,860,400 | ||||||
Occidental Petroleum Corp. | 1,071,000 | 97,696,620 | ||||||
QEP Resources, Inc. | 953,000 | 29,361,930 | ||||||
381,192,490 | ||||||||
PERSONAL PRODUCTS — 1.6% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 1,652,000 | 107,958,200 | ||||||
PHARMACEUTICALS — 0.4% | ||||||||
Teva Pharmaceutical Industries Ltd. ADR | 619,000 | 28,313,060 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 2.9% | ||||||||
Altera Corp. | 1,905,000 | 67,760,850 | ||||||
Linear Technology Corp. | 2,369,000 | 77,489,990 | ||||||
Microchip Technology, Inc. | 1,263,000 | 44,634,420 | ||||||
189,885,260 | ||||||||
SOFTWARE — 5.8% | ||||||||
Adobe Systems, Inc.(1) | 59,000 | 1,980,040 | ||||||
Electronic Arts, Inc.(1) | 4,625,000 | 71,132,500 | ||||||
Microsoft Corp. | 934,000 | 29,906,680 | ||||||
NetSuite, Inc.(1) | 403,000 | 17,885,140 | ||||||
Oracle Corp. | 3,792,000 | 111,446,880 | ||||||
Salesforce.com, Inc.(1) | 539,000 | 83,938,470 | ||||||
VMware, Inc., Class A(1) | 583,000 | 65,132,760 | ||||||
381,422,470 | ||||||||
SPECIALTY RETAIL — 4.1% | ||||||||
O’Reilly Automotive, Inc.(1) | 763,000 | $80,465,980 | ||||||
Tiffany & Co. | 1,155,000 | 79,071,300 | ||||||
TJX Cos., Inc. (The) | 2,616,000 | 109,113,360 | ||||||
268,650,640 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.7% | ||||||||
NIKE, Inc., Class B | 1,010,000 | 112,988,700 | ||||||
TOBACCO — 2.8% | ||||||||
Philip Morris International, Inc. | 2,055,000 | 183,943,050 | ||||||
TOTAL COMMON STOCKS (Cost $3,775,247,954) | 6,571,477,229 | |||||||
Temporary Cash Investments — 0.4% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $11,678,288), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $11,449,727) | 11,449,679 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $7,295,225), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $7,156,073) | 7,156,049 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $9,573,658), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $9,378,629) | 9,378,603 | |||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $27,984,331) | 27,984,331 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $3,803,232,285) | 6,599,461,560 | |||||||
OTHER ASSETS AND LIABILITIES† | 596,154 | |||||||
TOTAL NET ASSETS — 100.0% | $6,600,057,714 |
9
Forward Foreign Currency Exchange Contracts | ||||||||||||||
Contracts to Buy | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
3,800,844 | CHF for USD | Credit Suisse AG | 5/31/12 | $4,188,818 | $1,944 |
(Value on Settlement Date $4,186,874)
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | ||||||||||
121,565,131 | CHF for USD | Credit Suisse AG | 5/31/12 | $133,973,967 | $(128,516) |
(Value on Settlement Date $133,845,451)
Notes to Schedule of Investments
ADR = American Depositary Receipt
CHF = Swiss Franc
USD = United States Dollar
† Category is less than 0.05% of total net assets.
(1) Non-income producing.
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $3,803,232,285) | $6,599,461,560 | |||
Foreign currency holdings, at value (cost of $1,812,771) | 1,815,612 | |||
Receivable for investments sold | 24,118,132 | |||
Receivable for capital shares sold | 1,562,903 | |||
Unrealized gain on forward foreign currency exchange contracts | 1,944 | |||
Dividends and interest receivable | 5,937,544 | |||
6,632,897,695 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 17,995 | |||
Payable for investments purchased | 14,557,633 | |||
Payable for capital shares redeemed | 12,765,120 | |||
Unrealized loss on forward foreign currency exchange contracts | 128,516 | |||
Accrued management fees | 5,353,924 | |||
Distribution and service fees payable | 16,793 | |||
32,839,981 | ||||
Net Assets | $6,600,057,714 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $4,270,791,205 | |||
Undistributed net investment income | 9,204,000 | |||
Accumulated net realized loss | (476,181,371 | ) | ||
Net unrealized appreciation | 2,796,243,880 | |||
$6,600,057,714 |
Net assets | Shares outstanding | Net asset value per share | ||||
Investor Class, $0.01 Par Value | $6,463,231,988 | 246,037,356 | $26.27 | |||
Institutional Class, $0.01 Par Value | $63,302,047 | 2,354,076 | $26.89 | |||
A Class, $0.01 Par Value | $67,166,978 | 2,635,179 | $25.49 | * | ||
C Class, $0.01 Par Value | $1,204,941 | 51,353 | $23.46 | |||
R Class, $0.01 Par Value | $5,151,760 | 203,720 | $25.29 |
* | Maximum offering price $27.05 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $535,240) | $40,196,669 | |||
Interest | 10,364 | |||
40,207,033 | ||||
Expenses: | ||||
Management fees | 30,858,120 | |||
Distribution and service fees: | ||||
A Class | 78,891 | |||
C Class | 4,193 | |||
R Class | 11,482 | |||
Directors’ fees and expenses | 97,824 | |||
Other expenses | 75 | |||
31,050,585 | ||||
Net investment income (loss) | 9,156,448 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 59,307,463 | |||
Foreign currency transactions | 3,326,578 | |||
62,634,041 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 654,712,141 | |||
Translation of assets and liabilities in foreign currencies | (120,562 | ) | ||
654,591,579 | ||||
Net realized and unrealized gain (loss) | 717,225,620 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $726,382,068 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | ||||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | ||||||
Operations | ||||||||
Net investment income (loss) | $9,156,448 | $9,948,775 | ||||||
Net realized gain (loss) | 62,634,041 | 292,495,282 | ||||||
Change in net unrealized appreciation (depreciation) | 654,591,579 | 328,587,673 | ||||||
Net increase (decrease) in net assets resulting from operations | 726,382,068 | 631,031,730 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | — | (12,309,961 | ) | |||||
Institutional Class | — | (189,254 | ) | |||||
Decrease in net assets from distributions | — | (12,499,215 | ) | |||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (231,202,340 | ) | (537,865,157 | ) | ||||
Net increase (decrease) in net assets | 495,179,728 | 80,667,358 | ||||||
Net Assets | ||||||||
Beginning of period | 6,104,877,986 | 6,024,210,628 | ||||||
End of period | $6,600,057,714 | $6,104,877,986 | ||||||
Undistributed net investment income | $9,204,000 | $47,552 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (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 stocks of larger-sized companies that management believes will increase in value over time.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee. On October 21, 2011, all outstanding B Class shares were converted to A Class shares and the fund discontinued offering the B Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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 2008. 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 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, 2012 was 0.99% for the Investor Class, A Class, C Class and R Class and 0.79% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay 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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $216,562,778 and $430,799,268, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 3,500,000,000 | 3,500,000,000 | ||||||||||||||
Sold | 4,106,670 | $101,128,382 | 7,967,748 | $184,093,884 | ||||||||||||
Issued in reinvestment of distributions | — | — | 529,802 | 11,930,837 | ||||||||||||
Redeemed | (13,659,449 | ) | (334,789,478 | ) | (31,294,147 | ) | (725,130,132 | ) | ||||||||
(9,552,779 | ) | (233,661,096 | ) | (22,796,597 | ) | (529,105,411 | ) | |||||||||
Institutional Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||||
Sold | 394,739 | 9,989,838 | 651,707 | 15,348,582 | ||||||||||||
Issued in reinvestment of distributions | — | — | 8,231 | 189,232 | ||||||||||||
Redeemed | (243,587 | ) | (6,119,715 | ) | (567,827 | ) | (13,398,417 | ) | ||||||||
151,152 | 3,870,123 | 92,111 | 2,139,397 | |||||||||||||
A Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||||||||
Sold | 351,948 | 8,500,522 | 1,456,808 | 33,705,237 | ||||||||||||
Redeemed | (455,607 | ) | (10,804,649 | ) | (2,020,737 | ) | (44,830,105 | ) | ||||||||
(103,659 | ) | (2,304,127 | ) | (563,929 | ) | (11,124,868 | ) | |||||||||
B Class/Shares Authorized | N/A | 50,000,000 | ||||||||||||||
Sold | 929 | 19,516 | ||||||||||||||
Redeemed | (5,900 | ) | (131,961 | ) | ||||||||||||
(4,971 | ) | (112,445 | ) | |||||||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 20,087 | 454,009 | 6,859 | 146,359 | ||||||||||||
Redeemed | (989 | ) | (21,793 | ) | (15,725 | ) | (324,172 | ) | ||||||||
19,098 | 432,216 | (8,866 | ) | (177,813 | ) | |||||||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||
Sold | 50,328 | 1,226,281 | 78,707 | 1,717,632 | ||||||||||||
Redeemed | (31,266 | ) | (765,737 | ) | (52,771 | ) | (1,201,649 | ) | ||||||||
19,062 | 460,544 | 25,936 | 515,983 | |||||||||||||
Net increase (decrease) | (9,467,126 | ) | $(231,202,340 | ) | (23,256,316 | ) | $(537,865,157 | ) |
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 | $6,147,544,811 | — | — | |||||||||
Foreign Common Stocks | 266,179,210 | $157,753,208 | — | |||||||||
Temporary Cash Investments | — | 27,984,331 | — | |||||||||
Total Value of Investment Securities | $6,413,724,021 | $185,737,539 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(126,572 | ) | — |
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 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, 2012, is disclosed on the Statement of Assets and Liabilities as an asset of $1,944 in unrealized gain on forward foreign currency exchange contracts and as a liability of $128,516 in unrealized loss on forward foreign currency exchange contracts. For the six months ended April 30, 2012, the effect of foreign currency risk derivative instruments on the Statement of Operations was $3,314,238 in net realized gain (loss) on foreign currency transactions and $(79,020) 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.
18
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $3,859,718,924 | |||
Gross tax appreciation of investments | $2,853,399,589 | |||
Gross tax depreciation of investments | (113,656,953 | ) | ||
Net tax appreciation (depreciation) of investments | $2,739,742,636 |
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, 2011, the fund had accumulated capital losses of $(483,235,114), 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. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
19
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||||
2012(3) | $23.42 | 0.04 | 2.81 | 2.85 | — | — | — | $26.27 | 12.17% | 0.99%(4) | 0.30%(4) | 3% | $6,463,232 |
2011 | $21.22 | 0.04 | 2.20 | 2.24 | (0.04) | — | (0.04) | $23.42 | 10.59% | 0.99% | 0.16% | 13% | $5,984,972 |
2010 | $17.82 | 0.05 | 3.44 | 3.49 | (0.09) | — | (0.09) | $21.22 | 19.63% | 1.00% | 0.25% | 24% | $5,906,158 |
2009 | $15.67 | 0.11 | 2.12 | 2.23 | (0.08) | — | (0.08) | $17.82 | 14.35% | 1.00% | 0.69% | 53% | $5,435,051 |
2008 | $33.48 | 0.08 | (9.95) | (9.87) | — | (7.94) | (7.94) | $15.67 | (38.02)% | 0.99% | 0.36% | 152% | $5,275,836 |
2007 | $28.55 | (0.01) | 6.95 | 6.94 | — | (2.01) | (2.01) | $33.48 | 25.89% | 0.99% | (0.04)% | 93% | $10,065,759 |
Institutional Class | |||||||||||||
2012(3) | $23.95 | 0.06 | 2.88 | 2.94 | — | — | — | $26.89 | 12.28% | 0.79%(4) | 0.50%(4) | 3% | $63,302 |
2011 | $21.69 | 0.08 | 2.27 | 2.35 | (0.09) | — | (0.09) | $23.95 | 10.85% | 0.79% | 0.36% | 13% | $52,751 |
2010 | $18.22 | 0.09 | 3.51 | 3.60 | (0.13) | — | (0.13) | $21.69 | 19.81% | 0.80% | 0.45% | 24% | $45,791 |
2009 | $16.02 | 0.14 | 2.17 | 2.31 | (0.11) | — | (0.11) | $18.22 | 14.58% | 0.80% | 0.89% | 53% | $73,933 |
2008 | $33.98 | 0.15 | (10.17) | (10.02) | — | (7.94) | (7.94) | $16.02 | (37.89)% | 0.79% | 0.56% | 152% | $76,339 |
2007 | $28.90 | 0.05 | 7.04 | 7.09 | — | (2.01) | (2.01) | $33.98 | 26.14% | 0.79% | 0.16% | 93% | $325,035 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
A Class(5) | |||||||||||||
2012(3) | $22.75 | 0.01 | 2.73 | 2.74 | — | — | — | $25.49 | 12.04% | 1.24%(4) | 0.05%(4) | 3% | $67,167 |
2011 | $20.62 | (0.02) | 2.15 | 2.13 | — | — | — | $22.75 | 10.33% | 1.24% | (0.09)% | 13% | $62,304 |
2010 | $17.33 | —(6) | 3.33 | 3.33 | (0.04) | — | (0.04) | $20.62 | 19.24% | 1.25% | 0.00%(7) | 24% | $68,109 |
2009 | $15.23 | 0.07 | 2.07 | 2.14 | (0.04) | — | (0.04) | $17.33 | 14.14% | 1.25% | 0.44% | 53% | $77,484 |
2008 | $32.83 | 0.03 | (9.69) | (9.66) | — | (7.94) | (7.94) | $15.23 | (38.19)% | 1.24% | 0.11% | 152% | $85,723 |
2007 | $28.11 | (0.08) | 6.81 | 6.73 | — | (2.01) | (2.01) | $32.83 | 25.56% | 1.24% | (0.29)% | 93% | $235,217 |
C Class | |||||||||||||
2012(3) | $21.02 | (0.08) | 2.52 | 2.44 | — | — | — | $23.46 | 11.61% | 1.99%(4) | (0.70)%(4) | 3% | $1,205 |
2011 | $19.20 | (0.17) | 1.99 | 1.82 | — | — | — | $21.02 | 9.48% | 1.99% | (0.84)% | 13% | $678 |
2010 | $16.22 | (0.13) | 3.11 | 2.98 | — | — | — | $19.20 | 18.45% | 2.00% | (0.75)% | 24% | $789 |
2009 | $14.32 | (0.04) | 1.94 | 1.90 | — | — | — | $16.22 | 13.20% | 2.00% | (0.31)% | 53% | $884 |
2008 | $31.54 | (0.13) | (9.15) | (9.28) | — | (7.94) | (7.94) | $14.32 | (38.63)% | 1.99% | (0.64)% | 152% | $891 |
2007 | $27.26 | (0.29) | 6.58 | 6.29 | — | (2.01) | (2.01) | $31.54 | 24.64% | 1.99% | (1.04)% | 93% | $2,129 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
R Class | |||||||||||||
2012(3) | $22.60 | (0.02) | 2.71 | 2.69 | — | — | — | $25.29 | 11.90% | 1.49%(4) | (0.20)%(4) | 3% | $5,152 |
2011 | $20.54 | (0.08) | 2.14 | 2.06 | — | — | — | $22.60 | 10.03% | 1.49% | (0.34)% | 13% | $4,173 |
2010 | $17.26 | (0.05) | 3.33 | 3.28 | — | — | — | $20.54 | 19.00% | 1.50% | (0.25)% | 24% | $3,260 |
2009 | $15.17 | 0.03 | 2.07 | 2.10 | (0.01) | — | (0.01) | $17.26 | 13.84% | 1.50% | 0.19% | 53% | $3,056 |
2008 | $32.80 | (0.03) | (9.66) | (9.69) | — | (7.94) | (7.94) | $15.17 | (38.35)% | 1.49% | (0.14)% | 152% | $3,276 |
2007 | $28.15 | (0.15) | 6.81 | 6.66 | — | (2.01) | (2.01) | $32.80 | 25.26% | 1.49% | (0.54)% | 93% | $5,971 |
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(6) | Per-share amount was less than $0.005. |
(7) | Ratio was less than 0.005%. |
See Notes to Financial Statements.
22
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.
23
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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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75364 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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 | 23 |
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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-12-006716/prattsignature.jpg)
Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWCVX | 12.66% | -0.82% | 0.86% | 6.04% | 9.16% | 11/25/83 |
Russell Midcap Growth Index | — | 12.26% | 0.78% | 3.55% | 7.50% | N/A(2) | — |
Institutional Class | TWVIX | 12.77% | -0.58% | 1.07% | 6.25% | 5.52% | 11/14/96 |
A Class(3) No sales charge* With sales charge* | TWVAX | 12.53% 6.06% | -1.02% -6.71% | 0.62% -0.56% | 5.78% 5.15% | 4.55% 4.15% | 10/2/96 |
C Class No sales charge* With sales charge* | AVNCX | 12.11% 11.11% | -1.77% -1.77% | — — | — — | 12.64% 12.64% | 3/1/10 |
R Class | AVTRX | 12.36% | -1.29% | 0.37% | — | 3.61% | 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 |
1.03% | 0.83% | 1.28% | 2.03% | 1.53% |
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.
4
APRIL 30, 2012 | |
Top Ten Holdings | % of net assets |
Alliance Data Systems Corp. | 2.8% |
SXC Health Solutions Corp. | 2.4% |
National Oilwell Varco, Inc. | 2.3% |
Teradata Corp. | 2.1% |
Whole Foods Market, Inc. | 2.0% |
SBA Communications Corp., Class A | 2.0% |
Kansas City Southern | 1.9% |
TransDigm Group, Inc. | 1.8% |
PetSmart, Inc. | 1.8% |
O’Reilly Automotive, Inc. | 1.8% |
Top Five Industries | % of net assets |
Specialty Retail | 8.0% |
IT Services | 5.3% |
Energy Equipment and Services | 5.1% |
Software | 5.0% |
Chemicals | 4.8% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 89.2% |
Foreign Common Stocks* | 9.6% |
Total Common Stocks | 98.8% |
Temporary Cash Investments | 1.0% |
Other Assets and Liabilities | 0.2% |
*Includes depositary shares, dual listed securities and foreign ordinary shares. |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 – 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,126.60 | $5.29 | 1.00% |
Institutional Class | $1,000 | $1,127.70 | $4.23 | 0.80% |
A Class | $1,000 | $1,125.30 | $6.61 | 1.25% |
C Class | $1,000 | $1,121.10 | $10.55 | 2.00% |
R Class | $1,000 | $1,123.60 | $7.92 | 1.50% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.89 | $5.02 | 1.00% |
Institutional Class | $1,000 | $1,020.89 | $4.02 | 0.80% |
A Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
C Class | $1,000 | $1,014.92 | $10.02 | 2.00% |
R Class | $1,000 | $1,017.40 | $7.52 | 1.50% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
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APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 98.8% | ||||||||
AEROSPACE AND DEFENSE — 4.1% | ||||||||
BE Aerospace, Inc.(1) | 502,000 | $23,609,060 | ||||||
Spirit Aerosystems Holdings, Inc. Class A(1) | 416,000 | 10,400,000 | ||||||
TransDigm Group, Inc.(1) | 216,000 | 27,241,920 | ||||||
61,250,980 | ||||||||
AUTO COMPONENTS — 1.6% | ||||||||
BorgWarner, Inc.(1) | 212,000 | 16,756,480 | ||||||
Delphi Automotive plc(1) | 229,000 | 7,028,010 | ||||||
23,784,490 | ||||||||
BEVERAGES — 0.5% | ||||||||
Monster Beverage Corp.(1) | 108,000 | 7,015,680 | ||||||
BIOTECHNOLOGY — 2.2% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 278,000 | 25,108,960 | ||||||
Cepheid, Inc.(1) | 196,000 | 7,528,360 | ||||||
32,637,320 | ||||||||
BUILDING PRODUCTS — 0.5% | ||||||||
Fortune Brands Home & Security, Inc.(1) | 350,000 | 7,959,000 | ||||||
CAPITAL MARKETS — 2.1% | ||||||||
Affiliated Managers Group, Inc.(1) | 118,000 | 13,407,160 | ||||||
Jefferies Group, Inc. | 445,000 | 7,088,850 | ||||||
KKR & Co. LP | 806,000 | 11,380,720 | ||||||
31,876,730 | ||||||||
CHEMICALS — 4.8% | ||||||||
Airgas, Inc. | 243,000 | 22,268,520 | ||||||
Albemarle Corp. | 228,000 | 14,888,400 | ||||||
Celanese Corp. | 142,000 | 6,881,320 | ||||||
Eastman Chemical Co. | 111,000 | 5,990,670 | ||||||
FMC Corp. | 126,000 | 13,916,700 | ||||||
Rockwood Holdings, Inc.(1) | 138,000 | 7,636,920 | ||||||
71,582,530 | ||||||||
COMMERCIAL BANKS — 1.0% | ||||||||
Comerica, Inc. | 235,000 | 7,524,700 | ||||||
East West Bancorp., Inc. | 329,000 | 7,491,330 | ||||||
15,016,030 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 2.0% | ||||||||
Clean Harbors, Inc.(1) | 219,000 | 14,944,560 | ||||||
Stericycle, Inc.(1) | 169,000 | 14,635,400 | ||||||
29,579,960 | ||||||||
COMMUNICATIONS EQUIPMENT — 0.6% | ||||||||
F5 Networks, Inc.(1) | 64,000 | 8,571,520 | ||||||
COMPUTERS AND PERIPHERALS — 0.6% | ||||||||
Seagate Technology plc | 315,000 | 9,689,400 | ||||||
CONSTRUCTION AND ENGINEERING — 1.6% | ||||||||
Chicago Bridge & Iron Co. NV New York Shares | 226,000 | 10,038,920 | ||||||
KBR, Inc. | 220,000 | 7,449,200 | ||||||
Quanta Services, Inc.(1) | 327,000 | 7,233,240 | ||||||
24,721,360 | ||||||||
CONSUMER FINANCE — 1.2% | ||||||||
Discover Financial Services | 533,000 | 18,068,700 | ||||||
CONTAINERS AND PACKAGING — 0.7% | ||||||||
Rock-Tenn Co., Class A | 160,000 | 9,972,800 | ||||||
DIVERSIFIED FINANCIAL SERVICES — 0.6% | ||||||||
McGraw-Hill Cos., Inc. (The) | 172,000 | 8,457,240 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 1.3% | ||||||||
Trimble Navigation Ltd.(1) | 367,000 | 19,869,380 | ||||||
ENERGY EQUIPMENT AND SERVICES — 5.1% | ||||||||
Atwood Oceanics, Inc.(1) | 153,000 | 6,782,490 | ||||||
Core Laboratories NV | 89,000 | 12,191,220 | ||||||
National Oilwell Varco, Inc. | 447,000 | 33,864,720 | ||||||
Oceaneering International, Inc. | 238,000 | 12,287,940 | ||||||
Oil States International, Inc.(1) | 145,000 | 11,539,100 | ||||||
76,665,470 | ||||||||
FOOD AND STAPLES RETAILING — 2.0% | ||||||||
Whole Foods Market, Inc. | 360,000 | 29,905,200 | ||||||
FOOD PRODUCTS — 2.1% | ||||||||
McCormick & Co., Inc. | 135,000 | 7,547,850 | ||||||
Mead Johnson Nutrition Co. | 285,000 | 24,384,600 | ||||||
31,932,450 | ||||||||
GAS UTILITIES — 0.8% | ||||||||
ONEOK, Inc. | 133,000 | 11,423,370 | ||||||
HEALTH CARE EQUIPMENT AND SUPPLIES — 2.5% | ||||||||
Cooper Cos., Inc. (The) | 88,000 | 7,758,960 | ||||||
Intuitive Surgical, Inc.(1) | 10,000 | 5,782,000 | ||||||
MAKO Surgical Corp.(1) | 243,000 | 10,038,330 | ||||||
Mettler-Toledo International, Inc.(1) | 82,000 | 14,704,240 | ||||||
�� | 38,283,530 | |||||||
HEALTH CARE PROVIDERS AND SERVICES — 1.0% | ||||||||
Catalyst Health Solutions, Inc.(1) | 100,000 | 8,637,000 | ||||||
Centene Corp.(1) | 151,000 | 5,978,090 | ||||||
14,615,090 | ||||||||
HEALTH CARE TECHNOLOGY — 2.4% | ||||||||
SXC Health Solutions Corp.(1) | 406,000 | 36,775,480 | ||||||
HOTELS, RESTAURANTS AND LEISURE — 4.6% | ||||||||
Bally Technologies, Inc.(1) | 190,000 | 9,224,500 | ||||||
Chipotle Mexican Grill, Inc.(1) | 49,000 | 20,293,350 |
8
Shares | Value | |||||||
Domino’s Pizza, Inc. | 180,000 | $6,805,800 |
Las Vegas Sands Corp. | 200,000 | 11,098,000 | ||||||
Panera Bread Co., Class A(1) | 69,000 | 10,896,480 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. | 189,000 | 11,188,800 | ||||||
69,506,930 | ||||||||
HOUSEHOLD DURABLES — 0.6% | ||||||||
Toll Brothers, Inc.(1) | 380,000 | 9,652,000 | ||||||
HOUSEHOLD PRODUCTS — 1.0% | ||||||||
Church & Dwight Co., Inc. | 291,000 | 14,782,800 | ||||||
INTERNET AND CATALOG RETAIL — 1.4% | ||||||||
priceline.com, Inc.(1) | 28,000 | 21,302,960 | ||||||
INTERNET SOFTWARE AND SERVICES — 2.4% | ||||||||
Baidu, Inc. ADR(1) | 135,000 | 17,914,500 | ||||||
Rackspace Hosting, Inc.(1) | 314,000 | 18,240,260 | ||||||
36,154,760 | ||||||||
IT SERVICES — 5.3% | ||||||||
Alliance Data Systems Corp.(1) | 327,000 | 42,016,230 | ||||||
Cognizant Technology Solutions Corp., Class A(1) | 99,000 | 7,258,680 | ||||||
Teradata Corp.(1) | 446,000 | 31,121,880 | ||||||
80,396,790 | ||||||||
MACHINERY — 3.6% | ||||||||
Chart Industries, Inc.(1) | 193,000 | 14,750,990 | ||||||
Joy Global, Inc. | 237,000 | 16,772,490 | ||||||
Terex Corp.(1) | 348,000 | 7,878,720 | ||||||
Titan International, Inc. | 279,000 | 8,060,310 | ||||||
Trinity Industries, Inc. | 212,000 | 6,275,200 | ||||||
53,737,710 | ||||||||
MARINE — 0.8% | ||||||||
Kirby Corp.(1) | 172,000 | 11,415,640 | ||||||
MEDIA — 1.4% | ||||||||
CBS Corp., Class B | 657,000 | 21,910,950 | ||||||
METALS AND MINING — 1.7% | ||||||||
Carpenter Technology Corp. | 234,000 | 13,024,440 | ||||||
Cliffs Natural Resources, Inc. | 200,000 | 12,452,000 | ||||||
25,476,440 | ||||||||
MULTILINE RETAIL — 1.6% | ||||||||
Dollar Tree, Inc.(1) | 237,000 | 24,093,420 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 4.3% | ||||||||
Cabot Oil & Gas Corp. | 384,000 | 13,493,760 | ||||||
Concho Resources, Inc.(1) | 214,000 | 22,936,520 | ||||||
Kodiak Oil & Gas Corp.(1) | 819,000 | 7,248,150 | ||||||
Peabody Energy Corp. | 186,000 | 5,786,460 | ||||||
SandRidge Energy, Inc.(1) | 893,000 | 7,135,070 | ||||||
SM Energy Co. | 118,000 | 7,800,980 | ||||||
64,400,940 | ||||||||
PHARMACEUTICALS — 3.0% | ||||||||
Elan Corp. plc ADR(1) | 509,000 | 7,019,110 | ||||||
Perrigo Co. | 145,000 | 15,210,500 | ||||||
Questcor Pharmaceuticals, Inc.(1) | 256,000 | 11,494,400 | ||||||
Shire plc | 333,000 | 10,862,555 | ||||||
44,586,565 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.5% | ||||||||
Ventas, Inc. | 127,000 | 7,466,330 | ||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.8% | ||||||||
CBRE Group, Inc.(1) | 644,000 | 12,113,640 | ||||||
ROAD AND RAIL — 1.9% | ||||||||
Kansas City Southern | 375,000 | 28,882,500 | ||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 4.0% | ||||||||
ARM Holdings plc | 2,173,000 | 18,479,181 | ||||||
Avago Technologies Ltd. | 478,000 | 16,481,440 | ||||||
KLA-Tencor Corp. | 152,000 | 7,926,800 | ||||||
Xilinx, Inc. | 496,000 | 18,044,480 | ||||||
60,931,901 | ||||||||
SOFTWARE — 5.0% | ||||||||
Cerner Corp.(1) | 97,000 | 7,865,730 | ||||||
Check Point Software Technologies Ltd.(1) | 359,000 | 20,868,670 | ||||||
Citrix Systems, Inc.(1) | 289,000 | 24,741,290 | ||||||
NetSuite, Inc.(1) | 330,000 | 14,645,400 | ||||||
Sourcefire, Inc.(1) | 127,000 | 6,475,730 | ||||||
74,596,820 | ||||||||
SPECIALTY RETAIL — 8.0% | ||||||||
DSW, Inc., Class A | 176,000 | 9,901,760 | ||||||
GNC Holdings, Inc. Class A | 312,000 | 12,186,720 | ||||||
O’Reilly Automotive, Inc.(1) | 252,000 | 26,575,920 | ||||||
PetSmart, Inc. | 465,000 | 27,090,900 | ||||||
Tractor Supply Co. | 247,000 | 24,307,270 | ||||||
Ulta Salon Cosmetics & Fragrance, Inc. | 240,000 | 21,163,200 | ||||||
121,225,770 | ||||||||
TEXTILES, APPAREL AND LUXURY GOODS — 1.9% | ||||||||
Fossil, Inc.(1) | 56,000 | 7,317,520 | ||||||
Michael Kors Holdings Ltd.(1) | 301,000 | 13,746,670 | ||||||
VF Corp. | 54,000 | 8,210,700 | ||||||
29,274,890 | ||||||||
TRADING COMPANIES AND DISTRIBUTORS — 1.7% | ||||||||
Fastenal Co. | 155,000 | 7,257,100 | ||||||
United Rentals, Inc.(1) | 394,000 | 18,391,920 | ||||||
25,649,020 |
9
Shares | Value | |||||||
WIRELESS TELECOMMUNICATION SERVICES — 2.0% |
SBA Communications Corp., Class A(1) | 554,000 | $29,771,960 | ||||||
TOTAL COMMON STOCKS (Cost $1,052,850,157) | 1,486,984,446 | |||||||
Temporary Cash Investments — 1.0% | ||||||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% – 2.375%, 2/28/15 – 10/31/15, valued at $6,364,238), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $6,239,680) | 6,239,654 | |||||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $3,975,629), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $3,899,797) | 3,899,784 | |||||||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $5,217,291), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $5,111,008) | 5,110,994 | |||||||
SSgA U.S. Government Money Market Fund | 9,086 | 9,086 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $15,259,518) | 15,259,518 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $1,068,109,675) | 1,502,243,964 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 2,292,266 | |||||||
TOTAL NET ASSETS — 100.0% | $1,504,536,230 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Buy | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
574,020 | GBP for USD | Credit Suisse AG | 5/31/12 | $931,410 | $5,303 |
(Value on Settlement Date $926,107) | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
15,173,584 | GBP for USD | Credit Suisse AG | 5/31/12 | $24,620,805 | $(146,573) |
(Value on Settlement Date $24,474,232) |
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, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $1,068,109,675) | $1,502,243,964 | |||
Foreign currency holdings, at value (cost of $43,684) | 44,568 | |||
Receivable for investments sold | 12,431,001 | |||
Receivable for capital shares sold | 393,754 | |||
Unrealized gain on forward foreign currency exchange contracts | 5,303 | |||
Dividends and interest receivable | 972,732 | |||
1,516,091,322 | ||||
Liabilities | ||||
Payable for investments purchased | 8,393,608 | |||
Payable for capital shares redeemed | 1,775,686 | |||
Unrealized loss on forward foreign currency exchange contracts | 146,573 | |||
Accrued management fees | 1,208,907 | |||
Distribution and service fees payable | 30,318 | |||
11,555,092 | ||||
Net Assets | $1,504,536,230 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $1,222,924,637 | |||
Accumulated net investment loss | (2,482,328 | ) | ||
Accumulated net realized loss | (149,946,282 | ) | ||
Net unrealized appreciation | 434,040,203 | |||
$1,504,536,230 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $1,294,131,232 | 71,271,011 | $18.16 |
Institutional Class, $0.01 Par Value | $79,416,772 | 4,241,632 | $18.72 |
A Class, $0.01 Par Value | $113,987,332 | 6,509,239 | $17.51* |
C Class, $0.01 Par Value | $85,012 | 4,783 | $17.77 |
R Class, $0.01 Par Value | $16,915,882 | 964,296 | $17.54 |
*Maximum offering price $18.58 (net asset value divided by 0.9425). |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $9,273) | $4,672,669 | |||
Interest | 5,259 | |||
4,677,928 | ||||
Expenses: | ||||
Management fees | 7,177,210 | |||
Distribution and service fees: | ||||
A Class | 144,985 | |||
C Class | 417 | |||
R Class | 44,880 | |||
Directors’ fees and expenses | 25,069 | |||
Other expenses | 31 | |||
7,392,592 | ||||
Net investment income (loss) | (2,714,664 | ) | ||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 33,171,845 | |||
Futures contract transactions | (3,584,516 | ) | ||
Foreign currency transactions | 27,967 | |||
29,615,296 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | 134,554,622 | |||
Translation of assets and liabilities in foreign currencies | 70,074 | |||
134,624,696 | ||||
Net realized and unrealized gain (loss) | 164,239,992 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $161,525,328 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | |||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | |||||
Operations | |||||||
Net investment income (loss) | $(2,714,664 | ) | $(9,139,148 | ) | |||
Net realized gain (loss) | 29,615,296 | 342,241,037 | |||||
Change in net unrealized appreciation (depreciation) | 134,624,696 | (169,580,733 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 161,525,328 | 163,521,156 | |||||
Capital Share Transactions | |||||||
Net increase (decrease) in net assets from capital share transactions | (252,630,472 | ) | (695,555,495 | ) | |||
Net increase (decrease) in net assets | (91,105,144 | ) | (532,034,339 | ) | |||
Net Assets | |||||||
Beginning of period | 1,595,641,374 | 2,127,675,713 | |||||
End of period | $1,504,536,230 | $1,595,641,374 | |||||
Accumulated undistributed net investment income (loss) | $(2,482,328 | ) | $232,336 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (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. 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 stocks of medium-sized and smaller companies that management believes will increase in value over time.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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.
Business Development Companies — The fund may invest in securities of closed-end investment companies that have elected to be treated as a business development company under the 1940 Act. A business development company operates similar to an exchange-traded fund and represents a portfolio of securities. The fund may purchase a business development company to gain exposure to the securities in the underlying portfolio. The risks of owning a business development company generally reflect the risks of owning the underlying securities. Business development companies have expenses that reduce their value.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover futures contracts. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on futures contracts.
15
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 2008. 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.
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 1.00% for the Investor Class, A Class,
C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay 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, 2012 are detailed in the Statement of Operations.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund’s assets but are reflected in the return realized by the fund on its investment in the acquired funds.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc., 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, 13% of the shares of the fund. ACAAP does not invest in the fund for purposes of exercising management or control.
16
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $481,674,962 and $742,968,778, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | ||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Investor Class/Shares Authorized | 750,000,000 | 750,000,000 | |||||||||||||
Sold | 2,084,488 | $33,976,141 | 8,621,805 | $143,273,101 | |||||||||||
Redeemed | (15,745,208 | ) | (244,255,371 | ) | (39,205,210 | ) | (673,000,417 | ) | |||||||
(13,660,720 | ) | (210,279,230 | ) | (30,583,405 | ) | (529,727,316 | ) | ||||||||
Institutional Class/Shares Authorized | 80,000,000 | 80,000,000 | |||||||||||||
Sold | 413,544 | 6,939,459 | 1,888,308 | 31,910,361 | |||||||||||
Redeemed | (1,188,488 | ) | (20,665,407 | ) | (6,639,853 | ) | (114,083,570 | ) | |||||||
(774,944 | ) | (13,725,948 | ) | (4,751,545 | ) | (82,173,209 | ) | ||||||||
A Class/Shares Authorized | 310,000,000 | 310,000,000 | |||||||||||||
Sold | 533,700 | 8,564,760 | 2,133,309 | 34,631,696 | |||||||||||
Redeemed | (2,014,389 | ) | (32,304,715 | ) | (6,781,320 | ) | (109,933,117 | ) | |||||||
(1,480,689 | ) | (23,739,955 | ) | (4,648,011 | ) | (75,301,421 | ) | ||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | |||||||||||||
Sold | 222 | 3,659 | 3,649 | 62,747 | |||||||||||
Redeemed | (850 | ) | (14,298 | ) | (227 | ) | (3,470 | ) | |||||||
(628 | ) | (10,639 | ) | 3,422 | 59,277 | ||||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | |||||||||||||
Sold | 116,787 | 1,937,822 | 269,541 | 4,389,911 | |||||||||||
Redeemed | (415,004 | ) | (6,812,522 | ) | (805,128 | ) | (12,802,737 | ) | |||||||
(298,217 | ) | (4,874,700 | ) | (535,587 | ) | (8,412,826 | ) | ||||||||
Net increase (decrease) | (16,215,198 | ) | $(252,630,472 | ) | (40,515,126 | ) | $(695,555,495 | ) |
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.
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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 | |||||||||||
Domestic Common Stocks | $1,342,664,770 | — | — | ||||||||
Foreign Common Stocks | 114,977,940 | $29,341,736 | — | ||||||||
Temporary Cash Investments | 9,086 | 15,250,432 | — | ||||||||
Total Value of Investment Securities | $1,457,651,796 | $44,592,168 | — | ||||||||
Other Financial Instruments | |||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(141,270 | ) | — |
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 fund participated in foreign currency risk derivative instruments during the period consistent with its exposure to foreign denominated securities.
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Value of Derivative Instruments as of April 30, 2012 | |||||
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 | $5,303 | Unrealized loss on forward foreign currency exchange contracts | $146,573 | |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2012 | |||||
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 | $(3,584,516) | Change in net unrealized appreciation (depreciation) on futures contracts | — | |
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | 14,638 | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $86,733 | |
$(3,569,878) | $86,733 |
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $1,076,733,330 | |||
Gross tax appreciation of investments | $437,017,727 | |||
Gross tax depreciation of investments | (11,507,093 | ) | ||
Net tax appreciation (depreciation) of investments | $425,510,634 |
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, 2011, the fund had accumulated capital losses of $(168,621,419), 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. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||
2012(4) | $16.11 | (0.03) | 2.08 | 2.05 | — | $18.16 | 12.66% | 1.00%(5) | (0.36)%(5) | 33% | $1,294,131 |
2011 | $15.25 | (0.08) | 0.94 | 0.86 | — | $16.11 | 5.64% | 1.00% | (0.44)% | 90% | $1,368,299 |
2010 | $12.13 | (0.06) | 3.18 | 3.12 | — | $15.25 | 25.72% | 1.01% | (0.45)% | 132% | $1,761,319 |
2009 | $12.43 | (0.05) | (0.25) | (0.30) | — | $12.13 | (2.41)% | 1.00% | (0.48)% | 183% | $1,690,576 |
2008 | $24.24 | (0.11) | (9.61) | (9.72) | (2.09) | $12.43 | (43.58)% | 1.00% | (0.56)% | 167% | $1,800,788 |
2007 | $16.35 | (0.12) | 8.14 | 8.02 | (0.13) | $24.24 | 49.39% | 1.00% | (0.60)% | 121% | $2,920,908 |
Institutional Class | |||||||||||
2012(4) | $16.60 | (0.01) | 2.13 | 2.12 | — | $18.72 | 12.77% | 0.80%(5) | (0.16)%(5) | 33% | $79,417 |
2011 | $15.67 | (0.04) | 0.97 | 0.93 | — | $16.60 | 5.93% | 0.80% | (0.24)% | 90% | $83,261 |
2010 | $12.45 | (0.03) | 3.25 | 3.22 | — | $15.67 | 25.86% | 0.81% | (0.25)% | 132% | $153,112 |
2009 | $12.73 | (0.03) | (0.25) | (0.28) | — | $12.45 | (2.12)% | 0.80% | (0.28)% | 183% | $211,357 |
2008 | $24.72 | (0.07) | (9.83) | (9.90) | (2.09) | $12.73 | (43.50)% | 0.80% | (0.36)% | 167% | $238,727 |
2007 | $16.64 | (0.08) | 8.29 | 8.21 | (0.13) | $24.72 | 49.68% | 0.80% | (0.40)% | 121% | $254,528 |
A Class(6) | |||||||||||
2012(4) | $15.56 | (0.05) | 2.00 | 1.95 | — | $17.51 | 12.53% | 1.25%(5) | (0.61)%(5) | 33% | $113,987 |
2011 | $14.76 | (0.11) | 0.91 | 0.80 | — | $15.56 | 5.42% | 1.25% | (0.69)% | 90% | $124,296 |
2010 | $11.77 | (0.09) | 3.08 | 2.99 | — | $14.76 | 25.40% | 1.26% | (0.70)% | 132% | $186,529 |
2009 | $12.09 | (0.08) | (0.24) | (0.32) | — | $11.77 | (2.65)% | 1.25% | (0.73)% | 183% | $255,419 |
2008 | $23.69 | (0.15) | (9.36) | (9.51) | (2.09) | $12.09 | (43.72)% | 1.25% | (0.81)% | 167% | $257,057 |
2007 | $16.03 | (0.16) | 7.95 | 7.79 | (0.13) | $23.69 | 48.94% | 1.25% | (0.85)% | 121% | $380,555 |
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Realized Gains | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
C Class | |||||||||||
2012(4) | $15.85 | (0.11) | 2.03 | 1.92 | — | $17.77 | 12.11% | 2.00%(5) | (1.36)%(5) | 33% | $85 |
2011 | $15.15 | (0.25) | 0.95 | 0.70 | — | $15.85 | 4.62% | 2.00% | (1.44)% | 90% | $86 |
2010(7) | $13.73 | (0.14) | 1.56 | 1.42 | — | $15.15 | 10.34% | 2.01%(5) | (1.51)%(5) | 132%(8) | $30 |
R Class | |||||||||||
2012(4) | $15.60 | (0.07) | 2.01 | 1.94 | — | $17.54 | 12.36% | 1.50%(5) | (0.86)%(5) | 33% | $16,916 |
2011 | $14.84 | (0.16) | 0.92 | 0.76 | — | $15.60 | 5.19% | 1.50% | (0.94)% | 90% | $19,700 |
2010 | $11.87 | (0.13) | 3.10 | 2.97 | — | $14.84 | 25.02% | 1.51% | (0.95)% | 132% | $26,686 |
2009 | $12.22 | (0.12) | (0.23) | (0.35) | — | $11.87 | (2.86)% | 1.50% | (0.98)% | 183% | $22,618 |
2008 | $23.98 | (0.18) | (9.49) | (9.67) | (2.09) | $12.22 | (43.87)% | 1.50% | (1.06)% | 167% | $11,423 |
2007 | $16.25 | (0.21) | 8.07 | 7.86 | (0.13) | $23.98 | 48.71% | 1.50% | (1.10)% | 121% | $2,398 |
Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2012 (unaudited). |
(5) | Annualized. |
(6) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(7) | March 1, 2010 (commencement of sale) through October 31, 2010. |
(8) | 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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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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75366 1206
SEMIANNUAL REPORT APRIL 30, 2012
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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.
Dear Investor:
Thank you for reviewing our semiannual report for the six months ended April 30, 2012. This report offers a macroeconomic and 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 next annual report, dated October 31, 2012, will provide additional market perspective and commentary from our portfolio management team.
Macroeconomic and Financial Market Overview
Risk-reducing behavior by investors, which prevailed in August and September of 2011, switched to more of a risk-taking attitude during the fourth quarter of 2011 and the first quarter of 2012. Investment returns for the six months ended April 30, 2012, reflected rekindled confidence in the U.S. economic recovery and European debt crisis solutions. Improvements in the U.S. job and housing markets triggered optimism, particularly during the first five months of the period. Meanwhile, central banks around the world continued to bolster and maintain global financial market liquidity, especially in Europe.
As a result, U.S. stocks outpaced U.S. bonds for the reporting period. The S&P 500 Index surged ahead 12.77%, while its broad taxable bond market counterpart, the Barclays U.S. Aggregate Bond Index, advanced just 2.44%. U.S. Treasury returns (particularly for shorter-maturity Treasuries) were even lower than the broad bond market’s, as investors switched from Treasuries to higher-yielding bonds or other asset categories with more appreciation potential in stronger anticipated growth scenarios.
But the economic road ahead still has many possible bumps and potholes in it, reflected in April’s return to risk-reducing investment behavior. Europe, the Middle East, government budget deficits, and the U.S. presidential election could trigger more market instability. We believe strongly in adhering to a disciplined, diversified, long-term investment approach during volatile periods, and we appreciate your continued trust in us during these unsettled times.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Dear Fellow Shareholders,
The assets under management in American Century Investments’ funds grow through investors placing new assets in the funds and through market appreciation. Asset growth has been at near record levels over the past two calendar years as market movements were upward, the funds’ relative returns were generally favorable, and the distribution strategies implemented by fund management have been successful.
The board reviews fund performance and distribution strategies on a regular basis. Several years ago, the fund’s management team discussed with the board its plans to grow fund assets in the intermediary, institutional and international distribution channels. These distribution strategies have produced strong positive growth. The growth in the intermediary channel recognizes the funds’ strong relative investment performance and the desire of many shareholders to seek financial guidance. Investors in both the institutional and international channels appear to find the funds’ risk-based investment strategies attractive. The board continues to support fund management’s strategies to increase fund assets and will continue to work to provide the benefits of these gains to fund shareholders.
We continue to receive a steady flow of very thoughtful questions from shareholders. If there are issues that you would like the board to address please email me at dhpratt@fundboardchair.com. Thank you for your continued investment in American Century Investments funds.
Best regards,
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Don Pratt
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Total Returns as of April 30, 2012 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | AMVIX | 9.76% | 2.69% | -0.54% | 3.69% | 2.59% | 11/30/99 |
Russell 3000 Index | — | 12.74% | 3.40% | 1.25% | 5.17% | 2.63% | — |
Institutional Class | AVDIX | 9.78% | 2.99% | -0.33% | 3.89% | 1.19% | 8/1/00 |
(1) | Total returns for periods less than one year are not annualized. |
Total Annual Fund Operating Expenses | |
Investor Class | Institutional Class |
1.25% | 1.05% |
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.
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APRIL 30, 2012 | |
Top Ten Holdings | % of net assets |
Wal-Mart Stores, Inc. | 2.3% |
Eli Lilly & Co. | 1.3% |
Regions Financial Corp. | 1.2% |
Lockheed Martin Corp. | 1.2% |
VeriSign, Inc. | 1.2% |
Abbott Laboratories | 1.2% |
Toro Co. (The) | 1.2% |
McKesson Corp. | 1.1% |
FactSet Research Systems, Inc. | 1.1% |
Cemex SAB de CV ADR | 1.1% |
Top Five Industries | % of net assets |
Oil, Gas and Consumable Fuels | 9.8% |
Insurance | 7.2% |
IT Services | 6.9% |
Food and Staples Retailing | 6.4% |
Health Care Providers and Services | 5.6% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 88.7% |
Foreign Common Stocks* | 9.8% |
Total Common Stocks | 98.5% |
Temporary Cash Investments | 1.0% |
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, 2011 to April 30, 2012.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
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 11/1/11 | Ending Account Value 4/30/12 | Expenses Paid During Period(1) 11/1/11 - 4/30/12 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,097.60 | $6.52 | 1.25% |
Institutional Class | $1,000 | $1,097.80 | $5.48 | 1.05% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.65 | $6.27 | 1.25% |
Institutional Class | $1,000 | $1,019.64 | $5.27 | 1.05% |
(1) | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
7
APRIL 30, 2012 (UNAUDITED)
Shares | Value | |||||||
Common Stocks — 98.5% | ||||||||
AEROSPACE AND DEFENSE — 3.2% | ||||||||
General Dynamics Corp. | 11,600 | $783,000 | ||||||
Lockheed Martin Corp. | 10,877 | 984,804 | ||||||
United Technologies Corp. | 9,622 | 785,540 | ||||||
2,553,344 | ||||||||
AIR FREIGHT AND LOGISTICS — 1.7% | ||||||||
CH Robinson Worldwide, Inc. | 9,433 | 563,527 | ||||||
United Parcel Service, Inc., Class B | 10,206 | 797,497 | ||||||
1,361,024 | ||||||||
AUTO COMPONENTS — 1.0% | ||||||||
TRW Automotive Holdings Corp.(1) | 18,126 | 828,539 | ||||||
BEVERAGES — 0.5% | ||||||||
Boston Beer Co., Inc., Class A(1) | 3,782 | 390,756 | ||||||
BIOTECHNOLOGY — 1.5% | ||||||||
PDL BioPharma, Inc. | 66,527 | 418,455 | ||||||
Pharmacyclics, Inc.(1) | 28,218 | 777,688 | ||||||
1,196,143 | ||||||||
CAPITAL MARKETS — 1.6% | ||||||||
E*Trade Financial Corp.(1) | 49,908 | 530,522 | ||||||
FXCM, Inc., Class A | 32,639 | 377,960 | ||||||
Greenhill & Co., Inc. | 9,040 | 351,204 | ||||||
1,259,686 | ||||||||
CHEMICALS — 1.6% | ||||||||
International Flavors & Fragrances, Inc. | 14,028 | 844,626 | ||||||
Praxair, Inc. | 3,451 | 399,281 | ||||||
1,243,907 | ||||||||
COMMERCIAL BANKS — 2.4% | ||||||||
Park National Corp. | 2,741 | 184,332 | ||||||
Regions Financial Corp. | 147,031 | 990,989 | ||||||
Zions BanCorp. | 38,757 | 790,255 | ||||||
1,965,576 | ||||||||
COMMERCIAL SERVICES AND SUPPLIES — 2.9% | ||||||||
Avery Dennison Corp. | 25,273 | 808,231 | ||||||
Republic Services, Inc. | 27,166 | 743,533 | ||||||
Waste Management, Inc. | 22,554 | 771,347 | ||||||
2,323,111 | ||||||||
COMMUNICATIONS EQUIPMENT — 1.0% | ||||||||
Brocade Communications Systems, Inc.(1) | 151,507 | 839,349 | ||||||
COMPUTERS AND PERIPHERALS — 1.5% | ||||||||
Synaptics, Inc.(1) | 11,790 | 362,071 | ||||||
Western Digital Corp.(1) | 20,714 | 803,910 | ||||||
1,165,981 | ||||||||
CONSTRUCTION MATERIALS — 1.1% | ||||||||
Cemex SAB de CV ADR(1) | 124,312 | 898,776 | ||||||
CONTAINERS AND PACKAGING — 1.6% | ||||||||
Crown Holdings, Inc.(1) | 13,512 | 499,674 | ||||||
Packaging Corp. of America | 27,013 | 788,509 | ||||||
1,288,183 | ||||||||
DIVERSIFIED CONSUMER SERVICES — 1.1% | ||||||||
ITT Educational Services, Inc.(1) | 12,774 | 843,340 | ||||||
DIVERSIFIED TELECOMMUNICATION SERVICES — 1.5% | ||||||||
BCE, Inc. | 19,936 | 808,006 | ||||||
tw telecom, inc.(1) | 17,542 | 382,065 | ||||||
1,190,071 | ||||||||
ELECTRIC UTILITIES — 1.0% | ||||||||
CPFL Energia SA ADR | 28,475 | 802,995 | ||||||
ELECTRICAL EQUIPMENT — 0.7% | ||||||||
Emerson Electric Co. | 10,606 | 557,239 | ||||||
ELECTRONIC EQUIPMENT, INSTRUMENTS AND COMPONENTS — 2.7% | ||||||||
Flextronics International Ltd.(1) | 101,111 | 673,399 | ||||||
Multi-Fineline Electronix, Inc.(1) | 4,548 | 120,477 | ||||||
SYNNEX Corp.(1) | 21,627 | 823,772 | ||||||
Tech Data Corp.(1) | 9,868 | 530,800 | ||||||
2,148,448 | ||||||||
ENERGY EQUIPMENT AND SERVICES — 0.8% | ||||||||
Nabors Industries Ltd.(1) | 36,247 | 603,513 | ||||||
FOOD AND STAPLES RETAILING — 6.4% | ||||||||
CVS Caremark Corp. | 18,263 | 814,895 | ||||||
Koninklijke Ahold NV ADR | 24,151 | 307,925 | ||||||
Kroger Co. (The) | 19,748 | 459,536 | ||||||
Susser Holdings Corp.(1) | 31,728 | 846,821 | ||||||
Wal-Mart Stores, Inc. | 31,500 | 1,855,665 | ||||||
Walgreen Co. | 24,000 | 841,440 | ||||||
5,126,282 | ||||||||
FOOD PRODUCTS — 2.1% | ||||||||
General Mills, Inc. | 20,489 | 796,817 | ||||||
Unilever NV | 24,685 | 847,930 | ||||||
1,644,747 | ||||||||
GAS UTILITIES — 1.0% | ||||||||
UGI Corp. | 28,623 | 835,219 |
8
Shares | Value | |||||||
HEALTH CARE PROVIDERS AND SERVICES — 5.6% |
Air Methods Corp.(1) | 4,279 | $359,907 | ||||||
AmerisourceBergen Corp. | 20,388 | 758,637 | ||||||
Cardinal Health, Inc. | 20,758 | 877,441 | ||||||
Chemed Corp. | 13,036 | 786,592 | ||||||
DaVita, Inc.(1) | 9,264 | 820,605 | ||||||
McKesson Corp. | 9,951 | 909,621 | ||||||
Providence Service Corp. (The)(1) | 559 | 7,860 | ||||||
4,520,663 | ||||||||
HEALTH CARE TECHNOLOGY — 1.0% | ||||||||
Computer Programs & Systems, Inc. | 13,978 | 832,949 | ||||||
HOTELS, RESTAURANTS AND LEISURE — 2.3% | ||||||||
Buffalo Wild Wings, Inc.(1) | 8,105 | 679,604 | ||||||
Darden Restaurants, Inc. | 8,200 | 410,656 | ||||||
McDonald’s Corp. | 8,144 | 793,633 | ||||||
1,883,893 | ||||||||
INSURANCE — 7.2% | ||||||||
Allstate Corp. (The) | 23,941 | 797,953 | ||||||
Arthur J Gallagher & Co. | 22,521 | 845,889 | ||||||
Cincinnati Financial Corp. | 23,442 | 835,004 | ||||||
Fidelity National Financial, Inc. Class A | 32,851 | 633,039 | ||||||
Genworth Financial, Inc., Class A(1) | 76,687 | 460,889 | ||||||
Principal Financial Group, Inc. | 27,437 | 759,182 | ||||||
RLI Corp. | 11,320 | 779,721 | ||||||
Unum Group | 29,140 | 691,784 | ||||||
5,803,461 | ||||||||
INTERNET SOFTWARE AND SERVICES — 1.2% | ||||||||
VeriSign, Inc. | 23,870 | 981,296 | ||||||
IT SERVICES — 6.9% | ||||||||
Amdocs Ltd.(1) | 20,928 | 669,696 | ||||||
CACI International, Inc., Class A(1) | 7,918 | 484,027 | ||||||
Fidelity National Information Services, Inc. | 24,089 | 811,077 | ||||||
Gartner, Inc.(1) | 13,182 | 577,372 | ||||||
MAXIMUS, Inc. | 17,101 | 756,719 | ||||||
NeuStar, Inc., Class A(1) | 21,222 | 771,420 | ||||||
Paychex, Inc. | 25,741 | 797,456 | ||||||
Syntel, Inc. | 11,495 | 688,435 | ||||||
5,556,202 | ||||||||
MACHINERY — 1.2% | ||||||||
Toro Co. (The) | 13,081 | 934,768 | ||||||
MEDIA — 2.1% | ||||||||
Cablevision Systems Corp., Class A | 60,163 | 891,616 | ||||||
Washington Post Co. (The), Class B | 2,045 | 773,357 | ||||||
1,664,973 | ||||||||
METALS AND MINING — 0.8% | ||||||||
Cliffs Natural Resources, Inc. | 9,771 | 608,342 | ||||||
MULTI-UTILITIES — 2.1% | ||||||||
Alliant Energy Corp. | 18,815 | 851,190 | ||||||
MDU Resources Group, Inc. | 37,056 | 850,065 | ||||||
1,701,255 | ||||||||
MULTILINE RETAIL — 2.0% | ||||||||
Dollar General Corp.(1) | 17,406 | 826,089 | ||||||
Kohl’s Corp. | 14,796 | 741,723 | ||||||
1,567,812 | ||||||||
OFFICE ELECTRONICS — 1.0% | ||||||||
Canon, Inc. ADR | 17,214 | 780,827 | ||||||
OIL, GAS AND CONSUMABLE FUELS — 9.8% | ||||||||
Alliance Resource Partners LP | 12,326 | 796,013 | ||||||
Cimarex Energy Co. | 12,730 | 879,770 | ||||||
ConocoPhillips | 10,589 | 758,490 | ||||||
Enbridge Energy Partners LP | 26,200 | 809,580 | ||||||
Enterprise Products Partners LP | 11,064 | 570,239 | ||||||
Exxon Mobil Corp. | 9,588 | 827,828 | ||||||
Plains All American Pipeline LP | 10,016 | 820,611 | ||||||
Plains Exploration & Production Co.(1) | 18,206 | 743,715 | ||||||
Spectra Energy Partners LP | 25,869 | 840,225 | ||||||
Williams Partners LP | 14,791 | 849,595 | ||||||
7,896,066 | ||||||||
PHARMACEUTICALS — 3.1% | ||||||||
Abbott Laboratories | 15,318 | 950,635 | ||||||
AstraZeneca plc ADR | 11,968 | 525,395 | ||||||
Eli Lilly & Co. | 25,000 | 1,034,750 | ||||||
2,510,780 | ||||||||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.6% | ||||||||
American Capital Agency Corp. | 27,402 | 856,038 | ||||||
PS Business Parks, Inc. | 6,479 | 442,192 | ||||||
1,298,230 | ||||||||
REAL ESTATE MANAGEMENT AND DEVELOPMENT — 0.9% | ||||||||
Altisource Portfolio Solutions SA(1) | 12,724 | 761,277 | ||||||
ROAD AND RAIL — 0.7% | ||||||||
Hertz Global Holdings, Inc.(1) | 37,396 | 576,272 |
9
Shares | Value | |||||||
SEMICONDUCTORS AND SEMICONDUCTOR EQUIPMENT — 0.9% |
Micron Technology, Inc.(1) | 113,848 | $750,258 | ||||||
SOFTWARE — 3.2% | ||||||||
FactSet Research Systems, Inc. | 8,579 | 899,594 | ||||||
Intuit, Inc. | 13,899 | 805,725 | ||||||
Microsoft Corp. | 26,764 | 856,983 | ||||||
2,562,302 | ||||||||
SPECIALTY RETAIL — 2.6% | ||||||||
Buckle, Inc. (The) | 18,804 | 868,369 | ||||||
hhgregg, Inc.(1) | 61,472 | 642,997 | ||||||
Rue21, Inc.(1) | 18,334 | 556,437 | ||||||
2,067,803 | ||||||||
THRIFTS AND MORTGAGE FINANCE — 0.9% | ||||||||
Hudson City Bancorp., Inc. | 106,890 | 754,643 | ||||||
TOBACCO — 0.5% | ||||||||
Philip Morris International, Inc. | 4,105 | 367,439 | ||||||
WIRELESS TELECOMMUNICATION SERVICES — 2.0% | ||||||||
China Mobile Ltd. ADR | 15,456 | 855,335 | ||||||
United States Cellular Corp.(1) | 18,653 | 731,571 | ||||||
1,586,906 | ||||||||
TOTAL COMMON STOCKS(Cost $76,077,410) | 79,034,646 |
Value | ||||
Temporary Cash Investments — 1.0% | ||||
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.25% - 2.375%, 2/28/15 - 10/31/15, valued at $327,216), in a joint trading account at 0.15%, dated 4/30/12, due 5/1/12 (Delivery value $320,812) | $320,811 | |||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.875%, 8/15/40, valued at $204,406), in a joint trading account at 0.12%, dated 4/30/12, due 5/1/12 (Delivery value $200,508) | 200,507 | |||
Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.625%, 7/31/12, valued at $268,246), in a joint trading account at 0.10%, dated 4/30/12, due 5/1/12 (Delivery value $262,782) | 262,781 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $784,099) | 784,099 | |||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $76,861,509) | 79,818,745 | |||
OTHER ASSETS AND LIABILITIES — 0.5% | 385,475 | |||
TOTAL NET ASSETS — 100.0% | $80,204,220 |
Notes to Schedule of Investments
ADR = American Depositary Receipt
(1) Non-income producing.
See Notes to Financial Statements.
10
APRIL 30, 2012 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $76,861,509) | $79,818,745 | |||
Receivable for investments sold | 5,945,438 | |||
Receivable for capital shares sold | 10,543 | |||
Dividends and interest receivable | 82,276 | |||
85,857,002 | ||||
Liabilities | ||||
Disbursements in excess of demand deposit cash | 23,669 | |||
Payable for investments purchased | 5,332,025 | |||
Payable for capital shares redeemed | 214,833 | |||
Accrued management fees | 82,255 | |||
5,652,782 | ||||
Net Assets | $80,204,220 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $103,234,516 | |||
Accumulated net investment loss | (60,460 | ) | ||
Accumulated net realized loss | (25,927,072 | ) | ||
Net unrealized appreciation | 2,957,236 | |||
$80,204,220 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $79,991,924 | 11,844,113 | $6.75 |
Institutional Class, $0.01 Par Value | $212,296 | 30,878 | $6.88 |
See Notes to Financial Statements.
11
FOR THE SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $8,416) | $951,291 | |||
Interest | 267 | |||
951,558 | ||||
Expenses: | ||||
Management fees | 474,878 | |||
Directors’ fees and expenses | 1,175 | |||
Other expenses | 114 | |||
476,167 | ||||
Net investment income (loss) | 475,391 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 4,017,671 | |||
Foreign currency transactions | 5,016 | |||
4,022,687 | ||||
Change in net unrealized appreciation (depreciation) on investments | 2,373,472 | |||
Net realized and unrealized gain (loss) | 6,396,159 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $6,871,550 |
See Notes to Financial Statements.
12
SIX MONTHS ENDED APRIL 30, 2012 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2011 | |||||||
Increase (Decrease) in Net Assets | April 30, 2012 | October 31, 2011 | |||||
Operations | |||||||
Net investment income (loss) | $475,391 | $661,634 | |||||
Net realized gain (loss) | 4,022,687 | 20,605,823 | |||||
Change in net unrealized appreciation (depreciation) | 2,373,472 | (12,997,900 | ) | ||||
Net increase (decrease) in net assets resulting from operations | 6,871,550 | 8,269,557 | |||||
Distributions to Shareholders | |||||||
From net investment income: | |||||||
Investor Class | (1,049,869 | ) | (95,981 | ) | |||
Institutional Class | (2,838 | ) | (9,897 | ) | |||
Decrease in net assets from distributions | (1,052,707 | ) | (105,878 | ) | |||
Capital Share Transactions | |||||||
Net increase (decrease) in net assets from capital share transactions | 1,364,036 | (16,567,847 | ) | ||||
Redemption Fees | |||||||
Increase in net assets from redemption fees | 1,375 | 2,072 | |||||
Net increase (decrease) in net assets | 7,184,254 | (8,402,096 | ) | ||||
Net Assets | |||||||
Beginning of period | 73,019,966 | 81,422,062 | |||||
End of period | $80,204,220 | $73,019,966 | |||||
Accumulated undistributed net investment income (loss) | $(60,460 | ) | $516,856 |
See Notes to Financial Statements.
13
APRIL 30, 2012 (UNAUDITED)
1. Organization
American Century Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Veedot Fund (the fund) is one fund in a series issued by the corporation. The fund 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 using 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 offers the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. The Institutional Class is made available to institutional shareholders or through financial intermediaries whose clients do not require the same level of shareholder and administrative services as shareholders of other classes. As a result, the Institutional Class is charged a lower unified management fee.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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.
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. 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.
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 2008. 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.
15
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 60 days. The fee may not be applicable to all classes. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions. Prior to November 14, 2011, the redemption fee applied to shares held less than 180 days.
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 1.000% 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, 2012 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., 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.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2012 were $98,488,566 and $98,473,983, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2012 | Year ended October 31, 2011 | ||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | |||||||||||||
Sold | 920,203 | $6,187,865 | 609,907 | $3,792,990 | |||||||||||
Issued in reinvestment of distributions | 164,796 | 1,018,441 | 15,435 | 93,224 | |||||||||||
Redeemed | (894,742 | ) | (5,870,721 | ) | (2,786,705 | ) | (17,345,567 | ) | |||||||
190,257 | 1,335,585 | (2,161,363 | ) | (13,459,353 | ) | ||||||||||
Institutional Class/Shares Authorized | 100,000,000 | 100,000,000 | |||||||||||||
Sold | 4,766 | 32,038 | 33,847 | 215,520 | |||||||||||
Issued in reinvestment of distributions | 451 | 2,838 | 1,612 | 9,897 | |||||||||||
Redeemed | (951 | ) | (6,425 | ) | (524,367 | ) | (3,333,911 | ) | |||||||
4,266 | 28,451 | (488,908 | ) | (3,108,494 | ) | ||||||||||
Net increase (decrease) | 194,523 | $1,364,036 | (2,650,271 | ) | $(16,567,847 | ) |
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 | $71,169,268 | — | — | ||||||||
Foreign Common Stocks | 7,865,378 | — | — | ||||||||
Temporary Cash Investments | — | $784,099 | — | ||||||||
Total Value of Investment Securities | $79,034,646 | $784,099 | — |
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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 currencies. 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.
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, 2012, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $76,861,509 | |||
Gross tax appreciation of investments | $4,338,219 | |||
Gross tax depreciation of investments | (1,380,983 | ) | ||
Net tax appreciation (depreciation) of investments | $2,957,236 |
The cost of investments for federal income tax purposes was the same as the cost for financial reporting purposes.
As of October 31, 2011, the fund had accumulated capital losses of $(30,023,794), 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 $(7,339,030) and $(22,684,764) expire in 2016 and 2017, respectively. The Regulated Investment Company Modernization Act of 2010 allows the fund to carry forward capital losses incurred in future taxable years for an unlimited period. Any losses incurred during future taxable years will be required to be utilized prior to the losses which carry an expiration date. As a result, capital loss carryforwards may be more likely to expire unused.
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For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||
2012(3) | $6.25 | 0.04 | 0.55 | 0.59 | (0.09) | $6.75 | 9.76% | 1.25%(4) | 1.25%(4) | 130% | $79,992 |
2011 | $5.68 | 0.05 | 0.53 | 0.58 | (0.01) | $6.25 | 10.16% | 1.25% | 0.82% | 280% | $72,851 |
2010 | $4.71 | —(5) | 0.97 | 0.97 | —(5) | $5.68 | 20.66% | 1.26% | (0.06)% | 260% | $78,441 |
2009 | $5.34 | —(5) | (0.63) | (0.63) | — | $4.71 | (11.80)% | 1.25% | (0.03)% | 320% | $75,603 |
2008 | $9.25 | (0.02) | (3.89) | (3.91) | — | $5.34 | (42.27)% | 1.25% | (0.27)% | 257% | $98,991 |
2007 | $6.17 | (0.01) | 3.09 | 3.08 | — | $9.25 | 49.92% | 1.25% | (0.18)% | 207% | $195,105 |
Institutional Class | |||||||||||
2012(3) | $6.37 | 0.05 | 0.56 | 0.61 | (0.10) | $6.88 | 9.78% | 1.05%(4) | 1.45%(4) | 130% | $212 |
2011 | $5.78 | 0.06 | 0.55 | 0.61 | (0.02) | $6.37 | 10.55% | 1.05% | 1.02% | 280% | $169 |
2010 | $4.79 | 0.01 | 0.99 | 1.00 | (0.01) | $5.78 | 20.97% | 1.06% | 0.14% | 260% | $2,981 |
2009 | $5.43 | 0.01 | (0.65) | (0.64) | — | $4.79 | (11.79)% | 1.05% | 0.17% | 320% | $3,089 |
2008 | $9.38 | (0.01) | (3.94) | (3.95) | — | $5.43 | (42.11)% | 1.05% | (0.07)% | 257% | $4,864 |
2007 | $6.25 | —(5) | 3.13 | 3.13 | — | $9.38 | 50.08% | 1.05% | 0.02% | 207% | $9,188 |
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Notes to Financial Highlights
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2012 (unaudited). |
(4) | Annualized. |
(5) | Per-share amount was less than $0.005. |
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.
©2012 American Century Proprietary Holdings, Inc. All rights reserved.
CL-SAN-75365 1206
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, 2012 | |||
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, 2012 |
By: | /s/ C. Jean Wade | ||
Name: | C. Jean Wade | ||
Title: | Vice President, Treasurer, and | ||
Chief Financial Officer | |||
(principal financial officer) | |||
Date: | June 29, 2012 |