SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant __X__
Filed by a Party other than the Registrant _____
Check the appropriate box:
_____ Preliminary Proxy Statement
_____ Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
__X__ Definitive Proxy Statement
_____ Definitive Additional materials
_____ Soliciting Material Pursuant to ss.240.14a-l l(c) or ss.240.14a-12
AMERICAN CENTURY MUTUAL FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
__X__ No fee required.
_____ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
_____ Fee paid previously with preliminary materials.
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[front cover]
[american century logo (reg. sm)]
[photo of hand holding pen and ballot]
Proxy Statement
AMERICAN CENTURY MUTUAL FUNDS, INC.
APRIL 28, 2000
IMPORTANT VOTING INFORMATION INSIDE!
Table of Contents
LETTER FROM THE PRESIDENT 1
PROXY STATEMENT SUMMARY 2
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS 4
DETAILED DISCUSSION OF PROXY ISSUES 5
SHARE OWNERSHIP 7
PROPOSAL: ELIMINATION OF A FUNDAMENTAL INVESTMENT POLICY 9
OTHER MATTERS 11
Table of Contents American Century Investments
Letter from the President
American Century Investment Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
April 28, 2000
Dear American Century Shareholder,
I am writing to inform you of the upcoming Special Meeting of the
shareholders of the American Century Select and Heritage Funds. At this meeting,
you are being asked to vote on an important proposal affecting your fund.
I'm sure that you, like most people, lead a busy life and are tempted to put
this proxy aside. Please don't. When shareholders do not return their proxies,
additional expenses are incurred to pay for follow-up mailings and telephone
calls. PLEASE TAKE A FEW MINUTES TO REVIEW THIS PROXY STATEMENT AND SIGN AND
RETURN THE PROXY CARD TODAY.
The Board of Directors of the funds has unanimously approved this proposal
and recommends a vote "FOR" it. If you have any questions regarding the issue to
be voted on or need assistance completing your proxy card, please contact us at
1-800-345-2021 or 816-531-5575 weekdays from 7 a.m. to 7 p.m., and Saturdays 9
a.m. to 2 p.m. Central time.
I appreciate you taking the time to consider this important proposal. Thank
you for investing with American Century and for your continued support.
Sincerely,
[signature of Robert C. Puff]
Robert C. Puff, Jr.
President and Chief Investment Officer
Proxy Statement Letter from the President 1
Proxy Statement Summary
The following Q&A is a brief summary of the proposal to be considered at the
Special Meeting. The information below is qualified in its entirety by more
detailed information contained elsewhere in this proxy statement. Please read
all the enclosed proxy materials before voting.
When will the Special Meeting be held? Who is eligible to vote?
The meeting will be held on Friday, June 16, 2000, at 10 a.m. Central time at
American Century's offices at 4500 Main Street, Kansas City, Missouri. This will
be a business meeting only. There will be no presentations about the funds. The
record date for the meeting is the close of business April 14, 2000. Only
shareholders who own shares on the record date are entitled to vote at the
meeting.
Why are the funds having a special meeting?
Select and Heritage are currently required to invest 80% and 60% of their
assets, respectively, in securities of companies that pay dividends or are
committed to paying dividends or otherwise produce income. This reflects the
funds' strategy to invest in companies that are successful enough to pay
dividends. However, for several years, the importance of dividend payments as an
indication of a company's strength has diminished. An increasing number of
successful companies in the S&P 500, Select's benchmark, and the S&P 400,
Heritage's benchmark, are no longer paying dividends. In addition, those that do
not pay dividends are growing more quickly on average than dividend payers.
Because of these changes in the investing landscape, Select and Heritage have
been choosing stocks to meet the funds' primary objective of long-term capital
growth from a declining pool of growing companies that pay dividends. Therefore,
the funds' management teams proposed the elimination of this investment policy
to allow the funds to seek investments in successful companies regardless of
their dividend-paying histories. The Board of Directors agree. Because the
policy is fundamental for both funds, shareholder approval of the change is
required.
A complete description of the proposed change begins on page 9.
Will this change substantially affect the way Select and Heritage are managed?
No. Select and Heritage are both managed with a conservative growth
orientation, and that will continue. In an attempt to balance any incremental
risk incurred by the funds from the lack of a dividend-paying policy, the
managers will continue to track volatility carefully. They may choose to invest
more of the funds' assets in conservative industries and companies and/or to
take smaller holdings at industry and company levels. These strategies would
broaden diversification and lessen share price volatility, while maintaining the
funds' focus on accelerating growth companies.
2 Proxy Statement Summary American Century Investments
How do the directors recommend that I vote on this proposal?
The directors unanimously recommend that you vote "FOR" the proposal.
When will the change to the funds' fundamental investment policy take effect if
approved?
If approved, the proposed change to the investment policy will be effective
June 19, 2000.
Who is asking for my vote?
Your Board of Directors is asking you to sign and return the enclosed proxy
card so your votes can be cast at the Special Meeting. In the event the meeting
is adjourned, these proxies also would be voted at the reconvened meeting.
How do I vote my shares?
We've made it easy for you. You can vote online, by mail, by fax or in
person.
* To vote online, just visit https://vote.proxy-direct.com (you will need the
control number that appears on the right-hand side of your proxy card).
* To vote by mail, sign and send us the enclosed proxy card in the envelope
provided.
* To vote by fax, sign the proxy card and fax both sides of the card to
1-888-796-9932.
* Or, you can vote in person at the Special Meeting on June 16, 2000.
If I send my proxy in now, can I change my vote later?
A proxy can be revoked at any time by:
* Revoting online.
* Sending us another proxy card.
* Writing to us.
* Or, attending the meeting and voting in person. Even if you plan to attend the
meeting and vote in person, we ask that you return the enclosed proxy card.
Doing so will help us ensure that an adequate number of shares are present at
the meeting.
If you have any questions regarding the proxy statement or need assistance in
voting your shares, please call us at 1-800-345-2021 or 816-531-5575 weekdays
from 7 a.m. to 7 p.m., and Saturdays 9 a.m. to 2 p.m. Central time.
Proxy Statement Proxy Statement Summary 3
Notice of Special Meeting of Shareholders
TO BE HELD ON JUNE 16, 2000
American Century Investments
4500 Main Street
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021
816-531-5575
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders of the American
Century Select Fund and the American Century Heritage Fund (the "funds"), each a
series of American Century Mutual Funds, Inc., a Maryland corporation (the
"company"), will be held at the company's offices at 4500 Main Street, Kansas
City, Missouri, on Friday, June 16, 2000, at 10 a.m. Central time, for the
following purposes:
1. To approve the elimination of a fundamental investment policy of each of
the funds; and
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
This is a Notice and proxy statement for the funds. Please complete, sign and
return the enclosed proxy card.
Shareholders of record as of the close of business on April 14, 2000, are the
only persons entitled to notice of and to vote at the meeting and any
adjournments thereof. Your attention is directed to the attached proxy
statement.
We urge you to mark, sign, date and mail the enclosed proxy card in the
postage-paid envelope provided so you will be represented at the meeting.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU CAST YOUR
VOTE"FOR" THE PROPOSAL.
April 28, 2000 BY ORDER OF THE BOARD OF DIRECTORS
David C. Tucker
Vice President
4 Notice of Special Meeting of Shareholders American Century Investments
Detailed Discussion of Proxy Issues
April 28, 2000
The enclosed proxy is solicited by the Board of Directors of American Century
Mutual Funds, Inc. in connection with a Special Meeting of shareholders of the
American Century Select Fund and the American Century Heritage Fund. The Special
Meeting will be held Friday, June 16, 2000, at American Century's offices at
4500 Main Street, Kansas City, Missouri, at 10 a.m. Central time, and any
adjournments thereof. In this proxy statement, the investment company will be
referred to as the "company." The series of capital stock of the company for
which the special meeting is called, the American Century Select Fund and the
American Century Heritage Fund, will be referred to as the "funds."
The costs of soliciting proxies, including the cost of preparing and mailing
the notice of meeting and this proxy statement, will be paid by American Century
Investment Management, Inc., the funds' investment manager (referred to in the
proxy statement as "ACIM"). This notice of meeting and proxy statement are first
being mailed to shareholders on or around April 28, 2000. ACIM, at its expense,
has hired the proxy solicitation firm of Alamo Direct to help solicit proxies
for the meeting. Supplemental solicitations for the meeting may be made by Alamo
Direct or by ACIM, either personally or by mail, telephone or facsimile.
VOTING OF PROXY. If you vote your proxy now, you may revoke it before the
meeting by mailing written notice of revocation to the Secretary of the company
before the meeting, or personally delivering your revocation to the Secretary
any time prior to the taking of the vote at the meeting. Unless revoked, proxies
that have been returned by shareholders without instructions will be voted in
favor of the proposal. In instances where choices are specified on the proxy,
those proxies will be voted as the shareholder has instructed.
The funds are divided into three classes. All classes of shares of the funds
have identical voting rights, except where a proposal affects only one class.
Where a proposal affects only one class, only that class gets to vote on it.
This issue affects all classes equally, so the classes will not have separate
votes. The number of outstanding votes of each class of each fund, as of the
close of business on March 31, 2000, is:
Select Heritage
Investor Class 7,813,411,209 1,781,431,274
Institutional Class 171,181,916 7,252,148
Advisor Class 13,050,320 1,735,376
Because the record date is April 14, the total number of votes by class at
the meeting may be different.
Proxy Statement Detailed Discussion of Proxy Issues 5
Only those shareholders owning shares as of the close of business April 14,
2000, may vote at the meeting or any adjournments thereof. Each share of the
funds gets one vote for each dollar of the funds' net asset value the share
represents. If we do not receive enough "for" votes by June 16, 2000, to approve
the proposal being considered at the meeting, the named proxies may propose
adjourning the meeting to allow the gathering of more proxy votes. An
adjournment requires a vote "for" by a majority of the votes present at the
meeting (whether in person or by proxy). The named proxies will vote the "for"
votes they have received in favor of the adjournment, and any "against" or
"abstain" votes will count as votes against adjournment.
Abstentions and broker non-votes (i.e., proxies sent in by brokers and other
nominees that cannot vote on a proposal because instructions have not been
received from the beneficial owners) will be counted as "present" for purposes
of determining whether or not a quorum is present for the meeting. Abstentions
and broker non-votes will, however, be considered to be votes against the
proposals.
INVESTMENT MANAGER. American Century Investment Management, Inc. is the
funds' investment manager. American Century Services Corporation provides the
funds with transfer agency services. Both companies are wholly owned
subsidiaries of American Century Companies, Inc. The mailing address for
American Century and the funds is P.O. Box 419200, Kansas City, Missouri
64141-6200.
DISTRIBUTORS. Funds Distributor, Inc. ("FDI") and American Century Investment
Services, Inc. ("ACIS") are the funds' principal underwriters. FDI's mailing
address is 60 State Street, Suite 1300, Boston, Massachusetts 02109. ACIS's
mailing address is P.O. Box 419200, Kansas City, Missouri 64141-6200.
ANNUAL REPORT. The funds will furnish, without charge, a copy of their most
recent annual report and semiannual report upon request. To request these
materials, please call American Century at 1-800-345-2021 or 816-531-5575.
6 Detailed Discussion of Proxy Issues American Century Investments
Share Ownership
The following table shows, as of the close of business on March 31, 2000, the
share ownership of those shareholders known by ACIM to own more than 5% of the
funds' outstanding shares.
Fund Name and Address Shares Percent of
and Class of Record Owner Owned Outstanding
Shares
- --------------------------------------------------------------------------------
SELECT
Advisor
Principal Life Insurance Company
Des Moines, Iowa 54,973 23.3%
United Missouri Bank TR
Carolina First Bancshares PSP
Kansas City, Missouri 24,302 10.3%
Saxon & Co. FBO
Philadelphia, Pennsylvania 48,155 20.4%
Institutional
Morgan Guaranty Trust Company
of New York TR
Champion International Corporate Savings
Plan for Salaried Employees Plan Trust
New York, New York 394,969 12.8%
The Chase Manhattan Bank
Robert Bosch Corporation New Star
Plan & Trust
New York, New York 1,604,092 52.1%
UMB Bank NA Trustee
Buckeye Pipe Line Services Company
Retirement and Savings Plan
Kansas City, Missouri 349,915 11.4%
HERITAGE
Investor
Bankers Trust Company TR (Kraft General
Foods Inc)Master Savings Plan and Trust 21,746,564 22.6%
Bankers Trust Company TR (Philip Morris)
Deferred Profit Sharing Plan and Trust 15,977,506 16.6%
Advisor
North Carolina Trust Company TTEE
Greensboro Orthopedic Center Inc.
Employee Savings PL&PS Plan
Greensboro, North Carolina 72,618 76.5%
Proxy Statement Share Ownership 7
Fund Name and Address Shares Percent of
and Class of Record Owner Owned Outstanding
Shares
- --------------------------------------------------------------------------------
Saxon & Co. FBO
Philadelphia, Pennsylvania 7,176 7.6%
Institutional
Trustees of American Century Money
Purchase Plan & Trust
Kansas City, Missouri 20,697 5.2%
Trustees of American Century Profit Sharing
& 401k Savings Plan and Trust
Kansas City, Missouri 363,693 91.6%
As of March 31, 2000, the officers and directors of each fund, as a group,
owned less than 1% of each fund's outstanding shares.
8 Share Ownership American Century Investments
Proposal: Elimination of a Fundamental Investment Policy
The investment strategy of Select and Heritage, as described in their current
prospectus, is to invest in stocks of companies that they believe will increase
in value over time. Select and Heritage have traditionally invested in stocks of
companies that are successful enough to pay dividends. The funds currently have
the following fundamental investment policy:
Eighty percent (80%) of Select's and 60% of Heritage's assets must be
invested in securities of companies that pay regular dividends, or have
committed to pay dividends, or otherwise produce income.
ACIM has proposed, and the Board of Directors of the funds has approved,
eliminating this fundamental policy.
The proposed elimination of this fundamental investment policy will not
substantially change the basic growth objective of Select and Heritage, nor will
it substantially change the type of securities selected for their portfolios.
Those securities will be, as they have been in the past, securities (primarily
common stocks) that ACIM believes have better-than-average prospects for
appreciation.
ACIM believes, however, that the current dividend payment requirement
unnecessarily limits the funds' choice of investment opportunities. In pursuing
their investment objectives, both Select and Heritage look for successful
companies with earnings and revenues that are growing at an accelerating rate.
An increasing number of these companies, however, have elected to forego paying
dividends, and instead invest earnings back into the growth of the company. In
addition, numerous other firms have elected to use the cash they would otherwise
use to pay dividends to instead engage in share buyback programs. By engaging in
buyback programs, the companies create additional earnings per share growth and
additional value for existing shareholders. The number of dividend-paying
companies also has decreased through mergers and acquisitions, and ACIM believes
that continued consolidation will cause a further decrease in the number of such
companies.
Since 1990, dividend-paying companies included in the S&P 500, Select's
benchmark, have decreased from 96.70% of the index (based on market
capitalization) to 74.80% of the index in 1999. Similarly, for Heritage's
benchmark, the S&P 400, dividend-paying companies decreased from 75.34% in 1990
to 52.67% of the index in 1999.
More importantly, the non-dividend-paying companies are, on average, growing
at a much faster rate than those that pay dividends. Given their accelerating
growth style, it is a company's growth rate that particularly interests ACIM
when choosing investments for the funds. In 1999, the
Proxy Statement Proposal 9
weighted average sales growth rate for the non-dividend-paying companies in the
S&P 500 was 31.51%, and for the S&P 400 was 24.57%. For the same period, the
dividend-paying companies' sales growth rate was 13.23% for the S&P 500, and
11.19% for the S&P 400. It is this disparity that has prompted ACIM to propose
this change in investment policy.
With more of these successful companies refusing to pay dividends,
eliminating the dividend payment requirement will allow the funds to invest more
of their assets in these growing companies if they represent attractive
investment opportunities. This will allow the funds to own a broader variety of
investments. This change is being proposed by ACIM with the intent of enhancing
the long-term performance potential of the funds.
ACIM will continue to manage the risk and volatility of the funds. It will
utilize several strategies to manage risk, including the possible lowering of
holding sizes at industry and company levels. Doing so should broaden
diversification and lessen share price volatility. ACIM also may consider
increasing investments in industries and companies that are considered
conservative, and will continue to track and control the funds' volatility
versus their respective benchmarks. The funds will continue looking for
investments that have accelerating growth and otherwise fit their core
investment strategies.
In addition, ACIM will not completely eliminate investments in companies that
pay dividends. ACIM will have internal guidelines for each of the funds
governing the size of the dividend-paying portion, but such guidelines may be
revised without a shareholder vote. This will allow the funds to quickly react
to changing market conditions.
The proposed change will allow the funds to invest more of their assets in
companies with greater appreciation potential than is currently possible. Even
with the risk-monitoring measures undertaken by ACIM, such securities also may
have greater downside risk. ACIM does not believe, however, that the general
risk potential of the funds will be materially increased by the proposed change
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
THE PROPOSED AMENDMENT.
10 Proposal American Century Investments
Other Matters
OTHER BUSINESS TO BE BROUGHT BEFORE THE MEETING
The Board of Directors knows of no other business to be brought before the
meeting. However, if any other matters are properly brought before the meeting,
it is the intention that proxies that do not contain specific restrictions to
the contrary will be voted on such matters in accordance with the judgment of
the persons named in the enclosed form of proxy.
SUBMISSION OF SHAREHOLDER PROPOSALS
The funds do not hold annual shareholder meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to David C. Tucker, Vice President,
American Century Investments, P.O. Box 419200, Kansas City, Missouri 64141-6200.
NOTICE TO BANKS, BROKER-DEALERS, AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the funds, in care of American Century Investments, P.O. Box
419200, Kansas City, Missouri 64141-6200, whether other people are beneficial
owners of shares for which proxies are being solicited and, if so, the number of
copies of the proxy statement you wish to receive in order to supply copies to
the beneficial owners of the respective shares.
April 28, 2000 David C. Tucker
Vice President
Proxy Statement Other Matters 11
Notes
12 Notes American Century Investments
Notes
Proxy Statement Notes 13
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-BKT-19933
[recycled logo]
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PROXY CARD (FRONT)
American Century Select Fund
(A series of American Century Mutual Funds, Inc.)
Special Meeting of Shareholders, June 16, 2000
This proxy is solicited on behalf of the Board of Directors of American
Century Mutual Funds, Inc. and relates to a proposal that applies to the
American Century Select Fund. By signing below, I (we) appoint as proxies David
C. Tucker, David H. Reinmiller and Janet A. Nash and each of them (with power of
substitution) to vote for the undersigned all shares of common stock I (we) own
in the fund. The authority I am (we are) granting applies to the
above-referenced meeting and any adjournments of that meeting, with all the
power I (we) would have if personally present. The shares represented by this
proxy shall be deemed to grant authority to vote "FOR" all proposals relating to
the Company or the series or class, as applicable.
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and
either return it in the enclosed envelope to: American Century Investments, c/o
Proxy Tabulator, P.O. Box 9043, Smithtown, NY 11787-9831 or fax both sides to
1-888-796-9932. If you prefer, you can vote online at
https://vote.proxy-direct.com. This proxy will not be voted unless it is dated
and signed exactly as instructed on this card.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
CONTROL NUMBER: XXX XXXX XXXX XXX
If shares are held by an individual, sign your name
exactly as it appears on this card. If shares are
held jointly, either party may sign, but the name of
the party signing should conform exactly to the name
shown on this proxy card. If shares are held by a
corporation, partnership or similar account, the name
and the capacity of the individual signing the proxy
card should be indicated - for example: "ABC Corp.,
John Doe, Treasurer."
------------------------------------------
Signature
------------------------------------------
Signatures of joint owner, if any
------------------------------------, 2000
Date
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PROXY CARD (BACK)
Please indicate your vote by marking the appropriate box below. Example:
The Board of Directors recommends a vote "FOR" the proposal.
1. To eliminate a fundamental investment policy that requires 80%
of Select's assets to be invested in securities of companies
that pay regular dividends, or have committed to pay
dividends, or otherwise produce income.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IMPORTANT
PLEASE SIGN AND DATE THE FRONT OF THIS CARD
<PAGE>
PROXY CARD (FRONT)
American Century Heritage Fund
(A series of American Century Mutual Funds, Inc.)
Special Meeting of Shareholders, June 16, 2000
This proxy is solicited on behalf of the Board of Directors of American
Century Mutual Funds, Inc. and relates to a proposal that applies to the
American Century Heritage Fund. By signing below, I (we) appoint as proxies
David C. Tucker, David H. Reinmiller and Janet A. Nash and each of them (with
power of substitution) to vote for the undersigned all shares of common stock I
(we) own in the fund. The authority I am (we are) granting applies to the
above-referenced meeting and any adjournments of that meeting, with all the
power I (we) would have if personally present. The shares represented by this
proxy will be deemed to grant authority to vote "FOR" all proposals relating to
the Company or the series or class, as applicable.
YOUR VOTE IS IMPORTANT. Please date and sign this proxy below and
either return it in the enclosed envelope to: American Century Investments, c/o
Proxy Tabulator, P.O. Box 9043, Smithtown, NY 11787-9831 or fax both sides to
1-888-796-9932. If you prefer, you can vote online at
https://vote.proxy-direct.com. This proxy will not be voted unless it is dated
and signed exactly as instructed on this card.
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
Control number: XXX XXXX XXXX XXX
If shares are held by an individual, sign your name
exactly as it appears on this card. If shares are
held jointly, either party may sign, but the name of
the party signing should conform exactly to the name
shown on this proxy card. If shares are held by a
corporation, partnership or similar account, the name
and the capacity of the individual signing the proxy
card should be indicated - for example: "ABC Corp.,
John Doe, Treasurer."
------------------------------------------
Signature
------------------------------------------
Signatures of joint owner, if any
------------------------------------, 2000
Date
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PROXY CARD (BACK)
Please indicate your vote by marking the appropriate box below. Example:
The Board of Directors recommends a vote "FOR" the proposal.
1. To eliminate a fundamental investment policy that requires 60%
of Heritage's assets to be invested in securities of companies
that pay regular dividends, or have committed to pay
dividends, or otherwise produce income.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IMPORTANT
PLEASE SIGN AND DATE THE FRONT OF THIS CARD
