N-CSR 1 acmf103114n-csr.htm FORM N-CSR ACMF 10/31/14 N-CSR
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:
10-31-2014





ITEM 1. REPORTS TO STOCKHOLDERS.




 ANNUAL REPORT
OCTOBER 31, 2014

 
 


All Cap Growth Fund







Table of Contents
 
President’s Letter
Performance
Portfolio Commentary
Fund Characteristics
Shareholder Fee Example
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Financial Highlights
Report of Independent Registered Public Accounting Firm
Management
Approval of Management Agreement
Additional Information




















Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.



President’s Letter

Dear Investor:

Thank you for reviewing this annual report for the 12 months ended October 31, 2014. It provides investment performance and portfolio information for the reporting period, plus longer-term historical performance data.

Annual reports remain important vehicles for conveying information about fund returns, including market and economic factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Jonathan Thomas

Favorable Fiscal Year for U.S. Stocks and Bonds

Mostly stimulative monetary policies by central banks and expectations of longer-term economic improvement, interspersed with concerns about nearer-term weaker-than-expected global economic data and geopolitical conflicts, helped drive financial market returns during the reporting period. We believe the combination of longer-term optimism about U.S. economic growth, low costs of capital, and continued central bank stimulus (even as the U.S. Federal Reserve’s latest monthly bond purchase program ended) helped persuade investors to seek risk and yield, which benefited U.S. stocks and bonds. The S&P 500 Index gained 17.27% during the 12 months. The 30-year U.S. Treasury bond was close behind, returning 15.44%, according to Barclays. U.S. real estate investment trusts (REITs), whose shares combine performance attributes of stocks and bonds, benefited from both—the MSCI U.S. REIT Index advanced 19.19%.

U.S. market benchmark returns generally outpaced their non-U.S. counterparts. The U.S. was perceived by investors as a relative bastion of growth, stability, and potentially attractive yields compared with most of the rest of the world, so capital flows generally favored U.S. assets. These capital flows, along with weaker-than-expected global growth, lower-than-expected global inflation, and falling commodity and energy prices, helped keep long-term interest rates and other corporate costs low. U.S. stocks just completed a solid third-quarter earnings reporting season, though questions remain about next year’s revenues, given this year’s slowdown in global economic growth and concerns about how far it could extend into 2015.

We believe continuing global economic and geopolitical uncertainties could continue to support the relative appeal of U.S. assets in coming months. But the end of the U.S. Federal Reserve’s monthly bond-buying program and the still-looming possibility of higher interest rates in 2015 point to potential U.S. market volatility ahead. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios for meeting financial goals. We appreciate your continued trust in us.

Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments


2


Performance
 
Total Returns as of October 31, 2014
 
 
 
Average Annual Returns
 
 
Ticker
Symbol
1 year
5 years
10 years
Since
Inception
Inception
Date
Investor Class
TWGTX
11.50%
15.99%
12.27%
11.60%
11/25/83
Russell 3000 Growth Index
16.39%
17.51%
9.08%
10.01%(1)
Institutional Class
ACAJX
11.71%
19.67%
9/30/11
A Class
ACAQX
 
 
 
 
9/30/11
No sales charge*
 
11.22%
19.15%
 
With sales charge*
 
4.83%
16.89%
 
C Class
ACAHX
10.40%
18.25%
9/30/11
R Class
ACAWX
10.93%
18.84%
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)
Since November 30, 1983, the date nearest the Investor Class’s inception for which data are available.

























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. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.

3


Growth of $10,000 Over 10 Years
$10,000 investment made October 31, 2004
Performance for other share classes will vary due to differences in fee structure.
 
Value on October 31, 2014
 
Investor Class — $31,843
 
 
Russell 3000 Growth Index — $23,863
 

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. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.

4


Portfolio Commentary

Portfolio Managers: David Hollond, Michael Orndorff, and Marcus Scott

Performance Summary

All Cap Growth returned 11.50%* for the 12 months ended October 31, 2014, lagging the 16.39% return of the portfolio’s benchmark, the Russell 3000 Growth Index.

U.S. stock indices delivered solid returns during the reporting period. Within the Russell 3000 Growth Index, all sectors posted positive returns on a total-return basis. Health care was the top-performing sector, gaining more than 33%. Information technology also performed well and outpaced the benchmark average. Energy was the weakest sector, posting only a modest gain. Telecommunication services and consumer discretionary stocks registered single-digit returns as well.

All Cap Growth received positive contributions from most sectors, with information technology the top contributor. Energy was the only sector to post negative absolute returns. Stock decisions in the consumer discretionary, consumer staples, and health care sectors were key performance detractors relative to the Russell index. Stock selection in the financials sector aided results versus the benchmark.

Consumer Stocks Led Detractors

Stock choices in the consumer discretionary and consumer staples sectors detracted from relative results. Specialty-flooring retailer Lumber Liquidators failed to rebound from lower-than-expected first-quarter same-store sales caused by severe winter weather. The company also reported a shortage in hardwood flooring inventory. The stock was eliminated from the portfolio. The apparel and home goods company TJX also announced softer-than-expected same-store sales as a result of last year’s harsh winter weather. Twenty-First Century Fox detracted. The entertainment and media giant has been doing well at the box office but headwinds include its continued investment in cable television and slowing advertisement spending, which has affected media companies generally. We sold out of our position in Whole Foods Market, whose margins will likely be constrained by its price-reduction strategy as it seeks a larger market share in an increasingly competitive space.

The health care sector also detracted versus the benchmark, largely due to positioning in the pharmaceuticals industry, where we did not own several strong performers that are components of the benchmark.

LinkedIn was a major individual relative detractor. The social media employment site has seen some deceleration of growth in its user base and provided weaker-than-expected guidance for 2014. We believe that there is room for growth, however, as the company has no competition, a large, traditional job search market to disrupt, new product opportunities, and expansion potential.

Not owning Microsoft detracted from results as the company is generating market excitement over its new CEO’s plans to cut costs. Lighter-than-benchmark exposure to Apple hampered performance as the stock rose strongly on anticipation of and release of new products.





*
All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.

5


Financials Stocks Aided Results

The fund benefited from positioning in the financials sector, primarily among capital markets firms. Morgan Stanley was a key contributor in the sector, helped by strong merger and acquisition and IPO markets. The company reported higher margins from its wealth management business following its buyout of Smith Barney. Avoiding some weaker capital markets names was also positive.

In the information technology sector, Electronic Arts was a key contributor. The video game maker reported better-than-expected revenues and earnings and is well positioned to benefit from next-generation game consoles like Xbox One, which is creating increased demand for games that can use the new technology.
Although stock decisions among health care stocks generally detracted, Gilead Sciences was a significant relative contributor. The stock appreciated on better-than-expected earnings, resulting from strong sales of the biotechnology company’s hepatitis C drug, Sovaldi. Gilead reported positive phase III trial results for TAF, a drug that would be used in the company’s HIV blends. The fund’s holding of Canadian Pacific Railway, which is not in the index, was another key contributor. Canadian Pacific’s new CEO has significantly improved margins through a more efficient network, which has also allowed the firm to pursue shareholder-friendly uses of its cash, such as repurchasing stock.

Outlook

All Cap Growth’s investment process focuses on companies of all capitalization sizes with accelerating earnings growth rates and share price momentum. The fund’s positioning remains largely stock specific. As of October 31, 2014, the largest overweight was in health care, while the largest underweights were in materials and telecommunication services. Current investment themes include stocks of companies benefiting from the Affordable Care Act, which has given a lift to health care providers. We are also finding opportunities in companies that benefit from the secular shift toward natural and organic foods.



6


Fund Characteristics 
OCTOBER 31, 2014
 
Top Ten Holdings
% of net assets
Google, Inc.*
5.3%
Apple, Inc.
5.2%
Electronic Arts, Inc.
4.1%
Gilead Sciences, Inc.
3.5%
Comcast Corp., Class A
3.3%
Alliance Data Systems Corp.
2.7%
Schlumberger Ltd.
2.6%
Facebook, Inc., Class A
2.5%
Twenty-First Century Fox, Inc.
2.4%
Actavis plc
2.3%
*Includes all classes of the issuer.
 
 
 
Top Five Industries
% of net assets
Internet Software and Services
9.0%
Media
6.8%
Software
6.5%
Biotechnology
6.5%
Technology Hardware, Storage and Peripherals
5.2%
 
 
Types of Investments in Portfolio
% of net assets
Common Stocks
98.9%
Temporary Cash Investments
0.7%
Other Assets and Liabilities
0.4%


7


Shareholder Fee Example 

Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.

The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from May 1, 2014 to October 31, 2014.

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.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

8




Beginning
Account Value
5/1/14
Ending
Account Value
10/31/14
Expenses Paid
During Period
(1)5/1/14 - 10/31/14
Annualized
Expense Ratio
(1)
Actual
 
 
 
 
Investor Class
$1,000
$1,100.90
$5.30
1.00%
Institutional Class
$1,000
$1,101.90
$4.24
0.80%
A Class
$1,000
$1,099.60
$6.62
1.25%
C Class
$1,000
$1,095.50
$10.56
2.00%
R Class
$1,000
$1,098.00
$7.93
1.50%
Hypothetical
 
 
 
 
Investor Class
$1,000
$1,020.16
$5.09
1.00%
Institutional Class
$1,000
$1,021.17
$4.08
0.80%
A Class
$1,000
$1,018.90
$6.36
1.25%
C Class
$1,000
$1,015.12
$10.16
2.00%
R Class
$1,000
$1,017.64
$7.63
1.50%
(1)
Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 184, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.


9


Schedule of Investments

OCTOBER 31, 2014
 
Shares
Value
COMMON STOCKS — 98.9%
 
 
Aerospace and Defense — 0.8%
 
 
Esterline Technologies Corp.(1) 
78,692

$
9,215,620

Air Freight and Logistics — 1.2%
 
 
FedEx Corp.
76,417

12,792,206

Airlines — 1.1%
 
 
American Airlines Group, Inc.
77,545

3,206,486

Spirit Airlines, Inc.(1) 
123,646

9,039,759

 
 
12,246,245

Banks — 1.8%
 
 
Bank of America Corp.
349,377

5,995,309

East West Bancorp, Inc.
121,527

4,467,333

SVB Financial Group(1) 
79,649

8,919,891

 
 
19,382,533

Beverages — 2.4%
 
 
Brown-Forman Corp., Class B
82,457

7,641,290

Constellation Brands, Inc., Class A(1) 
203,671

18,644,044

 
 
26,285,334

Biotechnology — 6.5%
 
 
Alexion Pharmaceuticals, Inc.(1) 
55,096

10,543,171

Biogen Idec, Inc.(1) 
42,100

13,517,468

Gilead Sciences, Inc.(1) 
344,029

38,531,248

Regeneron Pharmaceuticals, Inc.(1) 
21,970

8,650,028

 
 
71,241,915

Building Products — 0.3%
 
 
Fortune Brands Home & Security, Inc.
76,955

3,328,304

Capital Markets — 2.2%
 
 
Charles Schwab Corp. (The)
354,400

10,160,648

Morgan Stanley
409,445

14,310,103

 
 
24,470,751

Chemicals — 2.0%
 
 
Monsanto Co.
192,643

22,161,651

Communications Equipment — 1.4%
 
 
Palo Alto Networks, Inc.(1) 
28,997

3,064,983

QUALCOMM, Inc.
162,613

12,766,747

 
 
15,831,730

Construction and Engineering — 0.5%
 
 
Quanta Services, Inc.(1) 
156,888

5,346,743

Consumer Finance — 0.9%
 
 
Discover Financial Services
153,880

9,814,466

Distributors — 1.3%
 
 
LKQ Corp.(1) 
501,463

14,326,798

Electrical Equipment — 0.6%
 
 
Acuity Brands, Inc.
43,779

6,104,106

Electronic Equipment, Instruments and Components — 0.3%
 
 
TE Connectivity Ltd.
53,441

3,266,848


10


 
Shares
Value
Energy Equipment and Services — 4.9%
 
 
Halliburton Co.
431,865

$
23,813,036

Schlumberger Ltd.
285,788

28,195,844

Weatherford International plc(1) 
147,602

2,423,625

 
 
54,432,505

Food and Staples Retailing — 2.6%
 
 
Costco Wholesale Corp.
185,133

24,691,188

United Natural Foods, Inc.(1) 
60,290

4,100,926

 
 
28,792,114

Food Products — 3.7%
 
 
Hain Celestial Group, Inc. (The)(1) 
91,166

9,868,719

Hershey Co. (The)
87,436

8,385,987

Mondelez International, Inc., Class A
625,030

22,038,558

 
 
40,293,264

Health Care Equipment and Supplies — 2.5%
 
 
Intuitive Surgical, Inc.(1) 
10,490

5,200,942

Teleflex, Inc.
200,387

22,868,164

 
 
28,069,106

Health Care Providers and Services — 3.5%
 
 
AmerisourceBergen Corp.
113,862

9,724,953

HCA Holdings, Inc.(1) 
92,209

6,459,240

McKesson Corp.
69,400

14,116,654

Team Health Holdings, Inc.(1) 
125,762

7,865,156

 
 
38,166,003

Hotels, Restaurants and Leisure — 2.2%
 
 
Chipotle Mexican Grill, Inc.(1) 
13,454

8,583,652

Panera Bread Co., Class A(1) 
32,228

5,209,334

Starbucks Corp.
144,810

10,941,844

 
 
24,734,830

Household Durables — 0.5%
 
 
Harman International Industries, Inc.
34,447

3,697,541

Mohawk Industries, Inc.(1) 
15,004

2,131,168

 
 
5,828,709

Household Products — 0.7%
 
 
Procter & Gamble Co. (The)
81,700

7,129,959

Internet and Catalog Retail — 2.1%
 
 
Priceline Group, Inc. (The)(1) 
12,098

14,592,729

TripAdvisor, Inc.(1) 
101,667

9,013,796

 
 
23,606,525

Internet Software and Services — 9.0%
 
 
Alibaba Group Holding Ltd. ADR(1) 
26,591

2,621,872

CoStar Group, Inc.(1) 
59,548

9,592,587

Facebook, Inc., Class A(1) 
372,030

27,898,530

Google, Inc., Class A(1) 
51,387

29,181,136

Google, Inc., Class C(1) 
51,387

28,729,444

LinkedIn Corp., Class A(1) 
7,176

1,643,017

 
 
99,666,586

IT Services — 4.5%
 
 
Alliance Data Systems Corp.(1) 
104,118

29,501,835

MasterCard, Inc., Class A
246,117

20,612,299

 
 
50,114,134


11


 
Shares
Value
Leisure Products — 0.6%
 
 
Polaris Industries, Inc.
43,400

$
6,547,324

Machinery — 3.3%
 
 
Flowserve Corp.
231,330

15,728,127

Ingersoll-Rand plc
135,009

8,454,263

Middleby Corp.(1) 
141,000

12,478,500

 
 
36,660,890

Media — 6.8%
 
 
Comcast Corp., Class A
667,100

36,923,985

Time Warner, Inc.
144,508

11,484,051

Twenty-First Century Fox, Inc.
770,382

26,562,771

 
 
74,970,807

Oil, Gas and Consumable Fuels — 0.5%
 
 
Antero Resources Corp.(1) 
97,920

5,134,925

Pharmaceuticals — 4.2%
 
 
Actavis plc(1) 
102,523

24,886,433

Johnson & Johnson
95,627

10,306,678

Zoetis, Inc.
303,383

11,273,712

 
 
46,466,823

Professional Services — 0.8%
 
 
Nielsen NV
203,416

8,643,146

Real Estate Management and Development — 0.4%
 
 
Jones Lang LaSalle, Inc.
28,507

3,854,432

Road and Rail — 3.5%
 
 
Canadian Pacific Railway Ltd., New York Shares
108,317

22,495,275

Kansas City Southern
94,465

11,599,357

Norfolk Southern Corp.
44,700

4,945,608

 
 
39,040,240

Semiconductors and Semiconductor Equipment — 1.2%
 
 
Avago Technologies Ltd.
82,700

7,132,875

NXP Semiconductor NV(1) 
82,037

5,632,660

 
 
12,765,535

Software — 6.5%
 
 
Adobe Systems, Inc.(1) 
116,309

8,155,587

Electronic Arts, Inc.(1) 
1,093,407

44,796,885

Intuit, Inc.
103,725

9,128,837

Salesforce.com, Inc.(1) 
147,940

9,466,681

 
 
71,547,990

Specialty Retail — 4.2%
 
 
Home Depot, Inc. (The)
153,022

14,922,706

Lowe's Cos., Inc.
385,787

22,067,016

Signet Jewelers Ltd.
51,998

6,240,280

TJX Cos., Inc. (The)
50,531

3,199,623

 
 
46,429,625

Technology Hardware, Storage and Peripherals — 5.2%
 
 
Apple, Inc.
533,873

57,658,284

Textiles, Apparel and Luxury Goods — 0.6%
 
 
Kate Spade & Co.(1) 
102,662

2,785,220

NIKE, Inc., Class B
35,928

3,340,226

 
 
6,125,446


12


 
Shares
Value
Tobacco — 0.5%
 
 
Philip Morris International, Inc.
60,140

$
5,353,061

Wireless Telecommunication Services — 1.1%
 
 
SBA Communications Corp., Class A(1) 
109,872

12,341,922

TOTAL COMMON STOCKS
(Cost $771,857,201)
 
1,090,189,435

TEMPORARY CASH INVESTMENTS — 0.7%
 
 
Repurchase Agreement, Bank of America Merrill Lynch, (collateralized by various U.S. Treasury obligations, 1.375% - 2.625%, 12/31/14 - 2/28/19, valued at $1,913,148), in a joint trading account at 0.07%, dated 10/31/14, due 11/3/14 (Delivery value $1,875,932)
 
1,875,921

Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.25%, 10/15/15, valued at $765,418), in a joint trading account at 0.04%, dated 10/31/14, due 11/3/14 (Delivery value $750,371)
 
750,368

Repurchase Agreement, Goldman Sachs & Co., (collateralized by various U.S. Treasury obligations, 0.125%, 12/31/14, valued at $1,532,299), in a joint trading account at 0.03%, dated 10/31/14, due 11/3/14 (Delivery value $1,500,741)
 
1,500,737

SSgA U.S. Government Money Market Fund, Class N
4,127,970

4,127,970

TOTAL TEMPORARY CASH INVESTMENTS
(Cost $8,254,996)
 
8,254,996

TOTAL INVESTMENT SECURITIES — 99.6%
(Cost $780,112,197)
 
1,098,444,431

OTHER ASSETS AND LIABILITIES — 0.4%
 
4,208,093

TOTAL NET ASSETS — 100.0%
 
$
1,102,652,524


FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Currency Purchased
Currency Sold
Counterparty
Settlement Date
Unrealized Appreciation
(Depreciation)
USD
19,839,677

CAD
22,262,102

JPMorgan Chase Bank N.A.
11/28/14
$
99,250


NOTES TO SCHEDULE OF INVESTMENTS
ADR
-
American Depositary Receipt
CAD
-
Canadian Dollar
USD
-
United States Dollar
(1)
Non-income producing.

See Notes to Financial Statements.

13


Statement of Assets and Liabilities
OCTOBER 31, 2014
 
Assets
 
Investment securities, at value (cost of $780,112,197)
$
1,098,444,431

Foreign currency holdings, at value (cost of $69,060)
66,516

Receivable for investments sold
8,573,512

Receivable for capital shares sold
112,101

Unrealized appreciation on forward foreign currency exchange contracts
99,250

Dividends and interest receivable
254,028

 
1,107,549,838

 
 
Liabilities
 
Payable for investments purchased
3,597,348

Payable for capital shares redeemed
398,484

Accrued management fees
892,666

Distribution and service fees payable
8,816

 
4,897,314

 
 
Net Assets
$
1,102,652,524

 
 
Net Assets Consist of:
 
Capital (par value and paid-in surplus)
$
633,432,184

Accumulated net investment loss
(1,702,952
)
Undistributed net realized gain
152,494,352

Net unrealized appreciation
318,428,940

 
$
1,102,652,524


 
Net Assets
Shares Outstanding
Net Asset Value Per Share
Investor Class, $0.01 Par Value

$1,079,950,335

31,113,697

$34.71
Institutional Class, $0.01 Par Value

$190,672

5,460

$34.92
A Class, $0.01 Par Value

$8,837,029

256,613

$34.44*
C Class, $0.01 Par Value

$3,931,690

116,945

$33.62
R Class, $0.01 Par Value

$9,742,798

285,189

$34.16
*Maximum offering price $36.54 (net asset value divided by 0.9425).


See Notes to Financial Statements.


14


Statement of Operations
YEAR ENDED OCTOBER 31, 2014
 
Investment Income (Loss)
 
Income:
 
Dividends (net of foreign taxes withheld of $43,693)
$
8,933,961

Interest
843

 
8,934,804

 
 
Expenses:
 
Management fees
10,908,205

Distribution and service fees:
 
A Class
22,735

C Class
36,395

R Class
38,954

Directors' fees and expenses
15,580

 
11,021,869

 
 
Net investment income (loss)
(2,087,065
)
 
 
Realized and Unrealized Gain (Loss)
 
Net realized gain (loss) on:
 
Investment transactions
162,533,177

Foreign currency transactions
414,924

 
162,948,101

 
 
Change in net unrealized appreciation (depreciation) on:
 
Investments
(42,213,669
)
Translation of assets and liabilities in foreign currencies
(2,385
)
 
(42,216,054
)
 
 
Net realized and unrealized gain (loss)
120,732,047

 
 
Net Increase (Decrease) in Net Assets Resulting from Operations
$
118,644,982



See Notes to Financial Statements.


15


Statement of Changes in Net Assets
YEARS ENDED OCTOBER 31, 2014 AND OCTOBER 31, 2013
Increase (Decrease) in Net Assets
October 31, 2014
October 31, 2013
Operations
 
 
Net investment income (loss)
$
(2,087,065
)
$
3,764,116

Net realized gain (loss)
162,948,101

146,001,955

Change in net unrealized appreciation (depreciation)
(42,216,054
)
86,441,524

Net increase (decrease) in net assets resulting from operations
118,644,982

236,207,595

 
 
 
Distributions to Shareholders
 
 
From net investment income:
 
 
Investor Class

(2,987,737
)
Institutional Class

(460
)
A Class

(23,405
)
C Class

(653
)
R Class

(2,856
)
From net realized gains:
 
 
Investor Class
(135,254,248
)
(64,330,394
)
Institutional Class
(13,915
)
(8,390
)
A Class
(1,123,968
)
(650,947
)
C Class
(454,606
)
(145,569
)
R Class
(827,562
)
(112,134
)
Decrease in net assets from distributions
(137,674,299
)
(68,262,545
)
 
 
 
Capital Share Transactions
 
 
Net increase (decrease) in net assets from capital share transactions (Note 5)
22,307,155

(44,384,524
)
 
 
 
Net increase (decrease) in net assets
3,277,838

123,560,526

 
 
 
Net Assets
 
 
Beginning of period
1,099,374,686

975,814,160

End of period
$
1,102,652,524

$
1,099,374,686

 
 
 
Accumulated net investment loss
$
(1,702,952
)
$
(97,550
)


See Notes to Financial Statements.


16


Notes to Financial Statements

OCTOBER 31, 2014

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 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 fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.

Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.

Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.

Fixed income securities 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, trade data or market information on comparable securities, and other relevant security specific information.

Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.

If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not

17


limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.

The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.

Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.

Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.

Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.

Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.

Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.

Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only

18


individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.

Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization). 

Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.

3. Fees and Transactions with Related Parties

Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
 
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 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 year ended October 31, 2014 are detailed in the Statement of Operations.

Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. Fees and expenses incurred in conjunction with the directors during the year ended October 31, 2014 are detailed in the Statement of Operations. The fund’s officers do not receive compensation from the fund.

4. Investment Transactions

Purchases and sales of investment securities, excluding short-term investments, for the year ended October 31, 2014 were $606,124,724 and $731,146,406, respectively.


19


5. Capital Share Transactions

Transactions in shares of the fund were as follows:
 
Year ended October 31, 2014
Year ended October 31, 2013
 
Shares
Amount
Shares
Amount
Investor Class/Shares Authorized
200,000,000

 
200,000,000

 
Sold
1,162,515

$
38,387,186

1,333,460

$
41,078,263

Issued in reinvestment of distributions
4,246,173

132,055,972

2,273,872

65,874,089

Redeemed
(4,648,558
)
(153,313,983
)
(4,842,756
)
(151,874,064
)
 
760,130

17,129,175

(1,235,424
)
(44,921,712
)
Institutional Class/Shares Authorized
25,000,000

 
25,000,000

 
Sold
2,427

80,496

3,302

101,354

Issued in reinvestment of distributions
446

13,915

305

8,850

Redeemed
(485
)
(16,142
)
(2,550
)
(81,844
)
 
2,388

78,269

1,057

28,360

A Class/Shares Authorized
25,000,000

 
25,000,000

 
Sold
132,615

4,368,596

150,961

4,648,002

Issued in reinvestment of distributions
36,351

1,123,968

22,308

644,487

Redeemed
(152,490
)
(4,957,707
)
(306,496
)
(10,032,622
)
 
16,476

534,857

(133,227
)
(4,740,133
)
C Class/Shares Authorized
25,000,000

 
25,000,000

 
Sold
39,397

1,268,756

38,907

1,224,286

Issued in reinvestment of distributions
14,564

442,613

4,234

121,389

Redeemed
(31,993
)
(1,022,084
)
(14,351
)
(451,908
)
 
21,968

689,285

28,790

893,767

R Class/Shares Authorized
25,000,000

 
25,000,000

 
Sold
169,022

5,520,467

156,475

4,980,335

Issued in reinvestment of distributions
26,921

827,562

3,990

114,990

Redeemed
(75,880
)
(2,472,460
)
(23,884
)
(740,131
)
 
120,063

3,875,569

136,581

4,355,194

Net increase (decrease)
921,025

$
22,307,155

(1,202,223
)
$
(44,384,524
)

6. Fair Value Measurements

The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.

Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.

Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.

Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).

The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.

20


The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
 
Level 1
Level 2
Level 3
Assets
 
 
 
Investment Securities
 
 
 
Common Stocks
$
1,090,189,435



Temporary Cash Investments
4,127,970

$
4,127,026


 
$
1,094,317,405

$
4,127,026


Other Financial Instruments
 
 
 
Forward Foreign Currency Exchange Contracts

$
99,250



7. Derivative Instruments

Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $13,054,506.

The value of foreign currency risk derivative instruments as of October 31, 2014, is disclosed on the Statement of Assets and Liabilities as an asset of $99,250 in unrealized appreciation on forward foreign currency exchange contracts. For the year ended October 31, 2014, the effect of foreign currency risk derivative instruments on the Statement of Operations was $422,970 in net realized gain (loss) on foreign currency transactions and $1,700 in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.

8. Federal Tax Information

The tax character of distributions paid during the years ended October 31, 2014 and October 31, 2013 were as follows:
 
2014
2013
Distributions Paid From
 
 
Ordinary income
$
12,321,590

$
3,015,111

Long-term capital gains
$
125,352,709

$
65,247,434


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.


21


As of October 31, 2014, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments
$
780,170,156

Gross tax appreciation of investments
$
321,854,256

Gross tax depreciation of investments
(3,579,981
)
Net tax appreciation (depreciation) of investments
318,274,275

Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities
in foreign currencies
(2,544
)
Net tax appreciation (depreciation)
$
318,271,731

Undistributed ordinary income

Accumulated long-term gains
$
152,552,311

Late-year ordinary loss deferral
$
(1,603,702
)

The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization for tax purposes of unrealized gains (losses) on certain foreign currency exchange contracts.

Loss deferrals represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.


22


Financial Highlights
 
For a Share Outstanding Throughout the Years Ended October 31 (except as noted)
Per-Share Data
 
 
 
 
 
 
 
Ratios and Supplemental Data
 
 
 
Income From Investment Operations:
Distributions From:
 
 
Ratio to Average Net Assets of:
 
 
 
Net Asset
Value,
Beginning
of Period
Net
Investment
Income
(Loss)
(1)
Net
Realized
and
Unrealized
Gain (Loss)
Total From
Investment
Operations
Net
Investment
Income
Net
Realized
Gains
Total
Distributions
Net Asset
Value,
End
of Period
Total
Return
(2)
Operating
Expenses
Net
Investment
Income
(Loss)
Portfolio
Turnover
Rate
Net
Assets,
End of
Period
(in thousands)
Investor Class
 
 
 
 
 
 
 
 
 
 
 
 
2014
$35.63
(0.06)
3.64
3.58
(4.50)
(4.50)
$34.71
11.50%
1.00%
(0.18)%
56%

$1,079,950

2013
$30.44
0.12
7.22
7.34
(0.10)
(2.05)
(2.15)
$35.63
25.72%
1.00%
0.38%
60%

$1,081,599

2012
$28.06
0.01
3.08
3.09
(0.71)
(0.71)
$30.44
11.40%
1.00%
0.04%
55%

$961,562

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

Institutional Class
 
 
 
 
 
 
 
 
 
 
 
 
2014
$35.76
(3)
3.66
3.66
(4.50)
(4.50)
$34.92
11.71%
0.80%
0.02%
56%

$191

2013
$30.50
0.16
7.26
7.42
(0.11)
(2.05)
(2.16)
$35.76
25.98%
0.80%
0.58%
60%

$110

2012
$28.06
0.09
3.06
3.15
(0.71)
(0.71)
$30.50
11.62%
0.80%
0.24%
55%

$61

2011(4)
$25.32
(0.01)
2.75
2.74
$28.06
10.82%
0.80%(5)
(0.28)%(5)
75%(6)

$28

A Class
 
 
 
 
 
 
 
 
 
 
 
 
2014
$35.47
(0.14)
3.61
3.47
(4.50)
(4.50)
$34.44
11.22%
1.25%
(0.43)%
56%

$8,837

2013
$30.36
0.04
7.19
7.23
(0.07)
(2.05)
(2.12)
$35.47
25.42%
1.25%
0.13%
60%

$8,517

2012
$28.05
(0.02)
3.04
3.02
(0.71)
(0.71)
$30.36
11.15%
1.25%
(0.21)%
55%

$11,334

2011(4)
$25.32
(0.02)
2.75
2.73
$28.05
10.78%
1.25%(5)
(0.73)%(5)
75%(6)

$28


23


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)
C Class
 
 
 
 
 
 
 
 
 
 
 
 
2014
$34.96
(0.38)
3.54
3.16
(4.50)
(4.50)
$33.62
10.40%
2.00%
(1.18)%
56%

$3,932

2013
$30.11
(0.20)
7.11
6.91
(0.01)
(2.05)
(2.06)
$34.96
24.45%
2.00%
(0.62)%
60%

$3,321

2012
$28.03
(0.25)
3.04
2.79
(0.71)
(0.71)
$30.11
10.32%
2.00%
(0.96)%
55%

$1,993

2011(4)
$25.32
(0.03)
2.74
2.71
$28.03
10.70%
2.00%(5)
(1.48)%(5)
75%(6)

$28

R Class
 
 
 
 
 
 
 
 
 
 
 
 
2014
$35.30
(0.22)
3.58
3.36
(4.50)
(4.50)
$34.16
10.93%
1.50%
(0.68)%
56%

$9,743

2013
$30.27
(0.09)
7.22
7.13
(0.05)
(2.05)
(2.10)
$35.30
25.12%
1.50%
(0.12)%
60%

$5,828

2012
$28.04
(0.08)
3.02
2.94
(0.71)
(0.71)
$30.27
10.86%
1.50%
(0.46)%
55%

$864

2011(4)
$25.32
(0.02)
2.74
2.72
$28.04
10.74%
1.50%(5)
(0.98)%(5)
75%(6)

$28


Notes to Financial Highlights
(1)
Computed using average shares outstanding throughout the period.
(2)
Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)
Per-share amount was less than $0.005.
(4)
September 30, 2011 (commencement of sale) through October 31, 2011.
(5)
Annualized.
(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.

24


Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
American Century Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of All Cap Growth Fund (the “Fund”), one of the funds constituting American Century Mutual Funds, Inc., as of October 31, 2014, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2014, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of All Cap Growth Fund of American Century Mutual Funds, Inc. as of October 31, 2014, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Kansas City, Missouri
December 17, 2014



25


Management
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.

Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). Mr. Fink is treated as an “interested person” because of his recent employment with ACC and American Century Services, LLC (ACS). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and ACS, and they do not have any other affiliations, positions, or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.

The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name
(Year of Birth)
Position(s) Held with Funds
Length of Time Served
Principal Occupation(s) During Past 5 Years
Number of American Century Portfolios Overseen by Director
Other Directorships Held During Past
5 Years
Independent Directors
 
 
 
 
Thomas A. Brown
(1940)
Director
Since 1980
Managing Member, Associated Investments, LLC (real estate investment company); Brown Cascade Properties, LLC (real estate investment company) (2001 to 2009)
73
None
Andrea C. Hall
(1945)
Director
Since 1997
Retired
73
None
Jan M. Lewis
(1957)
Director
Since 2011
Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013)
73
None
James A. Olson
(1942)
Director and Chairman of the Board
Since 2007 (Chairman since 2014)
Member, Plaza Belmont LLC (private equity fund manager)
73
Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013)

26


Name
(Year of Birth)
Position(s) Held with Funds
Length of Time Served
Principal Occupation(s) During Past 5 Years
Number of American Century Portfolios Overseen by Director
Other Directorships Held During Past
5 Years
Independent Directors
 
 
 
 
M. Jeannine Strandjord
(1945)
Director
Since 1994
Retired
73
Euronet Worldwide Inc.; Charming Shoppes, Inc. (2006 to 2010); and DST Systems Inc. (1996 to 2012)
John R. Whitten
(1946)
Director
Since 2008
Retired
73
Rudolph Technologies, Inc.
Stephen E. Yates
(1948)
Director
Since 2012
Retired; Executive Vice President, Technology & Operations, KeyCorp. (computer services) (2004 to 2010)
73
Applied Industrial Technologies, Inc. (2001 to 2010)
Interested Directors
 
 
 
 
Barry Fink
(1955)
Director
Since 2012
Retired; Executive Vice President, ACC (September 2007 to February 2013); President, ACS (October 2007 to February 2013); Chief Operating Officer, ACC (September 2007 to November 2012)
73
None
Jonathan S. Thomas
(1963)
Director and President
Since 2007
President and Chief Executive Officer, ACC (March 2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries
118
BioMed Valley Discoveries, Inc.

The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.



27


Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name
(Year of Birth)
Offices with
the Funds
Principal Occupation(s) During the Past Five Years
Jonathan S.
Thomas
(1963)
Director and
President
since 2007
President and Chief Executive Officer, ACC (March 2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries
Amy D. Shelton
(1964)
Chief Compliance
Officer since 2014
Chief Compliance Officer, American Century funds, (March 2014 to present); Chief Compliance Officer, ACIM (February 2014 to present); Chief Compliance Officer, ACIS (October 2009 to present); Vice President, Client Interactions and Marketing, ACIS (February 2013 to January 2014); Director, Client Interactions and Marketing, ACIS (June 2007 to January 2013). Also serves as Vice President, ACIS
Charles A.
Etherington
(1957)
General Counsel
since 2007 and
Senior Vice
President since 2006
Attorney, ACC (February 1994 to present); Vice President, ACC (November 2005 to present); General Counsel, ACC (March 2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS
C. Jean Wade
(1964)
Vice President,
Treasurer and
Chief Financial
Officer since 2012
Vice President, ACS (February 2000 to present)
Robert J.
Leach
(1966)
Vice President
since 2006 and
Assistant Treasurer
since 2012
Vice President, ACS (February 2000 to present)
David H.
Reinmiller
(1963)
Vice President
since 2000
Attorney, ACC (January 1994 to present); Associate General Counsel, ACC (January 2001 to present). Also serves as Vice President, ACIM and ACS
Ward D.
Stauffer
(1960)
Secretary
since 2005
Attorney, ACC (June 2003 to present)



28


Approval of Management Agreement

At a meeting held on June 18, 2014, the Fund’s Board of Directors unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.

Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continuous basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.

In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:

the nature, extent, and quality of investment management, shareholder services, and other services provided by the Advisor to the Fund;
the wide range of other programs and services the Advisor provides to the Fund and its shareholders on a routine and non-routine basis;
the Fund’s investment performance compared to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
the cost of owning the Fund compared to the cost of owning similar funds;
the Advisor’s compliance policies, procedures, and regulatory experience;
financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management;
the services provided and charges to other investment management clients of the Advisor;
acquired fund fees and expenses; and
any collateral benefits derived by the Advisor from the management of the Fund.

In keeping with its practice, the Board held two in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also had the benefit of the advice of their independent counsel throughout the process.

Factors Considered

The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel, and evaluated such information for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:


29


Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that under the management agreement, the Advisor provides or arranges at its own expense a wide variety of services including:

constructing and designing the Fund
portfolio research and security selection
initial capitalization/funding
securities trading
Fund administration
custody of Fund assets
daily valuation of the Fund’s portfolio
shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
legal services (except the independent Directors’ counsel)
regulatory and portfolio compliance
financial reporting
marketing and distribution (except Rule 12b-1 plans)

The Board noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.

Investment Management Services.    The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information during the management agreement approval process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the ten-year period and below its benchmark for the one-, three-, and five-year periods reviewed by the Board. The Board discussed the Fund’s performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
    
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency

30


and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.

Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. The financial information regarding the Advisor is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.

Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.

Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services.

Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.

Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.

31



Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions and concluded that this research is likely to benefit Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded, however, that the assets of those other clients are not material to its analysis.

Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.

Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.



32


Additional Information

Retirement Account Information
As required by law, distributions you receive from certain IRAs are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.


Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov.


Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling 1-800-345-2021.


33


Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.

The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended October 31, 2014.

For corporate taxpayers, the fund hereby designates $10,871,152, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended October 31, 2014 as qualified for the corporate dividends received deduction.

The fund hereby designates $12,321,590 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended October 31, 2014

The fund hereby designates $135,863,054, or up to the maximum amount allowable, as long-term capital gain distributions for the fiscal year ended October 31, 2014.

The fund utilized earnings and profits of $10,510,345 distributed to shareholders on redemption of
shares as part of the dividends paid deduction (tax equalization).
 



34


Notes

35


Notes


36






 
 
 
 
Contact Us
americancentury.com
 
Automated Information Line
1-800-345-8765
 
Investor Services Representative
1-800-345-2021
or 816-531-5575
 
Investors Using Advisors
1-800-378-9878
 
Business, Not-For-Profit, Employer-Sponsored Retirement Plans
1-800-345-3533
 
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies
1-800-345-6488
 
Telecommunications Relay Service for the Deaf
711
 
 
 
 
American Century Mutual Funds, Inc.
 
 
 
 
Investment Advisor:
American Century Investment Management, Inc.
Kansas City, Missouri
 
 
 
 
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus.
 
 
 
 
©2014 American Century Proprietary Holdings, Inc. All rights reserved.
CL-ANN-84002   1412
 



 ANNUAL REPORT
OCTOBER 31, 2014

 
 


Balanced Fund







Table of Contents
President’s Letter
Performance
Portfolio Commentary
Fund Characteristics
Shareholder Fee Example
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Financial Highlights
Report of Independent Registered Public Accounting Firm
Management
Approval of Management Agreement
Additional Information



















Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.



President’s Letter

Dear Investor:

Thank you for reviewing this annual report for the 12 months ended October 31, 2014. It provides investment performance and portfolio information for the reporting period, plus longer-term historical performance data.

Annual reports remain important vehicles for conveying information about fund returns, including market and economic factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Jonathan Thomas

Favorable Fiscal Year for U.S. Stocks and Bonds

Mostly stimulative monetary policies by central banks and expectations of longer-term economic improvement, interspersed with concerns about nearer-term weaker-than-expected global economic data and geopolitical conflicts, helped drive financial market returns during the reporting period. We believe the combination of longer-term optimism about U.S. economic growth, low costs of capital, and continued central bank stimulus (even as the U.S. Federal Reserve’s latest monthly bond purchase program ended) helped persuade investors to seek risk and yield, which benefited U.S. stocks and bonds. The S&P 500 Index gained 17.27% during the 12 months. The 30-year U.S. Treasury bond was close behind, returning 15.44%, according to Barclays. U.S. real estate investment trusts (REITs), whose shares combine performance attributes of stocks and bonds, benefited from both—the MSCI U.S. REIT Index advanced 19.19%.

U.S. market benchmark returns generally outpaced their non-U.S. counterparts. The U.S. was perceived by investors as a relative bastion of growth, stability, and potentially attractive yields compared with most of the rest of the world, so capital flows generally favored U.S. assets. These capital flows, along with weaker-than-expected global growth, lower-than-expected global inflation, and falling commodity and energy prices, helped keep long-term interest rates and other corporate costs low. U.S. stocks just completed a solid third-quarter earnings reporting season, though questions remain about next year’s revenues, given this year’s slowdown in global economic growth and concerns about how far it could extend into 2015.

We believe continuing global economic and geopolitical uncertainties could continue to support the relative appeal of U.S. assets in coming months. But the end of the U.S. Federal Reserve’s monthly bond-buying program and the still-looming possibility of higher interest rates in 2015 point to potential U.S. market volatility ahead. In this environment, we continue to believe in a disciplined, diversified, long-term investment approach, using professionally managed stock and bond portfolios for meeting financial goals. We appreciate your continued trust in us.

Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments


2


Performance
 
Total Returns as of October 31, 2014
 
 
 
 
Average Annual Returns
 
 
Ticker
Symbol
1 year
5 years
10 years
Since
Inception
Inception
Date
Investor Class
TWBIX
10.76%
11.58%
6.91%
8.25%
10/20/88
Blended Index(1)
11.93%
11.81%
7.05%
9.16%(2)
S&P 500 Index
17.27%
16.68%
8.20%
10.31%(2)
Barclays U.S. Aggregate Bond Index
4.14%
4.22%
4.63%
6.71%(2)
Institutional Class
ABINX
10.98%
11.79%
7.13%
5.22%
5/1/00
(1)
The blended index combines monthly returns of two widely known indices in proportion to the asset mix of the fund. The S&P 500 Index represents 60% of the index and the remaining 40% is represented by the Barclays U.S. Aggregate Bond Index.
(2)
Since October 31, 1988, the date nearest the Investor Class’s inception for which data are available.
Growth of $10,000 Over 10 Years
$10,000 investment made October 31, 2004
Performance for other share classes will vary due to differences in fee structure.
 
Value on October 31, 2014
 
Investor Class — $19,521
 
 
Blended Index — $19,773
 
 
S&P 500 Index — $22,001
 
 
Barclays U.S. Aggregate Bond Index — $15,734
 
Total Annual Fund Operating Expenses
 
Investor Class
Institutional Class
0.91%
0.71%
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.

Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.

3


Portfolio Commentary
 

Equity Portfolio Managers: Bill Martin and Claudia Musat
Fixed-Income Portfolio Managers: Dave MacEwen, Bob Gahagan, and Brian Howell

Performance Summary

Balanced returned 10.76%* for the fiscal year ended October 31, 2014. By comparison, the fund’s benchmark (a blended index consisting of 60% S&P 500 Index and 40% Barclays U.S. Aggregate Bond Index) returned 11.93%. The equity portion of Balanced underperformed the 17.27% return of the S&P 500 Index, while the fixed-income component outperformed the 4.14% return of the Barclays U.S. Aggregate Bond Index.

Financials Stocks Leading Equity Detractors

Stock selection in the financials sector was a main driver of underperformance, particularly in thrifts and mortgage finance companies and capital markets holdings. Security selection and positioning in the banking industry also weighed on results. Leading underperformers included a portfolio-only position in mortgage service provider Ocwen Financial Corporation, which fell steeply in light of possible legal action by a group of investors as well as a New York State investigation into conflicts of interest. The holding was sold due to its uncertain future. A portfolio-only position in investment management company Waddell & Reed Financial, which declined despite repeatedly beating quarterly earnings expectations on concerns over expense management and insider selling, hampered results. In spite of the recent investor skittishness surrounding the stock, we find the holding compelling given its very attractive valuation and quality insights.

Overweight positions, relative to the benchmark, in a number of retailers in the consumer discretionary sector also detracted from results. Video game retailer GameStop underperformed due to sluggish sales during the 2013 holiday season. Despite difficulty seen early in the reporting period, the holding appears attractive on strong valuation and quality factors. The fund’s position in office products superstore Staples, which fell on disappointing revenues and profits and an announcement of 225 store closings, was detrimental. Retail giant Target lagged in the wake of news about a security breach in its credit card payment system, as well as greater-than-expected cost increases associated with expansion. Both retailers were liquidated from the fund. Elsewhere in the sector, casino game equipment maker International Game Technology fell on disappointing earnings stemming from declining slot machine sales and we ultimately exited our position in the holding.

Positive contribution to results came from stock selection in the industrials, consumer staples, and energy sectors. Airline holdings, such as Southwest Airlines, were particularly beneficial. The company’s stock soared on strong revenues and earnings driven by rising traffic and declining oil prices. Among consumer staples, several poultry processors in the food products industry bolstered the fund’s gains, including an overweight position in Tyson Foods, which advanced on higher demand for poultry products and on general industry consolidation. Elsewhere in the sector, security selection in household products and beverage manufacturers also drove relative gains although no single position was a leading portfolio contributor.




* All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.

4


Energy sector holdings were also top relative performers. Drilling and rig services provider Nabors Industries rose on solid earnings and merger news during the first half of the period. Benefiting from an improving economic landscape, demand for refinery services, and rising oil prices early in the period, oil refiner Marathon Petroleum also contributed to gains. Given substantial appreciation in both stocks we opted to lock in gains and exited the positions.

Elsewhere in the fund, leading individual contributors included a portfolio-only position in apparel manufacturer Hanesbrands, whose earnings growth and announced intent to purchase French clothing manufacturer DBApparel, thereby increasing exposure in Europe, helped to drive its stock price higher. We sold out of the holding after substantial appreciation caused its valuation insights to become less attractive. Likewise, an underweight position in online retailer Amazon.com benefited the fund as concerns about the company’s profitability amid rising capital expenditures and falling margins pushed the stock price down. The position was liquidated by period-end.

Fixed-Income Portfolio Advanced

We continued to underweight, relative to the benchmark, Treasuries and government agencies in favor of spread (non-Treasury) sectors, including corporate credit and securitized sectors, throughout the 12-month period. Within the corporate allocation, security selection, combined with small, out-of-benchmark positions in high-yield securities, contributed strongly to the portfolio’s performance. Similarly, the overweight allocation and security selection within the securitized sector contributed favorably to results. In particular, our selections among traditional pass-through mortgage-backed securities, structured mortgage securities, and asset-backed securities contributed to performance.

Anticipating a gradual increase in U.S. interest rates, stemming from improving economic data and the Federal Reserve’s winding down of quantitative easing, we shortened the portfolio’s overall duration stance relative to the benchmark. This contributed favorably to performance early in the 12-month period, but the strategy detracted from results during 2014, as interest rates generally declined.

Outlook

Economic recovery in the U.S. appears to be progressing, albeit at a slower pace than during prior post-recessionary periods, and is expected to stay the course into 2015. Recent economic indicators such as improvements in consumer confidence and rising corporate profits and revenues point to a sustainable rebound, and economic growth is likely to further benefit from the ongoing recovery in the labor and housing markets. We expect interest rates and inflation to remain at current historically low levels in the near term, but longer-term increases are likely based on improving economic fundamentals and wage growth. Though a continuation of political instability in non-U.S. markets as well as the potential for rising inflation and interest rates could lead to heightened market volatility, we believe that our disciplined, objective, and systematic investment strategy, for both the equity and fixed-income components of the portfolio, is particularly beneficial during periods of volatility and we adhere to our process regardless of the market environment, allowing us to take advantage of opportunities presented by market inefficiencies.





5


Fund Characteristics
OCTOBER 31, 2014
 
Top Ten Common Stocks
% of net assets
Apple, Inc.
2.1%
Microsoft Corp.
1.7%
Johnson & Johnson
1.5%
Intel Corp.
1.1%
Exxon Mobil Corp.
1.1%
Pfizer, Inc.
1.1%
Gilead Sciences, Inc.
1.0%
Merck & Co., Inc.
1.0%
Amgen, Inc.
1.0%
Oracle Corp.
0.9%
 
 
Top Five Common Stocks Industries
% of net assets
Pharmaceuticals
4.5%
Oil, Gas and Consumable Fuels
3.7%
Technology Hardware, Storage and Peripherals
3.4%
Software
3.3%
Biotechnology
3.3%
 
 
Types of Investments in Portfolio
% of net assets
Common Stocks
59.8%
Corporate Bonds
11.1%
U.S. Treasury Securities
10.9%
U.S. Government Agency Mortgage-Backed Securities
10.7%
Collateralized Mortgage Obligations
2.4%
Commercial Mortgage-Backed Securities
2.2%
Asset-Backed Securities
1.3%
Sovereign Governments and Agencies
0.6%
Municipal Securities
0.4%
U.S. Government Agency Securities
0.1%
Temporary Cash Investments
1.2%
Other Assets and Liabilities
(0.7)%
 
 
Key Fixed-Income Portfolio Statistics
 
Weighted Average Life
6.8 years
Average Duration (effective)
5.1 years



6


Shareholder Fee Example 

Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.

The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from May 1, 2014 to October 31, 2014.

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.

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.



7




Beginning
Account Value
5/1/14
Ending
Account Value
10/31/14
Expenses Paid
During Period
(1)5/1/14 - 10/31/14
 
Annualized
Expense Ratio
(1)
Actual
 
 
 
 
Investor Class
$1,000
$1,045.70
$4.64
0.90%
Institutional Class
$1,000
$1,046.80
$3.61
0.70%
Hypothetical
 
 
 
 
Investor Class
$1,000
$1,020.67
$4.58
0.90%
Institutional Class
$1,000
$1,021.68
$3.57
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 184, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.




8


Schedule of Investments

OCTOBER 31, 2014
 
Shares/Principal Amount
Value
COMMON STOCKS — 59.8%
 
 
Aerospace and Defense — 2.8%
 
 
Boeing Co. (The)
29,391

$
3,671,230

Honeywell International, Inc.
61,982

5,957,710

Lockheed Martin Corp.
31,771

6,054,599

Northrop Grumman Corp.
7,535

1,039,529

Raytheon Co.
54,895

5,702,492

United Technologies Corp.
19,169

2,051,083

 
 
24,476,643

Air Freight and Logistics — 0.7%
 
 
United Parcel Service, Inc., Class B
58,894

6,178,570

Airlines — 0.5%
 
 
Southwest Airlines Co.
135,372

4,667,627

Auto Components — 0.4%
 
 
Magna International, Inc.
37,276

3,679,514

Banks — 2.1%
 
 
Bank of America Corp.
278,079

4,771,835

Citigroup, Inc.
7,360

393,981

JPMorgan Chase & Co.
98,827

5,977,057

SunTrust Banks, Inc.
87,149

3,411,012

Wells Fargo & Co.
59,091

3,137,141

 
 
17,691,026

Beverages — 0.7%
 
 
Coca-Cola Co. (The)
9,727

407,367

Dr Pepper Snapple Group, Inc.
75,164

5,205,107

PepsiCo, Inc.
712

68,473

 
 
5,680,947

Biotechnology — 3.3%
 
 
Amgen, Inc.
53,273

8,639,815

Biogen Idec, Inc.(1) 
19,460

6,248,217

Celgene Corp.(1) 
39,693

4,250,723

Gilead Sciences, Inc.(1) 
78,006

8,736,672

United Therapeutics Corp.(1) 
2,548

333,712

 
 
28,209,139

Capital Markets — 0.9%
 
 
Franklin Resources, Inc.
68,822

3,827,191

T. Rowe Price Group, Inc.
11,285

926,386

Waddell & Reed Financial, Inc., Class A
68,595

3,274,725

 
 
8,028,302

Chemicals — 2.4%
 
 
Albemarle Corp.
19,164

1,118,794


9


 
Shares/Principal Amount
Value
Ashland, Inc.
36,447

$
3,938,827

Cabot Corp.
54,813

2,544,968

Dow Chemical Co. (The)
122,226

6,037,964

E.I. du Pont de Nemours & Co.
8,624

596,350

Eastman Chemical Co.
47,138

3,807,808

International Flavors & Fragrances, Inc.
7,867

780,013

Olin Corp.
25,092

608,230

PPG Industries, Inc.
6,839

1,393,036

 
 
20,825,990

Commercial Services and Supplies — 0.1%
 
 
Pitney Bowes, Inc.
44,521

1,101,450

Communications Equipment — 1.8%
 
 
Cisco Systems, Inc.
311,909

7,632,413

QUALCOMM, Inc.
99,080

7,778,771

 
 
15,411,184

Consumer Finance — 0.5%
 
 
Cash America International, Inc.
82,474

4,053,597

Containers and Packaging — 0.8%
 
 
Ball Corp.
64,605

4,162,500

Sonoco Products Co.
70,451

2,879,332

 
 
7,041,832

Diversified Consumer Services — 0.5%
 
 
H&R Block, Inc.
132,923

4,294,742

Diversified Financial Services — 0.8%
 
 
Berkshire Hathaway, Inc., Class B(1) 
19,198

2,690,792

Voya Financial, Inc.
104,685

4,108,886

 
 
6,799,678

Diversified Telecommunication Services — 0.4%
 
 
AT&T, Inc.
40,589

1,414,121

Verizon Communications, Inc.
40,301

2,025,125

 
 
3,439,246

Electric Utilities — 0.3%
 
 
Entergy Corp.
29,154

2,449,519

Electrical Equipment — 0.7%
 
 
Emerson Electric Co.
71,342

4,570,168

Rockwell Automation, Inc.
9,873

1,109,232

 
 
5,679,400

Electronic Equipment, Instruments and Components — 0.4%
 
 
TE Connectivity Ltd.
56,012

3,424,014

Energy Equipment and Services — 1.8%
 
 
Baker Hughes, Inc.
83,537

4,424,119

National Oilwell Varco, Inc.
50,339

3,656,625

Schlumberger Ltd.
75,754

7,473,890

 
 
15,554,634


10


 
Shares/Principal Amount
Value
Food Products — 2.5%
 
 
Archer-Daniels-Midland Co.
115,838

$
5,444,386

Bunge Ltd.
42,570

3,773,830

Ingredion, Inc.
35,586

2,749,019

Kellogg Co.
68,984

4,412,217

Pilgrim's Pride Corp.(1) 
92,281

2,621,703

Sanderson Farms, Inc.
19,746

1,658,269

Tyson Foods, Inc., Class A
17,451

704,148

 
 
21,363,572

Gas Utilities — 0.1%
 
 
New Jersey Resources Corp.
17,516

1,024,336

Health Care Equipment and Supplies — 1.9%
 
 
Becton Dickinson and Co.
38,977

5,016,340

C.R. Bard, Inc.
7,215

1,183,044

Medtronic, Inc.
90,608

6,175,841

St. Jude Medical, Inc.
61,806

3,966,091

 
 
16,341,316

Health Care Providers and Services — 0.6%
 
 
Cardinal Health, Inc.
60,359

4,736,974

Hotels, Restaurants and Leisure — 0.9%
 
 
Las Vegas Sands Corp.
40,636

2,529,998

Royal Caribbean Cruises Ltd.
48,124

3,270,988

SeaWorld Entertainment, Inc.
37,439

720,326

Wyndham Worldwide Corp.
20,089

1,560,313

 
 
8,081,625

Household Durables — 0.4%
 
 
Newell Rubbermaid, Inc.
64,025

2,133,953

NVR, Inc.(1) 
1,047

1,285,276

 
 
3,419,229

Household Products — 1.5%
 
 
Energizer Holdings, Inc.
38,148

4,678,852

Kimberly-Clark Corp.
47,295

5,404,400

Procter & Gamble Co. (The)
28,997

2,530,568

 
 
12,613,820

Industrial Conglomerates — 0.6%
 
 
3M Co.
11,631

1,788,499

General Electric Co.
135,267

3,491,241

 
 
5,279,740

Insurance — 2.8%
 
 
Allstate Corp. (The)
77,195

5,006,096

American International Group, Inc.
112,322

6,017,089

Amtrust Financial Services, Inc.
76,749

3,443,728

Aspen Insurance Holdings Ltd.
57,119

2,492,102

Hanover Insurance Group, Inc. (The)
45,247

3,028,834

RenaissanceRe Holdings Ltd.
39,552

4,086,908

 
 
24,074,757


11


 
Shares/Principal Amount
Value
Internet and Catalog Retail — 0.8%
 
 
Expedia, Inc.
16,104

$
1,368,357

Priceline Group, Inc. (The)(1) 
4,318

5,208,415

 
 
6,576,772

Internet Software and Services — 1.3%
 
 
eBay, Inc.(1) 
106,196

5,575,290

Google, Inc., Class A(1) 
9,831

5,582,730

 
 
11,158,020

IT Services — 1.1%
 
 
Amdocs Ltd.
36,371

1,729,077

International Business Machines Corp.
48,146

7,915,203

 
 
9,644,280

Machinery — 1.2%
 
 
Caterpillar, Inc.
56,456

5,725,203

Parker-Hannifin Corp.
36,317

4,613,348

Snap-On, Inc.
2,711

358,232

 
 
10,696,783

Media — 0.8%
 
 
John Wiley & Sons, Inc., Class A
8,959

523,116

Time Warner, Inc.
79,370

6,307,534

Walt Disney Co. (The)
3,197

292,142

 
 
7,122,792

Multi-Utilities — 0.3%
 
 
Vectren Corp.
5,335

239,808

Wisconsin Energy Corp.
51,640

2,564,443

 
 
2,804,251

Multiline Retail — 1.3%
 
 
Dillard's, Inc., Class A
30,775

3,254,764

Kohl's Corp.
68,687

3,724,209

Macy's, Inc.
78,245

4,524,126

 
 
11,503,099

Oil, Gas and Consumable Fuels — 3.7%
 
 
Chevron Corp.
21,004

2,519,430

ConocoPhillips
63,461

4,578,711

EOG Resources, Inc.
54,245

5,155,987

Exxon Mobil Corp.
99,234

9,596,920

Occidental Petroleum Corp.
61,919

5,506,457

Valero Energy Corp.
96,035

4,810,393

 
 
32,167,898

Pharmaceuticals — 4.5%
 
 
AbbVie, Inc.
119,019

7,552,946

Johnson & Johnson
120,934

13,034,266