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: | 10-31 | |||||
Date of reporting period: | 04-30-2016 |
ITEM 1. REPORTS TO STOCKHOLDERS.
SEMIANNUAL REPORT | |
APRIL 30, 2016 | |
AC Alternatives® Long Short Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. | |
Jonathan Thomas |
Economic Growth Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 78.4% |
Warrants | 0.1% |
Common Stocks Sold Short | (10.8)% |
Exchange-Traded Funds Sold Short | (19.6)% |
Temporary Cash Investments | 19.6% |
Other Assets and Liabilities | 32.3%* |
*Amount relates primarily to deposits with broker for securities sold short at period end.
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2015 to April 30, 2016.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1) 11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $971.90 | $15.54 | 3.17% |
Institutional Class | $1,000 | $971.30 | $14.56 | 2.97% |
A Class | $1,000 | $970.40 | $16.75 | 3.42% |
C Class | $1,000 | $966.90 | $20.39 | 4.17% |
R Class | $1,000 | $968.90 | $17.97 | 3.67% |
R6 Class | $1,000 | $972.60 | $13.83 | 2.82% |
Hypothetical | ||||
Investor Class | $1,000 | $1,009.10 | $15.84 | 3.17% |
Institutional Class | $1,000 | $1,010.09 | $14.84 | 2.97% |
A Class | $1,000 | $1,007.86 | $17.07 | 3.42% |
C Class | $1,000 | $1,004.13 | $20.78 | 4.17% |
R Class | $1,000 | $1,006.61 | $18.31 | 3.67% |
R6 Class | $1,000 | $1,010.84 | $14.10 | 2.82% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 78.4% | ||||
Aerospace and Defense — 3.0% | ||||
Airbus Group SE | 2,417 | $ | 151,138 | |
General Dynamics Corp.(1) | 141 | 19,813 | ||
Honeywell International, Inc. | 3,098 | 354,009 | ||
L-3 Communications Holdings, Inc.(1) | 57 | 7,497 | ||
Lockheed Martin Corp.(1) | 2,274 | 528,432 | ||
Northrop Grumman Corp.(1) | 93 | 19,182 | ||
Raytheon Co. | 2,568 | 324,467 | ||
Textron, Inc.(1) | 150 | 5,802 | ||
United Technologies Corp. | 564 | 58,865 | ||
1,469,205 | ||||
Air Freight and Logistics — 1.1% | ||||
Deutsche Post AG | 6,822 | 200,288 | ||
FedEx Corp.(1) | 2,124 | 350,693 | ||
550,981 | ||||
Auto Components — 0.3% | ||||
Autoliv, Inc. SDR | 1,215 | 147,214 | ||
Goodyear Tire & Rubber Co. (The)(1) | 182 | 5,273 | ||
Johnson Controls, Inc.(1) | 346 | 14,324 | ||
166,811 | ||||
Automobiles — 0.1% | ||||
Ford Motor Co.(1) | 2,647 | 35,893 | ||
General Motors Co.(1) | 1,085 | 34,503 | ||
70,396 | ||||
Banks — 6.8% | ||||
ABN AMRO Group NV CVA(3) | 6,173 | 131,967 | ||
Banco Macro SA ADR(1) | 670 | 41,962 | ||
Bank of America Corp. | 54,842 | 798,500 | ||
Bank of the Ozarks, Inc. | 7,488 | 309,254 | ||
BB&T Corp.(1) | 538 | 19,034 | ||
BBVA Banco Frances SA ADR(1) | 1,786 | 37,685 | ||
CIT Group, Inc.(1) | 117 | 4,045 | ||
Citigroup, Inc.(1) | 2,074 | 95,985 | ||
Citizens Financial Group, Inc.(1) | 215 | 4,913 | ||
Comerica, Inc.(1) | 121 | 5,372 | ||
Danske Bank A/S | 9,531 | 269,520 | ||
Fifth Third Bancorp(1) | 553 | 10,125 | ||
First Republic Bank(1) | 98 | 6,891 | ||
Grupo Financiero Galicia SA ADR(1) | 1,565 | 44,556 | ||
Huntington Bancshares, Inc.(1) | 552 | 5,553 | ||
ING Groep NV CVA | 13,421 | 164,358 | ||
JPMorgan Chase & Co.(1) | 3,937 | 248,818 | ||
KBC Groep NV | 2,635 | 147,934 | ||
KeyCorp(1) | 584 | 7,177 | ||
M&T Bank Corp.(1) | 110 | 13,015 | ||
Nordea Bank AB | 7,887 | 76,558 |
6
Shares | Value | |||
PNC Financial Services Group, Inc. (The)(1) | 356 | $ | 31,250 | |
Regions Financial Corp.(1) | 918 | 8,611 | ||
Signature Bank(3) | 1,231 | 169,669 | ||
SunTrust Banks, Inc.(1) | 354 | 14,776 | ||
U.S. Bancorp(1) | 1,150 | 49,093 | ||
Wells Fargo & Co.(1) | 3,232 | 161,535 | ||
Western Alliance Bancorp(3) | 11,843 | 433,217 | ||
3,311,373 | ||||
Beverages — 3.8% | ||||
Coca-Cola Co. (The)(1) | 7,036 | 315,213 | ||
Constellation Brands, Inc., Class A | 7,114 | 1,110,211 | ||
Molson Coors Brewing Co., Class B(1) | 4,780 | 457,111 | ||
1,882,535 | ||||
Biotechnology — 0.7% | ||||
Gilead Sciences, Inc.(1) | 3,685 | 325,054 | ||
Capital Markets — 1.5% | ||||
Affiliated Managers Group, Inc.(3) | 1,474 | 251,051 | ||
Bank of New York Mellon Corp. (The)(1) | 683 | 27,484 | ||
BlackRock, Inc.(1) | 58 | 20,667 | ||
Charles Schwab Corp. (The)(1) | 229 | 6,506 | ||
E*Trade Financial Corp.(1)(3) | 198 | 4,985 | ||
Franklin Resources, Inc.(1) | 264 | 9,858 | ||
Goldman Sachs Group, Inc. (The)(1) | 299 | 49,069 | ||
Invesco Ltd.(1) | 7,220 | 223,892 | ||
Morgan Stanley(1) | 1,064 | 28,792 | ||
Northern Trust Corp.(1) | 160 | 11,373 | ||
OM Asset Management plc(1) | 6,655 | 89,310 | ||
Raymond James Financial, Inc.(1) | 88 | 4,591 | ||
State Street Corp.(1) | 279 | 17,382 | ||
744,960 | ||||
Chemicals — 3.6% | ||||
Akzo Nobel NV | 2,523 | 178,798 | ||
Celanese Corp.(1) | 99 | 6,999 | ||
CF Industries Holdings, Inc.(1) | 11,218 | 370,979 | ||
Dow Chemical Co. (The)(1) | 662 | 34,828 | ||
E.I. du Pont de Nemours & Co.(1) | 338 | 22,278 | ||
Eastman Chemical Co.(1) | 76 | 5,805 | ||
Mosaic Co. (The)(1) | 248 | 6,941 | ||
Sherwin-Williams Co. (The)(1) | 3,397 | 975,992 | ||
Yara International ASA | 4,130 | 165,367 | ||
1,767,987 | ||||
Commercial Services and Supplies — 0.1% | ||||
Republic Services, Inc.(1) | 167 | 7,860 | ||
Waste Management, Inc.(1) | 287 | 16,873 | ||
24,733 | ||||
Communications Equipment — 0.5% | ||||
Cisco Systems, Inc. | 3,506 | 96,380 | ||
Harris Corp.(1) | 70 | 5,601 | ||
Juniper Networks, Inc.(1) | 221 | 5,171 | ||
Radware Ltd.(3) | 5,738 | 61,971 |
7
Shares | Value | |||
Ruckus Wireless, Inc.(3) | 4,534 | $ | 62,297 | |
231,420 | ||||
Construction Materials — 0.6% | ||||
LafargeHolcim Ltd. | 5,401 | 273,456 | ||
Martin Marietta Materials, Inc.(1) | 40 | 6,769 | ||
Vulcan Materials Co.(1) | 79 | 8,503 | ||
288,728 | ||||
Consumer Finance — 0.2% | ||||
Ally Financial, Inc.(1)(3) | 315 | 5,610 | ||
American Express Co.(1) | 485 | 31,733 | ||
Capital One Financial Corp.(1) | 381 | 27,581 | ||
Discover Financial Services(1) | 306 | 17,219 | ||
82,143 | ||||
Containers and Packaging† | ||||
WestRock Co.(1) | 162 | 6,780 | ||
Diversified Financial Services — 0.8% | ||||
Berkshire Hathaway, Inc., Class B(3) | 1,190 | 173,121 | ||
CME Group, Inc.(1) | 223 | 20,496 | ||
Intercontinental Exchange, Inc.(1) | 891 | 213,867 | ||
Voya Financial, Inc.(1) | 157 | 5,098 | ||
412,582 | ||||
Diversified Telecommunication Services — 1.0% | ||||
AT&T, Inc. | 3,579 | 138,937 | ||
Cellnex Telecom SAU | 6,625 | 109,313 | ||
CenturyLink, Inc.(1) | 394 | 12,194 | ||
Level 3 Communications, Inc.(1)(3) | 180 | 9,407 | ||
Sunrise Communications Group AG | 2,453 | 150,100 | ||
Telecom Argentina SA ADR(1) | 2,104 | 39,387 | ||
Verizon Communications, Inc.(1) | 204 | 10,392 | ||
469,730 | ||||
Electric Utilities — 1.3% | ||||
American Electric Power Co., Inc.(1) | 348 | 22,098 | ||
Duke Energy Corp.(1) | 488 | 38,445 | ||
Edison International(1) | 5,761 | 407,360 | ||
Entergy Corp.(1) | 128 | 9,623 | ||
Eversource Energy(1) | 225 | 12,699 | ||
Exelon Corp.(1) | 614 | 21,545 | ||
FirstEnergy Corp.(1) | 295 | 9,614 | ||
Pampa Energia SA ADR(3) | 1,724 | 35,273 | ||
PG&E Corp.(1) | 342 | 19,904 | ||
PPL Corp.(1) | 473 | 17,804 | ||
Southern Co. (The)(1) | 638 | 31,964 | ||
Xcel Energy, Inc.(1) | 354 | 14,171 | ||
640,500 | ||||
Electrical Equipment — 0.9% | ||||
ABB Ltd. | 10,672 | 225,611 | ||
Eaton Corp. plc(1) | 318 | 20,120 | ||
Emerson Electric Co.(1) | 142 | 7,757 | ||
Prysmian SpA | 7,251 | 170,954 | ||
424,442 |
8
Shares | Value | |||
Electronic Equipment, Instruments and Components† | ||||
Corning, Inc.(1) | 854 | $ | 15,944 | |
Energy Equipment and Services — 0.8% | ||||
Baker Hughes, Inc.(1) | 293 | 14,170 | ||
Halliburton Co.(1) | 590 | 24,373 | ||
National Oilwell Varco, Inc.(1) | 269 | 9,695 | ||
SBM Offshore NV | 6,942 | 92,963 | ||
Schlumberger Ltd. | 3,154 | 253,392 | ||
Weatherford International plc(1)(3) | 534 | 4,341 | ||
398,934 | ||||
Food and Staples Retailing — 1.1% | ||||
Costco Wholesale Corp.(1) | 1,597 | 236,563 | ||
CVS Health Corp.(1) | 56 | 5,628 | ||
METRO AG | 5,102 | 162,117 | ||
Sysco Corp.(1) | 282 | 12,992 | ||
Wal-Mart Stores, Inc. | 1,044 | 69,812 | ||
Walgreens Boots Alliance, Inc.(1) | 492 | 39,006 | ||
526,118 | ||||
Food Products — 2.9% | ||||
Adecoagro SA(1)(3) | 3,881 | 41,371 | ||
Archer-Daniels-Midland Co.(1) | 443 | 17,693 | ||
Bunge Ltd.(1) | 103 | 6,438 | ||
ConAgra Foods, Inc.(1) | 249 | 11,095 | ||
J.M. Smucker Co. (The)(1) | 1,986 | 252,182 | ||
Kraft Heinz Co. (The) | 5,194 | 405,496 | ||
Mondelez International, Inc., Class A(1) | 10,306 | 442,746 | ||
Nestle SA | 3,401 | 253,489 | ||
Tyson Foods, Inc., Class A(1) | 191 | 12,572 | ||
1,443,082 | ||||
Gas Utilities† | ||||
AGL Resources, Inc.(1) | 84 | 5,532 | ||
Health Care Equipment and Supplies — 0.9% | ||||
Abbott Laboratories | 1,018 | 39,600 | ||
Baxter International, Inc.(1) | 138 | 6,103 | ||
Becton Dickinson and Co. | 1,012 | 163,195 | ||
Boston Scientific Corp.(1)(3) | 860 | 18,851 | ||
Medtronic plc | 978 | 77,409 | ||
Sonova Holding AG | 692 | 92,478 | ||
St. Jude Medical, Inc.(1) | 85 | 6,477 | ||
Stryker Corp.(1) | 116 | 12,645 | ||
Zimmer Biomet Holdings, Inc.(1) | 112 | 12,966 | ||
429,724 | ||||
Health Care Providers and Services — 1.8% | ||||
Acadia Healthcare Co., Inc.(3) | 3,185 | 201,260 | ||
Aetna, Inc.(1) | 181 | 20,321 | ||
Anthem, Inc.(1) | 146 | 20,553 | ||
DaVita HealthCare Partners, Inc.(1)(3) | 87 | 6,429 | ||
Express Scripts Holding Co.(1)(3) | 75 | 5,530 | ||
HCA Holdings, Inc.(1)(3) | 2,557 | 206,145 | ||
Laboratory Corp. of America Holdings(1)(3) | 46 | 5,765 | ||
Quest Diagnostics, Inc.(1) | 98 | 7,367 |
9
Shares | Value | |||
Universal Health Services, Inc., Class B(1) | 3,149 | $ | 420,958 | |
894,328 | ||||
Hotels, Restaurants and Leisure — 1.1% | ||||
Arcos Dorados Holdings, Inc., Class A(3) | 13,480 | 55,942 | ||
Carnival Corp.(1) | 5,931 | 290,916 | ||
McDonald's Corp. | 1,354 | 171,267 | ||
MGM Resorts International(1)(3) | 290 | 6,177 | ||
Royal Caribbean Cruises Ltd.(1) | 120 | 9,288 | ||
533,590 | ||||
Household Durables — 0.3% | ||||
Electrolux AB | 3,962 | 114,956 | ||
Garmin Ltd. | 349 | 14,878 | ||
Whirlpool Corp.(1) | 50 | 8,707 | ||
138,541 | ||||
Household Products — 0.5% | ||||
Colgate-Palmolive Co.(1) | 77 | 5,461 | ||
Kimberly-Clark Corp.(1) | 52 | 6,510 | ||
Procter & Gamble Co. (The) | 1,880 | 150,626 | ||
Svenska Cellulosa AB SCA, B Shares | 2,504 | 78,857 | ||
241,454 | ||||
Industrial Conglomerates — 2.8% | ||||
Danaher Corp.(1) | 4,804 | 464,787 | ||
General Electric Co.(1) | 29,651 | 911,768 | ||
Roper Technologies, Inc.(1) | 43 | 7,572 | ||
1,384,127 | ||||
Insurance — 1.2% | ||||
Aflac, Inc.(1) | 296 | 20,415 | ||
Ageas | 3,663 | 143,697 | ||
Alleghany Corp.(1)(3) | 11 | 5,734 | ||
Allstate Corp. (The)(1) | 283 | 18,409 | ||
American International Group, Inc. | 910 | 50,796 | ||
Arch Capital Group Ltd.(1)(3) | 86 | 6,062 | ||
Chubb Ltd.(1) | 320 | 37,715 | ||
Cincinnati Financial Corp.(1) | 114 | 7,525 | ||
Everest Re Group Ltd.(1) | 31 | 5,732 | ||
FNF Group(1) | 192 | 6,125 | ||
Hartford Financial Services Group, Inc. (The)(1) | 293 | 13,003 | ||
Lincoln National Corp.(1) | 175 | 7,604 | ||
Loews Corp.(1) | 215 | 8,531 | ||
Markel Corp.(1)(3) | 8 | 7,193 | ||
Marsh & McLennan Cos., Inc.(1) | 149 | 9,409 | ||
MetLife, Inc.(1) | 647 | 29,180 | ||
Principal Financial Group, Inc.(1) | 201 | 8,579 | ||
Progressive Corp. (The)(1) | 403 | 13,138 | ||
Prudential Financial, Inc.(1) | 310 | 24,069 | ||
Swiss Life Holding AG | 536 | 135,271 | ||
Torchmark Corp.(1) | 87 | 5,037 | ||
Travelers Cos., Inc. (The)(1) | 218 | 23,958 | ||
Unum Group(1) | 173 | 5,918 | ||
XL Group plc(1) | 213 | 6,972 | ||
600,072 |
10
Shares | Value | |||
Internet and Catalog Retail — 2.0% | ||||
Amazon.com, Inc.(3) | 687 | $ | 453,138 | |
Priceline Group, Inc. (The)(3) | 380 | 510,591 | ||
963,729 | ||||
Internet Software and Services — 5.9% | ||||
Alphabet, Inc., Class A(3) | 404 | 285,983 | ||
Facebook, Inc., Class A(3) | 8,250 | 970,035 | ||
MercadoLibre, Inc. | 430 | 53,703 | ||
Rackspace Hosting, Inc.(3) | 4,344 | 99,347 | ||
Tencent Holdings Ltd. | 39,962 | 818,621 | ||
Yahoo!, Inc.(1)(3) | 18,391 | 673,111 | ||
2,900,800 | ||||
IT Services — 0.4% | ||||
Amdocs Ltd.(1) | 106 | 5,993 | ||
Automatic Data Processing, Inc.(1) | 65 | 5,749 | ||
Computer Sciences Corp.(1) | 1,886 | 62,483 | ||
CSRA, Inc. | 3,125 | 81,125 | ||
Fidelity National Information Services, Inc.(1) | 111 | 7,304 | ||
International Business Machines Corp.(1) | 277 | 40,425 | ||
Xerox Corp.(1) | 753 | 7,229 | ||
210,308 | ||||
Leisure Products† | ||||
Mattel, Inc.(1) | 230 | 7,151 | ||
Life Sciences Tools and Services — 0.1% | ||||
Agilent Technologies, Inc.(1) | 221 | 9,043 | ||
Thermo Fisher Scientific, Inc.(1) | 182 | 26,254 | ||
35,297 | ||||
Machinery — 0.8% | ||||
Caterpillar, Inc.(1) | 349 | 27,124 | ||
Deere & Co.(1) | 192 | 16,149 | ||
Dover Corp.(1) | 111 | 7,293 | ||
GEA Group AG | 1,889 | 87,580 | ||
Ingersoll-Rand plc(1) | 171 | 11,207 | ||
Parker-Hannifin Corp.(1) | 53 | 6,149 | ||
Pentair plc(1) | 124 | 7,202 | ||
Sandvik AB | 10,746 | 110,264 | ||
SKF AB, B Shares | 5,943 | 109,455 | ||
Stanley Black & Decker, Inc.(1) | 96 | 10,744 | ||
393,167 | ||||
Marine — 0.3% | ||||
Kuehne + Nagel International AG | 901 | 129,801 | ||
Media — 6.6% | ||||
Charter Communications, Inc., Class A(1)(3) | 1,612 | 342,131 | ||
Comcast Corp., Class A(1) | 10,829 | 657,970 | ||
Discovery Communications, Inc., Class A(3) | 2,663 | 72,726 | ||
DISH Network Corp., Class A(1)(3) | 14,559 | 717,613 | ||
JCDecaux SA | 13,287 | 586,891 | ||
Liberty Braves Group, Class C(3) | 13 | 194 | ||
Liberty Media Group, Class C(3) | 34 | 612 | ||
Liberty SiriusXM Group, Class C(3) | 139 | 4,451 | ||
Mediaset SpA | 37,752 | 169,886 |
11
Shares | Value | |||
Thomson Reuters Corp.(1) | 228 | $ | 9,378 | |
Time Warner, Inc.(1) | 8,929 | 670,925 | ||
Twenty-First Century Fox, Inc., Class A(1) | 267 | 8,079 | ||
3,240,856 | ||||
Metals and Mining — 0.6% | ||||
Alcoa, Inc.(1) | 911 | 10,176 | ||
Freeport-McMoRan, Inc.(1) | 814 | 11,396 | ||
Newmont Mining Corp.(1) | 374 | 13,079 | ||
Norsk Hydro ASA | 25,341 | 110,248 | ||
Nucor Corp.(1) | 217 | 10,802 | ||
ThyssenKrupp AG | 6,373 | 148,210 | ||
303,911 | ||||
Multi-Utilities — 1.9% | ||||
Ameren Corp.(1) | 173 | 8,304 | ||
CenterPoint Energy, Inc.(1) | 303 | 6,499 | ||
CMS Energy Corp.(1) | 195 | 7,933 | ||
Consolidated Edison, Inc.(1) | 205 | 15,293 | ||
Dominion Resources, Inc.(1) | 399 | 28,517 | ||
DTE Energy Co.(1) | 128 | 11,412 | ||
Public Service Enterprise Group, Inc.(1) | 363 | 16,745 | ||
SCANA Corp.(1) | 102 | 7,006 | ||
Sempra Energy(1) | 8,016 | 828,454 | ||
WEC Energy Group, Inc.(1) | 222 | 12,923 | ||
943,086 | ||||
Multiline Retail — 0.7% | ||||
Dollar Tree, Inc.(3) | 3,958 | 315,492 | ||
Kohl's Corp.(1) | 139 | 6,158 | ||
Target Corp.(1) | 421 | 33,469 | ||
355,119 | ||||
Oil, Gas and Consumable Fuels — 2.4% | ||||
Anadarko Petroleum Corp.(1) | 359 | 18,941 | ||
Apache Corp.(1) | 269 | 14,634 | ||
California Resources Corp. | 49 | 108 | ||
Cheniere Energy, Inc.(1)(3) | 170 | 6,610 | ||
Chevron Corp.(1) | 1,302 | 133,038 | ||
Cimarex Energy Co.(1) | 66 | 7,186 | ||
Concho Resources, Inc.(1)(3) | 3,318 | 385,452 | ||
ConocoPhillips(1) | 864 | 41,291 | ||
Devon Energy Corp.(1) | 287 | 9,953 | ||
EOG Resources, Inc.(1) | 351 | 29,000 | ||
EQT Corp.(1) | 112 | 7,851 | ||
Exxon Mobil Corp.(1) | 2,931 | 259,100 | ||
Hess Corp.(1) | 179 | 10,672 | ||
HollyFrontier Corp.(1) | 113 | 4,023 | ||
Kinder Morgan, Inc.(1) | 1,239 | 22,005 | ||
Marathon Oil Corp.(1) | 480 | 6,763 | ||
Marathon Petroleum Corp.(1) | 341 | 13,326 | ||
Noble Energy, Inc.(1) | 298 | 10,761 | ||
Occidental Petroleum Corp. | 533 | 40,854 | ||
Phillips 66(1) | 373 | 30,627 | ||
Pioneer Natural Resources Co.(1) | 104 | 17,274 |
12
Shares | Value | |||
Spectra Energy Corp.(1) | 471 | $ | 14,728 | |
Tesoro Corp.(1) | 83 | 6,614 | ||
Valero Energy Corp.(1) | 350 | 20,604 | ||
YPF SA ADR(1) | 1,938 | 39,051 | ||
1,150,466 | ||||
Personal Products — 0.4% | ||||
Unilever NV CVA | 3,981 | 174,885 | ||
Pharmaceuticals — 6.1% | ||||
Allergan plc(1)(3) | 3,570 | 773,119 | ||
Bayer AG | 2,168 | 250,109 | ||
Bristol-Myers Squibb Co.(1) | 5,110 | 368,840 | ||
Endo International plc(1)(3) | 98 | 2,646 | ||
Johnson & Johnson | 5,438 | 609,491 | ||
Merck & Co., Inc. | 1,730 | 94,873 | ||
Perrigo Co. plc(1) | 80 | 7,734 | ||
Pfizer, Inc.(1) | 26,289 | 859,913 | ||
2,966,725 | ||||
Professional Services — 0.4% | ||||
Adecco SA | 2,794 | 179,849 | ||
Real Estate Investment Trusts (REITs) — 1.0% | ||||
Annaly Capital Management, Inc.(1) | 662 | 6,898 | ||
AvalonBay Communities, Inc.(1) | 91 | 16,088 | ||
Equity Residential(1) | 253 | 17,222 | ||
Essex Property Trust, Inc.(1) | 45 | 9,920 | ||
General Growth Properties, Inc.(1) | 403 | 11,296 | ||
HCP, Inc.(1) | 317 | 10,724 | ||
Host Hotels & Resorts, Inc.(1) | 538 | 8,511 | ||
Kimco Realty Corp.(1) | 283 | 7,958 | ||
Macerich Co. (The)(1) | 106 | 8,065 | ||
National Retail Properties, Inc. | 3,533 | 154,604 | ||
ProLogis, Inc.(1) | 361 | 16,393 | ||
Public Storage(1) | 592 | 144,928 | ||
Realty Income Corp.(1) | 170 | 10,064 | ||
SL Green Realty Corp.(1) | 68 | 7,145 | ||
UDR, Inc.(1) | 178 | 6,216 | ||
Ventas, Inc.(1) | 228 | 14,163 | ||
Vornado Realty Trust(1) | 130 | 12,445 | ||
Welltower, Inc.(1) | 134 | 9,302 | ||
Weyerhaeuser Co.(1) | 312 | 10,021 | ||
481,963 | ||||
Real Estate Management and Development — 0.6% | ||||
Deutsche Wohnen AG | 3,405 | 104,276 | ||
Realogy Holdings Corp.(1)(3) | 2,740 | 97,928 | ||
Vonovia SE | 3,405 | 114,569 | ||
316,773 | ||||
Road and Rail — 0.3% | ||||
CSX Corp.(1) | 492 | 13,417 | ||
Kansas City Southern(1) | 74 | 7,011 | ||
Norfolk Southern Corp.(1) | 203 | 18,292 | ||
Old Dominion Freight Line, Inc.(3) | 1,374 | 90,753 | ||
129,473 |
13
Shares | Value | |||
Semiconductors and Semiconductor Equipment — 1.6% | ||||
Applied Materials, Inc.(1) | 343 | $ | 7,021 | |
ASML Holding NV | 999 | 96,546 | ||
Broadcom Ltd. | 153 | 22,300 | ||
Intel Corp.(1) | 2,979 | 90,204 | ||
Maxim Integrated Products, Inc.(1) | 129 | 4,608 | ||
Micron Technology, Inc.(1)(3) | 659 | 7,084 | ||
NVIDIA Corp.(1) | 369 | 13,110 | ||
QUALCOMM, Inc. | 1,054 | 53,248 | ||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR(1) | 20,353 | 480,127 | ||
Xilinx, Inc.(1) | 134 | 5,773 | ||
780,021 | ||||
Software — 4.2% | ||||
Activision Blizzard, Inc.(1) | 335 | 11,548 | ||
CA, Inc.(1) | 211 | 6,258 | ||
Citrix Systems, Inc.(3) | 1,817 | 148,703 | ||
CommVault Systems, Inc.(3) | 2,082 | 91,129 | ||
Microsoft Corp.(1) | 20,170 | 1,005,878 | ||
Oracle Corp.(1) | 6,497 | 258,971 | ||
PTC, Inc.(3) | 4,281 | 156,085 | ||
SAP SE | 3,308 | 258,784 | ||
Symantec Corp.(1) | 7,483 | 124,555 | ||
Synopsys, Inc.(1)(3) | 98 | 4,657 | ||
2,066,568 | ||||
Specialty Retail† | ||||
Best Buy Co., Inc.(1) | 214 | 6,865 | ||
Staples, Inc.(1) | 473 | 4,825 | ||
11,690 | ||||
Technology Hardware, Storage and Peripherals — 1.1% | ||||
EMC Corp.(1) | 3,992 | 104,231 | ||
Hewlett Packard Enterprise Co.(1) | 1,251 | 20,842 | ||
HP, Inc.(1) | 1,235 | 15,153 | ||
SanDisk Corp.(1) | 144 | 10,819 | ||
Western Digital Corp.(1) | 9,462 | 386,665 | ||
537,710 | ||||
Textiles, Apparel and Luxury Goods — 0.2% | ||||
adidas AG | 613 | 79,036 | ||
PVH Corp.(1) | 56 | 5,353 | ||
84,389 | ||||
Tobacco — 1.1% | ||||
British American Tobacco plc | 8,333 | 507,730 | ||
Philip Morris International, Inc.(1) | 537 | 52,690 | ||
560,420 | ||||
Water Utilities† | ||||
American Water Works Co., Inc.(1) | 126 | 9,168 | ||
Wireless Telecommunication Services† | ||||
T-Mobile US, Inc.(1)(3) | 193 | 7,581 | ||
TOTAL COMMON STOCKS (Cost $37,893,798) | 38,422,712 |
14
Shares | Value | |||
WARRANTS — 0.1% | ||||
Banks — 0.1% | ||||
JPMorgan Chase & Co.(3) (Cost $30,545) | 1,426 | $ | 30,730 | |
TEMPORARY CASH INVESTMENTS(4) — 19.6% | ||||
SSgA U.S. Government Money Market Fund, Class N | 141,542 | 141,542 | ||
State Street Institutional Liquid Reserves Fund, Premier Class | 9,496,315 | 9,496,315 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $9,637,857) | 9,637,857 | |||
TOTAL INVESTMENT SECURITIES BEFORE SECURITIES SOLD SHORT — 98.1% (Cost $47,562,200) | 48,091,299 | |||
SECURITIES SOLD SHORT — (30.4)% | ||||
COMMON STOCKS SOLD SHORT — (10.8)% | ||||
Aerospace and Defense — (0.3)% | ||||
Boeing Co. (The) | (1,219) | (164,321) | ||
Air Freight and Logistics — (0.1)% | ||||
United Parcel Service, Inc., Class B | (422) | (44,339) | ||
Automobiles — (0.4)% | ||||
Ford Motor Co. | (9,067) | (122,949) | ||
Tesla Motors, Inc. | (344) | (82,821) | ||
(205,770) | ||||
Banks — (0.5)% | ||||
DBS Group Holdings Ltd. | (13,870) | (157,589) | ||
HSBC Holdings plc ADR | (2,512) | (83,725) | ||
(241,314) | ||||
Capital Markets — (0.7)% | ||||
Credit Suisse Group AG | (5,762) | (87,514) | ||
Deutsche Bank AG | (4,802) | (90,561) | ||
Goldman Sachs Group, Inc. (The) | (1,027) | (168,541) | ||
(346,616) | ||||
Chemicals — (1.4)% | ||||
Monsanto Co. | (2,726) | (255,372) | ||
Mosaic Co. (The) | (7,556) | (211,492) | ||
Potash Corp. of Saskatchewan, Inc. | (11,986) | (212,392) | ||
(679,256) | ||||
Diversified Telecommunication Services — (0.2)% | ||||
AT&T, Inc. | (2,359) | (91,576) | ||
Food and Staples Retailing — (0.7)% | ||||
Wal-Mart Stores, Inc. | (1,194) | (79,843) | ||
Whole Foods Market, Inc. | (3,934) | (114,401) | ||
Woolworths Ltd. | (9,421) | (158,379) | ||
(352,623) | ||||
Household Durables — (0.2)% | ||||
Lennar Corp., Class A | (2,531) | (114,680) | ||
Internet Software and Services — (0.2)% | ||||
Zillow Group, Inc. | (3,378) | (81,207) | ||
IT Services — (0.6)% | ||||
International Business Machines Corp. | (1,524) | (222,413) | ||
PayPal Holdings, Inc. | (2,095) | (82,082) | ||
(304,495) | ||||
Life Sciences Tools and Services — (0.3)% | ||||
Illumina, Inc. | (1,042) | (140,659 | ) |
15
Shares | Value | |||
Machinery — (0.4)% | ||||
Caterpillar, Inc. | (2,287) | $ | (177,746 | ) |
Deere & Co. | (445) | (37,429) | ||
(215,175 | ) | |||
Metals and Mining — (0.8)% | ||||
First Quantum Minerals Ltd. | (25,139) | (214,184) | ||
Glencore plc | (64,622) | (153,814) | ||
(367,998) | ||||
Multiline Retail — (0.3)% | ||||
Kohl's Corp. | (3,650) | (161,695) | ||
Oil, Gas and Consumable Fuels — (1.1)% | ||||
BP plc ADR | (10,489) | (352,221) | ||
Murphy Oil Corp. | (4,650) | (166,191) | ||
(518,412) | ||||
Pharmaceuticals — (0.3)% | ||||
Novo Nordisk A/S, B Shares | (2,308) | (128,863) | ||
Semiconductors and Semiconductor Equipment — (0.2)% | ||||
Micron Technology, Inc. | (10,478) | (112,638) | ||
Software — (0.6)% | ||||
Mobileye NV | (3,692) | (140,850) | ||
SAP SE | (1,805) | (141,205) | ||
(282,055) | ||||
Technology Hardware, Storage and Peripherals — (0.2)% | ||||
Western Digital Corp. | (2,591) | (105,881) | ||
Textiles, Apparel and Luxury Goods — (0.7)% | ||||
Cie Financiere Richemont SA | (2,500) | (166,267) | ||
Swatch Group AG (The) | (484) | (165,286) | ||
(331,553) | ||||
Trading Companies and Distributors — (0.6)% | ||||
Fastenal Co. | (6,425) | (300,626) | ||
TOTAL COMMON STOCKS SOLD SHORT (Proceeds $5,115,122) | (5,291,752) | |||
EXCHANGE-TRADED FUNDS SOLD SHORT — (19.6)% | ||||
Consumer Discretionary Select Sector SPDR Fund | (3,290) | (260,404) | ||
Health Care Select Sector SPDR Fund | (1,645) | (114,805) | ||
Industrial Select Sector SPDR Fund | (10,511) | (590,298) | ||
iShares Nasdaq Biotechnology ETF | (1,252) | (335,473) | ||
iShares Russell 1000 Growth ETF | (59,400) | (5,871,690) | ||
Materials Select Sector SPDR Fund | (5,431) | (255,800) | ||
SPDR S&P 500 ETF Trust | (7,070) | (1,458,541) | ||
SPDR S&P Regional Banking ETF | (5,838) | (235,563) | ||
Technology Select Sector SPDR Fund | (11,580) | (487,865) | ||
TOTAL EXCHANGE-TRADED FUNDS SOLD SHORT (Proceeds $9,734,119) | (9,610,439) | |||
TOTAL SECURITIES SOLD SHORT (Proceeds $14,849,241) | (14,902,191) | |||
OTHER ASSETS AND LIABILITIES(2) — 32.3% | 15,818,377 | |||
TOTAL NET ASSETS — 100.0% | $ | 49,007,485 |
16
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
CHF | 156,000 | USD | 162,705 | State Street Bank & Trust Co. | 5/18/16 | $ | 15 | |
CHF | 8,000 | USD | 8,372 | Morgan Stanley | 7/15/16 | (6 | ) | |
USD | 282,935 | CHF | 273,000 | State Street Bank & Trust Co. | 5/18/16 | (1,824 | ) | |
USD | 615,402 | CHF | 594,000 | State Street Bank & Trust Co. | 5/18/16 | (4,184 | ) | |
USD | 503,498 | CHF | 489,000 | State Street Bank & Trust Co. | 5/18/16 | (6,566 | ) | |
USD | 41,149 | CHF | 40,000 | State Street Bank & Trust Co. | 5/18/16 | (574 | ) | |
USD | 13,670 | CHF | 13,000 | Morgan Stanley | 7/15/16 | 75 | ||
USD | 108,307 | CHF | 103,000 | Morgan Stanley | 7/15/16 | 592 | ||
USD | 43,113 | CHF | 41,000 | Morgan Stanley | 7/15/16 | 236 | ||
DKK | 916,000 | USD | 139,145 | State Street Bank & Trust Co. | 5/18/16 | 1,846 | ||
DKK | 2,164,000 | USD | 329,023 | State Street Bank & Trust Co. | 5/18/16 | 4,059 | ||
USD | 90,175 | DKK | 594,000 | State Street Bank & Trust Co. | 5/18/16 | (1,253 | ) | |
USD | 376,769 | DKK | 2,486,000 | State Street Bank & Trust Co. | 5/18/16 | (5,875 | ) | |
USD | 269,546 | DKK | 1,752,000 | State Street Bank & Trust Co. | 5/18/16 | (121 | ) | |
EUR | 65,000 | USD | 73,437 | State Street Bank & Trust Co. | 5/18/16 | 1,023 | ||
EUR | 67,000 | USD | 75,315 | State Street Bank & Trust Co. | 5/18/16 | 1,436 | ||
EUR | 758,000 | USD | 857,913 | State Street Bank & Trust Co. | 5/18/16 | 10,409 | ||
EUR | 443,000 | USD | 507,347 | State Street Bank & Trust Co. | 5/18/16 | 129 | ||
EUR | 13,000 | USD | 14,919 | Morgan Stanley | 7/15/16 | — | ||
USD | 3,247,017 | EUR | 2,879,000 | State Street Bank & Trust Co. | 5/18/16 | (51,003 | ) | |
USD | 1,030,901 | EUR | 912,000 | State Street Bank & Trust Co. | 5/18/16 | (13,835 | ) | |
USD | 395,132 | EUR | 346,000 | Morgan Stanley | 7/15/16 | (1,949 | ) | |
USD | 308,340 | EUR | 270,000 | Morgan Stanley | 7/15/16 | (1,521 | ) | |
USD | 15,973 | EUR | 14,000 | Morgan Stanley | 7/15/16 | (93 | ) | |
GBP | 41,000 | USD | 59,102 | State Street Bank & Trust Co. | 5/18/16 | 807 | ||
USD | 59,485 | GBP | 42,000 | State Street Bank & Trust Co. | 5/18/16 | (1,885 | ) | |
USD | 163,917 | NOK | 1,339,000 | State Street Bank & Trust Co. | 5/18/16 | (2,370 | ) | |
USD | 109,270 | NOK | 880,000 | State Street Bank & Trust Co. | 5/18/16 | (15 | ) | |
SEK | 1,693,000 | USD | 208,424 | State Street Bank & Trust Co. | 5/18/16 | 2,508 | ||
SEK | 665,000 | USD | 81,890 | State Street Bank & Trust Co. | 5/18/16 | 963 | ||
SEK | 2,165,000 | USD | 266,593 | State Street Bank & Trust Co. | 5/18/16 | 3,145 | ||
SEK | 2,109,000 | USD | 260,658 | State Street Bank & Trust Co. | 5/18/16 | 2,103 | ||
USD | 60,736 | SEK | 494,000 | State Street Bank & Trust Co. | 5/18/16 | (812 | ) | |
USD | 747,960 | SEK | 6,069,000 | State Street Bank & Trust Co. | 5/18/16 | (8,180 | ) | |
USD | 639,917 | SEK | 5,139,000 | State Street Bank & Trust Co. | 5/18/16 | (353 | ) | |
$ | (73,073 | ) |
FUTURES CONTRACTS | ||||||||
Contracts Sold | Expiration Date | Underlying Face Amount at Value | Unrealized Appreciation (Depreciation) | |||||
1 | Amsterdam Exchange Index | May 2016 | $ | 99,997 | $ | 2,998 | ||
11 | Cotation Assistée en Continu 40 Index | May 2016 | 551,119 | (9,006 | ) | |||
3 | Deutscher Aktienindex Index | June 2016 | 866,130 | 13,764 | ||||
93 | Euro STOXX 50 Index | June 2016 | 3,170,198 | 6,616 | ||||
13 | FTSE 100 Index | June 2016 | 1,179,967 | 3,641 | ||||
1 | IBEX 35 Index | May 2016 | 103,112 | (60 | ) | |||
10 | OMX Stockholm 30 Index | May 2016 | 168,266 | (2,226 | ) | |||
27 | S&P 500 E-Mini | June 2016 | 2,779,785 | (67,605 | ) | |||
$ | 8,918,574 | $ | (51,878 | ) |
17
TOTAL RETURN SWAP AGREEMENTS* | |||||||||
Counterparty | Units | Reference Entity | Notional Amount | Value | |||||
Purchased | |||||||||
Credit Suisse Capital LLC | 14,955 | Credit Suisse Activist Index** | USD | 1,501,412 | $ | (79,150 | ) | ||
Credit Suisse Capital LLC | 2,309 | Credit Suisse Merger Arbitrage Liquid Index*** | USD | 2,500,000 | 14,460 | ||||
Goldman Sachs International | 1,402 | Capgemini SA | EUR | 103,580 | 12,266 | ||||
Goldman Sachs International | 15,333 | Credit Agricole SA | EUR | 152,238 | (4,737 | ) | |||
Goldman Sachs International | 2,922 | Faurecia | EUR | 108,240 | (3,255 | ) | |||
Goldman Sachs International | 2,336 | Cie Generale des Etablissements Michelin | EUR | 227,848 | (17,098 | ) | |||
Goldman Sachs International | 1,514 | Renault SA | EUR | 134,015 | (7,360 | ) | |||
Goldman Sachs International | 3,476 | Schneider Electric SE | EUR | 205,066 | (8,585 | ) | |||
Goldman Sachs International | 1,191 | Thales SA | EUR | 86,930 | 3,415 | ||||
Goldman Sachs International | 2,934 | TOTAL SA | EUR | 131,938 | (3,503 | ) | |||
Goldman Sachs International | 3,551 | Vinci SA | EUR | 231,686 | (43 | ) | |||
Goldman Sachs International | 3,274 | Zodiac Aerospace | EUR | 67,041 | (6 | ) | |||
Morgan Stanley Capital Services LLC | 4,654 | Abertis Infraestructuras SA | EUR | 68,536 | (6 | ) | |||
Morgan Stanley Capital Services LLC | 637 | Aena SA | EUR | 78,325 | 1,160 | ||||
Morgan Stanley Capital Services LLC | 8,261 | Aggreko plc | GBP | 85,870 | 8,445 | ||||
Morgan Stanley Capital Services LLC | 7,029 | Ashtead Group plc | GBP | 65,023 | (1,815 | ) | |||
Morgan Stanley Capital Services LLC | 26,204 | BAE Systems plc | GBP | 131,968 | (5,399 | ) | |||
Morgan Stanley Capital Services LLC | 89,337 | Banco de Sabadell SA | EUR | 151,081 | (2,264 | ) | |||
Morgan Stanley Capital Services LLC | 19,493 | Banco Santander SA | EUR | 89,616 | (2,707 | ) | |||
Morgan Stanley Capital Services LLC | 12,994 | Barratt Developments plc | GBP | 73,825 | (5,689 | ) | |||
Morgan Stanley Capital Services LLC | 2,131 | Berkely Group Holdings plc | GBP | 64,249 | (674 | ) | |||
Morgan Stanley Capital Services LLC | 6,700 | BHP Billiton plc | GBP | 62,060 | 659 | ||||
Morgan Stanley Capital Services LLC | 27,548 | BP plc | GBP | 105,366 | (3,533 | ) | |||
Morgan Stanley Capital Services LLC | 1,494 | British American Tobacco plc | GBP | 62,185 | 2,029 | ||||
Morgan Stanley Capital Services LLC | 42,331 | Centrica plc | GBP | 101,388 | (698 | ) | |||
Morgan Stanley Capital Services LLC | 6,410 | Compass Group plc | GBP | 74,150 | 5,755 | ||||
Morgan Stanley Capital Services LLC | 5,065 | CRH plc | GBP | 100,862 | (356 | ) | |||
Morgan Stanley Capital Services LLC | 35,717 | GKN plc | GBP | 103,088 | (5,194 | ) | |||
Morgan Stanley Capital Services LLC | 5,975 | GlaxoSmithKline plc | GBP | 88,945 | (2,600 | ) | |||
Morgan Stanley Capital Services LLC | 31,619 | Kingfisher plc | GBP | 118,754 | (5,489 | ) | |||
Morgan Stanley Capital Services LLC | 12,019 | National Grid plc | GBP | 119,555 | (3,596 | ) | |||
Morgan Stanley Capital Services LLC | 2,790 | Rio Tinto plc | GBP | 62,334 | 2,694 | ||||
Morgan Stanley Capital Services LLC | 25,511 | RSA Insurance Group plc | GBP | 121,643 | (6,704 | ) | |||
Morgan Stanley Capital Services LLC | 81,144 | Vodafone Group plc | GBP | 185,676 | (11,527 | ) | |||
Morgan Stanley Capital Services LLC | 1,582 | Whitbread plc | GBP | 64,329 | (4,502 | ) | |||
Morgan Stanley Capital Services LLC | 5,439 | WPP plc | GBP | 89,255 | (3,656 | ) | |||
$ | (139,263 | ) |
* The fund will pay or receive a floating rate as determined by the counterparty in accordance with guidelines outlined in the Master Confirmation Agreement. The floating rate and termination date adjust periodically and cannot be predicted with certainty.
** The Credit Suisse Activist Index is constructed to gain exposure to U.S. stocks with high ownership from 29 custom activist investors. The index consists of 25 stocks with high ownership (as filed on Form 13F with the Securities and Exchange Commission) subject to constraints on risk, liquidity and the size of activist exposure relative to firm value.
***The Credit Suisse Merger Arbitrage Liquid Index aims to achieve broad exposure to a merger arbitrage strategy using a quantitative methodology to invest in a liquid, diversified and broadly representative set of announced merger deals.
18
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CHF | - | Swiss Franc |
CVA | - | Certificaten Van Aandelen |
DKK | - | Danish Krone |
EUR | - | Euro |
FTSE | - | Financial Times Stock Exchange |
GBP | - | British Pound |
IBEX | - | Índice Bursátil Español |
NOK | - | Norwegian Krone |
OMX | - | Options Market Exchange |
SDR | - | Swedish Depositary Receipt |
SEK | - | Swedish Krona |
USD | - | United States Dollar |
† | Category is less than 0.05% of total net assets. |
(1) | Security, or a portion thereof, has been pledged at the custodian bank or with a broker for collateral requirements on securities sold short. At the period end, the aggregate value of securities pledged was $10,721,505. |
(2) | Amount relates primarily to deposits with broker for securities sold short at period end. |
(3) | Non-income producing. |
(4) | Category includes collateral received at the custodian bank for margin requirements on swap agreements. At the period end, the aggregate value of cash deposits received was $100,000. |
See Notes to Financial Statements.
19
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $47,562,200) | $ | 48,091,299 | |
Foreign currency holdings, at value (cost of $48,966) | 53,031 | ||
Deposits with broker for futures contracts and swap agreements | 1,281,676 | ||
Deposits with broker for securities sold short | 15,874,775 | ||
Receivable for investments sold | 728,503 | ||
Receivable for variation margin on futures contracts | 163,080 | ||
Unrealized appreciation on forward foreign currency exchange contracts | 29,346 | ||
Swap agreements, at value | 50,883 | ||
Dividends and interest receivable | 40,857 | ||
66,313,450 | |||
Liabilities | |||
Securities sold short, at value (proceeds of $14,849,241) | 14,902,191 | ||
Payable for collateral received for swap agreements | 100,000 | ||
Payable for investments purchased | 1,892,401 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 102,419 | ||
Swap agreements, at value | 190,146 | ||
Accrued management fees | 95,155 | ||
Distribution and service fees payable | 10,846 | ||
Dividend expense payable on securities sold short | 9,004 | ||
Broker fees and charges payable on securities sold short | 3,803 | ||
17,305,965 | |||
Net Assets | $ | 49,007,485 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 50,301,189 | |
Accumulated net investment loss | (836,387 | ) | |
Accumulated net realized loss | (671,007 | ) | |
Net unrealized appreciation | 213,690 | ||
$ | 49,007,485 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $19,627,593 | 2,013,328 | $9.75 | |||
Institutional Class, $0.01 Par Value | $5,894,660 | 604,246 | $9.76 | |||
A Class, $0.01 Par Value | $9,800,516 | 1,006,141 | $9.74* | |||
C Class, $0.01 Par Value | $9,760,782 | 1,004,564 | $9.72 | |||
R Class, $0.01 Par Value | $1,957,450 | 201,124 | $9.73 | |||
R6 Class, $0.01 Par Value | $1,966,484 | 201,480 | $9.76 |
*Maximum offering price $10.33 (net asset value divided by 0.9425).
See Notes to Financial Statements.
20
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $8,343) | $ | 400,892 | |
Interest | 16,955 | ||
417,847 | |||
Expenses: | |||
Dividend expense on securities sold short | 153,036 | ||
Broker fees and charges on securities sold short | 32,530 | ||
Management fees | 580,150 | ||
Distribution and service fees: | |||
A Class | 12,281 | ||
C Class | 49,016 | ||
R Class | 4,909 | ||
Directors' fees and expenses | 909 | ||
Other expenses | 3,069 | ||
835,900 | |||
Net investment income (loss) | (418,053 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (1,115,010 | ) | |
Securities sold short transactions | 158,931 | ||
Futures contract transactions | 162,732 | ||
Swap agreement transactions | 51,915 | ||
Foreign currency transactions | 109,864 | ||
(631,568 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 152,391 | ||
Securities sold short | (60,215 | ) | |
Futures contracts | 76,442 | ||
Swap agreements | (294,887 | ) | |
Translation of assets and liabilities in foreign currencies | (322,140 | ) | |
(448,409 | ) | ||
Net realized and unrealized gain (loss) | (1,079,977 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (1,498,030 | ) |
See Notes to Financial Statements.
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Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND PERIOD ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015(1) | ||||
Operations | ||||||
Net investment income (loss) | $ | (418,053 | ) | $ | (55,220 | ) |
Net realized gain (loss) | (631,568 | ) | (45,758 | ) | ||
Change in net unrealized appreciation (depreciation) | (448,409 | ) | 662,099 | |||
Net increase (decrease) in net assets resulting from operations | (1,498,030 | ) | 561,121 | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (154,800 | ) | — | |||
Institutional Class | (48,900 | ) | — | |||
A Class | (72,200 | ) | — | |||
C Class | (56,500 | ) | — | |||
R Class | (13,400 | ) | — | |||
R6 Class | (16,940 | ) | — | |||
Decrease in net assets from distributions | (362,740 | ) | — | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 307,134 | 50,000,000 | ||||
Net increase (decrease) in net assets | (1,553,636 | ) | 50,561,121 | |||
Net Assets | ||||||
Beginning of period | 50,561,121 | — | ||||
End of period | $ | 49,007,485 | $ | 50,561,121 | ||
Accumulated net investment loss | $ | (836,387 | ) | $ | (55,594 | ) |
(1) | October 15, 2015 (fund inception) through October 31, 2015. |
See Notes to Financial Statements.
22
Notes to Financial Statements |
APRIL 30, 2016 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. AC Alternatives Long Short Fund (formerly AC Alternatives Equity Fund) (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek to provide capital appreciation.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. All classes of the fund commenced operations on October 15, 2015, the fund's inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Exchange-traded futures and options contracts are valued based on quoted prices as provided by the appropriate exchange. Swap agreements are valued at an evaluated price as provided by independent pricing services or independent brokers. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service. Investments initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
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The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Securities Sold Short — The fund enters into short sales, which is selling securities it does not own, as part of its normal investment activities. Upon selling a security short, the fund will segregate cash, cash equivalents or other appropriate liquid securities in at least an amount equal to the current market value of the securities sold short until the fund replaces the borrowed security. Interest earned on segregated cash for securities sold short is reflected as interest income. The fund is required to pay any dividends or interest due on securities sold short. Such dividends and interest are recorded as an expense. The fund may pay fees or charges to the broker on the assets borrowed for securities sold short. These fees are calculated daily based upon the value of each security sold short and a rate that is dependent on the availability of such security. If the market price of a security increases after the fund borrows the security, the fund may suffer a loss when it replaces the borrowed security at the higher price. Any loss will be increased by the amount of compensation, interest or dividends, and transaction costs the fund must pay to the lender of the borrowed security. Liabilities for securities sold short are valued daily and changes in value are recorded as change in net unrealized appreciation (depreciation) on securities sold short. The fund records realized gain (loss) on a security sold short when it is terminated by the fund and includes as a component of net realized gain (loss) on securities sold short transactions.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively. Net realized and unrealized foreign currency exchange gains or losses related to securities sold short are a component of net realized gain (loss) on securities sold short transactions and change in net unrealized appreciation (depreciation) on securities sold short, respectively.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investments, including, but not limited to, short sales, futures contracts, options contracts, forward commitments, when-issued securities, swap agreements and certain forward foreign currency exchange contracts. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on short sales, futures contracts, options contracts, forward commitments and swap agreements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms
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and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. ACIM has engaged Perella Weinberg Partners Capital Management LP (PWP) as a subadvisor for the fund. PWP is responsible for making recommendations with respect to hiring, terminating, or replacing the fund’s underlying subadvisors. The fund’s underlying
subadvisors at the period end were Passport Capital, LLC, Sirios Capital Management, L.P. and Three Bridges Capital, LP. PWP determines the percentage of the fund’s portfolio allocated to each subadvisor, including PWP, in order to seek to achieve the fund’s investment objective. ACIM is responsible for entering into subadvisory agreements and overseeing the activities of each of the subadvisors including monitoring compliance with fund objectives, strategies and restrictions. ACIM pays all costs associated with retaining the subadvisors of the fund. ACIM and the fund’s subadvisors own 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, expenses on securities sold short, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The annual management fee is 2.40% for the Investor Class, A Class, C Class and R Class, 2.20% for the Institutional Class and 2.05% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2016 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund's assets but are reflected in the return realized by the fund on its investment in the acquired funds.
4. Investment Transactions
Purchases and sales of investment securities and securities sold short, excluding short-term investments, for the six months ended April 30, 2016 were $75,450,499 and $71,302,999, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Period ended October 31, 2015(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||
Sold | — | — | 2,000,000 | $ | 20,000,000 | |||||
Issued in reinvestment of distributions | 15,573 | $ | 154,800 | — | — | |||||
Redeemed | (2,245 | ) | (22,253 | ) | — | — | ||||
13,328 | 132,547 | 2,000,000 | 20,000,000 | |||||||
Institutional Class/Shares Authorized | 80,000,000 | 100,000,000 | ||||||||
Sold | — | — | 600,000 | 6,000,000 | ||||||
Issued in reinvestment of distributions | 4,920 | 48,900 | — | — | ||||||
Redeemed | (674 | ) | (6,679 | ) | — | — | ||||
4,246 | 42,221 | 600,000 | 6,000,000 | |||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | — | — | 1,000,000 | 10,000,000 | ||||||
Issued in reinvestment of distributions | 7,264 | 72,200 | — | — | ||||||
Redeemed | (1,123 | ) | (11,121 | ) | — | — | ||||
6,141 | 61,079 | 1,000,000 | 10,000,000 | |||||||
C Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | — | — | 1,000,000 | 10,000,000 | ||||||
Issued in reinvestment of distributions | 5,684 | 56,500 | — | — | ||||||
Redeemed | (1,120 | ) | (11,103 | ) | — | — | ||||
4,564 | 45,397 | 1,000,000 | 10,000,000 | |||||||
R Class/Shares Authorized | 20,000,000 | 40,000,000 | ||||||||
Sold | — | — | 200,000 | 2,000,000 | ||||||
Issued in reinvestment of distributions | 1,348 | 13,400 | — | — | ||||||
Redeemed | (224 | ) | (2,223 | ) | — | — | ||||
1,124 | 11,177 | 200,000 | 2,000,000 | |||||||
R6 Class/Shares Authorized | 30,000,000 | 40,000,000 | ||||||||
Sold | — | — | 200,000 | 2,000,000 | ||||||
Issued in reinvestment of distributions | 1,704 | 16,940 | — | — | ||||||
Redeemed | (224 | ) | (2,227 | ) | — | — | ||||
1,480 | 14,713 | 200,000 | 2,000,000 | |||||||
Net increase (decrease) | 30,883 | $ | 307,134 | 5,000,000 | $ | 50,000,000 |
(1) | October 15, 2015 (fund inception) through October 31, 2015. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
26
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
Aerospace and Defense | $ | 1,318,067 | $ | 151,138 | — | |||
Air Freight and Logistics | 350,693 | 200,288 | — | |||||
Auto Components | 19,597 | 147,214 | — | |||||
Banks | 2,521,036 | 790,337 | — | |||||
Chemicals | 1,423,822 | 344,165 | — | |||||
Construction Materials | 15,272 | 273,456 | — | |||||
Diversified Telecommunication Services | 210,317 | 259,413 | — | |||||
Electrical Equipment | 27,877 | 396,565 | — | |||||
Energy Equipment and Services | 305,971 | 92,963 | — | |||||
Food and Staples Retailing | 364,001 | 162,117 | — | |||||
Food Products | 1,189,593 | 253,489 | — | |||||
Health Care Equipment and Supplies | 337,246 | 92,478 | — | |||||
Household Durables | 23,585 | 114,956 | — | |||||
Household Products | 162,597 | 78,857 | — | |||||
Insurance | 321,104 | 278,968 | — | |||||
Internet Software and Services | 2,082,179 | 818,621 | — | |||||
Machinery | 85,868 | 307,299 | — | |||||
Marine | — | 129,801 | — | |||||
Media | 2,484,079 | 756,777 | — | |||||
Metals and Mining | 45,453 | 258,458 | — | |||||
Personal Products | — | 174,885 | — | |||||
Pharmaceuticals | 2,716,616 | 250,109 | — | |||||
Professional Services | — | 179,849 | — | |||||
Real Estate Management and Development | 97,928 | 218,845 | — | |||||
Semiconductors and Semiconductor Equipment | 683,475 | 96,546 | — | |||||
Software | 1,807,784 | 258,784 | — | |||||
Textiles, Apparel and Luxury Goods | 5,353 | 79,036 | — | |||||
Tobacco | 52,690 | 507,730 | — | |||||
Other Industries | 12,097,365 | — | — | |||||
Warrants | 30,730 | — | — | |||||
Temporary Cash Investments | 9,637,857 | — | — | |||||
$ | 40,418,155 | $ | 7,673,144 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | — | $ | 27,019 | — | ||||
Swap Agreements | — | 50,883 | — | |||||
Forward Foreign Currency Exchange Contracts | — | 29,346 | — | |||||
— | $ | 107,248 | — | |||||
Liabilities | ||||||||
Securities Sold Short | ||||||||
Common Stocks | $ | 3,828,090 | $ | 1,463,662 | — | |||
Exchange-Traded Funds | 9,610,439 | — | — | |||||
$ | 13,438,529 | $ | 1,463,662 | — | ||||
Other Financial Instruments | ||||||||
Futures Contracts | $ | 67,605 | $ | 11,292 | — | |||
Swap Agreements | — | 190,146 | — | |||||
Forward Foreign Currency Exchange Contracts | — | 102,419 | — | |||||
$ | 67,605 | $ | 303,857 | — |
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7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts, total return swap agreements or options contracts based on an equity index or specific security in order to manage its exposure to changes in market conditions. The risks of entering into equity price risk derivative instruments include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments.
A fund may purchase an option contract to protect against declines in market value on the underlying index or security. A purchased option contract provides the fund a right, but not an obligation, to buy (call) or sell (put) an equity-related asset at a specified exercise price within a certain period or on a specific date. The buyer pays the seller an initial purchase price (premium) for this right. Option contracts purchased by a fund are accounted for in the same manner as marketable portfolio securities. The proceeds from securities sold through the exercise of option contracts are decreased by the premium paid to purchase the option contracts. A fund recognizes a realized gain or loss when the option contract is exercised or expires. Net realized and unrealized gains or losses occurring during the holding period of options contracts are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively. During the period, the fund purchased options contracts for temporary investment purposes.
A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. The fund’s average exposure to these equity price risk derivative instruments was 148 futures contracts.
A fund may enter into total return swap agreements in order to attempt to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets or gain exposure to certain markets in the most economical way possible. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Changes in value, including the periodic amounts of interest to be paid or received on swap agreements, are recorded as unrealized appreciation (depreciation) on swap agreements. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The fund's average swap agreement units held during the period was 487,659.
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations or to gain exposure to the fluctuations in the value of foreign currencies. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $9,933,314.
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Value of Derivative Instruments as of April 30, 2016
Asset Derivatives | Liability Derivatives | |||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||
Equity Price Risk | Receivable for variation margin on futures contracts* | $ | 163,080 | Payable for variation margin on futures contracts* | — | |||
Equity Price Risk | Swap agreements | 50,883 | Swap agreements | $ | 190,146 | |||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | 29,346 | Unrealized depreciation on forward foreign currency exchange contracts | 102,419 | ||||
$ | 243,309 | $ | 292,565 |
* | Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2016
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | |||||||
Type of Risk Exposure | Location on Statement of Operations | Value | Location on Statement of Operations | Value | ||||
Equity Price Risk | Net realized gain (loss) on investment transactions | $ | (45,131 | ) | Change in net unrealized appreciation (depreciation) on investments | $ | 8,510 | |
Equity Price Risk | Net realized gain (loss) on futures contract transactions | 162,732 | Change in net unrealized appreciation (depreciation) on futures contracts | 76,442 | ||||
Equity Price Risk | Net realized gain (loss) on swap agreement transactions | 51,915 | Change in net unrealized appreciation (depreciation) on swap agreements | (294,887 | ) | |||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | 232,386 | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (323,852 | ) | |||
$ | 401,902 | $ | (533,787 | ) |
8. Risk Factors
ACIM utilizes multiple subadvisors to manage the fund’s assets, each employing its own particular investment strategy. Multi-manager strategies can increase the fund's portfolio turnover rate, which could result in higher levels of realized capital gains or losses, higher brokerage commissions and other transaction costs.
The fund may invest in foreign securities, which are generally riskier than U.S. securities. As a result the fund may be subject to foreign risk, meaning that political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters occurring in a country where the fund invests could cause the fund’s investments in that country to experience losses. For these and other reasons, securities of foreign issuers may be less liquid and more volatile. Investing in securities of companies located in emerging market countries generally is riskier than investing in securities of companies located in foreign developed countries.
The fund is subject to short sales risk. If the market price of a security increases after the fund borrows the security to sell short, the fund may suffer a loss when it replaces the borrowed security at the higher price. Any loss will be increased by the amount of compensation, interest or dividends, and transaction costs the fund must pay to a lender of the security.
29
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 47,737,949 | |
Gross tax appreciation of investments | $ | 1,810,809 | |
Gross tax depreciation of investments | (1,457,459 | ) | |
Net tax appreciation (depreciation) of investments | 353,350 | ||
Net tax appreciation (depreciation) on securities sold short | (70,033 | ) | |
Net tax appreciation (depreciation) | $ | 283,317 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2015, the fund had accumulated short-term capital losses of $(53,209) and accumulated long-term capital losses of $(66,954), 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 may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
30
Financial Highlights |
For a Share Outstanding Throughout the Periods Indicated | ||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Operating Expenses (excluding expenses on securities sold short)(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | ||||||||||||||
2016(4) | $10.11 | (0.07) | (0.21) | (0.28) | (0.08) | $9.75 | (2.81)% | 3.17%(5) | 2.42%(5) | (1.47)%(5) | 193% | $19,628 | ||
2015(6) | $10.00 | (0.01) | 0.12 | 0.11 | — | $10.11 | 1.10% | 2.75%(5) | 2.40%(5) | (2.28)%(5) | 81% | $20,227 | ||
Institutional Class | ||||||||||||||
2016(4) | $10.11 | (0.06) | (0.21) | (0.27) | (0.08) | $9.76 | (2.87)% | 2.97%(5) | 2.22%(5) | (1.27)%(5) | 193% | $5,895 | ||
2015(6) | $10.00 | (0.01) | 0.12 | 0.11 | — | $10.11 | 1.20% | 2.55%(5) | 2.20%(5) | (2.08)%(5) | 81% | $6,068 | ||
A Class | ||||||||||||||
2016(4) | $10.11 | (0.08) | (0.22) | (0.30) | (0.07) | $9.74 | (2.96)% | 3.42%(5) | 2.67%(5) | (1.72)%(5) | 193% | $9,801 | ||
2015(6) | $10.00 | (0.01) | 0.12 | 0.11 | — | $10.11 | 1.10% | 3.00%(5) | 2.65%(5) | (2.53)%(5) | 81% | $10,112 | ||
C Class | ||||||||||||||
2016(4) | $10.11 | (0.12) | (0.21) | (0.33) | (0.06) | $9.72 | (3.31)% | 4.17%(5) | 3.42%(5) | (2.47)%(5) | 193% | $9,761 | ||
2015(6) | $10.00 | (0.01) | 0.12 | 0.11 | — | $10.11 | 1.10% | 3.75%(5) | 3.40%(5) | (3.28)%(5) | 81% | $10,109 | ||
R Class | ||||||||||||||
2016(4) | $10.11 | (0.10) | (0.21) | (0.31) | (0.07) | $9.73 | (3.11)% | 3.67%(5) | 2.92%(5) | (1.97)%(5) | 193% | $1,957 | ||
2015(6) | $10.00 | (0.01) | 0.12 | 0.11 | — | $10.11 | 1.10% | 3.25%(5) | 2.90%(5) | (2.78)%(5) | 81% | $2,022 | ||
R6 Class | ||||||||||||||
2016(4) | $10.11 | (0.05) | (0.22) | (0.27) | (0.08) | $9.76 | (2.74)% | 2.82%(5) | 2.07%(5) | (1.12)%(5) | 193% | $1,966 | ||
2015(6) | $10.00 | (0.01) | 0.12 | 0.11 | — | $10.11 | 1.20% | 2.40%(5) | 2.05%(5) | (1.93)%(5) | 81% | $2,023 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2016 (unaudited). |
(5) | Annualized. |
(6) | October 15, 2015 (fund inception) through October 31, 2015. |
See Notes to Financial Statements.
Approval of Subadvisory Agreements |
The Fund is a multi-manager fund, which means that American Century Investment Management, Inc. (the "Advisor") has retained several subadvisors, each employing its own particular investment strategy, to manage and make investment decisions with respect to the Fund’s assets. The Advisor has engaged Perella Weinberg Partners Capital Management LP (“PWP”) to manage a portion of the Fund and to identify and recommend other underlying subadvisors to manage distinct investment strategies. PWP uses a flexible and opportunistic investment strategy that allocates Fund assets among underlying subadvisors with expertise in a particular investment strategy, and supplements those strategies with its own direct investment management and hedging strategies. PWP also provides tactical allocation of assets among the various underlying subadvisors and a framework for the risk management and investment monitoring of the Fund. The Advisor provides oversight of each of these functions.
At its meeting on March 3, 2016, the Fund's Board of Directors approved Levin Capital Strategies, LP and Seligman Investments, an offering brand of Columbia Management Investment Advisers, LLC (each a “Subadvisor” and, collectively, the “Subadvisors”) as subadvisors for the Fund. In considering the approval of each Subadvisor and each underlying subadvisory agreement between the Advisor and each of the Fund’s underlying subadvisors (collectively, the “Subadvisory Agreements”), the Board received detailed information regarding each Subadvisor, as well as those individuals designated to manage the Fund.
The Board received a recommendation from the Advisor and PWP to approve each Subadvisor as underlying subadvisors for the Fund. The information considered and the discussions held with regard to the Subadvisors included, but were not limited to:
• | the nature, extent, and quality of investment management services to be provided by each Subadvisor to the Fund; |
• | each Subadvisor’s breadth of experience in managing its particular investment strategy and in managing investments generally; |
• | the expected composition and liquidity of the securities to be held in each Subadvisor’s portion of the Fund; |
• | data comparing the performance of each Subadvisor’s proposed investment strategies employed in similar accounts to appropriate benchmarks; and |
• | the compliance policies, procedures, and regulatory experience of the Subadvisors, including management of other 1940 Act registered investment companies, if applicable. |
The independent Directors reviewed the proposed fees for the Subadvisors, noting that the compensation paid to each Subadvisor would be paid by the Advisor out of the Fund’s unified fee. They also noted that the terms of the Subadvisory Agreements were the result of arms’ length negotiations between the Advisor and each Subadvisor. The independent Directors considered all of the information provided by the Advisor, the Subadvisors, and the independent Directors’ independent counsel in connection with the approval, and concluded that they had sufficient information to evaluate the proposed agreements on behalf of the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. Based on all of the information considered, the independent Directors concluded that the Subadvisory Agreements with each Subadvisor were fair and reasonable in light of the services to be provided and should be approved.
33
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling 1-800-345-2021.
34
Notes |
35
Notes |
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century 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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89221 1606 |
SEMIANNUAL REPORT | |
APRIL 30, 2016 | |
AC Alternatives® Income Fund
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. | |
Jonathan Thomas |
Economic Growth Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Types of Investments in Portfolio | % of net assets |
Corporate Bonds | 18.1% |
Asset-Backed Securities | 15.7% |
Bank Loan Obligations | 15.0% |
Common Stocks | 13.4% |
Collateralized Loan Obligations | 9.4% |
Exchange-Traded Funds | 5.8% |
Commercial Mortgage-Backed Securities | 5.4% |
Exchange-Traded Notes | 5.0% |
Collateralized Mortgage Obligations | 4.1% |
U.S. Treasury Securities | 0.9% |
Purchased Options Contracts | 0.1% |
Corporate Bonds Sold Short | (0.2)% |
Temporary Cash Investments | 7.4% |
Other Assets and Liabilities | (0.1)% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2015 to April 30, 2016.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1) 11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $991.10 | $10.00 | 2.02% |
Institutional Class | $1,000 | $992.30 | $9.02 | 1.82% |
A Class | $1,000 | $990.70 | $11.24 | 2.27% |
C Class | $1,000 | $986.40 | $14.92 | 3.02% |
R Class | $1,000 | $988.50 | $12.46 | 2.52% |
R6 Class | $1,000 | $994.20 | $8.28 | 1.67% |
Hypothetical | ||||
Investor Class | $1,000 | $1,014.82 | $10.12 | 2.02% |
Institutional Class | $1,000 | $1,015.81 | $9.12 | 1.82% |
A Class | $1,000 | $1,013.58 | $11.36 | 2.27% |
C Class | $1,000 | $1,009.85 | $15.09 | 3.02% |
R Class | $1,000 | $1,012.33 | $12.61 | 2.52% |
R6 Class | $1,000 | $1,016.56 | $8.37 | 1.67% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Principal Amount/Shares | Value | ||||||
CORPORATE BONDS — 18.1% | |||||||
Aerospace and Defense — 0.1% | |||||||
StandardAero Aviation Holdings, Inc., 10.00%, 7/15/23(1) | $ | 63,000 | $ | 62,055 | |||
Airlines — 0.8% | |||||||
Intrepid Aviation Group Holdings LLC / Intrepid Finance Co., 6.875%, 2/15/19(1) | 500,000 | 457,500 | |||||
Auto Components — 0.1% | |||||||
Goodyear Tire & Rubber Co. (The), 5.125%, 11/15/23 | 64,000 | 66,400 | |||||
Automobiles — 0.2% | |||||||
Ally Financial, Inc., 4.25%, 4/15/21 | 106,000 | 108,120 | |||||
Chemicals — 1.3% | |||||||
Celanese US Holdings LLC, 4.625%, 11/15/22 | 63,000 | 65,174 | |||||
Chemours Co. (The), 6.125%, 5/15/23 | EUR | 100,000 | 102,218 | ||||
TPC Group, Inc., 8.75%, 12/15/20(1) | $ | 750,000 | 555,000 | ||||
722,392 | |||||||
Commercial Services and Supplies — 0.3% | |||||||
Midas Intermediate Holdco II LLC / Midas Intermediate Holdco II Finance, Inc., 7.875%, 10/1/22(1) | 65,000 | 61,913 | |||||
Prime Security Services Borrower LLC / Prime Finance, Inc., 9.25%, 5/15/23(1)(7) | 78,000 | 81,315 | |||||
143,228 | |||||||
Communications Equipment — 0.1% | |||||||
Zayo Group LLC / Zayo Capital, Inc., 6.00%, 4/1/23 | 28,000 | 28,980 | |||||
Zayo Group LLC / Zayo Capital, Inc., 6.375%, 5/15/25 | 35,000 | 36,575 | |||||
65,555 | |||||||
Construction and Engineering — 0.2% | |||||||
SBA Communications Corp., 4.875%, 7/15/22 | 126,000 | 127,339 | |||||
Construction Materials — 0.2% | |||||||
Standard Industries, Inc., 6.00%, 10/15/25(1) | 44,000 | 47,630 | |||||
USG Corp., 5.50%, 3/1/25(1) | 6,000 | 6,375 | |||||
Vulcan Materials Co., 4.50%, 4/1/25 | 29,000 | 31,030 | |||||
85,035 | |||||||
Consumer Finance — 0.5% | |||||||
CIT Group, Inc., 5.00%, 8/15/22 | 200,000 | 210,000 | |||||
GLP Capital LP / GLP Financing II, Inc., 4.375%, 4/15/21 | 23,000 | 23,575 | |||||
GLP Capital LP / GLP Financing II, Inc., 5.375%, 4/15/26 | 59,000 | 61,581 | |||||
295,156 | |||||||
Consumer Staples — 0.3% | |||||||
Kronos Acquisition Holdings, Inc., 9.00%, 8/15/23(1) | 51,000 | 49,598 | |||||
Sabre GLBL, Inc., 5.375%, 4/15/23(1) | 73,000 | 74,825 | |||||
Sabre GLBL, Inc., 5.25%, 11/15/23(1) | 53,000 | 53,927 | |||||
178,350 | |||||||
Containers and Packaging — 0.6% | |||||||
Ball Corp., 5.25%, 7/1/25 | 91,000 | 96,062 |
6
Principal Amount/Shares | Value | ||||||
Berry Plastics Corp., 5.50%, 5/15/22 | $ | 86,000 | $ | 88,795 | |||
BWAY Holding Co., 9.125%, 8/15/21(1) | 69,000 | 66,413 | |||||
Owens-Brockway Glass Container, Inc., 5.875%, 8/15/23(1) | 17,000 | 18,318 | |||||
Sealed Air Corp., 5.125%, 12/1/24(1) | 55,000 | 57,956 | |||||
327,544 | |||||||
Diversified Financial Services — 0.3% | |||||||
Opal Acquisition, Inc., 8.875%, 12/15/21(1) | 216,000 | 177,390 | |||||
Diversified Telecommunication Services — 1.0% | |||||||
Intelsat Jackson Holdings SA, 8.00%, 2/15/24(1) | 38,000 | 39,425 | |||||
Level 3 Financing, Inc., 5.625%, 2/1/23 | 500,000 | 515,625 | |||||
555,050 | |||||||
Energy Equipment and Services — 0.2% | |||||||
CHC Helicopter SA, 9.25%, 10/15/20(8)(9) | 252,000 | 114,660 | |||||
Food and Staples Retailing — 0.6% | |||||||
Aramark Services, Inc., 5.125%, 1/15/24 | 65,000 | 69,063 | |||||
Dollar Tree, Inc., 5.75%, 3/1/23(1) | 250,000 | 267,812 | |||||
336,875 | |||||||
Food Products — 1.1% | |||||||
Pinnacle Foods Finance LLC / Pinnacle Foods Finance Corp., 4.875%, 5/1/21(2) | 500,000 | 512,500 | |||||
TreeHouse Foods, Inc., 6.00%, 2/15/24(1) | 84,000 | 89,775 | |||||
602,275 | |||||||
Health Care Providers and Services — 1.8% | |||||||
Covenant Surgical Partners, Inc., 8.75%, 8/1/19(1) | 400,000 | 385,000 | |||||
DaVita HealthCare Partners, Inc., 5.125%, 7/15/24 | 135,000 | 137,645 | |||||
HCA, Inc., 5.375%, 2/1/25 | 250,000 | 255,938 | |||||
Tenet Healthcare Corp., 4.375%, 10/1/21 | 14,000 | 14,105 | |||||
Tenet Healthcare Corp., 6.75%, 6/15/23 | 200,000 | 199,250 | |||||
991,938 | |||||||
Hotels, Restaurants and Leisure — 0.6% | |||||||
1011778 BC ULC / New Red Finance, Inc., 4.625%, 1/15/22(1) | 250,000 | 256,875 | |||||
NCL Corp. Ltd., 5.25%, 11/15/19(1) | 12,000 | 12,390 | |||||
NCL Corp. Ltd., 4.625%, 11/15/20(1) | 51,000 | 52,084 | |||||
321,349 | |||||||
Household Durables — 0.3% | |||||||
Lennar Corp., 4.875%, 12/15/23 | 78,000 | 79,365 | |||||
Lennar Corp., 4.75%, 5/30/25 | 29,000 | 29,217 | |||||
Toll Brothers Finance Corp., 5.625%, 1/15/24 | 63,000 | 66,150 | |||||
174,732 | |||||||
Insurance — 1.7% | |||||||
AerCap Ireland Capital Ltd. / AerCap Global Aviation Trust, 5.00%, 10/1/21 | 500,000 | 528,750 | |||||
Aircastle Ltd., 5.50%, 2/15/22 | 375,000 | 400,781 | |||||
929,531 | |||||||
Machinery — 0.1% | |||||||
Huntington Ingalls Industries, Inc., 5.00%, 11/15/25(1) | 23,000 | 24,236 | |||||
7
Principal Amount/Shares | Value | ||||||
Media — 3.4% | |||||||
CCO Holdings LLC / CCO Holdings Capital Corp., 5.75%, 1/15/24 | $ | 387,000 | $ | 406,834 | |||
CCOH Safari LLC, 5.75%, 2/15/26(1) | 126,000 | 130,410 | |||||
Emerald Expositions Holding, Inc., 9.00%, 6/15/21(1) | 75,000 | 73,312 | |||||
Lamar Media Corp., 5.75%, 2/1/26(1) | 75,000 | 79,500 | |||||
National CineMedia LLC, 6.00%, 4/15/22 | 500,000 | 526,250 | |||||
Nielsen Finance LLC / Nielsen Finance Co., 5.00%, 4/15/22(1) | 63,000 | 64,496 | |||||
Regal Entertainment Group, 5.75%, 6/15/23 | 13,000 | 13,374 | |||||
Regal Entertainment Group, 5.75%, 2/1/25 | 65,000 | 66,137 | |||||
Sirius XM Radio, Inc., 6.00%, 7/15/24(1) | 59,000 | 62,398 | |||||
Unitymedia GmbH, 3.75%, 1/15/27 | EUR | 250,000 | 261,260 | ||||
Univision Communications, Inc., 6.75%, 9/15/22(1) | $ | 68,000 | 72,420 | ||||
Univision Communications, Inc., 5.125%, 5/15/23(1) | 22,000 | 22,303 | |||||
Univision Communications, Inc., 5.125%, 2/15/25(1) | 100,000 | 99,125 | |||||
1,877,819 | |||||||
Metals and Mining — 0.3% | |||||||
Compass Minerals International, Inc., 4.875%, 7/15/24(1) | 48,000 | 46,440 | |||||
Constellium NV, MTN, 4.625%, 5/15/21 | EUR | 125,000 | 122,525 | ||||
168,965 | |||||||
Oil, Gas and Consumable Fuels — 0.6% | |||||||
Alta Mesa Holdings LP / Alta Mesa Finance Services Corp., 9.625%, 10/15/18 | $ | 503,000 | 178,565 | ||||
Talos Production LLC / Talos Production Finance, Inc., 9.75%, 2/15/18(1) | 500,000 | 165,000 | |||||
343,565 | |||||||
Real Estate Management and Development — 0.2% | |||||||
Realogy Group LLC / Realogy Co-Issuer Corp., 4.50%, 4/15/19(1) | 102,000 | 106,208 | |||||
Software — 0.1% | |||||||
Ensemble S Merger Sub, Inc., 9.00%, 9/30/23(1) | 25,000 | 24,906 | |||||
Specialty Retail — 0.2% | |||||||
Sally Holdings LLC / Sally Capital, Inc., 5.625%, 12/1/25 | 81,000 | 86,873 | |||||
Textiles, Apparel and Luxury Goods — 0.3% | |||||||
L Brands, Inc., 5.625%, 2/15/22 | 63,000 | 69,615 | |||||
PVH Corp., 4.50%, 12/15/22 | 61,000 | 63,364 | |||||
132,979 | |||||||
Wireless Telecommunication Services — 0.6% | |||||||
T-Mobile USA, Inc., 6.375%, 3/1/25 | 12,000 | 12,645 | |||||
T-Mobile USA, Inc., 6.50%, 1/15/26 | 301,000 | 320,189 | |||||
332,834 | |||||||
TOTAL CORPORATE BONDS (Cost $10,520,319) | 9,940,859 | ||||||
ASSET-BACKED SECURITIES(3) — 15.7% | |||||||
AmeriCredit Automobile Receivables Trust, Series 2013-4, Class D, 3.31%, 10/8/19 | 365,000 | 371,672 | |||||
Bear Stearns Asset Backed Securities Trust, Series 2007-2, Class A2, VRN, 0.76%, 5/25/16 | 260,241 | 251,718 |
8
Principal Amount/Shares | Value | ||||||
CAL Funding II Ltd., Series 2012-1A, Class A SEQ, 3.47%, 10/25/27(1) | $ | 325,000 | $ | 311,804 | |||
CLI Funding V LLC, Series 2014-1A, Class A SEQ, 3.29%, 6/18/29(1) | 444,535 | 418,064 | |||||
CPS Auto Receivables Trust, Series 2011-C, Class D, 10.00%, 3/15/19(1) | 16,133 | 16,162 | |||||
CPS Auto Receivables Trust, Series 2012-B, Class D, 7.86%, 9/15/19(1) | 161,143 | 161,904 | |||||
CPS Auto Receivables Trust, Series 2013-A, Class E, 6.41%, 6/15/20(1) | 53,813 | 53,804 | |||||
Dell Equipment Finance Trust, Series 2015-2, Class A2B, VRN, 1.34%, 5/22/16(1) | 300,000 | 300,040 | |||||
Drive Auto Receivables Trust, Series 2015-AA, Class D, 4.12%, 7/15/22(1) | 300,000 | 298,161 | |||||
Drive Auto Receivables Trust, Series 2015-BA, Class A3 SEQ, 1.30%, 6/15/18(1) | 300,000 | 300,049 | |||||
Drive Auto Receivables Trust, Series 2015-CA, Class D, 4.20%, 9/15/21(1) | 300,000 | 298,527 | |||||
DT Auto Owner Trust, Series 2015-2A, Class D, 4.25%, 2/15/22(1) | 380,000 | 374,868 | |||||
Enterprise Fleet Financing LLC, Series 2013-2, Class A2 SEQ, 1.06%, 3/20/19(1) | 51,697 | 51,691 | |||||
Exeter Automobile Receivables Trust, Series 2013-2A, Class D, 6.81%, 8/17/20(1) | 300,000 | 304,163 | |||||
Exeter Automobile Receivables Trust, Series 2014-3A, Class D, 5.69%, 4/15/21(1) | 500,000 | 492,008 | |||||
Exeter Automobile Receivables Trust, Series 2015-2A, Class A SEQ, 1.54%, 11/15/19(1) | 251,348 | 250,497 | |||||
Flagship Credit Auto Trust, Series 2015-1, Class C, 3.76%, 6/15/21(1) | 250,000 | 237,804 | |||||
Flagship Credit Auto Trust, Series 2015-2, Class C, 4.08%, 12/15/21(1) | 300,000 | 283,627 | |||||
Global SC Finance II SRL, Series 2014-1A, Class A2, 3.09%, 7/17/29(1) | 391,875 | 367,381 | |||||
Invitation Homes Trust, Series 2015-SFR3, Class E, VRN, 4.19%, 5/17/16(1) | 1,000,000 | 967,172 | |||||
Neuberger Berman CLO XVI Ltd., Series 2014-16A, Class D, VRN, 3.98%, 5/15/16(1) | 1,000,000 | 925,421 | |||||
OneMain Financial Issuance Trust, Series 2015-2A, Class A SEQ, 2.57%, 7/18/25(1) | 450,000 | 448,488 | |||||
Progreso Receivables Funding IV LLC, Series 2015-B, Class A, 3.00%, 7/28/20(1) | 450,000 | 448,359 | |||||
Santander Drive Auto Receivables Trust, Series 2014-5, Class A3 SEQ, 1.15%, 1/15/19 | 250,000 | 250,089 | |||||
Sierra Timeshare Receivables Funding LLC, Series 2014-2A, Class B, 2.40%, 6/20/31(1) | 191,117 | 189,494 | |||||
TAL Advantage V LLC, Series 2014-1A, Class A, 3.51%, 2/22/39(1) | 235,000 | 225,071 | |||||
TOTAL ASSET-BACKED SECURITIES (Cost $8,695,408) | 8,598,038 | ||||||
BANK LOAN OBLIGATIONS(4) — 15.0% | |||||||
Aerospace and Defense — 0.6% | |||||||
DAE Aviation Holdings, Inc., 1st Lien Term Loan, 5.25%, 7/7/22 | 267,252 | 268,143 | |||||
Sequa Corporation, New Term Loan B, 6/19/17(5) | 99,742 | 76,594 | |||||
344,737 |
9
Principal Amount/Shares | Value | ||||||
Air Freight and Logistics — 0.6% | |||||||
XPO Logistics, Inc., Term Loan, 5.50%, 11/1/21 | $ | 349,165 | $ | 351,565 | |||
Chemicals — 0.5% | |||||||
Ascend Performance Materials Operations LLC, Term Loan B, 6.75%, 4/10/18 | 221,247 | 212,950 | |||||
Tronox Pigments (Netherlands) B.V., 2013 Term Loan, 4.50%, 3/19/20 | 78,271 | 75,956 | |||||
288,906 | |||||||
Commercial Services and Supplies — 1.1% | |||||||
ADS Waste Holdings, Inc., Term Loan B2, 3.75%, 10/9/19 | 377,497 | 376,931 | |||||
Prime Security Services Borrower, LLC, 1st Lien Term Loan, 5.00%, 7/1/21 | 248,750 | 249,216 | |||||
626,147 | |||||||
Construction Materials — 0.9% | |||||||
CPG International Inc., New Term Loan, 4.75%, 9/30/20 | 492,386 | 490,539 | |||||
Consumer Discretionary — 1.6% | |||||||
Jeld-Wen Inc., Term Loan B, 5.25%, 10/15/21 | 124,370 | 125,148 | |||||
National Vision, Inc., 1st Lien Term Loan, 4.00%, 3/12/21 | 248,731 | 244,223 | |||||
William Morris Endeavor Entertainment, LLC, 1st Lien Term Loan, 5.25%, 5/6/21 | 248,734 | 249,045 | |||||
Wilsonart LLC, Incremental Term Loan B2, 4.00%, 10/31/19 | 248,728 | 248,675 | |||||
867,091 | |||||||
Containers and Packaging — 0.2% | |||||||
BWAY Holding Company, Inc., New Term Loan B, 5.50%, 8/14/20 | 124,367 | 124,243 | |||||
Distributors — 0.6% | |||||||
American Tire Distributors Holdings, Inc., 2015 Term Loan, 5.25%, 9/1/21 | 101,157 | 98,881 | |||||
Spin Holdco Inc., New Term Loan B, 4.25%, 11/14/19 | 248,741 | 244,491 | |||||
343,372 | |||||||
Diversified Consumer Services — 0.2% | |||||||
Laureate Education, Inc., Term Loan B, 5.00%, 6/15/18 | 41,803 | 38,929 | |||||
MGM Growth Properties LLC, 2016 Term Loan B, 4.00%, 4/25/23 | 69,211 | 69,694 | |||||
108,623 | |||||||
Diversified Financial Services — 0.2% | |||||||
Hub International Limited, Term Loan B, 4.25%, 10/2/20 | 38,927 | 38,578 | |||||
Opal Acquisition, Inc., 1st Lien Term Loan, 5.00%, 11/27/20 | 56,874 | 50,476 | |||||
89,054 | |||||||
Diversified Telecommunication Services — 0.2% | |||||||
Intelsat Jackson Holdings S.A., Term Loan B2, 3.75%, 6/30/19 | 121,904 | 114,698 | |||||
Electronic Equipment, Instruments and Components — 0.3% | |||||||
Excelitas Technologies Corp., 1st Lien Term Loan, 6.00%, 10/31/20 | 145,117 | 135,321 | |||||
Energy Equipment and Services — 0.2% | |||||||
Murray Energy Corporation, Term Loan B2, 4/16/20(5) | 121,650 | 83,087 |
10
Principal Amount/Shares | Value | ||||||
Financial Services — 0.2% | |||||||
Travelport Finance (Luxembourg) S.A.R.L., 2014 Term Loan B, 5.75%, 9/2/21 | $ | 87,734 | $ | 88,141 | |||
Food and Staples Retailing — 0.1% | |||||||
Albertsons, LLC, Term Loan B3, 5.125%, 8/25/19 | 61,259 | 61,424 | |||||
Health Care Providers and Services — 0.3% | |||||||
National Mentor Holdings, Inc., Term Loan B, 4.25%, 1/31/21 | 47,410 | 47,339 | |||||
Precyse Acquisition Corp., 2016 1st Lien Term Loan, 9/30/22(5) | 111,372 | 111,163 | |||||
158,502 | |||||||
Hotels, Restaurants and Leisure — 0.1% | |||||||
Scientific Games International, Inc., 2014 Term Loan B1, 6.00%, 10/18/20 | 62,341 | 61,542 | |||||
Insurance — 0.3% | |||||||
Alliant Holdings I, Inc., 2015 Term Loan B, 4.50%, 8/12/22 | 168,697 | 167,582 | |||||
Internet Software and Services — 1.3% | |||||||
MH Sub I, LLC, 1st Lien Term Loan, 4.75%, 7/8/21 | 494,955 | 494,492 | |||||
MH Sub I, LLC, 2nd Lien Term Loan, 8.50%, 7/8/22 | 250,000 | 236,564 | |||||
731,056 | |||||||
IT Services — 0.9% | |||||||
Alion Science and Technology Corporation, 2015 Term Loan B, 5.50%, 8/19/21 | 107,745 | 106,802 | |||||
First Data Corporation, Extended 2021 Term Loan, 4.44%, 3/24/21 | 391,428 | 392,976 | |||||
499,778 | |||||||
Machinery — 0.3% | |||||||
Silver II US Holdings, LLC, Term Loan, 4.00%, 12/13/19 | 162,245 | 146,731 | |||||
Media — 1.5% | |||||||
Advantage Sales & Marketing, Inc., 2014 1st Lien Term Loan, 4.25%, 7/23/21 | 118,052 | 117,315 | |||||
Deluxe Entertainment Services Group, Inc., Term Loan 2014, 6.50%, 2/28/20 | 500,000 | 487,500 | |||||
Neptune Finco Corp., 2015 Term Loan B, 5.00%, 10/9/22 | 113,895 | 114,631 | |||||
WideOpenWest Finance LLC, 2015 Term Loan B, 4.50%, 4/1/19 | 86,446 | 86,219 | |||||
805,665 | |||||||
Multiline Retail — 0.3% | |||||||
J.C. Penney Corporation, Inc., 1st Lien Term Loan, 6.00%, 5/22/18 | 129,272 | 129,696 | |||||
Neiman Marcus Group, Inc. (The), 2020 Term Loan, 4.25%, 10/25/20 | 9,582 | 9,151 | |||||
138,847 | |||||||
Personal Products — 0.4% | |||||||
KIK Custom Products, Inc., 2015 Term Loan B, 6.00%, 8/26/22 | 231,037 | 225,659 | |||||
Semiconductors and Semiconductor Equipment — 0.1% | |||||||
ON Semiconductor Corporation, Term Loan B, 5.25%, 3/31/23 | 71,009 | 71,439 | |||||
Software — 0.9% | |||||||
Emdeon Business Services, LLC, Term Loan B2, 3.75%, 11/2/18 | 188,458 | 188,812 |
11
Principal Amount/Shares | Value | ||||||
Sophia, L.P., 2015 Term Loan B, 4.75%, 9/30/22 | $ | 177,345 | $ | 177,308 | |||
STG-Fairway Acquisitions, Inc., 2015 1st Lien Term Loan, 6.25%, 6/30/22 | 149,564 | 146,667 | |||||
512,787 | |||||||
Specialty Retail — 0.3% | |||||||
Petco Animal Supplies, Inc., 2016 Term Loan B1, 5.75%, 1/26/23 | 174,694 | 176,065 | |||||
Textiles, Apparel and Luxury Goods — 0.8% | |||||||
Ascena Retail Group, Inc., 2015 Term Loan B, 5.25%, 8/21/22 | 173,914 | 171,131 | |||||
Kate Spade & Company, Term Loan B, 4.00%, 4/10/21 | 248,734 | 248,683 | |||||
419,814 | |||||||
Wireless Telecommunication Services† | |||||||
Zayo Group, LLC, Term Loan B2, 4.50%, 5/6/21 | 14,518 | 14,627 | |||||
TOTAL BANK LOAN OBLIGATIONS (Cost $8,180,569) | 8,247,042 | ||||||
COMMON STOCKS — 13.4% | |||||||
Automobiles — 0.6% | |||||||
General Motors Co. | 10,437 | 331,897 | |||||
Beverages — 0.6% | |||||||
PepsiCo, Inc. | 3,281 | 337,812 | |||||
Biotechnology — 0.7% | |||||||
AbbVie, Inc. | 5,939 | 362,279 | |||||
Chemicals — 0.4% | |||||||
Mosaic Co. (The) | 2,518 | 70,479 | |||||
RPM International, Inc. | 1,611 | 81,404 | |||||
Scotts Miracle-Gro Co. (The), Class A | 1,003 | 70,992 | |||||
222,875 | |||||||
Commercial Services and Supplies — 0.6% | |||||||
KAR Auction Services, Inc. | 8,954 | 336,670 | |||||
Containers and Packaging — 0.7% | |||||||
Packaging Corp. of America | 1,270 | 82,398 | |||||
Sonoco Products Co. | 6,101 | 286,076 | |||||
368,474 | |||||||
Distributors — 0.6% | |||||||
Genuine Parts Co. | 3,420 | 328,217 | |||||
Electric Utilities — 0.6% | |||||||
PG&E Corp. | 5,696 | 331,507 | |||||
Electronic Equipment, Instruments and Components — 0.6% | |||||||
National Instruments Corp. | 11,109 | 306,275 | |||||
Food and Staples Retailing — 1.2% | |||||||
Sysco Corp. | 7,196 | 331,520 | |||||
Wal-Mart Stores, Inc. | 4,905 | 327,997 | |||||
659,517 | |||||||
Health Care Equipment and Supplies — 0.1% | |||||||
Abbott Laboratories | 1,813 | 70,526 |
12
Principal Amount/Shares | Value | ||||||
Hotels, Restaurants and Leisure — 0.6% | |||||||
Darden Restaurants, Inc. | 4,974 | $ | 309,632 | ||||
Industrial Conglomerates — 0.6% | |||||||
General Electric Co. | 10,735 | 330,101 | |||||
Machinery — 0.6% | |||||||
Cummins, Inc. | 3,015 | 352,846 | |||||
Metals and Mining — 0.2% | |||||||
Nucor Corp. | 1,592 | 79,250 | |||||
Multi-Utilities — 1.2% | |||||||
Alliant Energy Corp. | 4,633 | 326,719 | |||||
Public Service Enterprise Group, Inc. | 7,302 | 336,841 | |||||
663,560 | |||||||
Multiline Retail — 0.6% | |||||||
Target Corp. | 4,064 | 323,088 | |||||
Oil, Gas and Consumable Fuels — 0.1% | |||||||
Valero Energy Corp. | 1,131 | 66,582 | |||||
Pharmaceuticals — 0.6% | |||||||
Johnson & Johnson | 3,106 | 348,121 | |||||
Road and Rail — 0.3% | |||||||
CSX Corp. | 2,788 | 76,029 | |||||
Union Pacific Corp. | 885 | 77,198 | |||||
153,227 | |||||||
Semiconductors and Semiconductor Equipment — 1.6% | |||||||
Analog Devices, Inc. | 1,260 | 70,963 | |||||
Intel Corp. | 10,326 | 312,671 | |||||
Linear Technology Corp. | 5,849 | 260,164 | |||||
Microchip Technology, Inc. | 1,522 | 73,954 | |||||
QUALCOMM, Inc. | 1,421 | 71,789 | |||||
Xilinx, Inc. | 1,565 | 67,420 | |||||
856,961 | |||||||
Software — 0.1% | |||||||
Microsoft Corp. | 1,375 | 68,571 | |||||
Technology Hardware, Storage and Peripherals — 0.1% | |||||||
NetApp, Inc. | 2,771 | 65,506 | |||||
Textiles, Apparel and Luxury Goods — 0.1% | |||||||
Coach, Inc. | 1,884 | 75,869 | |||||
TOTAL COMMON STOCKS (Cost $7,246,406) | 7,349,363 | ||||||
COLLATERALIZED LOAN OBLIGATIONS(3) — 9.4% | |||||||
ALM VII Ltd., Series 2013-7R2A, 4/24/24(1)(6) | $ | 475,000 | 259,668 | ||||
Babson Collateralized Loan Obligations Ltd., Series 2013-IA, Class D, VRN, 4.13%, 5/20/16(1) | 300,000 | 274,399 | |||||
BlueMountain Collateralized Loan Obligations Ltd., Series 2014-1X, Class F, VRN, 6.12%, 5/1/16 | 470,000 | 331,874 | |||||
CIFC Funding Ltd., Series 2013-2A, Class A3L, VRN, 3.28%, 5/18/16(1) | 300,000 | 289,176 | |||||
13
Principal Amount/Shares | Value | ||||||
CIFC Funding Ltd., Series 2014-3A, Class E, VRN, 5.39%, 5/22/16(1) | $ | 500,000 | $ | 408,686 | |||
CIFC Funding Ltd., Series 2015-1A, Class D, VRN, 4.64%, 5/22/16(1) | 495,000 | 465,976 | |||||
Golub Capital Partners Collateralized Loan Obligations Ltd., Series 2015-22A, Class C, VRN, 4.77%, 5/20/16(1) | 300,000 | 288,805 | |||||
OZLM VI Ltd., Series 2014-6A, Class D, VRN, 5.38%, 5/18/16(1) | 535,000 | 440,124 | |||||
Pinnacle Park Collateralized Loan Obligations Ltd., Series 2014-1A, Class E, VRN, 5.58%, 5/15/16(1) | 520,000 | 428,911 | |||||
Sound Point Collateralized Loan Obligations IX Ltd., Series 2015-2A, Class D, VRN, 4.18%, 5/20/17(1) | 300,000 | 275,551 | |||||
Sound Point Collateralized Loan Obligations IX Ltd., Series 2015-2A, Class E, VRN, 6.13%, 5/20/16(1) | 300,000 | 249,998 | |||||
Sound Point Collateralized Loan Obligations V Ltd., Series 2014-1A, Class D, VRN, 4.03%, 5/18/16(1) | 300,000 | 268,519 | |||||
Venture XIV Collateralized Loan Obligations Ltd., Series 2013-14A, Class D, VRN, 4.39%, 5/29/16(1) | 300,000 | 275,487 | |||||
Venture XVI Collateralized Loan Obligations Ltd., Series 2014-16A, Class B1L, VRN, 4.08%, 5/15/16(1) | 1,000,000 | 874,843 | |||||
TOTAL COLLATERALIZED LOAN OBLIGATIONS (Cost $5,764,656) | 5,132,017 | ||||||
EXCHANGE-TRADED FUNDS — 5.8% | |||||||
iShares U.S. Preferred Stock ETF | 50,895 | 1,994,066 | |||||
PowerShares Preferred Portfolio ETF | 80,300 | 1,202,894 | |||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $3,183,127) | 3,196,960 | ||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES(3) — 5.4% | |||||||
ACRE Commercial Mortgage Trust, Series 2014-FL2, Class D, VRN, 3.83%, 5/15/16(1) | $ | 300,000 | 293,165 | ||||
CDGJ Commercial Mortgage Trust, Series 2014-BXCH, Class DPB, VRN, 4.28%, 5/15/16(1) | 229,384 | 225,724 | |||||
CDGJ Commercial Mortgage Trust, Series 2014-BXCH, Class EPA, VRN, 4.68%, 5/15/16(1) | 300,000 | 299,394 | |||||
COMM Mortgage Trust, Series 2007-C9, Class G, VRN, 6.01%, 5/1/16(1) | 300,000 | 292,829 | |||||
Hilton U.S.A. Trust, Series 2013-HLT, Class DFX, 4.41%, 11/5/30 | 300,000 | 301,685 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2014-BXH, Class E, VRN, 4.18%, 5/15/16(1) | 300,000 | 287,201 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2014-CBM, Class E, VRN, 4.28%, 5/15/16(1) | 300,000 | 288,931 | |||||
JPMorgan Chase Commercial Mortgage Securities Trust, Series 2015-CSMO, Class D, VRN, 3.73%, 5/15/16(1) | 1,000,000 | 990,999 | |||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES (Cost $3,018,390) | 2,979,928 | ||||||
EXCHANGE-TRADED NOTES — 5.0% | |||||||
Credit Suisse X-Links Cushing MLP Infrastructure ETN | 28,300 | 556,944 | |||||
ETRACS Alerian MLP Infrastructure Index ETN | 40,900 | 1,078,533 | |||||
JPMorgan Alerian MLP Index ETN | 35,900 | 1,078,436 | |||||
TOTAL EXCHANGE-TRADED NOTES (Cost $2,493,813) | 2,713,913 |
14
Principal Amount/Shares | Value | ||||||
COLLATERALIZED MORTGAGE OBLIGATIONS(3) — 4.1% | |||||||
Private Sponsor Collateralized Mortgage Obligation — 0.5% | |||||||
Credit Suisse Mortgage Trust, Series 2015-SAND, Class E, VRN, 4.28%, 5/15/16(1) | $ | 300,000 | $ | 293,944 | |||
U.S. Government Agency Collateralized Mortgage Obligations — 3.6% | |||||||
GNMA, Series 2012-87, IO, VRN, 0.66%, 5/1/16 | 7,267,484 | 324,712 | |||||
GNMA, Series 2012-99, IO, SEQ, VRN, 0.56%, 5/1/16 | 4,791,403 | 221,766 | |||||
GNMA, Series 2014-126, IO, SEQ, VRN, 0.77%, 5/1/16 | 6,288,518 | 401,046 | |||||
GNMA, Series 2014-126, IO, SEQ, VRN, 1.01%, 5/1/16 | 7,739,714 | 577,909 | |||||
GNMA, Series 2015-85, IO, VRN, 0.71%, 5/1/16 | 7,403,627 | 438,698 | |||||
1,964,131 | |||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $2,360,079) | 2,258,075 | ||||||
U.S. TREASURY SECURITIES — 0.9% | |||||||
U.S. Treasury Notes, 2.25%, 11/15/25 | 250,000 | 259,424 | |||||
U.S. Treasury Notes, 1.625%, 2/15/26 | 250,000 | 245,517 | |||||
TOTAL U.S. TREASURY SECURITIES (Cost $506,645) | 504,941 | ||||||
PURCHASED OPTIONS CONTRACTS — 0.1% | |||||||
SPDR S&P Oil & Gas Exploration, Call $35, Expires June 2016 | 26 | 6,695 | |||||
SPDR S&P 500 ETF Trust, Put $183, Expires March 2017 | 9 | 6,498 | |||||
SPDR S&P 500 ETF Trust, Put $184, Expires March 2017 | 4 | 2,976 | |||||
SPDR S&P 500 ETF Trust, Put $194, Expires June 2016 | 11 | 1,683 | |||||
SPDR S&P 500 ETF Trust, Put $197, Expires June 2016 | 18 | 3,600 | |||||
SPDR S&P 500 ETF Trust, Put $197, Expires July 2016 | 12 | 3,816 | |||||
TOTAL PURCHASED OPTIONS CONTRACTS (Cost $26,185) | 25,268 | ||||||
TEMPORARY CASH INVESTMENTS — 7.4% | |||||||
SSgA U.S. Government Money Market Fund, Class N | 2,690,135 | 2,690,135 | |||||
State Street Institutional Liquid Reserves Fund, Premier Class | 1,355,705 | 1,355,705 | |||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $4,045,840) | 4,045,840 | ||||||
TOTAL INVESTMENT SECURITIES BEFORE SECURITIES SOLD SHORT — 100.3% (Cost $56,041,437) | 54,992,244 | ||||||
CORPORATE BONDS SOLD SHORT — (0.2)% | |||||||
Automobiles — (0.2)% | |||||||
Fiat Chrysler Automobiles NV, 4.50%, 4/15/20 (Proceeds $97,545) | $ | (98,000 | ) | (100,401) | |||
OTHER ASSETS AND LIABILITIES — (0.1)% | (64,063) | ||||||
TOTAL NET ASSETS — 100.0% | $ | 54,827,780 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||
USD | 318,795 | EUR | 281,000 | State Street Bank & Trust Co. | 5/2/16 | $ | (2,964 | ) |
USD | 168,719 | EUR | 150,000 | State Street Bank & Trust Co. | 5/26/16 | (3,152 | ) | |
USD | 329,916 | EUR | 288,000 | State Street Bank & Trust Co. | 6/3/16 | (153 | ) | |
$ | (6,269 | ) |
15
SWAP AGREEMENTS
CENTRALLY CLEARED CREDIT DEFAULT | ||||||||||||||
Reference Entity | Notional Amount | Buy/Sell* Protection | Interest Rate | Termination Date | Implied Credit Spread** | Unrealized Appreciation (Depreciation) | Value | |||||||
Markit iTraxx Europe Series 25 | EUR | 660,000 | Sell | 1.00% | 6/20/21 | 0.73 | % | $ | (41 | ) | $ | 11,020 | ||
Markit iTraxx Europe Senior Financials Series 25 | EUR | 660,000 | Buy | 1.00% | 6/20/21 | 0.90 | % | 2 | (4,798 | ) | ||||
$ | (39 | ) | $ | 6,222 |
CREDIT DEFAULT | |||||||||||||||
Counterparty/ Reference Entity | Notional Amount | Buy/Sell Protection | Interest Rate | Termination Date | Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | Value*** | ||||||||
Bank of America N.A./ 21st Century Fox America, Inc. | $ | 190,000 | Buy | 1.00% | 6/20/21 | $ | (4,593 | ) | $ | (1,071 | ) | $ | (5,664 | ) | |
Bank of America N.A./ Comcast Corp. | 114,000 | Buy | 1.00% | 6/20/21 | (3,333 | ) | 393 | (2,940 | ) | ||||||
Bank of America N.A/ Cox Communications | 190,000 | Buy | 1.00% | 6/20/21 | (3,072 | ) | (454 | ) | (3,526 | ) | |||||
Bank of America N.A./ Verizon Communications, Inc. | 190,000 | Buy | 1.00% | 6/20/21 | (2,930 | ) | (1,156 | ) | (4,086 | ) | |||||
$ | (13,928 | ) | $ | (2,288 | ) | $ | (16,216 | ) |
* | The maximum potential amount the fund could be required to deliver as a seller of credit protection if a credit event occurs as defined under the terms of the agreement is the notional amount. The maximum potential amount may be partially offset by any recovery values of the reference entities and upfront payments received upon entering into the agreement. |
** Implied credit spreads for centrally cleared credit default swap agreements are linked to the weighted average spread across the underlying reference entities included in a particular index. Implied credit spreads serve as an indication of the seller's performance risk related to the likelihood of a credit event occurring as defined in the agreement. Implied credit spreads are used to determine the value of swap agreements and reflect the cost of buying/selling protection, which may include upfront payments made/received upon entering the agreement. Therefore, higher spreads would indicate a greater likelihood that a seller will be obligated to perform under the contract terms. Increasing values, in absolute terms and relative to notional amounts, are also indicative of greater performance risk.
***The value for credit default swap agreements serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability or profit at the period end. Increasing values in absolute terms when compared to the notional amount of the credit default swap agreement represent a deterioration of the reference entity's credit soundness and an increased likelihood or risk of a credit event occurring as defined in the agreement.
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NOTES TO SCHEDULE OF INVESTMENTS | ||
EUR | - | Euro |
GNMA | - | Government National Mortgage Association |
IO | - | Interest Only |
MLP | - | Master Limited Partnership |
MTN | - | Medium Term Note |
SEQ | - | Sequential Payer |
USD | - | United States Dollar |
VRN | - | Variable Rate Note. Interest reset date is indicated. Rate shown is effective at the period end. |
† | Category is less than 0.05% of total net assets. |
(1) | Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration, normally to qualified institutional investors. The aggregate value of these securities at the period end was $19,341,219, which represented 35.3% of total net assets. Of these securities, 1.8% of total net assets were deemed illiquid under policies approved by the Board of Directors. |
(2) | Security, or a portion thereof, has been pledged at the custodian bank or with a broker for collateral requirements on securities sold short. At the period end, the aggregate value of securities pledged was $29,623. |
(3) | Final maturity date indicated, unless otherwise noted. |
(4) | The interest rate on a bank loan obligation adjusts periodically based on a predetermined schedule. Rate shown is effective at period end. The maturity date on a bank loan obligation may be less than indicated as a result of contractual or optional prepayments. These prepayments cannot be predicted with certainty. Final maturity date is indicated. |
(5) | Security, or a portion thereof, represents an unsettled bank loan obligation. The interest rate will be determined at the time of settlement after period end. |
(6) | Security is a collateralized loan obligation equity. These securities do not have stated interest rate but are entitled to receive excess cash flow generated by the collateralized loan obligation. |
(7) | When-issued security. The issue price and yield are fixed on the date of the commitment, but payment and delivery are scheduled for a future date. |
(8) | Security is in default. |
(9) | Non-income producing. |
See Notes to Financial Statements.
17
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $56,041,437) | $ | 54,992,244 | |
Foreign currency holdings, at value (cost of $6,269) | 5,408 | ||
Deposits with broker for swap agreements | 12,325 | ||
Deposits with broker for securities sold short | 153,488 | ||
Receivable for investments sold | 1,304,275 | ||
Receivable for capital shares sold | 111,390 | ||
Receivable for variation margin on swap agreements | 561 | ||
Interest and dividends receivable | 330,435 | ||
56,910,126 | |||
Liabilities | |||
Securities sold short, at value (proceeds of $97,545) | 100,401 | ||
Payable for investments purchased | 1,862,741 | ||
Payable for capital shares redeemed | 455 | ||
Unrealized depreciation on forward foreign currency exchange contracts | 6,269 | ||
Swap agreements, at value (including net premiums paid (received) of $(13,928)) | 16,216 | ||
Accrued management fees | 85,338 | ||
Distribution and service fees payable | 10,639 | ||
Interest expense payable on securities sold short | 196 | ||
Broker fees and charges payable on securities sold short | 91 | ||
2,082,346 | |||
Net Assets | $ | 54,827,780 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 57,291,603 | |
Undistributed net investment income | 1,157,499 | ||
Accumulated net realized loss | (2,561,099 | ) | |
Net unrealized depreciation | (1,060,223 | ) | |
$ | 54,827,780 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $25,463,688 | 2,676,578 | $9.51 | |||
Institutional Class, $0.01 Par Value | $5,944,034 | 624,382 | $9.52 | |||
A Class, $0.01 Par Value | $9,804,157 | 1,031,409 | $9.51* | |||
C Class, $0.01 Par Value | $9,810,047 | 1,039,099 | $9.44 | |||
R Class, $0.01 Par Value | $1,895,509 | 199,858 | $9.48 | |||
R6 Class, $0.01 Par Value | $1,910,345 | 200,568 | $9.52 |
*Maximum offering price $10.09 (net asset value divided by 0.9425).
See Notes to Financial Statements.
18
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Interest | $ | 991,792 | |
Dividends (net of foreign taxes withheld of $175) | 150,305 | ||
1,142,097 | |||
Expenses: | |||
Management fees | 499,918 | ||
Distribution and service fees: | |||
A Class | 11,830 | ||
C Class | 46,799 | ||
R Class | 4,609 | ||
Directors' fees and expenses | 928 | ||
Interest expense on securities sold short | 2,820 | ||
Broker fees and charges on securities sold short | 259 | ||
Other expenses | 252 | ||
567,415 | |||
Net investment income (loss) | 574,682 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (1,095,128 | ) | |
Securities sold short transactions | (1,563 | ) | |
Written options contract transactions | 19,591 | ||
Swap agreement transactions | (1,168,787 | ) | |
Foreign currency transactions | (10,094 | ) | |
(2,255,981 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 530,661 | ||
Securities sold short | (2,606 | ) | |
Swap agreements | 753,337 | ||
Translation of assets and liabilities in foreign currencies | (7,132 | ) | |
1,274,260 | |||
Net realized and unrealized gain (loss) | (981,721 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (407,039 | ) |
See Notes to Financial Statements.
19
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND PERIOD ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015(1) | ||||
Operations | ||||||
Net investment income (loss) | $ | 574,682 | $ | 480,867 | ||
Net realized gain (loss) | (2,255,981 | ) | (177,692 | ) | ||
Change in net unrealized appreciation (depreciation) | 1,274,260 | (2,334,483 | ) | |||
Net increase (decrease) in net assets resulting from operations | (407,039 | ) | (2,031,308 | ) | ||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (34,873 | ) | — | |||
Institutional Class | (15,273 | ) | — | |||
A Class | (410 | ) | — | |||
R6 Class | (6,640 | ) | — | |||
Decrease in net assets from distributions | (57,196 | ) | — | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 4,424,043 | 52,899,280 | ||||
Net increase (decrease) in net assets | 3,959,808 | 50,867,972 | ||||
Net Assets | ||||||
Beginning of period | 50,867,972 | — | ||||
End of period | $ | 54,827,780 | $ | 50,867,972 | ||
Undistributed net investment income | $ | 1,157,499 | $ | 640,013 |
(1) | May 29, 2015 (fund inception) through October 31, 2015. |
See Notes to Financial Statements.
20
Notes to Financial Statements |
APRIL 30, 2016 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. AC Alternatives Income Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek to provide diverse sources of income.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. All classes of the fund commenced operations on May 29, 2015, the fund's inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Fixed income securities are valued at the evaluated mean as provided by independent pricing services or at the mean of the most recent bid and asked prices as provided by investment dealers. Corporate bonds, U.S. Treasury and Government Agency securities and bank loan obligations are valued using market models that consider trade data, quotations from dealers and active market makers, relevant yield curve and spread data, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information. Mortgage-related and asset-backed securities are valued based on models that consider trade data, prepayment and default projections, benchmark yield and spread data and estimated cash flows of each tranche of the issuer. Collateralized loan obligations are valued based on discounted cash flow models that consider trade and economic data, prepayment assumptions and default projections. Fixed income securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Exchange-traded notes and equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Swap agreements and over-the-counter options contracts are valued at an evaluated price as provided by independent pricing services or independent brokers. Forward foreign currency exchange contracts are
21
valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service. Exchange-traded options contracts are valued based on quoted prices as provided by the appropriate exchange. Investments initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Inflation adjustments related to inflation-linked debt securities are reflected as interest income. Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes.
Securities Sold Short — The fund enters into short sales, which is selling securities it does not own, as part of its normal investment activities. Upon selling a security short, the fund will segregate cash, cash equivalents or other appropriate liquid securities in at least an amount equal to the current market value of the securities sold short until the fund replaces the borrowed security. Interest earned on segregated cash for securities sold short is reflected as interest income. The fund is required to pay any dividends or interest due on securities sold short. Such dividends and interest are recorded as an expense. The fund may pay fees or charges to the broker on the assets borrowed for securities sold short. These fees are calculated daily based upon the value of each security sold short and a rate that is dependent on the availability of such security. If the market price of a security increases after the fund borrows the security, the fund may suffer a loss when it replaces the borrowed security at the higher price. Any loss will be increased by the amount of compensation, interest or dividends, and transaction costs the fund must pay to the lender of the borrowed security. Liabilities for securities sold short are valued daily and changes in value are recorded as change in net unrealized appreciation (depreciation) on securities sold short. The fund records realized gain (loss) on a security sold short when it is terminated by the fund and includes as a component of net realized gain (loss) on securities sold short transactions.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
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Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investments, including, but not limited to, short sales, futures contracts, options contracts, forward commitments, when-issued securities, swap agreements and certain forward foreign currency exchange contracts. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for margin requirements on short sales,
futures contracts, options contracts, forward commitments and swap agreements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly, but may be paid less frequently. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. ACIM has engaged Perella Weinberg Partners Capital Management LP (PWP) as a subadvisor for the fund. PWP is responsible for making recommendations with respect to hiring, terminating, or replacing the fund’s underlying subadvisors. The fund’s underlying subadvisors at the period end were Arrowpoint Asset Management, LLC, Bain Capital Credit, LP (formerly Sankaty Advisors, LP), and Good Hill Partners LP. PWP determines the percentage of the fund’s portfolio allocated to each subadvisor, including PWP, in order to seek to achieve the fund’s investment objective. ACIM is responsible for entering into subadvisory agreements and overseeing the activities of each of the subadvisors including monitoring compliance with fund objectives, strategies and restrictions. ACIM pays all costs associated with retaining the subadvisors of the fund. ACIM and the fund’s subadvisors own 87% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, expenses on securities sold short, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The annual management fee is 2.00% for the Investor Class, A Class, C Class and R Class, 1.80% for the Institutional Class and 1.65% for the R6 Class.
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Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2016 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund's assets but are reflected in the return realized by the fund on its investment in the acquired funds.
4. Investment Transactions
Purchases of investment securities and securities sold short, excluding short-term investments, for the six months ended April 30, 2016 totaled $31,079,085, of which $506,797 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities and securities sold short, excluding short-term investments, for the six months ended April 30, 2016 totaled $24,166,815, none of which were U.S. Treasury and Government Agency obligations.
Transactions in written options contracts during the six months ended April 30, 2016 were as follows:
Outstanding, Beginning of Period | Written | Exercised | Expired | Outstanding, End of Period | |||||||
Number of Contracts | — | 1,265 | (1,065 | ) | (200 | ) | — | ||||
Premium Amount | — | $ | 94,578 | $ | (74,987 | ) | $ | (19,591 | ) | — |
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Period ended October 31, 2015(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||
Sold | 491,596 | $ | 4,605,405 | 2,298,236 | $ | 22,883,895 | ||||
Issued in reinvestment of distributions | 3,731 | 34,843 | — | — | ||||||
Redeemed | (98,258 | ) | (912,235 | ) | (18,727 | ) | (182,732 | ) | ||
397,069 | 3,728,013 | 2,279,509 | 22,701,163 | |||||||
Institutional Class/Shares Authorized | 80,000,000 | 100,000,000 | ||||||||
Sold | 23,174 | 216,801 | 600,000 | 6,000,000 | ||||||
Issued in reinvestment of distributions | 1,635 | 15,273 | — | — | ||||||
Redeemed | (427 | ) | (3,985 | ) | — | — | ||||
24,382 | 228,089 | 600,000 | 6,000,000 | |||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 27,560 | 256,429 | 1,007,990 | 10,077,617 | ||||||
Issued in reinvestment of distributions | 44 | 410 | — | — | ||||||
Redeemed | (4,185 | ) | (39,215 | ) | — | — | ||||
23,419 | 217,624 | 1,007,990 | 10,077,617 | |||||||
C Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 27,249 | 252,924 | 1,012,561 | 10,120,500 | ||||||
Redeemed | (711 | ) | (6,595 | ) | — | — | ||||
26,538 | 246,329 | 1,012,561 | 10,120,500 | |||||||
R Class/Shares Authorized | 20,000,000 | 40,000,000 | ||||||||
Sold | — | — | 200,000 | 2,000,000 | ||||||
Redeemed | (142 | ) | (1,323 | ) | — | — | ||||
(142 | ) | (1,323 | ) | 200,000 | 2,000,000 | |||||
R6 Class/Shares Authorized | 30,000,000 | 40,000,000 | ||||||||
Sold | — | — | 200,000 | 2,000,000 | ||||||
Issued in reinvestment of distributions | 711 | 6,640 | — | — | ||||||
Redeemed | (143 | ) | (1,329 | ) | — | — | ||||
568 | 5,311 | 200,000 | 2,000,000 | |||||||
Net increase (decrease) | 471,834 | $ | 4,424,043 | 5,300,060 | $ | 52,899,280 |
(1) | May 29, 2015 (fund inception) through October 31, 2015. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
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The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Corporate Bonds | — | $ | 9,940,859 | — | ||||
Asset-Backed Securities | — | 8,598,038 | — | |||||
Bank Loan Obligations | — | 8,247,042 | — | |||||
Common Stocks | $ | 7,349,363 | — | — | ||||
Collateralized Loan Obligations | — | 5,132,017 | — | |||||
Exchange-Traded Funds | 3,196,960 | — | — | |||||
Commercial Mortgage-Backed Securities | — | 2,979,928 | — | |||||
Exchange-Traded Notes | 2,713,913 | — | — | |||||
Collateralized Mortgage Obligations | — | 2,258,075 | — | |||||
U.S. Treasury Securities | — | 504,941 | — | |||||
Purchased Options Contracts | 25,268 | — | — | |||||
Temporary Cash Investments | 4,045,840 | — | — | |||||
$ | 17,331,344 | $ | 37,660,900 | — | ||||
Other Financial Instruments | ||||||||
Swap Agreements | — | $ | 11,020 | — | ||||
Liabilities | ||||||||
Securities Sold Short | ||||||||
Corporate Bonds | — | $ | 100,401 | — | ||||
Other Financial Instruments | ||||||||
Swap Agreements | — | $ | 21,014 | — | ||||
Forward Foreign Currency Exchange Contracts | — | 6,269 | — | |||||
— | $ | 27,283 | — |
7. Derivative Instruments
Credit Risk — The fund is subject to credit risk in the normal course of pursuing its investment objectives. The value of a bond generally declines as the credit quality of its issuer declines. Credit default swap agreements enable a fund to buy/sell protection against a credit event of a specific issuer or index. A fund may attempt to enhance returns by selling protection or attempt to mitigate credit risk by buying protection. The buyer/seller of credit protection against a security or basket of securities may pay/receive an up-front or periodic payment to compensate for/against potential default events. Changes in value, including the periodic amounts of interest to be paid or received on swap agreements, are recorded as unrealized appreciation (depreciation) on swap agreements. Upon entering into a centrally cleared swap, a fund is required to deposit cash or securities (initial margin) with a financial intermediary in an amount equal to a certain percentage of the notional amount. Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the value and is a component of unrealized gains and losses. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The risks of entering into swap agreements include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments. The fund's average notional amount held during the period was $1,501,750.
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into total return swap agreements or option contracts based on an equity index or specific security in order to manage its exposure to changes in market conditions. The risks of entering into
26
equity price risk derivative instruments include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments.
A fund may purchase or write an option contract to protect against declines in market value on the underlying index or security. A purchased option contract provides the fund a right, but not an obligation, to buy (call) or sell (put) an equity-related asset at a specified exercise price within a certain period or on a specific date. A written option contract holds the corresponding obligation to sell (call writing) or buy (put writing) the underlying equity-related asset if the purchaser exercises the option contract. The buyer pays the seller an initial purchase price (premium) for this right. Option contracts purchased by a fund are accounted for in the same manner as marketable portfolio securities. The premium received by a fund for option contracts written is recorded as a liability and valued daily. The proceeds from securities sold through the exercise of option contracts are decreased by the premium paid to purchase the option contracts. A fund recognizes a realized gain or loss when the option contract is exercised or expires. Net realized and unrealized gains or losses occurring during the holding period of purchased options contracts are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively. Net realized and unrealized gains or losses occurring during the holding period of written options contracts are a component of net realized gain (loss) on written options contract transactions and change in net unrealized appreciation (depreciation) on written options contracts, respectively. The fund’s average exposure to these equity price risk derivative instruments during the period was 74 purchased options contracts and 1,074 written options contracts.
A fund may enter into total return swap agreements in order to attempt to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets or gain exposure to certain markets in the most economical way possible. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Changes in value, including the periodic amounts of interest to be paid or received on swap agreements, are recorded as unrealized appreciation (depreciation) on swap agreements. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The fund’s average swap agreement units held during the period was 8,341.
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward foreign currency exchange contract or purchased call option contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms.
A fund may purchase a call option contract for the right to purchase a specific amount of a currency at a specific price on a specific date in the future. Option contracts purchased by a fund are accounted for in the same manner as marketable portfolio securities. The cost of currencies received through the exercise of call option contracts is increased by the premium paid to purchase the option contracts. A fund recognizes a realized gain or loss when the option contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of options contracts are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively. The fund’s average exposure to foreign currency option contracts during the period was $350,000.
A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations or to gain exposure to the fluctuations in the value of foreign currencies. Forward foreign currency exchange contracts are transactions that require a specific amount of a currency to be delivered at a specific exchange rate on a specific date in the future. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the forward
foreign currency exchange contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. The fund’s average U.S. dollar exposure to forward foreign currency exchange contracts held during the period was $504,804.
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Value of Derivative Instruments as of April 30, 2016
Asset Derivatives | Liability Derivatives | |||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||
Credit Risk | Receivable for variation margin on swap agreements* | $ | 561 | Payable for variation margin on swap agreements* | — | |||
Credit Risk | Swap agreements | — | Swap agreements | $ | 16,216 | |||
Equity Price Risk | Investment securities | 25,268 | Investment securities | — | ||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | — | Unrealized depreciation on forward foreign currency exchange contracts | 6,269 | ||||
$ | 25,829 | $ | 22,485 |
* Included in the unrealized appreciation (depreciation) on centrally cleared credit default swap agreements as reported in the Schedule of Investments.
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended April 30, 2016
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | |||||||
Type of Risk Exposure | Location on Statement of Operations | Value | Location on Statement of Operations | Value | ||||
Credit Risk | Net realized gain (loss) on swap agreement transactions | $ | (15,539 | ) | Change in net unrealized appreciation (depreciation) on swap agreements | $ | (2,002 | ) |
Equity Price Risk | Net realized gain (loss) on investment transactions | (25,872 | ) | Change in net unrealized appreciation (depreciation) on investments | 3,537 | |||
Equity Price Risk | Net realized gain (loss) on written options contract transactions | 19,591 | Change in net unrealized appreciation (depreciation) on written options contracts | — | ||||
Equity Price Risk | Net realized gain (loss) on swap agreement transactions | (1,153,248 | ) | Change in net unrealized appreciation (depreciation) on swap agreements | 755,339 | |||
Foreign Currency Risk | Net realized gain (loss) on investment transactions | (1,785 | ) | Change in net unrealized appreciation (depreciation) on investments | 1,331 | |||
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | (17,876 | ) | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (7,556 | ) | ||
$ | (1,194,729 | ) | $ | 750,649 |
8. Risk Factors
ACIM utilizes multiple subadvisors to manage the fund’s assets, each employing its own particular investment strategy. Multi-manager strategies can increase the fund's portfolio turnover rate, which could result in higher levels of realized capital gains or losses, higher brokerage commissions and other transaction costs.
The fund’s investments in secured and unsecured participations in bank loan obligations and assignments of such loans may create substantial risk. The market for bank loans may not be highly liquid and the fund may have difficulty selling them. The fund’s bank loan investments typically will result in the fund having a contractual relationship only with the lender, not with the borrower. In connection with purchasing loan participations, the fund generally will have no right to enforce compliance by borrowers with loan terms nor any set off rights, and the fund may not benefit directly from any posted collateral. As a result, the fund may be subject to the credit risk of both the borrower and the lender selling the participation.
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The fund may invest in collateralized debt obligations, collateralized loan obligations and other related instruments. Collateralized debt obligations are subject to credit, interest rate, valuation, and prepayment and extension risks. These securities also are subject to risk of default on the underlying asset, particularly during periods of economic downturn.
The fund may invest in foreign securities, which are generally riskier than U.S. securities. As a result the fund may be subject to foreign risk, meaning that political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters occurring in a country where the fund invests could cause the fund’s investments in that country to experience losses. For these and other reasons, securities of foreign issuers may be less liquid and more volatile. Investing in securities of companies located in emerging market countries generally is riskier than investing in securities of companies located in foreign developed countries.
Issuers of high-yield securities (also known as “junk bonds”) are more vulnerable to real or perceived economic changes (such as an economic downturn or a prolonged period of rising interest rates), political changes or adverse developments specific to an issuer. These factors may be more likely to cause an issuer of low quality bonds to default on its obligations.
The fund may also be subject to liquidity risk. During periods of market turbulence or unusually low trading activity, in order to meet redemptions it may be necessary for the fund to sell securities at prices that could have an adverse effect on the fund’s share price.
Mortgage-related and other asset-backed securities are subject to additional risks including prepayment and extension risk. Mortgage-backed securities offered by non-governmental issuers are subject to specific risks, such as the failure of private insurers to meet their obligations and unexpectedly high rates of default on the mortgages backing the securities. Other asset-backed securities are subject to risks similar to those associated with mortgage-backed securities, as well as risks associated with the nature and servicing of the assets underlying the securities. Asset-backed securities may not have the benefit of a security interest in
collateral comparable to that of mortgage assets, resulting in additional credit risk.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 56,124,974 | |
Gross tax appreciation of investments | $ | 788,706 | |
Gross tax depreciation of investments | (1,921,436 | ) | |
Net tax appreciation (depreciation) of investments | (1,132,730 | ) | |
Net tax appreciation (depreciation) on securities sold short | (2,856 | ) | |
Net tax appreciation (depreciation) | $ | (1,135,586 | ) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2015, the fund had accumulated short-term capital losses of $(305,724), 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 may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
As of October 31, 2015, the fund had late-year ordinary loss deferrals of $(96,286), which represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
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Financial Highlights |
For a Share Outstanding Throughout the Periods Indicated | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2016(4) | $9.61 | 0.11 | (0.20) | (0.09) | (0.01) | $9.51 | (0.89)% | 2.02%(5) | 2.47%(5) | 54% | $25,464 | ||
2015(6) | $10.00 | 0.10 | (0.49) | (0.39) | — | $9.61 | (3.90)% | 2.00%(5) | 2.55%(5) | 23% | $21,898 | ||
Institutional Class | |||||||||||||
2016(4) | $9.61 | 0.12 | (0.18) | (0.06) | (0.03) | $9.52 | (0.77)% | 1.82%(5) | 2.67%(5) | 54% | $5,944 | ||
2015(6) | $10.00 | 0.11 | (0.50) | (0.39) | — | $9.61 | (3.80)% | 1.80%(5) | 2.75%(5) | 23% | $5,769 | ||
A Class | |||||||||||||
2016(4) | $9.60 | 0.10 | (0.19) | (0.09) | —(7) | $9.51 | (0.93)% | 2.27%(5) | 2.22%(5) | 54% | $9,804 | ||
2015(6) | $10.00 | 0.09 | (0.49) | (0.40) | — | $9.60 | (4.00)% | 2.25%(5) | 2.30%(5) | 23% | $9,673 | ||
C Class | |||||||||||||
2016(4) | $9.57 | 0.07 | (0.20) | (0.13) | — | $9.44 | (1.36)% | 3.02%(5) | 1.47%(5) | 54% | $9,810 | ||
2015(6) | $10.00 | 0.06 | (0.49) | (0.43) | — | $9.57 | (4.30)% | 3.00%(5) | 1.55%(5) | 23% | $9,687 | ||
R Class | |||||||||||||
2016(4) | $9.59 | 0.09 | (0.20) | (0.11) | — | $9.48 | (1.15)% | 2.52%(5) | 1.97%(5) | 54% | $1,896 | ||
2015(6) | $10.00 | 0.08 | (0.49) | (0.41) | — | $9.59 | (4.10)% | 2.50%(5) | 2.05%(5) | 23% | $1,917 | ||
R6 Class | |||||||||||||
2016(4) | $9.62 | 0.13 | (0.20) | (0.07) | (0.03) | $9.52 | (0.58)% | 1.67%(5) | 2.82%(5) | 54% | $1,910 | ||
2015(6) | $10.00 | 0.12 | (0.50) | (0.38) | — | $9.62 | (3.80)% | 1.65%(5) | 2.90%(5) | 23% | $1,924 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | Six months ended April 30, 2016 (unaudited). |
(5) | Annualized. |
(6) | May 29, 2015 (fund inception) through October 31, 2015. |
(7) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
Approval of Subadvisory Agreement |
The Fund is a multi-manager fund, which means that American Century Investment Management, Inc. (the "Advisor") has retained several subadvisors, each employing its own particular investment strategy, to manage and make investment decisions with respect to the Fund’s assets. The Advisor has engaged Perella Weinberg Partners Capital Management LP (“PWP”) to manage a portion of the Fund and to identify and recommend other underlying subadvisors to manage distinct investment strategies. PWP uses a flexible and opportunistic investment strategy that allocates Fund assets among underlying subadvisors with expertise in a particular investment strategy, and supplements those strategies with its own direct investment management and hedging strategies. PWP also provides tactical allocation of assets among the various underlying subadvisors and a framework for the risk management and investment monitoring of the Fund. The Advisor provides oversight of each of these functions.
At its meeting on December 1, 2015, the Fund's Board of Directors approved MAST Capital Management, LLC (the "Subadvisor") as an underlying subadvisor for the Fund. In considering the approval of the Subadvisor and the underlying subadvisory agreement between the Advisor and the Subadvisor, referred to herein as the “Subadvisory Agreement,” the Board received detailed information regarding the Subadvisor, as well as those individuals designated to manage the Fund.
The Board received a recommendation from the Advisor and PWP to approve the Subadvisor as an underlying subadvisor for the Fund. The information considered and the discussions held with regard to the Subadvisor included, but were not limited to:
• | the nature, extent, and quality of investment management services to be provided by the Subadvisor to the Fund; |
• | the Subadvisor’s breadth of experience in managing its particular investment strategy and in managing investments generally; |
• | the expected composition and liquidity of the securities to be held in the Subadvisor’s portion of the Fund; |
• | data comparing the performance of the Subadvisor’s proposed investment strategies employed in similar accounts to appropriate benchmarks; and |
• | the compliance policies, procedures, and regulatory experience of the Subadvisor, including management of other 1940 Act registered investment companies, if applicable. |
The independent Directors reviewed the proposed fees for the Subadvisor, noting that the compensation paid to the Subadvisor would be paid by the Advisor out of the Fund’s unified fee. They also noted that the terms of the Subadvisory Agreement were the result of arms’ length negotiations between the Advisor and the Subadvisor. The independent Directors considered all of the information provided by the Advisor, the Subadvisor, and the independent Directors’ independent counsel in connection with the approval, and concluded that they had sufficient information to evaluate the proposed agreement on behalf of the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. Based on all of the information considered, the independent Directors concluded that the Subadvisory Agreement was fair and reasonable in light of the services to be provided and should be approved.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Notes |
34
Notes |
35
Notes |
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century 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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89222 1606 |
Semiannual Report | |
April 30, 2016 | |
Global Real Estate Fund |
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. | |
Jonathan Thomas |
Economic Growth Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Simon Property Group, Inc. | 6.9% |
AvalonBay Communities, Inc. | 3.6% |
Mitsui Fudosan Co. Ltd. | 3.5% |
Boston Properties, Inc. | 3.3% |
ProLogis, Inc. | 3.3% |
Apartment Investment & Management Co., Class A | 3.1% |
General Growth Properties, Inc. | 3.0% |
Unibail-Rodamco SE | 2.8% |
CubeSmart | 2.6% |
Cheung Kong Property Holdings Ltd. | 2.5% |
Types of Investments in Portfolio | % of net assets |
Foreign Common Stocks | 49.6% |
Domestic Common Stocks | 49.1% |
Total Common Stocks | 98.7% |
Temporary Cash Investments | 1.7% |
Other Assets and Liabilities | (0.4)% |
Investments by Country | % of net assets |
United States | 49.1% |
Japan | 12.1% |
Hong Kong | 7.0% |
Australia | 5.4% |
United Kingdom | 5.3% |
France | 4.7% |
Canada | 2.9% |
China | 2.8% |
Germany | 2.6% |
Other Countries | 6.8% |
Cash and Equivalents* | 1.3% |
*Includes temporary cash investments and other assets and liabilities. |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2015 to April 30, 2016.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1) 11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,016.80 | $5.87 | 1.17% |
Investor Class (before waiver) | $1,000 | $1,016.80(2) | $6.07 | 1.21% |
Institutional Class (after waiver) | $1,000 | $1,017.90 | $4.87 | 0.97% |
Institutional Class (before waiver) | $1,000 | $1,017.90(2) | $5.07 | 1.01% |
A Class (after waiver) | $1,000 | $1,016.00 | $7.12 | 1.42% |
A Class (before waiver) | $1,000 | $1,016.00(2) | $7.32 | 1.46% |
C Class (after waiver) | $1,000 | $1,011.80 | $10.85 | 2.17% |
C Class (before waiver) | $1,000 | $1,011.80(2) | $11.05 | 2.21% |
R Class (after waiver) | $1,000 | $1,015.10 | $8.37 | 1.67% |
R Class (before waiver) | $1,000 | $1,015.10(2) | $8.57 | 1.71% |
R6 Class (after waiver) | $1,000 | $1,018.60 | $4.12 | 0.82% |
R6 Class (before waiver) | $1,000 | $1,018.60(2) | $4.32 | 0.86% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.05 | $5.87 | 1.17% |
Investor Class (before waiver) | $1,000 | $1,018.85 | $6.07 | 1.21% |
Institutional Class (after waiver) | $1,000 | $1,020.04 | $4.87 | 0.97% |
Institutional Class (before waiver) | $1,000 | $1,019.84 | $5.07 | 1.01% |
A Class (after waiver) | $1,000 | $1,017.80 | $7.12 | 1.42% |
A Class (before waiver) | $1,000 | $1,017.60 | $7.32 | 1.46% |
C Class (after waiver) | $1,000 | $1,014.07 | $10.87 | 2.17% |
C Class (before waiver) | $1,000 | $1,013.87 | $11.07 | 2.21% |
R Class (after waiver) | $1,000 | $1,016.56 | $8.37 | 1.67% |
R Class (before waiver) | $1,000 | $1,016.36 | $8.57 | 1.71% |
R6 Class (after waiver) | $1,000 | $1,020.79 | $4.12 | 0.82% |
R6 Class (before waiver) | $1,000 | $1,020.59 | $4.32 | 0.86% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
(2) | Ending account value assumes the return earned after waiver and would have been lower if a portion of the fees had not been waived. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 98.7% | ||||
Australia — 5.4% | ||||
Charter Hall Group | 60,562 | $ | 220,571 | |
Goodman Group | 337,536 | 1,768,287 | ||
Scentre Group | 295,135 | 1,052,464 | ||
Vicinity Centres | 556,921 | 1,405,870 | ||
Westfield Corp. | 195,891 | 1,504,352 | ||
5,951,544 | ||||
Brazil — 0.5% | ||||
BR Malls Participacoes SA | 117,700 | 583,153 | ||
Canada — 2.9% | ||||
Allied Properties Real Estate Investment Trust | 27,082 | 763,010 | ||
Boardwalk Real Estate Investment Trust | 11,843 | 506,870 | ||
Chartwell Retirement Residences | 111,196 | 1,225,664 | ||
H&R Real Estate Investment Trust | 39,253 | 685,762 | ||
3,181,306 | ||||
China — 2.8% | ||||
China Overseas Land & Investment Ltd. | 196,000 | 625,379 | ||
China Resources Land Ltd. | 542,888 | 1,340,965 | ||
Dalian Wanda Commercial Properties Co. Ltd., H Shares | 53,700 | 354,797 | ||
Longfor Properties Co. Ltd. | 538,000 | 757,385 | ||
3,078,526 | ||||
France — 4.7% | ||||
Klepierre | 30,660 | 1,442,030 | ||
Nexity SA | 12,227 | 655,645 | ||
Unibail-Rodamco SE | 11,504 | 3,082,402 | ||
5,180,077 | ||||
Germany — 2.6% | ||||
Deutsche Wohnen AG | 50,432 | 1,544,448 | ||
Grand City Properties SA | 60,247 | 1,330,737 | ||
2,875,185 | ||||
Hong Kong — 7.0% | ||||
Cheung Kong Property Holdings Ltd. | 399,000 | 2,739,077 | ||
Link REIT | 272,000 | 1,653,341 | ||
Sino Land Co. Ltd. | 610,000 | 960,977 | ||
Sun Hung Kai Properties Ltd. | 180,000 | 2,275,265 | ||
7,628,660 | ||||
Indonesia — 0.5% | ||||
Bumi Serpong Damai Tbk PT | 2,718,600 | 381,362 | ||
Summarecon Agung Tbk PT | 1,587,900 | 188,434 | ||
569,796 | ||||
Japan — 12.1% | ||||
Advance Residence Investment Corp. | 411 | 1,105,378 | ||
Daiwa House Residential Investment Corp. | 284 | 698,533 | ||
Hulic Co. Ltd. | 175,100 | 1,709,030 | ||
Japan Real Estate Investment Corp. | 250 | 1,552,001 | ||
Mitsubishi Estate Co. Ltd. | 45,000 | 855,271 |
6
Shares | Value | |||
Mitsui Fudosan Co. Ltd. | 159,000 | $ | 3,821,424 | |
Mori Hills REIT Investment Corp. | 1,116 | 1,675,082 | ||
Orix JREIT, Inc. | 1,082 | 1,803,026 | ||
13,219,745 | ||||
Philippines — 1.2% | ||||
Ayala Land, Inc. | 1,087,000 | 803,296 | ||
SM Prime Holdings, Inc. | 951,100 | 459,449 | ||
1,262,745 | ||||
Singapore — 1.8% | ||||
CapitaLand Mall Trust | 293,800 | 452,219 | ||
City Developments Ltd. | 100,000 | 620,144 | ||
Global Logistic Properties Ltd. | 328,900 | 468,337 | ||
Mapletree Industrial Trust | 368,500 | 439,783 | ||
1,980,483 | ||||
South Africa — 0.8% | ||||
Growthpoint Properties Ltd. | 346,346 | 611,904 | ||
Hyprop Investments Ltd. | 32,545 | 280,908 | ||
892,812 | ||||
Spain — 0.9% | ||||
Inmobiliaria Colonial SA(1) | 1,300,179 | 997,476 | ||
Sweden — 1.1% | ||||
Hufvudstaden AB, A Shares | 75,889 | 1,175,599 | ||
United Kingdom — 5.3% | ||||
Big Yellow Group plc | 60,467 | 712,112 | ||
Derwent London plc | 21,820 | 1,047,015 | ||
Great Portland Estates plc | 125,096 | 1,385,504 | ||
Land Securities Group plc | 76,895 | 1,271,861 | ||
Safestore Holdings plc | 133,670 | 661,326 | ||
UNITE Group plc (The) | 84,522 | 781,134 | ||
5,858,952 | ||||
United States — 49.1% | ||||
Acadia Realty Trust | 69,050 | 2,326,985 | ||
American Campus Communities, Inc. | 35,573 | 1,591,892 | ||
Apartment Investment & Management Co., Class A | 84,591 | 3,388,715 | ||
AvalonBay Communities, Inc. | 22,443 | 3,967,698 | ||
Boston Properties, Inc. | 28,367 | 3,655,372 | ||
Colony Starwood Homes | 44,641 | 1,087,901 | ||
CubeSmart | 95,954 | 2,841,198 | ||
Digital Realty Trust, Inc. | 28,659 | 2,521,419 | ||
Douglas Emmett, Inc. | 28,008 | 908,860 | ||
Equinix, Inc. | 5,050 | 1,668,268 | ||
General Growth Properties, Inc. | 116,383 | 3,262,215 | ||
Hilton Worldwide Holdings, Inc. | 51,955 | 1,145,608 | ||
Liberty Property Trust | 63,710 | 2,223,479 | ||
MGM Growth Properties LLC, Class A(1) | 4,159 | 91,789 | ||
Physicians Realty Trust | 66,737 | 1,209,942 | ||
ProLogis, Inc. | 79,299 | 3,600,968 | ||
Simon Property Group, Inc. | 37,720 | 7,588,132 | ||
SL Green Realty Corp. | 25,514 | 2,681,011 | ||
STORE Capital Corp. | 68,114 | 1,748,486 | ||
VEREIT, Inc. | 184,691 | 1,640,056 |
7
Shares | Value | |||
Vornado Realty Trust | 26,515 | $ | 2,538,281 | |
Welltower, Inc. | 32,388 | 2,248,375 | ||
53,936,650 | ||||
TOTAL COMMON STOCKS (Cost $99,084,813) | 108,372,709 | |||
TEMPORARY CASH INVESTMENTS — 1.7% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $732,639), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $718,199) | 718,190 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $1,223,469), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $1,197,008) | 1,197,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 809 | 809 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,915,999) | 1,915,999 | |||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $101,000,812) | 110,288,708 | |||
OTHER ASSETS AND LIABILITIES — (0.4)% | (438,081) | |||
TOTAL NET ASSETS — 100.0% | $ | 109,850,627 |
SUB-INDUSTRY ALLOCATION | ||
(as a % of net assets) | ||
Retail REITs | 21.8 | % |
Office REITs | 16.3 | % |
Residential REITs | 10.7 | % |
Diversified REITs | 8.3 | % |
Real Estate Operating Companies | 8.2 | % |
Diversified Real Estate Activities | 7.8 | % |
Specialized REITs | 7.6 | % |
Real Estate Development | 7.3 | % |
Industrial REITs | 5.3 | % |
Health Care REITs | 4.3 | % |
Hotels, Resorts and Cruise Lines | 1.0 | % |
Hotel and Resort REITs | 0.1 | % |
Cash and Equivalents* | 1.3 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
See Notes to Financial Statements.
8
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $101,000,812) | $ | 110,288,708 | |
Foreign currency holdings, at value (cost of $28,861) | 28,216 | ||
Receivable for investments sold | 687,157 | ||
Receivable for capital shares sold | 80,835 | ||
Dividends and interest receivable | 126,451 | ||
Other assets | 335 | ||
111,211,702 | |||
Liabilities | |||
Payable for investments purchased | 990,081 | ||
Payable for capital shares redeemed | 259,206 | ||
Accrued management fees | 101,586 | ||
Distribution and service fees payable | 10,202 | ||
1,361,075 | |||
Net Assets | $ | 109,850,627 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 106,054,468 | |
Distributions in excess of net investment income | (1,121,277 | ) | |
Accumulated net realized loss | (4,375,863 | ) | |
Net unrealized appreciation | 9,293,299 | ||
$ | 109,850,627 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $69,415,013 | 6,050,198 | $11.47 | |||
Institutional Class, $0.01 Par Value | $3,827,198 | 333,565 | $11.47 | |||
A Class, $0.01 Par Value | $20,561,461 | 1,792,110 | $11.47* | |||
C Class, $0.01 Par Value | $7,153,412 | 624,252 | $11.46 | |||
R Class, $0.01 Par Value | $148,437 | 12,929 | $11.48 | |||
R6 Class, $0.01 Par Value | $8,745,106 | 762,277 | $11.47 |
*Maximum offering price $12.17 (net asset value divided by 0.9425).
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $61,846) | $ | 1,600,790 | |
Interest | 923 | ||
1,601,713 | |||
Expenses: | |||
Management fees | 632,469 | ||
Distribution and service fees: | |||
A Class | 25,272 | ||
C Class | 35,096 | ||
R Class | 538 | ||
Directors' fees and expenses | 2,015 | ||
Other expenses | 721 | ||
696,111 | |||
Fees waived | (21,711 | ) | |
674,400 | |||
Net investment income (loss) | 927,313 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (230,523 | ) | |
Foreign currency transactions | 4,276 | ||
(226,247 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 687,880 | ||
Translation of assets and liabilities in foreign currencies | 8,740 | ||
696,620 | |||
Net realized and unrealized gain (loss) | 470,373 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,397,686 |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 927,313 | $ | 1,465,472 | ||
Net realized gain (loss) | (226,247 | ) | (1,579,776 | ) | ||
Change in net unrealized appreciation (depreciation) | 696,620 | (78,125 | ) | |||
Net increase (decrease) in net assets resulting from operations | 1,397,686 | (192,429 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (2,084,369 | ) | (2,431,936 | ) | ||
Institutional Class | (129,457 | ) | (256,274 | ) | ||
A Class | (553,119 | ) | (595,878 | ) | ||
C Class | (140,545 | ) | (150,914 | ) | ||
R Class | (5,959 | ) | (18,030 | ) | ||
R6 Class | (310,389 | ) | (1,267 | ) | ||
From net realized gains: | ||||||
Investor Class | — | (812,440 | ) | |||
Institutional Class | — | (81,260 | ) | |||
A Class | — | (213,379 | ) | |||
C Class | — | (68,884 | ) | |||
R Class | — | (6,955 | ) | |||
R6 Class | — | (387 | ) | |||
Decrease in net assets from distributions | (3,223,838 | ) | (4,637,604 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (1,279,972 | ) | 17,291,214 | |||
Net increase (decrease) in net assets | (3,106,124 | ) | 12,461,181 | |||
Net Assets | ||||||
Beginning of period | 112,956,751 | 100,495,570 | ||||
End of period | $ | 109,850,627 | $ | 112,956,751 | ||
Undistributed (distributions in excess of) net investment income | $ | (1,121,277 | ) | $ | 1,175,248 |
See Notes to Financial Statements.
11
Notes to Financial Statements |
APRIL 30, 2016 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Global Real Estate Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek high total investment return through a combination of capital appreciation and current income.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
12
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in
13
the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The annual management fee is 1.20% for the Investor Class, A Class, C Class and R Class, 1.00% for the Institutional Class and 0.85% for the R6 Class. During the six months ended April 30, 2016, the investment advisor voluntarily agreed to waive 0.04% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2017 and cannot terminate it prior to such date without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2016 was $13,715, $813, $4,044, $1,404, $43 and $1,692 for the Investor Class, Institutional Class, A Class, C Class, R Class and the R6 Class, respectively. The effective annual management fee after waiver for each class for the six months ended April 30, 2016 was 1.16% for the Investor Class, A Class, C Class and R Class, 0.96% for the Institutional Class and 0.81% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2016 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2016 were $156,601,707 and $160,150,086, respectively.
14
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 70,000,000 | ||||||||
Sold | 1,114,326 | $ | 12,426,891 | 4,069,897 | $ | 48,422,421 | ||||
Issued in reinvestment of distributions | 160,768 | 1,789,344 | 250,279 | 2,853,181 | ||||||
Redeemed | (1,487,915 | ) | (16,300,046 | ) | (3,808,028 | ) | (44,360,141 | ) | ||
(212,821 | ) | (2,083,811 | ) | 512,148 | 6,915,461 | |||||
Institutional Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 62,487 | 699,364 | 161,180 | 1,923,486 | ||||||
Issued in reinvestment of distributions | 11,297 | 125,737 | 29,062 | 331,011 | ||||||
Redeemed | (112,113 | ) | (1,252,365 | ) | (552,807 | ) | (6,566,497 | ) | ||
(38,329 | ) | (427,264 | ) | (362,565 | ) | (4,312,000 | ) | |||
A Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||
Sold | 182,995 | 2,035,307 | 827,296 | 9,807,640 | ||||||
Issued in reinvestment of distributions | 48,559 | 540,949 | 69,776 | 796,148 | ||||||
Redeemed | (272,869 | ) | (3,046,598 | ) | (444,969 | ) | (5,229,769 | ) | ||
(41,315 | ) | (470,342 | ) | 452,103 | 5,374,019 | |||||
C Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 33,750 | 379,871 | 219,128 | 2,603,059 | ||||||
Issued in reinvestment of distributions | 9,381 | 104,697 | 13,647 | 155,849 | ||||||
Redeemed | (42,196 | ) | (474,046 | ) | (63,466 | ) | (728,593 | ) | ||
935 | 10,522 | 169,309 | 2,030,315 | |||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 2,692 | 29,894 | 20,657 | 244,712 | ||||||
Issued in reinvestment of distributions | 534 | 5,959 | 2,188 | 24,985 | ||||||
Redeemed | (11,468 | ) | (126,166 | ) | (33,524 | ) | (411,077 | ) | ||
(8,242 | ) | (90,313 | ) | (10,679 | ) | (141,380 | ) | |||
R6 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 284,748 | 3,310,076 | 648,641 | 7,852,607 | ||||||
Issued in reinvestment of distributions | 27,913 | 310,389 | 145 | 1,654 | ||||||
Redeemed | (164,304 | ) | (1,839,229 | ) | (37,219 | ) | (429,462 | ) | ||
148,357 | 1,781,236 | 611,567 | 7,424,799 | |||||||
Net increase (decrease) | (151,415 | ) | $ | (1,279,972 | ) | 1,371,883 | $ | 17,291,214 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
15
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
United States | $ | 53,936,650 | — | — | ||||
Other Countries | — | $ | 54,436,059 | — | ||||
Temporary Cash Investments | 809 | 1,915,190 | — | |||||
$ | 53,937,459 | $ | 56,351,249 | — |
7. 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.
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 102,068,041 | |
Gross tax appreciation of investments | $ | 8,517,791 | |
Gross tax depreciation of investments | (297,124 | ) | |
Net tax appreciation (depreciation) of investments | $ | 8,220,667 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2015, the fund had accumulated short-term capital losses of $(2,270,477), 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 may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
16
Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||||
2016(3) | $11.62 | 0.10 | 0.08 | 0.18 | (0.33) | — | (0.33) | $11.47 | 1.68% | 1.17%(4) | 1.21%(4) | 1.78%(4) | 1.74%(4) | 145% | $69,415 | ||
2015 | $12.03 | 0.17 | 0.02 | 0.19 | (0.45) | (0.15) | (0.60) | $11.62 | 1.70% | 1.20% | 1.21% | 1.39% | 1.38% | 248% | $72,769 | ||
2014 | $11.54 | 0.13 | 0.88 | 1.01 | (0.37) | (0.15) | (0.52) | $12.03 | 9.29% | 1.20% | 1.20% | 1.15% | 1.15% | 275% | $69,207 | ||
2013 | $10.90 | 0.13 | 1.12 | 1.25 | (0.36) | (0.25) | (0.61) | $11.54 | 11.99% | 1.20% | 1.20% | 1.15% | 1.15% | 392% | $43,927 | ||
2012(5) | $9.75 | 0.07 | 1.08 | 1.15 | — | — | — | $10.90 | 11.68% | 1.20%(4) | 1.20%(4) | 1.15%(4) | 1.15%(4) | 264% | $23,143 | ||
2012(6) | $10.00 | 0.14 | (0.32)(7) | (0.18) | (0.07) | — | (0.07) | $9.75 | (1.57)% | 1.21%(4) | 1.21%(4) | 1.63%(4) | 1.63%(4) | 462% | $7,322 | ||
Institutional Class | |||||||||||||||||
2016(3) | $11.63 | 0.11 | 0.09 | 0.20 | (0.36) | — | (0.36) | $11.47 | 1.79% | 0.97%(4) | 1.01%(4) | 1.98%(4) | 1.94%(4) | 145% | $3,827 | ||
2015 | $12.05 | 0.19 | 0.02 | 0.21 | (0.48) | (0.15) | (0.63) | $11.63 | 1.83% | 1.00% | 1.01% | 1.59% | 1.58% | 248% | $4,325 | ||
2014 | $11.56 | 0.15 | 0.88 | 1.03 | (0.39) | (0.15) | (0.54) | $12.05 | 9.50% | 1.00% | 1.00% | 1.35% | 1.35% | 275% | $8,848 | ||
2013 | $10.91 | 0.15 | 1.13 | 1.28 | (0.38) | (0.25) | (0.63) | $11.56 | 12.30% | 1.00% | 1.00% | 1.35% | 1.35% | 392% | $7,916 | ||
2012(5) | $9.75 | 0.08 | 1.08 | 1.16 | — | — | — | $10.91 | 11.90% | 1.00%(4) | 1.00%(4) | 1.35%(4) | 1.35%(4) | 264% | $2,711 | ||
2012(6) | $10.00 | 0.17 | (0.33)(7) | (0.16) | (0.09) | — | (0.09) | $9.75 | (1.47)% | 1.01%(4) | 1.01%(4) | 1.83%(4) | 1.83%(4) | 462% | $1,210 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||||
2016(3) | $11.60 | 0.09 | 0.09 | 0.18 | (0.31) | — | (0.31) | $11.47 | 1.60% | 1.42%(4) | 1.46%(4) | 1.53%(4) | 1.49%(4) | 145% | $20,561 | ||
2015 | $12.02 | 0.13 | 0.02 | 0.15 | (0.42) | (0.15) | (0.57) | $11.60 | 1.35% | 1.45% | 1.46% | 1.14% | 1.13% | 248% | $21,275 | ||
2014 | $11.53 | 0.11 | 0.87 | 0.98 | (0.34) | (0.15) | (0.49) | $12.02 | 9.02% | 1.45% | 1.45% | 0.90% | 0.90% | 275% | $16,601 | ||
2013 | $10.89 | 0.10 | 1.12 | 1.22 | (0.33) | (0.25) | (0.58) | $11.53 | 11.72% | 1.45% | 1.45% | 0.90% | 0.90% | 392% | $18,926 | ||
2012(5) | $9.76 | 0.06 | 1.07 | 1.13 | — | — | — | $10.89 | 11.58% | 1.45%(4) | 1.45%(4) | 0.90%(4) | 0.90%(4) | 264% | $2,460 | ||
2012(6) | $10.00 | 0.12 | (0.31)(7) | (0.19) | (0.05) | — | (0.05) | $9.76 | (1.82)% | 1.46%(4) | 1.46%(4) | 1.38%(4) | 1.38%(4) | 462% | $700 | ||
C Class | |||||||||||||||||
2016(3) | $11.55 | 0.04 | 0.09 | 0.13 | (0.22) | — | (0.22) | $11.46 | 1.18% | 2.17%(4) | 2.21%(4) | 0.78%(4) | 0.74%(4) | 145% | $7,153 | ||
2015 | $11.96 | 0.05 | 0.02 | 0.07 | (0.33) | (0.15) | (0.48) | $11.55 | 0.73% | 2.20% | 2.21% | 0.39% | 0.38% | 248% | $7,197 | ||
2014 | $11.47 | 0.02 | 0.88 | 0.90 | (0.26) | (0.15) | (0.41) | $11.96 | 8.12% | 2.20% | 2.20% | 0.15% | 0.15% | 275% | $5,428 | ||
2013 | $10.83 | —(8) | 1.14 | 1.14 | (0.25) | (0.25) | (0.50) | $11.47 | 10.94% | 2.20% | 2.20% | 0.15% | 0.15% | 392% | $2,614 | ||
2012(5) | $9.75 | 0.02 | 1.06 | 1.08 | — | — | — | $10.83 | 11.08% | 2.20%(4) | 2.20%(4) | 0.15%(4) | 0.15%(4) | 264% | $610 | ||
2012(6) | $10.00 | 0.05 | (0.30)(7) | (0.25) | — | — | — | $9.75 | (2.50)% | 2.21%(4) | 2.21%(4) | 0.63%(4) | 0.63%(4) | 462% | $394 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||||
2016(3) | $11.59 | 0.07 | 0.10 | 0.17 | (0.28) | — | (0.28) | $11.48 | 1.51% | 1.67%(4) | 1.71%(4) | 1.28%(4) | 1.24%(4) | 145% | $148 | ||
2015 | $12.01 | 0.11 | 0.01 | 0.12 | (0.39) | (0.15) | (0.54) | $11.59 | 1.08% | 1.70% | 1.71% | 0.89% | 0.88% | 248% | $245 | ||
2014 | $11.52 | 0.08 | 0.87 | 0.95 | (0.31) | (0.15) | (0.46) | $12.01 | 8.74% | 1.70% | 1.70% | 0.65% | 0.65% | 275% | $382 | ||
2013 | $10.87 | 0.08 | 1.12 | 1.20 | (0.30) | (0.25) | (0.55) | $11.52 | 11.55% | 1.70% | 1.70% | 0.65% | 0.65% | 392% | $489 | ||
2012(5) | $9.76 | 0.05 | 1.06 | 1.11 | — | — | — | $10.87 | 11.37% | 1.70%(4) | 1.70%(4) | 0.65%(4) | 0.65%(4) | 264% | $439 | ||
2012(6) | $10.00 | 0.09 | (0.30)(7) | (0.21) | (0.03) | — | (0.03) | $9.76 | (2.07)% | 1.71%(4) | 1.71%(4) | 1.13%(4) | 1.13%(4) | 462% | $393 | ||
R6 Class | |||||||||||||||||
2016(3) | $11.64 | 0.12 | 0.08 | 0.20 | (0.37) | — | (0.37) | $11.47 | 1.86% | 0.82%(4) | 0.86%(4) | 2.13%(4) | 2.09%(4) | 145% | $8,745 | ||
2015 | $12.06 | 0.18 | 0.04 | 0.22 | (0.49) | (0.15) | (0.64) | $11.64 | 1.99% | 0.85% | 0.86% | 1.74% | 1.73% | 248% | $7,145 | ||
2014 | $11.57 | 0.17 | 0.88 | 1.05 | (0.41) | (0.15) | (0.56) | $12.06 | 9.67% | 0.85% | 0.85% | 1.50% | 1.50% | 275% | $28 | ||
2013(9) | $11.18 | 0.03 | 0.36 | 0.39 | — | — | — | $11.57 | 3.49% | 0.85%(4) | 0.85%(4) | 1.07%(4) | 1.07%(4) | 392%(10) | $26 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2016 (unaudited). |
(4) | Annualized. |
(5) | April 1, 2012 through October 31, 2012. The fund's fiscal year end was changed from March 31 to October 31, resulting in a seven-month annual reporting period. |
(6) | April 29, 2011 (fund inception) through March 31, 2012. |
(7) | Per-share amount was not in accord with the net realized and unrealized gain (loss) for the period because of the timing of transactions in shares of the fund and the amount and timing of per-share net realized and unrealized gain (loss) on such shares. |
(8) | Per-share amount was less than $0.005. |
(9) | July 26, 2013 (commencement of sale) through October 31, 2013. |
(10) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013. |
See Notes to Financial Statements.
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling 1-800-345-2021.
21
Notes |
22
Notes |
23
Notes |
24
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century 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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89220 1606 |
Semiannual Report | |
April 30, 2016 | |
NT Global Real Estate Fund |
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Simon Property Group, Inc. | 6.9% |
AvalonBay Communities, Inc. | 3.6% |
Mitsui Fudosan Co. Ltd. | 3.5% |
Boston Properties, Inc. | 3.3% |
ProLogis, Inc. | 3.3% |
Apartment Investment & Management Co., Class A | 3.1% |
General Growth Properties, Inc. | 3.0% |
Unibail-Rodamco SE | 2.8% |
CubeSmart | 2.6% |
Cheung Kong Property Holdings Ltd. | 2.5% |
Types of Investments in Portfolio | % of net assets |
Foreign Common Stocks | 49.3% |
Domestic Common Stocks | 49.0% |
Total Common Stocks | 98.3% |
Temporary Cash Investments | 1.9% |
Other Assets and Liabilities | (0.2)% |
Investments by Country | % of net assets |
United States | 49.0% |
Japan | 12.0% |
Hong Kong | 6.9% |
Australia | 5.4% |
United Kingdom | 5.3% |
France | 4.7% |
Canada | 2.9% |
China | 2.8% |
Germany | 2.6% |
Other Countries | 6.7% |
Cash and Equivalents* | 1.7% |
*Includes temporary cash investments and other assets and liabilities. |
2
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2015 to April 30, 2016.
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.
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.
3
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1) 11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class (after waiver) | $1,000 | $1,016.90 | $5.87 | 1.17% |
Investor Class (before waiver) | $1,000 | $1,016.90(2) | $6.07 | 1.21% |
Institutional Class (after waiver) | $1,000 | $1,017.40 | $4.87 | 0.97% |
Institutional Class (before waiver) | $1,000 | $1,017.40(2) | $5.07 | 1.01% |
R6 Class (after waiver) | $1,000 | $1,018.60 | $4.12 | 0.82% |
R6 Class (before waiver) | $1,000 | $1,018.60(2) | $4.32 | 0.86% |
Hypothetical | ||||
Investor Class (after waiver) | $1,000 | $1,019.05 | $5.87 | 1.17% |
Investor Class (before waiver) | $1,000 | $1,018.85 | $6.07 | 1.21% |
Institutional Class (after waiver) | $1,000 | $1,020.04 | $4.87 | 0.97% |
Institutional Class (before waiver) | $1,000 | $1,019.84 | $5.07 | 1.01% |
R6 Class (after waiver) | $1,000 | $1,020.79 | $4.12 | 0.82% |
R6 Class (before waiver) | $1,000 | $1,020.59 | $4.32 | 0.86% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
(2) | Ending account value assumes the return earned after waiver and would have been lower if a portion of the fees had not been waived. |
4
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 98.3% | ||||
Australia — 5.4% | ||||
Charter Hall Group | 214,742 | $ | 782,107 | |
Goodman Group | 1,196,844 | 6,270,039 | ||
Scentre Group | 1,048,359 | 3,738,491 | ||
Vicinity Centres | 1,978,258 | 4,993,838 | ||
Westfield Corp. | 689,624 | 5,295,991 | ||
21,080,466 | ||||
Brazil — 0.5% | ||||
BR Malls Participacoes SA | 416,200 | 2,062,092 | ||
Canada — 2.9% | ||||
Allied Properties Real Estate Investment Trust | 95,703 | 2,696,343 | ||
Boardwalk Real Estate Investment Trust | 41,912 | 1,793,795 | ||
Chartwell Retirement Residences | 394,710 | 4,350,713 | ||
H&R Real Estate Investment Trust | 139,498 | 2,437,073 | ||
11,277,924 | ||||
China — 2.8% | ||||
China Overseas Land & Investment Ltd. | 694,000 | 2,214,351 | ||
China Resources Land Ltd. | 1,920,000 | 4,742,513 | ||
Dalian Wanda Commercial Properties Co. Ltd., H Shares | 189,700 | 1,253,352 | ||
Longfor Properties Co. Ltd. | 1,904,000 | 2,680,411 | ||
10,890,627 | ||||
France — 4.7% | ||||
Klepierre | 108,356 | 5,096,302 | ||
Nexity SA | 43,931 | 2,355,699 | ||
Unibail-Rodamco SE | 40,979 | 10,979,987 | ||
18,431,988 | ||||
Germany — 2.6% | ||||
Deutsche Wohnen AG | 177,459 | 5,434,571 | ||
Grand City Properties SA | 214,003 | 4,726,903 | ||
10,161,474 | ||||
Hong Kong — 6.9% | ||||
Cheung Kong Property Holdings Ltd. | 1,421,000 | 9,754,960 | ||
Link REIT | 962,500 | 5,850,517 | ||
Sino Land Co. Ltd. | 2,148,000 | 3,383,898 | ||
Sun Hung Kai Properties Ltd. | 638,000 | 8,064,549 | ||
27,053,924 | ||||
Indonesia — 0.5% | ||||
Bumi Serpong Damai Tbk PT | 9,656,800 | 1,354,646 | ||
Summarecon Agung Tbk PT | 5,629,100 | 667,997 | ||
2,022,643 | ||||
Japan — 12.0% | ||||
Advance Residence Investment Corp. | 1,460 | 3,926,649 | ||
Daiwa House Residential Investment Corp. | 1,009 | 2,481,762 | ||
Hulic Co. Ltd. | 621,700 | 6,067,984 | ||
Japan Real Estate Investment Corp. | 888 | 5,512,706 | ||
Mitsubishi Estate Co. Ltd. | 160,000 | 3,040,962 |
5
Shares | Value | |||
Mitsui Fudosan Co. Ltd. | 564,000 | $ | 13,555,241 | |
Mori Hills REIT Investment Corp. | 3,966 | 5,952,844 | ||
Orix JREIT, Inc. | 3,845 | 6,407,240 | ||
46,945,388 | ||||
Philippines — 1.1% | ||||
Ayala Land, Inc. | 3,841,800 | 2,839,101 | ||
SM Prime Holdings, Inc. | 3,351,100 | 1,618,820 | ||
4,457,921 | ||||
Singapore — 1.8% | ||||
CapitaLand Mall Trust | 1,043,200 | 1,605,699 | ||
City Developments Ltd. | 356,400 | 2,210,191 | ||
Global Logistic Properties Ltd. | 1,167,800 | 1,662,890 | ||
Mapletree Industrial Trust | 1,308,400 | 1,561,499 | ||
7,040,279 | ||||
South Africa — 0.8% | ||||
Growthpoint Properties Ltd. | 1,230,712 | 2,174,349 | ||
Hyprop Investments Ltd. | 115,991 | 1,001,164 | ||
3,175,513 | ||||
Spain — 0.9% | ||||
Inmobiliaria Colonial SA(1) | 4,646,505 | 3,564,723 | ||
Sweden — 1.1% | ||||
Hufvudstaden AB, A Shares | 267,565 | 4,144,859 | ||
United Kingdom — 5.3% | ||||
Big Yellow Group plc | 214,523 | 2,526,411 | ||
Derwent London plc | 77,384 | 3,713,209 | ||
Great Portland Estates plc | 443,520 | 4,912,216 | ||
Land Securities Group plc | 274,015 | 4,532,271 | ||
Safestore Holdings plc | 474,076 | 2,345,471 | ||
UNITE Group plc (The) | 299,980 | 2,772,349 | ||
20,801,927 | ||||
United States — 49.0% | ||||
Acadia Realty Trust | 243,991 | 8,222,497 | ||
American Campus Communities, Inc. | 127,103 | 5,687,859 | ||
Apartment Investment & Management Co., Class A | 300,823 | 12,050,969 | ||
AvalonBay Communities, Inc. | 79,772 | 14,102,892 | ||
Boston Properties, Inc. | 101,047 | 13,020,916 | ||
Colony Starwood Homes | 158,468 | 3,861,865 | ||
CubeSmart | 341,802 | 10,120,757 | ||
Digital Realty Trust, Inc. | 102,353 | 9,005,017 | ||
Douglas Emmett, Inc. | 99,491 | 3,228,483 | ||
Equinix, Inc. | 17,802 | 5,880,891 | ||
General Growth Properties, Inc. | 414,574 | 11,620,509 | ||
Hilton Worldwide Holdings, Inc. | 185,052 | 4,080,397 | ||
Liberty Property Trust | 227,030 | 7,923,347 | ||
MGM Growth Properties LLC, Class A(1) | 14,732 | 325,135 | ||
Physicians Realty Trust | 236,529 | 4,288,271 | ||
ProLogis, Inc. | 282,526 | 12,829,506 | ||
Simon Property Group, Inc. | 134,388 | 27,034,834 | ||
SL Green Realty Corp. | 90,885 | 9,550,196 | ||
STORE Capital Corp. | 242,681 | 6,229,621 | ||
VEREIT, Inc. | 655,621 | 5,821,915 |
6
Shares | Value | |||
Vornado Realty Trust | 94,347 | $ | 9,031,838 | |
Welltower, Inc. | 115,055 | 7,987,118 | ||
191,904,833 | ||||
TOTAL COMMON STOCKS (Cost $360,671,010) | 385,016,581 | |||
TEMPORARY CASH INVESTMENTS — 1.9% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $2,817,758), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $2,762,224) | 2,762,189 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.875%, 8/15/45, valued at $4,701,244), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $4,605,031) | 4,605,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 1,819 | 1,819 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $7,369,008) | 7,369,008 | |||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $368,040,018) | 392,385,589 | |||
OTHER ASSETS AND LIABILITIES — (0.2)% | (738,799) | |||
TOTAL NET ASSETS — 100.0% | $ | 391,646,790 |
SUB-INDUSTRY ALLOCATION | ||
(as a % of net assets) | ||
Retail REITs | 21.9 | % |
Office REITs | 16.2 | % |
Residential REITs | 10.7 | % |
Diversified REITs | 8.2 | % |
Real Estate Operating Companies | 8.2 | % |
Specialized REITs | 7.6 | % |
Diversified Real Estate Activities | 7.6 | % |
Real Estate Development | 7.3 | % |
Industrial REITs | 5.3 | % |
Health Care REITs | 4.2 | % |
Hotels, Resorts and Cruise Lines | 1.0 | % |
Hotel and Resort REITs | 0.1 | % |
Cash and Equivalents* | 1.7 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
See Notes to Financial Statements.
7
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $368,040,018) | $ | 392,385,589 | |
Foreign currency holdings, at value (cost of $85,793) | 83,648 | ||
Receivable for investments sold | 2,376,901 | ||
Receivable for capital shares sold | 103,148 | ||
Dividends and interest receivable | 529,666 | ||
395,478,952 | |||
Liabilities | |||
Payable for investments purchased | 3,507,313 | ||
Accrued management fees | 324,849 | ||
3,832,162 | |||
Net Assets | $ | 391,646,790 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 407,980,075 | |
Distributions in excess of net investment income | (2,016,697 | ) | |
Accumulated net realized loss | (38,689,295 | ) | |
Net unrealized appreciation | 24,372,707 | ||
$ | 391,646,790 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $118,071,537 | 12,431,217 | $9.50 | |||
Institutional Class, $0.01 Par Value | $255,262,224 | 26,860,386 | $9.50 | |||
R6 Class, $0.01 Par Value | $18,313,029 | 1,926,222 | $9.51 |
See Notes to Financial Statements.
8
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $214,806) | $ | 5,443,244 | |
Interest | 4,090 | ||
5,447,334 | |||
Expenses: | |||
Management fees | 1,940,692 | ||
Directors' fees and expenses | 6,678 | ||
Other expenses | 4,624 | ||
1,951,994 | |||
Fees waived | (73,637 | ) | |
1,878,357 | |||
Net investment income (loss) | 3,568,977 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (11,570,707 | ) | |
Foreign currency transactions | 44,299 | ||
(11,526,408 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 15,445,800 | ||
Translation of assets and liabilities in foreign currencies | 36,313 | ||
15,482,113 | |||
Net realized and unrealized gain (loss) | 3,955,705 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 7,524,682 |
See Notes to Financial Statements.
9
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND PERIOD ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015(1) | ||||
Operations | ||||||
Net investment income (loss) | $ | 3,568,977 | $ | 3,500,140 | ||
Net realized gain (loss) | (11,526,408 | ) | (26,764,584 | ) | ||
Change in net unrealized appreciation (depreciation) | 15,482,113 | 8,890,594 | ||||
Net increase (decrease) in net assets resulting from operations | 7,524,682 | (14,373,850 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (3,011,060 | ) | — | |||
Institutional Class | (6,093,250 | ) | — | |||
R6 Class | (379,807 | ) | — | |||
Decrease in net assets from distributions | (9,484,117 | ) | — | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 47,508,357 | 360,471,718 | ||||
Net increase (decrease) in net assets | 45,548,922 | 346,097,868 | ||||
Net Assets | ||||||
Beginning of period | 346,097,868 | — | ||||
End of period | $ | 391,646,790 | $ | 346,097,868 | ||
Undistributed (distributions in excess of) net investment income | $ | (2,016,697 | ) | $ | 3,898,443 |
(1) | March 19, 2015 (fund inception) through October 31, 2015. |
See Notes to Financial Statements.
10
Notes to Financial Statements |
APRIL 30, 2016 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Global Real Estate Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek high total investment return through a combination of capital appreciation and current income. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry.
The fund offers the Investor Class, the Institutional Class and the R6 Class, which have different fees and expenses. The difference in the fee structures between the classes is the result of their separate arrangements for shareholder and distribution services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The fund’s shares are available for purchase exclusively by certain American Century Investments funds of funds and the fund’s arrangements for shareholder and distribution services take into account the varying levels of services required by shareholders of different classes of the funds of funds. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of the Investor Class. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees. All classes of the fund commenced sale on March 19, 2015, the fund’s inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been
11
declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only 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.
12
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The annual management fee is 1.20% for the Investor Class, 1.00% for the Institutional Class and 0.85% for the R6 Class. During the six months ended April 30, 2016, the investment advisor voluntarily agreed to waive 0.04% of the fund's management fee. The investment advisor expects this waiver to continue until February 28, 2017 and cannot terminate it prior to such date without the approval of the Board of Directors. The total amount of the waiver for each class for the six months ended April 30, 2016 was $22,342, $48,115 and $3,180 for the Investor Class, Institutional Class and R6 Class, respectively. The effective annual management fee after waiver for each class for the six months ended April 30, 2016 was 1.16% for the Investor Class, 0.96% for the Institutional Class and 0.81% for the R6 Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2016 were $589,246,302 and $549,357,590, respectively.
13
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Period ended October 31, 2015(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 70,000,000 | 70,000,000 | ||||||||
Sold | 4,155,801 | $ | 39,675,400 | 9,664,941 | $ | 96,620,631 | ||||
Issued in reinvestment of distributions | 331,980 | 3,011,060 | — | — | ||||||
Redeemed | (1,675,957 | ) | (15,537,221 | ) | (45,548 | ) | (431,789 | ) | ||
2,811,824 | 27,149,239 | 9,619,393 | 96,188,842 | |||||||
Institutional Class/Shares Authorized | 160,000,000 | 150,000,000 | ||||||||
Sold | 2,376,285 | 21,342,992 | 26,126,396 | 260,420,333 | ||||||
Issued in reinvestment of distributions | 671,803 | 6,093,250 | — | — | ||||||
Redeemed | (1,304,049 | ) | (12,056,335 | ) | (1,010,049 | ) | (9,865,944 | ) | ||
1,744,039 | 15,379,907 | 25,116,347 | 250,554,389 | |||||||
R6 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Sold | 540,969 | 4,975,550 | 1,501,440 | 14,826,317 | ||||||
Issued in reinvestment of distributions | 41,921 | 379,807 | — | — | ||||||
Redeemed | (40,019 | ) | (376,146 | ) | (118,089 | ) | (1,097,830 | ) | ||
542,871 | 4,979,211 | 1,383,351 | 13,728,487 | |||||||
Net increase (decrease) | 5,098,734 | $ | 47,508,357 | 36,119,091 | $ | 360,471,718 |
(1) | March 19, 2015 (fund inception) through October 31, 2015. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
United States | $ | 191,904,833 | — | — | ||||
Other Countries | — | $ | 193,111,748 | — | ||||
Temporary Cash Investments | 1,819 | 7,367,189 | — | |||||
$ | 191,906,652 | $ | 200,478,937 | — |
14
7. 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.
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 372,929,494 | |
Gross tax appreciation of investments | $ | 21,025,316 | |
Gross tax depreciation of investments | (1,569,221 | ) | |
Net tax appreciation (depreciation) of investments | $ | 19,456,095 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2015, the fund had accumulated short-term capital losses of $(22,764,806), 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 may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
15
Financial Highlights |
For a Share Outstanding Throughout the Period Indicated | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2016(3) | $9.57 | 0.08 | 0.07 | 0.15 | (0.22) | $9.50 | 1.69% | 1.17%(4) | 1.21%(4) | 1.79%(4) | 1.75%(4) | 151% | $118,072 | ||
2015(5) | $10.00 | 0.09 | (0.52) | (0.43) | — | $9.57 | (4.30)% | 1.19%(4) | 1.20%(4) | 1.50%(4) | 1.49%(4) | 151% | $92,086 | ||
Institutional Class | |||||||||||||||
2016(3) | $9.59 | 0.09 | 0.06 | 0.15 | (0.24) | $9.50 | 1.74% | 0.97%(4) | 1.01%(4) | 1.99%(4) | 1.95%(4) | 151% | $255,262 | ||
2015(5) | $10.00 | 0.10 | (0.51) | (0.41) | — | $9.59 | (4.20)% | 0.99%(4) | 1.00%(4) | 1.70%(4) | 1.69%(4) | 151% | $240,740 | ||
R6 Class | |||||||||||||||
2016(3) | $9.59 | 0.10 | 0.07 | 0.17 | (0.25) | $9.51 | 1.86% | 0.82%(4) | 0.86%(4) | 2.14%(4) | 2.10%(4) | 151% | $18,313 | ||
2015(5) | $10.00 | 0.11 | (0.52) | (0.41) | — | $9.59 | (4.10)% | 0.84%(4) | 0.85%(4) | 1.85%(4) | 1.84%(4) | 151% | $13,271 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Six months ended April 30, 2016 (unaudited). |
(4) | Annualized. |
(5) | March 19, 2015 (fund inception) through October 31, 2015. |
See Notes to Financial Statements.
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling 1-800-345-2021.
17
Notes |
18
Notes |
19
Notes |
20
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century 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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89228 1606 |
Semiannual Report | |
April 30, 2016 | |
Real Estate Fund |
Table of Contents |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Dear Investor: Thank you for reviewing this semiannual report for the six months ended April 30, 2016. It provides a macroeconomic and financial market overview (below), followed by a schedule of fund investments and other financial information. For additional commentary and information on fund performance, key factors that affected asset returns, and other insights regarding the investment markets, we encourage you to visit our website, americancentury.com. | |
Jonathan Thomas |
Economic Growth Concerns and Central Bank Policies Triggered Market Volatility
Global macroeconomic events—in the form of widespread recession fears and resulting central bank policy moves—played key roles in a volatile market period. Stock index graphs of the six months show a massive V shape, with the nadir of the V pointed directly at February 11. From December 29 to mid-February, stock market indices declined sharply on a confluence of factors that carried over from last summer’s similar sell-off, including concerns about China’s slowing economic growth, its possible contagion to the global economy, another supply/demand imbalance-based energy price collapse, and a Chinese currency devaluation.
Furthermore, the Federal Reserve (Fed) started to raise interest rates in December and projected four more rate hikes in 2016, which put additional pressure on commodity prices and emerging markets. These factors combined to drive down stock prices and U.S. Treasury yields until mid-February, when the markets reversed, partly in response to glimmers of hope in relieving the global oil supply glut. Oil prices started to rise, China stabilized, and stock markets rallied. Central bank stimulus governed the markets, with the Bank of Japan suddenly resorting to negative interest rates, the Fed holding rates steady while reducing its rate hike projections, and the European Central Bank announcing significant additional stimulus.
Relatively moderate broad market gains and losses for the reporting period do not capture what a volatile six months it was. Bonds (and higher-yielding, more bond-like stock sectors, such as utilities, telecommunications, and REITs) generally outperformed the broad stock market. Conversely, the information technology and financials stock sectors lagged. We expect additional market volatility this year due to the fragile global economic environment and uncertainty surrounding future Fed moves and the U.S. presidential election. This could present both challenges and opportunities for active investment managers. In this environment, we continue to believe in a disciplined, diversified, risk-aware investment approach, using professionally managed portfolios to meet financial goals. We appreciate your trust in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
APRIL 30, 2016 | |
Top Ten Holdings | % of net assets |
Simon Property Group, Inc. | 11.1% |
ProLogis, Inc. | 4.9% |
Equinix, Inc. | 4.8% |
Boston Properties, Inc. | 4.6% |
Welltower, Inc. | 4.4% |
General Growth Properties, Inc. | 4.2% |
Vornado Realty Trust | 3.7% |
AvalonBay Communities, Inc. | 3.7% |
Public Storage | 3.5% |
SL Green Realty Corp. | 3.4% |
Sub-Industry Allocation | % of net assets |
Retail REITs | 25.7% |
Residential REITs | 16.2% |
Office REITs | 16.1% |
Specialized REITs | 14.4% |
Health Care REITs | 9.1% |
Diversified REITs | 8.9% |
Industrial REITs | 4.9% |
Hotel and Resort REITs | 2.3% |
Hotels, Resorts and Cruise Lines | 1.0% |
Cash and Equivalents* | 1.4% |
*Includes temporary cash investments and other assets and liabilities. | |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.6% |
Temporary Cash Investments | 1.6% |
Other Assets and Liabilities | (0.2)% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from November 1, 2015 to April 30, 2016.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
4
Beginning Account Value 11/1/15 | Ending Account Value 4/30/16 | Expenses Paid During Period(1) 11/1/15 - 4/30/16 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,040.10 | $5.78 | 1.14% |
Institutional Class | $1,000 | $1,041.10 | $4.77 | 0.94% |
A Class | $1,000 | $1,038.80 | $7.05 | 1.39% |
C Class | $1,000 | $1,034.80 | $10.83 | 2.14% |
R Class | $1,000 | $1,037.60 | $8.31 | 1.64% |
R6 Class | $1,000 | $1,041.90 | $4.01 | 0.79% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.20 | $5.72 | 1.14% |
Institutional Class | $1,000 | $1,020.19 | $4.72 | 0.94% |
A Class | $1,000 | $1,017.95 | $6.97 | 1.39% |
C Class | $1,000 | $1,014.22 | $10.72 | 2.14% |
R Class | $1,000 | $1,016.71 | $8.22 | 1.64% |
R6 Class | $1,000 | $1,020.94 | $3.97 | 0.79% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. |
5
Schedule of Investments |
APRIL 30, 2016 (UNAUDITED)
Shares | Value | |||
COMMON STOCKS — 98.6% | ||||
Diversified REITs — 8.9% | ||||
Duke Realty Corp. | 1,021,081 | $ | 22,331,042 | |
Forest City Realty Trust, Inc. | 894,094 | 18,579,273 | ||
Liberty Property Trust | 972,540 | 33,941,646 | ||
STORE Capital Corp. | 1,002,311 | 25,729,323 | ||
VEREIT, Inc. | 3,456,181 | 30,690,887 | ||
131,272,171 | ||||
Health Care REITs — 9.1% | ||||
Care Capital Properties, Inc. | 435,749 | 11,621,426 | ||
Medical Properties Trust, Inc. | 1,040,368 | 13,847,298 | ||
Physicians Realty Trust | 980,223 | 17,771,443 | ||
Ventas, Inc. | 439,382 | 27,294,410 | ||
Welltower, Inc. | 923,793 | 64,129,710 | ||
134,664,287 | ||||
Hotel and Resort REITs — 2.3% | ||||
Host Hotels & Resorts, Inc. | 1,259,838 | 19,930,637 | ||
MGM Growth Properties LLC, Class A(1) | 55,948 | 1,234,772 | ||
Pebblebrook Hotel Trust | 135,407 | 3,742,650 | ||
Sunstone Hotel Investors, Inc. | 702,448 | 8,998,359 | ||
33,906,418 | ||||
Hotels, Resorts and Cruise Lines — 1.0% | ||||
Hilton Worldwide Holdings, Inc. | 670,093 | 14,775,551 | ||
Industrial REITs — 4.9% | ||||
ProLogis, Inc. | 1,590,718 | 72,234,504 | ||
Office REITs — 16.1% | ||||
Alexandria Real Estate Equities, Inc. | 252,745 | 23,492,648 | ||
Boston Properties, Inc. | 526,177 | 67,803,168 | ||
Douglas Emmett, Inc. | 589,583 | 19,131,968 | ||
Hudson Pacific Properties, Inc. | 262,339 | 7,673,416 | ||
Mack-Cali Realty Corp. | 561,972 | 14,364,004 | ||
SL Green Realty Corp. | 477,118 | 50,135,559 | ||
Vornado Realty Trust | 567,035 | 54,282,261 | ||
236,883,024 | ||||
Residential REITs — 16.2% | ||||
American Campus Communities, Inc. | 406,108 | 18,173,333 | ||
Apartment Investment & Management Co., Class A | 741,381 | 29,699,723 | ||
AvalonBay Communities, Inc. | 306,317 | 54,153,782 | ||
Camden Property Trust | 303,291 | 24,484,682 | ||
Colony Starwood Homes | 747,115 | 18,207,193 | ||
Education Realty Trust, Inc. | 300,507 | 11,951,163 | ||
Equity Residential | 598,706 | 40,753,917 | ||
Essex Property Trust, Inc. | 161,406 | 35,581,953 | ||
UDR, Inc. | 163,293 | 5,702,192 | ||
238,707,938 | ||||
Retail REITs — 25.7% | ||||
Acadia Realty Trust | 578,447 | 19,493,664 |
6
Shares | Value | |||
Brixmor Property Group, Inc. | 727,729 | $ | 18,375,157 | |
Equity One, Inc. | 584,402 | 16,538,577 | ||
General Growth Properties, Inc. | 2,230,424 | 62,518,785 | ||
Kimco Realty Corp. | 1,293,865 | 36,383,484 | ||
Macerich Co. (The) | 258,515 | 19,667,821 | ||
Retail Properties of America, Inc. | 1,387,127 | 22,180,161 | ||
Simon Property Group, Inc. | 814,740 | 163,901,246 | ||
Urban Edge Properties | 761,908 | 19,763,893 | ||
378,822,788 | ||||
Specialized REITs — 14.4% | ||||
CubeSmart | 626,538 | 18,551,790 | ||
Digital Realty Trust, Inc. | 462,093 | 40,654,942 | ||
Equinix, Inc. | 211,854 | 69,985,969 | ||
Extra Space Storage, Inc. | 266,656 | 22,652,427 | ||
Gaming and Leisure Properties, Inc. | 231,901 | 7,604,034 | ||
Public Storage | 212,009 | 51,901,924 | ||
211,351,086 | ||||
TOTAL COMMON STOCKS (Cost $1,215,125,589) | 1,452,617,767 | |||
TEMPORARY CASH INVESTMENTS — 1.6% | ||||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 0.50% - 1.50%, 6/15/16 - 7/31/16, valued at $8,655,334), in a joint trading account at 0.15%, dated 4/29/16, due 5/2/16 (Delivery value $8,484,748) | 8,484,642 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.75%, 11/15/43, valued at $14,433,600), at 0.08%, dated 4/29/16, due 5/2/16 (Delivery value $14,146,094) | 14,146,000 | |||
State Street Institutional Liquid Reserves Fund, Premier Class | 4,811 | 4,811 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $22,635,453) | 22,635,453 | |||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $1,237,761,042) | 1,475,253,220 | |||
OTHER ASSETS AND LIABILITIES — (0.2)% | (2,381,240) | |||
TOTAL NET ASSETS — 100.0% | $ | 1,472,871,980 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
See Notes to Financial Statements.
7
Statement of Assets and Liabilities |
APRIL 30, 2016 (UNAUDITED) | |||
Assets | |||
Investment securities, at value (cost of $1,237,761,042) | $ | 1,475,253,220 | |
Receivable for investments sold | 9,088,409 | ||
Receivable for capital shares sold | 1,475,780 | ||
Dividends and interest receivable | 350,128 | ||
1,486,167,537 | |||
Liabilities | |||
Payable for investments purchased | 10,742,171 | ||
Payable for capital shares redeemed | 1,191,525 | ||
Accrued management fees | 1,305,544 | ||
Distribution and service fees payable | 56,317 | ||
13,295,557 | |||
Net Assets | $ | 1,472,871,980 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,190,163,182 | |
Distributions in excess of net investment income | (8,417,455 | ) | |
Undistributed net realized gain | 53,634,075 | ||
Net unrealized appreciation | 237,492,178 | ||
$ | 1,472,871,980 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $922,855,394 | 30,387,025 | $30.37 | |||
Institutional Class, $0.01 Par Value | $161,633,894 | 5,309,816 | $30.44 | |||
A Class, $0.01 Par Value | $168,885,288 | 5,560,858 | $30.37* | |||
C Class, $0.01 Par Value | $16,395,345 | 549,071 | $29.86 | |||
R Class, $0.01 Par Value | $17,673,774 | 584,674 | $30.23 | |||
R6 Class, $0.01 Par Value | $185,428,285 | 6,092,887 | $30.43 |
*Maximum offering price $32.22 (net asset value divided by 0.9425).
See Notes to Financial Statements.
8
Statement of Operations |
FOR THE SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends | $ | 24,274,561 | |
Interest | 7,883 | ||
24,282,444 | |||
Expenses: | |||
Management fees | 7,683,133 | ||
Distribution and service fees: | |||
A Class | 213,033 | ||
C Class | 82,905 | ||
R Class | 39,509 | ||
Directors' fees and expenses | 26,659 | ||
Other expenses | 2,221 | ||
8,047,460 | |||
Net investment income (loss) | 16,234,984 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on investment transactions | 230,808,657 | ||
Change in net unrealized appreciation (depreciation) on investments | (191,487,518 | ) | |
Net realized and unrealized gain (loss) | 39,321,139 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 55,556,123 |
See Notes to Financial Statements.
9
Statement of Changes in Net Assets |
SIX MONTHS ENDED APRIL 30, 2016 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 2015 | ||||||
Increase (Decrease) in Net Assets | April 30, 2016 | October 31, 2015 | ||||
Operations | ||||||
Net investment income (loss) | $ | 16,234,984 | $ | 22,893,558 | ||
Net realized gain (loss) | 230,808,657 | 140,383,346 | ||||
Change in net unrealized appreciation (depreciation) | (191,487,518) | (61,602,845) | ||||
Net increase (decrease) in net assets resulting from operations | 55,556,123 | 101,674,059 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (15,368,958) | (18,881,364) | ||||
Institutional Class | (2,883,311) | (5,994,221) | ||||
A Class | (2,695,769) | (2,938,676) | ||||
C Class | (217,765) | (169,883) | ||||
R Class | (220,908) | (151,917) | ||||
R6 Class | (3,265,728) | (2,301,700 | ) | |||
Decrease in net assets from distributions | (24,652,439) | (30,437,761) | ||||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (25,674,189 | ) | (246,440,506) | |||
Net increase (decrease) in net assets | 5,229,495 | (175,204,208) | ||||
Net Assets | ||||||
Beginning of period | 1,467,642,485 | 1,642,846,693 | ||||
End of period | $ | 1,472,871,980 | $ | 1,467,642,485 | ||
Distributions in excess of net investment income | $ | (8,417,455 | ) | $ | — |
See Notes to Financial Statements.
10
Notes to Financial Statements |
APRIL 30, 2016 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Real Estate Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek high total investment return through a combination of capital appreciation and current income.
The fund offers the Investor Class, the Institutional Class, the A Class, the C Class, the R Class and the R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. The Institutional Class and R6 Class shareholders do not require the same level of shareholder and administrative services from American Century Investment Management, Inc. (ACIM) (the investment advisor) as shareholders of other classes. In addition, financial intermediaries do not receive any service, distribution or administrative fees for the R6 Class. As a result, the Institutional Class and R6 Class are charged lower unified management fees.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could
11
affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
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3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 1.00% to 1.20% for the Investor Class, A Class, C Class and R Class. The annual management fee schedule ranges from 0.80% to 1.00% for the Institutional Class and 0.65% to 0.85% for the R6 Class. The effective annual management fee for each class for the six months ended April 30, 2016 was 1.14% for the Investor Class, A Class, C Class and R Class, 0.94% for the Institutional Class and 0.79% for the R6 Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended April 30, 2016 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended April 30, 2016 were $1,225,620,215 and $1,252,019,717, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended April 30, 2016 | Year ended October 31, 2015 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||
Sold | 3,672,163 | $ | 108,715,774 | 12,303,508 | $ | 369,568,617 | ||||
Issued in reinvestment of distributions | 505,950 | 15,040,952 | 635,750 | 18,429,857 | ||||||
Redeemed | (4,976,777 | ) | (146,018,304 | ) | (17,510,664 | ) | (525,318,867 | ) | ||
(798,664 | ) | (22,261,578 | ) | (4,571,406 | ) | (137,320,393 | ) | |||
Institutional Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 1,213,911 | 35,870,179 | 3,155,595 | 95,323,733 | ||||||
Issued in reinvestment of distributions | 78,088 | 2,326,465 | 182,987 | 5,397,113 | ||||||
Redeemed | (1,349,080 | ) | (39,065,054 | ) | (11,434,924 | ) | (352,919,499 | ) | ||
(57,081 | ) | (868,410 | ) | (8,096,342 | ) | (252,198,653 | ) | |||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 809,398 | 23,830,528 | 2,355,656 | 70,464,832 | ||||||
Issued in reinvestment of distributions | 86,799 | 2,580,653 | 98,462 | 2,851,154 | ||||||
Redeemed | (1,257,683 | ) | (37,047,018 | ) | (2,637,014 | ) | (78,153,884 | ) | ||
(361,486 | ) | (10,635,837 | ) | (182,896 | ) | (4,837,898 | ) | |||
C Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 37,616 | 1,087,527 | 145,880 | 4,310,667 | ||||||
Issued in reinvestment of distributions | 5,837 | 170,920 | 4,541 | 129,831 | ||||||
Redeemed | (91,266 | ) | (2,630,993 | ) | (154,361 | ) | (4,514,636 | ) | ||
(47,813 | ) | (1,372,546 | ) | (3,940 | ) | (74,138 | ) | |||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||
Sold | 174,067 | 5,089,216 | 313,203 | 9,313,920 | ||||||
Issued in reinvestment of distributions | 6,341 | 187,665 | 4,748 | 135,987 | ||||||
Redeemed | (84,984 | ) | (2,474,586 | ) | (134,904 | ) | (3,967,197 | ) | ||
95,424 | 2,802,295 | 183,047 | 5,482,710 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 863,107 | 25,224,223 | 7,671,347 | 225,205,102 | ||||||
Issued in reinvestment of distributions | 109,634 | 3,265,728 | 82,066 | 2,301,700 | ||||||
Redeemed | (736,426 | ) | (21,828,064 | ) | (2,911,026 | ) | (84,998,936 | ) | ||
236,315 | 6,661,887 | 4,842,387 | 142,507,866 | |||||||
Net increase (decrease) | (933,305) | $ | (25,674,189 | ) | (7,829,150 | ) | $ | (246,440,506 | ) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions). |
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The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,452,617,767 | — | — | ||||
Temporary Cash Investments | 4,811 | $ | 22,630,642 | — | ||||
$ | 1,452,622,578 | $ | 22,630,642 | — |
7. 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.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of April 30, 2016, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,273,057,212 | |
Gross tax appreciation of investments | $ | 209,634,161 | |
Gross tax depreciation of investments | (7,438,153 | ) | |
Net tax appreciation (depreciation) of investments | $ | 202,196,008 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of October 31, 2015, the fund had accumulated short-term capital losses of $(127,505,007), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers expire in 2017.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2016(3) | $29.69 | 0.33 | 0.85 | 1.18 | (0.50) | $30.37 | 4.01% | 1.14%(4) | 2.24%(4) | 85% | $922,855 | ||
2015 | $28.69 | 0.42 | 1.13 | 1.55 | (0.55) | $29.69 | 5.51% | 1.14% | 1.42% | 140% | $925,934 | ||
2014 | $24.56 | 0.30 | 4.29 | 4.59 | (0.46) | $28.69 | 18.89% | 1.14% | 1.16% | 127% | $1,025,749 | ||
2013 | $23.05 | 0.36 | 1.70 | 2.06 | (0.55) | $24.56 | 9.04% | 1.14% | 1.48% | 170% | $847,977 | ||
2012(5) | $22.35 | 0.09 | 0.66 | 0.75 | (0.05) | $23.05 | 3.38% | 1.15%(4) | 0.64%(4) | 86% | $759,303 | ||
2012 | $19.58 | 0.17 | 2.87 | 3.04 | (0.27) | $22.35 | 15.62% | 1.16% | 0.83% | 168% | $696,245 | ||
2011 | $15.79 | 0.13 | 3.83 | 3.96 | (0.17) | $19.58 | 25.19% | 1.16% | 0.76% | 238% | $605,529 | ||
Institutional Class | |||||||||||||
2016(3) | $29.76 | 0.35 | 0.86 | 1.21 | (0.53) | $30.44 | 4.11% | 0.94%(4) | 2.44%(4) | 85% | $161,634 | ||
2015 | $28.75 | 0.51 | 1.11 | 1.62 | (0.61) | $29.76 | 5.70% | 0.94% | 1.62% | 140% | $159,721 | ||
2014 | $24.61 | 0.35 | 4.30 | 4.65 | (0.51) | $28.75 | 19.17% | 0.94% | 1.36% | 127% | $387,099 | ||
2013 | $23.10 | 0.41 | 1.70 | 2.11 | (0.60) | $24.61 | 9.23% | 0.94% | 1.68% | 170% | $413,623 | ||
2012(5) | $22.40 | 0.11 | 0.67 | 0.78 | (0.08) | $23.10 | 3.47% | 0.95%(4) | 0.84%(4) | 86% | $324,283 | ||
2012 | $19.62 | 0.21 | 2.87 | 3.08 | (0.30) | $22.40 | 15.86% | 0.96% | 1.03% | 168% | $290,557 | ||
2011 | $15.81 | 0.17 | 3.84 | 4.01 | (0.20) | $19.62 | 25.48% | 0.96% | 0.96% | 238% | $297,740 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||
2016(3) | $29.69 | 0.29 | 0.85 | 1.14 | (0.46) | $30.37 | 3.88% | 1.39%(4) | 1.99%(4) | 85% | $168,885 | ||
2015 | $28.69 | 0.34 | 1.14 | 1.48 | (0.48) | $29.69 | 5.24% | 1.39% | 1.17% | 140% | $175,833 | ||
2014 | $24.55 | 0.24 | 4.30 | 4.54 | (0.40) | $28.69 | 18.59% | 1.39% | 0.91% | 127% | $175,133 | ||
2013 | $23.05 | 0.30 | 1.69 | 1.99 | (0.49) | $24.55 | 8.77% | 1.39% | 1.23% | 170% | $201,660 | ||
2012(5) | $22.35 | 0.05 | 0.67 | 0.72 | (0.02) | $23.05 | 3.21% | 1.40%(4) | 0.39%(4) | 86% | $166,497 | ||
2012 | $19.60 | 0.11 | 2.87 | 2.98 | (0.23) | $22.35 | 15.33% | 1.41% | 0.58% | 168% | $151,198 | ||
2011 | $15.81 | 0.09 | 3.83 | 3.92 | (0.13) | $19.60 | 24.92% | 1.41% | 0.51% | 238% | $141,257 | ||
C Class | |||||||||||||
2016(3) | $29.22 | 0.18 | 0.83 | 1.01 | (0.37) | $29.86 | 3.48% | 2.14%(4) | 1.24%(4) | 85% | $16,395 | ||
2015 | $28.25 | 0.12 | 1.13 | 1.25 | (0.28) | $29.22 | 4.47% | 2.14% | 0.42% | 140% | $17,439 | ||
2014 | $24.18 | 0.04 | 4.23 | 4.27 | (0.20) | $28.25 | 17.74% | 2.14% | 0.16% | 127% | $16,972 | ||
2013 | $22.72 | 0.12 | 1.67 | 1.79 | (0.33) | $24.18 | 7.93% | 2.14% | 0.48% | 170% | $17,057 | ||
2012(5) | $22.11 | (0.05) | 0.66 | 0.61 | — | $22.72 | 2.76% | 2.15%(4) | (0.36)%(4) | 86% | $5,622 | ||
2012 | $19.48 | (0.02) | 2.82 | 2.80 | (0.17) | $22.11 | 14.44% | 2.16% | (0.17)% | 168% | $2,574 | ||
2011 | $15.75 | (0.04) | 3.82 | 3.78 | (0.05) | $19.48 | 24.00% | 2.16% | (0.24)% | 238% | $1,595 |
For a Share Outstanding Throughout the Years Ended October 31 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||
2016(3) | $29.55 | 0.24 | 0.86 | 1.10 | (0.42) | $30.23 | 3.76% | 1.64%(4) | 1.74%(4) | 85% | $17,674 | ||
2015 | $28.55 | 0.26 | 1.15 | 1.41 | (0.41) | $29.55 | 4.97% | 1.64% | 0.92% | 140% | $14,458 | ||
2014 | $24.44 | 0.16 | 4.28 | 4.44 | (0.33) | $28.55 | 18.30% | 1.64% | 0.66% | 127% | $8,743 | ||
2013 | $22.95 | 0.24 | 1.68 | 1.92 | (0.43) | $24.44 | 8.50% | 1.64% | 0.98% | 170% | $5,866 | ||
2012(5) | $22.27 | 0.02 | 0.66 | 0.68 | —(6) | $22.95 | 3.06% | 1.65%(4) | 0.14%(4) | 86% | $3,466 | ||
2012 | $19.55 | 0.08 | 2.84 | 2.92 | (0.20) | $22.27 | 15.01% | 1.66% | 0.33% | 168% | $2,224 | ||
2011 | $15.78 | 0.06 | 3.81 | 3.87 | (0.10) | $19.55 | 24.60% | 1.66% | 0.26% | 238% | $1,364 | ||
R6 Class | |||||||||||||
2016(3) | $29.75 | 0.38 | 0.85 | 1.23 | (0.55) | $30.43 | 4.19% | 0.79%(4) | 2.59%(4) | 85% | $185,428 | ||
2015 | $28.74 | 0.49 | 1.17 | 1.66 | (0.65) | $29.75 | 5.86% | 0.79% | 1.77% | 140% | $174,257 | ||
2014 | $24.61 | 0.33 | 4.35 | 4.68 | (0.55) | $28.74 | 19.31% | 0.79% | 1.51% | 127% | $29,151 | ||
2013(7) | $25.22 | 0.07 | (0.53) | (0.46) | (0.15) | $24.61 | (1.77)% | 0.79%(4) | 1.04%(4) | 170%(8) | $1,377 |
Notes to Financial Highlights |
(2) Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3) Six months ended April 30, 2016 (unaudited).
(4) Annualized.
(5) April 1, 2012 through October 31, 2012. The fund's fiscal year end was changed from March 31 to October 31, resulting in a seven-month annual reporting period. For the years before October 31, 2012, the fund's fiscal year end was March 31.
(6) Per-share amount was less than $0.005.
(7) July 26, 2013 (commencement of sale) through October 31, 2013.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended October 31, 2013.
See Notes to Financial Statements.
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain IRAs are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
Distributions you receive from 403(b), 457 and qualified plans are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling 1-800-345-2021.
20
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century 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. | ||
©2016 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-89219 1606 |
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) | The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. |
(b) | Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. |
(b) | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
ITEM 12. EXHIBITS.
(a)(1) | Not applicable for semiannual report filings. |
(a)(2) | Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT. |
(a)(3) | Not applicable. |
(b) | A certification by the registrant’s chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as EX- 99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | American Century Capital Portfolios, Inc. | ||
By: | /s/ Jonathan S. Thomas | ||
Name: | Jonathan S. Thomas | ||
Title: | President | ||
Date: | June 28, 2016 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jonathan S. Thomas | |
Name: | Jonathan S. Thomas | |
Title: | President | |
(principal executive officer) | ||
Date: | June 28, 2016 |
By: | /s/ C. Jean Wade | |
Name: | C. Jean Wade | |
Title: | Vice President, Treasurer, and | |
Chief Financial Officer | ||
(principal financial officer) | ||
Date: | June 28, 2016 |