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 811-07820 --------------------------------------------- AMERICAN CENTURY CAPITAL PORTFOLIOS, 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: 03-31 ------------------------------------------------------ Date of reporting period: 09-30-2008 ------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS.
[front cover] SEMIANNUAL REPORT SEPTEMBER 30, 2008 [american century investments logo and text logo ®] AMERICAN CENTURY INVESTMENTS MID CAP VALUE FUND SMALL CAP VALUE FUND PRESIDENT'S LETTER [photo of Jonathan Thomas] JONATHAN THOMAS Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended September 30, 2008. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s/Jonathan Thomas Jonathan S. Thomas President and Chief Executive Officer American Century Investments TABLE OF CONTENTS Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Stock Index Returns. . . . . . . . . . . . . . . . . . . . . . 2 MID CAP VALUE Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . 6 SMALL CAP VALUE Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . 9 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . 9 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . 10 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . 10 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . 11 FINANCIAL STATEMENTS Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . 13 Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . 22 Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . 24 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . 25 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . 26 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . 33 OTHER INFORMATION Approval of Management Agreements for Mid Cap Value and Small Cap Value. . . . . . . . . . . . . . . . . . . . . . . . . 40 Additional Information . . . . . . . . . . . . . . . . . . . . . . . 45 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 46 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team 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. MARKET PERSPECTIVE [photo of Chief Investment Officer] By Phil Davidson, Chief Investment Officer, U.S. Value Equity FINANCIAL SYSTEM SHAKEN A series of startling events put downward pressure on the U.S. equity market during the six months ended September 30, 2008. The U.S. financial system remained mired in unprecedented credit-market turmoil, which intensified throughout the six-month period. The credit and liquidity stress reached critical mass in September, when the federal government's takeover of mortgage lenders Fannie Mae and Freddie Mac, and its rescue of insurer AIG were followed by the bankruptcy of Lehman Brothers and Bank of America's acquisition of troubled Merrill Lynch. A number of other major financial firms faced similar circumstances. Few investors anticipated the scope of the credit crunch, which has blossomed into a full-blown financial crisis. The adverse effects are being felt on a global scale--the U.S. economy is likely already facing a recession as job losses mount and consumer spending withers, and the malaise is quickly spreading throughout the rest of the world's economies. The U.S. government and the Federal Reserve have taken extraordinary steps to provide support for the flagging financial system, and other governments and central banks are expected to follow suit. In the stock market, volatility reached extreme levels on a day-to-day basis as investors lost confidence in the financial system and the ability of the government to remedy the situation. As a result, the major stock indexes slumped for the six-month period (see the accompanying table). VALUE OUTPERFORMED In this challenging environment, value stocks generally held up better than growth-oriented issues. Against a persistent backdrop of market uncertainty and heightened volatility, companies with attractive valuation characteristics became beacons for risk-averse investors. However, security selection took on greater importance as the market became rife with "value traps"--stocks that are inexpensive for good reason. Our value funds stand to benefit from an increased emphasis on selectivity, thanks to our risk-conscious focus on robust balance sheets, competitive strength, cash flows, and earnings power. We believe these characteristics are indicative of higher-quality companies that will successfully weather the current financial storm. U.S. Stock Index Returns For the six months ended September 30, 2008* RUSSELL 1000 INDEX (LARGE-CAP) -11.06% Russell 1000 Value Index -11.10% Russell 1000 Growth Index -11.23% RUSSELL MIDCAP INDEX -10.58% Russell Midcap Value Index -7.46% Russell Midcap Growth Index -13.93% RUSSELL 2000 INDEX (SMALL-CAP) -0.54% Russell 2000 Value Index 1.24% Russell 2000 Growth Index -2.83% * Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE Mid Cap Value Total Returns as of September 30, 2008 Average Annual Returns Since Inception 6 months(1) 1 Year Inception Date INVESTOR CLASS -1.39% -14.36% 7.97% 3/31/04 RUSSELL MIDCAP VALUE INDEX(2) -7.46% -20.50% 6.46% -- Institutional Class -1.30% -14.19% 8.62% 8/2/04 Advisor Class -1.52% -14.58% 5.90% 1/13/05 R Class -1.55% -14.79% 2.89% 7/29/05 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. ©2008 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 3 Mid Cap Value Growth of $10,000 Over Life of Class $10,000 investment made March 31, 2004
One-Year Returns Over Life of Class Periods ended September 30 2004* 2005 2006 2007 2008 Investor Class 2.80% 20.48% 15.22% 15.59% -14.36% Russell Midcap Value Index 3.50% 26.13% 12.28% 13.75% -20.50% * From 3/31/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 PORTFOLIO COMMENTARY Mid Cap Value Portfolio Managers: Kevin Toney, Michael Liss, and Phil Davidson PERFORMANCE SUMMARY Mid Cap Value returned -1.39%* for the six months ended September 30, 2008. By comparison, the median return for Morningstar's Mid Cap Value category (whose performance, like Mid Cap Value's, reflects fund operating expenses) was - -9.48%.** The fund's benchmark, the Russell Midcap Value Index, returned - -7.46%. Its returns do not include operating expenses. The volatile market environment described in the Market Perspective on page 2 hampered Mid Cap Value's absolute performance. However, on a relative basis, the portfolio significantly outpaced the performance of its benchmark, the Russell Midcap Value Index. Mid Cap Value outperformed because of effective security selection and our continued emphasis on less-risky businesses with sound balance sheets. The portfolio benefited most from its position in the utilities, consumer staples, and materials sectors. Its mix of energy stocks hindered relative performance. The portfolio's complement of international holdings also restrained performance. Since its inception on March 31, 2004, Mid Cap Value has produced an average annual return of 7.97%, topping the returns for that period for Morningstar's Mid Cap Value category median** and the Russell Midcap Value Index (see the performance information on pages 3-4). ALLOCATION TO UTILITIES WAS A PLUS Mid Cap Value's position in utilities was the largest contributor to relative performance. Because of valuations and higher-risk business models, we did not hold any independent power producers, which declined 57% in the benchmark. Investors appear to have connected these companies to both the credit crisis and the sharp drop in energy prices in the closing months of the period. Security selection, particularly among electric utilities, also boosted results. A significant holding was Empire District Electric, which principally provides electricity to customers in southwestern Missouri. By obtaining regulatory approval to pass through most of its fuel and power costs to ratepayers, Empire limited its exposure to rising commodity prices. Top Ten Holdings as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 iShares Russell Midcap Value Index Fund 4.0% -- Kimberly-Clark Corp. 3.4% 2.9% People's United Financial, Inc. 2.8% 1.5% Equitable Resources Inc. 2.2% 1.2% ConAgra Foods, Inc. 2.0% 1.3% Marsh & McLennan Cos., Inc. 2.0% 1.4% Bemis Co., Inc. 1.9% 3.4% Chubb Corp. 1.8% 0.6% Beckman Coulter, Inc. 1.7% 1.7% Allstate Corp. 1.7% 1.4% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one-year and since inception average returns as of September 30, 2008, for Morningstar's Mid Cap Value category were -21.47% and 4.10%, respectively. ©2008 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed: and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. - ------ 5 Mid Cap Value CONSUMER STAPLES ADDED VALUE The portfolio's mix of consumer staples companies--particularly its food and household products holdings--added positively to performance against the benchmark. A top contributor was personal-care and paper-product manufacturer, Kimberly-Clark Corp., which benefited from cost cutting and price increases. We believe the company's margins could improve if the cost of energy, oil-based materials, and product distribution continue to decline. The consumer staples sector was also the source of an international detractor, Maple Leaf Foods. A leading food processor headquartered in Toronto, Canada, Maple Leaf experienced a setback when many of its products were linked to a harmful strain of listeria, a food-borne bacteria. MATERIALS CONTRIBUTED In materials, an overweight position and security selection added to results. A top performer was Bemis Co., one of the portfolio's top holdings. Bemis, a major producer of flexible packaging, primarily for the food industry, reported improved sales volume and should benefit from lower resin input costs. Another notable contributor was Rohm and Haas, a specialty chemical company. Its stock rose on the news that it would be acquired at a substantial premium by Dow Chemical. ENERGY POSITION HAMPERED RESULTS The portfolio's complement of energy stocks slowed relative performance. The sector also provided a significant detractor, Equitable Resources, which is an integrated energy company engaged in Appalachian-region natural gas activities, including production, gathering and processing, distribution, transmission, storage, and marketing. Despite its strong resource base, Equitable's prospects dimmed as natural gas prices fell and its access to capital was restricted by tight credit conditions, which may hinder its ability to execute its growth plans. OUTLOOK We continue to follow our disciplined, bottom-up process, selecting companies one at a time for the portfolio. We see opportunities in consumer staples, utilities, materials, and industrials stocks, reflected by overweight positions in these sectors, relative to the benchmark. Our fundamental analysis and valuation work are also directing us toward smaller relative weightings in financials, consumer discretionary, and energy stocks. PORTFOLIO MANAGER SCOTT MOORE HAS LEFT AMERICAN CENTURY INVESTMENTS TO PURSUE ANOTHER CAREER OPPORTUNITY. PORTFOLIO MANAGER KEVIN TONEY HAS JOINED THE MID CAP VALUE MANAGEMENT TEAM. MR. TONEY, A PORTFOLIO MANAGER ON THE EQUITY INCOME AND VALUE PORTFOLIOS, PREVIOUSLY SERVED AS A SENIOR INVESTMENT ANALYST FOR MID CAP VALUE SINCE ITS INCEPTION. Top Five Industries as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 Insurance 8.6% 6.2% Electric Utilities 6.8% 5.8% Multi-Utilities 4.9% 3.4% Oil, Gas & Consumable Fuels 4.6% 2.0% Food Products 4.6% 9.2% Types of Investments in Portfolio % of % of net assets net assets as of as of 9/30/08 3/31/08 Common Stocks 98.6% 96.6% Temporary Cash Investments 1.4% 1.5% Other Assets and Liabilities(1) --(2) 1.9% (1) Includes securities lending collateral and other assets and liabilities. (2) Category is less than 0.05% of total net assets. - ------ 6 PERFORMANCE Small Cap Value Total Returns as of September 30, 2008 Average Annual Returns 6 1 5 10 Since Inception months(1) year years years Inception Date INVESTOR CLASS -0.92% -13.57% 9.32% 13.00% 11.63% 7/31/98 RUSSELL 2000 VALUE INDEX(2) 1.24% -12.25% 9.45% 10.14% 8.72% -- Institutional Class -0.78% -13.36% 9.55% -- 12.55% 10/26/98 Advisor Class -1.10% -13.82% 9.05% -- 13.06% 12/31/99 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. ©2008 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund's performance may be affected by investments in initial public offerings. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 7 Small Cap Value Growth of $10,000 Over 10 Years $10,000 investment made September 30, 1998
One-Year Returns Over 10 Years Periods ended September 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Investor Class 13.25% 21.76% 27.06% -1.21% 25.63% 24.21% 20.19% 8.94% 11.13% -13.57% Russell 2000 Value Index 5.83% 15.36% 5.61% -1.47% 31.66% 25.66% 17.75% 14.01% 6.09% -12.25% Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund's performance may be affected by investments in initial public offerings. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 8 PORTFOLIO COMMENTARY Small Cap Value Portfolio Managers: Ben Giele and James Pitman PERFORMANCE SUMMARY Small Cap Value returned -0.92%* for the six months ended September 30, 2008. By comparison, its benchmark, the Russell 2000 Value Index, returned 1.24%. The portfolio's returns reflect operating expenses while the index's returns do not. The Lipper Small-Cap Value Funds Index, which includes operating expenses, returned -4.07%.** The volatile market environment described in the Market Perspective on page 2 hampered Small Company Value's performance on both an absolute and relative basis. U.S. equity indices were almost universally down for the six months. Nevertheless, we continued our emphasis on less-risky businesses with sound balance sheets. Investments in the energy and financials sector slowed relative progress. The portfolio's small complement of international holdings also restrained performance. Contributing the most were holdings among health care and information technology stocks. Since Small Cap Value's inception on July 31, 1998, the portfolio has produced an average annual return of 11.63%, outpacing the benchmark's return of 8.72% and the 8.38% return of the Lipper Small-Cap Value Funds Index for the same period (see performance information on pages 7-8). ENERGY HAMPERED PROGRESS The portfolio's overweight in the energy sector was a drag on results. As energy prices declined during the third quarter, many of these names underperformed. The energy equipment and services industry provided two significant detractors: Global Industries Ltd., an offshore construction company that builds pipelines and drilling platforms around the world; and North American Energy Partners, based in Edmonton, Canada--a leading resource provider to major oil and natural gas companies, with a primary focus on the Canadian oil sands. Global Industries reported a second-quarter loss after bad weather and scheduling problems interrupted normal business operations. North American Energy's margins were pressured during the period by production challenges on a single mining project, as well as an intensifying level of competition in the western Canadian oil sands region. Top Ten Holdings as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 HCC Insurance Holdings, Inc. 2.9% 2.4% Aspen Insurance Holdings Ltd., 5.625%, 12/31/49 (Conv. Pref.) 2.2% 1.8% Sybase, Inc. 1.5% 2.1% Global Industries Ltd. 1.5% 0.4% Parametric Technology Corp. 1.5% 2.5% Great Plains Energy Inc. 1.4% 0.8% Bemis Co., Inc. 1.3% 1.3% DHT Maritime, Inc.(1) 1.2% 0.9% Ares Capital Corp. 1.2% 0.7% Federated Investors Inc. Cl B 1.2% -- (1) Formally Double Hull Tankers Inc. * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The Lipper Small-Cap Value Funds Index returned -16.35%, 8.65% and 10.15% for the one-, five-and ten-year periods ended September 30, 2008, respectively. - ------ 9 Small Cap Value FINANCIALS DETRACTED Small Cap Value's position in the financials sector slowed relative performance. The portfolio was underweight commercial banks, which was one of the top-performing industries in the benchmark. One of our holdings, MCG Capital Corp. (MCG), was a key detractor. MCG, which provides capital to finance activities such as acquisitions, recapitalizations, and buyouts, declined on fears of credit losses, the need for additional capital, and the company's announcement that it would pay no dividend in 2008. HEALTH CARE ENHANCED RESULTS Small Cap Value's position in the health care sector was the largest positive contributor to relative performance. Our mix of pharmaceutical names was particularly advantageous. A notable contributor was Sciele Pharma, an Atlanta-based pharmaceutical company. Sciele's stock price rose on news that the firm would be acquired at a significant premium by Japan's Shionogi & Co., which is seeking to expand its U.S. presence. INFORMATION TECHNOLOGY CONTRIBUTED Our mix of information technology names boosted the portfolio's results versus the benchmark. A top contributor was Parametric Technology, a leader in mechanical design automation. The company benefited from increased demand for its software in Asia, a broader suite of products, and acquisitions that could help it improve operating performance. In addition, Parametric is reportedly approaching bidders in an attempt to sell itself. OUTLOOK We continue to be bottom-up investment managers, evaluating each company individually and building the portfolio one stock at a time. In our search for companies that are undervalued, we will structure exposure to market segments based on the attractiveness of individual companies. The portfolio is broadly diversified, with larger positions than the benchmark in energy, information technology, and health care. Our fundamental analysis and valuation work is also directing us toward a smaller relative weighting in financials stocks. Top Five Industries as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 Insurance 10.1% 8.6% Commercial Banks 5.5% 6.0% Software 5.5% 5.9% Capital Markets 5.4% 4.3% Energy Equipment & Services 4.0% 3.3% Types of Investments in Portfolio % of % of net assets net assets as of as of 9/30/08 3/31/08 Common Stocks & Rights 92.8% 92.2% Convertible Preferred Stocks 3.0% 2.8% Preferred Stocks 1.2% 1.0% TOTAL EQUITY EXPOSURE 97.0% 96.0% Temporary Cash Investments 3.1% 3.9% Other Assets and Liabilities(1) (0.1)% 0.1% (1) Includes securities lending collateral and other assets and liabilities. - ------ 10 SHAREHOLDER FEE EXAMPLES (UNAUDITED) 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 April 1, 2008 to September 30, 2008. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Investments Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 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. - ------ 11 Expenses Paid Beginning Ending During Period* Account Account Value 4/1/08 - Annualized Value 4/1/08 9/30/08 9/30/08 Expense Ratio* Mid Cap Value ACTUAL Investor Class $1,000 $986.10 $4.98 1.00% Institutional Class $1,000 $987.00 $3.98 0.80% Advisor Class $1,000 $984.80 $6.22 1.25% R Class $1,000 $984.50 $7.46 1.50% HYPOTHETICAL Investor Class $1,000 $1,020.05 $5.06 1.00% Institutional Class $1,000 $1,021.06 $4.05 0.80% Advisor Class $1,000 $1,018.80 $6.33 1.25% R Class $1,000 $1,017.55 $7.59 1.50% Small Cap Value ACTUAL Investor Class $1,000 $990.80 $6.24 1.25% Institutional Class $1,000 $992.20 $5.24 1.05% Advisor Class $1,000 $989.00 $7.48 1.50% HYPOTHETICAL Investor Class $1,000 $1,018.80 $6.33 1.25% Institutional Class $1,000 $1,019.80 $5.32 1.05% Advisor Class $1,000 $1,017.55 $7.59 1.50% * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 12 SCHEDULE OF INVESTMENTS Mid Cap Value SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 98.6% AEROSPACE & DEFENSE -- 0.4% 23,000 Northrop Grumman Corp. $1,392,422 ------------ AIRLINES -- 0.3% 71,603 Southwest Airlines Co. 1,038,960 ------------ AUTO COMPONENTS -- 1.0% 91,032 Autoliv, Inc. 3,072,330 ------------ AUTOMOBILES -- 1.0% 50,500 Bayerische Motoren Werke AG ORD 1,970,063 83,559 Winnebago Industries, Inc. 1,079,582 ------------ 3,049,645 ------------ BEVERAGES -- 1.8% 220,600 Coca-Cola Enterprises Inc. 3,699,462 66,400 Pepsi Bottling Group Inc. 1,936,888 ------------ 5,636,350 ------------ BUILDING PRODUCTS -- 0.2% 42,548 Masco Corp. 763,311 ------------ CAPITAL MARKETS -- 3.4% 133,600 AllianceBernstein Holding L.P. 4,944,536 80,200 Ameriprise Financial Inc. 3,063,640 63,600 Legg Mason, Inc. 2,420,616 ------------ 10,428,792 ------------ CHEMICALS -- 3.4% 45,700 Ecolab Inc. 2,217,364 102,839 International Flavors & Fragrances Inc. 4,058,027 18,201 Minerals Technologies Inc. 1,080,411 46,000 Rohm & Haas Co. 3,220,000 ------------ 10,575,802 ------------ COMMERCIAL BANKS -- 3.7% 122,000 Associated Banc-Corp 2,433,900 41,000 BancorpSouth Inc. 1,153,330 72,320 Commerce Bancshares, Inc. 3,355,648 100,016 Marshall & Ilsley Corp. 2,015,322 17,506 SunTrust Banks, Inc. 787,595 44,300 Synovus Financial Corp. 458,505 38,900 United Bankshares, Inc. 1,361,500 ------------ 11,565,800 ------------ COMMERCIAL SERVICES & SUPPLIES -- 4.4% 91,900 Avery Dennison Corp. 4,087,712 90,960 HNI Corp. 2,304,926 72,459 Pitney Bowes, Inc. 2,409,986 68,398 Republic Services, Inc. 2,050,572 88,044 Waste Management, Inc. 2,772,506 ------------ 13,625,702 ------------ Shares Value COMMUNICATIONS EQUIPMENT -- 0.6% 176,700 Emulex Corp.(1) $1,885,389 ------------ COMPUTERS & PERIPHERALS -- 1.2% 109,851 Diebold, Inc. 3,637,167 ------------ CONTAINERS & PACKAGING -- 2.6% 229,284 Bemis Co., Inc. 5,988,898 79,100 Pactiv Corp.(1) 1,964,053 ------------ 7,952,951 ------------ DISTRIBUTORS -- 1.1% 83,094 Genuine Parts Co. 3,341,210 ------------ DIVERSIFIED -- 4.2% 316,000 iShares Russell Midcap Value Index Fund 12,393,520 10,520 iShares S&P MidCap 400 Index Fund 761,227 ------------ 13,154,747 ------------ DIVERSIFIED FINANCIAL SERVICES -- 0.7% 67,300 McGraw-Hill Companies, Inc. (The) 2,127,353 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.2% 37,500 CenturyTel Inc. 1,374,375 30,000 Embarq Corp. 1,216,500 87,800 Frontier Communications Corp. 1,009,700 ------------ 3,600,575 ------------ ELECTRIC UTILITIES -- 6.8% 191,882 Empire District Electric Co. 4,096,681 161,283 IDACORP, Inc. 4,691,722 214,209 Portland General Electric Co. 5,068,185 232,000 Sierra Pacific Resources 2,222,560 218,941 Westar Energy Inc. 5,044,401 ------------ 21,123,549 ------------ ELECTRICAL EQUIPMENT -- 1.4% 120,700 Hubbell Inc. Cl B 4,230,535 ------------ ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 3.3% 50,800 AVX Corp. 517,652 35,591 Littelfuse, Inc.(1) 1,058,120 196,384 Molex Inc. 4,408,821 108,589 Tyco Electronics Ltd. 3,003,572 174,800 Vishay Intertechnology, Inc.(1) 1,157,176 ------------ 10,145,341 ------------ FOOD PRODUCTS -- 4.6% 32,100 Campbell Soup Co. 1,239,060 312,390 ConAgra Foods, Inc. 6,079,109 49,177 Hershey Co. (The) 1,944,459 - ------ 13 Mid Cap Value Shares Value 21,200 Hormel Foods Corp. $ 769,136 29,900 Kellogg Co. 1,677,390 202,020 Maple Leaf Foods Inc. ORD 1,622,765 84,577 Tyson Foods, Inc. Cl A 1,009,849 ------------ 14,341,768 ------------ GAS UTILITIES -- 2.2% 66,200 AGL Resources Inc. 2,077,356 79,403 Southwest Gas Corp. 2,402,735 68,215 WGL Holdings Inc. 2,213,577 ------------ 6,693,668 ------------ HEALTH CARE EQUIPMENT & SUPPLIES -- 3.5% 76,612 Beckman Coulter, Inc. 5,438,686 89,800 Boston Scientific Corp.(1) 1,101,846 21,200 Hospira Inc.(1) 809,840 69,041 Symmetry Medical Inc.(1) 1,281,401 32,600 Zimmer Holdings Inc.(1) 2,104,656 ------------ 10,736,429 ------------ HEALTH CARE PROVIDERS & SERVICES -- 1.0% 41,400 LifePoint Hospitals Inc.(1) 1,330,596 31,000 Patterson Companies, Inc.(1) 942,710 13,637 Universal Health Services, Inc. Cl B 764,081 ------------ 3,037,387 ------------ HEALTH CARE TECHNOLOGY -- 0.5% 89,200 IMS Health Inc. 1,686,772 ------------ HOTELS, RESTAURANTS & LEISURE -- 3.0% 125,733 International Speedway Corp. Cl A 4,892,271 230,371 Speedway Motorsports Inc. 4,487,627 ------------ 9,379,898 ------------ HOUSEHOLD DURABLES -- 0.7% 26,600 Whirlpool Corp. 2,109,114 ------------ HOUSEHOLD PRODUCTS -- 4.2% 38,300 Clorox Co. 2,401,027 164,523 Kimberly-Clark Corp. 10,667,671 ------------ 13,068,698 ------------ INSURANCE -- 8.6% 116,004 Allstate Corp. 5,350,104 103,800 Chubb Corp. 5,698,620 94,078 Gallagher (Arthur J.) & Co. 2,414,041 18,881 Hartford Financial Services Group Inc. (The) 773,932 60,600 HCC Insurance Holdings, Inc. 1,636,200 194,250 Horace Mann Educators Corp. 2,499,998 54,600 Lincoln National Corp. 2,337,426 191,217 Marsh & McLennan Cos., Inc. 6,073,052 ------------ 26,783,373 ------------ Shares Value IT SERVICES -- 0.4% 26,100 Automatic Data Processing, Inc. $1,115,775 ------------ LEISURE EQUIPMENT & PRODUCTS -- 0.3% 50,736 RC2 Corp.(1) 1,014,720 ------------ MACHINERY -- 2.0% 200,785 Altra Holdings Inc.(1) 2,963,587 42,100 Dover Corp. 1,707,155 36,800 Kaydon Corp. 1,658,208 ------------ 6,328,950 ------------ METALS & MINING -- 0.8% 59,500 Alcoa Inc. 1,343,510 32,300 Newmont Mining Corp. 1,251,948 ------------ 2,595,458 ------------ MULTILINE RETAIL -- 0.2% 28,700 Family Dollar Stores, Inc. 680,190 ------------ MULTI-UTILITIES -- 4.9% 70,400 Ameren Corp. 2,747,712 49,000 Consolidated Edison, Inc. 2,105,040 75,037 Puget Energy, Inc. 2,003,488 96,400 Wisconsin Energy Corp. 4,328,360 197,959 Xcel Energy Inc. 3,957,200 ------------ 15,141,800 ------------ OIL, GAS & CONSUMABLE FUELS -- 4.6% 37,251 Apache Corp. 3,884,534 190,052 Equitable Resources Inc. 6,973,008 14,600 Murphy Oil Corp. 936,444 30,500 Noble Energy Inc. 1,695,495 66,100 Talisman Energy Inc. 939,942 ------------ 14,429,423 ------------ PAPER & FOREST PRODUCTS -- 2.0% 47,900 International Paper Co. 1,254,022 96,285 MeadWestvaco Corp. 2,244,403 46,136 Weyerhaeuser Co. 2,794,919 ------------ 6,293,344 ------------ PHARMACEUTICALS -- 1.4% 115,600 Bristol-Myers Squibb Co. 2,410,260 65,869 Watson Pharmaceuticals, Inc.(1) 1,877,267 ------------ 4,287,527 ------------ REAL ESTATE INVESTMENT TRUSTS (REITS) -- 3.4% 23,000 Boston Properties Inc. 2,154,180 95,900 Host Hotels & Resorts Inc. 1,274,511 43,600 ProLogis 1,799,372 16,400 Public Storage, Inc. 1,623,764 78,365 Rayonier, Inc. 3,710,583 ------------ 10,562,410 ------------ - ------ 14 Mid Cap Value Shares Value ROAD & RAIL -- 0.3% 56,700 Heartland Express, Inc. $ 879,984 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.5% 84,900 Applied Materials, Inc. 1,284,537 76,000 KLA-Tencor Corp. 2,405,400 142,200 Teradyne, Inc.(1) 1,110,582 ------------ 4,800,519 ------------ SOFTWARE -- 0.6% 95,958 Synopsys, Inc.(1) 1,914,362 ------------ SPECIALTY RETAIL -- 0.8% 78,697 Lowe's Companies, Inc. 1,864,332 12,200 Sherwin-Williams Co. (The) 697,352 ------------ 2,561,684 ------------ THRIFTS & MORTGAGE FINANCE -- 3.7% 450,689 People's United Financial, Inc. 8,675,763 151,000 Washington Federal, Inc. 2,785,950 ------------ 11,461,713 ------------ TRADING COMPANIES & DISTRIBUTORS -- 0.3% 60,200 Interline Brands Inc.(1) 975,842 ------------ WATER UTILITIES -- 0.4% 60,524 American Water Works Co., Inc. 1,301,266 ------------ TOTAL COMMON STOCKS (Cost $318,521,004) 306,530,005 ------------ Principal Amount Value Temporary Cash Investments -- 1.4% $4,500,000 FHLB Discount Notes, 0.10%, 10/1/08(2) (Cost $4,499,988) $4,500,000 ------------ TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $323,020,992) 311,030,005 ------------ OTHER ASSETS AND LIABILITIES(3) 41,559 ------------ TOTAL NET ASSETS -- 100.0% $311,071,564 ============ Forward Foreign Currency Exchange Contracts Settlement Unrealized Contracts to Sell Date Value Gain (Loss) 2,155,627 CAD for USD 10/31/08 $2,028,839 $ 56,612 909,636 EUR for USD 10/31/08 1,284,748 44,430 ------------- ------------- $3,313,587 $101,042 ============= ============= (Value on Settlement Date $3,414,629) Notes to Schedule of Investments CAD = Canadian Dollar EUR = Euro FHLB = Federal Home Loan Bank ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Category is less than 0.05% of total net assets. See Notes to Financial Statements. - ------ 15 Small Cap Value SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 92.8% AEROSPACE & DEFENSE -- 2.0% 80,000 Alliant Techsystems Inc.(1) $ 7,515,200 40,000 American Science and Engineering, Inc. 2,389,200 40,000 Curtiss-Wright Corp. 1,818,000 35,000 DRS Technologies, Inc. 2,686,250 70,000 Esterline Technologies Corp.(1) 2,771,300 95,000 Moog Inc. Cl A(1) 4,073,600 115,000 Triumph Group, Inc. 5,256,650 -------------- 26,510,200 -------------- AIR FREIGHT & LOGISTICS -- 0.3% 210,000 UTI Worldwide Inc. 3,574,200 -------------- AIRLINES -- 0.3% 90,000 Alaska Air Group, Inc.(1) 1,835,100 150,000 SkyWest, Inc. 2,397,000 -------------- 4,232,100 -------------- AUTO COMPONENTS -- 1.4% 240,000 Autoliv, Inc. 8,100,000 235,000 Cooper Tire & Rubber Co. 2,021,000 120,000 Hawk Corp. Cl A(1) 2,415,600 255,000 Lear Corp.(1) 2,677,500 105,000 Superior Industries International, Inc. 2,011,800 150,000 Tenneco Inc.(1) 1,594,500 -------------- 18,820,400 -------------- AUTOMOBILES -- 0.2% 160,000 Winnebago Industries, Inc. 2,067,200 -------------- BUILDING PRODUCTS -- 0.8% 965,000 Griffon Corp.(1) 8,704,300 70,000 Simpson Manufacturing Co. Inc. 1,896,300 -------------- 10,600,600 -------------- CAPITAL MARKETS -- 5.4% 1,550,000 Ares Capital Corp. 16,166,500 555,000 Cowen Group Inc.(1) 4,745,250 545,000 Federated Investors Inc. Cl B 15,712,350 481,833 HFF, Inc. Cl A(1) 1,927,332 530,000 Highland Distressed Opportunities Inc. 1,574,100 145,000 Knight Capital Group, Inc. Cl A(1) 2,154,700 2,180,000 MCG Capital Corp. 5,711,600 190,000 MVC Capital Inc.(2) 2,897,500 620,000 Patriot Capital Funding, Inc. 3,949,400 Shares Value 590,000 PennantPark Investment Corp. $ 4,371,900 195,000 Prospect Energy Corp. 2,497,950 481,417 TradeStation Group, Inc.(1) 4,501,249 265,000 Waddell & Reed Financial, Inc. Cl A 6,558,750 -------------- 72,768,581 -------------- CHEMICALS -- 1.9% 65,000 Arch Chemicals, Inc. 2,294,500 130,000 Cytec Industries Inc. 5,058,300 69,196 Ferro Corp. 1,390,840 90,000 H.B. Fuller Co. 1,878,300 200,000 Hawkins, Inc. 3,504,000 205,000 Hercules Inc. 4,056,950 50,000 Minerals Technologies Inc. 2,968,000 140,000 OM Group, Inc.(1) 3,150,000 65,000 Sensient Technologies Corp. 1,828,450 -------------- 26,129,340 -------------- COMMERCIAL BANKS -- 5.4% 90,000 Associated Banc-Corp 1,795,500 117,464 Central Pacific Financial Corp. 1,974,570 1,045,000 Citizens Republic Bancorp, Inc. 3,218,600 210,000 FNB Corp. 3,355,800 830,000 Fulton Financial Corp. 9,055,300 840,000 Hanmi Financial Corp. 4,242,000 1,400,000 National City Corp. 2,450,000 180,000 Old National Bancorp 3,603,600 295,000 Provident Bankshares Corp. 2,864,450 245,000 South Financial Group Inc. (The) 1,795,850 105,000 Susquehanna Bancshares Inc. 2,049,600 255,000 Synovus Financial Corp. 2,639,250 160,000 TCF Financial Corp. 2,880,000 310,000 UCBH Holdings Inc. 1,987,100 60,000 United Bankshares, Inc. 2,100,000 230,000 Webster Financial Corp. 5,807,500 335,000 Whitney Holding Corp. 8,123,750 444,414 Wilmington Trust Corp. 12,812,455 -------------- 72,755,325 -------------- COMMERCIAL SERVICES & SUPPLIES -- 0.8% 90,000 ABM Industries Inc. 1,965,600 85,000 Consolidated Graphics Inc.(1) 2,578,050 95,000 G&K Services Inc. Cl A 3,139,750 75,000 Herman Miller Inc. 1,835,250 35,000 United Stationers Inc.(1) 1,674,050 -------------- 11,192,700 -------------- - ------ 16 Small Cap Value Shares Value COMMUNICATIONS EQUIPMENT -- 1.4% 240,000 Adtran, Inc. $ 4,677,600 160,000 Bel Fuse Inc. 4,555,200 60,000 Black Box Corp. 2,071,800 500,000 Emulex Corp.(1) 5,335,000 90,000 Plantronics, Inc. 2,026,800 -------------- 18,666,400 -------------- COMPUTERS & PERIPHERALS -- 1.3% 545,000 Electronics for Imaging, Inc.(1) 7,591,850 75,000 Imation Corp. 1,696,500 175,000 Lexmark International, Inc. Cl A(1) 5,699,750 205,000 Rackable Systems, Inc.(1) 2,011,050 -------------- 16,999,150 -------------- CONSTRUCTION & ENGINEERING -- 1.3% 145,000 EMCOR Group Inc.(1) 3,816,400 264,630 Granite Construction Inc. 9,479,047 250,000 Sterling Construction Co., Inc.(1) 4,050,000 -------------- 17,345,447 -------------- CONSUMER FINANCE -- 0.1% 625,000 Advance America, Cash Advance Centers, Inc. 1,868,750 -------------- CONTAINERS & PACKAGING -- 1.3% 665,000 Bemis Co., Inc. 17,369,800 -------------- DISTRIBUTORS -- 0.4% 225,000 Core-Mark Holding Co., Inc.(1) 5,622,750 -------------- DIVERSIFIED -- 1.4% 80,000 iShares Russell 2000 Index Fund 5,440,000 125,000 iShares Russell 2000 Value Index Fund 8,405,000 85,000 iShares S&P SmallCap 600/BARRA Value Index Fund 5,529,250 -------------- 19,374,250 -------------- DIVERSIFIED CONSUMER SERVICES -- 0.3% 100,000 Regis Corp. 2,750,000 55,000 Steiner Leisure Ltd.(1) 1,890,900 -------------- 4,640,900 -------------- DIVERSIFIED FINANCIAL SERVICES -- 0.1% 170,000 Asset Acceptance Capital Corp.(1)(2) 1,791,800 -------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.9% 134,102 Atlantic Tele-Network Inc. 3,754,856 170,290 D&E Communications, Inc. 1,285,690 360,000 Iowa Telecommunications Services Inc. 6,724,800 -------------- 11,765,346 -------------- Shares Value ELECTRIC UTILITIES -- 3.8% 110,000 Cleco Corp. $ 2,777,500 660,000 Empire District Electric Co. 14,091,000 835,000 Great Plains Energy Inc. 18,495,250 205,000 MGE Energy, Inc. 7,287,750 80,000 Portland General Electric Co. 1,892,800 255,000 Westar Energy Inc. 5,875,200 -------------- 50,419,500 -------------- ELECTRICAL EQUIPMENT -- 1.8% 50,000 Acuity Brands Inc. 2,088,000 65,000 Belden Inc. 2,067,650 105,000 Brady Corp. Cl A 3,704,400 75,000 General Cable Corp.(1) 2,672,250 85,000 Hubbell Inc. Cl B 2,979,250 649,857 LSI Industries Inc. 5,374,317 40,000 Regal-Beloit Corp. 1,700,800 80,000 Thomas & Betts Corp.(1) 3,125,600 -------------- 23,712,267 -------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 2.8% 35,000 Anixter International Inc.(1) 2,082,850 390,000 Benchmark Electronics Inc.(1) 5,491,200 55,000 Coherent, Inc.(1) 1,955,250 385,000 Electro Scientific Industries Inc.(1) 5,474,700 230,000 Insight Enterprises Inc.(1) 3,084,300 60,000 Littelfuse, Inc.(1) 1,783,800 120,000 Park Electrochemical Corp. 2,908,800 95,000 Rogers Corp.(1) 3,513,100 100,000 Tech Data Corp.(1) 2,985,000 145,000 Technitrol, Inc. 2,144,550 990,000 Vishay Intertechnology, Inc.(1) 6,553,800 -------------- 37,977,350 -------------- ENERGY EQUIPMENT & SERVICES -- 4.0% 125,000 Bristow Group Inc.(1) 4,230,000 2,933,529 Global Industries Ltd.(1) 20,358,691 390,000 Grey Wolf Inc.(1) 3,034,200 564,775 Helix Energy Solutions Group, Inc.(1) 13,712,737 50,000 Hornbeck Offshore Services Inc.(1) 1,931,000 340,000 Key Energy Services, Inc.(1) 3,944,000 25,000 Lufkin Industries Inc. 1,983,750 385,000 North American Energy Partners Inc.(1) 3,992,450 -------------- 53,186,828 -------------- - ------ 17 Small Cap Value Shares Value FOOD & STAPLES RETAILING -- 1.4% 55,000 BJ's Wholesale Club Inc.(1) $ 2,137,300 90,000 Casey's General Stores, Inc. 2,715,300 100,000 Village Super Market, Inc. Cl A 4,767,000 265,000 Weis Markets Inc. 9,542,650 -------------- 19,162,250 -------------- FOOD PRODUCTS -- 1.5% 835,000 B&G Foods, Inc. Cl A 5,970,250 40,000 Corn Products International Inc. 1,291,200 80,322 Farmer Bros. Co. 1,997,608 155,000 J&J Snack Foods Corp. 5,256,050 70,000 Lancaster Colony Corp. 2,636,200 170,000 Pilgrim's Pride Corp. 423,300 30,000 Ralcorp Holdings, Inc.(1) 2,022,300 -------------- 19,596,908 -------------- GAS UTILITIES -- 1.2% 130,000 AGL Resources Inc. 4,079,400 210,000 Atmos Energy Corp. 5,590,200 55,000 Nicor Inc. 2,439,250 45,000 Southwest Gas Corp. 1,361,700 100,000 WGL Holdings Inc. 3,245,000 -------------- 16,715,550 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 2.4% 510,000 Cutera, Inc.(1) 5,411,100 180,000 ICU Medical Inc.(1) 5,473,800 55,000 STERIS Corp. 2,066,900 141,874 Utah Medical Products, Inc. 3,908,629 25,000 Vital Signs Inc. 1,847,500 676,521 Young Innovations, Inc.(3) 13,652,193 -------------- 32,360,122 -------------- HEALTH CARE PROVIDERS & SERVICES -- 2.7% 150,000 Amsurg Corp.(1) 3,820,500 680,000 Assisted Living Concepts, Inc. Cl A(1) 4,331,600 370,000 LCA-Vision Inc. 1,716,800 85,000 LifePoint Hospitals Inc.(1) 2,731,900 305,000 Magellan Health Services Inc.(1) 12,523,300 120,000 National HealthCare Corp. 5,654,400 260,000 Odyssey HealthCare, Inc.(1) 2,639,000 195,000 U.S. Physical Therapy Inc.(1) 3,385,200 -------------- 36,802,700 -------------- HEALTH CARE TECHNOLOGY -- 0.2% 19,793 MedQuist Inc. 94,808 130,000 Vital Images, Inc.(1) 1,950,000 -------------- 2,044,808 -------------- Shares Value HOTELS, RESTAURANTS & LEISURE -- 2.6% 90,000 Bally Technologies, Inc.(1) $ 2,725,200 131,127 California Pizza Kitchen, Inc.(1) 1,687,604 80,000 CEC Entertainment Inc.(1) 2,656,000 215,000 Chipotle Mexican Grill Inc. Cl B(1) 10,051,250 95,000 Jack in the Box Inc.(1) 2,004,500 240,000 Red Robin Gourmet Burgers Inc.(1) 6,432,000 785,000 Ruby Tuesday Inc.(1) 4,545,150 145,000 WMS Industries Inc.(1) 4,432,650 -------------- 34,534,354 -------------- HOUSEHOLD DURABLES -- 0.8% 125,000 American Greetings Corp. Cl A 1,911,250 115,000 CSS Industries, Inc. 2,960,100 145,000 Ethan Allen Interiors Inc. 4,062,900 65,000 Tupperware Brands Corp. 1,795,950 -------------- 10,730,200 -------------- HOUSEHOLD PRODUCTS -- 0.1% 50,000 WD-40 Co. 1,796,500 -------------- INSURANCE -- 7.7% 515,000 American Equity Investment Life Holding Co. 3,862,500 260,000 Aspen Insurance Holdings Ltd. 7,150,000 140,000 Assured Guaranty Ltd. 2,276,400 90,000 Baldwin & Lyons, Inc. Cl B 2,157,300 145,000 Erie Indemnity Co. Cl A 6,129,150 140,000 Hanover Insurance Group Inc. 6,372,800 1,459,548 HCC Insurance Holdings, Inc. 39,407,796 40,000 Hilb Rogal & Hobbs Co. 1,869,600 110,000 IPC Holdings, Ltd. 3,323,100 160,000 Max Capital Group Ltd. 3,716,800 54,000 Mercer Insurance Group, Inc. 867,240 185,000 National Financial Partners Corp. 2,775,000 355,000 OneBeacon Insurance Group Ltd. 7,508,250 195,000 Phoenix Companies Inc. 1,801,800 115,000 Platinum Underwriters Holdings, Ltd. 4,080,200 100,000 ProAssurance Corp.(1) 5,600,000 70,000 United Fire & Casualty Co. 2,001,300 105,603 Unitrin, Inc. 2,633,739 -------------- 103,532,975 -------------- IT SERVICES -- 0.8% 40,000 CACI International Inc.(1) 2,004,000 355,000 NeuStar, Inc. Cl A(1) 7,060,950 115,000 Perot Systems Corp. Cl A(1) 1,995,250 -------------- 11,060,200 -------------- - ------ 18 Small Cap Value Shares Value LEISURE EQUIPMENT & PRODUCTS -- 0.7% 190,000 Callaway Golf Co. $ 2,673,300 80,000 Pool Corp. 1,866,400 90,000 RC2 Corp.(1) 1,800,000 255,000 Sport Supply Group, Inc. 2,805,000 -------------- 9,144,700 -------------- MACHINERY -- 2.5% 105,000 Altra Holdings Inc.(1) 1,549,800 395,000 Barnes Group Inc. 7,986,900 180,000 Commercial Vehicle Group Inc.(1) 1,279,800 110,000 IDEX Corp. 3,412,200 115,000 Kadant Inc.(1) 2,618,550 170,000 Kennametal Inc. 4,610,400 375,000 Mueller Industries Inc. 8,628,750 320,000 Mueller Water Products, Inc. Series B 2,080,000 50,000 Pentair, Inc. 1,728,500 -------------- 33,894,900 -------------- MARINE -- 0.9% 200,000 Genco Shipping & Trading Ltd. 6,648,000 380,000 OceanFreight Inc. 5,118,600 -------------- 11,766,600 -------------- MEDIA -- 1.4% 410,000 Belo Corp. Series A 2,443,600 730,000 Entravision Communications Corp. Cl A(1) 1,963,700 140,000 Hearst-Argyle Television, Inc. 3,126,200 1,545,000 Journal Communications Inc. 7,539,600 520,000 McClatchy Co. Cl A(2) 2,288,000 235,000 Valassis Communications Inc.(1) 2,035,100 -------------- 19,396,200 -------------- METALS & MINING -- 1.8% 110,000 Carpenter Technology 2,821,500 120,175 Haynes International Inc.(1) 5,627,795 40,000 Kaiser Aluminum Corp. 1,718,000 205,000 Mesabi Trust 3,966,750 105,000 RTI International Metals, Inc.(1) 2,053,800 175,000 Schnitzer Steel Industries, Inc. Cl A 6,867,000 40,000 Worthington Industries, Inc. 597,600 -------------- 23,652,445 -------------- MULTILINE RETAIL -- 0.5% 95,000 Dollar Tree, Inc.(1) 3,454,200 190,000 Fred's, Inc. 2,701,800 -------------- 6,156,000 -------------- Shares Value MULTI-UTILITIES -- 0.5% 130,000 Black Hills Corp. $4,039,100 100,000 Puget Energy, Inc. 2,670,000 -------------- 6,709,100 -------------- OIL, GAS & CONSUMABLE FUELS -- 3.1% 85,000 Berry Petroleum Company Cl A 3,292,050 60,000 BP Prudhoe Bay Royalty Trust 5,578,200 15,000 Cross Timbers Royalty Trust 693,000 2,455,000 DHT Maritime, Inc.(3) 16,497,600 280,000 Frontier Oil Corp. 5,157,600 10,000 Mesa Royalty Trust 627,500 148,655 St. Mary Land & Exploration Co. 5,299,551 100,000 Swift Energy Co.(1) 3,869,000 -------------- 41,014,501 -------------- PAPER & FOREST PRODUCTS -- 0.3% 145,000 Glatfelter (P.H.) Co. 1,963,300 80,000 Neenah Paper Inc. 1,584,000 -------------- 3,547,300 -------------- PERSONAL PRODUCTS -- 0.6% 470,000 Bare Escentuals Inc.(1) 5,108,900 445,000 Schiff Nutrition International, Inc.(1) 3,039,350 -------------- 8,148,250 -------------- PHARMACEUTICALS -- 1.8% 50,000 Alpharma Inc. Cl A(1) 1,844,500 180,000 Matrixx Initiatives Inc.(1) 3,238,200 310,000 Obagi Medical Products Inc.(1) 3,093,800 300,000 Sciele Pharma Inc. 9,237,000 345,000 Sepracor Inc.(1) 6,316,950 -------------- 23,730,450 -------------- PROFESSIONAL SERVICES -- 0.9% 175,000 Corporate Executive Board Co. (The) 5,468,750 105,000 Heidrick & Struggles International, Inc. 3,165,750 190,000 MPS Group, Inc.(1) 1,915,200 35,000 Watson Wyatt Worldwide, Inc. Cl A 1,740,550 -------------- 12,290,250 -------------- REAL ESTATE INVESTMENT TRUSTS (REITS) -- 2.7% 280,000 Capstead Mortgage Corp. 3,066,000 315,000 Education Realty Trust, Inc. 3,490,200 165,000 Getty Realty Corp. 3,669,600 90,000 Hatteras Financial Corp. 2,088,000 120,000 Healthcare Realty Trust Inc. 3,498,000 105,000 Mack-Cali Realty Corp. 3,556,350 - ------ 19 Small Cap Value Shares Value 1,450,000 MFA Mortgage Investments, Inc. $ 9,425,000 185,000 National Retail Properties, Inc. 4,430,750 105,000 Realty Income Corp. 2,688,000 67,817 Sunstone Hotel Investors, Inc. 915,530 -------------- 36,827,430 -------------- ROAD & RAIL -- 0.7% 160,000 Arkansas Best Corp. 5,390,400 115,000 Heartland Express, Inc. 1,784,800 80,000 Werner Enterprises Inc. 1,736,800 -------------- 8,912,000 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 2.9% 65,000 Cabot Microelectronics Corp.(1) 2,085,200 130,000 Cohu, Inc. 2,056,600 135,000 Cymer, Inc.(1) 3,419,550 443,658 Intellon Corp.(1) 1,623,788 555,000 Mattson Technology Inc.(1) 2,625,150 105,000 MKS Instruments, Inc.(1) 2,090,550 385,000 Rudolph Technologies Inc.(1) 3,226,300 260,000 Semtech Corp.(1) 3,629,600 355,000 Varian Semiconductor Equipment Associates, Inc.(1) 8,917,600 545,000 Verigy Ltd.(1) 8,872,600 -------------- 38,546,938 -------------- SOFTWARE -- 5.5% 320,000 Aspen Technology, Inc.(1) 4,064,000 415,000 Cadence Design Systems Inc.(1) 2,805,400 120,000 Fair Isaac Corp. 2,767,200 1,075,000 Parametric Technology Corp.(1) 19,780,000 675,000 Sybase, Inc.(1) 20,668,500 315,000 Synopsys, Inc.(1) 6,284,250 525,000 THQ Inc.(1) 6,321,000 1,790,745 Ulticom, Inc.(1) 11,639,843 -------------- 74,330,193 -------------- SPECIALTY RETAIL -- 2.7% 115,000 Barnes & Noble Inc. 2,999,200 265,000 Cato Corp. (The) Cl A 4,650,750 440,000 Christopher & Banks Corp. 3,374,800 190,000 Dress Barn Inc.(1) 2,905,100 300,000 DSW Inc. Cl A(1) 4,110,000 60,000 Group 1 Automotive, Inc. 1,303,800 365,000 Hot Topic, Inc.(1) 2,412,650 160,000 Men's Wearhouse, Inc. (The) 3,398,400 220,000 Penske Automotive Group, Inc. 2,523,400 Shares Value 165,000 Rent-A-Center Inc.(1) $ 3,676,200 195,000 Stage Stores Inc. 2,663,700 75,000 Zale Corp.(1) 1,875,000 -------------- 35,893,000 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 1.1% 915,000 Crocs, Inc.(1) 3,275,700 90,000 Kenneth Cole Productions, Inc. Cl A 1,323,000 134,570 Weyco Group, Inc. 4,504,058 235,000 Wolverine World Wide, Inc. 6,220,450 -------------- 15,323,208 -------------- THRIFTS & MORTGAGE FINANCE -- 0.5% 135,000 Astoria Financial Corp. 2,798,550 130,000 First Niagara Financial Group Inc. 2,047,500 95,000 Washington Federal, Inc. 1,752,750 -------------- 6,598,800 -------------- TOBACCO -- 0.2% 40,000 Universal Corp. 1,963,600 -------------- TRADING COMPANIES & DISTRIBUTORS -- 0.7% 100,000 Applied Industrial Technologies Inc. 2,693,000 175,000 Kaman Corp. 4,984,000 82,194 Lawson Products, Inc. 2,272,664 -------------- 9,949,664 -------------- TOTAL COMMON STOCKS (Cost $1,324,181,800) 1,245,523,280 -------------- Convertible Preferred Stocks -- 3.0% COMMERCIAL BANKS -- 0.1% 195,000 Midwest Banc Holdings, Inc., Series A, 7.75%, 12/31/49 1,977,300 -------------- INSURANCE -- 2.2% 621,882 Aspen Insurance Holdings Ltd., 5.625%, 12/31/49 29,228,454 -------------- METALS & MINING -- 0.2% 50,000 Hecla Mining Co., 6.50%, 1/1/11 2,665,500 -------------- REAL ESTATE INVESTMENT TRUSTS (REITS) -- 0.2% 76,710 Lexington Realty Trust, 6.50%, 12/31/49 2,573,621 -------------- TOBACCO -- 0.3% 4,000 Universal Corp., 6.75%, 12/31/49 4,466,000 -------------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $49,161,598) 40,910,875 -------------- - ------ 20 Small Cap Value Shares Value Preferred Stocks -- 1.2% INSURANCE -- 0.2% 113,623 Odyssey Re Holdings Corp., Series A, 8.125%, 10/20/10 $ 2,158,837 -------------- REAL ESTATE INVESTMENT TRUSTS (REITS) -- 1.0% 320,000 Ashford Hospitality Trust, Inc., Series D, 8.45%, 7/18/12 3,520,000 275,431 National Retail Properties Inc., Series C, 7.375%, 10/12/11 5,508,620 240,000 PS Business Parks, Inc., Series K, 7.95%, 6/30/09 5,064,000 -------------- 14,092,620 -------------- TOTAL PREFERRED STOCKS (Cost $22,563,799) 16,251,457 -------------- Temporary Cash Investments -- 3.1% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 7.125%, 2/15/23, valued at $42,002,099), in a joint trading account at 0.40%, dated 9/30/08, due 10/1/08 (Delivery value $41,200,458) (Cost $41,200,000) 41,200,000 -------------- Temporary Cash Investments - Securities Lending Collateral(4) -- 0.3% Repurchase Agreement, Barclays Capital Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 2.00%, dated 9/30/08, due 10/1/08 (Delivery value $800,044) 800,000 Repurchase Agreement, BNP Paribas Securities Corp., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 1.00%, dated 9/30/08, due 10/1/08 (Delivery value $800,022) 800,000 Repurchase Agreement, Credit Suisse Securities USA LLC, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 1.50%, dated 9/30/08, due 10/1/08 (Delivery value $800,033) 800,000 Shares Value Repurchase Agreement, Deutsche Bank Securities Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 2.00%, dated 9/30/08, due 10/1/08 (Delivery value $900,050) $ 900,000 Repurchase Agreement, UBS Securities LLC, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 1.75%, dated 9/30/08, due 10/1/08 (Delivery value $858,696) 858,654 -------------- TOTAL TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL (Cost $4,158,654) 4,158,654 -------------- TOTAL INVESTMENT SECURITIES -- 100.4% (Cost $1,441,265,851) 1,348,044,266 -------------- OTHER ASSETS AND LIABILITIES -- (0.4)% (5,343,996) -------------- TOTAL NET ASSETS -- 100.0% $1,342,700,270 ============== Notes to Schedule of Investments (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of September 30, 2008. (3) Affiliated Company: the fund's holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 21 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2008 (UNAUDITED) Mid Cap Value Small Cap Value ASSETS Investment securities -- unaffiliated, at value (cost of $323,020,992 and $1,398,296,037, respectively) -- including $- and $3,912,298 of securities on loan, respectively $311,030,005 $1,313,735,819 Investment securities -- affiliated, at value (cost of $- and $38,811,160, respectively) -- 30,149,793 Investments made with cash collateral received for securities on loan, at value (cost of $- and $4,158,654, respectively) -- 4,158,654 ------------ -------------- Total investment securities, at value (cost of $323,020,992 and $1,441,265,851, respectively) 311,030,005 1,348,044,266 Receivable for investments sold 10,547,649 49,293,987 Receivable for forward foreign currency exchange contracts 101,042 -- Receivable for capital shares sold -- 685 Dividends and interest receivable 665,976 3,026,734 ------------ -------------- 322,344,672 1,400,365,672 ------------ -------------- LIABILITIES Disbursements in excess of demand deposit cash 437,972 2,515,034 Payable for collateral received for securities on loan -- 4,158,654 Payable for investments purchased 10,567,228 49,518,352 Accrued management fees 261,346 1,401,651 Distribution and services fees payable 6,562 71,711 ------------ -------------- 11,273,108 57,665,402 ------------ -------------- NET ASSETS $311,071,564 $1,342,700,270 ============ ============== See Notes to Financial Statements. - ------ 22 SEPTEMBER 30, 2008 (UNAUDITED) Mid Cap Value Small Cap Value NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $368,524,931 $1,551,462,312 Undistributed net investment income 265,518 1,342,242 Accumulated net realized loss on investment and foreign currency transactions (45,828,940) (116,882,699) Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies (11,889,945) (93,221,585) ------------ -------------- $311,071,564 $1,342,700,270 ============ ============== INVESTOR CLASS, $0.01 PAR VALUE Net assets $264,944,747 $646,598,791 Shares outstanding 25,424,742 93,871,488 Net asset value per share $10.42 $6.89 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $18,936,031 $365,247,916 Shares outstanding 1,816,790 52,875,044 Net asset value per share $10.42 $6.91 ADVISOR CLASS, $0.01 PAR VALUE Net assets $23,961,468 $330,853,563 Shares outstanding 2,299,231 48,136,954 Net asset value per share $10.42 $6.87 R CLASS, $0.01 PAR VALUE Net assets $3,229,318 N/A Shares outstanding 309,894 N/A Net asset value per share $10.42 N/A See Notes to Financial Statements. - ------ 23 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) Mid Cap Value Small Cap Value INVESTMENT INCOME (LOSS) INCOME: Dividends (including $- and $531,550, respectively, from affiliates and net of foreign taxes withheld of $12,746 and $-, respectively) $ 4,230,277 $ 18,867,789 Interest 32,540 465,548 Securities lending, net 182,575 1,084,546 ------------ ------------- 4,445,392 20,417,883 ------------ ------------- EXPENSES: Management fees 1,587,769 8,511,150 Distribution and service fees: Advisor Class 32,149 395,623 R Class 8,211 -- Directors' fees and expenses 5,315 26,474 Other expenses 3,635 1,590 ------------ ------------- 1,637,079 8,934,837 ------------ ------------- NET INVESTMENT INCOME (LOSS) 2,808,313 11,483,046 ------------ ------------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions (including $- and $(4,663,081) from affiliates, respectively) (6,200,723) 17,111,502 Foreign currency transactions 228,132 -- ------------ ------------- (5,972,591) 17,111,502 ------------ ------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (2,090,511) (39,057,901) Translation of assets and liabilities in foreign currencies 84,175 -- ------------ ------------- (2,006,336) (39,057,901) ------------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (7,978,927) (21,946,399) ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(5,170,614) $(10,463,353) ============ ============= See Notes to Financial Statements. - ------ 24 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) AND YEAR ENDED MARCH 31, 2008 Mid Cap Value Small Cap Value Increase (Decrease) in Net Assets Sept. 30, 2008 March 31, 2008 Sept. 30, 2008 March 31, 2008 OPERATIONS Net investment income (loss) $ 2,808,313 $ 4,558,936 $ 11,483,046 $ 18,442,595 Net realized gain (loss) (5,972,591) (21,051,582) 17,111,502 88,882,119 Change in net unrealized appreciation (depreciation) (2,006,336) (27,926,511) (39,057,901) (316,346,129) -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations (5,170,614) (44,419,157) (10,463,353) (209,021,415) -------------- --------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (2,434,984) (4,104,303) (6,767,451) (10,158,186) Institutional Class (181,953) (260,361) (4,261,082) (4,596,852) Advisor Class (192,409) (310,213) (2,473,346) (2,850,364) R Class (20,759) (21,175) -- -- From net realized gains: Investor Class -- (29,129,100) _ (181,311,827) Institutional Class -- (1,403,616) -- (74,519,198) Advisor Class -- (2,795,932) -- (65,013,709) R Class -- (318,237) -- -- -------------- --------------- -------------- -------------- Decrease in net assets from distributions (2,830,105) (38,342,937) (13,501,879) (338,450,136) -------------- --------------- -------------- -------------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (2,328,030) 59,664,484 (22,950,394) (205,103,118) -------------- --------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS (10,328,749) (23,097,610) (46,915,626) (752,574,669) NET ASSETS Beginning of period 321,400,313 344,497,923 1,389,615,896 2,142,190,565 -------------- --------------- -------------- -------------- End of period $311,071,564 $321,400,313 $1,342,700,270 $1,389,615,896 ============== =============== ============== ============== Undistributed net investment income $265,518 $287,310 $1,342,242 $3,361,075 ============== =============== ============== ============== See Notes to Financial Statements. - ------ 25 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2008 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Mid Cap Value Fund (Mid Cap Value) and Small Cap Value Fund (Small Cap Value) (collectively, the funds) are two funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objective is to seek long-term capital growth. The production of income is a secondary objective. Mid Cap Value pursues its investment objective by investing in stocks of mid-sized market capitalization companies that management believes to be undervalued at the time of purchase. Small Cap Value pursues its investment objective by investing in stocks of smaller market capitalization companies that management believes to be undervalued at the time of purchase. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- Mid Cap Value is authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the R Class. Small Cap Value is authorized to issue the Investor Class, the Institutional Class and the Advisor Class. Prior to December 3, 2007, Small Cap Value was authorized to issue the C Class (see Note 11). The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The income earned, net of any rebates or fees, is included in the Statement of Operations. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. - ------ 26 EXCHANGE TRADED FUNDS -- The funds may invest in exchange traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have management fees, which increase their cost. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds 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. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each 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 each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), 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 each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The funds have adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" during the current fiscal year. The funds are no longer subject to examination by tax authorities for years prior to 2005. At this time, management has not identified any uncertain tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. - ------ 27 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 funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds 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 the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century Investments family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for Mid Cap Value is 1.00%, 0.80%, 1.00% and 1.00% for the Investor Class, Institutional Class, Advisor Class and R Class, respectively. The annual management fee schedule for Small Cap Value ranges from 1.00% to 1.25% for the Investor Class and Advisor Class. The Institutional Class is 0.20% less at each point within the range for Small Cap Value. The effective annual management fee for each class of each fund for the six months ended September 30, 2008, was as follows: Mid Cap Value Small Cap Value Investor 1.00% 1.25% Institutional 0.80% 1.05% Advisor 1.00% 1.25% R 1.00% N/A DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the Advisor Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2008, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The funds are eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. - ------ 28 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended September 30, 2008, were as follows: Mid Cap Value Small Cap Value Purchases $258,814,774 $1,239,299,553 Proceeds from sales $254,398,675 $1,247,750,020 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: Six months ended Year ended September 30, 2008 March 31, 2008 Shares Amount Shares Amount Mid Cap Value INVESTOR CLASS/SHARES AUTHORIZED 75,000,000 75,000,000 ============ ============ Sold 3,370,650 $36,735,931 17,293,738 $228,962,537 Issued in reinvestment of distributions 181,355 1,974,982 2,316,859 26,920,796 Redeemed (3,927,914) (41,749,366) (16,447,138) (211,237,414) ------------ ------------ ------------ ------------ (375,909) (3,038,453) 3,163,459 44,645,919 ------------ ------------ ------------ ------------ INSTITUTIONAL CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============ ============ Sold 283,154 3,030,029 848,248 10,325,708 Issued in reinvestment of distributions 16,709 181,953 141,623 1,648,141 Redeemed (113,620) (1,226,592) (906,797) (11,720,977) ------------ ------------ ------------ ------------ 186,243 1,985,390 83,074 252,872 ------------ ------------ ------------ ------------ ADVISOR CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============ ============ Sold 255,940 2,771,848 1,655,353 21,805,126 Issued in reinvestment of distributions 17,553 191,154 247,640 2,873,707 Redeemed (407,841) (4,379,534) (1,076,268) (12,988,849) ------------ ------------ ------------ ------------ (134,348) (1,416,532) 826,725 11,689,984 ------------ ------------ ------------ ------------ R CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============ ============ Sold 51,908 559,451 300,359 3,892,667 Issued in reinvestment of distributions 1,906 20,759 29,385 339,412 Redeemed (41,616) (438,645) (93,608) (1,156,370) ------------ ------------ ------------ ------------ 12,198 141,565 236,136 3,075,709 ------------ ------------ ------------ ------------ Net increase (decrease) (311,816) $(2,328,030) 4,309,394 $ 59,664,484 ============ ============ ============ ============ - ------ 29 Six months ended Year ended September 30, 2008 March 31, 2008 Shares Amount Shares Amount Small Cap Value INVESTOR CLASS/SHARES AUTHORIZED 500,000,000 500,000,000 ============= ============ Sold 6,904,351 $50,057,570 14,409,793 $127,579,003 Issued in reinvestment of distributions 910,056 6,652,691 24,242,645 186,591,128 Redeemed (18,379,097) (132,479,142) (60,205,011) (531,313,197) ------------- -------------- ------------ --------------- (10,564,690) (75,768,881) (21,552,573) (217,143,066) ------------- -------------- ------------ --------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 150,000,000 150,000,000 ============= ============ Sold 6,472,692 47,580,985 17,780,266 148,386,323 Issued in reinvestment of distributions 509,884 3,737,667 8,820,939 68,112,615 Redeemed (6,714,664) (48,178,583) (18,158,464) (164,133,933) ------------- -------------- ------------ --------------- 267,912 3,140,069 8,442,741 52,365,005 ------------- -------------- ------------ --------------- ADVISOR CLASS/SHARES AUTHORIZED 190,000,000 190,000,000 ============= ============ Sold 11,876,411 82,991,482 4,535,149 41,436,663 Issueed in connection with reclassification (Note 11) -- -- 125,057 1,134,706 Issued in reinvestment of distributions 302,242 2,201,619 8,838,593 67,729,817 Redeemed (4,936,776) (35,514,683) (16,043,501) (147,271,195) ------------- -------------- ------------ --------------- 7,241,877 49,678,418 (2,544,702) (36,970,009) ------------- -------------- ------------ --------------- C CLASS/SHARES AUTHORIZED N/A N/A ============= ============ Redeemed in connection with reclassification (Note 11) (125,057) (1,134,706) Redeemed (234,227) (2,220,342) ------------ --------------- (359,284) (3,355,048) ------------ --------------- Net increase (decrease) (3,054,901) $(22,950,394) (16,013,818) $(205,103,118) ============= ============== ============ =============== 5. SECURITIES LENDING As of September 30, 2008, securities in Small Cap Value valued at $3,912,298, were on loan through the lending agent, JPMCB, to certain approved borrowers. As of September 30, 2008 Mid Cap Value did not have any securities on loan. JPMCB receives and maintains collateral in the form of cash and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total market value of all collateral received for Small Cap, at this date, was $4,158,654. The funds' risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the funds may be delayed or limited. - ------ 30 6. AFFILIATED COMPANY TRANSACTIONS If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the six months ended September 30, 2008, follows: September 30, 2008 Share Balance Purchase Sales Realized Dividend Share Market Fund/Company 3/31/08 Cost Cost Gain (Loss) Income Balance Value Small Cap Value Cowen Group Inc.(1)(2) 750,000 -- $ 2,550,822 $(929,615) -- 555,000 (1) Cutera, Inc.(1)(2) 530,000 $ 2,827,921 6,514,126 (2,892,329) -- 510,000 (1) DHT Maritime, Inc.(3) 1,170,000 16,190,918 2,889,445 (486,646) $478,750 2,455,000 $16,497,600 Young Innovations, Inc. 600,000 2,205,147 1,383,561 (354,491) 52,800 676,521 13,652,193 ----------- ----------- ------------ -------- --------- ----------- $21,223,986 $13,337,954 $(4,663,081) $531,550 $30,149,793 =========== =========== ============ ======== ========= =========== (1) Company was not an affiliate at September 30, 2008. (2) Non-income producing. (3) Formally Double Hull Tankers Inc. 7. FAIR VALUE MEASUREMENTS The funds' securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the funds. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as the 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 an indication of the risks associated with investing in these securities or other financial instruments. The following is a summary of the valuation inputs used to determine the fair value of the funds' securities and other financial instruments as of September 30, 2008: Unrealized Gain (Loss) Value of on Other Investment Financial Fund/Valuation Inputs Securities Instruments* MID CAP VALUE Level 1 -- Quoted Prices $302,937,177 -- Level 2 -- Other Significant Observable Inputs $8,092,828 $101,042 Level 3 -- Significant Unobservable Inputs -- -- --------------- ------------- $311,030,005 $101,042 =============== ============= SMALL CAP VALUE Level 1 -- Quoted Prices $1,261,774,737 -- Level 2 -- Other Significant Observable Inputs $86,269,529 -- Level 3 -- Significant Unobservable Inputs -- -- --------------- ------------- $1,348,044,266 =============== ============= *Includes forward foreign currency exchange contracts. - ------ 31 8. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement with Bank of America, N.A. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement, which is subject to annual renewal, bear interest at the Federal Funds rate plus 0.40%. The funds did not borrow from the line during the six months ended September 30, 2008. 9. RISK FACTORS Small Cap Value generally invests in smaller companies which may be more volatile, and subject to greater short-term risk than those of larger companies. In addition, Small Cap Value's performance may be affected by investments in initial public offerings (IPOs). The impact of IPOs on a fund's performance depends on the strength of the IPO market and the size of the fund. IPOs may have less impact on a fund's performance as its assets grow. 10. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of September 30, 2008, the components of investments for federal income tax purposes were as follows: Mid Cap Value Small Cap Value Federal tax cost of investments $340,543,145 $1,546,012,232 ============== =============== Gross tax appreciation of investments $ 9,561,700 $ 70,954,687 Gross tax depreciation of investments (39,074,840) (268,922,653) -------------- --------------- Net tax appreciation (depreciation) of investments $(29,513,140) $(197,967,966) ============== =============== The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of March 31, 2008, Mid Cap Value and Small Cap Value had capital loss deferrals of $(27,987,975) and $(56,231,868), respectively, which represent net capital losses incurred in the five-month period ended March 31, 2008. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 11. CORPORATE EVENT On July 27, 2007, the C Class shareholders of Small Cap Value approved a reclassification of C Class shares into Advisor Class shares. The reclassification was effective December 3, 2007. The change was approved by the Board of Directors on November 29, 2006 and March 7, 2007. 12. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 does not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for fiscal years beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 32 FINANCIAL HIGHLIGHTS Mid Cap Value Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.66 $13.33 $12.10 $11.32 $10.02 $10.00 -------- -------- -------- -------- ------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.10 0.16 0.16 0.21 0.09 --(4) Net Realized and Unrealized Gain (Loss) (0.24) (1.51) 1.87 1.70 1.54 0.02 -------- -------- -------- -------- ------- -------- Total From Investment Operations (0.14) (1.35) 2.03 1.91 1.63 0.02 -------- -------- -------- -------- ------- -------- Distributions From Net Investment Income (0.10) (0.16) (0.14) (0.21) (0.06) -- From Net Realized Gains -- (1.16) (0.66) (0.92) (0.27) -- -------- -------- -------- -------- ------- -------- Total Distributions (0.10) (1.32) (0.80) (1.13) (0.33) -- -------- -------- -------- -------- ------- -------- Net Asset Value, End of Period $10.42 $10.66 $13.33 $12.10 $11.32 $10.02 ======== ======== ======== ======== ======= ======== TOTAL RETURN(5) (1.39)% (10.84)% 17.12% 17.62% 16.40% 0.20% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.00%(6) 1.00% 1.00% 1.00% 1.00% 1.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 1.76%(6) 1.25% 1.30% 1.77% 0.83% 0.00%(6) Portfolio Turnover Rate 81% 206% 187% 228% 192% 0% Net Assets, End of Period (in thousands) $264,945 $274,918 $301,642 $115,262 $42,059 $1,619 (1) Six months ended September 30, 2008 (unaudited). (2) For the one day period ended March 31, 2004 (fund inception). (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 33 Mid Cap Value Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.66 $13.33 $12.10 $11.33 $10.07 -------- -------- ------- ------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.11 0.18 0.19 0.24 0.07 Net Realized and Unrealized Gain (Loss) (0.24) (1.51) 1.87 1.69 1.51 -------- -------- ------- ------- -------- Total From Investment Operations (0.13) (1.33) 2.06 1.93 1.58 -------- -------- ------- ------- -------- Distributions From Net Investment Income (0.11) (0.18) (0.17) (0.24) (0.05) From Net Realized Gains -- (1.16) (0.66) (0.92) (0.27) -------- -------- ------- ------- -------- Total Distributions (0.11) (1.34) (0.83) (1.16) (0.32) -------- -------- ------- ------- -------- Net Asset Value, End of Period $10.42 $10.66 $13.33 $12.10 $11.33 ======== ======== ======= ======= ======== TOTAL RETURN(4) (1.30)% (10.67)% 17.36% 17.74% 15.82% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.80%(5) 0.80% 0.80% 0.80% 0.80%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.96%(5) 1.45% 1.50% 1.97% 1.00%(5) Portfolio Turnover Rate 81% 206% 187% 228% 192%(6) Net Assets, End of Period (in thousands) $18,936 $17,378 $20,623 $10,510 $8,082 (1) Six months ended September 30, 2008 (unaudited). (2) August 2, 2004 (commencement of sale) through March 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2005. See Notes to Financial Statements. - ------ 34 Mid Cap Value Advisor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.66 $13.33 $12.10 $11.32 $10.99 -------- -------- ------- ------ -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.08 0.13 0.14 0.16 0.03 Net Realized and Unrealized Gain (Loss) (0.24) (1.51) 1.86 1.72 0.31 -------- -------- ------- ------ -------- Total From Investment Operations (0.16) (1.38) 2.00 1.88 0.34 -------- -------- ------- ------ -------- Distributions From Net Investment Income (0.08) (0.13) (0.11) (0.18) (0.01) From Net Realized Gains -- (1.16) (0.66) (0.92) -- -------- -------- ------- ------ -------- Total Distributions (0.08) (1.29) (0.77) (1.10) (0.01) -------- -------- ------- ------ -------- Net Asset Value, End of Period $10.42 $10.66 $13.33 $12.10 $11.32 ======== ======== ======= ====== ======== TOTAL RETURN(4) (1.52)% (11.07)% 16.83% 17.32% 3.05% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.25%(5) 1.25% 1.25% 1.25% 1.25%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.51%(5) 1.00% 1.05% 1.52% 1.34%(5) Portfolio Turnover Rate 81% 206% 187% 228% 192%(6) Net Assets, End of Period (in thousands) $23,961 $25,932 $21,412 $8,175 $1,057 (1) Six months ended September 30, 2008 (unaudited). (2) January 13, 2005 (commencement of sale) through March 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2005. See Notes to Financial Statements. - ------ 35 Mid Cap Value R Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.65 $13.32 $12.09 $12.21 -------- -------- ------ -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.07 0.10 0.13 0.07 Net Realized and Unrealized Gain (Loss) (0.23) (1.51) 1.84 0.79 -------- -------- ------ -------- Total From Investment Operations (0.16) (1.41) 1.97 0.86 -------- -------- ------ -------- Distributions From Net Investment Income (0.07) (0.10) (0.08) (0.06) From Net Realized Gains -- (1.16) (0.66) (0.92) -------- -------- ------ -------- Total Distributions (0.07) (1.26) (0.74) (0.98) -------- -------- ------ -------- Net Asset Value, End of Period $10.42 $10.65 $13.32 $12.09 ======== ======== ====== ======== TOTAL RETURN(4) (1.55)% (11.30)% 16.55% 7.56% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50% 1.50% 1.50%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.26%(5) 0.75% 0.80% 0.97%(5) Portfolio Turnover Rate 81% 206% 187% 228%(6) Net Assets, End of Period (in thousands) $3,229 $3,172 $820 $27 (1) Six months ended September 30, 2008 (unaudited). (2) July 29, 2005 (commencement of sale) through March 31, 2006. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2006. See Notes to Financial Statements. - ------ 36 Small Cap Value Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.02 $10.01 $10.45 $10.07 $9.71 $6.44 -------- -------- --------- ---------- ---------- ---------- Income From Investment Operations Net Investment Income (Loss)(2) 0.06 0.09 0.06 0.06 0.03 0.05 Net Realized and Unrealized Gain (Loss) (0.12) (1.16) 0.87 1.72 1.31 3.26 -------- -------- --------- ---------- ---------- ---------- Total From Investment Operations (0.06) (1.07) 0.93 1.78 1.34 3.31 -------- -------- --------- ---------- ---------- ---------- Distributions From Net Investment Income (0.07) (0.09) (0.04) (0.06) (0.03) (0.04) From Net Realized Gains -- (1.83) (1.33) (1.34) (0.95) -- -------- -------- --------- ---------- ---------- ---------- Total Distributions (0.07) (1.92) (1.37) (1.40) (0.98) (0.04) -------- -------- --------- ---------- ---------- ---------- Net Asset Value, End of Period $6.89 $7.02 $10.01 $10.45 $10.07 $9.71 ======== ======== ========== ========== ========== ========== TOTAL RETURN(3) (0.92)% (12.22)% 9.38% 18.67% 14.00% 51.53% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.25%(4) 1.26% 1.25% 1.25% 1.25% 1.26% Ratio of Net Investment Income (Loss) to Average Net Assets 1.61%(4) 1.01% 0.57% 0.58% 0.32% 0.59% Portfolio Turnover Rate 90% 123% 121% 111% 108% 110% Net Assets, End of Period (in thousands) $646,599 $732,968 $1,261,392 $1,390,024 $1,252,153 $1,050,500 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 37 Small Cap Value Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.04 $10.03 $10.47 $10.08 $9.72 $6.45 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.07 0.11 0.08 0.08 0.05 0.07 Net Realized and Unrealized Gain (Loss) (0.12) (1.17) 0.87 1.73 1.31 3.26 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.05) (1.06) 0.95 1.81 1.36 3.33 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.08) (0.10) (0.06) (0.08) (0.05) (0.06) From Net Realized Gains -- (1.83) (1.33) (1.34) (0.95) -- -------- -------- -------- -------- -------- -------- Total Distributions (0.08) (1.93) (1.39) (1.42) (1.00) (0.06) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.91 $7.04 $10.03 $10.47 $10.08 $9.72 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (0.78)% (12.05)% 9.52% 18.98% 14.20% 51.75% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.05%(4) 1.06% 1.05% 1.05% 1.05% 1.06% Ratio of Net Investment Income (Loss) to Average Net Assets 1.81%(4) 1.21% 0.77% 0.78% 0.52% 0.79% Portfolio Turnover Rate 90% 123% 121% 111% 108% 110% Net Assets, End of Period (in thousands) $365,248 $370,422 $443,173 $435,327 $314,700 $170,784 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 38 Small Cap Value Advisor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.00 $10.00 $10.45 $10.06 $9.71 $6.43 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.05 0.07 0.03 0.03 0.01 0.03 Net Realized and Unrealized Gain (Loss) (0.12) (1.17) 0.87 1.74 1.30 3.27 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.07) (1.10) 0.90 1.77 1.31 3.30 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.06) (0.07) (0.02) (0.04) (0.01) (0.02) From Net Realized Gains -- (1.83) (1.33) (1.34) (0.95) -- -------- -------- -------- -------- -------- -------- Total Distributions (0.06) (1.90) (1.35) (1.38) (0.96) (0.02) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.87 $7.00 $10.00 $10.45 $10.06 $9.71 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (1.10)% (12.51)% 9.10% 18.51% 13.70% 51.38% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.50%(4) 1.51% 1.50% 1.50% 1.50% 1.51% Ratio of Net Investment Income (Loss) to Average Net Assets 1.36%(4) 0.76% 0.32% 0.33% 0.07% 0.34% Portfolio Turnover Rate 90% 123% 121% 111% 108% 110% Net Assets, End of Period (in thousands) $330,854 $286,227 $434,182 $455,001 $624,633 $432,261 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 39 APPROVAL OF MANAGEMENT AGREEMENTS Mid Cap Value and Small Cap Value 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 independent directors or trustees (the "Directors") each year. At American Century, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning Mid Cap Value and Small Cap Value (the "funds") and the services provided to the funds under the management agreement. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds; * reports on the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * information about the compliance policies, procedures, and regulatory experience of the advisor; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two in-person meetings and one telephonic meeting to review and discuss the information provided. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 40 FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. In connection with their review of the fund, 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 under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. 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 funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of the services provided by the advisor have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. - ------ 41 INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided to the funds is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with its investment objectives and approved strategies. 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. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the funds. The Directors also review detailed performance information during the 15(c) Process comparing the funds' performance with that of similar funds not managed by the advisor. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. Small Cap Value's performance for both the one- and three-year periods was above the median for its peer group. Mid Cap Value's performance was above the median for its peer group for the three-year period and below the median for the one-year period. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. 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 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. COSTS OF SERVICES PROVIDED AND PROFITABILITY. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate 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 funds. ETHICS. The Directors generally consider 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. - ------ 42 ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various functions to the funds, and the fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the funds increase in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). 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 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 Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the fund's unified fee to the total expense ratio of other funds in the fund's peer group. The unified fee charged to shareholders of Small Cap Value was at the median of the total expense ratios of its peer group. The unified fee charged to shareholders of Mid Cap Value was below the median of the total expense ratios of its peer group. The board concluded that the management fee paid by each fund to the advisor was reasonable in light of the services provided to the fund. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. - ------ 43 COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use the fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors 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 Directors also determined that the advisor is able to provide investment management services to certain clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the fund to determine breakpoints in the funds' fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the board, including all of the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor concluded that the investment management agreement between the funds and the advisor is fair and reasonable in light of the services provided and should be renewed. - ------ 44 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] 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. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The funds file their 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 funds' 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 funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 45 INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The LIPPER SMALL-CAP VALUE FUNDS INDEX is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Small-Cap Value fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 1000® GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 1000® VALUE INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 2000® INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® GROWTH Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 2000® VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP® GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL MIDCAP® VALUE INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. - ------ 46 NOTES - ------ 47 NOTES - ------ 48 [back cover] [american century investments logo and text logo ®] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE . . . . . . . . . . . . . . . 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE . . . . . . . . . . . . 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS. . . . . . . . . . . . . . . . . . . . 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES . . . . . . 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF . . . . . . . . . 1-800-634-4113 AMERICAN CENTURY CAPITAL PORTFOLIOS, 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. American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES American Century Investment Services, Inc., Distributor ©2008 American Century Proprietary Holdings, Inc. All rights reserved. 0811 CL-SAN-61619S
[front cover] SEMIANNUAL REPORT SEPTEMBER 30, 2008 [american century investments logo and text logo ®] AMERICAN CENTURY INVESTMENTS EQUITY INCOME FUND VALUE FUND LARGE COMPANY VALUE FUND PRESIDENT'S LETTER [photo of Jonathan Thomas] JONATHAN THOMAS Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended September 30, 2008. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s/ Jonathan Thomas Jonathan S. Thomas President and CEO American Century Investments TABLE OF CONTENTS Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Stock Index Returns . . . . . . . . . . . . . . . . . . . . . . 2 EQUITY INCOME Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 6 VALUE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 9 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 10 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 10 LARGE COMPANY VALUE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 13 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 14 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 14 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 15 FINANCIAL STATEMENTS Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 18 Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 27 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 29 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 30 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 32 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 42 OTHER INFORMATION Approval of Management Agreements for Equity Income, Value and Large Company Value. . . . . . . . . . . . . . . . . . . . 60 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 64 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 65 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team 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. MARKET PERSPECTIVE [photo of chief investment officer] By Phil Davidson, Chief Investment Officer, U.S. Value Equity FINANCIAL SYSTEM SHAKEN A series of startling events put downward pressure on the U.S. equity market during the six months ended September 30, 2008. The U.S. financial system remained mired in unprecedented credit-market turmoil, which intensified throughout the six-month period. The credit and liquidity stress reached critical mass in September, when the federal government's takeover of mortgage lenders Fannie Mae and Freddie Mac, and its rescue of insurer AIG were followed by the bankruptcy of Lehman Brothers and Bank of America's acquisition of troubled Merrill Lynch. A number of other major financial firms faced similar circumstances. Few investors anticipated the scope of the credit crunch, which has blossomed into a full-blown financial crisis. The adverse effects are being felt on a global scale--the U.S. economy is likely already facing a recession as job losses mount and consumer spending withers, and the malaise is quickly spreading throughout the rest of the world's economies. The U.S. government and the Federal Reserve have taken extraordinary steps to provide support for the flagging financial system, and other governments and central banks are expected to follow suit. In the stock market, volatility reached extreme levels on a day-to-day basis as investors lost confidence in the financial system and the ability of the government to remedy the situation. As a result, the major stock indexes slumped for the six-month period (see the accompanying table). VALUE OUTPERFORMED In this challenging environment, value stocks generally held up better than growth-oriented issues. Against a persistent backdrop of market uncertainty and heightened volatility, companies with attractive valuation characteristics became beacons for risk-averse investors. However, security selection took on greater importance as the market became rife with "value traps"--stocks that are inexpensive for good reason. Our value funds stand to benefit from an increased emphasis on selectivity, thanks to our risk-conscious focus on robust balance sheets, competitive strength, cash flows, and earnings power. We believe these characteristics are indicative of higher-quality companies that will successfully weather the current financial storm. U.S. Stock Index Returns For the six months ended September 30, 2008* RUSSELL 1000 INDEX (LARGE-CAP) -11.06% Russell 1000 Value Index -11.10% Russell 1000 Growth Index -11.23% RUSSELL MIDCAP INDEX -10.58% Russell Midcap Value Index -7.46% Russell Midcap Growth Index -13.93% RUSSELL 2000 INDEX (SMALL-CAP) -0.54% Russell 2000 Value Index 1.24% Russell 2000 Growth Index -2.83% *Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE Equity Income Total Returns as of September 30, 2008 Average Annual Returns 6 5 10 Since Inception months(1) 1 year years years Inception Date INVESTOR CLASS -4.27% -13.68% 7.09% 8.72% 11.54% 8/1/94 RUSSELL 3000 VALUE INDEX(2) -10.16% -22.70% 7.29% 5.86% 9.91%(3) -- S&P 500 INDEX(2) -10.87% -21.98% 5.17% 3.06% 8.75%(3) -- LIPPER EQUITY INCOME FUNDS INDEX(2) -11.30% -22.36% 5.92% 4.10% 7.65%(3) -- Institutional Class -4.30% -13.51% 7.30% 8.93% 7.98% 7/8/98 A Class(4) No sales charge* -4.39% -13.89% 6.83% 8.45% 9.13% With sales charge* -9.94% -18.85% 5.56% 7.81% 8.58% 3/7/97 B Class No sales charge* -4.74% -14.53% -- -- -14.42% With sales charge* -9.74% -18.53% -- -- -18.40% 9/28/07 C Class No sales charge* -4.74% -14.53% 6.07% -- 5.43% With sales charge* -5.68% -14.53% 6.07% -- 5.43% 7/13/01 R Class -4.65% -14.15% 6.51% -- 6.31% 8/29/03 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. ©2008 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Lipper Fund Performance -- Performance data is total return, and is preliminary and subject to revision. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 7/31/94, the date nearest the Investor Class's inception for which data are available. (4) Prior to September 4, 2007, the A Class was referred to as the Advisor Class. Performance, with sales charge, prior to that date has been adjusted to reflect the A Class's current sales charge. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 3 Equity Income Growth of $10,000 Over 10 Years $10,000 investment made September 30, 1998
One-Year Returns Over 10 Years Periods ended September 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Investor Class 15.98% 6.80% 14.30% -3.72% 20.17% 17.22% 8.79% 13.47% 12.81% -13.68% Russell 3000 Value Index 17.64% 9.35% -7.98% -15.89% 24.89% 20.89% 16.78% 14.55% 13.73% -22.70% S&P 500 Index 27.80% 13.28% -26.62% -20.49% 24.40% 13.87% 12.25% 10.79% 16.44% -21.98% Lipper Equity Income Funds Index 13.36% 8.10% -8.82% -16.74% 20.48% 17.09% 13.52% 12.09% 15.23% -22.36% Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 4 PORTFOLIO COMMENTARY Equity Income Portfolio Managers: Phil Davidson, Kevin Toney, and Michael Liss PERFORMANCE SUMMARY Equity Income returned -4.27%* for the six months ended September 30, 2008. By comparison, the Lipper Equity Income Index returned -11.30%, and the median return for Morningstar's Large Cap Value category** (whose performance, like Equity Income's, reflects fund operating expenses) was - -11.23%. Two market indices--the Russell 3000 Value Index and the S&P 500 Index--returned -10.16% and -10.87%, respectively. The portfolio's return reflects operating expenses, while the indices' returns do not. The volatile market environment described in the Market Perspective on page 2 hampered Equity Income's absolute performance. However, on a relative basis, the portfolio significantly outpaced the performance of its benchmark, the Russell 3000 Value Index. The key to our results was our continued focus on higher-quality businesses with sound balance sheets. Performance benefited most from strong security selection across financials, consumer staples, and utilities. Conversely, Equity Income's mix of industrials and energy stocks was a drag on results. The portfolio's complement of international holdings also restrained performance. Since its inception on August 1, 1994, Equity Income has produced an average annual return of 11.54%, topping the returns for the Lipper Equity Income Index, Morningstar's Large Cap Value category median,** the Russell 3000 Value Index, and the S&P 500 for the same period (see performance information on pages 3-4). FINANCIALS POSITION BOOSTED RESULTS Strong security selection and an underweight in financials added to relative performance. We avoided several headline names, including insurance company American International Group; bank holding company Wachovia Corp.; savings and loan company Washington Mutual; and government-sponsored mortgage lenders Fannie Mae and Freddie Mac. The sector provided two significant contributors--leading insurance broker Marsh & McLennan, and bank holding company People's United Financial, Inc. Marsh continued to show performance within its key insurance brokerage segment. People's United Financial has steered clear of subprime loans and is using its strong, well-capitalized balance sheet to make acquisitions. Financials was also the source of a top detractor, AllianceBernstein Holding LP. The asset manager experienced weak investment performance, compounding a decline in assets under management which accompanied the downturn in the financial markets. Top Ten Holdings as of September 30, 2008 % of net % of net assets as of assets as of 9/30/08 3/31/08 Exxon Mobil Corp. 6.2% 6.9% Bank of America Corp., 7.25%, 12/31/49 (Convertible Pref.) 5.2% 0.6% General Electric Co. 4.9% 5.4% AT&T Inc. 4.2% 4.3% Intel Corp., 2.95%, 12/15/35 (Convertible Bond) 3.8% 2.4% Proctor & Gamble Co. (The) 2.9% 1.8% Beckman Coulter, Inc., 2.50%, 12/15/36 (Convertible Bond) 2.8% -- Chevron Corp. 2.8% -- Total SA ORD 2.7% 2.1% BP plc(1) 2.6% 4.9% (1) Includes shares traded on all exchanges. * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The median returns for Morningstar's Large Cap Value category were - -23.23%, 5.61% and 4.60% for the one-, five- and ten-year periods ended September 30, 2008, respectively, and 8.00% since the fund's inception. (c) Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. - ------ 5 Equity Income CONSUMER STAPLES, UTILITIES ENHANCED PERFORMANCE In consumer staples, our holdings among large packaged-food companies contributed to relative results. A key holding was Campbell Soup, a leading producer of soups, simple meals, baked goods, and healthy beverages. Campbell has benefited from new products and improved pricing. Strong security selection in utilities added value. Although electric and gas utilities were down for the benchmark, we owned two top performers--Southern Co., an electric utility serving primarily the southeast, and Nicor, a gas distribution company that serves northern Illinois and the Chicago suburbs. ACQUISITIONS ADDED VALUE Merger and acquisition activity during the period was also beneficial. We owned specialty chemical company Rohm and Haas, which announced it would be bought at a substantial premium by Dow Chemical. UST, the leading producer of smokeless tobacco products, reported a pending acquisition by Altria Group, owner of Philip Morris USA. INDUSTRIALS DETRACTED Investments in the industrials sector slowed relative performance. A leading detractor was General Electric, which comprised approximately 4% of the benchmark. The company's shares suffered in sympathy with the overall decline in financials due to concern about its financial unit, GE Capital. ENERGY HAMPERED PROGRESS In energy, we concentrated our investments in international integrated energy companies, which we considered more attractively valued than their domestic competitors. Two of these holdings--Total SA, a French oil and gas company, and BP Plc., an oil and gas holding company based in the United Kingdom--detracted as a slowing global economy weighed on their share prices. OUTLOOK We will continue to follow our disciplined, bottom-up investment process, selecting companies one at a time for the portfolio. We see attractive opportunities in information technology, utilities, and health care, reflected by overweight positions in these sectors. We continue to be selective in holdings of consumer discretionary companies and industrials, relying on fundamental analysis to identify strong, financially-sound businesses whose securities provide attractive yields. PORTFOLIO MANAGER SCOTT MOORE HAS LEFT AMERICAN CENTURY INVESTMENTS TO PURSUE ANOTHER CAREER OPPORTUNITY. PORTFOLIO MANAGER MICHAEL LISS HAS JOINED THE EQUITY INCOME INVESTMENT TEAM. MR. LISS, A PORTFOLIO MANAGER ON THE VALUE AND MID CAP VALUE MANAGEMENT TEAMS, PREVIOUSLY SERVED AS A SENIOR INVESTMENT ANALYST FOR EQUITY INCOME. Top Five Industries as of September 30, 2008 % of net % of net assets as of assets as of 9/30/08 3/31/08 Oil, Gas & Consumable Fuels 15.1% 16.0% Insurance 10.9% 5.3% Pharmaceuticals 10.0% 7.0% Diversified Financial Services 7.6% 2.5% Industrial Conglomerates 4.9% 6.8% Types of Investments in Portfolio % of net % of net assets as of assets as of 9/30/08 3/31/08 Common Stocks 77.1% 84.0% Convertible Bonds 15.2% 13.5% Convertible Preferred Stocks 6.2% 1.6% Preferred Stocks 0.3% 0.1% TOTAL EQUITY EXPOSURE 98.8% 99.2% Temporary Cash Investments 0.5% 0.3% Other Assets and Liabilities(1) 0.7% 0.5% (1) Includes securities lending collateral and other assets and liabilities. - ------ 6 PERFORMANCE Value Total Returns as of September 30, 2008 Average Annual Returns 6 5 10 Since Inception months(1) 1 year years years Inception Date INVESTOR CLASS -6.01% -19.99% 6.22% 7.02% 9.89% 9/1/93 RUSSELL 3000 VALUE INDEX(2) -10.16% -22.70% 7.29% 5.86% 9.30%(3) -- S&P 500 INDEX(2) -10.87% -21.98% 5.17% 3.06% 8.29%(3) -- LIPPER MULTI-CAP VALUE FUNDS INDEX(2) -11.87% -25.26% 4.88% 5.19% 7.93%(3) -- Institutional Class -5.91% -19.80% 6.42% 7.23% 6.41% 7/31/97 A Class(4) No sales charge* -6.13% -20.08% 5.96% 6.76% 7.79% With sales charge* -11.49% -24.68% 4.70% 6.13% 7.25% 10/2/96 B Class No sales charge* -6.48% -20.66% 5.23% -- 7.44% With sales charge* -11.48% -24.66% 5.07% -- 7.31% 1/31/03 C Class No sales charge* -6.53% -20.68% 5.22% -- 3.61% With sales charge* -7.45% -20.68% 5.22% -- 3.61% 6/4/01 R Class -6.25% -20.38% -- -- -0.30% 7/29/05 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. ©2008 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Lipper Fund Performance -- Performance data is total return, and is preliminary and subject to revision. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 8/31/93, the date nearest the Investor Class's inception for which data are available. (4) Prior to September 4, 2007, the A Class was referred to as the Advisor Class. Performance, with sales charge, prior to that date has been adjusted to reflect the A Class's current sales charge. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 7 Value Growth of $10,000 Over 10 Years $10,000 investment made September 30, 1998
One-Year Returns Over 10 Years Periods ended September 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Investor Class 12.04% 2.95% 12.36% -8.55% 23.02% 19.56% 9.96% 14.69% 12.11% -19.99% Russell 3000 Value Index 17.64% 9.35% -7.98% -15.89% 24.89% 20.89% 16.78% 14.55% 13.73% -22.70% S&P 500 Index 27.80% 13.28% -26.62% -20.49% 24.40% 13.87% 12.25% 10.79% 16.44% -21.98% Lipper Multi-Cap Value Funds Index 15.36% 10.61% -6.04% -14.25% 27.08% 17.61% 15.42% 10.94% 12.73% -25.26% Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 8 PORTFOLIO COMMENTARY Value Portfolio Managers: Michael Liss, Kevin Toney, and Phil Davidson PERFORMANCE SUMMARY Value returned -6.01%* for the six months ended September 30, 2008. By comparison, the Lipper Multi-Cap Value Index returned -11.87%, while the median return for Morningstar's Large Cap Value category** (whose performance, like Value's, reflects fund operating expenses) was -11.23%. Two market indices--the Russell 3000 Value Index and the S&P 500 Index--returned -10.16% and -10.87%, respectively. (The portfolio's returns reflect operating expenses, while the indices' returns do not.) The volatile market environment described in the Market Perspective on page 2 hampered Value's absolute performance. However, on a relative basis, the portfolio significantly outpaced the performance of its benchmark, the Russell 3000 Value Index. Value outperformed due to effective security selection and a continued emphasis on less-risky businesses with sound balance sheets. The portfolio benefited most from its position in the consumer staples, materials, and health care sectors. An underweight position in energy stocks hindered relative performance. The portfolio's complement of international holdings also restrained performance. Since Value's inception on September 1, 1993, the portfolio has produced an average annual return of 9.89%, topping the returns for that period for the Lipper Multi-Cap Value Index, Morningstar's Large Cap Value category median,** the Russell 3000 Value Index, and the S&P 500 (see the performance information on pages 7-8). CONSUMER STAPLES BOOSTED PERFORMANCE An overweight and effective security selection in consumer staples--particularly among food and household products names--contributed positively to relative performance. Our valuation work uncovered a number of attractively priced businesses--industry leaders with high and sustainable market-share positions, solid returns on capital, and good financial strength. Two top holdings were significant relative contributors. Kraft Foods, the largest branded food company in the U.S., has put more resources behind fewer brands and is pushing more of its products into China, Russia, and Brazil. Kimberly-Clark Corp., one of the largest makers of personal-care and paper products, benefited from ongoing cost cutting and price increases. Its share price rose on anticipation of lower prices for oil, natural gas, and pulp, helping its profit margins. Top Ten Holdings as of September 30, 2008 % of net % of net assets as of assets as of 9/30/08 3/31/08 General Electric Co. 5.9% 4.9% Exxon Mobil Corp. 5.0% 4.7% AT&T Inc. 3.4% 3.8% Kimberly-Clark Corp. 3.2% 2.9% JPMorgan Chase & Co. 3.0% 1.4% Bank of America Corp. 2.9% 2.2% BP plc ADR 2.8% 3.8% Johnson & Johnson 2.5% 2.6% Kraft Foods Inc. Cl A 2.4% 4.0% Bemis Co., Inc. 2.3% 3.2% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The median returns for Morningstar's Large Cap Value category were - -23.23%, 5.61% and 4.60% for the one-, five- and ten-year periods ended September 30, 2008, respectively, and 7.99% since the fund's inception. (c) Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. - ------ 9 Value MATERIALS, HEALTH CARE CONTRIBUTED The materials sector was another source of relative outperformance. In the containers and packaging segment, effective security selection added to results. A top contributor was Bemis Co., one of Value's largest holdings. Bemis, a major producer of flexible packaging, primarily for the food industry, reported an increase in profits from the sale of its flexible and dry-food packaging products. Value held no metals and mining company stocks, which enhanced its progress versus the benchmark. For some time, we have had limited exposure to this segment because we believe earnings are at peak levels and unsustainable. This proved advantageous as falling commodity prices put pressure on earnings. In the health care sector, Value benefited from its mix of stocks in the pharmaceutical and health care equipment industries. One key holding was Beckman Coulter. The manufacturer of diagnostic testing instruments and consumables reported increased revenue on sales of clinical diagnostic equipment. ENERGY DETRACTED The energy sector was the source of two top detractors--French oil company, Total SA and Equitable Resources, a natural gas company involved in both exploration and production, primarily in the Appalachian region. Total's share price declined, partly on fears that a global recession would end high oil prices. Despite its strong resource base, Equitable's prospects dimmed as natural gas prices fell and its access to capital was restricted by tight credit conditions, which hindered its ability to execute its growth plans. OUTLOOK We will continue to follow our disciplined, bottom-up process, selecting securities one at a time for the portfolio. We see opportunities in consumer staples, industrials, and information technology companies, reflected by overweight positions in these sectors relative to the benchmark. Our fundamental analysis and valuation work are also directing us toward relative underweights in financials and energy stocks. PORTFOLIO MANAGER SCOTT MOORE HAS LEFT AMERICAN CENTURY INVESTMENTS TO PURSUE ANOTHER CAREER OPPORTUNITY. MICHAEL LISS, WHO IS ALSO ON THE MID CAP VALUE AND EQUITY INCOME MANAGEMENT TEAMS, CONTINUES TO CO-MANAGE VALUE. PORTFOLIO MANAGER KEVIN TONEY HAS JOINED THE VALUE MANAGEMENT TEAM. MR. TONEY, A PORTFOLIO MANAGER ON THE EQUITY INCOME AND MID CAP VALUE PORTFOLIOS, PREVIOUSLY SERVED AS A SENIOR INVESTMENT ANALYST FOR VALUE. Top Five Industries as of September 30, 2008 % of net % of net assets as of assets as of 9/30/08 3/31/08 Oil, Gas & Consumable Fuels 11.6% 9.9% Pharmaceuticals 8.3% 6.7% Food Products 7.3% 10.4% Industrial Conglomerates 7.1% 5.7% Diversified Financial Services 6.6% 4.1% Types of Investments in Portfolio % of net % of net assets as of assets as of 9/30/08 3/31/08 Domestic Common Stocks 90.9% 91.1% Foreign Common Stocks(1) 8.9% 7.9% TOTAL COMMON STOCKS 99.8% 99.0% Temporary Cash Investments 1.5% 2.0% Other Assets and Liabilities(2) (1.3)% (1.0)% (1) Includes depositary shares, dual listed securities and foreign ordinary shares. (2) Includes securities lending collateral and other assets and liabilities. - ------ 10 PERFORMANCE Large Company Value Total Returns as of September 30, 2008 Average Annual Returns 6 5 Since Inception months(1) 1 year years Inception Date INVESTOR CLASS -12.58% -25.28% 5.07% 3.65% 7/30/99 RUSSELL 1000 VALUE INDEX(2) -11.10% -23.56% 7.12% 3.27% -- S&P 500 INDEX(2) -10.87% -21.98% 5.17% 0.26% -- Institutional Class -12.49% -25.13% 5.27% 3.26% 8/10/01 A Class(3) No sales charge* -12.55% -25.46% 4.81% 4.57% With sales charge* -17.52% -29.74% 3.58% 3.78% 10/26/00 B Class No sales charge* -12.84% -25.95% 4.09% 6.19% With sales charge* -17.84% -29.95% 3.92% 6.05% 1/31/03 C Class No sales charge* -12.88% -26.02% 4.07% 2.95% With sales charge* -13.75% -26.02% 4.07% 2.95% 11/7/01 R Class -12.80% -25.65% 4.54% 4.22% 8/29/03 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. ©2008 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Prior to December 3, 2007, the A Class was referred to as the Advisor Class. Performance, with sales charge, prior to that date has been adjusted to reflect the A Class's current sales charge. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 11 Large Company Value Growth of $10,000 Over Life of Class $10,000 investment made July 30, 1999
One-Year Returns Over Life of Class Periods ended September 30 1999* 2000 2001 2002 2003 2004 2005 2006 2007 2008 Investor Class -8.56% 5.67% 4.99% -13.70% 23.93% 18.84% 12.38% 13.42% 13.15% -25.28% Russell 1000 Value Index -7.08% 8.91% -8.91% -16.95% 24.37% 20.52% 16.69% 14.62% 14.45% -23.56% S&P 500 Index -3.22% 13.28% -26.62% -20.49% 24.40% 13.87% 12.25% 10.79% 16.44% -21.98% * From 7/30/99, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 12 PORTFOLIO COMMENTARY Large Company Value Portfolio Managers: Chuck Ritter and Brendan Healy PERFORMANCE SUMMARY Large Company Value returned -12.58%* for the six months ended September 30, 2008. By comparison, its benchmark, the Russell 1000 Value Index, returned - -11.10%. The broader market, as measured by the S&P 500, returned -10.87%. The portfolio's return reflects operating expenses, while the indices' returns do not. The median return for Morningstar's Large Cap Value category (whose performance, like Large Company Value's, reflects operating expenses) was -11.23%.** The volatile market environment described in the Market Perspective on page 2 hampered Large Company Value's absolute and relative performance. U.S. equity indices were almost universally down for the six months. Value outperformed growth--except among mega-cap stocks (shares of especially large companies, represented by the Russell Top 200 Index). Large Company Value was slowed by its position in the financials sector and holdings among utilities and consumer discretionary stocks. On the positive side, the portfolio benefited from strong security selection in the information technology, health care, and consumer staples sectors. Since Large Company Value's inception on July 30, 1999, the portfolio has produced an average annual return of 3.65%, topping the returns for Morningstar's Large Cap Value category median,** the Russell 1000 Value Index, and the S&P 500 for that period (see performance information on pages 11-12). FINANCIALS HINDERED PROGRESS Even an underweight in financials--the portfolio's largest source of relative underperformance--was insufficient to protect Large Company Value from the turmoil in the sector. Although we continue to be selective about portfolio holdings, our complement of insurance stocks hampered results. A top detractor was American International Group (AIG), the leading U.S.-based international insurer. AIG's shares fell significantly after the Federal Reserve stepped in to rescue the company from bankruptcy. We eliminated the position during the reporting period. Also slowing progress was a significant underweight in real estate investment trusts (REITS), which boosted returns for the benchmark. We continued to limit exposure to this segment because we believe REITS are overvalued relative to their fundamentals. Top Ten Holdings as of September 30, 2008 % of net % of net assets as of assets as of 9/30/08 3/31/08 Exxon Mobil Corp. 5.6% 5.1% General Electric Co. 4.7% 5.0% Chevron Corp. 4.6% 3.6% JPMorgan Chase & Co. 3.5% 2.6% AT&T Inc. 3.5% 4.0% ConocoPhillips 3.1% 2.4% Citigroup Inc. 3.1% 2.7% Johnson & Johnson 3.0% 2.7% Pfizer Inc. 2.9% 2.6% Bank of America Corp. 2.8% 3.0% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The median returns for Morningstar's Large Cap Value category were -23.23% and 5.61% one- and five-year periods ended September 30, 2008, respectively, and 2.50% since the fund's inception. (c) Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. - ------ 13 Large Company Value UTILITIES, CONSUMER DISCRETIONARY DETRACTED The portfolio's mix of electric utilities was a drag on relative performance. A key detractor was Exelon, the nation's largest nuclear generator, which saw its cost advantage over carbon-based generators decline as oil and gas prices fell. In consumer discretionary stocks, our holdings in the media industry hampered performance. The sector provided two key detractors--entertainment giant Viacom, and newspaper publisher Gannett Co. Both companies have been hurt by a significant drop-off in advertising revenue. INFORMATION TECHNOLOGY CONTRIBUTED On the positive side, the portfolio benefited most from strong security selection in the information technology sector, with most of the gains coming from large leading software and technology companies. A significant holding was computer and peripheral maker Hewlett-Packard. Its acquisition of outsourcing giant Electronic Data Systems appears to offer a competitive advantage and could add value through reorganization and cost-cutting efforts. High-tech giant International Business Machines (IBM) reported strong earnings from growth in its software and services divisions. HEALTH CARE, CONSUMER STAPLES ADDED VALUE Large Company Value's position in health care and consumer staples contributed to results. During difficult economic times or periods of stock market turbulence, investors often regard consumer staples and health care stocks as lower-risk, defensive investments. Moreover, our preference for large industry leaders proved advantageous as many of these names outperformed. In health care, a key holding was Abbott Laboratories, which develops and manufactures laboratory diagnostics, medical devices and pharmaceutical therapies. Abbott reported strong sales across its entire product line, including Humira (a drug that treats autoimmune diseases). In consumer staples, a significant contributor was Wal-Mart Stores. The slowing economy has put pressure on consumers, making the retailer's low-price strategy particularly appealing. OUTLOOK We continue to be bottom-up investment managers, evaluating each company individually and building the portfolio one stock at a time. Large Company Value is broadly diversified, with ongoing overweight positions in the information technology, energy, and industrials sectors. Our valuation work is also directing us toward smaller relative weightings in financials and utilities stocks. We are still finding greater value opportunities among mega-cap stocks and have maintained our bias toward these firms. Top Five Industries as of September 30, 2008 % of net % of net assets as of assets as of 9/30/08 3/31/08 Oil, Gas & Consumable Fuels 16.7% 13.9% Pharmaceuticals 9.9% 8.9% Diversified Financial Services 9.4% 8.3% Diversified Telecommunication Services 5.9% 6.0% Industrial Conglomerates 5.1% 5.7% Types of Investments in Portfolio % of net % of net assets as of assets as of 9/30/08 3/31/08 Common Stocks & Futures 99.3% 99.1% Temporary Cash Investments 1.3% 0.8% Other Assets and Liabilities(1) (0.6)% 0.1% (1) Includes securities lending collateral and other assets and liabilities. - ------ 14 SHAREHOLDER FEE EXAMPLES (UNAUDITED) 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 April 1, 2008 to September 30, 2008. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Investments Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 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. - ------ 15 Beginning Ending Account Account Expenses Paid Annualized Value Value During Period* Expense 4/1/08 9/30/08 4/1/08 - 9/30/08 Ratio* Equity Income ACTUAL Investor Class $1,000 $957.30 $4.76 0.97% Institutional Class $1,000 $957.00 $3.78 0.77% A Class $1,000 $956.10 $5.98 1.22% B Class $1,000 $952.60 $9.64 1.97% C Class $1,000 $952.60 $9.64 1.97% R Class $1,000 $953.50 $7.20 1.47% HYPOTHETICAL Investor Class $1,000 $1,020.21 $4.91 0.97% Institutional Class $1,000 $1,021.21 $3.90 0.77% A Class $1,000 $1,018.95 $6.17 1.22% B Class $1,000 $1,015.19 $9.95 1.97% C Class $1,000 $1,015.19 $9.95 1.97% R Class $1,000 $1,017.70 $7.44 1.47% Value ACTUAL Investor Class $1,000 $939.90 $4.86 1.00% Institutional Class $1,000 $940.90 $3.89 0.80% A Class $1,000 $938.70 $6.08 1.25% B Class $1,000 $935.20 $9.70 2.00% C Class $1,000 $934.70 $9.70 2.00% R Class $1,000 $937.50 $7.29 1.50% HYPOTHETICAL Investor Class $1,000 $1,020.05 $5.06 1.00% Institutional Class $1,000 $1,021.06 $4.05 0.80% A Class $1,000 $1,018.80 $6.33 1.25% B Class $1,000 $1,015.04 $10.10 2.00% C Class $1,000 $1,015.04 $10.10 2.00% R Class $1,000 $1,017.55 $7.59 1.50% * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 16 Beginning Ending Account Account Expenses Paid Annualized Value Value During Period* Expense 4/1/08 9/30/08 4/1/08 - 9/30/08 Ratio* Large Company Value ACTUAL Investor Class $1,000 $874.20 $3.90 0.83% Institutional Class $1,000 $875.10 $2.96 0.63% A Class $1,000 $874.50 $5.08 1.08% B Class $1,000 $871.60 $8.59 1.83% C Class $1,000 $871.20 $8.58 1.83% R Class $1,000 $872.00 $6.24 1.33% HYPOTHETICAL Investor Class $1,000 $1,020.91 $4.20 0.83% Institutional Class $1,000 $1,021.91 $3.19 0.63% A Class $1,000 $1,019.65 $5.47 1.08% B Class $1,000 $1,015.89 $9.25 1.83% C Class $1,000 $1,015.89 $9.25 1.83% R Class $1,000 $1,018.40 $6.73 1.33% * 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 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 17 SCHEDULE OF INVESTMENTS Equity Income SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 77.1% AEROSPACE & DEFENSE -- 0.1% 118,627 Northrop Grumman Corp. $ 7,181,671 -------------- AIR FREIGHT & LOGISTICS -- 0.8% 637,821 United Parcel Service, Inc. Cl B 40,112,563 -------------- AUTOMOBILES -- 0.4% 669,900 Honda Motor Co., Ltd. ORD 19,899,107 -------------- BEVERAGES -- 0.6% 557,800 Coca-Cola Co. (The) 29,496,464 -------------- CAPITAL MARKETS -- 1.5% 1,649,730 AllianceBernstein Holding L.P. 61,056,507 464,900 Merrill Lynch & Co., Inc. 11,761,970 -------------- 72,818,477 -------------- CHEMICALS -- 1.0% 366,300 Dow Chemical Co. (The) 11,641,014 893,300 du Pont (E.I.) de Nemours & Co. 35,999,990 -------------- 47,641,004 -------------- COMMERCIAL BANKS -- 1.0% 312,900 Associated Banc-Corp 6,242,355 354,991 Marshall & Ilsley Corp. 7,153,069 434,600 PNC Financial Services Group, Inc. 32,464,620 -------------- 45,860,044 -------------- COMMERCIAL SERVICES & SUPPLIES -- 1.0% 132,100 Pitney Bowes, Inc. 4,393,646 1,328,345 Waste Management, Inc. 41,829,584 -------------- 46,223,230 -------------- COMMUNICATIONS EQUIPMENT -- 0.1% 266,500 Nokia Oyj ADR 4,970,225 -------------- DIVERSIFIED(1) 7,900 Standard and Poor's 500 Depositary Receipt Series 1 916,558 -------------- DIVERSIFIED FINANCIAL SERVICES -- 2.1% 2,120,700 JPMorgan Chase & Co. 99,036,690 -------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 4.6% 7,281,600 AT&T Inc. 203,302,272 310,700 Embarq Corp. 12,598,885 342,200 Frontier Communications Corp. 3,935,300 -------------- 219,836,457 -------------- Shares Value ELECTRIC UTILITIES -- 4.9% 2,112,443 Portland General Electric Co. $ 49,980,401 2,749,900 Southern Co. 103,643,731 3,447,649 Westar Energy Inc. 79,433,833 -------------- 233,057,965 -------------- ELECTRICAL EQUIPMENT -- 0.6% 758,800 Hubbell Inc. Cl B 26,595,940 -------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 0.6% 676,200 AVX Corp. 6,890,478 1,142,400 Molex Inc. Cl A 23,773,344 -------------- 30,663,822 -------------- FOOD & STAPLES RETAILING -- 0.8% 664,716 Wal-Mart Stores, Inc. 39,809,841 -------------- FOOD PRODUCTS -- 3.6% 1,639,221 Campbell Soup Co. 63,273,931 783,000 Hershey Co. (The) 30,959,820 1,968,320 Kraft Foods Inc. Cl A 64,462,480 442,000 Unilever N.V. CVA 12,489,095 -------------- 171,185,326 -------------- GAS UTILITIES -- 3.5% 2,751,000 AGL Resources Inc. 86,326,380 2,492,188 WGL Holdings Inc.(2) 80,871,501 -------------- 167,197,881 -------------- HOTELS, RESTAURANTS & LEISURE -- 0.2% 116,600 McDonald's Corp. 7,194,220 -------------- HOUSEHOLD DURABLES -- 1.2% 746,100 Whirlpool Corp. 59,158,269 -------------- HOUSEHOLD PRODUCTS -- 4.1% 914,924 Kimberly-Clark Corp. 59,323,672 1,978,300 Procter & Gamble Co. (The) 137,867,727 -------------- 197,191,399 -------------- INDUSTRIAL CONGLOMERATES -- 4.9% 9,175,400 General Electric Co. 233,972,700 -------------- INSURANCE -- 9.8% 1,532,515 ACE Ltd. 82,955,037 2,382,100 Allstate Corp. 109,862,451 1,968,700 Chubb Corp. 108,081,630 754,600 Gallagher (Arthur J.) & Co. 19,363,036 2,226,280 Marsh & McLennan Companies, Inc. 70,706,653 1,449,641 MetLife, Inc. 81,179,896 -------------- 472,148,703 -------------- - ------ 18 Equity Income Shares Value IT SERVICES -- 0.3% 268,700 Automatic Data Processing, Inc. $ 11,486,925 20,100 International Business Machines Corp. 2,350,896 -------------- 13,837,821 -------------- METALS & MINING -- 0.6% 1,214,000 Alcoa Inc. 27,412,120 -------------- OIL, GAS & CONSUMABLE FUELS -- 14.3% 1,376,300 BP plc ADR 69,048,971 6,725,100 BP plc ORD 55,992,897 1,605,700 Chevron Corp. 132,438,136 3,839,229 Exxon Mobil Corp. 298,154,524 2,134,000 Total SA ORD 128,768,968 -------------- 684,403,496 -------------- PAPER & FOREST PRODUCTS -- 0.9% 463,312 International Paper Co. 12,129,508 530,191 Weyerhaeuser Co. 32,118,971 -------------- 44,248,479 -------------- PHARMACEUTICALS -- 9.5% 496,400 Abbott Laboratories 28,582,712 3,656,600 Bristol-Myers Squibb Co. 76,240,110 1,691,100 Johnson & Johnson 117,159,408 2,065,000 Merck & Co., Inc. 65,171,400 6,582,600 Pfizer Inc. 121,383,144 1,320,000 Wyeth 48,760,800 -------------- 457,297,574 -------------- REAL ESTATE INVESTMENT TRUSTS (REITS) -- 0.8% 325,600 ProLogis 13,437,512 498,550 Rayonier, Inc. 23,606,343 -------------- 37,043,855 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.2% 660,300 Applied Materials, Inc. 9,990,339 -------------- SOFTWARE -- 0.2% 459,800 Microsoft Corp. 12,272,062 -------------- SPECIALTY RETAIL -- 0.5% 749,500 Lowe's Companies, Inc. 17,755,655 81,300 Sherwin-Williams Co. (The) 4,647,108 -------------- 22,402,763 -------------- THRIFTS & MORTGAGE FINANCE -- 2.4% 4,982,5People's United Financial, Inc. 95,913,857 1,016,396 Washington Federal, Inc. 18,752,506 -------------- 114,666,363 -------------- TOTAL COMMON STOCKS (Cost $3,661,948,626) 3,695,743,428 -------------- Principal Amount Value Convertible Bonds -- 15.2% CAPITAL MARKETS -- 2.0% $ 421,000 Deutsche Bank AG (London), (convertible into Ameriprise Financial, Inc.), 13.27%, 10/31/2008(3) $ 16,307,259 500,000 Deutsche Bank AG (London), (convertible into Ameriprise Financial, Inc.), 19.96%, 3/17/09(3)(4) 19,670,579 2,880,000 Deutsche Bank AG (London), (convertible into Charles Schwab Corp. (The)), 16.30%, 1/27/09(3)(4) 59,988,454 -------------- 95,966,292 -------------- FOOD PRODUCTS -- 0.5% 22,981,000 Tyson Foods, Inc., 3.25%, 10/15/13 21,544,688 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 2.8% 121,436,000 Beckman Coulter, Inc., 2.50%, 12/15/36 133,427,804 -------------- HEALTH CARE PROVIDERS & SERVICES -- 1.0% 52,649,000 Lincare Holdings Inc., Series A, 2.75%, 11/1/37 48,108,024 -------------- INSURANCE -- 1.1% 1,886,800 Deutsche Bank AG (London), (convertible into Marsh & McLennan Companies, Inc.), 9.50%, 1/8/09(3)(4) 53,157,648 -------------- IT SERVICES -- 0.7% 28,282,000 DST Systems, Inc., 3.625%, 8/15/23 32,488,948 -------------- METALS & MINING -- 0.5% 25,486,000 Newmont Mining Corp., 1.625%, 7/15/17 25,995,720 -------------- MULTILINE RETAIL -- 0.5% 526,300 Credit Suisse Nassau, (convertible into Target Corp.), 14.25%, 2/27/09(3) 25,715,520 -------------- OIL, GAS & CONSUMABLE FUELS -- 0.8% 23,693,000 Peabody Energy Corp., 4.75%, 12/15/66 21,471,781 17,968,000 St. Mary Land & Exploration Co., 3.50%, 4/1/27 17,181,900 -------------- 38,653,681 -------------- PHARMACEUTICALS -- 0.5% 26,005,000 Watson Pharmaceuticals, Inc., 1.75%, 3/15/23 24,379,688 -------------- - ------ 19 Equity Income Shares/Principal Amount Value REAL ESTATE INVESTMENT TRUSTS (REITS) -- 1.0% $ 20,000,000 Boston Properties L.P., 3.625%, 2/15/14 $ 18,800,000 28,120,000 Host Hotels & Resorts L.P., 3.25%, 4/15/24(4) 27,733,350 -------------- 46,533,350 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 3.8% 208,445,000 Intel Corp., 2.95%, 12/15/35 183,171,043 -------------- TOTAL CONVERTIBLE BONDS (Cost $757,118,604) 729,142,406 -------------- Convertible Preferred Stocks -- 6.2% DIVERSIFIED FINANCIAL SERVICES -- 5.2% 299,403 Bank of America Corp., 7.25%, 12/31/49 250,899,714 -------------- HOUSEHOLD DURABLES -- 1.0% 1,208,625 Newell Financial Trust I, 5.25%, 12/1/27 46,909,758 -------------- TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $353,161,131) 297,809,472 -------------- Shares Value Preferred Stocks -- 0.3% DIVERSIFIED FINANCIAL SERVICES -- 0.3% 803,659 Citigroup, Inc., 8.125%, 2/15/18 $ 13,260,374 -------------- REAL ESTATE INVESTMENT TRUSTS (REITS)(1) 46,980 Public Storage, Inc., 7.50%, 11/28/08 915,170 -------------- TOTAL PREFERRED STOCKS (Cost $15,791,180) 14,175,544 -------------- Temporary Cash Investments -- 0.5% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $25,946,491), in a joint trading account at 0.03%, dated 9/30/08, due 10/1/08 (Delivery value $25,500,021) (Cost $25,500,000) 25,500,000 -------------- TOTAL INVESTMENT SECURITIES -- 99.3% (Cost $4,813,519,541) 4,762,370,850 -------------- OTHER ASSETS AND LIABILITIES -- 0.7% 32,823,198 -------------- TOTAL NET ASSETS -- 100.0% $4,795,194,048 ============== Forward Foreign Currency Exchange Contracts Settlement Unrealized Contracts to Sell Date Value Gain (Loss) 85,218,375 Euro for USD 10/31/08 $120,360,371 $4,291,781 58,394,603 GBP for USD 10/31/08 104,093,870 3,258,769 1,454,352,900 JPY for USD 10/31/08 13,744,222 7,142 ------------ ------------ $238,198,463 $7,557,692 ============ ============ (Value on Settlement Date $245,756,155) Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen GBP = British Pound JPY = Japanese Yen ORD = Foreign Ordinary Share USD = United States Dollar (1) Industry is less than 0.05% of total net assets. (2) Affiliated Company: the fund's holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940. (3) Equity-linked debt security. The aggregated value of these securities at September 30, 2008, was $174,839,459, which represented 3.6% of total net assets. (4) Security was purchased under Rule 144A of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of these securities at September 30, 2008, was $160,550,031, which represented 3.3% of total net assets. See Notes to Financial Statements. - ------ 20 Value SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 99.8% AEROSPACE & DEFENSE -- 0.4% 131,350 Northrop Grumman Corp. $ 7,951,931 -------------- AIR FREIGHT & LOGISTICS -- 1.2% 332,350 United Parcel Service, Inc. Cl B 20,901,492 -------------- AIRLINES -- 0.5% 569,720 Southwest Airlines Co. 8,266,637 -------------- AUTO COMPONENTS -- 0.8% 402,280 Autoliv, Inc. 13,576,950 -------------- AUTOMOBILES -- 1.8% 212,800 Honda Motor Co., Ltd. ORD 6,321,138 128,550 Thor Industries Inc.(1) 3,190,611 546,600 Toyota Motor Corp. ORD 23,210,352 -------------- 32,722,101 -------------- BEVERAGES -- 1.3% 194,380 Anheuser-Busch Companies, Inc. 12,611,374 92,220 Coca-Cola Co. (The) 4,876,594 89,950 PepsiCo, Inc. 6,410,737 -------------- 23,898,705 -------------- BIOTECHNOLOGY -- 0.6% 177,240 Amgen Inc.(2) 10,505,015 -------------- BUILDING PRODUCTS -- 0.3% 260,510 Masco Corp. 4,673,549 -------------- CAPITAL MARKETS -- 3.3% 497,520 AllianceBernstein Holding L.P. 18,413,215 174,550 Ameriprise Financial Inc. 6,667,810 114,960 Goldman Sachs Group, Inc. (The) 14,714,880 273,360 Legg Mason, Inc. 10,404,082 333,540 Merrill Lynch & Co., Inc. 8,438,562 -------------- 58,638,549 -------------- CHEMICALS -- 1.9% 297,350 du Pont (E.I.) de Nemours & Co. 11,983,205 394,120 International Flavors & Fragrances Inc. 15,551,975 97,420 Minerals Technologies Inc. 5,782,851 -------------- 33,318,031 -------------- COMMERCIAL BANKS -- 3.8% 816,300 Associated Banc-Corp 16,285,185 244,240 BB&T Corp. 9,232,272 678,470 Marshall & Ilsley Corp. 13,671,171 193,280 SunTrust Banks, Inc. 8,695,667 Shares Value 472,770 U.S. Bancorp $ 17,029,175 78,580 Zions Bancorporation 3,041,046 -------------- 67,954,516 -------------- COMMERCIAL SERVICES & SUPPLIES -- 2.8% 492,750 Avery Dennison Corp. 21,917,520 308,250 Pitney Bowes, Inc. 10,252,395 265,930 Republic Services, Inc. 7,972,581 302,630 Waste Management, Inc. 9,529,819 -------------- 49,672,315 -------------- COMMUNICATIONS EQUIPMENT -- 0.1% 150,970 Nokia Oyj ADR 2,815,591 -------------- COMPUTERS & PERIPHERALS -- 0.9% 465,550 Diebold, Inc. 15,414,361 -------------- CONTAINERS & PACKAGING -- 2.3% 1,544,520 Bemis Co., Inc. 40,342,862 -------------- DISTRIBUTORS -- 0.9% 386,540 Genuine Parts Co. 15,542,773 -------------- DIVERSIFIED FINANCIAL SERVICES -- 6.6% 1,455,990 Bank of America Corp. 50,959,650 1,125,760 JPMorgan Chase & Co. 52,572,992 406,880 McGraw-Hill Companies, Inc. (The) 12,861,477 -------------- 116,394,119 -------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 4.8% 2,132,270 AT&T Inc. 59,532,978 808,530 Verizon Communications Inc. 25,945,728 -------------- 85,478,706 -------------- ELECTRIC UTILITIES -- 2.9% 654,120 IDACORP, Inc. 19,028,351 122,820 Southern Co. 4,629,086 1,216,500 Westar Energy Inc. 28,028,160 -------------- 51,685,597 -------------- ELECTRICAL EQUIPMENT -- 1.4% 166,010 Emerson Electric Co. 6,771,548 511,950 Hubbell Inc. Cl B 17,943,847 -------------- 24,715,395 -------------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 2.4% 1,046,880 Molex Inc. 23,502,456 695,620 Tyco Electronics Ltd. 19,240,849 -------------- 42,743,305 -------------- FOOD & STAPLES RETAILING -- 0.3% 77,240 Wal-Mart Stores, Inc. 4,625,904 -------------- - ------ 21 Value Shares Value FOOD PRODUCTS -- 7.3% 210,460 Campbell Soup Co. $ 8,123,756 1,665,970 ConAgra Foods, Inc. 32,419,776 237,390 Hershey Co. (The) 9,386,401 175,560 Kellogg Co. 9,848,916 1,274,500 Kraft Foods Inc. Cl A 41,739,875 983,360 Unilever N.V. CVA 27,785,694 -------------- 129,304,418 -------------- GAS UTILITIES -- 1.0% 231,260 Southwest Gas Corp. 6,997,928 328,510 WGL Holdings Inc. 10,660,149 -------------- 17,658,077 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 1.9% 443,300 Beckman Coulter, Inc. 31,469,867 228,960 Boston Scientific Corp.(2) 2,809,339 -------------- 34,279,206 -------------- HEALTH CARE PROVIDERS & SERVICES -- 0.3% 192,650 LifePoint Hospitals Inc.(2) 6,191,771 -------------- HOTELS, RESTAURANTS & LEISURE -- 2.2% 477,010 International Speedway Corp. Cl A 18,560,459 1,033,340 Speedway Motorsports Inc. 20,129,463 -------------- 38,689,922 -------------- HOUSEHOLD DURABLES -- 0.6% 125,040 Whirlpool Corp. 9,914,422 -------------- HOUSEHOLD PRODUCTS -- 4.3% 183,030 Clorox Co. 11,474,151 882,720 Kimberly-Clark Corp. 57,235,564 95,720 Procter & Gamble Co. (The) 6,670,727 -------------- 75,380,442 -------------- INDUSTRIAL CONGLOMERATES -- 7.1% 304,750 3M Co. 20,817,473 4,098,440 General Electric Co. 104,510,220 -------------- 125,327,693 -------------- INSURANCE -- 6.2% 463,040 Allstate Corp. 21,355,405 230 Berkshire Hathaway Inc. Cl A(2) 30,038,000 213,960 Chubb Corp. 11,746,404 216,300 Hartford Financial Services Group Inc. (The) 8,866,137 1,024,630 Marsh & McLennan Companies, Inc. 32,542,249 120,310 Travelers Companies, Inc. (The) 5,438,012 -------------- 109,986,207 -------------- Shares Value LEISURE EQUIPMENT & PRODUCTS -- 0.3% 251,540 RC2 Corp.(2) $ 5,030,800 -------------- MULTILINE RETAIL -- 0.6% 212,700 Target Corp. 10,432,935 -------------- MULTI-UTILITIES -- 2.6% 118,660 Ameren Corp. 4,631,300 123,620 Consolidated Edison, Inc. 5,310,715 366,010 Puget Energy, Inc. 9,772,467 413,360 Wisconsin Energy Corp. 18,559,864 442,940 Xcel Energy Inc. 8,854,371 -------------- 47,128,717 -------------- OIL, GAS & CONSUMABLE FUELS -- 11.6% 68,060 Apache Corp. 7,097,297 992,910 BP plc ADR 49,814,295 176,450 Chevron Corp. 14,553,596 63,380 Devon Energy Corp. 5,780,256 349,860 Equitable Resources Inc. 12,836,363 1,130,730 Exxon Mobil Corp. 87,812,491 79,310 Royal Dutch Shell plc ADR 4,680,083 390,010 Total SA ORD 23,533,826 -------------- 206,108,207 -------------- PAPER & FOREST PRODUCTS -- 0.8% 229,450 Weyerhaeuser Co. 13,900,081 -------------- PHARMACEUTICALS -- 8.3% 958,350 Bristol-Myers Squibb Co. 19,981,598 370,060 Eli Lilly & Co. 16,293,742 651,850 Johnson & Johnson 45,160,167 567,450 Merck & Co., Inc. 17,908,722 2,162,580 Pfizer Inc. 39,877,975 203,460 Wyeth 7,515,812 -------------- 146,738,016 -------------- ROAD & RAIL -- 0.4% 422,820 Heartland Express, Inc. 6,562,166 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 2.3% 309,900 Applied Materials, Inc. 4,688,787 773,020 Intel Corp. 14,478,665 290,340 KLA-Tencor Corp. 9,189,261 590,510 Texas Instruments Inc. 12,695,965 -------------- 41,052,678 -------------- SPECIALTY RETAIL -- 0.7% 516,810 Lowe's Companies, Inc. 12,243,229 -------------- TOTAL COMMON STOCKS (Cost $1,834,144,130) 1,767,767,391 -------------- - ------ 22 Value Value Temporary Cash Investments -- 1.5% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $24,013,223), in a joint trading account at 0.03%, dated 9/30/08, due 10/1/08 (Delivery value $23,600,020) $ 23,600,000 Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 7.625%, 11/15/22, valued at $3,158,778), in a joint trading account at 0.20%, dated 9/30/08, due 10/1/08 (Delivery value $3,100,017) 3,100,000 -------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $26,700,000) 26,700,000 -------------- Temporary Cash Investments -- Securities Lending Collateral(3) -- 0.2% Repurchase Agreement, Barclays Capital Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 2.00%, dated 9/30/08, due 10/1/08 (Delivery value $750,042) 750,000 Repurchase Agreement, BNP Paribas Securities Corp., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 1.00%, dated 9/30/08, due 10/1/08 (Delivery value $750,021) 750,000 Value Repurchase Agreement, Credit Suisse Securities USA LLC, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 1.50%, dated 9/30/08, due 10/1/08 (Delivery value $750,031) $750,000 Repurchase Agreement, Deutsche Bank Securities Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 2.00%, dated 9/30/08, due 10/1/08 (Delivery value $600,637) 600,604 Repurchase Agreement, UBS Securities LLC, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 1.75%, dated 9/30/08, due 10/1/08 (Delivery value $577,290) 577,262 -------------- TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL (Cost $3,427,866) 3,427,866 -------------- TOTAL INVESTMENT SECURITIES -- 101.5% (Cost $1,864,271,996) 1,797,895,257 -------------- OTHER ASSETS AND LIABILITIES -- (1.5)% (25,860,625) -------------- TOTAL NET ASSETS -- 100.0% $1,772,034,632 ============== Forward Foreign Currency Exchange Contracts Settlement Unrealized Contracts to Sell Date Value Gain (Loss) 36,015,974 Euro for USD 10/31/08 $ 50,868,091 $1,792,884 31,498,662 GBP for USD 10/31/08 56,149,326 1,773,365 2,105,820,600 JPY for USD 10/31/08 19,900,855 7,635 ------------ ------------ $126,918,272 $3,573,884 ============ ============ (Value on Settlement Date $130,492,156) Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen GBP = British Pound JPY = Japanese Yen ORD = Foreign Ordinary Share USD = United States Dollar (1) Security, or a portion thereof, was on loan as of September 30, 2008. (2) Non-income producing. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 23 Large Company Value SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 96.4% AEROSPACE & DEFENSE -- 1.1% 338,500 Northrop Grumman Corp. $ 20,492,801 -------------- BEVERAGES -- 2.1% 510,900 Coca-Cola Co. (The) 27,016,392 428,800 Pepsi Bottling Group Inc. 12,508,096 -------------- 39,524,488 -------------- BIOTECHNOLOGY -- 0.9% 293,600 Amgen Inc.(1) 17,401,672 -------------- CAPITAL MARKETS -- 3.6% 486,300 Bank of New York Mellon Corp. (The) 15,843,654 138,900 Goldman Sachs Group, Inc. (The) 17,779,200 126,300 Legg Mason, Inc. 4,806,978 560,300 Merrill Lynch & Co., Inc. 14,175,590 628,000 Morgan Stanley 14,444,000 -------------- 67,049,422 -------------- CHEMICALS -- 2.0% 511,000 du Pont (E.I.) de Nemours & Co. 20,593,300 276,300 PPG Industries, Inc. 16,113,816 -------------- 36,707,116 -------------- COMMERCIAL BANKS -- 3.1% 1,183,300 National City Corp. 2,070,775 520,800 U.S. Bancorp 18,759,216 993,900 Wells Fargo & Co. 37,301,067 -------------- 58,131,058 -------------- COMMERCIAL SERVICES & SUPPLIES -- 1.9% 208,900 Avery Dennison Corp. 9,291,872 86,200 Pitney Bowes, Inc. 2,867,012 456,600 R.R. Donnelley & Sons Co. 11,200,398 391,200 Waste Management, Inc. 12,318,888 -------------- 35,678,170 -------------- COMMUNICATIONS EQUIPMENT -- 0.2% 389,300 Motorola, Inc. 2,779,602 -------------- COMPUTERS & PERIPHERALS -- 1.0% 397,300 Hewlett-Packard Co. 18,371,152 -------------- CONSUMER FINANCE -- 0.3% 402,500 Discover Financial Services 5,562,550 -------------- DIVERSIFIED CONSUMER SERVICES -- 0.7% 580,700 H&R Block, Inc. 13,094,785 -------------- Shares Value DIVERSIFIED FINANCIAL SERVICES -- 9.4% 1,512,000 Bank of America Corp. $ 52,920,000 2,826,500 Citigroup Inc. 57,971,515 1,422,700 JPMorgan Chase & Co. 66,440,090 -------------- 177,331,605 -------------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 5.9% 2,342,300 AT&T Inc. 65,397,016 167,300 Embarq Corp. 6,784,015 1,179,600 Verizon Communications Inc. 37,853,364 -------------- 110,034,395 -------------- ELECTRIC UTILITIES -- 2.4% 405,900 Exelon Corp. 25,417,458 535,100 PPL Corp. 19,809,402 -------------- 45,226,860 -------------- ENERGY EQUIPMENT & SERVICES -- 0.5% 188,400 National Oilwell Varco, Inc.(1) 9,463,332 -------------- FOOD & STAPLES RETAILING -- 2.6% 511,700 Kroger Co. (The) 14,061,516 414,300 Walgreen Co. 12,826,728 379,800 Wal-Mart Stores, Inc. 22,746,222 -------------- 49,634,466 -------------- FOOD PRODUCTS -- 0.7% 465,300 Unilever N.V. New York Shares 13,102,848 -------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 0.7% 266,700 Medtronic, Inc. 13,361,670 -------------- HEALTH CARE PROVIDERS & SERVICES -- 0.4% 153,000 Quest Diagnostics Inc. 7,905,510 -------------- HOTELS, RESTAURANTS & LEISURE -- 0.6% 173,100 Darden Restaurants, Inc. 4,955,853 32,800 McDonald's Corp. 2,023,760 325,000 Starbucks Corp.(1) 4,832,750 -------------- 11,812,363 -------------- HOUSEHOLD DURABLES -- 0.7% 728,900 Newell Rubbermaid Inc. 12,580,814 -------------- HOUSEHOLD PRODUCTS -- 0.7% 216,500 Clorox Co. 13,572,385 -------------- INDEPENDENT POWER PRODUCERS & ENERGY TRADERS -- 0.6% 435,500 NRG Energy Inc.(1) 10,778,625 -------------- - ------ 24 Large Company Value Shares Value INDUSTRIAL CONGLOMERATES -- 5.1% 3,467,500 General Electric Co.(2) $ 88,421,250 231,100 Tyco International Ltd. 8,093,122 -------------- 96,514,372 -------------- INSURANCE -- 4.2% 556,700 Allstate Corp. 25,675,004 317,800 Hartford Financial Services Group Inc. (The) 13,026,622 192,789 Loews Corp. 7,613,238 237,100 Torchmark Corp. 14,178,580 401,600 Travelers Companies, Inc. (The) 18,152,320 -------------- 78,645,764 -------------- IT SERVICES -- 1.6% 152,100 Fiserv, Inc.(1) 7,197,372 194,200 International Business Machines Corp. 22,713,632 -------------- 29,911,004 -------------- MACHINERY -- 2.6% 252,600 Caterpillar Inc. 15,054,960 293,300 Dover Corp. 11,893,315 425,800 Ingersoll-Rand Company Ltd. Cl A 13,272,186 177,900 Parker-Hannifin Corp. 9,428,700 -------------- 49,649,161 -------------- MEDIA -- 3.0% 726,200 CBS Corp. Cl B 10,587,996 514,700 Gannett Co., Inc. 8,703,577 1,854,800 Time Warner Inc. 24,316,428 546,300 Viacom Inc. Cl B(1) 13,570,092 -------------- 57,178,093 -------------- METALS & MINING -- 0.4% 207,400 Nucor Corp. 8,192,300 -------------- MULTILINE RETAIL -- 0.7% 267,500 Kohl's Corp.(1) 12,326,400 -------------- OFFICE ELECTRONICS -- 0.6% 929,200 Xerox Corp. 10,713,676 -------------- OIL, GAS & CONSUMABLE FUELS -- 16.7% 87,600 Apache Corp. 9,134,928 1,045,700 Chevron Corp. 86,249,336 803,700 ConocoPhillips 58,871,025 102,700 Devon Energy Corp. 9,366,240 1,344,500 Exxon Mobil Corp. 104,413,870 779,900 Royal Dutch Shell plc ADR 46,021,899 -------------- 314,057,298 -------------- Shares Value PAPER & FOREST PRODUCTS -- 1.1% 229,600 International Paper Co. $ 6,010,928 247,000 Weyerhaeuser Co. 14,963,260 -------------- 20,974,188 -------------- PHARMACEUTICALS -- 9.9% 317,500 Abbott Laboratories 18,281,650 355,900 Eli Lilly & Co. 15,670,277 817,400 Johnson & Johnson 56,629,472 637,200 Merck & Co., Inc. 20,110,032 2,950,400 Pfizer Inc. 54,405,376 547,100 Wyeth 20,209,874 -------------- 185,306,681 -------------- PROFESSIONAL SERVICES -- 0.1% 99,100 Robert Half International Inc. 2,452,725 -------------- REAL ESTATE INVESTMENT TRUSTS (REITS) -- 0.3% 165,700 Developers Diversified Realty Corp. 5,251,033 -------------- ROAD & RAIL -- 0.2% 276,700 YRC Worldwide Inc.(1) 3,309,332 -------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.0% 431,500 Applied Materials, Inc. 6,528,595 429,600 Intel Corp. 8,046,408 178,800 Texas Instruments Inc. 3,844,200 -------------- 18,419,203 -------------- SOFTWARE -- 1.9% 810,000 Microsoft Corp. 21,618,900 728,500 Oracle Corp.(1) 14,795,835 -------------- 36,414,735 -------------- SPECIALTY RETAIL -- 2.5% 340,400 Best Buy Co., Inc. 12,765,000 480,100 Gap, Inc. (The) 8,536,178 531,100 Home Depot, Inc. (The) 13,750,179 547,900 Staples, Inc. 12,327,750 -------------- 47,379,107 -------------- TEXTILES, APPAREL & LUXURY GOODS -- 0.7% 169,600 VF Corp. 13,111,776 -------------- THRIFTS & MORTGAGE FINANCE -- 0.2% 393,300 MGIC Investment Corp. 2,764,899 -------------- TOBACCO -- 1.1% 514,000 Altria Group Inc. 10,197,760 159,200 Lorillard, Inc. 11,327,080 -------------- 21,524,840 -------------- - ------ 25 Large Company Value Shares/Principal Amount Value WIRELESS TELECOMMUNICATION SERVICES -- 0.4% 1,086,700 Sprint Nextel Corp. $ 6,628,870 -------------- TOTAL COMMON STOCKS (Cost $1,842,391,934) 1,810,323,146 -------------- Temporary Cash Investments -- Segregated For Futures Contracts -- 2.9% $ 5,000,000 FHLB Discount Notes, 0.00%, 10/1/08(3) 5,000,000 50,000,000 FHLB Discount Notes, 0.00%, 10/7/08(3) 49,996,050 -------------- TOTAL TEMPORARY CASH INVESTMENTS -- SEGREGATED FOR FUTURES CONTRACTS (Cost $54,999,159) 54,996,050 -------------- Principal Amount Value Temporary Cash Investments -- 1.3% $23,900,000 FHLB Discount Notes, 0.00%, 10/1/08(3) (Cost $23,900,000) $ 23,900,000 -------------- TOTAL INVESTMENT SECURITIES -- 100.6% (Cost $1,921,291,093) 1,889,219,196 -------------- OTHER ASSETS AND LIABILITIES -- (0.6)% (10,835,365) -------------- TOTAL NET ASSETS -- 100.0% $1,878,383,831 ============== Futures Contracts Expiration Underlying Face Unrealized Contracts Purchased Date Amount at Value Gain (Loss) 925 S&P 500 E-Mini Futures December 2008 $53,992,250 $(3,763,808) ============ ============ Notes to Schedule of Investments ADR = American Depositary Receipt FHLB = Federal Home Loan Bank (1) Non-income producing. (2) Security, or a portion thereof, has been segregated for futures contracts. (3) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 26 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2008 (UNAUDITED) Large Equity Income Value Company Value ASSETS Investment securities -- unaffiliated, at value (cost of $4,744,621,003, $1,860,844,130 and $1,921,291,093, respectively) - -- including $-, $3,304,063 and $- of securities on loan, respectively $4,681,499,349 $1,794,467,391 $1,889,219,196 Investment securities -- affiliated, at value (cost of $68,898,538, $- and $-, respectively) 80,871,501 -- -- Investments made with cash collateral received for securities on loan, at value (cost of $-, $3,427,866 and $-, respectively) -- 3,427,866 -- -------------- -------------- -------------- Total investment securities, at value (cost of $4,813,519,541, $1,864,271,996 and $1,921,291,093, respectively) 4,762,370,850 1,797,895,257 1,889,219,196 Receivable for investments sold 185,942,998 27,345,145 14,412,939 Receivable for forward foreign currency exchange contracts 7,557,692 3,573,884 -- Receivable for capital shares sold 281,395 379 125,638 Receivable for variation margin on futures contracts -- -- 3,744,557 Dividends and interest receivable 24,174,227 4,732,791 3,395,613 -------------- -------------- -------------- 4,980,327,162 1,833,547,456 1,910,897,943 -------------- -------------- -------------- LIABILITIES Disbursements in excess of demand deposit cash 6,760,614 7,837,044 17,249,383 Payable for collateral received for securities on loan -- 3,427,866 -- Payable for investments purchased 174,057,274 48,598,860 13,678,234 Payable for capital shares redeemed 154,024 114,776 214,155 Accrued management fees 3,879,350 1,490,374 1,264,447 Distribution fees payable 66,743 8,482 29,262 Service fees (and distribution fees -- A Class and R Class) payable 215,109 35,422 78,631 -------------- -------------- -------------- 185,133,114 61,512,824 32,514,112 -------------- -------------- -------------- NET ASSETS $4,795,194,048 $1,772,034,632 $1,878,383,831 ============== ============== ============== See Notes to Financial Statements. - ------ 27 SEPTEMBER 30, 2008 (UNAUDITED) Large Equity Income Value Company Value NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $5,307,482,201 $2,198,102,556 $2,050,207,836 Undistributed net investment income 17,131,894 2,208,234 944,265 Accumulated net realized loss on investment and foreign currency transactions (485,797,589) (365,472,014) (136,932,565) Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies (43,622,458) (62,804,144) (35,835,705) -------------- -------------- -------------- $4,795,194,048 $1,772,034,632 $1,878,383,831 ============== ============== ============== INVESTOR CLASS, $0.01 PAR VALUE Net assets $3,328,472,661 $1,431,509,945 $1,012,537,617 Shares outstanding 484,052,564 266,588,031 180,702,812 Net asset value per share $6.88 $5.37 $5.60 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $493,969,135 $175,918,087 $521,413,323 Shares outstanding 71,808,208 32,714,068 93,058,146 Net asset value per share $6.88 $5.38 $5.60 A CLASS, $0.01 PAR VALUE Net assets $827,276,101 $149,561,928 $285,699,289 Shares outstanding 120,307,255 27,864,905 51,002,545 Net asset value per share $6.88 $5.37 $5.60 Maximum offering price (net asset value divided by 0.9425) $7.30 $5.70 $5.94 B CLASS, $0.01 PAR VALUE Net assets $600,929 $4,384,616 $9,568,978 Shares outstanding 87,360 816,831 1,702,953 Net asset value per share $6.88 $5.37 $5.62 C CLASS, $0.01 PAR VALUE Net assets $104,435,504 $8,663,658 $34,317,070 Shares outstanding 15,186,147 1,626,218 6,125,254 Net asset value per share $6.88 $5.33 $5.60 R CLASS, $0.01 PAR VALUE Net assets $40,439,718 $1,996,398 $14,847,554 Shares outstanding 5,893,243 371,840 2,649,056 Net asset value per share $6.86 $5.37 $5.60 See Notes to Financial Statements. - ------ 28 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) Large Equity Income Value Company Value INVESTMENT INCOME (LOSS) INCOME: Dividends (including $3,199,915 from affiliates in Equity Income and net of foreign taxes withheld of $563,366, $204,880 and $250,615, respectively) $ 94,612,754 $ 33,401,546 $ 32,535,166 Interest 11,722,755 215,255 908,531 Securities lending, net 651,669 137,003 369,330 -------------- -------------- -------------- 106,987,178 33,753,804 33,813,027 -------------- -------------- -------------- EXPENSES: Management fees 24,558,308 9,944,888 8,452,512 Distribution fees: B Class 1,415 18,875 44,558 C Class 422,380 38,205 169,978 Service fees: B Class 471 6,292 14,853 C Class 140,793 12,735 56,659 Distribution and service fees: A Class 1,116,427 216,732 427,792 R Class 107,381 4,625 40,790 Directors' fees and expenses 97,940 35,160 41,397 Other expenses 30,275 17,051 2,273 -------------- -------------- -------------- 26,475,390 10,294,563 9,250,812 -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) 80,511,788 23,459,241 24,562,215 -------------- -------------- -------------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions (including $1,564,304 from affiliates in Equity Income) (107,785,409) (103,604,590) (157,893,293) Foreign currency transactions 27,749,773 10,364,227 -- -------------- -------------- -------------- (80,035,636) (93,240,363) (157,893,293) -------------- -------------- -------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (227,758,259) (57,070,085) (144,992,437) Translation of assets and liabilities in foreign currencies 4,427,879 2,485,211 -- -------------- -------------- -------------- (223,330,380) (54,584,874) (144,992,437) -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (303,366,016) (147,825,237) (302,885,730) -------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(222,854,228) $(124,365,996) $(278,323,515) ============== ============== ============== See Notes to Financial Statements. - ------ 29 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) AND YEAR ENDED MARCH 31, 2008 Equity Income Value Increase (Decrease) in Net Assets Sept. 30, 2008 March 31, 2008 Sept. 30, 2008 March 31, 2008 OPERATIONS Net investment income (loss) $ 80,511,788 $ 171,871,145 $ 23,459,241 $ 46,600,016 Net realized gain (loss) (80,035,636) (47,601,269) (93,240,363) (65,678,124) Change in net unrealized appreciation (depreciation) (223,330,380) (413,121,826) (54,584,874) (284,334,141) -------------- --------------- -------------- -------------- Net increase (decrease) in net assets resulting from operations (222,854,228) (288,851,950) (124,365,996) (303,412,249) -------------- --------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (55,361,357) (126,757,125) (17,777,484) (37,683,425) Institutional Class (8,141,863) (18,178,082) (2,913,433) (6,387,555) A Class (12,594,665) (30,371,773) (1,677,891) (3,763,083) A Class (old) (Note 11) -- -- -- (132,911) B Class (4,580) (1,723) (31,576) (52,218) C Class (1,177,749) (2,423,835) (63,895) (120,758) R Class (558,191) (1,137,635) (16,944) (17,413) From net realized gains: Investor Class -- (373,678,155) -- (254,095,425) Institutional Class -- (49,979,556) -- (42,172,944) A Class -- (95,264,362) -- (30,107,815) B Class -- (9,280) -- (850,431) C Class -- (11,272,883) -- (2,109,263) R Class -- (4,226,795) -- (156,140) -------------- --------------- -------------- -------------- Decrease in net assets from distributions (77,838,405) (713,301,204) (22,481,223) (377,649,381) -------------- --------------- -------------- -------------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (213,444,492) (483,149,448) (306,750,849) (227,749,543) -------------- --------------- -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS (514,137,125) (1,485,302,602) (453,598,068) (908,811,173) NET ASSETS Beginning of period 5,309,331,173 6,794,633,775 2,225,632,700 3,134,443,873 -------------- --------------- -------------- -------------- End of period $4,795,194,048 $5,309,331,173 $1,772,034,632 $2,225,632,700 ============== =============== ============== ============== Undistributed net investment income $17,131,894 $14,458,511 $2,208,234 $1,230,216 ============== =============== ============== ============== See Notes to Financial Statements. - ------ 30 SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) AND YEAR ENDED MARCH 31, 2008 Large Company Value Increase (Decrease) in Net Assets Sept. 30, 2008 March 31, 2008 OPERATIONS Net investment income (loss) $ 24,562,215 $ 50,489,004 Net realized gain (loss) (157,893,293) 87,022,508 Change in net unrealized appreciation (depreciation) (144,992,437) (395,075,046) -------------- -------------- Net increase (decrease) in net assets resulting from operations (278,323,515) (257,563,534) -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (13,081,132) (29,578,990) Institutional Class (6,865,917) (12,612,481) A Class (3,285,094) (6,000,251) A Class (old) (Note 11) -- (1,792,049) B Class (70,541) (155,982) C Class (268,037) (639,654) R Class (141,229) (278,651) From net realized gains: Investor Class -- (42,817,971) Institutional Class -- (16,693,652) A Class -- (12,534,118) B Class -- (447,000) C Class -- (1,803,288) R Class -- (545,099) -------------- -------------- Decrease in net assets from distributions (23,711,950) (125,899,186) -------------- -------------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (66,001,431) (84,653,829) -------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS (368,036,896) (468,116,549) NET ASSETS Beginning of period 2,246,420,727 2,714,537,276 -------------- -------------- End of period $1,878,383,831 $2,246,420,727 ============== ============== Undistributed net investment income $944,265 $94,000 ============== ============== See Notes to Financial Statements. - ------ 31 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2008 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Equity Income Fund (Equity Income), Value Fund (Value) and Large Company Value Fund (Large Company Value) (collectively, the funds) are three funds in a series issued by the corporation. The funds are diversified under the 1940 Act. Equity Income's investment objective is to seek current income; capital appreciation is a secondary objective. Equity Income pursues its investment objective by investing in securities of companies with a favorable income-paying history that have prospects for income payments to continue or increase. Value and Large Company Value's investment objective is to seek long-term capital growth; income is a secondary objective. Value and Large Company Value pursue their investment objective by investing in stocks of companies that management believes to be undervalued at the time of purchase. Value invests in companies with small, medium, and large market capitalization and Large Company Value invests in companies with larger market capitalization. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- The funds are authorized to issue the Investor Class, the Institutional Class, the A Class (formerly Advisor Class), the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of Equity Income's B Class commenced on September 28, 2007. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. - ------ 32 SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The income earned, net of any rebates or fees, is included in the Statement of Operations. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FUTURES AND OPTIONS CONTRACTS -- The funds may enter into futures contracts and purchase put options in order to manage the funds' exposure to changes in market conditions. One of the risks of entering into futures contracts and options is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Options purchased by the funds are accounted for in the same manner as marketable portfolio securities. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase the put options. Upon entering into a futures contract, the funds are required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the funds. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The funds recognize a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. EQUITY-LINKED DEBT AND LINKED-EQUITY SECURITIES -- The funds may invest in hybrid equity securities, which usually convert into common stock at a date predetermined by the issuer. These securities generally offer a higher dividend yield than that of the common stock to which the security is linked. These instruments are issued by a company other than the one to which the security is linked and carry the credit of the issuer, not that of the underlying common stock. The securities' appreciation is limited based on a predetermined final cap price at the date of the conversion. Risks of investing in these securities include, but are not limited to, a set time to capture the yield advantage, limited appreciation potential, decline in value of the underlying stock, and failure of the issuer to pay dividends or to deliver common stock at maturity. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds 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. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each 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 each fund under each repurchase agreement. - ------ 33 JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), 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 each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The funds have adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" during the current fiscal year. The funds are no longer subject to examination by tax authorities for years prior to 2005. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds 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 the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century Investments family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for Equity Income ranges from 0.80% to 1.00% for the Investor Class, A Class, B Class, C Class and R Class. The annual management fee schedule for Value ranges from 0.85% to 1.00% for the Investor Class, A Class, B Class, C Class and R Class. The annual management fee schedule for Large Company Value ranges from 0.70% to 0.90% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class of each fund is 0.20% less at each point within the range. The effective annual management fee for each class of each fund for the six months ended September 30, 2008, was as follows: Investor, A, B, C & R Institutional Equity Income 0.97% 0.77% Value 1.00% 0.80% Large Company Value 0.82% 0.62% - ------ 34 DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and the C Class will each pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2008, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. The funds are eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended September 30, 2008, were as follows: Equity Income Value Large Company Value Purchases $6,988,162,284 $1,035,277,695 $283,104,450 Proceeds from sales $7,223,692,683 $1,307,885,437 $357,719,556 - ------ 35 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: Six months ended Year ended September 30, 2008 March 31, 2008(1) Shares Amount Shares Amount Equity Income INVESTOR CLASS/SHARES AUTHORIZED 1,500,000,000 1,500,000,000 ============== ============== Sold 26,502,743 $ 193,265,238 86,497,946 $ 732,783,293 Issued in reinvestment of distributions 7,255,801 51,785,331 57,630,203 461,310,501 Redeemed (59,083,261) (425,810,366) (188,655,276) (1,565,013,939) -------------- -------------- -------------- --------------- (25,324,717) (180,759,797) (44,527,127) (370,920,145) -------------- -------------- -------------- --------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 240,000,000 240,000,000 ============== ============== Sold 11,810,455 85,112,492 25,454,164 220,747,714 Issued in reinvestment of distributions 1,120,707 7,991,732 8,329,370 66,669,823 Redeemed (9,021,354) (65,440,703) (29,593,511) (246,373,931) -------------- -------------- -------------- --------------- 3,909,808 27,663,521 4,190,023 41,043,606 -------------- -------------- -------------- --------------- A CLASS/SHARES AUTHORIZED 475,000,000 475,000,000 ============== ============== Sold 13,667,409 98,489,852 34,637,326 295,784,082 Issued in reinvestment of distributions 1,716,569 12,251,607 15,215,308 121,615,154 Redeemed (22,924,603) (165,791,633) (70,097,342) (588,618,649) -------------- -------------- -------------- --------------- (7,540,625) (55,050,174) (20,244,708) (171,219,413) -------------- -------------- -------------- --------------- B CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============== ============== Sold 64,183 461,910 31,226 249,461 Issued in reinvestment of distributions 565 4,014 993 7,818 Redeemed (9,607) (71,413) -- -- -------------- -------------- -------------- --------------- 55,141 394,511 32,219 257,279 -------------- -------------- -------------- --------------- C CLASS/SHARES AUTHORIZED 50,000,000 50,000,000 ============== ============== Sold 1,011,102 7,305,346 3,062,619 26,442,946 Issued in reinvestment of distributions 150,251 1,073,700 1,577,148 12,559,343 Redeemed (1,994,752) (14,384,711) (3,333,340) (27,468,435) -------------- -------------- -------------- --------------- (833,399) (6,005,665) 1,306,427 11,533,854 -------------- -------------- -------------- --------------- R CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============== ============== Sold 796,758 5,752,513 1,863,334 15,974,449 Issued in reinvestment of distributions 76,414 544,647 660,261 5,258,200 Redeemed (842,220) (5,984,048) (1,846,826) (15,077,278) -------------- -------------- -------------- --------------- 30,952 313,112 676,769 6,155,371 -------------- -------------- -------------- --------------- Net increase (decrease) (29,702,840) $(213,444,492) (58,566,397) $ (483,149,448) ============== ============== ============== =============== (1) September 28, 2007 (commencement of sale) through March 31, 2008 for the B Class. - ------ 36 Six months ended Year ended September 30, 2008 March 31, 2008 Shares Amount Shares Amount Value INVESTOR CLASS/SHARES AUTHORIZED 1,250,000,000 1,250,000,000 ============== ============== Sold 12,564,518 $ 70,238,269 26,795,945 $ 192,485,324 Issued in reinvestment of distributions 2,975,933 16,585,641 43,153,018 275,895,444 Redeemed (44,160,811) (250,324,803) (102,497,869) (735,388,471) -------------- -------------- -------------- -------------- (28,620,360) (163,500,893) (32,548,906) (267,007,703) -------------- -------------- -------------- -------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 125,000,000 125,000,000 ============== ============== Sold 3,332,685 19,156,014 21,049,735 154,695,580 Issued in reinvestment of distributions 519,973 2,913,433 7,589,258 48,506,946 Redeemed (24,276,089) (132,536,096) (13,489,917) (93,706,190) -------------- -------------- -------------- -------------- (20,423,431) (110,466,649) 15,149,076 109,496,336 -------------- -------------- -------------- -------------- A CLASS/SHARES AUTHORIZED 150,000,000 150,000,000 ============== ============== Sold 3,858,259 21,635,647 5,656,979 40,732,287 Issued in connection with reclassification (Note 11) -- -- 8,894,774 68,678,162 Issued in reinvestment of distributions 296,107 1,650,685 5,215,034 33,245,516 Redeemed (9,456,833) (53,576,012) (19,350,464) (136,544,275) -------------- -------------- -------------- -------------- (5,302,467) (30,289,680) 416,323 6,111,690 -------------- -------------- -------------- -------------- A CLASS (OLD)/SHARES AUTHORIZED N/A N/A ============== ============== Sold 662,726 5,260,916 Issued in reinvestment of distributions 15,737 125,739 Redeemed in connection with reclassification (Note 11) (8,894,774) (68,678,162) Redeemed (1,001,889) (7,911,168) -------------- -------------- (9,218,200) (71,202,675) -------------- -------------- B CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============== ============== Sold 9,667 54,888 81,475 595,253 Issued in reinvestment of distributions 4,908 27,329 120,823 765,058 Redeemed (166,558) (941,919) (250,589) (1,720,368) -------------- -------------- -------------- -------------- (151,983) (859,702) (48,291) (360,057) -------------- -------------- -------------- -------------- C CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============== ============== Sold 85,911 480,180 326,344 2,353,715 Issued in reinvestment of distributions 9,099 50,308 262,066 1,650,552 Redeemed (478,678) (2,683,422) (1,523,779) (10,474,334) -------------- -------------- -------------- -------------- (383,668) (2,152,934) (935,369) (6,470,067) -------------- -------------- -------------- -------------- R CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============== ============== Sold 135,374 779,753 284,329 1,995,315 Issued in reinvestment of distributions 3,046 16,944 27,378 173,553 Redeemed (47,687) (277,688) (74,072) (485,935) -------------- -------------- -------------- -------------- 90,733 519,009 237,635 1,682,933 -------------- -------------- -------------- -------------- Net increase (decrease) (54,791,176) $(306,750,849) (26,947,732) $(227,749,543) ============== =============== ============== ============== - ------ 37 Six months ended Year ended September 30, 2008 March 31, 2008 Shares Amount Shares Amount Large Company Value INVESTOR CLASS/SHARES AUTHORIZED 550,000,000 550,000,000 ============ ============ Sold 31,215,172 $ 197,609,846 76,540,681 $ 576,064,660 Issued in reinvestment of distributions 1,347,065 8,136,784 7,187,899 52,324,248 Redeemed (45,144,903) (278,398,878) (88,750,820) (657,473,389) ------------ ------------- ------------ ------------- (12,582,666) (72,652,248) (5,022,240) (29,084,481) ------------ ------------- ------------ ------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 200,000,000 200,000,000 ============ ============ Sold 22,114,042 137,581,440 33,589,521 243,933,475 Issued in reinvestment of distributions 981,778 5,875,041 3,541,198 25,810,952 Redeemed (13,476,894) (82,389,644) (31,400,005) (228,197,043) ------------ ------------- ------------ ------------- 9,618,926 61,066,837 5,730,714 41,547,384 ------------ ------------- ------------ ------------- A CLASS/SHARES AUTHORIZED 300,000,000 300,000,000 ============ ============ Sold 5,473,968 34,170,102 12,320,960 90,750,995 Issued in connection with reclassification (Note 11) -- -- 27,248,825 204,605,063 Issued in reinvestment of distributions 398,712 2,398,989 2,102,988 15,217,432 Redeemed (12,501,152) (78,097,062) (21,497,528) (157,103,590) ------------ ------------- ------------ ------------- (6,628,472) (41,527,971) 20,175,245 153,469,900 ------------ ------------- ------------ ------------- A CLASS (OLD)/SHARES AUTHORIZED N/A N/A ============ ============ Sold 2,048,715 16,003,585 Issued in reinvestment of distributions 201,210 1,569,589 Redeemed in connection with reclassification (Note 11) (27,248,825) (204,605,063) Redeemed (6,685,340) (52,269,420) ------------ ------------- (31,684,240) (239,301,309) ------------ ------------- B CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============ ============ Sold 11,721 70,987 74,011 572,482 Issued in reinvestment of distributions 9,574 57,523 69,313 504,234 Redeemed (315,054) (1,953,186) (440,433) (3,203,529) ------------ ------------- ------------ ------------- (293,759) (1,824,676) (297,109) (2,126,813) ------------ ------------- ------------ ------------- C CLASS/SHARES AUTHORIZED 50,000,000 50,000,000 ============ ============ Sold 257,522 1,602,001 1,786,478 13,418,691 Issued in reinvestment of distributions 15,435 92,683 125,755 912,831 Redeemed (2,144,958) (13,185,987) (3,420,371) (25,225,156) ------------ ------------- ------------ ------------- (1,872,001) (11,491,303) (1,508,138) (10,893,634) ------------ ------------- ------------ ------------- R CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 ============ ============ Sold 381,523 2,381,371 862,344 6,446,439 Issued in reinvestment of distributions 22,750 136,339 109,464 795,585 Redeemed (329,748) (2,089,780) (748,527) (5,506,900) ------------ ------------- ------------ ------------- 74,525 427,930 223,281 1,735,124 ------------ ------------- ------------ ------------- Net increase (decrease) (11,683,447) $(66,001,431) (12,382,487) $(84,653,829) ============ ============= ============ ============= - ------ 38 5. AFFILIATED COMPANY TRANSACTIONS If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the six months ended September 30, 2008 follows: September 30, 2008 Share Balance Purchase Sales Realized Dividend Share Market Fund/Company 3/31/08 Cost Cost Gain (Loss) Income Balance Value Equity Income Nicor Inc.(1) 2,255,000 $ 1,652,901 $ 96,088,704 $ 973,593 $1,528,362 -- -- WGL Holdings Inc. 2,471,500 13,430,822 12,789,819 590,711 1,671,553 2,492,188 $80,871,501 --------- ----------- ------------ ---------- ---------- --------- ----------- $15,083,723 $108,878,523 $1,564,304 $3,199,915 $80,871,501 =========== ============ ========== ========== =========== (1) Company was not an affiliate at September 30, 2008. 6. SECURITIES LENDING As of September 30, 2008, securities in Value valued at $3,304,063 were on loan through the lending agent, JPMCB, to certain approved borrowers. As of September 30, 2008, Equity Income and Large Company Value did not have any securities on loan. JPMCB receives and maintains collateral in the form of cash and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total market value of all collateral received for Value, at this date, was $3,427,866. The funds' risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the funds may be delayed or limited. 7. FAIR VALUE MEASUREMENTS The funds' securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the funds. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as the 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 an indication of the risks associated with investing in these securities or other financial instruments. - ------ 39 The following is a summary of the valuation inputs used to determine the fair value of the funds' securities and other financial instruments as of September 30, 2008: Unrealized Gain (Loss) Value of on Other Investment Financial Fund/Valuation Inputs Securities Instruments* EQUITY INCOME Level 1 -- Quoted Prices $3,492,768,904 -- Level 2 -- Other Significant Observable Inputs 1,269,601,946 $7,557,692 Level 3 -- Significant Unobservable Inputs -- -- -------------- ------------ $4,762,370,850 $7,557,692 ============== ============ VALUE Level 1 -- Quoted Prices $1,686,916,381 -- Level 2 -- Other Significant Observable Inputs 110,978,876 $3,573,884 Level 3 -- Significant Unobservable Inputs -- -- -------------- ------------ $1,797,895,257 $3,573,884 ============== ============ LARGE COMPANY VALUE Level 1 -- Quoted Prices $1,810,323,146 $(3,763,808) Level 2 -- Other Significant Observable Inputs 78,896,050 -- Level 3 -- Significant Unobservable Inputs -- -- -------------- ------------ $1,889,219,196 $(3,763,808) ============== ============ *Includes forward foreign currency exchange contracts and futures contracts. 8. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement with Bank of America, N.A. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement, which is subject to annual renewal, bear interest at the Federal Funds rate plus 0.40%. The funds did not borrow from the line during the six months ended September 30, 2008. 9. RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic development, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws and restrictions. - ------ 40 10. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of September 30, 2008, the components of investments for federal income tax purposes were as follows: Large Equity Income Value Company Value Federal tax cost of investments $4,979,113,953 $1,970,227,921 $1,926,839,093 ============== ============== ============== Gross tax appreciation of investments $ 201,059,744 $ 70,530,257 $ 261,403,307 Gross tax depreciation of investments (417,802,847) (242,862,921) (299,023,204) -------------- -------------- -------------- Net tax appreciation (depreciation) of investments $(216,743,103) $(172,332,664) $(37,619,897) ============== ============== ============== The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of March 31, 2008, Equity Income had capital loss deferrals of $(307,109,322). As of March 31, 2008, Value had capital and currency loss deferrals of $(200,845,570) and $(56,460), respectively. The capital and currency loss deferrals represent net capital and foreign currency losses incurred in the five-month period ended March 31, 2008. Equity Income and Value have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 11. CORPORATE EVENT On July 27, 2007, the A Class (old) shareholders of Value approved a reclassification of A Class (old) shares into Advisor Class shares. The change was approved by the Board of Directors on November 29, 2006 and March 7, 2007. The reclassification was effective on September 4, 2007. Subsequent to the reclassification, the Advisor Class was renamed A Class. On September 25, 2007, the A Class shareholders of Large Company Value approved a reclassification of A Class (old) shares into Advisor Class shares. The change was approved by the Board of Directors on November 29, 2006 and March 7, 2007. The reclassification was effective on December 3, 2007. Subsequent to the reclassification, the Advisor Class was renamed A Class. 12. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 does not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for fiscal years beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 41 FINANCIAL HIGHLIGHTS Equity Income Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.30 $8.65 $8.11 $8.05 $7.84 $6.22 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.11 0.23 0.21 0.20 0.21 0.22 Net Realized and Unrealized Gain (Loss) (0.42) (0.62) 1.05 0.36 0.61 1.71 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.31) (0.39) 1.26 0.56 0.82 1.93 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.11) (0.23) (0.17) (0.18) (0.19) (0.19) From Net Realized Gains -- (0.73) (0.55) (0.32) (0.42) (0.12) -------- -------- -------- -------- -------- -------- Total Distributions (0.11) (0.96) (0.72) (0.50) (0.61) (0.31) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.88 $7.30 $8.65 $8.11 $8.05 $7.84 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (4.27)% (5.17)% 15.79% 7.21% 10.69% 31.30% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.97%(4) 0.97% 0.97% 0.98% 0.99% 1.00% Ratio of Net Investment Income (Loss) to Average Net Assets 3.17%(4) 2.68% 2.43% 2.53% 2.56% 2.95% Portfolio Turnover Rate 145% 165% 160% 150% 174% 91% Net Assets, End of Period (in thousands) $3,328,473 $3,719,757 $4,790,510 $3,715,366 $3,290,442 $2,248,158 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 42 Equity Income Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.31 $8.65 $8.11 $8.06 $7.85 $6.23 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.12 0.25 0.23 0.22 0.22 0.24 Net Realized and Unrealized Gain (Loss) (0.43) (0.61) 1.05 0.35 0.61 1.71 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.31) (0.36) 1.28 0.57 0.83 1.95 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.12) (0.25) (0.19) (0.20) (0.20) (0.21) From Net Realized Gains -- (0.73) (0.55) (0.32) (0.42) (0.12) -------- -------- -------- -------- -------- -------- Total Distributions (0.12) (0.98) (0.74) (0.52) (0.62) (0.33) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.88 $7.31 $8.65 $8.11 $8.06 $7.85 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (4.30)% (4.85)% 16.01% 7.29% 10.91% 31.51% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.77%(4) 0.77% 0.77% 0.78% 0.79% 0.80% Ratio of Net Investment Income (Loss) to Average Net Assets 3.37%(4) 2.88% 2.63% 2.73% 2.76% 3.15% Portfolio Turnover Rate 145% 165% 160% 150% 174% 91% Net Assets, End of Period (in thousands) $493,969 $496,033 $551,202 $382,909 $257,195 $183,330 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 43 Equity Income A Class(1) For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(2) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.30 $8.65 $8.11 $8.05 $7.84 $6.22 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.10 0.20 0.19 0.18 0.19 0.20 Net Realized and Unrealized Gain (Loss) (0.42) (0.61) 1.05 0.36 0.61 1.72 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.32) (0.41) 1.24 0.54 0.80 1.92 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.10) (0.21) (0.15) (0.16) (0.17) (0.18) From Net Realized Gains -- (0.73) (0.55) (0.32) (0.42) (0.12) -------- -------- -------- -------- -------- -------- Total Distributions (0.10) (0.94) (0.70) (0.48) (0.59) (0.30) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.88 $7.30 $8.65 $8.11 $8.05 $7.84 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) (4.39)% (5.40)% 15.51% 6.94% 10.41% 30.97% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.22%(5) 1.22% 1.22% 1.23% 1.24% 1.25% Ratio of Net Investment Income (Loss) to Average Net Assets 2.92%(5) 2.43% 2.18% 2.28% 2.31% 2.70% Portfolio Turnover Rate 145% 165% 160% 150% 174% 91% Net Assets, End of Period (in thousands) $827,276 $933,600 $1,280,888 $902,749 $765,331 $457,360 (1) Prior to September 4, 2007, the A Class was referred to as the Advisor Class. (2) Six months ended September 30, 2008 (unaudited). (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 44 Equity Income B Class For a Share Outstanding Throughout the Periods Indicated 2008(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $7.30 $8.99 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.07 0.08 Net Realized and Unrealized Gain (Loss) (0.41) (0.95) -------- -------- Total From Investment Operations (0.34) (0.87) -------- -------- Distributions From Net Investment Income (0.08) (0.09) From Net Realized Gains -- (0.73) -------- -------- Total Distributions (0.08) (0.82) -------- -------- Net Asset Value, End of Period $6.88 $7.30 ======== ======== TOTAL RETURN(4) (4.74)% (10.28)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.97%(5) 1.97%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.17%(5) 2.11%(5) Portfolio Turnover Rate 145% 165%(6) Net Assets, End of Period (in thousands) $601 $235 (1) Six months ended September 30, 2008 (unaudited). (2) September 28, 2007 (commencement of sale) through March 31, 2008. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. See Notes to Financial Statements. - ------ 45 Equity Income C Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $7.30 $8.65 $8.11 $8.06 $7.85 $6.21 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.07 0.14 0.12 0.13 0.13 0.15 Net Realized and Unrealized Gain (Loss) (0.41) (0.61) 1.06 0.34 0.61 1.73 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.34) (0.47) 1.18 0.47 0.74 1.88 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.08) (0.15) (0.09) (0.10) (0.11) (0.12) From Net Realized Gains -- (0.73) (0.55) (0.32) (0.42) (0.12) -------- -------- -------- -------- -------- -------- Total Distributions (0.08) (0.88) (0.64) (0.42) (0.53) (0.24) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.88 $7.30 $8.65 $8.11 $8.06 $7.85 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (4.74)% (6.10)% 14.65% 6.02% 9.60% 30.37% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.97%(4) 1.97% 1.97% 1.98% 1.99% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets 2.17%(4) 1.68% 1.43% 1.53% 1.56% 1.95% Portfolio Turnover Rate 145% 165% 160% 150% 174% 91% Net Assets, End of Period (in thousands) $104,436 $116,985 $127,266 $98,481 $63,512 $42,579 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 46 Equity Income R Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004(2) PER-SHARE DATA Net Asset Value, Beginning of Period $7.29 $8.63 $8.09 $8.04 $7.84 $7.22 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.09 0.18 0.17 0.17 0.17 0.11 Net Realized and Unrealized Gain (Loss) (0.43) (0.60) 1.05 0.34 0.60 0.76 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.34) (0.42) 1.22 0.51 0.77 0.87 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.09) (0.19) (0.13) (0.14) (0.15) (0.13) From Net Realized Gains -- (0.73) (0.55) (0.32) (0.42) (0.12) -------- -------- -------- -------- -------- -------- Total Distributions (0.09) (0.92) (0.68) (0.46) (0.57) (0.25) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $6.86 $7.29 $8.63 $8.09 $8.04 $7.84 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) (4.65)% (5.53)% 15.25% 6.56% 10.03% 12.19% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.47%(5) 1.47% 1.47% 1.48% 1.44%(6) 1.50%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.67%(5) 2.18% 1.93% 2.03% 2.11%(6) 2.44%(5) Portfolio Turnover Rate 145% 165% 160% 150% 174% 91%(7) Net Assets, End of Period (in thousands) $40,440 $42,720 $44,767 $24,283 $6,046 $392 (1) Six months ended September 30, 2008 (unaudited). (2) August 29, 2003 (commencement of sale) through March 31, 2004. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During a portion of the year ended March 31, 2005, the class received a partial reimbursement of its distribution and service fees. Had fees not been reimbursed the annualized ratio of operating expenses to average net assets and annualized ratio of net investment income (loss) to average net assets would have been 1.49% and 2.06%, respectively. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2004. See Notes to Financial Statements. - ------ 47 Value Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.78 $7.61 $7.18 $7.31 $7.72 $5.61 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.07 0.12 0.12 0.12 0.09 0.09 Net Realized and Unrealized Gain (Loss) (0.42) (0.92) 0.93 0.57 0.64 2.18 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.35) (0.80) 1.05 0.69 0.73 2.27 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.06) (0.12) (0.11) (0.10) (0.09) (0.08) From Net Realized Gains -- (0.91) (0.51) (0.72) (1.05) (0.08) -------- -------- -------- -------- -------- -------- Total Distributions (0.06) (1.03) (0.62) (0.82) (1.14) (0.16) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.37 $5.78 $7.61 $7.18 $7.31 $7.72 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (6.01)% (11.56)% 14.90% 9.89% 9.95% 40.66% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.00%(4) 1.00% 0.99% 0.99% 0.99% 1.00% Ratio of Net Investment Income (Loss) to Average Net Assets 2.30%(4) 1.65% 1.58% 1.71% 1.16% 1.26% Portfolio Turnover Rate 52% 152% 140% 134% 130% 122% Net Assets, End of Period (in thousands) $1,431,510 $1,707,366 $2,495,067 $2,296,153 $2,315,507 $2,152,265 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 48 Value Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.79 $7.62 $7.19 $7.32 $7.72 $5.61 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.07 0.13 0.13 0.14 0.10 0.10 Net Realized and Unrealized Gain (Loss) (0.41) (0.91) 0.94 0.57 0.65 2.18 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.34) (0.78) 1.07 0.71 0.75 2.28 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.07) (0.14) (0.13) (0.12) (0.10) (0.09) From Net Realized Gains -- (0.91) (0.51) (0.72) (1.05) (0.08) -------- -------- -------- -------- -------- -------- Total Distributions (0.07) (1.05) (0.64) (0.84) (1.15) (0.17) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.38 $5.79 $7.62 $7.19 $7.32 $7.72 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (5.91)% (11.36)% 15.11% 10.10% 10.30% 40.93% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.80%(4) 0.80% 0.79% 0.79% 0.79% 0.80% Ratio of Net Investment Income (Loss) to Average Net Assets 2.50%(4) 1.85% 1.78% 1.91% 1.36% 1.46% Portfolio Turnover Rate 52% 152% 140% 134% 130% 122% Net Assets, End of Period (in thousands) $175,918 $307,769 $289,536 $254,778 $251,812 $223,282 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using the average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 49 Value A Class(1) For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(2) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.78 $7.61 $7.18 $7.31 $7.72 $5.60 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.06 0.10 0.10 0.10 0.07 0.07 Net Realized and Unrealized Gain (Loss) (0.41) (0.92) 0.93 0.57 0.64 2.19 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.35) (0.82) 1.03 0.67 0.71 2.26 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.06) (0.10) (0.09) (0.08) (0.07) (0.06) From Net Realized Gains -- (0.91) (0.51) (0.72) (1.05) (0.08) -------- -------- -------- -------- -------- -------- Total Distributions (0.06) (1.01) (0.60) (0.80) (1.12) (0.14) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.37 $5.78 $7.61 $7.18 $7.31 $7.72 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) (6.13)% (11.76)% 14.62% 9.61% 9.67% 40.56% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.25%(5) 1.25% 1.24% 1.24% 1.24% 1.25% Ratio of Net Investment Income (Loss) to Average Net Assets 2.05%(5) 1.40% 1.33% 1.46% 0.91% 1.01% Portfolio Turnover Rate 52% 152% 140% 134% 130% 122% Net Assets, End of Period (in thousands) $149,562 $191,739 $249,265 $214,835 $236,960 $403,212 (1) Prior to September 4, 2007, the A Class was referred to as the Advisor Class. (2) Six months ended September 30, 2008 (unaudited). (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 50 Value B Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.78 $7.61 $7.18 $7.31 $7.73 $5.61 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.04 0.05 0.04 0.05 0.01 0.01 Net Realized and Unrealized Gain (Loss) (0.41) (0.92) 0.94 0.57 0.65 2.20 ------- ------- ------- ------- ------- ------- Total From Investment Operations (0.37) (0.87) 0.98 0.62 0.66 2.21 ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.04) (0.05) (0.04) (0.03) (0.03) (0.01) From Net Realized Gains -- (0.91) (0.51) (0.72) (1.05) (0.08) ------- ------- ------- ------- ------- ------- Total Distributions (0.04) (0.96) (0.55) (0.75) (1.08) (0.09) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $5.37 $5.78 $7.61 $7.18 $7.31 $7.73 ======= ======= ======= ======= ======= ======= TOTAL RETURN(3) (6.48)% (12.41)% 13.78% 8.81% 8.93% 39.51% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.00%(4) 2.00% 1.99% 1.99% 1.99% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets 1.30%(4) 0.65% 0.58% 0.71% 0.16% 0.26% Portfolio Turnover Rate 52% 152% 140% 134% 130% 122% Net Assets, End of Period (in thousands) $4,385 $5,601 $7,740 $7,129 $5,059 $2,656 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 51 Value C Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.74 $7.56 $7.14 $7.27 $7.70 $5.58 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.04 0.05 0.04 0.05 0.01 0.02 Net Realized and Unrealized Gain (Loss) (0.41) (0.91) 0.93 0.57 0.64 2.19 ------- ------- ------- ------- ------- ------- Total From Investment Operations (0.37) (0.86) 0.97 0.62 0.65 2.21 ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.04) (0.05) (0.04) (0.03) (0.03) (0.01) From Net Realized Gains -- (0.91) (0.51) (0.72) (1.05) (0.08) ------- ------- ------- ------- ------- ------- Total Distributions (0.04) (0.96) (0.55) (0.75) (1.08) (0.09) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $5.33 $5.74 $7.56 $7.14 $7.27 $7.70 ======= ======= ======= ======= ======= ======= TOTAL RETURN(3) (6.53)% (12.36)% 13.71% 8.87% 8.84% 39.73% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.00%(4) 2.00% 1.99% 1.99% 1.99% 2.00% Ratio of Net Investment Income (Loss) to Average Net Assets 1.30%(4) 0.65% 0.58% 0.71% 0.16% 0.26% Portfolio Turnover Rate 52% 152% 140% 134% 130% 122% Net Assets, End of Period (in thousands) $8,664 $11,532 $22,274 $19,259 $13,885 $6,613 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 52 Value R Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $5.78 $7.61 $7.18 $7.60 ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.05 0.09 0.08 0.06 Net Realized and Unrealized Gain (Loss) (0.41) (0.92) 0.94 0.29 ------- ------- ------- ------- Total From Investment Operations (0.36) (0.83) 1.02 0.35 ------- ------- ------- ------- Distributions From Net Investment Income (0.05) (0.09) (0.08) (0.05) From Net Realized Gains -- (0.91) (0.51) (0.72) ------- ------- ------- ------- Total Distributions (0.05) (1.00) (0.59) (0.77) ------- ------- ------- ------- Net Asset Value, End of Period $5.37 $5.78 $7.61 $7.18 ======= ======= ======= ======= TOTAL RETURN(4) (6.25)% (11.98)% 14.34% 4.99% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50% 1.49% 1.49%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.80%(5) 1.15% 1.08% 1.17%(5) Portfolio Turnover Rate 52% 152% 140% 134%(6) Net Assets, End of Period (in thousands) $1,996 $1,625 $331 $43 (1) Six months ended September 30, 2008 (unaudited). (2) July 29, 2005 (commencement of sale) through March 31, 2006. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2006. See Notes to Financial Statements. - ------ 53 Large Company Value Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $6.48 $7.55 $6.72 $6.39 $5.89 $4.29 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.07 0.14 0.13 0.12 0.12 0.09 Net Realized and Unrealized Gain (Loss) (0.88) (0.85) 0.89 0.47 0.51 1.59 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.81) (0.71) 1.02 0.59 0.63 1.68 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.07) (0.15) (0.13) (0.11) (0.11) (0.08) From Net Realized Gains -- (0.21) (0.06) (0.15) (0.02) -- -------- -------- -------- -------- -------- -------- Total Distributions (0.07) (0.36) (0.19) (0.26) (0.13) (0.08) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.60 $6.48 $7.55 $6.72 $6.39 $5.89 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (12.58)% (9.88)% 15.37% 9.44% 10.73% 39.34% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.83%(4) 0.83% 0.83% 0.84% 0.87% 0.90% Ratio of Net Investment Income (Loss) to Average Net Assets 2.26%(4) 1.93% 1.86% 1.75% 1.90% 1.58% Portfolio Turnover Rate 14% 18% 12% 16% 18% 14% Net Assets, End of Period (in thousands) $1,012,538 $1,251,631 $1,498,119 $1,112,858 $659,277 $350,516 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 54 Large Company Value Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $6.48 $7.55 $6.72 $6.39 $5.89 $4.29 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.08 0.16 0.15 0.13 0.13 0.10 Net Realized and Unrealized Gain (Loss) (0.88) (0.86) 0.88 0.47 0.51 1.59 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.80) (0.70) 1.03 0.60 0.64 1.69 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.08) (0.16) (0.14) (0.12) (0.12) (0.09) From Net Realized Gains -- (0.21) (0.06) (0.15) (0.02) -- -------- -------- -------- -------- -------- -------- Total Distributions (0.08) (0.37) (0.20) (0.27) (0.14) (0.09) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.60 $6.48 $7.55 $6.72 $6.39 $5.89 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) (12.49)% (9.70)% 15.60% 9.65% 10.94% 39.61% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.63%(4) 0.63% 0.63% 0.64% 0.67% 0.70% Ratio of Net Investment Income (Loss) to Average Net Assets 2.46%(4) 2.13% 2.06% 1.95% 2.10% 1.78% Portfolio Turnover Rate 14% 18% 12% 16% 18% 14% Net Assets, End of Period (in thousands) $521,413 $540,297 $587,012 $527,109 $438,518 $151,622 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 55 Large Company Value A Class(1) For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(2) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $6.47 $7.55 $6.72 $6.39 $5.89 $4.29 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.06 0.12 0.12 0.10 0.10 0.07 Net Realized and Unrealized Gain (Loss) (0.87) (0.86) 0.88 0.47 0.51 1.60 -------- -------- -------- -------- -------- -------- Total From Investment Operations (0.81) (0.74) 1.00 0.57 0.61 1.67 -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.06) (0.13) (0.11) (0.09) (0.09) (0.07) From Net Realized Gains -- (0.21) (0.06) (0.15) (0.02) -- -------- -------- -------- -------- -------- -------- Total Distributions (0.06) (0.34) (0.17) (0.24) (0.11) (0.07) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.60 $6.47 $7.55 $6.72 $6.39 $5.89 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) (12.55)% (10.24)% 15.08% 9.17% 10.45% 38.99% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.08%(5) 1.08% 1.08% 1.09% 1.12% 1.15% Ratio of Net Investment Income (Loss) to Average Net Assets 2.01%(5) 1.68% 1.61% 1.50% 1.65% 1.33% Portfolio Turnover Rate 14% 18% 12% 16% 18% 14% Net Assets, End of Period (in thousands) $285,699 $373,078 $282,930 $184,601 $104,612 $19,265 (1) Prior to December 3, 2007, the A Class was referred to as the Advisor Class. (2) Six months ended September 30, 2008 (unaudited). (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 56 Large Company Value B Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $6.49 $7.57 $6.74 $6.41 $5.91 $4.29 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.04 0.07 0.06 0.05 0.05 0.03 Net Realized and Unrealized Gain (Loss) (0.87) (0.87) 0.89 0.47 0.52 1.62 ------- ------- ------- ------- ------- ------- Total From Investment Operations (0.83) (0.80) 0.95 0.52 0.57 1.65 ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.04) (0.07) (0.06) (0.04) (0.05) (0.03) From Net Realized Gains -- (0.21) (0.06) (0.15) (0.02) -- ------- ------- ------- ------- ------- ------- Total Distributions (0.04) (0.28) (0.12) (0.19) (0.07) (0.03) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $5.62 $6.49 $7.57 $6.74 $6.41 $5.91 ======= ======= ======= ======= ======= ======= TOTAL RETURN(3) (12.84)% (10.88)% 14.18% 8.33% 9.59% 38.41% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.83%(4) 1.83% 1.83% 1.84% 1.87% 1.90% Ratio of Net Investment Income (Loss) to Average Net Assets 1.26%(4) 0.93% 0.86% 0.75% 0.90% 0.58% Portfolio Turnover Rate 14% 18% 12% 16% 18% 14% Net Assets, End of Period (in thousands) $9,569 $12,965 $17,374 $15,954 $13,009 $5,642 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 57 Large Company Value C Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $6.47 $7.55 $6.72 $6.39 $5.89 $4.28 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.04 0.07 0.06 0.05 0.05 0.03 Net Realized and Unrealized Gain (Loss) (0.87) (0.87) 0.89 0.47 0.52 1.61 ------- ------- ------- ------- ------- ------- Total From Investment Operations (0.83) (0.80) 0.95 0.52 0.57 1.64 ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.04) (0.07) (0.06) (0.04) (0.05) (0.03) From Net Realized Gains -- (0.21) (0.06) (0.15) (0.02) -- ------- ------- ------- ------- ------- ------- Total Distributions (0.04) (0.28) (0.12) (0.19) (0.07) (0.03) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $5.60 $6.47 $7.55 $6.72 $6.39 $5.89 ======= ======= ======= ======= ======= ======= TOTAL RETURN(3) (12.88)% (10.91)% 14.22% 8.35% 9.62% 38.27% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.83%(4) 1.83% 1.83% 1.84% 1.87% 1.90% Ratio of Net Investment Income (Loss) to Average Net Assets 1.26%(4) 0.93% 0.86% 0.75% 0.90% 0.58% Portfolio Turnover Rate 14% 18% 12% 16% 18% 14% Net Assets, End of Period (in thousands) $34,317 $51,775 $71,792 $61,682 $40,789 $11,030 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 58 Large Company Value R Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004(2) PER-SHARE DATA Net Asset Value, Beginning of Period $6.48 $7.56 $6.72 $6.39 $5.89 $5.18 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.06 0.11 0.10 0.09 0.09 0.03 Net Realized and Unrealized Gain (Loss) (0.89) (0.87) 0.89 0.47 0.51 0.72 ------- ------- ------- ------- ------- ------- Total From Investment Operations (0.83) (0.76) 0.99 0.56 0.60 0.75 ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.05) (0.11) (0.09) (0.08) (0.08) (0.04) From Net Realized Gains -- (0.21) (0.06) (0.15) (0.02) -- ------- ------- ------- ------- ------- ------- Total Distributions (0.05) (0.32) (0.15) (0.23) (0.10) (0.04) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $5.60 $6.48 $7.56 $6.72 $6.39 $5.89 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) (12.80)% (10.45)% 14.95% 8.90% 10.17% 14.63% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.33%(5) 1.33% 1.33% 1.34% 1.33%(6) 1.40%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.76%(5) 1.43% 1.36% 1.25% 1.44%(6) 0.77%(5) Portfolio Turnover Rate 14% 18% 12% 16% 18% 14%(7) Net Assets, End of Period (in thousands) $14,848 $16,675 $17,765 $10,984 $2,143 $168 (1) Six months ended September 30, 2008 (unaudited). (2) August 29, 2003 (commencement of sale) through March 31, 2004. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During the year ended March 31, 2005, the class received a partial reimbursement of its distribution and service fee. Had fees not been reimbursed, the ratio of operating expenses to average net assets and ratio of net investment income (loss) to average net assets would have been 1.37% and 1.40%, respectively. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2004. See Notes to Financial Statements. - ------ 59 APPROVAL OF MANAGEMENT AGREEMENTS Equity Income, Value and Large Company Value 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 independent directors or trustees (the "Directors") each year. At American Century, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning Equity Income, Value and Large Company Value (the "funds") and the services provided to the funds under the management agreement. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds; * reports on the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * information about the compliance policies, procedures, and regulatory experience of the advisor; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two in-person meetings and one telephonic meeting to review and discuss the information provided. The board also had the benefit of the advice of its independent counsel throughout the period. FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. In connection with their review of - ------ 60 the fund, 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 under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. 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 funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of the services provided by the advisor have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided to the funds is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with its investment objectives and approved strategies. 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. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the funds. The Directors also review detailed performance information during the 15(c) Process comparing the funds' performance with that of similar funds not managed by the - ------ 61 advisor. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The funds' quarter end performance fell below the median for their peer groups for both the one- and three-year periods during the past year. The board discussed the funds' performance with the advisor and was satisfied with the efforts being undertaken by the advisor. The board will continue to monitor these efforts and the performance of the funds. More detailed information about the funds' performance can be found in the PERFORMANCE and PORTFOLIO COMMENTARY sections of this report. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. 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 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. COSTS OF SERVICES PROVIDED AND PROFITABILITY. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate 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 funds. ETHICS. The Directors generally consider 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 Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various functions to the funds, and the fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the funds increase in size, and through reinvestment in its business to provide shareholders additional content and services. - ------ 62 COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). 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 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 funds and provides a direct incentive to minimize administrative inefficiencies. Part of the Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the funds' unified fee to the total expense ratio of other funds in the funds' peer groups. The unified fee charged to shareholders of each of the funds was below the median of the total expense ratios of their respective peer groups. The board concluded that the management fee paid by the funds to the advisor was reasonable in light of the services provided to the funds. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use the fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors 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 Directors also determined that the advisor is able to provide investment management services to certain clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the funds to determine breakpoints in the funds' fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the board, including all of the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor concluded that the investment management agreement between the funds and the advisor is fair and reasonable in light of the services provided and should be renewed. - ------ 63 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] 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. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The funds file their 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 funds' 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 funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 64 INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The LIPPER EQUITY INCOME FUNDS INDEX is an equally-weighted index of, typically, the 30 largest equity income mutual funds that purchase securities of companies of all market capitalizations. The LIPPER MULTI-CAP VALUE FUNDS INDEX is an equally-weighted index of, typically, the 30 largest mutual funds that use a value investment strategy to purchase securities of companies of all market capitalizations. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 1000® GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 1000® VALUE INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 2000® INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 2000® VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 3000® VALUE INDEX measures the performance of those Russell 3000 Index companies (the 3,000 largest U.S. companies based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP® GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. - ------ 65 The RUSSELL MIDCAP® VALUE INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 66 NOTES - ------ 67 NOTES - ------ 68 [back cover] [american century investments logo and text logo ®] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE . . . . . . . . . . . . . . . . 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE . . . . . . . . . . . . . 1-800-345-2021 or 816-531-5575 INVESTORS USING ADVISORS . . . . . . . . . . . . . . . . . 1-800-378-9878 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS . . . . . . . . . . . . . . . . . . . . . 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES . . . . . . . 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF . . . . . . . . . . 1-800-634-4113 AMERICAN CENTURY CAPITAL PORTFOLIOS, 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. American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES American Century Investment Services, Inc., Distributor ©2008 American Century Proprietary Holdings, Inc. All rights reserved. 0811 CL-SAN-61618S
[front cover] SEMIANNUAL REPORT SEPTEMBER 30, 2008 [american century investments logo and text logo ®] AMERICAN CENTURY INVESTMENTS EQUITY INDEX FUND PRESIDENT'S LETTER JONATHAN THOMAS [photo of Jonathan Thomas] Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended September 30, 2008. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s/Jonathan Thomas Jonathan S. Thomas President and Chief Executive Officer American Century Investments TABLE OF CONTENTS Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Stock Index Returns . . . . . . . . . . . . . . . . . . . . . . 2 EQUITY INDEX Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . 7 FINANCIAL STATEMENTS Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 9 Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 17 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 18 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 19 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 20 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 25 OTHER INFORMATION Approval of Management Agreement for Equity Index . . . . . . . . . . 27 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 32 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 33 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team 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. MARKET PERSPECTIVE [photo of Chief Investment Officer] By Enrique Chang, Chief Investment Officer, American Century Investments AN OLD-FASHIONED FINANCIAL CRISIS The six months ended September 30, 2008, represented a tumultuous period for the U.S. equity market. Continued deterioration in the credit environment and a deepening liquidity crisis--ignited by last year's mortgage-market meltdown--led to an increasingly urgent need for capital at many major financial companies. By September, the crisis reached a tipping point as a number of major financial institutions filed for bankruptcy, sold out to competitors to avoid insolvency, or were taken over by the federal government. The financial crisis had a detrimental impact on an already weak U.S. economy. Steady job losses pushed the unemployment rate up to a five-year high, consumer spending began to decline, and mortgage foreclosures and delinquencies rose markedly. In addition, as the crisis spread around the world, the likelihood of diminishing global economic activity increased. On the positive side, the slowing economic environment brought the prices of energy and other commodities down sharply from record highs reached during the summer. The troubling financial and economic news led to an unprecedented level of stock market turbulence. Day-to-day volatility increased dramatically as investor confidence faltered, producing a market storm that has not been seen since the 1930s. As the accompanying table shows, stocks were mostly down across the board for the six-month period, though small-cap shares held up considerably better than their mid- and large-cap peers. INTERVENTION AND RESILIENCY As business and economic conditions worsened, intervention increased. The U.S. government and the Federal Reserve have provided extraordinary levels of fiscal and monetary assistance, and other central banks and governments are likely to contribute additional stimulus in the months ahead. Furthermore, downturns play the sometimes necessary role of correcting past market misbehavior and eliminating excesses and inefficiencies. The current downturn was years in the making, so it may take some time before we are firmly on the road to recovery. However, we remain confident in the stock market's long-term resiliency. U.S. Stock Index Returns For the six months ended September 30, 2008* RUSSELL 1000 INDEX (LARGE-CAP) -11.06% Russell 1000 Value Index -11.10% Russell 1000 Growth Index -11.23% RUSSELL MIDCAP INDEX -10.58% Russell Midcap Value Index -7.46% Russell Midcap Growth Index -13.93% RUSSELL 2000 INDEX (SMALL-CAP) -0.54% Russell 2000 Value Index 1.24% Russell 2000 Growth Index -2.83% * Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE Equity Index Total Returns as of September 30, 2008 Average Annual Returns Since Inception 6 months(1) 1 year 5 years Inception Date INVESTOR CLASS -11.03% -22.28% 4.68% 0.56% 2/26/99 S&P 500 INDEX(2) -10.87% -21.98% 5.17% 1.04%(3) -- Institutional Class -10.95% -22.25% 4.89% 0.76% 2/26/99 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. ©2008 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 2/28/99, 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 3 Equity Index Growth of $10,000 Over Life of Class $10,000 investment made February 26, 1999
One-Year Returns Over Life of Class Periods ended September 30 1999* 2000 2001 2002 2003 2004 2005 2006 2007 2008 Investor Class 4.02% 12.54% -26.89% -20.61% 23.56% 13.14% 11.87% 10.17% 16.01% -22.28% S&P 500 Index 4.38% 13.28% -26.62% -20.49% 24.40% 13.87% 12.25% 10.79% 16.44% -21.98% * From 2/26/99, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 PORTFOLIO COMMENTARY Equity Index Subadvisor: Northern Trust Investments, N.A. PERFORMANCE SUMMARY Equity Index returned -11.03%* for the six months ended September 30, 2008, compared with the -10.87% return of its benchmark, the S&P 500 Index. The portfolio's results reflected operating expenses, whereas the index return did not. The portfolio's double-digit decline for the six-month period resulted from the turbulence in the U.S. stock market brought on by the worsening credit and liquidity crisis. Every sector in the S&P 500 declined during the period, with financials and commodity-related stocks taking the worst of it. FINANCIALS IN DISTRESS The credit crunch weighed heavily on the financials sector, which had the biggest negative impact on portfolio performance for the six months. Five of the portfolio's ten worst individual contributors to performance came from the financials sector, led by insurance firm American International Group (AIG). AIG plunged late in the period after the company agreed to an $85 billion bailout by the federal government that could cost the insurer its independence. Other casualties among the portfolio's financials holdings included mortgage lenders Fannie Mae and Freddie Mac, which were nationalized by the federal government; brokerage firm Lehman Brothers, which filed for bankruptcy; and banks Wachovia and Washington Mutual, both of which agreed to be acquired by competitors under pressure from regulators. On the positive side, however, the top two contributors to portfolio performance were also financial stocks--commercial bank Wells Fargo and investment bank JPMorgan Chase. Both companies were better-capitalized than many of their peers, and as a result they were able to acquire other downtrodden financial companies at fire-sale prices. COMMODITY SECTORS SLUMPED The slowing economy and a sharp decline in commodity prices put downward pressure on the industrials and materials sectors. Machinery manufacturers and industrial conglomerates detracted the most in the industrials sector. General Electric was the weakest contributor, falling as troubles at its finance unit weighed on the company's earnings. Agricultural machinery maker Deere also declined as the weaker economic environment led to reduced demand for its products. Top Ten Holdings as of September 30, 2008 % of net assets as of % of net assets as of 9/30/08 3/31/08 Exxon Mobil Corp. 3.9% 3.9% General Electric Co. 2.4% 3.2% Procter & Gamble Co. (The) 2.0% 1.9% Microsoft Corp. 2.0% 1.9% Johnson & Johnson 1.9% 1.6% JPMorgan Chase & Co. 1.7% 1.2% Chevron Corp. 1.6% 1.5% AT&T Inc. 1.6% 2.0% Bank of America Corp. 1.5% 1.4% International Business Machines Corp. 1.5% 1.4% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. - ------ 5 Equity Index In the materials sector, metals and mining companies and chemicals producers were responsible for much of the overall decline. Metals producer Freeport McMoRan Copper & Gold and agricultural chemicals producer Monsanto were the biggest individual detractors. Energy stocks were also hit by the decline in commodity prices, though to a lesser extent. Oil prices peaked at record highs in July and then fell back in the ensuing months. Notable decliners included energy producer Exxon Mobil and oil services provider Schlumberger. CONSUMER STAPLES AND HEALTH CARE HELD UP BEST The portfolio's consumer staples and health care holdings were the best performers, producing largely flat returns for the six-month period. Companies in these sectors tend to perform well in slower economic conditions because their products and services are always in demand regardless of the economic environment. Discount retailer Wal-Mart was the top contributor in the consumer staples sector, benefiting from a consumer shift toward shopping at discount stores. Beverage maker Anheuser-Busch was another positive contributor, advancing after the company agreed to be acquired by international beverage giant InBev. In the health care sector, biotechnology stocks were the best performers. The top contributor in this sector was biotech company Amgen, which rallied as its new osteoporosis medication, denosumab, achieved success in clinical trials. Johnson & Johnson also performed well as strength in its consumer products and medical devices units helped offset weakness in its pharmaceutical business. OUTLOOK Volatility and uncertainty are likely to remain the watchwords in the stock market as we move through the last few months of 2008. The market faces a probable recession, depressed corporate earnings, and the continued unwinding of the credit crunch. However, the market's sell-off over the past year has wrung out much of the speculative excess, and the federal government's recent efforts to provide systemic stability should establish the groundwork for an eventual recovery. Top Five Industries as of September 30, 2008 % of net assets as of % of net assets as of 9/30/08 3/31/08 Oil, Gas & Consumable Fuels 10.4% 10.4% Pharmaceuticals 6.5% 6.1% Diversified Financial Services 4.9% 4.3% Software 3.7% 3.3% Industrial Conglomerates 3.1% 4.0% Types of Investments in Portfolio % of net assets as of % of net assets as of 9/30/08 3/31/08 Common Stocks and Futures 100.2% 100.9% Other Assets and Liabilities(1) (0.2)% (0.9)% (1) Includes securities lending collateral and other assets and liabilities. - ------ 6 SHAREHOLDER FEE EXAMPLE (UNAUDITED) 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 April 1, 2008 to September 30, 2008. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Investments Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 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 Ending Expenses Paid Value Account Value During Period* Annualized 4/1/08 9/30/08 4/1/08 - 9/30/08 Expense Ratio* ACTUAL Investor Class $1,000 $889.70 $2.32 0.49% Institutional Class $1,000 $890.50 $1.37 0.29% HYPOTHETICAL Investor Class $1,000 $1,022.61 $2.48 0.49% Institutional Class $1,000 $1,023.61 $1.47 0.29% * 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 183, 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 Equity Index SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 97.5% AEROSPACE & DEFENSE -- 2.6% 33,663 Boeing Co. $ 1,930,573 18,077 General Dynamics Corp. 1,330,829 5,671 Goodrich Corp. 235,914 33,944 Honeywell International Inc. 1,410,373 5,553 L-3 Communications Holdings, Inc. 545,971 15,158 Lockheed Martin Corp. 1,662,378 15,371 Northrop Grumman Corp. 930,560 6,372 Precision Castparts Corp. 501,986 18,917 Raytheon Co. 1,012,249 7,266 Rockwell Collins, Inc. 349,422 43,923 United Technologies Corp. 2,638,015 ------------ 12,548,270 ------------ AIR FREIGHT & LOGISTICS -- 1.0% 7,772 C.H. Robinson Worldwide Inc. 396,061 9,700 Expeditors International of Washington, Inc. 337,948 14,169 FedEx Corp. 1,119,918 45,923 United Parcel Service, Inc. Cl B 2,888,097 ------------ 4,742,024 ------------ AIRLINES -- 0.1% 33,429 Southwest Airlines Co. 485,055 ------------ AUTO COMPONENTS -- 0.2% 10,998 Goodyear Tire & Rubber Co. (The)(1) 168,379 27,031 Johnson Controls, Inc. 819,851 ------------ 988,230 ------------ AUTOMOBILES -- 0.2% 102,928 Ford Motor Co.(1) 535,225 25,723 General Motors Corp. 243,082 10,725 Harley-Davidson, Inc. 400,043 ------------ 1,178,350 ------------ BEVERAGES -- 2.8% 32,741 Anheuser-Busch Companies, Inc. 2,124,236 3,541 Brown-Forman Corp. Cl B 254,279 90,514 Coca-Cola Co. (The) 4,786,380 14,458 Coca-Cola Enterprises Inc. 242,461 8,809 Constellation Brands Inc. Cl A(1) 189,041 6,834 Molson Coors Brewing Co., Cl B 319,490 6,184 Pepsi Bottling Group Inc. 180,387 71,282 PepsiCo, Inc. 5,080,268 ------------ 13,176,542 ------------ Shares Value BIOTECHNOLOGY -- 1.6% 48,218 Amgen Inc.(1) $ 2,857,881 13,192 Biogen Idec Inc.(1) 663,426 20,670 Celgene Corp.(1) 1,307,998 12,251 Genzyme Corp.(1) 990,983 41,845 Gilead Sciences, Inc.(1) 1,907,295 ------------ 7,727,583 ------------ BUILDING PRODUCTS -- 0.1% 16,390 Masco Corp. 294,037 ------------ CAPITAL MARKETS -- 2.8% 9,405 American Capital, Ltd. 239,922 9,830 Ameriprise Financial Inc. 375,506 52,191 Bank of New York Mellon Corp. (The) 1,700,383 42,519 Charles Schwab Corp. (The) 1,105,494 24,446 E*TRADE Financial Corp.(1) 68,449 3,990 Federated Investors Inc. Cl B 115,032 6,958 Franklin Resources, Inc. 613,209 19,770 Goldman Sachs Group, Inc. (The) 2,530,559 17,600 Invesco Ltd. 369,248 7,317 Janus Capital Group Inc. 177,657 6,482 Legg Mason, Inc. 246,705 69,774 Merrill Lynch & Co., Inc. 1,765,281 50,511 Morgan Stanley 1,161,753 12,683 Northern Trust Corp. 915,713 19,655 State Street Corp. 1,117,976 11,773 T. Rowe Price Group Inc. 632,328 ------------ 13,135,215 ------------ CHEMICALS -- 2.0% 9,630 Air Products & Chemicals, Inc. 659,559 2,595 Ashland Inc. 75,878 2,600 CF Industries Holdings, Inc. 237,796 42,107 Dow Chemical Co. (The) 1,338,160 41,028 du Pont (E.I.) de Nemours & Co. 1,653,428 3,469 Eastman Chemical Co. 189,928 8,002 Ecolab Inc. 388,257 5,110 Hercules Inc. 101,127 3,547 International Flavors & Fragrances Inc. 139,965 25,036 Monsanto Co. 2,478,063 7,411 PPG Industries, Inc. 432,210 14,346 Praxair, Inc. 1,029,182 5,652 Rohm & Haas Co. 395,640 5,765 Sigma-Aldrich Corp. 302,201 ------------ 9,421,394 ------------ - ------ 9 Equity Index Shares Value COMMERCIAL BANKS -- 2.9% 24,959 BB&T Corp. $ 943,450 6,848 Comerica Inc. 224,546 26,263 Fifth Third Bancorp 312,530 9,188 First Horizon National Corp. 87,286 16,694 Huntington Bancshares Inc. 133,385 22,466 KeyCorp 268,244 3,497 M&T Bank Corp. 312,107 11,848 Marshall & Ilsley Corp. 238,737 34,629 National City Corp. 60,601 15,755 PNC Financial Services Group, Inc. 1,176,899 31,606 Regions Financial Corp. 303,418 16,097 SunTrust Banks, Inc. 724,204 79,315 U.S. Bancorp 2,856,926 98,270 Wachovia Corp. 343,945 150,653 Wells Fargo & Co. 5,654,006 5,251 Zions Bancorp. 203,214 ------------ 13,843,498 ------------ COMMERCIAL SERVICES & SUPPLIES -- 0.4% 15,393 Allied Waste Industries Inc.(1) 171,016 4,873 Avery Dennison Corp. 216,751 6,049 Cintas Corp. 173,667 9,473 Pitney Bowes, Inc. 315,072 9,510 R.R. Donnelley & Sons Co. 233,280 22,336 Waste Management, Inc. 703,361 ------------ 1,813,147 ------------ COMMUNICATIONS EQUIPMENT -- 2.6% 4,113 Ciena Corp.(1) 41,459 268,863 Cisco Systems Inc.(1) 6,065,549 71,861 Corning Inc. 1,123,906 6,100 Harris Corp. 281,820 9,749 JDS Uniphase Corp.(1) 82,477 24,768 Juniper Networks, Inc.(1) 521,862 103,156 Motorola, Inc. 736,534 74,726 QUALCOMM Inc. 3,210,976 18,153 Tellabs, Inc.(1) 73,701 ------------ 12,138,284 ------------ COMPUTERS & PERIPHERALS -- 2.8% 40,304 Apple Inc.(1)(2) 4,580,953 79,398 Dell Inc.(1) 1,308,479 94,262 EMC Corp.(1) 1,127,374 111,546 Hewlett-Packard Co. 5,157,886 4,003 Lexmark International, Inc. Cl A(1) 130,378 14,957 NetApp, Inc.(1) 272,666 6,001 QLogic Corp.(1) 92,175 10,263 SanDisk Corp.(1) 200,642 Shares Value 34,321 Sun Microsystems, Inc.(1) $ 260,840 8,076 Teradata Corp.(1) 157,482 ------------ 13,288,875 ------------ CONSTRUCTION & ENGINEERING -- 0.2% 8,192 Fluor Corp. 456,294 5,600 Jacobs Engineering Group Inc.(1) 304,136 ------------ 760,430 ------------ CONSTRUCTION MATERIALS -- 0.1% 4,968 Vulcan Materials Co. 370,116 ------------ CONSUMER FINANCE -- 0.7% 52,749 American Express Co. 1,868,897 17,053 Capital One Financial Corp. 869,703 21,802 Discover Financial Services 301,304 21,306 SLM Corp.(1) 262,916 ------------ 3,302,820 ------------ CONTAINERS & PACKAGING -- 0.1% 4,414 Ball Corp. 174,308 4,533 Bemis Co., Inc. 118,402 5,931 Pactiv Corp.(1) 147,267 7,228 Sealed Air Corp. 158,944 ------------ 598,921 ------------ DISTRIBUTORS -- 0.1% 7,409 Genuine Parts Co. 297,916 ------------ DIVERSIFIED CONSUMER SERVICES -- 0.1% 4,861 Apollo Group, Inc. Cl A(1) 288,257 14,982 H&R Block, Inc. 337,844 ------------ 626,101 ------------ DIVERSIFIED FINANCIAL SERVICES -- 4.9% 207,648 Bank of America Corp. 7,267,680 13,031 CIT Group Inc. 90,696 247,849 Citigroup Inc. 5,083,383 3,060 CME Group Inc. 1,136,821 3,400 IntercontinentalExchange Inc.(1) 274,312 169,114 JPMorgan Chase & Co. 7,897,624 8,000 Leucadia National Corp. 363,520 14,517 McGraw-Hill Companies, Inc. (The) 458,882 9,007 Moody's Corp. 306,238 12,100 NYSE Euronext 474,078 ------------ 23,353,234 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES -- 2.7% 268,252 AT&T Inc. 7,489,596 4,598 CenturyTel Inc. 168,517 6,455 Embarq Corp. 261,750 14,329 Frontier Communications Corp. 164,784 - ------ 10 Equity Index Shares Value 67,588 Qwest Communications International Inc. $ 218,309 129,637 Verizon Communications Inc. 4,160,051 20,020 Windstream Corp. 219,019 ------------ 12,682,026 ------------ ELECTRIC UTILITIES -- 2.1% 7,734 Allegheny Energy, Inc. 284,379 18,287 American Electric Power Co., Inc. 678,082 57,545 Duke Energy Corp. 1,003,009 14,817 Edison International 591,198 8,774 Entergy Corp. 780,974 29,929 Exelon Corp. 1,874,154 13,830 FirstEnergy Corp. 926,472 18,604 FPL Group, Inc. 935,781 9,200 Pepco Holdings, Inc. 210,772 4,581 Pinnacle West Capital Corp. 157,632 17,088 PPL Corp. 632,598 11,954 Progress Energy Inc. 515,576 34,997 Southern Co. 1,319,037 ------------ 9,909,664 ------------ ELECTRICAL EQUIPMENT -- 0.4% 7,929 Cooper Industries, Ltd. Cl A 316,764 35,295 Emerson Electric Co. 1,439,683 6,594 Rockwell Automation Inc. 246,220 ------------ 2,002,667 ------------ ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 0.3% 16,261 Agilent Technologies, Inc.(1) 482,301 8,100 Amphenol Corp. Cl A 325,134 9,518 Jabil Circuit, Inc. 90,802 6,526 Molex Inc. 146,509 21,480 Tyco Electronics Ltd. 594,136 ------------ 1,638,882 ------------ ENERGY EQUIPMENT & SERVICES -- 2.6% 13,977 Baker Hughes Inc. 846,168 13,401 BJ Services Co. 256,361 9,900 Cameron International Corp.(1) 381,546 6,496 ENSCO International Inc. 374,364 39,953 Halliburton Co. 1,294,078 12,751 Nabors Industries Ltd.(1) 317,755 18,986 National Oilwell Varco, Inc.(1) 953,667 12,270 Noble Corp. 538,653 5,101 Rowan Companies, Inc. 155,836 54,641 Schlumberger Ltd. 4,266,915 9,819 Smith International, Inc. 575,786 Shares Value 14,500 Transocean Inc.(1) $ 1,592,680 30,984 Weatherford International Ltd.(1) 778,938 ------------ 12,332,747 ------------ FOOD & STAPLES RETAILING -- 2.8% 19,741 Costco Wholesale Corp. 1,281,783 65,305 CVS/Caremark Corp. 2,198,166 29,767 Kroger Co. (The) 817,997 19,833 Safeway Inc. 470,439 9,720 SUPERVALU, Inc. 210,924 27,425 SYSCO Corp. 845,513 45,036 Walgreen Co. 1,394,315 102,077 Wal-Mart Stores, Inc. 6,113,392 6,383 Whole Foods Market, Inc. 127,851 ------------ 13,460,380 ------------ FOOD PRODUCTS -- 1.7% 29,324 Archer-Daniels-Midland Co. 642,489 9,657 Campbell Soup Co. 372,760 20,678 ConAgra Foods, Inc. 402,394 6,951 Dean Foods Co.(1) 162,375 15,271 General Mills, Inc. 1,049,423 14,239 H.J. Heinz Co. 710,668 7,594 Hershey Co. (The) 300,267 11,357 Kellogg Co. 637,128 69,083 Kraft Foods Inc. Cl A 2,262,469 5,852 McCormick & Co., Inc. 225,009 32,107 Sara Lee Corp. 405,511 13,707 Tyson Foods, Inc. Cl A 163,662 9,849 Wm. Wrigley Jr. Co. 782,011 ------------ 8,116,166 ------------ GAS UTILITIES -- 0.1% 2,051 Nicor Inc. 90,962 7,873 Questar Corp. 322,163 ------------ 413,125 ------------ HEALTH CARE EQUIPMENT & SUPPLIES -- 2.3% 28,627 Baxter International Inc. 1,878,790 11,114 Becton, Dickinson & Co. 892,010 68,377 Boston Scientific Corp.(1) 838,986 4,510 C.R. Bard, Inc. 427,864 22,781 Covidien Ltd. 1,224,707 7,236 Hospira Inc.(1) 276,415 1,800 Intuitive Surgical Inc.(1) 433,764 51,367 Medtronic, Inc. 2,573,486 15,523 St. Jude Medical, Inc.(1) 675,095 11,230 Stryker Corp. 699,629 5,655 Varian Medical Systems, Inc.(1) 323,070 10,253 Zimmer Holdings Inc.(1) 661,934 ------------ 10,905,750 ------------ - ------ 11 Equity Index Shares Value HEALTH CARE PROVIDERS & SERVICES -- 1.9% 21,454 Aetna Inc. $ 774,704 7,175 AmerisourceBergen Corp. 270,139 16,352 Cardinal Health, Inc. 805,827 12,458 CIGNA Corp. 423,323 6,779 Coventry Health Care Inc.(1) 220,656 4,800 DaVita Inc.(1) 273,648 11,222 Express Scripts, Inc.(1) 828,408 7,721 Humana Inc.(1) 318,105 5,063 Laboratory Corp. of America Holdings(1) 351,879 12,570 McKesson Corp. 676,392 22,984 Medco Health Solutions Inc.(1) 1,034,280 4,194 Patterson Companies, Inc.(1) 127,540 7,214 Quest Diagnostics Inc. 372,747 18,928 Tenet Healthcare Corp.(1) 105,050 55,435 UnitedHealth Group Inc. 1,407,494 23,281 WellPoint Inc.(1) 1,088,852 ------------ 9,079,044 ------------ HEALTH CARE TECHNOLOGY(3) 8,310 IMS Health Inc. 157,142 ------------ HOTELS, RESTAURANTS & LEISURE -- 1.3% 19,899 Carnival Corp. 703,430 6,358 Darden Restaurants, Inc. 182,030 14,149 International Game Technology 243,080 13,424 Marriott International, Inc. Cl A 350,232 51,172 McDonald's Corp. 3,157,312 33,308 Starbucks Corp.(1) 495,290 8,509 Starwood Hotels & Resorts Worldwide, Inc. 239,443 8,141 Wyndham Worldwide Corp. 127,895 21,349 Yum! Brands, Inc. 696,191 ------------ 6,194,903 ------------ HOUSEHOLD DURABLES -- 0.4% 2,743 Black & Decker Corp. 166,637 5,609 Centex Corp. 90,866 12,585 D.R. Horton, Inc. 163,857 6,792 Fortune Brands, Inc. 389,589 2,642 Harman International Industries Inc. 90,013 3,363 KB Home 66,184 7,271 Leggett & Platt, Inc. 158,435 6,447 Lennar Corp. Cl A 97,930 12,640 Newell Rubbermaid Inc. 218,166 9,692 Pulte Homes Inc. 135,397 2,588 Snap-on Inc. 136,284 3,581 Stanley Works (The) 149,471 3,450 Whirlpool Corp. 273,551 ------------ 2,136,380 ------------ Shares Value HOUSEHOLD PRODUCTS -- 2.7% 6,311 Clorox Co. (The) $ 395,637 23,060 Colgate-Palmolive Co. 1,737,571 18,905 Kimberly-Clark Corp. 1,225,800 138,099 Procter & Gamble Co. (The) 9,624,119 ------------ 12,983,127 ------------ INDEPENDENT POWER PRODUCERS & ENERGY TRADERS -- 0.1% 30,617 AES Corp. (The)(1) 357,912 8,139 Constellation Energy Group Inc. 197,778 23,013 Dynegy Inc. Cl A(1) 82,387 ------------ 638,077 ------------ INDUSTRIAL CONGLOMERATES -- 3.1% 31,756 3M Co. 2,169,252 452,807 General Electric Co. 11,546,579 11,288 Textron Inc. 330,513 21,581 Tyco International Ltd. 755,767 ------------ 14,802,111 ------------ INSURANCE -- 2.9% 21,661 Aflac Inc. 1,272,584 24,678 Allstate Corp. (The) 1,138,149 122,463 American International Group, Inc. 407,802 12,625 Aon Corp. 567,620 5,362 Assurant, Inc. 294,910 16,406 Chubb Corp. 900,698 7,413 Cincinnati Financial Corp. 210,826 19,661 Genworth Financial Inc. Cl A 169,281 13,682 Hartford Financial Services Group Inc. (The) 560,825 11,689 Lincoln National Corp. 500,406 16,434 Loews Corp. 648,979 23,392 Marsh & McLennan Companies, Inc. 742,930 8,925 MBIA Inc. 106,208 31,278 MetLife, Inc. 1,751,568 11,748 Principal Financial Group, Inc. 510,921 30,740 Progressive Corp. (The) 534,876 19,428 Prudential Financial, Inc. 1,398,816 4,034 Torchmark Corp. 241,233 26,932 Travelers Companies, Inc. (The) 1,217,326 15,782 Unum Group 396,128 14,263 XL Capital Ltd. Cl A 255,878 ------------ 13,827,964 ------------ - ------ 12 Equity Index Shares Value INTERNET & CATALOG RETAIL -- 0.3% 14,527 Amazon.com, Inc.(1) $ 1,056,985 9,468 Expedia, Inc.(1) 143,061 ------------ 1,200,046 ------------ INTERNET SOFTWARE & SERVICES -- 1.5% 7,670 Akamai Technologies, Inc.(1) 133,765 49,790 eBay Inc.(1) 1,114,300 10,850 Google Inc. Cl A(1) 4,345,642 8,824 VeriSign, Inc.(1) 230,130 63,124 Yahoo! Inc.(1) 1,092,045 ------------ 6,915,882 ------------ IT SERVICES -- 2.5% 4,460 Affiliated Computer Services Inc. Cl A(1) 225,810 23,218 Automatic Data Processing, Inc. 992,569 13,236 Cognizant Technology Solutions Corp. Cl A(1) 302,178 6,938 Computer Sciences Corp.(1) 278,422 5,533 Convergys Corp.(1) 81,778 8,663 Fidelity National Information Services, Inc. 159,919 7,433 Fiserv, Inc.(1) 351,730 61,727 International Business Machines Corp. 7,219,589 3,300 MasterCard Inc. Cl A 585,189 14,652 Paychex, Inc. 483,956 9,053 Total System Services Inc. 148,469 16,306 Unisys Corp.(1) 44,842 33,173 Western Union Co. (The) 818,377 ------------ 11,692,828 ------------ LEISURE EQUIPMENT & PRODUCTS -- 0.1% 13,147 Eastman Kodak Co. 202,201 5,684 Hasbro, Inc. 197,348 16,449 Mattel, Inc. 296,740 ------------ 696,289 ------------ LIFE SCIENCES TOOLS & SERVICES -- 0.4% 7,768 Applied Biosystems, Inc. 266,054 2,483 Millipore Corp.(1) 170,830 5,465 PerkinElmer, Inc. 136,461 19,052 Thermo Fisher Scientific Inc.(1) 1,047,861 4,518 Waters Corp.(1) 262,857 ------------ 1,884,063 ------------ MACHINERY -- 1.6% 27,733 Caterpillar Inc. 1,652,887 9,182 Cummins Inc. 401,437 11,658 Danaher Corp. 809,065 19,410 Deere & Co. 960,795 Shares Value 8,548 Dover Corp. $ 346,621 7,589 Eaton Corp. 426,350 18,151 Illinois Tool Works Inc. 806,812 14,458 Ingersoll-Rand Co. Ltd. Cl A 450,656 8,323 ITT Corp. 462,842 5,900 Manitowoc Co., Inc. (The) 91,745 16,523 PACCAR, Inc. 631,013 5,463 Pall Corp. 187,873 7,580 Parker-Hannifin Corp. 401,740 4,396 Terex Corp.(1) 134,166 ------------ 7,764,002 ------------ MEDIA -- 2.5% 30,947 CBS Corp. Cl B 451,207 132,829 Comcast Corp. Cl A 2,607,433 26,339 DIRECTV Group, Inc. (The)(1) 689,292 10,383 Gannett Co., Inc. 175,577 21,725 Interpublic Group of Companies, Inc. (The)(1) 168,369 1,653 Meredith Corp. 46,367 5,277 New York Times Co. (The) Cl A 75,408 104,531 News Corp. Cl A 1,253,327 14,519 Omnicom Group Inc. 559,853 4,033 Scripps Networks Interactive, Inc. 146,438 163,119 Time Warner Inc. 2,138,490 28,253 Viacom Inc. Cl B(1) 701,805 85,463 Walt Disney Co. (The) 2,622,858 243 Washington Post Co. (The) Cl B 135,293 ------------ 11,771,717 ------------ METALS & MINING -- 0.8% 5,100 AK Steel Holding Corp. 132,192 37,070 Alcoa Inc. 837,041 4,620 Allegheny Technologies Inc. 136,521 17,510 Freeport-McMoRan Copper & Gold, Inc. 995,443 20,799 Newmont Mining Corp. 806,169 14,377 Nucor Corp. 567,892 3,900 Titanium Metals Corp. 44,226 5,320 United States Steel Corp. 412,885 ------------ 3,932,369 ------------ MULTILINE RETAIL -- 0.8% 3,756 Big Lots, Inc.(1) 104,529 2,584 Dillard's Inc. Cl A 30,491 6,333 Family Dollar Stores, Inc. 150,092 10,104 J.C. Penney Co., Inc. 336,867 13,861 Kohl's Corp.(1) 638,716 19,184 Macy's Inc. 344,928 7,260 Nordstrom, Inc. 209,233 - ------ 13 Equity Index Shares Value 2,626 Sears Holdings Corp.(1) $ 245,531 34,320 Target Corp. 1,683,397 ------------ 3,743,784 ------------ MULTI-UTILITIES -- 1.2% 9,597 Ameren Corp. 374,571 15,573 CenterPoint Energy, Inc. 226,899 10,209 CMS Energy Corp. 127,306 12,467 Consolidated Edison, Inc. 535,582 26,422 Dominion Resources Inc. 1,130,332 7,467 DTE Energy Co. 298,307 3,439 Integrys Energy Group Inc. 171,744 12,450 NiSource Inc. 183,762 16,384 PG&E Corp. 613,581 23,180 Public Service Enterprise Group Inc. 760,072 11,228 Sempra Energy 566,677 9,660 TECO Energy, Inc. 151,952 20,301 Xcel Energy Inc. 405,817 ------------ 5,546,602 ------------ OFFICE ELECTRONICS -- 0.1% 39,724 Xerox Corp. 458,018 ------------ OIL, GAS & CONSUMABLE FUELS -- 10.4% 21,332 Anadarko Petroleum Corp. 1,034,815 15,248 Apache Corp. 1,590,061 4,700 Cabot Oil & Gas Corp. 169,858 23,747 Chesapeake Energy Corp. 851,567 93,553 Chevron Corp. 7,716,251 69,123 ConocoPhillips 5,063,260 8,351 CONSOL Energy Inc. 383,227 20,094 Devon Energy Corp. 1,832,573 31,944 El Paso Corp. 407,605 11,382 EOG Resources Inc. 1,018,234 236,420 Exxon Mobil Corp. 18,360,378 12,856 Hess Corp. 1,055,220 32,099 Marathon Oil Corp. 1,279,787 3,800 Massey Energy Co. 135,546 8,638 Murphy Oil Corp. 554,041 7,800 Noble Energy Inc. 433,602 37,198 Occidental Petroleum Corp. 2,620,599 12,420 Peabody Energy Corp. 558,900 5,500 Pioneer Natural Resources Co. 287,540 7,008 Range Resources Corp. 300,433 15,600 Southwestern Energy Co.(1) 476,424 27,941 Spectra Energy Corp. 664,996 5,372 Sunoco, Inc. 191,136 6,300 Tesoro Corp. 103,887 23,877 Valero Energy Corp. 723,473 Shares Value 26,188 Williams Companies, Inc. (The) $ 619,346 24,986 XTO Energy Inc. 1,162,349 ------------ 49,595,108 ------------ PAPER & FOREST PRODUCTS -- 0.3% 19,448 International Paper Co. 509,149 7,830 MeadWestvaco Corp. 182,517 9,674 Weyerhaeuser Co. 586,051 ------------ 1,277,717 ------------ PERSONAL PRODUCTS -- 0.2% 19,413 Avon Products, Inc. 806,999 5,176 Estee Lauder Companies, Inc. (The) Cl A 258,334 ------------ 1,065,333 ------------ PHARMACEUTICALS -- 6.5% 70,154 Abbott Laboratories 4,039,467 13,945 Allergan, Inc. 718,168 4,992 Barr Pharmaceuticals Inc.(1) 325,978 90,071 Bristol-Myers Squibb Co. 1,877,980 45,494 Eli Lilly & Co. 2,003,101 13,876 Forest Laboratories, Inc.(1) 392,413 127,191 Johnson & Johnson 8,811,791 11,202 King Pharmaceuticals, Inc.(1) 107,315 97,503 Merck & Co., Inc. 3,077,195 13,890 Mylan Inc.(1) 158,624 306,870 Pfizer Inc. 5,658,683 73,951 Schering-Plough Corp. 1,365,875 4,770 Watson Pharmaceuticals, Inc.(1) 135,945 60,746 Wyeth 2,243,957 ------------ 30,916,492 ------------ PROFESSIONAL SERVICES -- 0.1% 5,778 Equifax Inc. 199,053 5,619 Monster Worldwide Inc.(1) 83,779 7,067 Robert Half International Inc. 174,908 ------------ 457,740 ------------ REAL ESTATE INVESTMENT TRUSTS (REITS) -- 1.3% 3,920 Apartment Investment & Management Co. Cl A 137,278 3,509 AvalonBay Communities Inc. 345,356 5,476 Boston Properties Inc. 512,882 5,512 Developers Diversified Realty Corp. 174,675 12,295 Equity Residential 546,021 10,321 General Growth Properties, Inc. 155,847 11,500 HCP, Inc. 461,495 23,706 Host Hotels & Resorts Inc. 315,053 10,349 Kimco Realty Corp. 382,292 - ------ 14 Equity Index Shares Value 7,822 Plum Creek Timber Co. Inc. $ 390,005 11,947 ProLogis 493,053 5,677 Public Storage 562,080 10,276 Simon Property Group, Inc. 996,771 6,210 Vornado Realty Trust 564,800 ------------ 6,037,608 ------------ REAL ESTATE MANAGEMENT & DEVELOPMENT(3) 7,786 CB Richard Ellis Group, Inc. Cl A(1) 104,099 ------------ ROAD & RAIL -- 1.1% 12,857 Burlington Northern Santa Fe Corp. 1,188,373 18,577 CSX Corp. 1,013,747 17,142 Norfolk Southern Corp. 1,134,972 2,596 Ryder System, Inc. 160,952 23,176 Union Pacific Corp. 1,649,203 ------------ 5,147,247 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 2.2% 27,588 Advanced Micro Devices, Inc.(1) 144,837 13,669 Altera Corp. 282,675 13,220 Analog Devices, Inc. 348,347 61,105 Applied Materials, Inc. 924,519 20,137 Broadcom Corp. Cl A(1) 375,152 255,938 Intel Corp. 4,793,719 7,919 KLA-Tencor Corp. 250,636 10,023 Linear Technology Corp. 307,305 29,278 LSI Corp.(1) 156,930 10,256 MEMC Electronic Materials Inc.(1) 289,835 8,400 Microchip Technology Inc. 247,212 34,658 Micron Technology, Inc.(1) 140,365 8,849 National Semiconductor Corp. 152,291 4,563 Novellus Systems, Inc.(1) 89,617 25,303 NVIDIA Corp.(1) 270,995 7,674 Teradyne, Inc.(1) 59,934 59,671 Texas Instruments Inc. 1,282,927 12,567 Xilinx, Inc. 294,696 ------------ 10,411,992 ------------ SOFTWARE -- 3.7% 24,116 Adobe Systems Inc.(1) 951,859 10,303 Autodesk, Inc.(1) 345,666 8,710 BMC Software Inc.(1) 249,367 17,897 CA, Inc. 357,224 8,329 Citrix Systems, Inc.(1) 210,391 11,605 Compuware Corp.(1) 112,452 14,548 Electronic Arts Inc.(1) 538,131 14,564 Intuit Inc.(1) 460,368 Shares Value 357,474 Microsoft Corp. $ 9,540,980 15,691 Novell, Inc.(1) 80,652 178,441 Oracle Corp.(1) 3,624,137 4,700 salesforce.com, inc.(1) 227,480 38,202 Symantec Corp.(1) 747,995 ------------ 17,446,702 ------------ SPECIALTY RETAIL -- 1.6% 3,947 Abercrombie & Fitch Co. Cl A 155,709 4,888 AutoNation, Inc.(1) 54,941 1,869 AutoZone, Inc.(1) 230,522 11,838 Bed Bath & Beyond Inc.(1) 371,832 15,374 Best Buy Co., Inc. 576,525 7,500 GameStop Corp. Cl A(1) 256,575 21,358 Gap, Inc. (The) 379,745 77,333 Home Depot, Inc. (The) 2,002,150 12,936 Limited Brands, Inc. 224,052 66,710 Lowe's Companies, Inc. 1,580,360 12,546 Office Depot, Inc.(1) 73,018 5,917 RadioShack Corp. 102,246 4,508 Sherwin-Williams Co. (The) 257,677 32,351 Staples, Inc. 727,898 5,702 Tiffany & Co. 202,535 19,101 TJX Companies, Inc. (The) 582,963 ------------ 7,778,748 ------------ TEXTILES, APPAREL & LUXURY GOODS -- 0.5% 15,364 Coach Inc.(1) 384,715 3,818 Jones Apparel Group, Inc. 70,671 4,252 Liz Claiborne, Inc. 69,860 17,808 NIKE, Inc. Cl B 1,191,356 2,631 Polo Ralph Lauren Corp. 175,330 3,969 VF Corp. 306,843 ------------ 2,198,775 ------------ THRIFTS & MORTGAGE FINANCE -- 0.1% 23,656 Hudson City Bancorp, Inc. 436,454 6,083 MGIC Investment Corp. 42,763 24,754 Sovereign Bancorp Inc. 97,778 ------------ 576,995 ------------ TOBACCO -- 1.6% 93,752 Altria Group Inc. 1,860,040 7,934 Lorillard, Inc. 564,504 93,852 Philip Morris International Inc. 4,514,280 7,767 Reynolds American Inc. 377,632 6,688 UST Inc. 445,020 ------------ 7,761,476 ------------ TRADING COMPANIES & DISTRIBUTORS -- 0.1% 5,900 Fastenal Co. 291,401 2,915 Grainger (W.W.), Inc. 253,518 ------------ 544,919 ------------ - ------ 15 Equity Index Shares Value WIRELESS TELECOMMUNICATION SERVICES -- 0.3% 17,900 American Tower Corp. Cl A(1) $ 643,863 129,952 Sprint Nextel Corp. 792,707 ------------ 1,436,570 ------------ TOTAL COMMON STOCKS (Cost $346,986,024) 463,733,318 ------------ Principal Amount Value Short-Term Investments -- Segregated for Futures Contracts -- 2.7% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $11,396,106), in a joint trading account at 0.03%, dated 9/30/08, due 10/1/08 (Delivery value $11,200,009) $ 11,200,000 $1,500,000 U.S. Treasury Bills, 2.06%, 12/4/08(4) 1,498,014 ------------ TOTAL SHORT-TERM INVESTMENTS -- SEGREGATED FOR FUTURES CONTRACTS (Cost $12,694,506) 12,698,014 ------------ TOTAL INVESTMENT SECURITIES -- 100.2% (Cost $359,680,530) 476,431,332 ------------ OTHER ASSETS AND LIABILITIES -- (0.2)% (799,247) ------------ TOTAL NET ASSETS -- 100.0% $475,632,085 ============ Futures Contracts Expiration Underlying Face Unrealized Gain Contracts Purchased Date Amount at Value (Loss) 229 S&P 500 E-Mini Futures December 2008 $13,366,730 $(324,947) =========== ========== Notes to Schedule of Investments (1) Non-income producing. (2) Security, or a portion thereof, has been segregated on the fund's records, at the custodian bank, or with the broker as initial margin on futures contracts. (3) Industry is less than 0.05% of total net assets. (4) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 16 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2008 (UNAUDITED) ASSETS Investment securities, at value (cost of $359,680,530) $476,431,332 Receivable for investments sold 103,597 Receivable for variation margin on futures contracts 556,458 Dividends and interest receivable 865,185 ------------ 477,956,572 ------------ LIABILITIES Disbursements in excess of demand deposit cash 1,202,514 Payable for investments purchased 938,708 Accrued management fees 183,265 ------------ 2,324,487 ------------ NET ASSETS $475,632,085 ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $423,241,641 Undistributed net investment income 421,351 Accumulated net realized loss on investment transactions (64,456,762) Net unrealized appreciation on investments 116,425,855 ------------ $475,632,085 ============ INVESTOR CLASS, $0.01 PAR VALUE Net assets $185,788,405 Shares outstanding 40,062,019 Net asset value per share $4.64 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $289,843,680 Shares outstanding 62,467,720 Net asset value per share $4.64 See Notes to Financial Statements. - ------ 17 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) INVESTMENT INCOME (LOSS) INCOME: Dividends $ 7,864,610 Interest 195,525 Securities lending, net 71,200 ------------- 8,131,335 ------------- EXPENSES: Management fees 1,296,470 Directors' fees and expenses 11,976 Other expenses 3,712 ------------- 1,312,158 ------------- NET INVESTMENT INCOME (LOSS) 6,819,177 ------------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions 29,304,882 Futures transactions (2,504,795) ------------- 26,800,087 ------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (102,933,867) Futures (433,024) ------------- (103,366,891) ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (76,566,804) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(69,747,627) ============= See Notes to Financial Statements. - ------ 18 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) AND YEAR ENDED MARCH 31, 2008 Increase (Decrease) in Net Assets Sept. 30, 2008 March 31, 2008 OPERATIONS Net investment income (loss) $ 6,819,177 $ 16,738,450 Net realized gain (loss) 26,800,087 19,760,873 Change in net unrealized appreciation (depreciation) (103,366,891) (77,223,575) ------------- ------------- Net increase (decrease) in net assets resulting from operations (69,747,627) (40,724,252) ------------- ------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (1,717,137) (3,698,248) Institutional Class (4,680,689) (13,706,733) From tax return of capital: Investor Class -- (222,628) Institutional Class -- (718,537) ------------- ------------- Decrease in net assets from distributions (6,397,826) (18,346,146) ------------- ------------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (255,707,268) (179,896,379) ------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS (331,852,721) (238,966,777) NET ASSETS Beginning of period 807,484,806 1,046,451,583 ------------- ------------- End of period $ 475,632,085 $ 807,484,806 ============= ============= Undistributed net investment income $421,351 -- ============= ============= See Notes to Financial Statements. - ------ 19 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2008 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Equity Index Fund (the fund) is one fund in a series issued by the corporation. The fund is nondiversified under the 1940 Act. The fund's investment objective is to seek long-term capital growth. The fund pursues its objective by matching, as closely as possible, the investment characteristics and results of the S&P 500 Composite Price Index (S&P 500 Index). The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, 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. SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. The income earned, net of any rebates or fees, is included in the Statement of Operations. The fund continues to recognize any gain or loss in the market price of the securities loaned and records any interest earned or dividends declared. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. - ------ 20 FUTURES CONTRACTS -- The fund may enter into futures contracts in order to manage the fund's exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on futures transactions and unrealized appreciation (depreciation) on futures, 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. Each repurchase agreement is recorded at cost. 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 other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund has adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" during the current fiscal year. The fund is no longer subject to examination by tax authorities for years prior to 2005. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. - ------ 21 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century Investments family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for the fund ranges from 0.430% to 0.490% for the Investor Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class of the fund for the six months ended September 30, 2008 was 0.49% and 0.29% for the Investor Class and Institutional Class, respectively. ACIM has entered into a Subadvisory Agreement with Northern Trust Investments, N.A. (NTI) (the subadvisor) on behalf of the fund. The subadvisor makes investment decisions for the fund in accordance with the fund's investment objectives, policies and restrictions under the supervision of ACIM and the Board of Directors. ACIM pays all costs associated with retaining NTI as the subadvisor of the fund. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2008, were $17,225,925 and $278,002,902, respectively. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the fund were as follows: Six months ended September 30, 2008 Year ended March 31, 2008 Shares Amount Shares Amount INVESTOR CLASS/SHARES AUTHORIZED 150,000,000 150,000,000 ============ ============ Sold 4,507,696 $ 23,271,214 7,464,834 $ 43,252,429 Issued in reinvestment of distributions 332,260 1,677,711 636,655 3,658,806 Redeemed (4,226,980) (21,618,738) (9,782,140) (56,794,873) ------------ -------------- ------------ -------------- 612,976 3,330,187 (1,680,651) (9,883,638) ------------ -------------- ------------ -------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 500,000,000 500,000,000 ============ ============ Sold 6,951,026 36,713,317 29,366,320 173,102,007 Issued in reinvestment of distributions 919,434 4,680,689 2,498,910 14,425,270 Redeemed (59,356,653) (300,431,461) (61,520,613) (357,540,018) ------------ -------------- ------------ -------------- (51,486,193) (259,037,455) (29,655,383) (170,012,741) ------------ -------------- ------------ -------------- Net increase (decrease) (50,873,217) $(255,707,268) (31,336,034) $(179,896,379) ============ ============== ============ ============== - ------ 22 5. SECURITIES LENDING As of September 30, 2008, the fund did not have any securities on loan. JPMCB receives and maintains collateral in the form of cash and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The fund's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the fund may be delayed or limited. 6. FAIR VALUE MEASUREMENTS The fund's securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as the 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 an indication of the risks associated with investing in these securities or other financial instruments. The following is a summary of the valuation inputs used to determine the fair value of the fund's securities and other financial instruments as of September 30, 2008: Value of Investment Unrealized Gain (Loss) on Valuation Inputs Securities Other Financial Instruments* Level 1 -- Quoted Prices $463,733,318 $(324,947) Level 2 -- Other Significant Observable Inputs 12,698,014 -- Level 3 -- Significant Unobservable Inputs -- -- ------------ ---------- $476,431,332 $(324,947) ============ ========== * Includes futures contracts. 7. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500,000,000 unsecured bank line of credit agreement with Bank of America, N.A. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement, which is subject to annual renewal, bear interest at the Federal Funds rate plus 0.40%. The fund did not borrow from the line during the six months ended September 30, 2008. - ------ 23 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of September 30, 2008, the components of investments for federal income tax purposes were as follows: Federal tax cost of investments $384,956,406 ============ Gross tax appreciation of investments $152,588,064 Gross tax depreciation of investments (61,113,138) ------------ Net tax appreciation (depreciation) of investments $ 91,474,926 ============ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and return of capital dividends. As of March 31, 2008, the fund had accumulated capital losses of $(64,151,807), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: 2011 2012 2013 2014 2015 $(46,771,036) $(1,957,751) $(1,992,016) $(5,270,954) $(8,160,050) 9. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 does not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for fiscal years beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 24 FINANCIAL HIGHLIGHTS Equity Index Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.26 $5.66 $5.16 $4.70 $4.50 $3.39 ------ ------ ------ ------ ------ ------ Income From Investment Operations Net Investment Income (Loss)(2) 0.04 0.09 0.08 0.07 0.07 0.05 Net Realized and Unrealized Gain (Loss) (0.62) (0.39) 0.50 0.46 0.20 1.11 ------ ------ ------ ------ ------ ------ Total From Investment Operations (0.58) (0.30) 0.58 0.53 0.27 1.16 ------ ------ ------ ------ ------ ------ Distributions From Net Investment Income (0.04) (0.10) (0.08) (0.07) (0.07) (0.05) From Tax Return of Capital -- --(3) -- -- -- -- ------ ------ ------ ------ ------ ------ Total From Distributions (0.04) (0.10) (0.08) (0.07) (0.07) (0.05) ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period $4.64 $5.26 $5.66 $5.16 $4.70 $4.50 ====== ====== ====== ====== ====== ====== TOTAL RETURN(4) (11.03)% (5.46)% 11.28% 11.36% 6.04% 34.27% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.49%(5) 0.49% 0.49% 0.49% 0.49% 0.49% Ratio of Net Investment Income (Loss) to Average Net Assets 1.67%(5) 1.51% 1.49% 1.43% 1.59% 1.23% Portfolio Turnover Rate 2% 9% 4% 17% 4% 16% Net Assets, End of Period (in thousands) $185,788 $207,571 $232,880 $152,799 $150,454 $142,324 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 25 Equity Index Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $5.26 $5.67 $5.16 $4.71 $4.50 $3.39 ------ ------ ------ ------ ------ ------ Income From Investment Operations Net Investment Income (Loss)(2) 0.05 0.10 0.09 0.08 0.08 0.06 Net Realized and Unrealized Gain (Loss) (0.62) (0.40) 0.51 0.45 0.21 1.11 ------ ------ ------ ------ ------ ------ Total From Investment Operations (0.57) (0.30) 0.60 0.53 0.29 1.17 ------ ------ ------ ------ ------ ------ Distributions From Net Investment Income (0.05) (0.11) (0.09) (0.08) (0.08) (0.06) From Tax Return of Capital -- --(3) -- -- -- -- ------ ------ ------ ------ ------ ------ Total From Distributions (0.05) (0.11) (0.09) (0.08) (0.08) (0.06) ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period $4.64 $5.26 $5.67 $5.16 $4.71 $4.50 ====== ====== ====== ====== ====== ====== TOTAL RETURN(4) (10.95)% (5.27)% 11.50% 11.35% 6.47% 34.53% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.29%(5) 0.29% 0.29% 0.29% 0.29% 0.29% Ratio of Net Investment Income (Loss) to Average Net Assets 1.87%(5) 1.71% 1.69% 1.63% 1.79% 1.43% Portfolio Turnover Rate 2% 9% 4% 17% 4% 16% Net Assets, End of Period (in thousands) $289,844 $599,914 $813,571 $662,759 $907,886 $842,269 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 26 APPROVAL OF MANAGEMENT AGREEMENT Equity Index Under Section 15(c) of the Investment Company Act, contracts for investment advisory services (including subadvisory services) are required to be reviewed, evaluated and approved by a majority of a fund's independent directors or trustees (the "Directors") each year. At American Century Investments, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor and the subadvisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning Equity Index (the "Fund") and the services provided to the Fund under the management and subadvisory agreements. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the Fund; * reports on the wide range of programs and services the advisor provides to the Fund and its shareholders on a routine and non-routine basis; * information about the compliance policies, procedures, and regulatory experience of both the advisor and the subadvisor; * data comparing the cost of owning the Fund to the cost of owning a similar fund; * data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the Fund to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the Fund's board of directors held two in-person meetings and one telephonic meeting to review and discuss the information provided. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 27 FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. In connection with their review of the Fund, 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 and subadvisory agreements under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. 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: * Fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of Fund assets * daily valuation of the Fund's portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of the services provided by the advisor have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. The directors specifically noted that with respect to the Fund, the advisor had retained the subadvisor to provide the day-to-day security selection. Under the subadvisory agreement, the subadvisor is responsible for managing the investment operations and composition of the Fund, including the purchase, retention, and disposition of the investments contained in the Fund. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. - ------ 28 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, and liquidity. In evaluating investment performance, the board expects the advisor and subadvisor to manage the Fund in accordance with its investment objectives and approved strategies. In providing these services, the advisor and subadvisor utilize 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. At each quarterly meeting the Directors review investment performance information for the Fund, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the Fund. The Directors also review detailed performance information during the 15(c) Process comparing the Fund's performance with that of similar funds not managed by the advisor. If performance concerns are identified, the Directors discuss 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 quarter end performance fell below the index by less than its total expense ratio for both the one- and three-year periods during the past year. SHAREHOLDER AND OTHER SERVICES. The advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. 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 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. COSTS OF SERVICES PROVIDED AND PROFITABILITY. The advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate 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. The board did not consider the profitability of the subadvisor because the subadvisor is paid from the unified fee of the advisor as a result of arm's length negotiations. ETHICS. The Directors generally consider 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. With respect to the subadvisor, as part of its oversight responsibilities, the board approves the subadvisor's code of ethics and any changes thereto. Further, through the advisor's compliance group, the board stays abreast of any violations of the subadvisor's code. - ------ 29 ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the Fund specifically, the expenses incurred by the advisor in providing various functions to the Fund, and the fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the Fund increases in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. 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). The Directors specifically noted that the subadvisory fees paid to the subadvisor under the subadvisory agreement were subject to arm's length negotiation between the advisor and the subadvisor and are paid by the advisor out of its unified fee. 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 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 Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the Fund's unified fee to the total expense ratio of other funds in the Fund's peer group. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of its peer group. The board concluded that the management fee paid by the Fund to the advisor was reasonable in light of the services provided to the Fund. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, 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 Directors analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison. - ------ 30 COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives 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 the Fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors 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 Directors 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 Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the Fund to determine breakpoints in the Fund's fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the board, including all of the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor concluded that the investment management agreement between the Fund and the advisor is fair and reasonable in light of the services provided and should be renewed. Additionally, the board, including all the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the subadvisory agreement between the advisor and the subadvisor, on behalf of the fund, is fair and reasonable in light of the services provided and should be renewed. - ------ 31 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] 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. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is 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. - ------ 32 INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 1000® GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 1000® VALUE INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 2000® INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 2000® VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP® GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL MIDCAP® VALUE INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 33 NOTES - ------ 34 NOTES - ------ 35 NOTES - ------ 36 [back cover] [american century investments logo and text logo ®] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE. . . . . . . . . . . . . . . . . 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE. . . . . . . . . . . . . . 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS . .. . . . . . . . . . . . . . . . . . . . . . . . . . 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES. . . . . . . . 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF. . . . . . . . . . . 1-800-634-4113 AMERICAN CENTURY CAPITAL PORTFOLIOS, 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. American Century Investment Services, Inc., Distributor ©2008 American Century Proprietary Holdings, Inc. All rights reserved. 0811 CL-SAN-61620N
[front cover] SEMIANNUAL REPORT SEPTEMBER 30, 2008 [american century investments logo and text logo ®] AMERICAN CENTURY INVESTMENTS REAL ESTATE FUND PROSPECTUS SUPPLEMENT ENCLOSED PRESIDENT'S LETTER JONATHAN THOMAS [photo of Jonathan Thomas] Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended September 30, 2008. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s/Jonathan Thomas Jonathan S. Thomas President and Chief Executive Officer American Century Investments TABLE OF CONTENTS Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Stock Index Returns . . . . . . . . . . . . . . . . . . . . . . 2 REAL ESTATE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Industry Allocation. . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 6 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . 7 FINANCIAL STATEMENTS Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 9 Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 10 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 12 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 13 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 14 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 20 OTHER INFORMATION Approval of Management Agreement for Real Estate. . . . . . . . . . . 26 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 31 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The opinions expressed in the Market Perspective and the Portfolio Commentary reflect those of the portfolio management team 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. MARKET PERSPECTIVE [photo of Chief Investment Officer] By Enrique Chang, Chief Investment Officer, American Century Investments AN OLD-FASHIONED FINANCIAL CRISIS The six months ended September 30, 2008, represented a tumultuous period for the U.S. equity market. Continued deterioration in the credit environment and a deepening liquidity crisis--ignited by last year's mortgage-market meltdown--led to an increasingly urgent need for capital at many major financial companies. By September, the crisis reached a tipping point as a number of major financial institutions filed for bankruptcy, sold out to competitors to avoid insolvency, or were taken over by the federal government. The financial crisis had a detrimental impact on an already weak U.S. economy. Steady job losses pushed the unemployment rate up to a five-year high, consumer spending began to decline, and mortgage foreclosures and delinquencies rose markedly. In addition, as the crisis spread around the world, the likelihood of diminishing global economic activity increased. On the positive side, the slowing economic environment brought the prices of energy and other commodities down sharply from record highs reached during the summer. The troubling financial and economic news led to an unprecedented level of stock market turbulence. Day-to-day volatility increased dramatically as investor confidence faltered, producing a market storm that has not been seen since the 1930s. As the accompanying table shows, stocks were mostly down across the board for the six-month period, though small-cap shares held up considerably better than their mid- and large-cap peers. INTERVENTION AND RESILIENCY As business and economic conditions worsened, intervention increased. The U.S. government and the Federal Reserve have provided extraordinary levels of fiscal and monetary assistance, and other central banks and governments are likely to contribute additional stimulus in the months ahead. Furthermore, downturns play the sometimes necessary role of correcting past market misbehavior and eliminating excesses and inefficiencies. The current downturn was years in the making, so it may take some time before we are firmly on the road to recovery. However, we remain confident in the stock market's long-term resiliency. U.S. Stock Index Returns For the six months ended September 30, 2008* RUSSELL 1000 INDEX (LARGE-CAP) -11.06% Russell 1000 Value Index -11.10% Russell 1000 Growth Index -11.23% RUSSELL MIDCAP INDEX -10.58% Russell Midcap Value Index -7.46% Russell Midcap Growth Index -13.93% RUSSELL 2000 INDEX (SMALL-CAP) -0.54% Russell 2000 Value Index 1.24% Russell 2000 Growth Index -2.83% * Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE Real Estate Total Returns as of September 30, 2008 Average Annual Returns 6 10 Since Inception months(1) 1 year 5 years years Inception Date INVESTOR CLASS -1.39% -12.37% 13.44% 13.23% 13.60% 9/21/95(2) MSCI US REIT INDEX -0.35% -11.63% 13.19% 12.38% 12.44%(3) -- Institutional Class -1.29% -12.18% 13.66% 13.47% 11.54% 6/16/97 A Class(4) No sales charge* -1.47% -12.57% 13.18% -- 13.77% With sales charge* -7.13% -17.60% 11.85% -- 13.09% 10/6/98 B Class No sales charge* -1.85% -13.21% -- -- -13.11% With sales charge* -6.85% -17.21% -- -- -17.08% 9/28/07 C Class No sales charge* -1.85% -13.21% -- -- -13.11% With sales charge* -2.83% -13.21% -- -- -13.11% 9/28/07 R Class -1.59% -12.78% -- -- -12.69% 9/28/07 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) The inception date for RREEF Real Estate Securities Fund, Real Estate's predecessor. That fund merged with Real Estate on 6/13/97 and Real Estate was first offered to the public on 6/16/97. (3) Since 9/30/95, the date nearest the Investor Class's inception for which data are available. (4) Prior to September 4, 2007, the A Class was referred to as the Advisor Class. Performance, with sales charge, prior to that date has been adjusted to reflect the A Class's current sales charge. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund may be subject to certain risks similar to those associated with direct investment in real estate including but not limited to: local or regional economic conditions, changes in zoning laws, changes in property values, property tax increases, overbuilding, increased competition, environmental contamination, natural disasters and interest rate risk. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 3 Real Estate Growth of $10,000 Over 10 Years $10,000 investment made September 30, 1998
One-Year Returns Over 10 Years Periods ended September 30 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Investor Class -2.94% 21.61% 10.96% 9.78% 28.35% 25.40% 25.88% 28.40% 5.84% -12.37% MSCI US REIT Index -5.88% 21.25% 11.62% 8.56% 25.11% 24.85% 27.10% 26.56% 4.67% -11.63% Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund may be subject to certain risks similar to those associated with direct investment in real estate including but not limited to: local or regional economic conditions, changes in zoning laws, changes in property values, property tax increases, overbuilding, increased competition, environmental contamination, natural disasters and interest rate risk. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 4 PORTFOLIO COMMENTARY Real Estate Portfolio Manager: Kay Herr PERFORMANCE SUMMARY Real Estate returned -1.39%* for the six months ended September 30, 2008. By comparison, its benchmark--the MSCI US REIT Index--returned -0.35%. Both the fund and its benchmark significantly outperformed the -10.87% return of the S&P 500 Index**, a broad stock market measure. (See the previous page for additional performance details.) The portfolio's performance during the reporting period--as well as that of its benchmark-- masked a high level of volatility in the real estate investment trust (REIT) market, which was driven by the series of arguably unprecedented events that beset the financial market. The period was marked by brokers continuing to report write-downs. In June, Lehman Brothers wrote down its stake in the 2007 privatization of Archstone-Smith, an apartment REIT. Post Properties, a long-rumored takeover candidate, announced that they had concluded their review of a privatization or sale without any offers in June, in retrospect arguably marking the end of the privatization wave. The period ended on the heels of the failure of Lehman Brothers, the government rescue of AIG, and debate over the Troubled Asset Relief Program (TARP). REITs spent most of the latter part of the period trading largely in sync with financials. RESIDENTIAL AND RETAIL SECTORS HURT The portfolio underperformed its benchmark during the period, hampered by stock selection in the residential and retail sectors. The largest stock-specific detractors were overweight positions in ProLogis and Colonial Properties Trust. Shares of ProLogis, the world's largest owner and developer of warehouse and distribution centers, suffered over the period as the potential impact of a global slowdown on its overseas operations and a slowdown in U.S. industrial sector fundamentals resulted in a downward revision of the company's 2008 and 2009 earnings guidance. While the company combats market uncertainty in the U.S., its global footprint and access to capital both for its core operations and funds give us confidence in its ability to outperform. Colonial Properties has underperformed its apartment peers significantly due to concerns about its ability to sustain its dividend while trying to deleverage its balance sheet in this challenging economic environment. We maintained an overweight in the position due to its attractive valuation and dividend yield even after a potential reduction, as well as its exposure to markets like Texas and Colorado that are still generating job growth. Top Ten Holdings as of September 30, 2008 % of net assets as of % of net assets as 9/30/08 of 3/31/08 Simon Property Group, Inc. 10.3% 9.3% ProLogis 6.7% 6.0% Kimco Realty Corp. 5.6% 6.2% Vornado Realty Trust 4.7% 1.9% AvalonBay Communities Inc. 4.1% 1.1% Boston Properties Inc. 3.9% 3.0% Apartment Investment and Management Co. Cl A 3.9% 5.4% Digital Realty Trust Inc. 3.8% 3.6% Ventas, Inc. 3.6% 3.1% Liberty Property Trust 3.6% 4.0% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The S&P 500 Index returned -21.98%, 5.17% and 3.06% for the one-, five- and ten-year periods ended September 30, 2008, respectively. - ------ 5 Real Estate OFFICE/INDUSTRIAL REITS HELPED On the upside, the portfolio benefited overall from stock selection in the office/industrial and "other" sectors. The biggest stock-specific contributors were overweight positions in Digital Realty Trust and Liberty Property Trust. Digital Realty owns and develops technology-related properties, primarily data centers, in markets across the U.S. and overseas. The company reported strong first-quarter earnings amid continued confidence in both demand prospects and leasing activity for data-center space despite challenging economic conditions. Specialty REITs like Digital Realty have outperformed the broader office universe due to the belief that prospects for their niche exceed those of the overall sector. Liberty Property, the owner of a suburban industrial and office portfolio, rallied due to its attractive valuation and a recent joint venture on a major development that addressed financing concerns. Moreover, investors have shown interest in companies with lower exposure to markets with lower employment concentration in financial services. OUTLOOK The level of transactional volume in the direct real estate market remains subdued, resulting in uncertainty over current valuations in the private market. Commercial real estate cash flows remain relatively resilient, but this should not be interpreted as a sign of economic strength as real estate has always been a lagging indicator. We don't expect REITs to make a sustained rally until the financial-market crisis is resolved and the scale of direct real estate repricing is determined. With the credit liquidity crisis continuing to weigh on both the U.S. economy and REIT market, we expect continued volatility over the next couple of quarters. J.P. MORGAN INVESTMENT MANAGEMENT, INC. HAS BEEN SERVING AS SUBADVISOR FOR AMERICAN CENTURY REAL ESTATE FUND, BUT EFFECTIVE NOVEMBER 17, 2008, AMERICAN CENTURY INVESTMENTS WILL BRING THE MANAGEMENT OF THIS PORTFOLIO IN-HOUSE, UNDER THE LEADERSHIP OF A NEW PORTFOLIO MANAGER. STEVEN R. BROWN JOINS OUR FIRM NOVEMBER 10 AS VICE PRESIDENT AND SENIOR PORTFOLIO MANAGER. MR. BROWN HAS 21 YEARS OF INDUSTRY EXPERIENCE, ALL FOCUSED ON THE REAL ESTATE SECTOR. HE MOST RECENTLY SERVED AS GLOBAL HEAD OF REAL ESTATE SECURITIES AT NEUBERGER BERMAN, LLC, IN NEW YORK. Industry Allocation % of net assets as of % of net assets as of 9/30/08 3/31/08 Retail REITs 30.0% 30.5% Office REITs 17.9% 17.8% Specialized REITs 15.7% 17.5% Residential REITs 13.5% 12.3% Diversified REITs 10.2% 8.7% Industrial REITs 9.9% 8.8% Wireless Telecommunication Services 0.8% -- Homebuilding -- 0.5% Cash and Equivalents(1) 2.0% 3.9% (1) Includes temporary cash investments, securities lending collateral and other assets and liabilities. Types of Investments in Portfolio % of net assets as of % of net assets as of 9/30/08 3/31/08 Common Stocks 98.0% 96.1% Temporary Cash Investments 1.6% 3.4% Other Assets and Liabilities(2) 0.4% 0.5% (2) Includes securities lending collateral and other assets and liabilities. - ------ 6 SHAREHOLDER FEE EXAMPLE (UNAUDITED) 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 April 1, 2008 to September 30, 2008. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Investments Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 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 Expenses Paid Beginning Ending During Period* Account Account Value 4/1/08 - Annualized Value 4/1/08 9/30/08 9/30/08 Expense Ratio* ACTUAL Investor Class $1,000 $986.10 $5.68 1.14% Institutional Class $1,000 $987.10 $4.68 0.94% A Class $1,000 $985.30 $6.92 1.39% B Class $1,000 $981.50 $10.63 2.14% C Class $1,000 $981.50 $10.63 2.14% R Class $1,000 $984.10 $8.16 1.64% HYPOTHETICAL Investor Class $1,000 $1,019.35 $5.77 1.14% Institutional Class $1,000 $1,020.36 $4.76 0.94% A Class $1,000 $1,018.10 $7.03 1.39% B Class $1,000 $1,014.34 $10.81 2.14% C Class $1,000 $1,014.34 $10.81 2.14% R Class $1,000 $1,016.85 $8.29 1.64% * 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 183, 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 Real Estate SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 98.0% DIVERSIFIED REITS -- 10.2% 1,410,010 Colonial Properties Trust $ 26,353,089 1,322,934 Liberty Property Trust 49,808,465 709,280 Vornado Realty Trust 64,509,016 -------------- 140,670,570 -------------- INDUSTRIAL REITS -- 9.9% 668,300 AMB Property Corp. 30,273,990 1,877,100 DCT Industrial Trust Inc. 14,059,479 2,222,600 ProLogis 91,726,702 -------------- 136,060,171 -------------- OFFICE REITS -- 17.9% 439,100 Alexandria Real Estate Equities, Inc. 49,653,428 578,840 Boston Properties Inc. 54,214,154 525,900 Brandywine Realty Trust 8,430,177 1,094,550 Digital Realty Trust Inc. 51,717,488 1,860,712 Duke Realty Corporation 45,736,301 452,900 Kilroy Realty Corp. 21,644,091 401,010 Mack-Cali Realty Corp. 13,582,209 108,700 Maguire Properties, Inc. 647,852 -------------- 245,625,700 -------------- RESIDENTIAL REITS -- 13.5% 1,537,059 Apartment Investment and Management Co. Cl A 53,827,806 574,000 AvalonBay Communities Inc. 56,493,080 740,900 Camden Property Trust 33,977,674 206,600 Equity Residential 9,175,106 218,100 Essex Property Trust, Inc. 25,807,773 46,100 Mid-America Apartment Communities Inc. 2,265,354 144,100 UDR, Inc. 3,768,215 -------------- 185,315,008 -------------- RETAIL REITS -- 30.0% 305,300 CBL & Associates Properties, Inc. 6,130,424 1,405,900 Developers Diversified Realty Corp. 44,552,971 1,158,490 General Growth Properties, Inc. 17,493,199 2,072,899 Kimco Realty Corp. 76,572,889 668,744 Macerich Co. (The) 42,565,556 1,983,529 National Retail Properties, Inc. 47,505,520 461,700 Realty Income Corp. 11,819,520 1,461,966 Simon Property Group, Inc. 141,810,701 112,800 Taubman Centers Inc. 5,640,000 535,582 Weingarten Realty Investors 19,104,210 -------------- 413,194,990 -------------- Shares Value SPECIALIZED REITS -- 15.7% 394,800 Extra Space Storage Inc. $ 6,064,128 735,100 HCP, Inc. 29,499,563 627,690 Hospitality Properties Trust 12,880,199 2,754,925 Host Hotels & Resorts Inc. 36,612,953 440,989 Public Storage, Inc. 43,662,321 1,405,500 Senior Housing Properties Trust 33,493,065 75,050 Sovran Self Storage, Inc. 3,371,997 1,011,700 Ventas, Inc. 49,998,213 -------------- 215,582,439 -------------- WIRELESS TELECOMMUNICATION SERVICES -- 0.8% 379,500 Crown Castle International Corp.(1) 10,994,115 -------------- TOTAL COMMON STOCKS (Cost $1,330,401,222) 1,347,442,993 -------------- Temporary Cash Investments -- 1.6% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 7.125%, 2/15/23, valued at $22,122,465), in a joint trading account at 0.40%, dated 9/30/08, due 10/1/08 (Delivery value $21,700,241) (Cost $21,700,000) 21,700,000 -------------- TOTAL INVESTMENT SECURITIES -- 99.6% (Cost $1,352,101,222) 1,369,142,993 -------------- OTHER ASSETS AND LIABILITIES -- 0.4% 5,652,470 -------------- TOTAL NET ASSETS -- 100.0% $1,374,795,463 ============== Notes to Schedule of Investments REIT = Real Estate Investment Trust (1) Non-income producing. See Notes to Financial Statements. - ------ 9 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2008 (UNAUDITED) ASSETS Investment securities, at value (cost of $1,352,101,222) $1,369,142,993 Foreign currency holdings, at value (cost of $6,138) 6,142 Receivable for investments sold 19,937,871 Receivable for capital shares sold 15,320 Dividends and interest receivable 4,492,179 -------------- 1,393,594,505 -------------- LIABILITIES Disbursements in excess of demand deposit cash 5,252,884 Payable for investments purchased 12,151,865 Payable for capital shares redeemed 71,743 Accrued management fees 1,271,052 Distribution fees payable 258 Service fees (and distribution fees -- A Class and R Class) payable 51,240 -------------- 18,799,042 -------------- NET ASSETS $1,374,795,463 ============== See Notes to Financial Statements. - ------ 10 SEPTEMBER 30, 2008 (UNAUDITED) NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $1,528,290,168 Undistributed net investment income 4,690,378 Accumulated net realized loss on investment and foreign currency transactions (175,226,858) Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 17,041,775 -------------- $1,374,795,463 ============== INVESTOR CLASS, $0.01 PAR VALUE Net assets $905,537,559 Shares outstanding 42,655,747 Net asset value per share $21.23 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $223,893,843 Shares outstanding 10,532,843 Net asset value per share $21.26 A CLASS, $0.01 PAR VALUE Net assets $244,763,762 Shares outstanding 11,514,548 Net asset value per share $21.26 Maximum offering price (net asset value divided by 0.9425) $22.56 B CLASS, $0.01 PAR VALUE Net assets $55,471 Shares outstanding 2,622 Net asset value per share $21.16 C CLASS, $0.01 PAR VALUE Net assets $405,047 Shares outstanding 19,143 Net asset value per share $21.16 R CLASS, $0.01 PAR VALUE Net assets $139,781 Shares outstanding 6,591 Net asset value per share $21.21 See Notes to Financial Statements. - ------ 11 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) INVESTMENT INCOME (LOSS) INCOME: Dividends $ 21,157,718 Interest 370,127 Securities lending, net 128,652 ------------- 21,656,497 ------------- EXPENSES: Management fees 7,682,949 Distribution fees: B Class 141 C Class 1,159 Service fees: B Class 47 C Class 386 Distribution and service fees: A Class 319,877 R Class 160 Directors' fees and expenses 24,663 Other expenses 3,725 ------------- 8,033,107 ------------- NET INVESTMENT INCOME (LOSS) 13,623,390 ------------- REALIZED AND UNREALIZED GAIN (LOSS) Net realized gain (loss) on investment and foreign currency transactions (34,652,885) Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (2,242,493) ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (36,895,378) ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(23,271,988) ============= See Notes to Financial Statements. - ------ 12 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) AND YEAR ENDED MARCH 31, 2008 September 30, Increase (Decrease) in Net Assets 2008 March 31, 2008 OPERATIONS Net investment income (loss) $ 13,623,390 $ 26,690,825 Net realized gain (loss) (34,652,885) (130,456,267) Change in net unrealized appreciation (depreciation) (2,242,493) (236,332,792) -------------- --------------- Net increase (decrease) in net assets resulting from operations (23,271,988) (340,098,234) -------------- --------------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (5,987,114) (21,143,716) Institutional Class (1,771,238) (5,215,050) A Class (1,170,781) (6,187,601) B Class (157) (162) C Class (1,145) (186) R Class (506) (171) From net realized gains: Investor Class - (138,287,089) Institutional Class - (31,745,958) A Class - (47,058,947) B Class - (4,266) C Class - (4,409) R Class - (3,591) -------------- --------------- Decrease in net assets from distributions (8,930,941) (249,651,146) -------------- --------------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 88,465,271 (549,465,923) -------------- --------------- NET INCREASE (DECREASE) IN NET ASSETS 56,262,342 (1,139,215,303) NET ASSETS Beginning of period 1,318,533,121 2,457,748,424 -------------- --------------- End of period $1,374,795,463 $ 1,318,533,121 ============== =============== Accumulated undistributed net investment income (loss) $4,690,378 $(2,071) ============== =============== See Notes to Financial Statements. - ------ 13 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2008 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Real Estate Fund (the fund) is one fund in a series issued by the corporation. The fund is nondiversified under the 1940 Act. The fund's investment objective is to seek high total investment return through a combination of capital appreciation and current income. The fund pursues its objective by investing primarily in securities issued by real estate investment trusts and in the securities of companies which are principally engaged in the real estate industry. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the Institutional Class, the A Class (formerly Advisor Class), the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. Sale of the B Class, C Class and R Class commenced on September 28, 2007. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. The income earned, net of any rebates or fees, is included in the Statement of Operations. The fund continues to recognize any gain or loss in the market price of the securities loaned and records any interest earned or dividends declared. - ------ 14 FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. 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 other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund has adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" during the current fiscal year. The fund is no longer subject to examination by tax authorities for years prior to 2005. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. - ------ 15 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment advisor that are not in the American Century Investments family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for the fund ranges from 1.05% to 1.20% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class of the fund for the six months ended September 30, 2008 was 1.14%, 0.94%, 1.14%, 1.14%, 1.14% and 1.14% for the Investor Class, Institutional Class, A Class, B Class, C Class and R Class, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and the C Class will each pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. 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 plan during the six months ended September 30, 2008, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. ACIM has entered into a Subadvisory Agreement with J.P. Morgan Investment Management, Inc. (JPMIM) on behalf of the fund. The subadvisor makes investment decisions for the fund in accordance with the fund's investment objectives, policies, and restrictions under the supervision of ACIM and the Board of Directors. ACIM pays all costs associated with retaining JPMIM as the subadvisor of the fund. JPMIM is a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. The fund has a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2008, were $534,579,417 and $400,246,795, respectively. - ------ 16 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the fund were as follows: Six months ended September 30, 2008 Year ended March 31, 2008(1) Shares Amount Shares Amount INVESTOR CLASS/SHARES AUTHORIZED 125,000,000 125,000,000 =========== ============ Sold 9,267,205 $ 203,764,755 14,161,256 $ 359,902,447 Issued in reinvestment of distributions 253,692 5,437,797 6,214,862 140,796,874 Redeemed (6,736,450) (146,343,133) (31,199,553) (852,159,766) ----------- ------------- ------------ -------------- 2,784,447 62,859,419 (10,823,435) (351,460,445) ----------- ------------- ------------ -------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 50,000,000 50,000,000 =========== ============ Sold 2,058,624 44,934,594 2,096,335 52,082,339 Issued in reinvestment of distributions 75,644 1,625,613 1,510,649 34,353,181 Redeemed (859,706) (18,445,594) (6,418,105) (176,831,718) ----------- ------------- ------------ -------------- 1,274,562 28,114,613 (2,811,121) (90,396,198) ----------- ------------- ------------ -------------- A CLASS/SHARES AUTHORIZED 50,000,000 50,000,000 =========== ============ Sold 2,305,747 50,547,241 3,823,982 101,152,569 Issued in reinvestment of distributions 53,469 1,144,220 2,298,933 52,033,616 Redeemed (2,530,761) (54,703,402) (9,982,652) (260,936,432) ----------- ------------- ------------ -------------- (171,545) (3,011,941) (3,859,737) (107,750,247) ----------- ------------- ------------ -------------- B CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 =========== ============ Sold 1,215 25,529 1,314 35,689 Issued in reinvestment of distributions 7 157 199 4,428 Redeemed (113) (2,597) -- -- ----------- ------------- ------------ -------------- 1,109 23,089 1,513 40,117 ----------- ------------- ------------ -------------- C CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 =========== ============ Sold 17,475 391,820 2,673 64,147 Issued in reinvestment of distributions 41 883 207 4,595 Redeemed (1,253) (27,139) -- -- ----------- ------------- ------------ -------------- 16,263 365,564 2,880 68,742 ----------- ------------- ------------ -------------- R CLASS/SHARES AUTHORIZED 20,000,000 20,000,000 =========== ============ Sold 5,394 114,209 1,030 28,645 Issued in reinvestment of distributions 21 456 169 3,762 Redeemed (7) (138) (16) (299) ----------- ------------- ------------ -------------- 5,408 114,527 1,183 32,108 ----------- ------------- ------------ -------------- Net increase (decrease) 3,910,244 $ 88,465,271 (17,488,717) $(549,465,923) =========== ============= ============ ============== (1) September 28, 2007 (commencement of sale) through March 31, 2008 for the B Class, C Class and R Class. 5. SECURITIES LENDING As of September 30, 2008, the fund did not have any securities on loan. JPMCB receives and maintains collateral in the form of cash and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The fund's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the fund may be delayed or limited. - ------ 17 6. FAIR VALUE MEASUREMENTS The fund's securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as the 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 an indication of the risks associated with investing in these securities or other financial instruments. The following is a summary of the valuation inputs used to determine the fair value of the fund's securities as of September 30, 2008: Valuation Inputs Value of Investment Securities Level 1 -- Quoted Prices $1,347,442,993 Level 2 -- Other Significant Observable Inputs 21,700,000 Level 3 -- Significant Unobservable Inputs -- -------------- $1,369,142,993 ============== 7. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM or ACGIM, has a $500,000,000 unsecured bank line of credit agreement with Bank of America, N.A. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement, which is subject to annual renewal, bear interest at the Federal Funds rate plus 0.40%. The fund did not borrow from the line during the six months ended September 30, 2008. 8. RISK FACTORS The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund is subject to certain additional risks as compared to investing in a more diversified portfolio of investments. The fund may be subject to certain risks similar to those associated with direct investment in real estate including but not limited to: local or regional economic conditions, changes in zoning laws, changes in property values, property tax increases, overbuilding, increased competition, environmental contamination, natural disasters, and interest rate risk. - ------ 18 9. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of September 30, 2008, the components of investments for federal income tax purposes were as follows: Federal tax cost of investments $1,413,702,099 ============== Gross tax appreciation of investments $ 100,049,505 Gross tax depreciation of investments (144,608,611) -------------- Net tax appreciation (depreciation) of investments $ (44,559,106) ============== The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of March 31, 2008, the fund had capital and currency loss deferrals of $(81,457,100) and $(2,071), respectively, which represent net capital and foreign currency losses incurred in the five-month period ended March 31, 2008. The fund has elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 10. CORPORATE EVENT Effective November 17, 2008, ACIM will terminate the Subadvisory Agreement with JPMIM on behalf of the fund. ACIM will assume the responsibilities performed by the subadvisor. The termination of the Subadvisory Agreement was approved by the Board of Directors on October 9, 2008. 11. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 does not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for fiscal years beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 19 FINANCIAL HIGHLIGHTS Real Estate Investor Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $21.67 $31.37 $29.00 $23.24 $23.09 $15.83 ------ ------ ------ ------ ------ ------ Income From Investment Operations Net Investment Income (Loss)(2) 0.22 0.43 0.53 0.53 0.46 0.46 Net Realized and Unrealized Gain (Loss) (0.52) (5.53) 5.70 8.44 1.79 7.49 ------ ------ ------ ------ ------ ------ Total From Investment Operations (0.30) (5.10) 6.23 8.97 2.25 7.95 ------ ------ ------ ------ ------ ------ Distributions From Net Investment Income (0.14) (0.51) (0.49) (0.49) (0.46) (0.54) From Net Realized Gains -- (4.09) (3.37) (2.72) (1.64) (0.15) ------ ------ ------ ------ ------ ------ Total Distributions (0.14) (4.60) (3.86) (3.21) (2.10) (0.69) ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period $21.23 $21.67 $31.37 $29.00 $23.24 $23.09 ====== ====== ====== ====== ====== ====== TOTAL RETURN(3) (1.39)% (16.60)% 22.02% 40.65% 9.53% 50.97% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.14%(4) 1.14% 1.13% 1.15% 1.16% 1.17% Ratio of Net Investment Income (Loss) to Average Net Assets 1.98%(4) 1.60% 1.72% 2.00% 1.88% 2.28% Portfolio Turnover Rate 30% 153% 197% 177% 171% 158% Net Assets, End of Period (in thousands) $905,538 $864,011 $1,590,428 $986,526 $522,676 $393,604 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 20 Real Estate Institutional Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $21.71 $31.41 $29.03 $23.25 $23.10 $15.85 ------ ------ ------ ------ ------ ------ Income From Investment Operations Net Investment Income (Loss)(2) 0.24 0.48 0.59 0.59 0.44 0.51 Net Realized and Unrealized Gain (Loss) (0.52) (5.54) 5.71 8.45 1.86 7.47 ------ ------ ------ ------ ------ ------ Total From Investment Operations (0.28) (5.06) 6.30 9.04 2.30 7.98 ------ ------ ------ ------ ------ ------ Distributions From Net Investment Income (0.17) (0.55) (0.55) (0.54) (0.51) (0.58) From Net Realized Gains -- (4.09) (3.37) (2.72) (1.64) (0.15) ------ ------ ------ ------ ------ ------ Total Distributions (0.17) (4.64) (3.92) (3.26) (2.15) (0.73) ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period $21.26 $21.71 $31.41 $29.03 $23.25 $23.10 ====== ====== ====== ====== ====== ====== TOTAL RETURN(3) (1.29)% (16.44)% 22.27% 40.99% 9.74% 51.14% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.94%(4) 0.94% 0.93% 0.95% 0.96% 0.97% Ratio of Net Investment Income (Loss) to Average Net Assets 2.18%(4) 1.80% 1.92% 2.20% 2.08% 2.48% Portfolio Turnover Rate 30% 153% 197% 177% 171% 158% Net Assets, End of Period (in thousands) $223,894 $200,982 $379,044 $242,745 $143,183 $82,488 (1) Six months ended September 30, 2008 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 21 Real Estate A Class(1) For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(2) 2008 2007 2006 2005 2004 PER-SHARE DATA Net Asset Value, Beginning of Period $21.69 $31.41 $29.04 $23.26 $23.11 $15.83 ------ ------ ------ ------ ------ ------ Income From Investment Operations Net Investment Income (Loss)(3) 0.19 0.36 0.45 0.46 0.35 0.42 Net Realized and Unrealized Gain (Loss) (0.52) (5.53) 5.71 8.46 1.84 7.50 ------ ------ ------ ------ ------ ------ Total From Investment Operations (0.33) (5.17) 6.16 8.92 2.19 7.92 ------ ------ ------ ------ ------ ------ Distributions From Net Investment Income (0.10) (0.46) (0.42) (0.42) (0.40) (0.49) From Net Realized Gains -- (4.09) (3.37) (2.72) (1.64) (0.15) ------ ------ ------ ------ ------ ------ Total Distributions (0.10) (4.55) (3.79) (3.14) (2.04) (0.64) ------ ------ ------ ------ ------ ------ Net Asset Value, End of Period $21.26 $21.69 $31.41 $29.04 $23.26 $23.11 ====== ====== ====== ====== ====== ====== TOTAL RETURN(4) (1.47)% (16.84)% 21.70% 40.37% 9.30% 50.66% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.39%(5) 1.39% 1.38% 1.40% 1.41% 1.42% Ratio of Net Investment Income (Loss) to Average Net Assets 1.73%(5) 1.35% 1.47% 1.75% 1.63% 2.03% Portfolio Turnover Rate 30% 153% 197% 177% 171% 158% Net Assets, End of Period (in thousands) $244,764 $253,419 $488,277 $331,329 $161,592 $82,471 (1) Prior to September 4, 2007, the A Class was referred to as the Advisor Class. (2) Six months ended September 30, 2008 (unaudited). (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 22 Real Estate B Class For a Share Outstanding Throughout the Periods Indicated 2008(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $21.62 $29.12 ------ ------ Income From Investment Operations Net Investment Income (Loss)(3) 0.12 0.14 Net Realized and Unrealized Gain (Loss) (0.52) (3.42) ------ ------ Total From Investment Operations (0.40) (3.28) ------ ------ Distributions From Net Investment Income (0.06) (0.13) From Net Realized Gains -- (4.09) ------ ------ Total Distributions (0.06) (4.22) ------ ------ Net Asset Value, End of Period $21.16 $21.62 ====== ====== TOTAL RETURN(4) (1.85)% (11.57)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.14%(5) 2.14%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 0.98%(5) 1.17%(5) Portfolio Turnover Rate 30% 153%(6) Net Assets, End of Period (in thousands) $55 $33 (1) Six months ended September 30, 2008 (unaudited). (2) September 28, 2007 (commencement of sale) through March 31, 2008. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. See Notes to Financial Statements. - ------ 23 Real Estate C Class For a Share Outstanding Throughout the Periods Indicated 2008(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $21.62 $29.12 ------ ------ Income From Investment Operations Net Investment Income (Loss)(3) 0.12 0.13 Net Realized and Unrealized Gain (Loss) (0.52) (3.41) ------ ------ Total From Investment Operations (0.40) (3.28) ------ ------ Distributions From Net Investment Income (0.06) (0.13) From Net Realized Gains -- (4.09) ------ ------ Total Distributions (0.06) (4.22) ------ ------ Net Asset Value, End of Period $21.16 $21.62 ====== ====== TOTAL RETURN(4) (1.85)% (11.57)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.14%(5) 2.14%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 0.98%(5) 1.15%(5) Portfolio Turnover Rate 30% 153%(6) Net Assets, End of Period (in thousands) $405 $62 (1) Six months ended September 30, 2008 (unaudited). (2) September 28, 2007 (commencement of sale) through March 31, 2008. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. See Notes to Financial Statements. - ------ 24 Real Estate R Class For a Share Outstanding Throughout the Periods Indicated 2008(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $21.65 $29.12 ------ ------ Income From Investment Operations Net Investment Income (Loss)(3) 0.16 0.19 Net Realized and Unrealized Gain (Loss) (0.51) (3.41) ------ ------ Total From Investment Operations (0.35) (3.22) ------ ------ Distributions From Net Investment Income (0.09) (0.16) From Net Realized Gains -- (4.09) ------ ------ Total Distributions (0.09) (4.25) ------ ------ Net Asset Value, End of Period $21.21 $21.65 ====== ====== TOTAL RETURN(4) (1.59)% (11.37)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.64%(5) 1.64%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.48%(5) 1.65%(5) Portfolio Turnover Rate 30% 153%(6) Net Assets, End of Period (in thousands) $140 $26 (1) Six months ended September 30, 2008 (unaudited). (2) September 28, 2007 (commencement of sale) through March 31, 2008. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. See Notes to Financial Statements. - ------ 25 APPROVAL OF MANAGEMENT AGREEMENT Real Estate Under Section 15(c) of the Investment Company Act, contracts for investment advisory services (including subadvisory services) are required to be reviewed, evaluated and approved by a majority of a fund's independent directors or trustees (the "Directors") each year. At American Century Investments, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor and the subadvisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning Real Estate (the "Fund") and the services provided to the Fund under the management and subadvisory agreements. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the Fund; * reports on the wide range of programs and services the advisor provides to the Fund and its shareholders on a routine and non-routine basis; * information about the compliance policies, procedures, and regulatory experience of both the advisor and the subadvisor; * data comparing the cost of owning the Fund to the cost of owning a similar fund; * data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the Fund to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the Fund's board of directors held two in-person meetings and one telephonic meeting to review and discuss the information provided. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 26 FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. In connection with their review of the Fund, 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 and subadvisory agreements under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. 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: * Fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of Fund assets * daily valuation of the Fund's portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of the services provided by the advisor have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. The directors specifically noted that with respect to the Fund, the advisor had retained the subadvisor to provide the day-to-day security selection. Under the subadvisory agreement, the subadvisor is responsible for managing the investment operations and composition of the Fund, including the purchase, retention, and disposition of the investments contained in the Fund. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. - ------ 27 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, and liquidity. In evaluating investment performance, the board expects the advisor and subadvisor to manage the Fund in accordance with its investment objectives and approved strategies. In providing these services, the advisor and subadvisor utilize 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. At each quarterly meeting the Directors review investment performance information for the Fund, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the Fund. The Directors also review detailed performance information during the 15(c) Process comparing the Fund's performance with that of similar funds not managed by the advisor. If performance concerns are identified, the Directors discuss 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 for both the one- and three-year periods was above the median for its peer group. SHAREHOLDER AND OTHER SERVICES. The advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. 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 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. COSTS OF SERVICES PROVIDED AND PROFITABILITY. The advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate 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. The board did not consider the profitability of the subadvisor because the subadvisor is paid from the unified fee of the advisor as a result of arm's length negotiations. ETHICS. The Directors generally consider 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. With respect to the subadvisor, as part of its oversight responsibilities, the board approves the subadvisor's code of ethics and any changes thereto. Further, through the advisor's compliance group, the board stays abreast of any violations of the subadvisor's code. - ------ 28 ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the Fund specifically, the expenses incurred by the advisor in providing various functions to the Fund, and the fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the Fund increases in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. 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). The Directors specifically noted that the subadvisory fees paid to the subadvisor under the subadvisory agreement were subject to arm's length negotiation between the advisor and the subadvisor and are paid by the advisor out of its unified fee. 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 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 Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the Fund's unified fee to the total expense ratio of other funds in the Fund's peer group. The unified fee charged to shareholders of the Fund was slightly above the median of the total expense ratios of its peer group. The board concluded that the management fee paid by the Fund to the advisor was reasonable in light of the services provided to the Fund. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, 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 Directors analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison. - ------ 29 COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives 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 the Fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors 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 Directors 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 Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the Fund to determine breakpoints in the Fund's fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the board, including all of the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor concluded that the investment management agreement between the Fund and the advisor is fair and reasonable in light of the services provided and should be renewed. Additionally, the board, including all the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the subadvisory agreement between the advisor and the subadvisor, on behalf of the fund, is fair and reasonable in light of the services provided and should be renewed. - ------ 30 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] 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. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is 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. - ------ 31 INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The MORGAN STANLEY CAPITAL INTERNATIONAL US REAL ESTATE INVESTMENT TRUST (MSCI US REIT) INDEX is a market value-weighted index that tracks the daily stock price performance of equity securities of the most actively traded REITs. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 1000® GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 1000® VALUE INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 2000® INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 2000® VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP® GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL MIDCAP® VALUE INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 32 [back cover] [american century investments logo and text logo ®] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE. . . . . . . . . . . . . . . . . 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE. . . . . . . . . . . . . . 1-800-345-2021 or 816-531-5575 INVESTORS USING ADVISORS. . . . . . . . . . . . . . . . . . 1-800-378-9878 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS . .. . . . . . . . . . . . . . . . . . . . . . . . . . 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES. . . . . . . . 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF. . . . . . . . . . . 1-800-634-4113 AMERICAN CENTURY CAPITAL PORTFOLIOS, 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. American Century Investment Services, Inc., Distributor ©2008 American Century Proprietary Holdings, Inc. All rights reserved. 0811 CL-SAN-61617N-SUP
[front cover] SEMIANNUAL REPORT SEPTEMBER 30, 2008 [american century investments logo and text logo ®] AMERICAN CENTURY INVESTMENTS NT LARGE COMPANY VALUE FUND NT MID CAP VALUE FUND PRESIDENT'S LETTER [photo of Jonathan Thomas] JONATHAN THOMAS Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended September 30, 2008. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s/ Jonathan Thomas Jonathan S. Thomas President and Chief Executive Officer American Century Investments TABLE OF CONTENTS Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Stock Index Returns . . . . . . . . . . . . . . . . . . . . . . 2 NT LARGE COMPANY VALUE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 4 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 5 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 5 NT MID CAP VALUE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 7 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Top Five Industries. . . . . . . . . . . . . . . . . . . . . . . . . 8 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 8 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 9 FINANCIAL STATEMENTS Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 11 Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 17 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 18 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 19 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 20 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 25 OTHER INFORMATION Approval of Management Agreements for NT Large Company Value and NT Mid Cap Value. . . . . . . . . . . . . 27 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 31 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 32 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team 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. MARKET PERSPECTIVE [photo of Chief Investment Officer] By Phil Davidson, Chief Investment Officer, U.S. Value Equity FINANCIAL SYSTEM SHAKEN A series of startling events put downward pressure on the U.S. equity market during the six months ended September 30, 2008. The U.S. financial system remained mired in unprecedented credit-market turmoil, which intensified throughout the six-month period. The credit and liquidity stress reached critical mass in September, when the federal government's takeover of mortgage lenders Fannie Mae and Freddie Mac, and its rescue of insurer AIG were followed by the bankruptcy of Lehman Brothers and Bank of America's acquisition of troubled Merrill Lynch. A number of other major financial firms faced similar circumstances. Few investors anticipated the scope of the credit crunch, which has blossomed into a full-blown financial crisis. The adverse effects are being felt on a global scale--the U.S. economy is likely already facing a recession as job losses mount and consumer spending withers, and the malaise is quickly spreading throughout the rest of the world's economies. The U.S. government and the Federal Reserve have taken extraordinary steps to provide support for the flagging financial system, and other governments and central banks are expected to follow suit. In the stock market, volatility reached extreme levels on a day-to-day basis as investors lost confidence in the financial system and the ability of the government to remedy the situation. As a result, the major stock indexes slumped for the six-month period (see the accompanying table). VALUE OUTPERFORMED In this challenging environment, value stocks generally held up better than growth-oriented issues. Against a persistent backdrop of market uncertainty and heightened volatility, companies with attractive valuation characteristics became beacons for risk-averse investors. However, security selection took on greater importance as the market became rife with "value traps"--stocks that are inexpensive for good reason. Our value funds stand to benefit from an increased emphasis on selectivity, thanks to our risk-conscious focus on robust balance sheets, competitive strength, cash flows, and earnings power. We believe these characteristics are indicative of higher-quality companies that will successfully weather the current financial storm. U.S. Stock Index Returns For the six months ended September 30, 2008* RUSSELL 1000 INDEX (LARGE-CAP) -11.06% Russell 1000 Value Index -11.10% Russell 1000 Growth Index -11.23% RUSSELL MIDCAP INDEX -10.58% Russell Midcap Value Index -7.46% Russell Midcap Growth Index -13.93% RUSSELL 2000 INDEX (SMALL-CAP) -0.54% Russell 2000 Value Index 1.24% Russell 2000 Growth Index -2.83% *Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE NT Large Company Value Total Returns as of September 30, 2008 Average Annual Returns Since Inception 6 months(1) 1 year Inception Date INSTITUTIONAL CLASS -12.58% -25.39% -4.68% 5/12/06 RUSSELL 1000 VALUE INDEX -11.10% -23.56% -3.35% -- S&P 500 INDEX -10.87% -21.98% -2.27% -- (1) Total returns for periods less than one year are not annualized. Growth of $10,000 Over Life of Class $10,000 investment made May 12, 2006
One-Year Returns Over Life of Class Periods ended September 30 2006* 2007 2008 Institutional Class 5.67% 13.13% -25.39% Russell 1000 Value Index 5.37% 14.45% -23.56% S&P 500 Index 4.20% 16.44% -21.98% *From 5/12/06, the Institutional Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 3 PORTFOLIO COMMENTARY NT Large Company Value Portfolio Managers: Chuck Ritter and Brendan Healy PERFORMANCE SUMMARY NT Large Company Value returned -12.58%* for the six months ended September 30, 2008. By comparison, its benchmark, the Russell 1000 Value Index, returned - -11.10%. The broader market, as measured by the S&P 500 Index, returned - -10.87%. The portfolio's return reflects operating expenses, while the indices' returns do not. The volatile market environment described in the Market Perspective on page 2 hampered NT Large Company Value's absolute and relative performance. U.S. equity indices were almost universally down for the six months. Value outperformed growth-- except among mega-cap stocks (shares of especially large companies, represented by the Russell Top 200 Index). NT Large Company Value was slowed by its position in the financials sector and holdings among utilities and consumer discretionary stocks. On the positive side, the portfolio benefited from strong security selection in the information technology and health care sectors. FINANCIALS HINDERED PROGRESS Even an underweight in financials-- the portfolio's largest source of relative underperformance--was insufficient to protect NT Large Company Value from the turmoil in the sector. Although we continue to be selective about portfolio holdings, NT Large Company Value's complement of insurance stocks hampered results. A top detractor was American International Group (AIG), the leading U.S.-based international insurer. AIG's shares fell significantly after the Federal Reserve stepped in to rescue the company from bankruptcy. We eliminated the position during the reporting period. Also slowing progress was a significant underweight in real estate investment trusts (REITs), which boosted returns for the benchmark. We continued to limit exposure to this segment because we believe REITs are overvalued relative to their fundamentals. UTILITIES, CONSUMER DISCRETIONARY DETRACTED The portfolio's mix of electric utilities was a drag on relative performance. A key detractor was Exelon, the nation's largest nuclear generator, which saw its cost advantage over carbon-based generators decline as oil and gas prices fell. In consumer discretionary stocks, holdings in the media industry hampered performance. The sector provided two key detractors--entertainment giant Viacom and newspaper publisher Gannett Co. Both companies have been hurt by a significant drop-off in advertising revenue. Top Ten Holdings as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 Exxon Mobil Corp. 5.2% 4.9% Chevron Corp. 4.6% 3.4% General Electric Co. 4.5% 4.9% JPMorgan Chase & Co. 3.5% 2.6% AT&T Inc. 3.4% 3.9% ConocoPhillips 3.1% 2.4% Citigroup Inc. 3.1% 2.7% Johnson & Johnson 2.9% 2.7% Pfizer Inc. 2.8% 2.6% Bank of America Corp. 2.7% 2.9% *Total returns for periods less than one year are not annualized. - ------ 4 NT Large Company Value INFORMATION TECHNOLOGY CONTRIBUTED On the positive side, the portfolio benefited most from strong security selection in the information technology sector, with most of the gains coming from large leading software and technology companies. A significant holding was computer and peripheral maker Hewlett-Packard, whose acquisition of outsourcing giant Electronic Data Systems appears to offer a competitive advantage and could add value through reorganization and cost-cutting efforts. High-tech giant International Business Machines (IBM) reported strong earnings from growth in its software and services divisions. HEALTH CARE ADDED VALUE Holdings in the health care sector contributed to results. During difficult economic times or periods of stock market turbulence, investors often regard consumer staples and health care stocks as lower-risk, defensive investments. Moreover, our preference for large industry leaders proved advantageous as many of these names outperformed. Two notable contributors were Abbott Laboratories, which develops and manufactures laboratory diagnostics, medical devices, and pharmaceutical therapies, and Johnson & Johnson, the world's sixth-largest pharmaceutical company and the maker of consumer health care products and medical devices and diagnostics. Abbott reported strong sales across its entire product line, including Humira (a drug that treats autoimmune diseases). Johnson & Johnson raised its 2008 earnings-per-share forecast and announced strong sales of its medical devices and consumer products. OUTLOOK We continue to be bottom-up investment managers, evaluating each company individually and building the portfolio one stock at a time. NT Large Company Value is broadly diversified, with ongoing overweight positions in the information technology, energy, and industrials sectors. Our valuation work is also directing us toward smaller relative weightings in financials and utilities stocks. We are still finding greater value opportunities among mega-cap stocks and have maintained our bias toward these firms. Top Five Industries as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 Oil, Gas & Consumable Fuels 16.3% 13.7% Pharmaceuticals 9.7% 8.8% Diversified Financial Services 9.3% 8.2% Diversified Telecommunication Services 5.8% 5.9% Industrial Conglomerates 5.0% 5.6% Types of Investments in Portfolio % of % of net assets net assets as of as of 9/30/08 3/31/08 Common Stocks and Futures 99.1% 99.2% Temporary Cash Investments -- 1.0% Other Assets and Liabilities(1) 0.9% (0.2)% (1) Includes securities lending collateral and other assets and liabilities. - ------ 5 PERFORMANCE NT Mid Cap Value Total Returns as of September 30, 2008 Average Annual Returns Since Inception 6 months(1) 1 year Inception Date INSTITUTIONAL CLASS -1.27% -14.17% 0.92% 5/12/06 RUSSELL MIDCAP VALUE INDEX -7.46% -20.50% -2.98% -- (1) Total returns for periods less than one year are not annualized. Growth of $10,000 Over Life of Class $10,000 investment made May 12, 2006
One-Year Returns Over Life of Class Periods ended September 30 2006* 2007 2008 Institutional Class 2.97% 15.64% -14.17% Russell Midcap Value Index 2.88% 13.75% -20.50% *From 5/12/06, the Institutional Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 6 PORTFOLIO COMMENTARY NT Mid Cap Value Portfolio Managers: Kevin Toney, Michael Liss, and Phil Davidson PERFORMANCE SUMMARY NT Mid Cap Value returned -1.27%* for the six months ended September 30, 2008. The fund's benchmark, the Russell Midcap Value Index, returned -7.46%. Its returns do not include operating expenses. The volatile market environment described in the Market Perspective on page 2 hampered NT Mid Cap Value's absolute performance. However, on a relative basis, the portfolio significantly outpaced the performance of its benchmark, the Russell Midcap Value Index. NT Mid Cap Value outperformed because of effective security selection and our continued emphasis on less-risky businesses with sound balance sheets. The portfolio benefited most from its positions in the utilities, consumer staples, and materials sectors. Its mix of energy stocks hindered relative performance. The portfolio's complement of international holdings also restrained performance. ALLOCATION TO UTILITIES WAS A PLUS NT Mid Cap Value's position in utilities was the largest contributor to relative performance. Because of valuations and higher-risk business models, we did not hold any independent power producers, which declined 57% in the benchmark. Investors appear to have connected these companies to both the credit crisis and the sharp drop in energy prices in the closing months of the period. Security selection, particularly among electric utilities, also boosted results. A significant holding was Empire District Electric, which principally provides electricity to customers in southwestern Missouri. By obtaining regulatory approval to pass through most of its fuel and power costs to ratepayers, Empire limited its exposure to rising commodity prices. CONSUMER STAPLES ADDED VALUE The portfolio's mix of consumer staples companies--particularly its food and household products holdings--added positively to performance against the benchmark. A top contributor was personal-care and paper-product manufacturer Kimberly-Clark Corp., which benefited from cost cutting and price increases. We believe the company's margins could improve if the cost of energy, oil-based materials, and product distribution continue to decline. Top Ten Holdings as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 iShares Russell Midcap Value Index Fund 4.0% -- Kimberly-Clark Corp. 3.4% 2.9% People's United Financial, Inc. 2.8% 1.5% Equitable Resources Inc. 2.2% 1.2% Marsh & McLennan Companies, Inc. 1.9% 1.5% ConAgra Foods, Inc. 1.9% 1.3% Bemis Co., Inc. 1.9% 3.5% Chubb Corp. 1.8% 0.6% Beckman Coulter, Inc. 1.7% 1.7% Allstate Corp. 1.7% 1.4% *Total returns for periods less than one year are not annualized. - ------ 7 NT Mid Cap Value The consumer staples sector was also the source of an international detractor, Maple Leaf Foods. A leading food processor headquartered in Toronto, Canada, Maple Leaf experienced a setback when many of its products were linked to a harmful strain of listeria, a food-borne bacteria. MATERIALS CONTRIBUTED In materials, an overweight position and security selection added to results. A top performer was Bemis Co., one of the portfolio's top holdings. Bemis, a major producer of flexible packaging, primarily for the food industry, reported improved sales volume and should benefit from lower resin input costs. Another notable contributor was Rohm and Haas, a specialty chemical company. Its stock rose on the news that it would be acquired at a substantial premium by Dow Chemical. ENERGY POSITION HAMPERED RESULTS The portfolio's complement of energy stocks slowed relative performance. The sector also provided a significant detractor, Equitable Resources, which is an integrated energy company engaged in Appalachian-region natural gas activities, including production, gathering and processing, distribution, transmission, storage, and marketing. Despite its strong resource base, Equitable's prospects dimmed as natural gas prices fell and its access to capital was restricted by tight credit conditions, which may hinder its ability to execute its growth plans. OUTLOOK We continue to follow our disciplined, bottom-up process, selecting companies one at a time for the portfolio. We see opportunities in consumer staples, utilities, materials, and industrials stocks, reflected by overweight positions in these sectors, relative to the benchmark. Our fundamental analysis and valuation work are also directing us toward smaller relative weightings in financials, consumer discretionary, and energy stocks. PORTFOLIO MANAGER SCOTT MOORE HAS LEFT AMERICAN CENTURY INVESTMENTS TO PURSUE ANOTHER CAREER OPPORTUNITY. PORTFOLIO MANAGER KEVIN TONEY HAS JOINED THE NT MID CAP VALUE MANAGEMENT TEAM. MR. TONEY, A PORTFOLIO MANAGER ON THE EQUITY INCOME AND VALUE PORTFOLIOS, PREVIOUSLY SERVED AS A SENIOR INVESTMENT ANALYST FOR NT MID CAP VALUE SINCE ITS INCEPTION. Top Five Industries as of September 30, 2008 % of % of net assets net assets as of as of 9/30/08 3/31/08 Insurance 8.6% 6.2% Electric Utilities 6.7% 5.8% Multi-Utilities 4.8% 3.4% Oil, Gas & Consumable Fuels 4.6% 2.0% Food Products 4.6% 9.2% Types of Investments in Portfolio % of % of net assets net assets as of as of 9/30/08 3/31/08 Common Stocks 98.0% 97.0% Temporary Cash Investments 1.2% 2.2% Other Assets and Liabilities(1) 0.8% 0.8% (1) Includes securities lending collateral and other assets and liabilities. - ------ 8 SHAREHOLDER FEE EXAMPLES (UNAUDITED) 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 April 1, 2008 to September 30, 2008. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Investments Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. 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. - ------ 9 Beginning Ending Expenses Paid Account Value Account Value During Period* Annualized 4/1/08 9/30/08 4/1/08 - 9/30/08 Expense Ratio* NT Large Company Value -- Institutional Class Actual $1,000 $874.20 $2.96 0.63% Hypothetical $1,000 $1,021.91 $3.19 0.63% NT Mid Cap Value -- Institutional Class Actual $1,000 $987.30 $4.04 0.81% Hypothetical $1,000 $1,021.01 $4.10 0.81% *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 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 10 SCHEDULE OF INVESTMENTS NT Large Company Value SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 94.5% AEROSPACE & DEFENSE -- 1.1% 19,300 Northrop Grumman Corp. $ 1,168,423 ------------ BEVERAGES -- 2.1% 28,000 Coca-Cola Co. (The) 1,480,640 24,100 Pepsi Bottling Group Inc. 702,997 ------------ 2,183,637 ------------ BIOTECHNOLOGY -- 0.9% 16,600 Amgen Inc.(1) 983,882 ------------ CAPITAL MARKETS -- 3.5% 26,600 Bank of New York Mellon Corp. (The) 866,628 7,600 Goldman Sachs Group, Inc. (The) 972,800 7,300 Legg Mason, Inc. 277,838 30,600 Merrill Lynch & Co., Inc. 774,180 32,700 Morgan Stanley 752,100 ------------ 3,643,546 ------------ CHEMICALS -- 1.9% 28,000 du Pont (E.I.) de Nemours & Co. 1,128,400 15,100 PPG Industries, Inc. 880,632 ------------ 2,009,032 ------------ COMMERCIAL BANKS -- 3.0% 65,000 National City Corp. 113,750 28,400 U.S. Bancorp 1,022,968 54,200 Wells Fargo & Co. 2,034,126 ------------ 3,170,844 ------------ COMMERCIAL SERVICES & SUPPLIES -- 1.9% 11,400 Avery Dennison Corp. 507,072 4,700 Pitney Bowes, Inc. 156,322 24,900 R.R. Donnelley & Sons Co. 610,797 21,300 Waste Management, Inc. 670,737 ------------ 1,944,928 ------------ COMMUNICATIONS EQUIPMENT -- 0.2% 22,400 Motorola, Inc. 159,936 ------------ COMPUTERS & PERIPHERALS -- 1.0% 21,700 Hewlett-Packard Co. 1,003,408 ------------ CONSUMER FINANCE -- 0.3% 22,400 Discover Financial Services 309,568 ------------ DIVERSIFIED -- 1.2% 11,200 Standard and Poor's 500 Depositary Receipt Series 1 1,299,424 ------------ Shares Value DIVERSIFIED CONSUMER SERVICES -- 0.6% 29,600 H&R Block, Inc.(2) $ 667,480 ------------ DIVERSIFIED FINANCIAL SERVICES -- 9.3% 82,800 Bank of America Corp. 2,898,000 157,500 Citigroup Inc. 3,230,325 78,900 JPMorgan Chase & Co. 3,684,630 ------------ 9,812,955 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES -- 5.8% 128,900 AT&T Inc. 3,598,888 9,500 Embarq Corp. 385,225 65,000 Verizon Communications Inc. 2,085,850 ------------ 6,069,963 ------------ ELECTRIC UTILITIES -- 2.3% 21,900 Exelon Corp. 1,371,378 28,800 PPL Corp. 1,066,176 ------------ 2,437,554 ------------ ENERGY EQUIPMENT & SERVICES -- 0.5% 10,100 National Oilwell Varco, Inc.(1) 507,323 ------------ FOOD & STAPLES RETAILING -- 2.5% 25,700 Kroger Co. (The) 706,236 23,500 Walgreen Co. 727,560 20,800 Wal-Mart Stores, Inc. 1,245,712 ------------ 2,679,508 ------------ FOOD PRODUCTS -- 0.7% 25,500 Unilever N.V. New York Shares 718,080 ------------ HEALTH CARE EQUIPMENT & SUPPLIES -- 0.7% 14,600 Medtronic, Inc. 731,460 ------------ HEALTH CARE PROVIDERS & SERVICES -- 0.4% 8,400 Quest Diagnostics Inc. 434,028 ------------ HOTELS, RESTAURANTS & LEISURE -- 0.6% 9,800 Darden Restaurants, Inc. 280,574 1,800 McDonald's Corp. 111,060 18,500 Starbucks Corp.(1) 275,095 ------------ 666,729 ------------ HOUSEHOLD DURABLES -- 0.7% 39,900 Newell Rubbermaid Inc. 688,674 ------------ HOUSEHOLD PRODUCTS -- 0.7% 11,800 Clorox Co. 739,742 ------------ - ------ 11 NT Large Company Value Shares Value INDEPENDENT POWER PRODUCERS & ENERGY TRADERS -- 0.6% 23,800 NRG Energy Inc.(1) $ 589,050 ------------ INDUSTRIAL CONGLOMERATES -- 5.0% 187,200 General Electric Co. 4,773,600 12,900 Tyco International Ltd. 451,758 ------------ 5,225,358 ------------ INSURANCE -- 4.1% 31,400 Allstate Corp. 1,448,168 17,500 Hartford Financial Services Group Inc. (The) 717,325 10,300 Loews Corp. 406,747 13,100 Torchmark Corp. 783,380 21,800 Travelers Companies, Inc. (The) 985,360 ------------ 4,340,980 ------------ IT SERVICES -- 1.5% 8,300 Fiserv, Inc.(1) 392,756 10,500 International Business Machines Corp. 1,228,080 ------------ 1,620,836 ------------ MACHINERY -- 2.6% 13,700 Caterpillar Inc. 816,520 16,000 Dover Corp. 648,800 23,100 Ingersoll-Rand Company Ltd. Cl A 720,027 9,800 Parker-Hannifin Corp. 519,400 ------------ 2,704,747 ------------ MEDIA -- 3.0% 39,600 CBS Corp. Cl B 577,368 29,100 Gannett Co., Inc. 492,081 104,300 Time Warner Inc. 1,367,373 29,900 Viacom Inc. Cl B(1) 742,716 ------------ 3,179,538 ------------ METALS & MINING -- 0.4% 11,300 Nucor Corp. 446,350 ------------ MULTILINE RETAIL -- 0.6% 14,600 Kohl's Corp.(1) 672,768 ------------ OFFICE ELECTRONICS -- 0.6% 50,500 Xerox Corp. 582,265 ------------ OIL, GAS & CONSUMABLE FUELS -- 16.3% 4,800 Apache Corp. 500,544 58,700 Chevron Corp. 4,841,576 44,900 ConocoPhillips 3,288,925 5,700 Devon Energy Corp. 519,840 71,000 Exxon Mobil Corp. 5,513,860 42,500 Royal Dutch Shell plc ADR 2,507,925 ------------ 17,172,670 ------------ Shares Value PAPER & FOREST PRODUCTS -- 1.1% 11,900 International Paper Co. $ 311,542 13,500 Weyerhaeuser Co. 817,830 ------------ 1,129,372 ------------ PHARMACEUTICALS -- 9.7% 17,400 Abbott Laboratories 1,001,892 19,400 Eli Lilly & Co. 854,182 44,700 Johnson & Johnson 3,096,816 35,900 Merck & Co., Inc. 1,133,004 160,400 Pfizer Inc. 2,957,776 30,700 Wyeth 1,134,058 ------------ 10,177,728 ------------ PROFESSIONAL SERVICES -- 0.1% 5,000 Robert Half International Inc. 123,750 ------------ REAL ESTATE INVESTMENT TRUSTS (REITS) -- 0.3% 8,400 Developers Diversified Realty Corp. 266,196 ------------ ROAD & RAIL -- 0.2% 13,600 YRC Worldwide Inc.(1) 162,656 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.0% 24,600 Applied Materials, Inc. 372,198 24,800 Intel Corp. 464,504 9,800 Texas Instruments Inc. 210,700 ------------ 1,047,402 ------------ SOFTWARE -- 1.9% 45,500 Microsoft Corp. 1,214,395 39,700 Oracle Corp.(1) 806,307 ------------ 2,020,702 ------------ SPECIALTY RETAIL -- 2.5% 19,200 Best Buy Co., Inc. 720,000 25,800 Gap, Inc. (The) 458,724 29,800 Home Depot, Inc. (The) 771,522 30,000 Staples, Inc. 675,000 ------------ 2,625,246 ------------ TEXTILES, APPAREL & LUXURY GOODS -- 0.7% 9,300 VF Corp. 718,983 ------------ THRIFTS & MORTGAGE FINANCE -- 0.1% 18,800 MGIC Investment Corp. 132,164 ------------ WIRELESS TELECOMMUNICATION SERVICES -- 0.3% 59,200 Sprint Nextel Corp. 361,120 ------------ TOTAL COMMON STOCKS (Cost $112,099,742) 99,330,005 ------------ - ------ 12 NT Large Company Value Value Temporary Cash Investments -- Segregated For Futures Contracts -- 4.6% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 7.125%, 2/15/23, valued at $4,893,448), in a joint trading account at 0.40%, dated 9/30/08, due 10/1/08 (Delivery value $4,800,053) (Cost $4,800,000) $ 4,800,000 ------------ Value TOTAL INVESTMENT SECURITIES -- 99.1% (Cost $116,899,742) 104,130,005 ------------ OTHER ASSETS AND LIABILITIES -- 0.9% 954,841 ------------ TOTAL NET ASSETS -- 100.0% $105,084,846 ============ Futures Contracts Expiration Underlying Face Unrealized Gain Contracts Purchased Date Amount at Value (Loss) 74 S&P 500 E-Mini Futures December 2008 $4,319,380 $(347,384) ============ ============ Notes to Schedule of Investments ADR = American Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, has been segregated for futures contracts. See Notes to Financial Statements. - ------ 13 SCHEDULE OF INVESTMENTS NT Mid Cap Value SEPTEMBER 30, 2008 (UNAUDITED) Shares Value Common Stocks -- 98.0% AEROSPACE & DEFENSE -- 0.5% 3,600 Northrop Grumman Corp. $ 217,945 ----------- AIRLINES -- 0.3% 11,138 Southwest Airlines Co. 161,612 ----------- AUTO COMPONENTS -- 1.0% 14,110 Autoliv, Inc. 476,213 ----------- AUTOMOBILES -- 1.0% 7,800 Bayerische Motoren Werke AG ORD 304,287 13,025 Winnebago Industries, Inc. 168,283 ----------- 472,570 ----------- BEVERAGES -- 1.8% 34,400 Coca-Cola Enterprises Inc. 576,888 10,400 Pepsi Bottling Group Inc. 303,368 ----------- 880,256 ----------- BUILDING PRODUCTS -- 0.2% 6,563 Masco Corp. 117,740 ----------- CAPITAL MARKETS -- 3.3% 20,800 AllianceBernstein Holding L.P. 769,808 12,500 Ameriprise Financial Inc. 477,500 9,900 Legg Mason, Inc. 376,794 ----------- 1,624,102 ----------- CHEMICALS -- 3.4% 7,200 Ecolab Inc. 349,344 16,198 International Flavors & Fragrances Inc. 639,173 2,870 Minerals Technologies Inc. 170,363 7,200 Rohm & Haas Co. 504,000 ----------- 1,662,880 ----------- COMMERCIAL BANKS -- 3.7% 18,932 Associated Banc-Corp 377,693 6,400 BancorpSouth Inc. 180,032 11,205 Commerce Bancshares, Inc. 519,912 15,568 Marshall & Ilsley Corp. 313,695 2,723 SunTrust Banks, Inc. 122,508 6,900 Synovus Financial Corp. 71,415 6,000 United Bankshares, Inc. 210,000 ----------- 1,795,255 ----------- COMMERCIAL SERVICES & SUPPLIES -- 4.4% 14,300 Avery Dennison Corp. 636,064 14,153 HNI Corp. 358,637 11,263 Pitney Bowes, Inc. 374,607 Shares Value 10,598 Republic Services, Inc. $ 317,728 13,696 Waste Management, Inc. 431,287 ----------- 2,118,323 ----------- COMMUNICATIONS EQUIPMENT -- 0.6% 27,400 Emulex Corp.(1) 292,358 ----------- COMPUTERS & PERIPHERALS -- 1.2% 17,014 Diebold, Inc. 563,334 ----------- CONTAINERS & PACKAGING -- 2.5% 35,740 Bemis Co., Inc. 933,529 12,300 Pactiv Corp.(1) 305,409 ----------- 1,238,938 ----------- DISTRIBUTORS -- 1.1% 12,856 Genuine Parts Co. 516,940 ----------- DIVERSIFIED -- 4.2% 49,100 iShares Russell Midcap Value Index Fund 1,925,702 1,596 iShares S&P MidCap 400 Index Fund 115,487 ----------- 2,041,189 ----------- DIVERSIFIED FINANCIAL SERVICES -- 0.7% 10,500 McGraw-Hill Companies, Inc. (The) 331,905 ----------- DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.2% 5,800 CenturyTel Inc. 212,570 4,700 Embarq Corp. 190,585 13,600 Frontier Communications Corp. 156,400 ----------- 559,555 ----------- ELECTRIC UTILITIES -- 6.7% 29,784 Empire District Electric Co. 635,888 25,024 IDACORP, Inc. 727,948 33,296 Portland General Electric Co. 787,784 36,000 Sierra Pacific Resources 344,880 34,031 Westar Energy Inc. 784,074 ----------- 3,280,574 ----------- ELECTRICAL EQUIPMENT -- 1.4% 18,800 Hubbell Inc. Cl B 658,940 ----------- ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 3.2% 7,900 AVX Corp. 80,501 5,529 Littelfuse, Inc.(1) 164,377 30,558 Molex Inc. 686,027 16,824 Tyco Electronics Ltd. 465,352 27,200 Vishay Intertechnology, Inc.(1) 180,064 ----------- 1,576,321 ----------- - ------ 14 Shares Value FOOD PRODUCTS -- 4.6% 5,000 Campbell Soup Co. $ 193,000 48,507 ConAgra Foods, Inc. 943,946 7,606 Hershey Co. (The) 300,741 3,300 Hormel Foods Corp. 119,724 4,600 Kellogg Co. 258,060 31,390 Maple Leaf Foods Inc. ORD 252,146 13,174 Tyson Foods, Inc. Cl A 157,298 ----------- 2,224,915 ----------- GAS UTILITIES -- 2.1% 10,300 AGL Resources Inc. 323,214 12,320 Southwest Gas Corp. 372,803 10,553 WGL Holdings Inc. 342,445 ----------- 1,038,462 ----------- HEALTH CARE EQUIPMENT & SUPPLIES -- 3.4% 11,860 Beckman Coulter, Inc. 841,941 13,900 Boston Scientific Corp.(1) 170,553 3,300 Hospira Inc.(1) 126,060 10,762 Symmetry Medical Inc.(1) 199,743 5,100 Zimmer Holdings Inc.(1) 329,256 ----------- 1,667,553 ----------- HEALTH CARE PROVIDERS & SERVICES -- 1.0% 6,400 LifePoint Hospitals Inc.(1) 205,696 4,800 Patterson Companies, Inc.(1) 145,968 2,102 Universal Health Services, Inc. Cl B 117,775 ----------- 469,439 ----------- HEALTH CARE TECHNOLOGY -- 0.5% 13,900 IMS Health Inc. 262,849 ----------- HOTELS, RESTAURANTS & LEISURE -- 3.0% 19,686 International Speedway Corp. Cl A 765,983 35,730 Speedway Motorsports Inc. 696,020 ----------- 1,462,003 ----------- HOUSEHOLD DURABLES -- 0.7% 4,100 Whirlpool Corp. 325,089 ----------- HOUSEHOLD PRODUCTS -- 4.2% 5,900 Clorox Co. 369,871 25,595 Kimberly-Clark Corp. 1,659,580 ----------- 2,029,451 ----------- INSURANCE -- 8.6% 18,035 Allstate Corp. 831,774 16,100 Chubb Corp. 883,890 14,639 Gallagher (Arthur J.) & Co. 375,637 Shares Value 2,943 Hartford Financial Services Group Inc. (The) $ 120,634 9,400 HCC Insurance Holdings, Inc. 253,800 30,151 Horace Mann Educators Corp. 388,043 8,500 Lincoln National Corp. 363,885 29,754 Marsh & McLennan Companies, Inc. 944,988 ----------- 4,162,651 ----------- IT SERVICES -- 0.4% 4,000 Automatic Data Processing, Inc. 171,000 ----------- LEISURE EQUIPMENT & PRODUCTS -- 0.3% 7,885 RC2 Corp.(1) 157,700 ----------- MACHINERY -- 2.0% 31,145 Altra Holdings Inc.(1) 459,700 6,500 Dover Corp. 263,575 5,700 Kaydon Corp. 256,842 ----------- 980,117 ----------- METALS & MINING -- 0.8% 9,200 Alcoa Inc. 207,736 5,000 Newmont Mining Corp. 193,800 ----------- 401,536 ----------- MULTILINE RETAIL -- 0.2% 4,500 Family Dollar Stores, Inc. 106,650 ----------- MULTI-UTILITIES -- 4.8% 10,900 Ameren Corp. 425,427 7,600 Consolidated Edison, Inc. 326,496 11,594 Puget Energy, Inc. 309,560 14,960 Wisconsin Energy Corp. 671,704 30,797 Xcel Energy Inc. 615,632 ----------- 2,348,819 ----------- OIL, GAS & CONSUMABLE FUELS -- 4.6% 5,748 Apache Corp. 599,401 29,542 Equitable Resources Inc. 1,083,896 2,300 Murphy Oil Corp. 147,522 4,700 Noble Energy Inc. 261,273 10,300 Talisman Energy Inc. 146,466 ----------- 2,238,558 ----------- PAPER & FOREST PRODUCTS -- 2.0% 7,400 International Paper Co. 193,732 14,948 MeadWestvaco Corp. 348,438 7,206 Weyerhaeuser Co. 436,539 ----------- 978,709 ----------- PHARMACEUTICALS -- 1.4% 17,900 Bristol-Myers Squibb Co. 373,215 10,252 Watson Pharmaceuticals, Inc.(1) 292,182 ----------- 665,397 ----------- - ------ 15 Shares Value REAL ESTATE INVESTMENT TRUSTS (REITS) -- 3.4% 3,600 Boston Properties Inc. $ 337,176 14,900 Host Hotels & Resorts Inc. 198,021 6,800 ProLogis 280,636 2,500 Public Storage Inc. 247,525 12,188 Rayonier, Inc. 577,102 ----------- 1,640,460 ----------- ROAD & RAIL -- 0.3% 8,800 Heartland Express, Inc. 136,576 ----------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 1.5% 13,200 Applied Materials, Inc. 199,716 11,800 KLA-Tencor Corp. 373,470 22,000 Teradyne, Inc.(1) 171,820 ----------- 745,006 ----------- SOFTWARE -- 0.6% 14,935 Synopsys, Inc.(1) 297,953 ----------- SPECIALTY RETAIL -- 0.8% 12,162 Lowe's Companies, Inc. 288,118 1,900 Sherwin-Williams Co. (The) 108,604 ----------- 396,722 ----------- THRIFTS & MORTGAGE FINANCE -- 3.7% 70,033 People's United Financial, Inc. 1,348,135 23,500 Washington Federal, Inc. 433,575 ----------- 1,781,710 ----------- Shares Value TRADING COMPANIES & DISTRIBUTORS -- 0.3% 9,400 Interline Brands Inc.(1) $ 152,374 ----------- WATER UTILITIES -- 0.4% 9,414 American Water Works Co., Inc. 202,401 ----------- TOTAL COMMON STOCKS (Cost $49,044,494) 47,631,050 ----------- Temporary Cash Investments -- 1.2% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 7.125%, 2/15/23, valued at $611,681), in a joint trading account at 0.40%, dated 9/30/08, due 10/1/08 (Delivery value $600,007) (Cost $600,000) 600,000 ----------- TOTAL INVESTMENT SECURITIES -- 99.2% (Cost $49,644,494) 48,231,050 ----------- OTHER ASSETS AND LIABILITIES -- 0.8% 412,838 ----------- TOTAL NET ASSETS -- 100.0% $48,643,888 =========== Forward Foreign Currency Exchange Contracts Contracts to Sell Settlement Date Value Unrealized Gain (Loss) 335,185 CAD for USD 10/31/08 $315,470 $ 8,803 142,131 Euro for USD 10/31/08 200,742 6,942 -------- -------- $516,212 $15,745 ======== ======== (Value on Settlement Date $531,957) Notes to Schedule of Investments CAD = Canadian Dollar ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. See Notes to Financial Statements. - ------ 16 STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2008 (UNAUDITED) NT Large Company NT Mid Cap Value Value ASSETS Investment securities, at value (cost of $116,899,742 and $49,644,494, respectively) $104,130,005 $48,231,050 Cash 587,933 288,174 Receivable for investments sold 130,384 1,637,697 Receivable for forward foreign currency exchange contracts -- 15,745 Receivable for variation margin on futures contracts 179,820 -- Dividends and interest receivable 178,792 105,208 ------------ ----------- 105,206,934 50,277,874 ------------ ----------- LIABILITIES Payable for investments purchased 66,489 1,600,949 Accrued management fees 55,599 33,037 ------------ ----------- 122,088 1,633,986 ------------ ----------- NET ASSETS $105,084,846 $48,643,888 ============ =========== INSTITUTIONAL CLASS CAPITAL SHARES, $0.01 PAR VALUE Authorized 30,000,000 30,000,000 ============ =========== Outstanding 12,523,496 5,504,501 ============ =========== NET ASSET VALUE PER SHARE $8.39 $8.84 ============ =========== NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $128,202,800 $55,100,302 Undistributed net investment income 70,701 60,370 Accumulated net realized loss on investment and foreign currency transactions (10,071,534) (5,119,081) Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies (13,117,121) (1,397,703) ------------ ----------- $105,084,846 $48,643,888 ============ =========== See Notes to Financial Statements. - ------ 17 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) NT Large Company NT Mid Cap Value Value INVESTMENT INCOME (LOSS) INCOME: Dividends (net of foreign taxes withheld of $11,931 and $1,914 respectively) $ 1,569,759 $ 664,208 Interest 48,316 6,893 Securities lending, net 16,215 27,751 ------------- ----------- 1,634,290 698,852 ------------- ----------- EXPENSES: Management fees 332,147 196,917 Directors' fees and expenses 1,602 737 Other expenses 104 1,306 ------------- ----------- 333,853 198,960 ------------- ----------- NET INVESTMENT INCOME (LOSS) 1,300,437 499,892 ------------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment and foreign currency transactions (9,112,594) (731,797) Futures transactions (267,226) -- ------------- ----------- (9,379,820) (731,797) ------------- ----------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments and translation of assets and liabilities in foreign currencies (6,473,045) (421,559) Futures (333,926) -- ------------- ----------- (6,806,971) (421,559) ------------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) (16,186,791) (1,153,356) ------------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(14,886,354) $(653,464) ============= =========== See Notes to Financial Statements. - ------ 18 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED SEPTEMBER 30, 2008 (UNAUDITED) AND YEAR ENDED MARCH 31, 2008 NT Large Company Value NT Mid Cap Value Increase (Decrease) in March 31, Sept. 30, March 31, Net Assets Sept. 30, 2008 2008 2008 2008 OPERATIONS Net investment income (loss) $ 1,300,437 $ 1,860,725 $ 499,892 $ 588,915 Net realized gain (loss) (9,379,820) 231,787 (731,797) (2,452,313) Change in net unrealized appreciation (depreciation) (6,806,971) (12,577,054) (421,559) (2,674,647) ------------ ------------ ----------- ----------- Net increase (decrease) in net assets resulting from operations (14,886,354) (10,484,542) (653,464) (4,538,045) ------------ ------------ ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income (1,252,090) (1,863,182) (479,235) (608,003) From net realized gains -- (1,095,232) -- (3,708,762) ------------ ------------ ----------- ----------- Decrease in net assets from distributions (1,252,090) (2,958,414) (479,235) (4,316,765) ------------ ------------ ----------- ----------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 26,541,866 48,365,507 8,728,317 25,235,011 Payments for shares redeemed (3,936,140) (8,275,312) (4,783,670) (3,922,971) ------------ ------------ ----------- ----------- Net increase (decrease) in net assets from capital share transactions 22,605,726 40,090,195 3,944,647 21,312,040 ------------ ------------ ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS 6,467,282 26,647,239 2,811,948 12,457,230 NET ASSETS Beginning of period 98,617,564 71,970,325 45,831,940 33,374,710 ------------ ------------ ----------- ----------- End of period $105,084,846 $98,617,564 $48,643,888 $45,831,940 ============ ============ =========== =========== Undistributed net investment income $70,701 $22,354 $60,370 $39,713 ============ ============ =========== =========== TRANSACTIONS IN SHARES OF THE FUNDS Sold 2,805,013 4,428,581 949,049 2,465,147 Redeemed (442,744) (732,587) (517,221) (349,992) ------------ ------------ ----------- ----------- Net increase (decrease) in shares of the funds 2,362,269 3,695,994 431,828 2,115,155 ============ ============ =========== =========== See Notes to Financial Statements. - ------ 19 NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2008 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. NT Large Company Value Fund (NT Large Company Value) and NT Mid Cap Value Fund (NT Mid Cap Value) (collectively, the funds) are two funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objective is to seek long-term capital growth. Income is a secondary objective. The funds pursue their investment objective by investing in stocks of companies that management believes to be undervalued at the time of purchase. NT Large Company Value invests primarily in companies with larger market capitalization. NT Mid Cap Value invests in mid-sized market capitalization companies. The funds are not permitted to invest in any securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry. The following is a summary of the funds' significant accounting policies. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. EXCHANGE TRADED FUNDS -- The funds may invest in exchange traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have management fees, which increase their cost. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. - ------ 20 Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. FUTURES CONTRACTS -- The funds may enter into futures contracts in order to manage the funds' exposure to changes in market conditions. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Upon entering into a futures contract, the funds are required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the funds. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The funds recognize a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on futures transactions and unrealized appreciation (depreciation) on futures, respectively. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The income earned, net of any rebates or fees, is included in the Statement of Operations. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. REPURCHASE AGREEMENTS -- The funds 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. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each 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 each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), 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 each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The funds have adopted the provisions of Financial Accounting Standards Board Interpretation No. 48, "Accounting for Income Taxes" during the current fiscal year. All tax years for the funds remain subject to examination by tax authorities. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. - ------ 21 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 funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee). The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century Investments family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for NT Large Company Value ranges from 0.50% to 0.70%. The effective annual management fee for NT Large Company Value for the six months ended September 30, 2008 was 0.62%. The annual management fee for NT Mid Cap Value is 0.80%. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The funds are wholly owned, in aggregate, by various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in the funds for the purpose of exercising management or control. The funds are eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended September 30, 2008, were as follows: NT Large Company Value NT Mid Cap Value Purchases $35,778,994 $44,445,847 Proceeds from sales $14,861,287 $40,084,150 - ------ 22 4. SECURITIES LENDING As of September 30, 2008, the funds did not have any securities on loan. JPMCB receives and maintains collateral in the form of cash and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The funds' risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the funds may be delayed or limited. 5. FAIR VALUE MEASUREMENTS The funds' securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the funds. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as the 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 an indication of the risks associated with investing in these securities or other financial instruments. The following is a summary of the valuation inputs used to determine the fair value of the funds' securities and other financial instruments as of September 30, 2008: Value of Investment Unrealized Gain (Loss) on Fund/Valuation Inputs Securities Other Financial Instruments* NT LARGE COMPANY VALUE Level 1 -- Quoted Prices $ 99,330,005 $ (347,384) Level 2 -- Other Significant Observable Inputs 4,800,000 -- Level 3 -- Significant Unobservable Inputs -- -- ------------- ----------- $ 104,130,005 $ (347,384) ============= =========== NT MID CAP VALUE Level 1 -- Quoted Prices $ 47,074,617 -- Level 2 -- Other Significant Observable Inputs 1,156,433 $ 15,745 Level 3 -- Significant Unobservable Inputs -- -- ------------- ----------- $ 48,231,050 $ 15,745 ============= =========== *Includes forward foreign currency exchange contracts and futures contracts. 6. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement with Bank of America, N.A. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement, which is subject to annual renewal, bear interest at the Federal Funds rate plus 0.40%. The funds did not borrow from the line during the six months ended September 30, 2008. - ------ 23 7. RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of September 30, 2008, the components of investments for federal income tax purposes were as follows: NT Large Company NT Mid Cap Value Value Federal tax cost of investments $117,979,414 $52,435,699 ============= ============ Gross tax appreciation of investments $4,396,371 $1,425,974 Gross tax depreciation of investments (18,245,780) (5,630,623) ------------- ------------ Net tax appreciation (depreciation) of investments $(13,849,409) $(4,204,649) ============= ============ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of March 31, 2008, NT Large Company Value and NT Mid Cap Value had $(117,578) and $(2,443,256) of capital loss deferrals, respectively. These deferrals represent net capital losses incurred in the five-month period ended March 31, 2008. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. RECENTLY ISSUED ACCOUNTING STANDARDS The Financials Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 does not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities--an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for fiscal years beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 24 FINANCIAL HIGHLIGHTS NT Large Company Value For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.71 $11.13 $10.00 -------- ------- -------- Income From Investment Operations Net Investment Income (Loss) 0.11(3) 0.22 0.18 Net Realized and Unrealized Gain (Loss) (1.32) (1.29) 1.14 -------- ------- -------- Total From Investment Operations (1.21) (1.07) 1.32 -------- ------- -------- Distributions From Net Investment Income (0.11) (0.22) (0.18) From Net Realized Gains -- (0.13) (0.01) -------- ------- -------- Total Distributions (0.11) (0.35) (0.19) -------- ------- -------- Net Asset Value, End of Period $8.39 $9.71 $11.13 ======== ======= ======== TOTAL RETURN(4) (12.58)% (9.93)% 13.26% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.63%(5) 0.62% 0.63%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.44%(5) 2.10% 2.01%(5) Portfolio Turnover Rate 15% 20% 18% Net Assets, End of Period (in thousands) $105,085 $98,618 $71,970 (1) Six months ended September 30, 2008 (unaudited). (2) May 12, 2006 (fund inception) through March 31, 2007. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Annualized. See Notes to Financial Statements. - ------ 25 NT Mid Cap Value For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2008(1) 2008 2007(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.04 $11.28 $10.00 -------- -------- -------- Income From Investment Operations Net Investment Income (Loss) 0.09(3) 0.16(3) 0.14 Net Realized and Unrealized Gain (Loss) (0.20) (1.29) 1.44 -------- -------- -------- Total From Investment Operations (0.11) (1.13) 1.58 -------- -------- -------- Distributions From Net Investment Income (0.09) (0.15) (0.12) From Net Realized Gains -- (0.96) (0.18) -------- -------- -------- Total Distributions (0.09) (1.11) (0.30) -------- -------- -------- Net Asset Value, End of Period $8.84 $9.04 $11.28 ======== ======== ======== TOTAL RETURN(4) (1.27)% (10.79)% 16.03% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 0.81%(5) 0.80% 0.80%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.03%(5) 1.48% 1.55%(5) Portfolio Turnover Rate 84% 208% 203% Net Assets, End of Period (in thousands) $48,644 $45,832 $33,375 (1) Six months ended September 30, 2008 (unaudited). (2) May 12, 2006 (fund inception) through March 31, 2007. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Annualized. See Notes to Financial Statements. - ------ 26 APPROVAL OF MANAGEMENT AGREEMENTS NT Large Company Value and NT Mid Cap Value 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 independent directors or trustees (the "Directors") each year. At American Century Investments, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. Under a Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning NT Large Company Value and NT Mid Cap Value (the "funds") and the services provided to the funds under the management agreement. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds; * reports on the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * information about the compliance policies, procedures, and regulatory experience of the advisor; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two in-person meetings and one telephonic meeting to review and discuss the information provided. The board also had the benefit of the advice of its independent counsel throughout the period. FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. In connection with their review of - ------ 27 the fund, 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 under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. 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 funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of the services provided by the advisor have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided to the funds is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with its investment objectives and approved strategies. 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. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the funds. The Directors also review detailed performance information during the 15(c) Process comparing the funds' performance with that of similar funds not managed by the - ------ 28 advisor. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. NT Mid Cap Value's performance was above the median for its peer group for the three-year period and below the median for the one-year period. NT Large Company Value's performance fell below the median for its peer group for both the one- and three-year periods during the past year. The board discussed the fund's performance with the advisor and was satisfied with the efforts being undertaken by the advisor. The board will continue to monitor these efforts and the performance of the fund. More detailed information about the funds' performance can be found in the PERFORMANCE and PORTFOLIO COMMENTARY sections of this report. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. 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 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. COSTS OF SERVICES PROVIDED AND PROFITABILITY. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate 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 funds. ETHICS. The Directors generally consider 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 Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various functions to the funds, and the fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the funds increase in size, and through reinvestment in its business to provide shareholders additional content and services. - ------ 29 COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). 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 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 Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the fund's unified fee to the total expense ratio of other funds in the fund's peer group. The unified fee charged to shareholders of each of the funds was below the median of the total expense ratios of their respective peer groups. The board concluded that the management fee paid by the funds to the advisor was reasonable in light of the services provided to the funds. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use the fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors 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 Directors also determined that the advisor is able to provide investment management services to certain clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the fund to determine breakpoints in the funds' fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the board, including all of the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor concluded that the investment management agreement between the funds and the advisor is fair and reasonable in light of the services provided and should be renewed. - ------ 30 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] 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. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the funds' investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The funds file their 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 funds' 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 funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 31 INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 1000® GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 1000® VALUE INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL 2000® INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL 2000® VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP® GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL MIDCAP® VALUE INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 32 [back cover] [american century investments logo and text logo ®] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE . . . . . . . . . . . . . . . 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE . . . . . . . . . . . . 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS . . . . . . . . . . . . . . . . . . . . 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES . . . . . . 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF . . . . . . . . . 1-800-634-4113 AMERICAN CENTURY CAPITAL PORTFOLIOS, 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. American Century Investment Services, Inc., Distributor ©2008 American Century Proprietary Holdings, Inc. All rights reserved. 0811 CL-SAN-61609N
ITEM 2. CODE OF ETHICS. Not applicable for semiannual report filings. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semiannual report filings. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semiannual report filings. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. INVESTMENTS. (a) The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. (b) Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant's board. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable for semiannual report filings. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. By: /s/ Jonathan S. Thomas -------------------------------------------------- Name: Jonathan S. Thomas Title: President Date: November 28, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Jonathan S. Thomas --------------------------------------------------- Name: Jonathan S. Thomas Title: President (principal executive officer) Date: November 28, 2008 By: /s/ Robert J. Leach --------------------------------------------------- Name: Robert J. Leach Title: Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: November 28, 2008