UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-07820 | |||||||||||||||||||
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. | ||||||||||||||||||||
(Exact name of registrant as specified in charter) | ||||||||||||||||||||
4500 MAIN STREET, KANSAS CITY, MISSOURI | 64111 | |||||||||||||||||||
(Address of principal executive offices) | (Zip Code) | |||||||||||||||||||
CHARLES A. ETHERINGTON 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 | ||||||||||||||||||||
(Name and address of agent for service) | ||||||||||||||||||||
Registrant’s telephone number, including area code: | 816-531-5575 | |||||||||||||||||||
Date of fiscal year end: | 03-31 | |||||||||||||||||||
Date of reporting period: | 03-31-2021 |
ITEM 1. REPORTS TO STOCKHOLDERS.
(a) Provided under separate cover.
ANNUAL REPORT | ![]() | ||||
MARCH 31, 2021 | |||||
AC Alternatives® Market Neutral Value Fund | |||||
Investor Class (ACVVX) | |||||
I Class (ACVKX) | |||||
A Class (ACVQX) | |||||
C Class (ACVHX) | |||||
R Class (ACVWX) |
![acaltscarrotblacknobleeda0a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/acaltscarrotblacknobleeda0a.jpg)
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image231.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image231.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2021. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Stocks Soared, Bonds Moderated Amid Growing Economic Optimism
March 31 marked the end of a remarkable 12-month period, as the COVID-19 pandemic wreaked havoc on global economies, governments and society. In response, states issued unprecedented lockdown orders. Unemployment surged, corporate earnings plunged and second-quarter-2020 gross domestic product sank a record 31.4% (annualized). This triggered soaring demand for safe-haven assets.
Swift and significant action from the Federal Reserve and the federal government helped reignite investor confidence and bolster the economic backdrop. Riskier assets quickly rebounded from their early 2020 lows. The economy expanded a record 33.4% in the third quarter and continued to grow amid the gradual lifting of lockdowns and the emergency approval of vaccines.
Late in the reporting period, improving vaccine distributions, additional federal coronavirus aid and ongoing reopenings bolstered the economic and earnings outlooks. This improving backdrop combined with massive monetary and fiscal support helped fuel a 12-month gain of 56% for the S&P 500 Index. These same economic dynamics lifted longer-term inflation expectations and U.S. Treasury yields, pressuring investment-grade bond returns. After rallying through most of 2020, the Bloomberg Barclays U.S. Aggregate Bond Index gained less than 1% for the 12-month period.
A Return to Normalcy in Sight
The return to pre-pandemic life appears to be on the horizon, thanks largely to expanding vaccine availability. In addition, medical professionals continue to improve treatment protocols for those afflicted with the virus. Until the U.S. is fully reopened, investors still may face the effects of regional virus-related restrictions, economic and political uncertainty and heightened market volatility. These influences can be unsettling, but they tend to be temporary.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image161.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image161.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of March 31, 2021 | |||||||||||||||||
Average Annual Returns | |||||||||||||||||
Ticker Symbol | 1 year | 5 years | Since Inception | Inception Date | |||||||||||||
Investor Class | ACVVX | -6.57% | -1.55% | 0.85% | 10/31/11 | ||||||||||||
Bloomberg Barclays U.S. 1-3 Month Treasury Bill Index | — | 0.09% | 1.12% | 0.62% | — | ||||||||||||
I Class | ACVKX | -6.37% | -1.34% | 1.06% | 10/31/11 | ||||||||||||
A Class | ACVQX | 10/31/11 | |||||||||||||||
No sales charge | -6.72% | -1.77% | 0.61% | ||||||||||||||
With sales charge | -12.09% | -2.93% | -0.02% | ||||||||||||||
C Class | ACVHX | -7.55% | -2.53% | -0.16% | 10/31/11 | ||||||||||||
R Class | ACVWX | -7.10% | -2.05% | 0.35% | 10/31/11 |
Fund returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%.
C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over Life of Class | ||
$10,000 investment made October 31, 2011 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-f7249e5260964bf78d51a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-f7249e5260964bf78d51a.jpg)
Value on March 31, 2021 | |||||
Investor Class — $10,826 | |||||
Bloomberg Barclays U.S. 1-3 Month Treasury Bill Index — $10,597 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | ||||||||||
3.49% | 3.29% | 3.74% | 4.49% | 3.99% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Portfolio Commentary |
Portfolio Managers: Phillip N. Davidson, Michael Liss, Kevin Toney, Brian Woglom, David Byrns and Philip Sundell
Performance Summary
AC Alternatives Market Neutral Value declined -6.57%* for the fiscal year ended March 31, 2021, compared with the 0.09% return for its benchmark, the Bloomberg Barclays U.S. 1-3 Month Treasury Bill Index. The fund’s return reflects operating expenses, while the index’s return does not.
The foundation of the strategy is to pair long positions in more undervalued companies with short positions in overvalued companies. We believe this helps reduce the risk inherent in long/short strategies. Additionally, we tend to favor higher-quality companies for our long positions and lower-quality companies for our short positions.
Over the trailing 12-month period, equity markets rallied significantly due to unprecedented monetary and fiscal stimulus and COVID-19 vaccine rollouts that created a path toward economic recovery. In this environment, lower-quality stocks outperformed higher-quality stocks by a notable margin, resulting in a headwind for our strategy.
Key Detractors
A long position in American Express and a short position in Discover Financial Services negatively impacted performance. We view Discover as a lower-quality company given its riskier loan portfolio and weaker balance sheet compared to American Express. In line with the overall outperformance of lower-quality stocks, Discover’s stock rose significantly and outperformed American Express. The pandemic-driven credit cycle was not as severe as we initially believed it would be, leading us to close our position in this pair.
Our performance was also hindered by a long position in the Consumer Discretionary Select Sector SPDR Fund and a short position in Signet Jewelers. We held a short position in Signet given its lower-quality characteristics, including a high debt level. Signet has a notable exposure to shopping malls, but investors rewarded the stock as Signet was able to pivot to a successful online business model. In addition, stimulus checks supported Signet’s sales.
Key Contributors
Among the top contributors to performance was a pair consisting of a long position in Siemens and a short position in General Electric (GE). We view Siemens as a higher-quality industrial conglomerate relative to GE. Siemens’ stock rose as the company delivered solid financial results, accelerated its cost-cutting program and announced the spin-off of Siemens Energy. GE’s stock declined, due in part to a slowdown in its commercial aviation segment and COVID-19-related disruption. We closed our position in this pair following its notable contribution to the fund’s performance.
Another top contributor was a pair consisting of a long position in HEICO Class A shares and a short position in HEICO common stock. We believe both securities possess the same economic value, but at times, we see a valuation spread (a difference in valuation) between the two
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
securities. This pair was one of the larger weights in the portfolio because we view it as relatively low risk in nature. The pair positively impacted performance as the valuation spread between the two securities narrowed.
Portfolio Positioning
AC Alternatives Market Neutral Value is designed to address several secular financial planning trends, including the need for an alternative to cash in a low interest rate environment, diversification resulting from not being correlated to equity markets, low-volatility exposure and a hedge against a rise in inflation and/or interest rates.
We continue to follow our disciplined, bottom-up process, selecting securities one at a time for the portfolio. We look for securities of companies that we believe are misvalued on both the long and short side of the market with consideration for both upside potential and downside risk. The portfolio’s current positioning reflects the individual opportunities identified by our team.
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Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Long Holdings | % of net assets | ||||
Lennar Corp., Class B | 5.04% | ||||
iShares Russell 1000 Value ETF | 5.03% | ||||
Fox Corp., Class B | 4.88% | ||||
Atlas Copco AB, B Shares | 4.63% | ||||
Royal Dutch Shell plc, Class B ADR | 4.56% | ||||
HEICO Corp., Class A | 4.36% | ||||
Teradyne, Inc. (Convertible) | 4.29% | ||||
Tesla, Inc. (Convertible) | 3.91% | ||||
Microchip Technology, Inc. (Convertible) | 3.78% | ||||
Consumer Discretionary Select Sector SPDR Fund | 1.55% | ||||
Top Ten Short Holdings | % of net assets | ||||
Lennar Corp., Class A | (5.06)% | ||||
iShares Russell 1000 Value ETF | (4.85)% | ||||
Atlas Copco AB, A Shares | (4.63)% | ||||
Royal Dutch Shares plc, Class A ADR | (4.55)% | ||||
HEICO Corp. | (4.48)% | ||||
Fox Corp., Class A | (4.46)% | ||||
Teradyne, Inc. | (4.30)% | ||||
Tesla, Inc. | (3.93)% | ||||
Microchip Technology, Inc. | (1.78)% | ||||
Utilities Select Sector SPDR Fund | (1.68)% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 43.4% | ||||
Foreign Common Stocks* | 15.6% | ||||
Convertible Bonds | 12.0% | ||||
Exchange-Traded Funds | 6.6% | ||||
Convertible Preferred Stocks | 0.3% | ||||
Domestic Common Stocks Sold Short | (56.4)% | ||||
Foreign Common Stocks Sold Short* | (12.8)% | ||||
Exchange-Traded Funds Sold Short | (7.2)% | ||||
Temporary Cash Investments | 20.6% | ||||
Other Assets and Liabilities | 77.9%** |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
**Amount relates primarily to deposits for securities sold short at period end.
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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 October 1, 2020 to March 31, 2021.
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 I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 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.
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Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $977.40 | $17.30 | 3.51% | ||||||||||
I Class | $1,000 | $978.70 | $16.33 | 3.31% | ||||||||||
A Class | $1,000 | $976.70 | $18.53 | 3.76% | ||||||||||
C Class | $1,000 | $972.30 | $22.18 | 4.51% | ||||||||||
R Class | $1,000 | $974.80 | $19.74 | 4.01% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,007.43 | $17.57 | 3.51% | ||||||||||
I Class | $1,000 | $1,008.43 | $16.57 | 3.31% | ||||||||||
A Class | $1,000 | $1,006.18 | $18.81 | 3.76% | ||||||||||
C Class | $1,000 | $1,002.44 | $22.52 | 4.51% | ||||||||||
R Class | $1,000 | $1,004.94 | $20.04 | 4.01% |
(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 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
MARCH 31, 2021
Shares/ Principal Amount | Value | |||||||
COMMON STOCKS — 59.0% | ||||||||
Aerospace and Defense — 5.0% | ||||||||
Airbus SE, ADR(1) | 6,256 | $ | 177,608 | |||||
HEICO Corp., Class A(2) | 19,395 | 2,203,272 | ||||||
Lockheed Martin Corp. | 369 | 136,345 | ||||||
2,517,225 | ||||||||
Air Freight and Logistics — 0.5% | ||||||||
United Parcel Service, Inc., Class B | 1,433 | 243,596 | ||||||
Automobiles — 1.3% | ||||||||
General Motors Co.(1) | 5,026 | 288,794 | ||||||
Volkswagen AG, Preference Shares | 1,379 | 385,380 | ||||||
674,174 | ||||||||
Banks — 2.0% | ||||||||
JPMorgan Chase & Co. | 2,888 | 439,640 | ||||||
Toronto-Dominion Bank (The) | 1,867 | 121,763 | ||||||
U.S. Bancorp(2) | 4,615 | 255,255 | ||||||
UMB Financial Corp. | 1,957 | 180,690 | ||||||
997,348 | ||||||||
Beverages — 1.0% | ||||||||
Heineken Holding NV | 3,688 | 328,297 | ||||||
PepsiCo, Inc.(2) | 1,137 | 160,829 | ||||||
489,126 | ||||||||
Biotechnology — 0.3% | ||||||||
Alexion Pharmaceuticals, Inc.(1) | 1,100 | 168,201 | ||||||
Building Products — 2.1% | ||||||||
AO Smith Corp. | 2,033 | 137,451 | ||||||
Hayward Holdings, Inc.(1) | 20,119 | 339,609 | ||||||
Johnson Controls International plc(2) | 5,551 | 331,228 | ||||||
Masco Corp. | 4,406 | 263,919 | ||||||
1,072,207 | ||||||||
Capital Markets — 1.0% | ||||||||
AllianceBernstein Holding LP | 8,932 | 357,191 | ||||||
Northern Trust Corp.(2) | 1,301 | 136,748 | ||||||
493,939 | ||||||||
Chemicals — 1.0% | ||||||||
Akzo Nobel NV | 2,194 | 245,187 | ||||||
Axalta Coating Systems Ltd.(1) | 3,804 | 112,522 | ||||||
Linde plc | 479 | 134,187 | ||||||
491,896 | ||||||||
Commercial Services and Supplies — 0.8% | ||||||||
Republic Services, Inc.(2) | 4,249 | 422,138 | ||||||
Containers and Packaging — 0.3% | ||||||||
Packaging Corp. of America | 969 | 130,311 | ||||||
Diversified Telecommunication Services — 0.6% | ||||||||
Verizon Communications, Inc.(2) | 5,006 | 291,099 | ||||||
Electric Utilities — 1.8% | ||||||||
Duke Energy Corp.(2) | 3,177 | 306,676 | ||||||
Pinnacle West Capital Corp.(2) | 5,260 | 427,901 |
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Shares/ Principal Amount | Value | |||||||
Xcel Energy, Inc.(2) | 2,961 | $ | 196,936 | |||||
931,513 | ||||||||
Electrical Equipment — 1.1% | ||||||||
Emerson Electric Co.(2) | 6,136 | 553,590 | ||||||
Energy Equipment and Services — 0.5% | ||||||||
Baker Hughes Co. | 11,852 | 256,122 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.1% | ||||||||
Equinix, Inc. | 268 | 182,130 | ||||||
MGM Growth Properties LLC, Class A | 5,853 | 190,925 | ||||||
Welltower, Inc. | 2,646 | 189,533 | ||||||
562,588 | ||||||||
Food and Staples Retailing — 2.2% | ||||||||
Koninklijke Ahold Delhaize NV | 9,265 | 258,068 | ||||||
Sysco Corp.(2) | 7,861 | 618,975 | ||||||
Walmart, Inc.(2) | 1,838 | 249,655 | ||||||
1,126,698 | ||||||||
Food Products — 1.0% | ||||||||
Conagra Brands, Inc. | 9,410 | 353,816 | ||||||
Mondelez International, Inc., Class A | 2,377 | 139,126 | ||||||
492,942 | ||||||||
Gas Utilities — 1.4% | ||||||||
Atmos Energy Corp.(2) | 2,628 | 259,778 | ||||||
ONE Gas, Inc.(2) | 5,792 | 445,462 | ||||||
705,240 | ||||||||
Health Care Equipment and Supplies — 0.9% | ||||||||
Becton Dickinson and Co.(2) | 905 | 220,051 | ||||||
Medtronic plc | 2,145 | 253,389 | ||||||
473,440 | ||||||||
Health Care Providers and Services — 0.5% | ||||||||
Cigna Corp. | 574 | 138,759 | ||||||
Universal Health Services, Inc., Class B | 760 | 101,376 | ||||||
240,135 | ||||||||
Household Durables — 5.0% | ||||||||
Lennar Corp., Class B(2) | 30,976 | 2,550,564 | ||||||
Insurance — 2.7% | ||||||||
Globe Life, Inc. | 2,440 | 235,777 | ||||||
Hartford Financial Services Group, Inc. (The) | 4,947 | 330,410 | ||||||
Marsh & McLennan Cos., Inc.(2) | 2,760 | 336,168 | ||||||
Principal Financial Group, Inc. | 7,940 | 476,083 | ||||||
1,378,438 | ||||||||
IT Services — 0.6% | ||||||||
Automatic Data Processing, Inc. | 1,115 | 210,144 | ||||||
Visa, Inc., Class A(2) | 480 | 101,630 | ||||||
311,774 | ||||||||
Machinery — 6.5% | ||||||||
Atlas Copco AB, B Shares(2) | 44,986 | 2,340,338 | ||||||
Deere & Co.(2) | 1,644 | 615,086 | ||||||
PACCAR, Inc. | 1,780 | 165,398 | ||||||
Schindler Holding AG, Bearer Participation Certificate | 525 | 154,222 | ||||||
3,275,044 | ||||||||
Media — 4.9% | ||||||||
Fox Corp., Class B(2) | 70,625 | 2,466,931 |
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Shares/ Principal Amount | Value | |||||||
Multiline Retail — 0.3% | ||||||||
Dollar Tree, Inc.(1) | 1,515 | $ | 173,407 | |||||
Oil, Gas and Consumable Fuels — 6.0% | ||||||||
ConocoPhillips(2) | 1,160 | 61,445 | ||||||
Enterprise Products Partners LP | 8,637 | 190,187 | ||||||
Galp Energia SGPS SA | 10,354 | 120,339 | ||||||
Royal Dutch Shell plc, Class B ADR | 62,658 | 2,307,694 | ||||||
TOTAL SE, ADR | 7,762 | 361,244 | ||||||
3,040,909 | ||||||||
Paper and Forest Products — 0.3% | ||||||||
Mondi plc | 5,984 | 152,672 | ||||||
Personal Products — 1.0% | ||||||||
Unilever plc, ADR | 9,267 | 517,377 | ||||||
Pharmaceuticals — 1.6% | ||||||||
Johnson & Johnson(2) | 1,547 | 254,250 | ||||||
Merck & Co., Inc. | 1,689 | 130,205 | ||||||
Roche Holding AG, ADR | 10,672 | 432,856 | ||||||
817,311 | ||||||||
Road and Rail — 1.0% | ||||||||
Heartland Express, Inc. | 6,282 | 123,002 | ||||||
Norfolk Southern Corp. | 474 | 127,278 | ||||||
Union Pacific Corp. | 1,046 | 230,549 | ||||||
480,829 | ||||||||
Semiconductors and Semiconductor Equipment — 1.0% | ||||||||
Applied Materials, Inc. | 1,601 | 213,893 | ||||||
Maxim Integrated Products, Inc.(2) | 3,343 | 305,450 | ||||||
519,343 | ||||||||
Software — 1.1% | ||||||||
Microsoft Corp.(2) | 1,476 | 347,997 | ||||||
Oracle Corp. (New York) | 2,702 | 189,599 | ||||||
537,596 | ||||||||
Specialty Retail — 0.4% | ||||||||
TJX Cos., Inc. (The) | 2,918 | 193,026 | ||||||
Trading Companies and Distributors — 0.2% | ||||||||
Ferguson plc | 986 | 118,448 | ||||||
TOTAL COMMON STOCKS (Cost $20,301,738) | 29,867,197 | |||||||
CONVERTIBLE BONDS — 12.0% | ||||||||
Automobiles — 3.9% | ||||||||
Tesla, Inc., 2.00%, 5/15/24 | $ | 184,000 | 1,977,540 | |||||
Semiconductors and Semiconductor Equipment — 8.1% | ||||||||
Microchip Technology, Inc., 0.125%, 11/15/24 | 1,613,000 | 1,914,429 | ||||||
Teradyne, Inc., 1.25%, 12/15/23 | 564,000 | 2,170,695 | ||||||
4,085,124 | ||||||||
TOTAL CONVERTIBLE BONDS (Cost $2,904,226) | 6,062,664 | |||||||
EXCHANGE-TRADED FUNDS — 6.6% | ||||||||
Consumer Discretionary Select Sector SPDR Fund | 4,675 | 785,727 | ||||||
iShares Russell 1000 Value ETF | 16,799 | 2,545,889 | ||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $2,160,792) | 3,331,616 |
12
Shares/ Principal Amount | Value | |||||||
CONVERTIBLE PREFERRED STOCKS — 0.3% | ||||||||
Auto Components — 0.3% | ||||||||
Aptiv plc, 5.50%, 6/15/23 (Cost $90,214) | 860 | $ | 136,095 | |||||
TEMPORARY CASH INVESTMENTS — 20.6% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $1,892,205), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $1,855,039) | 1,855,039 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.75%, 3/31/26, valued at $6,308,727), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $6,185,000) | 6,185,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 2,398,040 | 2,398,040 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $10,438,079) | 10,438,079 | |||||||
TOTAL INVESTMENT SECURITIES BEFORE SECURITIES SOLD SHORT — 98.5% (Cost 35,895,049) | 49,835,651 | |||||||
SECURITIES SOLD SHORT — (76.4)% | ||||||||
COMMON STOCKS SOLD SHORT — (69.2)% | ||||||||
Aerospace and Defense — (5.1)% | ||||||||
Boeing Co. (The) | (706) | (179,833) | ||||||
HEICO Corp. | (17,999) | (2,264,274) | ||||||
Northrop Grumman Corp. | (425) | (137,547) | ||||||
(2,581,654) | ||||||||
Air Freight and Logistics — (0.5)% | ||||||||
FedEx Corp. | (835) | (237,173) | ||||||
Auto Components — (0.3)% | ||||||||
BorgWarner, Inc. | (2,969) | (137,643) | ||||||
Automobiles — (5.3)% | ||||||||
Ford Motor Co. | (23,331) | (285,805) | ||||||
Tesla, Inc. | (2,973) | (1,985,756) | ||||||
Volkswagen AG | (1,064) | (385,993) | ||||||
(2,657,554) | ||||||||
Banks — (2.0)% | ||||||||
Bank of America Corp. | (5,642) | (218,289) | ||||||
Bank OZK | (4,347) | (177,575) | ||||||
Citigroup, Inc. | (3,209) | (233,455) | ||||||
M&T Bank Corp. | (1,677) | (254,250) | ||||||
National Bank of Canada | (1,799) | (122,209) | ||||||
(1,005,778) | ||||||||
Beverages — (0.6)% | ||||||||
Heineken NV | (3,187) | (327,513) | ||||||
Building Products — (1.2)% | ||||||||
Carrier Global Corp. | (4,292) | (181,208) | ||||||
Daikin Industries Ltd. | (800) | (161,982) | ||||||
Fortune Brands Home & Security, Inc. | (2,840) | (272,129) | ||||||
(615,319) | ||||||||
Capital Markets — (1.0)% | ||||||||
Franklin Resources, Inc. | (11,946) | (353,602) | ||||||
State Street Corp. | (1,595) | (133,996) | ||||||
(487,598) |
13
Shares/ Principal Amount | Value | |||||||
Chemicals — (1.0)% | ||||||||
Air Products and Chemicals, Inc. | (477) | $ | (134,199) | |||||
PPG Industries, Inc. | (2,371) | (356,267) | ||||||
(490,466) | ||||||||
Commercial Services and Supplies — (0.8)% | ||||||||
Waste Management, Inc. | (3,328) | (429,379) | ||||||
Containers and Packaging — (0.3)% | ||||||||
International Paper Co. | (2,443) | (132,093) | ||||||
Diversified Telecommunication Services — (0.6)% | ||||||||
AT&T, Inc. | (4,537) | (137,335) | ||||||
Lumen Technologies, Inc. | (11,775) | (157,196) | ||||||
(294,531) | ||||||||
Electric Utilities — (1.0)% | ||||||||
American Electric Power Co., Inc. | (2,314) | (195,996) | ||||||
Southern Co. (The) | (4,999) | (310,738) | ||||||
(506,734) | ||||||||
Energy Equipment and Services — (0.5)% | ||||||||
Schlumberger NV | (9,313) | (253,221) | ||||||
Entertainment — (0.3)% | ||||||||
Walt Disney Co. (The) | (803) | (148,170) | ||||||
Equity Real Estate Investment Trusts (REITs) — (1.1)% | ||||||||
Brixmor Property Group, Inc. | (9,462) | (191,416) | ||||||
SL Green Realty Corp. | (2,488) | (174,135) | ||||||
Ventas, Inc. | (3,509) | (187,170) | ||||||
(552,721) | ||||||||
Food and Staples Retailing — (1.8)% | ||||||||
Kroger Co. (The) | (6,996) | (251,786) | ||||||
US Foods Holding Corp. | (16,899) | (644,190) | ||||||
(895,976) | ||||||||
Food Products — (1.3)% | ||||||||
Campbell Soup Co. | (3,780) | (190,021) | ||||||
Hormel Foods Corp. | (3,710) | (177,264) | ||||||
Lamb Weston Holdings, Inc. | (1,815) | (140,626) | ||||||
McCormick & Co., Inc. | (1,832) | (163,341) | ||||||
(671,252) | ||||||||
Health Care Equipment and Supplies — (1.0)% | ||||||||
Baxter International, Inc. | (2,669) | (225,103) | ||||||
Stryker Corp. | (1,065) | (259,413) | ||||||
(484,516) | ||||||||
Health Care Providers and Services — (0.5)% | ||||||||
HCA Healthcare, Inc. | (535) | (100,762) | ||||||
UnitedHealth Group, Inc. | (384) | (142,875) | ||||||
(243,637) | ||||||||
Household Durables — (5.3)% | ||||||||
Lennar Corp., Class A | (25,273) | (2,558,386) | ||||||
Whirlpool Corp. | (660) | (145,431) | ||||||
(2,703,817) | ||||||||
Household Products — (1.0)% | ||||||||
Procter & Gamble Co. (The) | (3,863) | (523,166) | ||||||
Insurance — (2.7)% | ||||||||
Aon plc, Class A | (1,428) | (328,597) |
14
Shares/ Principal Amount | Value | |||||||
Chubb Ltd. | (803) | $ | (126,850) | |||||
Prudential Financial, Inc. | (5,173) | (471,260) | ||||||
Travelers Cos., Inc. (The) | (1,307) | (196,573) | ||||||
Unum Group | (8,717) | (242,594) | ||||||
(1,365,874) | ||||||||
Internet and Direct Marketing Retail — (0.7)% | ||||||||
Amazon.com, Inc. | (112) | (346,537) | ||||||
IT Services — (1.0)% | ||||||||
International Business Machines Corp. | (1,392) | (185,498) | ||||||
Mastercard, Inc., Class A | (279) | (99,338) | ||||||
Paychex, Inc. | (2,187) | (214,370) | ||||||
(499,206) | ||||||||
Machinery — (7.6)% | ||||||||
AGCO Corp. | (4,285) | (615,540) | ||||||
Atlas Copco AB, A Shares | (38,474) | (2,342,548) | ||||||
Caterpillar, Inc. | (2,466) | (571,791) | ||||||
Kone Oyj, B Shares | (1,911) | (156,080) | ||||||
Volvo AB, B Shares | (6,744) | (170,638) | ||||||
(3,856,597) | ||||||||
Media — (4.8)% | ||||||||
Discovery, Inc., Class A | (4,569) | (198,569) | ||||||
Fox Corp., Class A | (62,476) | (2,256,008) | ||||||
(2,454,577) | ||||||||
Multi-Utilities — (0.6)% | ||||||||
Consolidated Edison, Inc. | (3,815) | (285,362) | ||||||
Multiline Retail — (0.3)% | ||||||||
Ollie's Bargain Outlet Holdings, Inc. | (2,032) | (176,784) | ||||||
Oil, Gas and Consumable Fuels — (5.6)% | ||||||||
Chevron Corp. | (2,300) | (241,017) | ||||||
Occidental Petroleum Corp. | (2,388) | (63,568) | ||||||
Royal Dutch Shell plc, Class A ADR | (58,713) | (2,302,137) | ||||||
Valero Energy Corp. | (3,355) | (240,218) | ||||||
(2,846,940) | ||||||||
Paper and Forest Products — (0.3)% | ||||||||
UPM-Kymmene Oyj | (4,313) | (154,908) | ||||||
Pharmaceuticals — (2.0)% | ||||||||
AstraZeneca plc, ADR | (3,391) | (168,600) | ||||||
Bristol-Myers Squibb Co. | (7,083) | (447,150) | ||||||
Pfizer, Inc. | (3,686) | (133,544) | ||||||
Sanofi | (2,412) | (238,397) | ||||||
(987,691) | ||||||||
Road and Rail — (1.4)% | ||||||||
Avis Budget Group, Inc. | (3,398) | (246,491) | ||||||
CSX Corp. | (3,741) | (360,707) | ||||||
Werner Enterprises, Inc. | (2,618) | (123,491) | ||||||
(730,689) | ||||||||
Semiconductors and Semiconductor Equipment — (7.1)% | ||||||||
Analog Devices, Inc. | (1,995) | (309,384) | ||||||
Lam Research Corp. | (357) | (212,501) | ||||||
Microchip Technology, Inc. | (5,794) | (899,345) | ||||||
Teradyne, Inc. | (17,861) | (2,173,326) | ||||||
(3,594,556) |
15
Shares/ Principal Amount | Value | |||||||
Specialty Retail — (1.7)% | ||||||||
Burlington Stores, Inc. | (660) | $ | (197,208) | |||||
Carvana Co. | (759) | (199,162) | ||||||
Signet Jewelers Ltd. | (3,798) | (220,208) | ||||||
Tractor Supply Co. | (1,431) | (253,401) | ||||||
(869,979) | ||||||||
Trading Companies and Distributors — (0.9)% | ||||||||
SiteOne Landscape Supply, Inc. | (2,589) | (442,046) | ||||||
TOTAL COMMON STOCKS SOLD SHORT (Proceeds $20,917,747) | (34,991,657) | |||||||
EXCHANGE-TRADED FUNDS SOLD SHORT — (7.2)% | ||||||||
Alerian MLP ETF | (6,420) | (195,810) | ||||||
ARK Innovation ETF | (1,290) | (154,735) | ||||||
iShares Russell 1000 Growth ETF | (10,098) | (2,454,218) | ||||||
Utilities Select Sector SPDR Fund | (13,255) | (848,850) | ||||||
TOTAL EXCHANGE-TRADED FUNDS SOLD SHORT (Proceeds $2,492,086) | (3,653,613) | |||||||
TOTAL SECURITIES SOLD SHORT— (76.4)% (Proceeds $23,409,833) | (38,645,270) | |||||||
OTHER ASSETS AND LIABILITIES(3) — 77.9% | 39,397,577 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 50,587,958 |
16
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 1,204 | USD | 968 | Morgan Stanley | 6/30/21 | $ | (10) | |||||||||||||
CAD | 243 | USD | 196 | Morgan Stanley | 6/30/21 | (2) | ||||||||||||||
CAD | 60 | USD | 48 | Morgan Stanley | 6/30/21 | — | ||||||||||||||
CAD | 1,173 | USD | 939 | Morgan Stanley | 6/30/21 | (5) | ||||||||||||||
CAD | 268 | USD | 212 | Morgan Stanley | 6/30/21 | 1 | ||||||||||||||
CAD | 6,537 | USD | 5,192 | Morgan Stanley | 6/30/21 | 11 | ||||||||||||||
USD | 5,310 | CAD | 6,641 | Morgan Stanley | 6/30/21 | 25 | ||||||||||||||
USD | 861 | CAD | 1,081 | Morgan Stanley | 6/30/21 | — | ||||||||||||||
USD | 609 | CAD | 766 | Morgan Stanley | 6/30/21 | (1) | ||||||||||||||
USD | 371 | CAD | 466 | Morgan Stanley | 6/30/21 | — | ||||||||||||||
USD | 29 | CAD | 37 | Morgan Stanley | 6/30/21 | — | ||||||||||||||
USD | 384 | CAD | 484 | Morgan Stanley | 6/30/21 | (1) | ||||||||||||||
USD | 498,415 | CHF | 462,524 | Morgan Stanley | 6/30/21 | 7,904 | ||||||||||||||
EUR | 81,193 | USD | 96,905 | Credit Suisse AG | 6/30/21 | (1,518) | ||||||||||||||
EUR | 19,502 | USD | 23,102 | Credit Suisse AG | 6/30/21 | (191) | ||||||||||||||
EUR | 1,608 | USD | 1,896 | Credit Suisse AG | 6/30/21 | (7) | ||||||||||||||
USD | 704,780 | EUR | 589,656 | Credit Suisse AG | 6/30/21 | 12,038 | ||||||||||||||
USD | 50,433 | EUR | 42,159 | Credit Suisse AG | 6/30/21 | 904 | ||||||||||||||
USD | 17,109 | EUR | 14,518 | Credit Suisse AG | 6/30/21 | 53 | ||||||||||||||
USD | 21,003 | EUR | 17,887 | Credit Suisse AG | 6/30/21 | (10) | ||||||||||||||
GBP | 7,707 | USD | 10,688 | JPMorgan Chase Bank N.A. | 6/30/21 | (61) | ||||||||||||||
GBP | 6,679 | USD | 9,207 | JPMorgan Chase Bank N.A. | 6/30/21 | 3 | ||||||||||||||
USD | 8,757 | GBP | 6,289 | JPMorgan Chase Bank N.A. | 6/30/21 | 85 | ||||||||||||||
USD | 270,902 | GBP | 194,425 | JPMorgan Chase Bank N.A. | 6/30/21 | 2,796 | ||||||||||||||
USD | 14,154 | GBP | 10,322 | JPMorgan Chase Bank N.A. | 6/30/21 | (80) | ||||||||||||||
USD | 7,471 | GBP | 5,438 | JPMorgan Chase Bank N.A. | 6/30/21 | (28) | ||||||||||||||
USD | 8,215 | GBP | 5,986 | JPMorgan Chase Bank N.A. | 6/30/21 | (40) | ||||||||||||||
USD | 17,066 | GBP | 12,368 | JPMorgan Chase Bank N.A. | 6/30/21 | 11 | ||||||||||||||
JPY | 17,426,700 | USD | 160,038 | Bank of America N.A. | 6/30/21 | (2,516) | ||||||||||||||
JPY | 499,800 | USD | 4,557 | Bank of America N.A. | 6/30/21 | (39) | ||||||||||||||
JPY | 465,800 | USD | 4,227 | Bank of America N.A. | 6/30/21 | (17) | ||||||||||||||
USD | 16,523 | JPY | 1,800,300 | Bank of America N.A. | 6/30/21 | 250 | ||||||||||||||
USD | 4,762 | JPY | 516,800 | Bank of America N.A. | 6/30/21 | 90 | ||||||||||||||
USD | 4,000 | JPY | 435,200 | Bank of America N.A. | 6/30/21 | 66 | ||||||||||||||
USD | 3,493 | JPY | 380,800 | Bank of America N.A. | 6/30/21 | 51 | ||||||||||||||
SEK | 1,430,977 | USD | 169,144 | UBS AG | 6/30/21 | (5,163) | ||||||||||||||
SEK | 34,833 | USD | 4,098 | UBS AG | 6/30/21 | (106) | ||||||||||||||
SEK | 83,469 | USD | 9,731 | UBS AG | 6/30/21 | (166) | ||||||||||||||
SEK | 110,939 | USD | 12,768 | UBS AG | 6/30/21 | (55) | ||||||||||||||
USD | 9,375 | SEK | 79,831 | UBS AG | 6/30/21 | 227 | ||||||||||||||
USD | 20,058 | SEK | 172,412 | UBS AG | 6/30/21 | 300 | ||||||||||||||
USD | 4,294 | SEK | 37,188 | UBS AG | 6/30/21 | 33 | ||||||||||||||
USD | 7,794 | SEK | 68,100 | UBS AG | 6/30/21 | (10) | ||||||||||||||
USD | 5,262 | SEK | 45,806 | UBS AG | 6/30/21 | 13 | ||||||||||||||
$ | 14,835 |
17
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
CAD | - | Canadian Dollar | ||||||
CHF | - | Swiss Franc | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
JPY | - | Japanese Yen | ||||||
SEK | - | Swedish Krona | ||||||
USD | - | United States Dollar |
(1)Non-income producing.
(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 $8,665,294.
(3)Amount relates primarily to deposits for securities sold short at period end.
See Notes to Financial Statements.
18
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities, at value (cost of $35,895,049) | $ | 49,835,651 | |||
Deposits for securities sold short | 39,599,212 | ||||
Receivable for investments sold | 86,252 | ||||
Receivable for capital shares sold | 30,077 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 24,861 | ||||
Dividends and interest receivable | 83,404 | ||||
89,659,457 | |||||
Liabilities | |||||
Securities sold short, at value (proceeds of $23,409,833) | 38,645,270 | ||||
Disbursements in excess of demand deposit cash | 9,048 | ||||
Payable for investments purchased | 107,845 | ||||
Payable for capital shares redeemed | 183,205 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 10,026 | ||||
Accrued management fees | 64,546 | ||||
Distribution and service fees payable | 1,896 | ||||
Dividend expense payable on securities sold short | 36,056 | ||||
Fees and charges payable on borrowings for securities sold short | 13,607 | ||||
39,071,499 | |||||
Net Assets | $ | 50,587,958 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 97,964,124 | |||
Distributable earnings | (47,376,166) | ||||
$ | 50,587,958 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $7,507,043 | 845,295 | $8.88 | ||||||||
I Class, $0.01 Par Value | $40,396,125 | 4,469,536 | $9.04 | ||||||||
A Class, $0.01 Par Value | $761,001 | 87,414 | $8.71* | ||||||||
C Class, $0.01 Par Value | $1,746,480 | 216,109 | $8.08 | ||||||||
R Class, $0.01 Par Value | $177,309 | 20,856 | $8.50 |
*Maximum offering price $9.24 (net asset value divided by 0.9425).
See Notes to Financial Statements.
19
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $14,365) | $ | 986,635 | |||
Interest | 48,629 | ||||
1,035,264 | |||||
Expenses: | |||||
Dividend expense on securities sold short | 1,043,759 | ||||
Fees and charges on borrowings for securities sold short | 201,940 | ||||
Management fees | 887,532 | ||||
Distribution and service fees: | |||||
A Class | 4,473 | ||||
C Class | 28,204 | ||||
R Class | 895 | ||||
Directors' fees and expenses | 1,824 | ||||
Other expenses | 9,105 | ||||
2,177,732 | |||||
Net investment income (loss) | (1,142,468) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 15,783,628 | ||||
Securities sold short transactions | (15,102,961) | ||||
Forward foreign currency exchange contract transactions | (101,818) | ||||
Foreign currency translation transactions | 63 | ||||
578,912 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 13,587,200 | ||||
Securities sold short | (17,159,823) | ||||
Forward foreign currency exchange contracts | 20,169 | ||||
Translation of assets and liabilities in foreign currencies | 1,931 | ||||
(3,550,523) | |||||
Net realized and unrealized gain (loss) | (2,971,611) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (4,114,079) |
See Notes to Financial Statements.
20
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (1,142,468) | $ | 205,309 | ||||
Net realized gain (loss) | 578,912 | (16,491,153) | ||||||
Change in net unrealized appreciation (depreciation) | (3,550,523) | 19,624,781 | ||||||
Net increase (decrease) in net assets resulting from operations | (4,114,079) | 3,338,937 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (23,722) | (130,637) | ||||||
I Class | (207,288) | (443,124) | ||||||
A Class | (366) | (10,199) | ||||||
R Class | — | (102) | ||||||
Decrease in net assets from distributions | (231,376) | (584,062) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (20,758,122) | (204,267,713) | ||||||
Net increase (decrease) in net assets | (25,103,577) | (201,512,838) | ||||||
Net Assets | ||||||||
Beginning of period | 75,691,535 | 277,204,373 | ||||||
End of period | $ | 50,587,958 | $ | 75,691,535 | ||||
See Notes to Financial Statements.
21
Notes to Financial Statements |
MARCH 31, 2021
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 Market Neutral Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth, independent of equity market conditions.
The fund offers the Investor Class, I Class, A Class, C Class and R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
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 (NAV) per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities 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 and convertible bonds 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.
Hybrid 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. Preferred stocks and convertible preferred stocks with perpetual maturities 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.
Open-end management investment companies are valued at the reported NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
22
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 NAV 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. 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, if any, 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 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. 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 investment securities and other financial instruments. American Century Investment Management, Inc. (ACIM) (the investment advisor) monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
23
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.
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 ACIM will pay all expenses of managing and operating the fund, except expenses on securities sold short, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder 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 annual management fee for each class is as follows:
Investor Class | I Class | A Class | C Class | R Class | ||||||||||
1.65% | 1.45% | 1.65% | 1.65% | 1.65% |
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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 period ended March 31, 2021 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.
Other Expenses — The fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, filing fees for foreign tax reclaims and other miscellaneous expenses. The impact of other expenses to the ratio of operating expenses to average net assets was 0.02% for the period ended March 31, 2021.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $185,827 and $759,021, respectively. The effect of interfund transactions on the Statement of Operations was $37,537 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities and securities sold short, excluding short-term investments, for the period ended March 31, 2021 were $149,810,448 and $146,249,755, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2021 | Year ended March 31, 2020 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 80,000,000 | 100,000,000 | ||||||||||||
Sold | 249,059 | $ | 2,284,342 | 321,330 | $ | 3,047,343 | ||||||||
Issued in reinvestment of distributions | 2,606 | 23,476 | 13,739 | 130,105 | ||||||||||
Redeemed | (639,488) | (5,843,159) | (6,921,253) | (65,546,953) | ||||||||||
(387,823) | (3,535,341) | (6,586,184) | (62,369,505) | |||||||||||
I Class/Shares Authorized | 80,000,000 | 120,000,000 | ||||||||||||
Sold | 2,865,984 | 26,725,355 | 7,043,479 | 68,117,462 | ||||||||||
Issued in reinvestment of distributions | 22,594 | 207,187 | 43,691 | 420,744 | ||||||||||
Redeemed | (4,322,747) | (40,550,020) | (20,814,474) | (202,447,815) | ||||||||||
(1,434,169) | (13,617,478) | (13,727,304) | (133,909,609) | |||||||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 44,856 | 398,075 | 53,781 | 499,901 | ||||||||||
Issued in reinvestment of distributions | 41 | 366 | 1,097 | 10,191 | ||||||||||
Redeemed | (206,377) | (1,825,909) | (229,997) | (2,138,082) | ||||||||||
(161,480) | (1,427,468) | (175,119) | (1,627,990) | |||||||||||
C Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||||||
Sold | 21,045 | 175,697 | 58,928 | 512,711 | ||||||||||
Redeemed | (286,428) | (2,397,931) | (802,602) | (6,978,211) | ||||||||||
(265,383) | (2,222,234) | (743,674) | (6,465,500) | |||||||||||
R Class/Shares Authorized | 25,000,000 | 20,000,000 | ||||||||||||
Sold | 21,883 | 192,879 | 14,041 | 128,307 | ||||||||||
Issued in reinvestment of distributions | — | — | 11 | 102 | ||||||||||
Redeemed | (16,960) | (148,480) | (2,571) | (23,518) | ||||||||||
4,923 | 44,399 | 11,481 | 104,891 | |||||||||||
Net increase (decrease) | (2,243,932) | $ | (20,758,122) | (21,220,800) | $ | (204,267,713) |
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.
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The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | |||||||||||
Automobiles | $ | 288,794 | $ | 385,380 | — | ||||||
Banks | 875,585 | 121,763 | — | ||||||||
Beverages | 160,829 | 328,297 | — | ||||||||
Chemicals | 246,709 | 245,187 | — | ||||||||
Food and Staples Retailing | 868,630 | 258,068 | — | ||||||||
Machinery | 780,484 | 2,494,560 | — | ||||||||
Oil, Gas and Consumable Fuels | 2,920,570 | 120,339 | — | ||||||||
Paper and Forest Products | — | 152,672 | — | ||||||||
Other Industries | 19,619,330 | — | — | ||||||||
Convertible Bonds | — | 6,062,664 | — | ||||||||
Exchange-Traded Funds | 3,331,616 | — | — | ||||||||
Convertible Preferred Stocks | — | 136,095 | — | ||||||||
Temporary Cash Investments | 2,398,040 | 8,040,039 | — | ||||||||
$ | 31,490,587 | $ | 18,345,064 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 24,861 | — | |||||||
Liabilities | |||||||||||
Securities Sold Short | |||||||||||
Common Stocks | |||||||||||
Automobiles | $ | 2,271,561 | $ | 385,993 | — | ||||||
Banks | 883,569 | 122,209 | — | ||||||||
Beverages | — | 327,513 | — | ||||||||
Building Products | 453,337 | 161,982 | — | ||||||||
Machinery | 1,187,331 | 2,669,266 | — | ||||||||
Paper and Forest Products | — | 154,908 | — | ||||||||
Pharmaceuticals | 749,294 | 238,397 | — | ||||||||
Other Industries | 25,386,297 | — | — | ||||||||
Exchange-Traded Funds | 3,653,613 | — | — | ||||||||
$ | 34,585,002 | $ | 4,060,268 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 10,026 | — |
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7.Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $4,731,317.
The value of foreign currency risk derivative instruments as of March 31, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $24,861 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $10,026 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(101,818) in net realized gain (loss) on forward foreign currency exchange contract transactions and $20,169 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the companies whose securities it owns in its long portfolio, or in which the fund has taken a short position as well as other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
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.
The fund is subject to short sales risk. 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.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
9. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 231,376 | $ | 584,062 | ||||
Long-term capital gains | — | — |
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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.
The reclassifications, which are primarily due to net operating losses, were made to capital $(751,530) and distributable earnings $751,530.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 37,004,975 | |||
Gross tax appreciation of investments | $ | 12,884,950 | |||
Gross tax depreciation of investments | (54,274) | ||||
Net tax appreciation (depreciation) of investments | 12,830,676 | ||||
Gross tax appreciation on securities sold short | — | ||||
Gross tax depreciation on securities sold short | (15,660,805) | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 1,585 | ||||
Net tax appreciation (depreciation) | $ | (2,828,544) | |||
Other book-to-tax adjustments | $ | (5,018,489) | |||
Undistributed ordinary income | — | ||||
Accumulated short-term capital losses | $ | (39,283,282) | |||
Late-year ordinary loss deferral | $ | (245,851) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Other book-to-tax adjustments are attributable primarily to the tax deferral of losses on straddle positions.
Accumulated capital losses 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.
Loss deferrals represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
29
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 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) | Operating Expenses (excluding expenses on securities sold short) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | $9.53 | (0.19) | (0.44) | (0.63) | (0.02) | — | (0.02) | $8.88 | (6.57)% | 3.77% | 3.77% | 1.67% | (2.03)% | (2.03)% | 299% | $7,507 | ||||||||||||||||||||||||||||||||||
2020 | $9.45 | —(3) | 0.14 | 0.14 | (0.06) | — | (0.06) | $9.53 | 1.52% | 3.47% | 3.47% | 1.66% | 0.04% | 0.04% | 580% | $11,753 | ||||||||||||||||||||||||||||||||||
2019 | $10.27 | 0.02 | (0.33) | (0.31) | — | (0.51) | (0.51) | $9.45 | (3.04)% | 3.48% | 3.58% | 1.66% | 0.26% | 0.16% | 324% | $73,871 | ||||||||||||||||||||||||||||||||||
2018 | $10.76 | (0.12) | (0.13) | (0.25) | — | (0.24) | (0.24) | $10.27 | (2.36)% | 3.82% | 4.07% | 1.66% | (1.10)% | (1.35)% | 307% | $232,629 | ||||||||||||||||||||||||||||||||||
2017 | $10.73 | (0.18) | 0.49 | 0.31 | — | (0.28) | (0.28) | $10.76 | 2.97% | 3.68% | 3.94% | 1.64% | (1.65)% | (1.91)% | 374% | $419,925 | ||||||||||||||||||||||||||||||||||
I Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | $9.70 | (0.17) | (0.45) | (0.62) | (0.04) | — | (0.04) | $9.04 | (6.37)% | 3.57% | 3.57% | 1.47% | (1.83)% | (1.83)% | 299% | $40,396 | ||||||||||||||||||||||||||||||||||
2020 | $9.61 | 0.02 | 0.15 | 0.17 | (0.08) | — | (0.08) | $9.70 | 1.80% | 3.27% | 3.27% | 1.46% | 0.24% | 0.24% | 580% | $57,261 | ||||||||||||||||||||||||||||||||||
2019 | $10.42 | 0.05 | (0.35) | (0.30) | — | (0.51) | (0.51) | $9.61 | (2.90)% | 3.28% | 3.38% | 1.46% | 0.46% | 0.36% | 324% | $188,718 | ||||||||||||||||||||||||||||||||||
2018 | $10.89 | (0.09) | (0.14) | (0.23) | — | (0.24) | (0.24) | $10.42 | (2.15)% | 3.62% | 3.87% | 1.46% | (0.90)% | (1.15)% | 307% | $261,906 | ||||||||||||||||||||||||||||||||||
2017 | $10.83 | (0.16) | 0.50 | 0.34 | — | (0.28) | (0.28) | $10.89 | 3.23% | 3.48% | 3.74% | 1.44% | (1.45)% | (1.71)% | 374% | $184,717 | ||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | $9.34 | (0.21) | (0.42) | (0.63) | —(3) | — | —(3) | $8.71 | (6.72)% | 4.02% | 4.02% | 1.92% | (2.28)% | (2.28)% | 299% | $761 | ||||||||||||||||||||||||||||||||||
2020 | $9.26 | (0.04) | 0.16 | 0.12 | (0.04) | — | (0.04) | $9.34 | 1.29% | 3.72% | 3.72% | 1.91% | (0.21)% | (0.21)% | 580% | $2,325 | ||||||||||||||||||||||||||||||||||
2019 | $10.10 | (0.01) | (0.32) | (0.33) | — | (0.51) | (0.51) | $9.26 | (3.29)% | 3.73% | 3.83% | 1.91% | 0.01% | (0.09)% | 324% | $3,926 | ||||||||||||||||||||||||||||||||||
2018 | $10.61 | (0.15) | (0.12) | (0.27) | — | (0.24) | (0.24) | $10.10 | (2.58)% | 4.07% | 4.32% | 1.91% | (1.35)% | (1.60)% | 307% | $12,055 | ||||||||||||||||||||||||||||||||||
2017 | $10.61 | (0.20) | 0.48 | 0.28 | — | (0.28) | (0.28) | $10.61 | 2.72% | 3.93% | 4.19% | 1.89% | (1.90)% | (2.16)% | 374% | $106,662 |
For a Share Outstanding Throughout the Years Ended March 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) | Operating Expenses (excluding expenses on securities sold short) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | $8.74 | (0.25) | (0.41) | (0.66) | — | — | — | $8.08 | (7.55)% | 4.77% | 4.77% | 2.67% | (3.03)% | (3.03)% | 299% | $1,746 | ||||||||||||||||||||||||||||||||||
2020 | $8.69 | (0.09) | 0.14 | 0.05 | — | — | — | $8.74 | 0.58% | 4.47% | 4.47% | 2.66% | (0.96)% | (0.96)% | 580% | $4,206 | ||||||||||||||||||||||||||||||||||
2019 | $9.58 | (0.07) | (0.31) | (0.38) | — | (0.51) | (0.51) | $8.69 | (4.00)% | 4.48% | 4.58% | 2.66% | (0.74)% | (0.84)% | 324% | $10,648 | ||||||||||||||||||||||||||||||||||
2018 | $10.16 | (0.21) | (0.13) | (0.34) | — | (0.24) | (0.24) | $9.58 | (3.39)% | 4.82% | 5.07% | 2.66% | (2.10)% | (2.35)% | 307% | $22,629 | ||||||||||||||||||||||||||||||||||
2017 | $10.24 | (0.27) | 0.47 | 0.20 | — | (0.28) | (0.28) | $10.16 | 2.03% | 4.68% | 4.94% | 2.64% | (2.65)% | (2.91)% | 374% | $34,958 | ||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | $9.15 | (0.22) | (0.43) | (0.65) | — | — | — | $8.50 | (7.10)% | 4.27% | 4.27% | 2.17% | (2.53)% | (2.53)% | 299% | $177 | ||||||||||||||||||||||||||||||||||
2020 | $9.07 | (0.08) | 0.18 | 0.10 | (0.02) | — | (0.02) | $9.15 | 1.06% | 3.97% | 3.97% | 2.16% | (0.46)% | (0.46)% | 580% | $146 | ||||||||||||||||||||||||||||||||||
2019 | $9.92 | (0.03) | (0.31) | (0.34) | — | (0.51) | (0.51) | $9.07 | (3.45)% | 3.98% | 4.08% | 2.16% | (0.24)% | (0.34)% | 324% | $40 | ||||||||||||||||||||||||||||||||||
2018 | $10.46 | (0.16) | (0.14) | (0.30) | — | (0.24) | (0.24) | $9.92 | (2.91)% | 4.32% | 4.57% | 2.16% | (1.60)% | (1.85)% | 307% | $79 | ||||||||||||||||||||||||||||||||||
2017 | $10.49 | (0.22) | 0.47 | 0.25 | — | (0.28) | (0.28) | $10.46 | 2.47% | 4.18% | 4.44% | 2.14% | (2.15)% | (2.41)% | 374% | $123 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)Per-share amount was less than $0.005.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of AC Alternatives® Market Neutral Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of AC Alternatives® Market Neutral Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
32
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
33
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
34
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
35
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
36
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
37
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $231,376, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
38
Notes |
39
Notes |
40
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications 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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92270 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
Equity Income Fund | |||||
Investor Class (TWEIX) | |||||
I Class (ACIIX) | |||||
Y Class (AEIYX) | |||||
A Class (TWEAX) | |||||
C Class (AEYIX) | |||||
R Class (AEURX) | |||||
R5 Class (AEIUX) | |||||
R6 Class (AEUDX) | |||||
G Class (AEIMX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image231.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image231.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2021. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Stocks Soared, Bonds Moderated Amid Growing Economic Optimism
March 31 marked the end of a remarkable 12-month period, as the COVID-19 pandemic wreaked havoc on global economies, governments and society. In response, states issued unprecedented lockdown orders. Unemployment surged, corporate earnings plunged and second-quarter-2020 gross domestic product sank a record 31.4% (annualized). This triggered soaring demand for safe-haven assets.
Swift and significant action from the Federal Reserve and the federal government helped reignite investor confidence and bolster the economic backdrop. Riskier assets quickly rebounded from their early 2020 lows. The economy expanded a record 33.4% in the third quarter and continued to grow amid the gradual lifting of lockdowns and the emergency approval of vaccines.
Late in the reporting period, improving vaccine distributions, additional federal coronavirus aid and ongoing reopenings bolstered the economic and earnings outlooks. This improving backdrop combined with massive monetary and fiscal support helped fuel a 12-month gain of 56% for the S&P 500 Index. These same economic dynamics lifted longer-term inflation expectations and U.S. Treasury yields, pressuring investment-grade bond returns. After rallying through most of 2020, the Bloomberg Barclays U.S. Aggregate Bond Index gained less than 1% for the 12-month period.
A Return to Normalcy in Sight
The return to pre-pandemic life appears to be on the horizon, thanks largely to expanding vaccine availability. In addition, medical professionals continue to improve treatment protocols for those afflicted with the virus. Until the U.S. is fully reopened, investors still may face the effects of regional virus-related restrictions, economic and political uncertainty and heightened market volatility. These influences can be unsettling, but they tend to be temporary.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image161.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image161.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWEIX | 35.30% | 9.99% | 9.92% | — | 8/1/94 | ||||||||||||||
Russell 3000 Value Index | — | 58.38% | 11.86% | 10.90% | — | — | ||||||||||||||
S&P 500 Index | — | 56.35% | 16.28% | 13.90% | — | — | ||||||||||||||
I Class | ACIIX | 35.67% | 10.22% | 10.14% | — | 7/8/98 | ||||||||||||||
Y Class | AEIYX | 35.83% | — | — | 8.68% | 4/10/17 | ||||||||||||||
A Class | TWEAX | 3/7/97 | ||||||||||||||||||
No sales charge | 34.95% | 9.72% | 9.64% | — | ||||||||||||||||
With sales charge | 27.11% | 8.43% | 9.00% | — | ||||||||||||||||
C Class | AEYIX | 33.90% | 8.90% | 8.82% | — | 7/13/01 | ||||||||||||||
R Class | AEURX | 34.60% | 9.43% | 9.36% | — | 8/29/03 | ||||||||||||||
R5 Class | AEIUX | 35.72% | — | — | 8.51% | 4/10/17 | ||||||||||||||
R6 Class | AEUDX | 35.68% | 10.38% | — | 9.82% | 7/26/13 | ||||||||||||||
G Class | AEIMX | 36.61% | — | — | 9.14% | 8/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available.
G Class returns would have been lower if a portion of the fees had not been waived. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-1fafbbc4a92d47199111a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-1fafbbc4a92d47199111a.jpg)
Value on March 31, 2021 | |||||
Investor Class — $25,759 | |||||
Russell 3000 Value Index — $28,155 | |||||
S&P 500 Index — $36,788 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
0.92% | 0.72% | 0.57% | 1.17% | 1.92% | 1.42% | 0.72% | 0.57% | 0.57% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Phil Davidson, Kevin Toney, Michael Liss and Brian Woglom
Performance Summary
Equity Income returned 35.30%* for the fiscal year ended March 31, 2021, underperforming the Russell 3000 Value Index, which returned 58.38%. The fund’s return reflects operating expenses, while the index’s return does not.
The financials sector detracted from performance relative to the benchmark due to security selection. Security selection and an overweight in consumer staples also hampered performance. Security selection in information technology contributed. An underweight allocation in the real estate sector also benefited performance.
Stock Selection in Financials and Consumer Staples Detracted
Our conservative security selection in financials led to significant relative underperformance in the sector. Specifically, our exposure to fixed-to-floating preferred stocks within the banking industry, including JPMorgan Chase & Co. and U.S. Bancorp, and an underweight to the common stocks of mega-cap banks were notable detractors.
Security selection and an overweight to the consumer staples sector detracted from relative performance, particularly in the food products industry. We believe some investors reduced their expectations for consumer staples companies in a post-pandemic environment, in favor of stocks likely to benefit more from economic reopening. Nestle underperformed along with many other consumer staples stocks. On the heels of positive vaccine news, the market rotated away from more defensive names like this food and beverage company, which had outperformed earlier in 2020.
Elsewhere, Roche Holding was a significant detractor. The pharmaceutical company weighed on performance after it provided guidance for its 2021 fiscal year that was more conservative than anticipated. Some investors also had concerns regarding the company’s future growth. Additionally, the pharmaceuticals industry was pressured by concerns over possible drug pricing reform.
Information Technology and Real Estate Contributed
Stock selection in the information technology sector, in the semiconductors and semiconductor equipment industry in particular, supported performance. Texas Instruments, the largest analog supplier in the world, was a key contributor. Our avoidance of several benchmark names in the IT services industry also contributed. Our limited exposure to companies in the real estate sector was another contributor to relative performance.
Emerson Electric was a notable contributor. This higher-quality industrial company continued to execute on its restructuring actions, driving market expansion through the economic downturn. Additionally, Emerson’s disciplined capital allocation supported free cash flow growth and a dividend increase.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation and relative yield does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
At the end of the period, consumer staples, utilities and health care were other large overweights relative to the benchmark. We held significant underweights in consumer discretionary, communication services and industrials.
We maintain a significant exposure to consumer staples as we believe companies in the sector generally offer defensive characteristics and are well-suited for our portfolio. We value those companies with relatively strong balance sheets, growing dividend streams and access to large numbers of consumers. We use temporary weakness in consumer staples stocks to build positions in higher-quality companies.
We also had a notable exposure to utilities at the end of the period. Companies in the sector provide essential services and consequently are viewed as stable and reliable dividend-paying investments through economic turmoil. There are also value opportunities in health care, where we are finding quality companies with attractive risk/reward profiles, particularly in the pharmaceuticals and health care equipment and supplies industries.
We also maintain a significant absolute weight in the financials sector and have identified many higher-quality companies that fit our process. Within the banking industry, we have exposure to banks via a mix of fixed-to-floating preferred stocks and common stock holdings. We also hold select positions in capital markets and insurance industries.
6
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Johnson & Johnson | 4.9% | ||||
Medtronic plc | 4.3% | ||||
Verizon Communications, Inc. | 2.9% | ||||
Emerson Electric Co. | 2.7% | ||||
Walmart, Inc. | 2.7% | ||||
Roche Holding AG | 2.7% | ||||
iShares Russell 1000 Value ETF | 2.5% | ||||
Colgate-Palmolive Co. | 2.3% | ||||
Marsh & McLennan Cos., Inc. | 2.1% | ||||
ONE Gas, Inc. | 2.0% | ||||
Top Five Industries | % of net assets | ||||
Banks | 9.3% | ||||
Pharmaceuticals | 8.1% | ||||
Capital Markets | 6.3% | ||||
Health Care Equipment and Supplies | 6.3% | ||||
Gas Utilities | 5.3% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 70.2% | ||||
Foreign Common Stocks* | 9.8% | ||||
Preferred Stocks | 9.2% | ||||
Convertible Bonds | 3.5% | ||||
Exchange-Traded Funds | 2.5% | ||||
Convertible Preferred Stocks | 1.5% | ||||
Total Equity Exposure | 96.7% | ||||
Corporate Bonds | 0.2% | ||||
Temporary Cash Investments | 3.3% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.1% | ||||
Other Assets and Liabilities | (0.3)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2020 to March 31, 2021.
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 I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,160.90 | $4.90 | 0.91% | ||||||||||
I Class | $1,000 | $1,161.70 | $3.83 | 0.71% | ||||||||||
Y Class | $1,000 | $1,163.80 | $3.02 | 0.56% | ||||||||||
A Class | $1,000 | $1,159.40 | $6.25 | 1.16% | ||||||||||
C Class | $1,000 | $1,155.10 | $10.26 | 1.91% | ||||||||||
R Class | $1,000 | $1,157.40 | $7.58 | 1.41% | ||||||||||
R5 Class | $1,000 | $1,161.90 | $3.83 | 0.71% | ||||||||||
R6 Class | $1,000 | $1,162.50 | $3.02 | 0.56% | ||||||||||
G Class | $1,000 | $1,165.60 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.39 | $4.58 | 0.91% | ||||||||||
I Class | $1,000 | $1,021.39 | $3.58 | 0.71% | ||||||||||
Y Class | $1,000 | $1,022.14 | $2.82 | 0.56% | ||||||||||
A Class | $1,000 | $1,019.15 | $5.84 | 1.16% | ||||||||||
C Class | $1,000 | $1,015.41 | $9.60 | 1.91% | ||||||||||
R Class | $1,000 | $1,017.90 | $7.09 | 1.41% | ||||||||||
R5 Class | $1,000 | $1,021.39 | $3.58 | 0.71% | ||||||||||
R6 Class | $1,000 | $1,022.14 | $2.82 | 0.56% | ||||||||||
G Class | $1,000 | $1,024.93 | $0.00 | 0.00%(2) |
(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 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
(2)Other expenses, which include directors' fees and expenses, did not exceed 0.005%.
9
Schedule of Investments |
MARCH 31, 2021
Shares/ Principal Amount | Value | |||||||
COMMON STOCKS — 80.0% | ||||||||
Aerospace and Defense — 0.9% | ||||||||
Raytheon Technologies Corp. | 1,399,840 | $ | 108,165,637 | |||||
Air Freight and Logistics — 0.8% | ||||||||
United Parcel Service, Inc., Class B | 590,107 | 100,312,289 | ||||||
Automobiles — 0.5% | ||||||||
Toyota Motor Corp. | 799,700 | 62,478,212 | ||||||
Banks — 2.5% | ||||||||
Commerce Bancshares, Inc. | 555,700 | 42,572,177 | ||||||
JPMorgan Chase & Co. | 1,196,891 | 182,202,717 | ||||||
PNC Financial Services Group, Inc. (The) | 395,874 | 69,440,258 | ||||||
294,215,152 | ||||||||
Beverages — 1.8% | ||||||||
PepsiCo, Inc. | 1,497,406 | 211,808,079 | ||||||
Capital Markets — 4.8% | ||||||||
Ameriprise Financial, Inc. | 399,686 | 92,907,011 | ||||||
Bank of New York Mellon Corp. (The) | 3,798,548 | 179,633,335 | ||||||
BlackRock, Inc. | 72,319 | 54,525,633 | ||||||
Charles Schwab Corp. (The) | 699,233 | 45,576,007 | ||||||
Janus Henderson Group plc | 689,058 | 21,464,157 | ||||||
Northern Trust Corp. | 1,299,985 | 136,641,423 | ||||||
T. Rowe Price Group, Inc. | 297,430 | 51,038,988 | ||||||
581,786,554 | ||||||||
Chemicals — 2.8% | ||||||||
Akzo Nobel NV | 989,437 | 110,572,843 | ||||||
Linde plc | 798,900 | 223,803,846 | ||||||
334,376,689 | ||||||||
Commercial Services and Supplies — 0.7% | ||||||||
Republic Services, Inc. | 799,752 | 79,455,361 | ||||||
Communications Equipment — 1.7% | ||||||||
Cisco Systems, Inc. | 3,997,553 | 206,713,466 | ||||||
Construction Materials — 0.3% | ||||||||
Martin Marietta Materials, Inc. | 94,610 | 31,771,930 | ||||||
Containers and Packaging — 0.7% | ||||||||
Packaging Corp. of America | 596,826 | 80,261,160 | ||||||
Diversified Telecommunication Services — 2.9% | ||||||||
Verizon Communications, Inc. | 5,998,590 | 348,818,008 | ||||||
Electric Utilities — 2.3% | ||||||||
Duke Energy Corp. | 699,007 | 67,475,145 | ||||||
Evergy, Inc. | 1,996,881 | 118,874,326 | ||||||
Eversource Energy | 1,012,737 | 87,692,897 | ||||||
274,042,368 | ||||||||
Electrical Equipment — 4.4% | ||||||||
ABB Ltd. | 799,618 | 24,320,129 | ||||||
Emerson Electric Co. | 3,655,309 | 329,781,978 | ||||||
Hubbell, Inc. | 909,936 | 170,057,939 | ||||||
524,160,046 |
10
Shares/ Principal Amount | Value | |||||||
Electronic Equipment, Instruments and Components — 0.7% | ||||||||
Corning, Inc. | 1,999,900 | $ | 87,015,649 | |||||
Equity Real Estate Investment Trusts (REITs) — 0.6% | ||||||||
American Tower Corp. | 99,900 | 23,882,094 | ||||||
Equinix, Inc. | 69,900 | 47,503,341 | ||||||
71,385,435 | ||||||||
Food and Staples Retailing — 3.6% | ||||||||
Koninklijke Ahold Delhaize NV | 3,849,620 | 107,227,501 | ||||||
Walmart, Inc. | 2,397,814 | 325,695,075 | ||||||
432,922,576 | ||||||||
Food Products — 3.7% | ||||||||
Hershey Co. (The) | 598,685 | 94,688,019 | ||||||
Mondelez International, Inc., Class A | 2,698,892 | 157,966,149 | ||||||
Nestle SA | 1,699,715 | 189,442,289 | ||||||
442,096,457 | ||||||||
Gas Utilities — 5.3% | ||||||||
Atmos Energy Corp. | 2,198,684 | 217,339,913 | ||||||
ONE Gas, Inc.(1) | 3,099,217 | 238,360,780 | ||||||
Spire, Inc. | 2,496,021 | 184,430,992 | ||||||
640,131,685 | ||||||||
Health Care Equipment and Supplies — 5.3% | ||||||||
Becton Dickinson and Co. | 468,847 | 114,000,148 | ||||||
Medtronic plc | 4,399,993 | 519,771,173 | ||||||
633,771,321 | ||||||||
Health Care Providers and Services — 0.9% | ||||||||
Cigna Corp. | 99,900 | 24,149,826 | ||||||
Quest Diagnostics, Inc. | 698,970 | 89,705,810 | ||||||
113,855,636 | ||||||||
Health Care Technology — 0.6% | ||||||||
Cerner Corp. | 996,243 | 71,609,947 | ||||||
Household Products — 3.5% | ||||||||
Colgate-Palmolive Co. | 3,497,801 | 275,731,653 | ||||||
Kimberly-Clark Corp. | 198,844 | 27,649,258 | ||||||
Procter & Gamble Co. (The) | 895,682 | 121,302,213 | ||||||
424,683,124 | ||||||||
Insurance — 4.8% | ||||||||
Aflac, Inc. | 1,398,145 | 71,557,061 | ||||||
Allstate Corp. (The) | 497,900 | 57,208,710 | ||||||
Chubb Ltd. | 1,119,771 | 176,890,225 | ||||||
Hartford Financial Services Group, Inc. (The) | 299,800 | 20,023,642 | ||||||
Marsh & McLennan Cos., Inc. | 2,098,600 | 255,609,480 | ||||||
581,289,118 | ||||||||
IT Services — 1.5% | ||||||||
Automatic Data Processing, Inc. | 976,944 | 184,124,636 | ||||||
Machinery — 0.3% | ||||||||
PACCAR, Inc. | 398,816 | 37,057,983 | ||||||
Oil, Gas and Consumable Fuels — 4.2% | ||||||||
Chevron Corp. | 1,799,931 | 188,614,770 | ||||||
Enterprise Products Partners LP | 8,899,249 | 195,961,463 | ||||||
Shell Midstream Partners LP | 698,780 | 9,321,725 | ||||||
TOTAL SE | 2,398,341 | 111,699,862 | ||||||
505,597,820 |
11
Shares/ Principal Amount | Value | |||||||
Personal Products — 1.9% | ||||||||
Unilever plc | 3,999,912 | $ | 223,175,542 | |||||
Pharmaceuticals — 8.1% | ||||||||
Johnson & Johnson | 3,597,929 | 591,319,631 | ||||||
Merck & Co., Inc. | 497,700 | 38,367,693 | ||||||
Novartis AG | 199,600 | 17,050,393 | ||||||
Roche Holding AG | 999,784 | 323,169,738 | ||||||
969,907,455 | ||||||||
Road and Rail — 1.6% | ||||||||
Norfolk Southern Corp. | 694,804 | 186,568,770 | ||||||
Semiconductors and Semiconductor Equipment — 1.7% | ||||||||
Texas Instruments, Inc. | 1,063,580 | 201,005,984 | ||||||
Software — 3.7% | ||||||||
Microsoft Corp. | 999,627 | 235,682,058 | ||||||
Oracle Corp. (New York) | 2,998,000 | 210,369,660 | ||||||
446,051,718 | ||||||||
Thrifts and Mortgage Finance — 0.9% | ||||||||
Capitol Federal Financial, Inc.(1) | 7,987,872 | 105,799,365 | ||||||
TOTAL COMMON STOCKS (Cost $7,210,613,714) | 9,596,415,172 | |||||||
PREFERRED STOCKS — 9.2% | ||||||||
Banks — 6.4% | ||||||||
Bank of America Corp., 4.30% | 43,960,000 | 44,179,800 | ||||||
Bank of America Corp., 5.875% | 103,154,000 | 112,635,915 | ||||||
Citigroup, Inc., 5.95% | 68,696,000 | 72,095,982 | ||||||
JPMorgan Chase & Co., 3.68% | 82,975,000 | 83,019,605 | ||||||
JPMorgan Chase & Co., 4.60% | 89,842,000 | 90,965,025 | ||||||
JPMorgan Chase & Co., 5.00% | 162,725,000 | 168,345,224 | ||||||
U.S. Bancorp, 5.30% | 138,659,000 | 152,420,906 | ||||||
Wells Fargo & Co., 3.90% | 39,879,000 | 40,298,726 | ||||||
763,961,183 | ||||||||
Capital Markets — 1.1% | ||||||||
Bank of New York Mellon Corp. (The), 3.61% | 28,881,000 | 28,877,468 | ||||||
Bank of New York Mellon Corp. (The), 4.70% | 9,963,000 | 10,819,320 | ||||||
Charles Schwab Corp. (The), 4.00% | 39,959,000 | 40,650,291 | ||||||
Charles Schwab Corp. (The), 5.00% | 6,743,000 | 6,992,491 | ||||||
Charles Schwab Corp. (The), 5.375% | 34,629,000 | 38,340,190 | ||||||
125,679,760 | ||||||||
Electric Utilities — 0.9% | ||||||||
Duke Energy Corp., 4.875% | 103,810,000 | 109,934,790 | ||||||
Insurance — 0.2% | ||||||||
Progressive Corp. (The), 5.375% | 24,077,000 | 25,107,496 | ||||||
Multi-Utilities — 0.6% | ||||||||
Dominion Energy, Inc., 4.65% | 69,883,000 | 73,747,530 | ||||||
TOTAL PREFERRED STOCKS (Cost $1,052,801,599) | 1,098,430,759 | |||||||
CONVERTIBLE BONDS — 3.5% | ||||||||
Airlines — 0.1% | ||||||||
Southwest Airlines Co., 1.25%, 5/1/25 | $ | 9,195,000 | 15,832,641 | |||||
Capital Markets — 0.4% | ||||||||
Credit Suisse AG, (convertible into Charles Schwab Corp. (The)), 8.55%, 4/22/21(2)(3) | 498,270 | 20,187,375 |
12
Shares/ Principal Amount | Value | |||||||
Credit Suisse AG, (convertible into Charles Schwab Corp. (The)), 9.10%, 5/25/21(2)(3) | $ | 499,900 | $ | 25,260,717 | ||||
45,448,092 | ||||||||
Construction Materials — 0.3% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Martin Marietta Materials, Inc.), 10.87%, 4/9/21(2)(3) | 82,480 | 21,727,216 | ||||||
Merrill Lynch International & Co. CV, (convertible into Martin Marietta Materials, Inc.), 10.30%, 6/15/21(2)(3) | 50,000 | 13,660,120 | ||||||
35,387,336 | ||||||||
Diversified Financial Services — 1.7% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Berkshire Hathaway, Inc., Class B), 2.61%, 7/15/21(2)(3) | 117,000 | 27,823,299 | ||||||
Goldman Sachs International, (convertible into Berkshire Hathaway, Inc., Class B), 1.28%, 8/11/21(2)(3) | 98,900 | 23,636,902 | ||||||
JPMorgan Chase Bank N.A., (convertible into Berkshire Hathaway, Inc., Class B), 2.52%, 9/21/21(2)(3) | 99,900 | 25,365,806 | ||||||
Merrill Lynch International & Co. CV, (convertible into Berkshire Hathaway, Inc., Class B), 2.95%, 8/26/21(2)(3) | 169,500 | 41,840,302 | ||||||
Royal Bank of Canada, (convertible into Berkshire Hathaway, Inc., Class B), 2.50%, 4/13/21(2)(3) | 129,710 | 28,404,272 | ||||||
UBS AG, (convertible into Berkshire Hathaway, Inc., Class B), 2.60%, 5/5/21(2)(3) | 129,710 | 27,254,356 | ||||||
UBS AG, (convertible into Berkshire Hathaway, Inc., Class B), 0.55%, 10/4/21(2)(3) | 99,900 | 25,629,845 | ||||||
199,954,782 | ||||||||
Electrical Equipment — 0.2% | ||||||||
Merrill Lynch International & Co. CV, (convertible into Emerson Electric Co.), 8.00%, 6/18/21(2)(3) | 299,900 | 25,185,194 | ||||||
Oil, Gas and Consumable Fuels — 0.1% | ||||||||
Pioneer Natural Resources Co., 0.25%, 5/15/25(2) | 6,994,000 | 10,987,574 | ||||||
Road and Rail — 0.2% | ||||||||
Royal Bank of Canada, (convertible into Norfolk Southern Corp.), 4.35%, 5/21/21(2)(3) | 99,900 | 25,113,839 | ||||||
Semiconductors and Semiconductor Equipment — 0.5% | ||||||||
Microchip Technology, Inc., 0.125%, 11/15/24 | 49,988,000 | 59,329,507 | ||||||
TOTAL CONVERTIBLE BONDS (Cost $392,215,466) | 417,238,965 | |||||||
EXCHANGE-TRADED FUNDS — 2.5% | ||||||||
iShares Russell 1000 Value ETF (Cost $202,582,900) | 1,999,089 | 302,961,938 | ||||||
CONVERTIBLE PREFERRED STOCKS — 1.5% | ||||||||
Auto Components — 0.1% | ||||||||
Aptiv plc, 5.50%, 6/15/23 | 67,946 | 10,752,455 | ||||||
Banks — 0.4% | ||||||||
Wells Fargo & Co., 7.50% | 39,911 | 56,757,880 | ||||||
Health Care Equipment and Supplies — 1.0% | ||||||||
Becton Dickinson and Co., 6.00%, 6/1/23(4) | 2,199,653 | 118,220,350 | ||||||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $171,502,583) | 185,730,685 | |||||||
CORPORATE BONDS — 0.2% | ||||||||
Electric Utilities — 0.2% | ||||||||
NextEra Energy Capital Holdings, Inc., VRN, 5.65%, 5/1/79 (Cost $19,989,941) | $ | 19,962,000 | 22,817,726 |
13
Shares/ Principal Amount | Value | |||||||
TEMPORARY CASH INVESTMENTS — 3.3% | ||||||||
Federal Farm Credit Discount Notes, 0.02%, 4/1/21(5) | $ | 15,000,000 | $ | 15,000,000 | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $67,654,137), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $66,325,311) | 66,325,293 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.125%, 5/15/26 - 6/30/26, valued at $225,595,882), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $221,172,000) | 221,172,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 85,712,531 | 85,712,531 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $388,209,824) | 388,209,824 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(6) — 0.1% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $12,114,850) | 12,114,850 | 12,114,850 | ||||||
TOTAL INVESTMENT SECURITIES — 100.3% (Cost $9,450,030,877) | 12,023,919,919 | |||||||
OTHER ASSETS AND LIABILITIES — (0.3)% | (30,831,142) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 11,993,088,777 |
WRITTEN OPTIONS CONTRACTS | |||||||||||||||||||||||
Reference Entity | Contracts | Type | Exercise Price | Expiration Date | Underlying Notional Amount | Premiums Received | Value | ||||||||||||||||
Oracle Corp. | 1,000 | Put | $ | 60.00 | 4/16/21 | $ | 7,017,000 | $ | (46,334) | $ | (5,500) | ||||||||||||
Walmart, Inc. | 279 | Put | $ | 124.00 | 4/16/21 | $ | 3,789,657 | (10,464) | (2,790) | ||||||||||||||
$ | (56,798) | $ | (8,290) |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 508,456,782 | CHF | 471,842,809 | Morgan Stanley | 6/30/21 | $ | 8,063,243 | |||||||||||||
USD | 505,462,355 | EUR | 422,896,824 | Credit Suisse AG | 6/30/21 | 8,633,570 | ||||||||||||||
JPY | 207,282,240 | USD | 1,909,950 | Bank of America N.A. | 6/30/21 | (36,301) | ||||||||||||||
JPY | 174,174,660 | USD | 1,597,690 | Bank of America N.A. | 6/30/21 | (23,305) | ||||||||||||||
USD | 54,621,732 | JPY | 5,951,447,370 | Bank of America N.A. | 6/30/21 | 825,886 | ||||||||||||||
USD | 2,518,138 | JPY | 274,217,130 | Bank of America N.A. | 6/30/21 | 39,457 | ||||||||||||||
USD | 1,569,524 | JPY | 172,015,470 | Bank of America N.A. | 6/30/21 | 14,655 | ||||||||||||||
$ | 17,517,205 |
14
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
CHF | - | Swiss Franc | ||||||
EUR | - | Euro | ||||||
JPY | - | Japanese Yen | ||||||
USD | - | United States Dollar | ||||||
VRN | - | Variable Rate Note. The rate adjusts periodically based upon the terms set forth in the security’s offering documents. The rate shown is effective at the period end and the reference rate and spread, if any, is indicated. The security's effective maturity date may be shorter than the final maturity date shown. |
(1)Affiliated Company: the fund’s holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940.
(2)Security was purchased pursuant to Rule 144A or Section 4(2) 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 $342,076,817, which represented 2.9% of total net assets.
(3)Equity-linked debt security. The aggregated value of these securities at the period end was $331,089,243, which represented 2.8% of total net assets.
(4)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $11,838,411. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(5)The rate indicated is the yield to maturity at purchase.
(6)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $12,114,850.
See Notes to Financial Statements.
15
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $9,199,292,279) — including $11,838,411 of securities on loan | $ | 11,667,644,924 | |||
Investment securities - affiliated, at value (cost of $238,623,748) | 344,160,145 | ||||
Investment made with cash collateral received for securities on loan, at value (cost of $12,114,850) | 12,114,850 | ||||
Total investment securities, at value (cost of $9,450,030,877) | 12,023,919,919 | ||||
Foreign currency holdings, at value (cost of $441,801) | 439,932 | ||||
Deposits with broker for options contracts | 2,837,880 | ||||
Receivable for investments sold | 6,246,017 | ||||
Receivable for capital shares sold | 5,765,354 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 17,576,811 | ||||
Dividends and interest receivable | 31,452,244 | ||||
Securities lending receivable | 2,977 | ||||
12,088,241,134 | |||||
Liabilities | |||||
Written options, at value (premiums received $56,798) | 8,290 | ||||
Payable for collateral received for securities on loan | 12,114,850 | ||||
Payable for investments purchased | 48,955,533 | ||||
Payable for capital shares redeemed | 25,695,202 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 59,606 | ||||
Accrued management fees | 7,854,422 | ||||
Distribution and service fees payable | 464,454 | ||||
95,152,357 | |||||
Net Assets | $ | 11,993,088,777 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 9,376,586,770 | |||
Distributable earnings | 2,616,502,007 | ||||
$ | 11,993,088,777 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $4,211,553,561 | 445,539,445 | $9.45 | ||||||||
I Class, $0.01 Par Value | $5,167,201,574 | 545,919,776 | $9.47 | ||||||||
Y Class, $0.01 Par Value | $281,614,246 | 29,720,086 | $9.48 | ||||||||
A Class, $0.01 Par Value | $869,137,210 | 91,952,779 | $9.45* | ||||||||
C Class, $0.01 Par Value | $303,205,258 | 32,083,224 | $9.45 | ||||||||
R Class, $0.01 Par Value | $57,031,516 | 6,058,718 | $9.41 | ||||||||
R5 Class, $0.01 Par Value | $62,609,667 | 6,621,424 | $9.46 | ||||||||
R6 Class, $0.01 Par Value | $1,040,729,961 | 109,847,010 | $9.47 | ||||||||
G Class, $0.01 Par Value | $5,784 | 610 | $9.48 |
*Maximum offering price $10.03 (net asset value divided by 0.9425).
See Notes to Financial Statements.
16
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $10,402,861 from affiliates and net of foreign taxes withheld of $5,421,029) | $ | 286,873,965 | |||
Interest | 54,095,965 | ||||
Securities lending, net | 461,746 | ||||
341,431,676 | |||||
Expenses: | |||||
Management fees | 89,306,421 | ||||
Distribution and service fees: | |||||
A Class | 1,898,159 | ||||
C Class | 3,711,409 | ||||
R Class | 294,460 | ||||
Directors' fees and expenses | 339,713 | ||||
Other expenses | 17,340 | ||||
95,567,502 | |||||
Fees waived - G Class | (28) | ||||
95,567,474 | |||||
Net investment income (loss) | 245,864,202 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $(1,495,836) from affiliates) (Note 4) | 447,024,746 | ||||
Forward foreign currency exchange contract transactions | (47,892,430) | ||||
Written options contract transactions | 2,822,743 | ||||
Foreign currency translation transactions | (102,379) | ||||
401,852,680 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $(1,920,902) from affiliates) | 2,707,989,125 | ||||
Forward foreign currency exchange contracts | 26,447,791 | ||||
Written options contracts | (20,659) | ||||
Translation of assets and liabilities in foreign currencies | 37,114 | ||||
2,734,453,371 | |||||
Net realized and unrealized gain (loss) | 3,136,306,051 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 3,382,170,253 |
See Notes to Financial Statements.
17
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 245,864,202 | $ | 256,621,230 | ||||
Net realized gain (loss) | 401,852,680 | 290,403,850 | ||||||
Change in net unrealized appreciation (depreciation) | 2,734,453,371 | (1,945,113,540) | ||||||
Net increase (decrease) in net assets resulting from operations | 3,382,170,253 | (1,398,088,460) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (89,824,916) | (340,852,305) | ||||||
I Class | (116,672,660) | (366,932,951) | ||||||
Y Class | (6,594,058) | (19,641,585) | ||||||
A Class | (14,576,470) | (60,875,609) | ||||||
C Class | (4,417,051) | (31,995,010) | ||||||
R Class | (1,002,485) | (5,030,757) | ||||||
R5 Class | (1,336,997) | (78,647) | ||||||
R6 Class | (24,137,281) | (72,662,809) | ||||||
G Class | (160) | (358) | ||||||
Decrease in net assets from distributions | (258,562,078) | (898,070,031) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (1,141,632,398) | 894,237,191 | ||||||
Net increase (decrease) in net assets | 1,981,975,777 | (1,401,921,300) | ||||||
Net Assets | ||||||||
Beginning of period | 10,011,113,000 | 11,413,034,300 | ||||||
End of period | $ | 11,993,088,777 | $ | 10,011,113,000 |
See Notes to Financial Statements.
18
Notes to Financial Statements |
MARCH 31, 2021
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. Equity Income Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek current income. Capital appreciation is a secondary objective.
The fund offers the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class, R6 Class and G 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. Sale of the G Class commenced on August 1, 2019.
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 (NAV) per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities 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 convertible bonds 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.
Hybrid 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. Preferred stocks and convertible preferred stocks with perpetual maturities 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.
Open-end management investment companies are valued at the reported NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded options contracts are valued at a mean as provided by independent pricing services. 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.
19
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 NAV 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. 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 lending income is net of fees and rebates earned by the lending agent for its services.
Equity-Linked Debt and Linked-Equity Securities — The fund may invest in hybrid equity securities, which usually convert into common stock at a date predetermined by the issuer. These securities generally offer a higher dividend yield than that of the common stock to which the security is linked. These instruments are issued by a company other than the one to which the security is linked and carry the credit of the issuer, not that of the underlying common stock. The securities’ appreciation is limited based on a predetermined final cap price at the date of the conversion. Risks of investing in these securities include, but are not limited to, a set time to capture the yield advantage, limited appreciation potential, decline in value of the underlying stock, and failure of the issuer to pay dividends or to deliver common stock at maturity.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
20
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. 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 collateral requirements.
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
21
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Convertible Preferred Stocks | $ | 12,114,850 | — | — | — | $ | 12,114,850 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 12,114,850 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder 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 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 use very similar investment teams and strategies (strategy assets). The investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.80% to 1.00% | 0.91% | ||||||
I Class | 0.60% to 0.80% | 0.71% | ||||||
Y Class | 0.45% to 0.65% | 0.56% | ||||||
A Class | 0.80% to 1.00% | 0.91% | ||||||
C Class | 0.80% to 1.00% | 0.91% | ||||||
R Class | 0.80% to 1.00% | 0.91% | ||||||
R5 Class | 0.60% to 0.80% | 0.71% | ||||||
R6 Class | 0.45% to 0.65% | 0.56% | ||||||
G Class | 0.45% to 0.65% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.56%.
22
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 period ended March 31, 2021 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $24,084,967 and $31,960,791, respectively. The effect of interfund transactions on the Statement of Operations was $6,453,143 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended March 31, 2021 were $5,526,734,698 and $6,725,857,656, respectively.
For the period ended March 31, 2021, the fund incurred net realized gains of $3,009,649 from redemptions in kind. A redemption in kind occurs when a fund delivers securities from its portfolio in lieu of cash as payment to a redeeming shareholder.
23
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2021 | Year ended March 31, 2020(1) | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 3,600,000,000 | 4,700,000,000 | ||||||||||||
Sold | 66,931,155 | $ | 558,165,028 | 76,577,889 | $ | 675,765,127 | ||||||||
Issued in reinvestment of distributions | 10,296,106 | 86,745,797 | 36,635,090 | 332,268,596 | ||||||||||
Redeemed | (144,331,250) | (1,220,193,872) | (300,004,541) | (2,611,886,041) | ||||||||||
(67,103,989) | (575,283,047) | (186,791,562) | (1,603,852,318) | |||||||||||
I Class/Shares Authorized | 3,850,000,000 | 3,700,000,000 | ||||||||||||
Sold | 161,889,860 | 1,356,311,143 | 370,363,277 | 3,265,100,957 | ||||||||||
Issued in reinvestment of distributions | 13,122,030 | 110,995,416 | 38,092,032 | 345,571,110 | ||||||||||
Redeemed | (210,474,171) | (1,780,200,380) | (151,793,644) | (1,291,749,298) | ||||||||||
(35,462,281) | (312,893,821) | 256,661,665 | 2,318,922,769 | |||||||||||
Y Class/Shares Authorized | 200,000,000 | 220,000,000 | ||||||||||||
Sold | 6,952,418 | 58,596,972 | 11,050,681 | 93,766,095 | ||||||||||
Issued in reinvestment of distributions | 748,529 | 6,345,832 | 2,090,685 | 18,982,712 | ||||||||||
Redeemed | (9,109,803) | (76,780,263) | (8,498,354) | (72,292,572) | ||||||||||
(1,408,856) | (11,837,459) | 4,643,012 | 40,456,235 | |||||||||||
A Class/Shares Authorized | 720,000,000 | 700,000,000 | ||||||||||||
Sold | 27,235,924 | 231,711,362 | 19,853,899 | 176,773,387 | ||||||||||
Issued in reinvestment of distributions | 1,610,153 | 13,580,326 | 6,419,773 | 58,271,266 | ||||||||||
Redeemed | (34,722,510) | (285,333,015) | (26,236,608) | (230,967,832) | ||||||||||
(5,876,433) | (40,041,327) | 37,064 | 4,076,821 | |||||||||||
C Class/Shares Authorized | 275,000,000 | 400,000,000 | ||||||||||||
Sold | 3,214,897 | 26,939,727 | 9,411,907 | 84,070,191 | ||||||||||
Issued in reinvestment of distributions | 494,459 | 4,109,198 | 3,151,688 | 28,683,849 | ||||||||||
Redeemed | (26,853,941) | (228,095,966) | (19,320,917) | (170,097,143) | ||||||||||
(23,144,585) | (197,047,041) | (6,757,322) | (57,343,103) | |||||||||||
R Class/Shares Authorized | 70,000,000 | 80,000,000 | ||||||||||||
Sold | 950,355 | 8,012,700 | 1,221,785 | 10,377,138 | ||||||||||
Issued in reinvestment of distributions | 116,317 | 968,783 | 548,345 | 4,959,868 | ||||||||||
Redeemed | (2,938,398) | (24,840,585) | (4,059,305) | (35,774,297) | ||||||||||
(1,871,726) | (15,859,102) | (2,289,175) | (20,437,291) | |||||||||||
R5 Class/Shares Authorized | 50,000,000 | 20,000,000 | ||||||||||||
Sold | 7,141,230 | 57,602,916 | 44,230 | 399,711 | ||||||||||
Issued in reinvestment of distributions | 157,987 | 1,336,997 | 8,678 | 78,647 | ||||||||||
Redeemed | (805,398) | (6,991,331) | (27,847) | (244,584) | ||||||||||
6,493,819 | 51,948,582 | 25,061 | 233,774 | |||||||||||
R6 Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||||||
Sold | 25,998,150 | 221,466,928 | 34,167,972 | 304,078,802 | ||||||||||
Issued in reinvestment of distributions | 2,848,378 | 24,137,221 | 8,004,159 | 72,662,809 | ||||||||||
Redeemed | (33,581,581) | (286,223,492) | (19,007,157) | (164,566,665) | ||||||||||
(4,735,053) | (40,619,343) | 23,164,974 | 212,174,946 | |||||||||||
G Class/Shares Authorized | 65,000,000 | 140,000,000 | ||||||||||||
Sold | — | — | 552 | 5,000 | ||||||||||
Issued in reinvestment of distributions | 19 | 160 | 39 | 358 | ||||||||||
19 | 160 | 591 | 5,358 | |||||||||||
Net increase (decrease) | (133,109,085) | $ | (1,141,632,398) | 88,694,308 | $ | 894,237,191 |
(1)August 1, 2019 (commencement of sale) through March 31, 2020 for the G Class.
24
6. Affiliated Company Transactions
If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the period ended March 31, 2021 follows (amounts in thousands):
Company | Beginning Value | Purchase Cost | Sales Cost | Change in Net Unrealized Appreciation (Depreciation) | Ending Value | Ending Shares | Net Realized Gain (Loss) | Income | ||||||||||||||||||
Capitol Federal Financial, Inc. | $ | 106,806 | — | $ | 14,630 | $ | 13,623 | $ | 105,799 | 7,988 | $ | (1,629) | $ | 3,963 | ||||||||||||
ONE Gas, Inc. | 208,899 | $ | 45,221 | 215 | (15,544) | 238,361 | 3,099 | 133 | 6,440 | |||||||||||||||||
$ | 315,705 | $ | 45,221 | $ | 14,845 | $ | (1,921) | $ | 344,160 | 11,087 | $ | (1,496) | $ | 10,403 |
7. 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.
25
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 | |||||||||||
Automobiles | — | $ | 62,478,212 | — | |||||||
Chemicals | $ | 223,803,846 | 110,572,843 | — | |||||||
Electrical Equipment | 499,839,917 | 24,320,129 | — | ||||||||
Food and Staples Retailing | 325,695,075 | 107,227,501 | — | ||||||||
Food Products | 252,654,168 | 189,442,289 | — | ||||||||
Oil, Gas and Consumable Fuels | 393,897,958 | 111,699,862 | — | ||||||||
Personal Products | — | 223,175,542 | — | ||||||||
Pharmaceuticals | 629,687,324 | 340,220,131 | — | ||||||||
Other Industries | 6,101,700,375 | — | — | ||||||||
Preferred Stocks | — | 1,098,430,759 | — | ||||||||
Convertible Bonds | — | 417,238,965 | — | ||||||||
Exchange-Traded Funds | 302,961,938 | — | — | ||||||||
Convertible Preferred Stocks | — | 185,730,685 | — | ||||||||
Corporate Bonds | — | 22,817,726 | — | ||||||||
Temporary Cash Investments | 85,712,531 | 302,497,293 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 12,114,850 | — | — | ||||||||
$ | 8,828,067,982 | $ | 3,195,851,937 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 17,576,811 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 59,606 | — | |||||||
Written Options Contracts | $ | 8,290 | — | — | |||||||
$ | 8,290 | $ | 59,606 | — |
8. 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 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 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 may recognize a realized gain or loss when the option contract is closed, 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 equity price risk derivative instruments held during the period was 2,386 written options contracts.
26
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $1,101,932,525.
Value of Derivative Instruments as of March 31, 2021
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 | Written Options | — | Written Options | $ | 8,290 | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 17,576,811 | Unrealized depreciation on forward foreign currency exchange contracts | 59,606 | |||||||||
$ | 17,576,811 | $ | 67,896 |
Effect of Derivative Instruments on the Statement of Operations for the Year Ended March 31, 2021
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 written options contract transactions | $ | 2,822,743 | Change in net unrealized appreciation (depreciation) on written options contracts | $ | (20,659) | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | (47,892,430) | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 26,447,791 | ||||||||||
$ | (45,069,687) | $ | 26,427,132 |
9. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
27
10. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 258,562,078 | $ | 471,893,439 | ||||
Long-term capital gains | — | $ | 426,176,592 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 9,563,339,002 | |||
Gross tax appreciation of investments | $ | 2,519,188,611 | |||
Gross tax depreciation of investments | (58,607,694) | ||||
Net tax appreciation (depreciation) of investments | 2,460,580,917 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 205,015 | ||||
Net tax appreciation (depreciation) | $ | 2,460,785,932 | |||
Undistributed ordinary income | $ | 24,396,428 | |||
Accumulated long-term gains | $ | 131,319,647 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
28
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.14 | 0.17 | 2.33 | 2.50 | (0.19) | — | (0.19) | $9.45 | 35.30% | 0.91% | 0.91% | 2.10% | 2.10% | 52% | $4,211,554 | ||||||||||||||||||||||||||||||||
2020 | $8.69 | 0.18 | (1.07) | (0.89) | (0.19) | (0.47) | (0.66) | $7.14 | (11.81)% | 0.91% | 0.91% | 2.07% | 2.07% | 85% | $3,660,808 | ||||||||||||||||||||||||||||||||
2019 | $8.60 | 0.18 | 0.56 | 0.74 | (0.18) | (0.47) | (0.65) | $8.69 | 9.07% | 0.91% | 0.91% | 2.13% | 2.13% | 80% | $6,081,355 | ||||||||||||||||||||||||||||||||
2018 | $9.13 | 0.17 | 0.37 | 0.54 | (0.17) | (0.90) | (1.07) | $8.60 | 5.61% | 0.91% | 0.91% | 1.86% | 1.86% | 75% | $6,496,269 | ||||||||||||||||||||||||||||||||
2017 | $8.41 | 0.17 | 1.24 | 1.41 | (0.17) | (0.52) | (0.69) | $9.13 | 17.14% | 0.91% | 0.91% | 1.91% | 1.91% | 93% | $7,327,473 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.15 | 0.20 | 2.32 | 2.52 | (0.20) | — | (0.20) | $9.47 | 35.67% | 0.71% | 0.71% | 2.30% | 2.30% | 52% | $5,167,202 | ||||||||||||||||||||||||||||||||
2020 | $8.70 | 0.21 | (1.08) | (0.87) | (0.21) | (0.47) | (0.68) | $7.15 | (11.62)% | 0.71% | 0.71% | 2.27% | 2.27% | 85% | $4,157,382 | ||||||||||||||||||||||||||||||||
2019 | $8.61 | 0.20 | 0.56 | 0.76 | (0.20) | (0.47) | (0.67) | $8.70 | 9.27% | 0.71% | 0.71% | 2.33% | 2.33% | 80% | $2,826,256 | ||||||||||||||||||||||||||||||||
2018 | $9.14 | 0.19 | 0.37 | 0.56 | (0.19) | (0.90) | (1.09) | $8.61 | 5.82% | 0.71% | 0.71% | 2.06% | 2.06% | 75% | $2,621,898 | ||||||||||||||||||||||||||||||||
2017 | $8.42 | 0.19 | 1.24 | 1.43 | (0.19) | (0.52) | (0.71) | $9.14 | 17.36% | 0.71% | 0.71% | 2.11% | 2.11% | 93% | $1,515,758 |
For a Share Outstanding Throughout the Years Ended March 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) | |||||||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.16 | 0.21 | 2.33 | 2.54 | (0.22) | — | (0.22) | $9.48 | 35.83% | 0.56% | 0.56% | 2.45% | 2.45% | 52% | $281,614 | ||||||||||||||||||||||||||||||||
2020 | $8.71 | 0.22 | (1.08) | (0.86) | (0.22) | (0.47) | (0.69) | $7.16 | (11.48)% | 0.56% | 0.56% | 2.42% | 2.42% | 85% | $222,844 | ||||||||||||||||||||||||||||||||
2019 | $8.62 | 0.22 | 0.55 | 0.77 | (0.21) | (0.47) | (0.68) | $8.71 | 9.43% | 0.56% | 0.56% | 2.48% | 2.48% | 80% | $230,773 | ||||||||||||||||||||||||||||||||
2018(3) | $9.16 | 0.20 | 0.36 | 0.56 | (0.20) | (0.90) | (1.10) | $8.62 | 5.83% | 0.56%(4) | 0.56%(4) | 2.25%(4) | 2.25%(4) | 75%(5) | $216,014 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.14 | 0.16 | 2.31 | 2.47 | (0.16) | — | (0.16) | $9.45 | 34.95% | 1.16% | 1.16% | 1.85% | 1.85% | 52% | $869,137 | ||||||||||||||||||||||||||||||||
2020 | $8.69 | 0.16 | (1.07) | (0.91) | (0.17) | (0.47) | (0.64) | $7.14 | (12.02)% | 1.16% | 1.16% | 1.82% | 1.82% | 85% | $698,473 | ||||||||||||||||||||||||||||||||
2019 | $8.60 | 0.16 | 0.56 | 0.72 | (0.16) | (0.47) | (0.63) | $8.69 | 8.80% | 1.16% | 1.16% | 1.88% | 1.88% | 80% | $850,117 | ||||||||||||||||||||||||||||||||
2018 | $9.13 | 0.14 | 0.38 | 0.52 | (0.15) | (0.90) | (1.05) | $8.60 | 5.36% | 1.16% | 1.16% | 1.61% | 1.61% | 75% | $931,567 | ||||||||||||||||||||||||||||||||
2017 | $8.41 | 0.15 | 1.24 | 1.39 | (0.15) | (0.52) | (0.67) | $9.13 | 16.85% | 1.16% | 1.16% | 1.66% | 1.66% | 93% | $2,139,411 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.14 | 0.09 | 2.32 | 2.41 | (0.10) | — | (0.10) | $9.45 | 33.90% | 1.91% | 1.91% | 1.10% | 1.10% | 52% | $303,205 | ||||||||||||||||||||||||||||||||
2020 | $8.69 | 0.10 | (1.08) | (0.98) | (0.10) | (0.47) | (0.57) | $7.14 | (12.66)% | 1.91% | 1.91% | 1.07% | 1.07% | 85% | $394,129 | ||||||||||||||||||||||||||||||||
2019 | $8.60 | 0.10 | 0.55 | 0.65 | (0.09) | (0.47) | (0.56) | $8.69 | 8.00% | 1.91% | 1.91% | 1.13% | 1.13% | 80% | $538,726 | ||||||||||||||||||||||||||||||||
2018 | $9.13 | 0.08 | 0.37 | 0.45 | (0.08) | (0.90) | (0.98) | $8.60 | 4.58% | 1.91% | 1.91% | 0.86% | 0.86% | 75% | $627,651 | ||||||||||||||||||||||||||||||||
2017 | $8.41 | 0.08 | 1.24 | 1.32 | (0.08) | (0.52) | (0.60) | $9.13 | 15.97% | 1.91% | 1.91% | 0.91% | 0.91% | 93% | $711,149 |
For a Share Outstanding Throughout the Years Ended March 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.11 | 0.14 | 2.30 | 2.44 | (0.14) | — | (0.14) | $9.41 | 34.60% | 1.41% | 1.41% | 1.60% | 1.60% | 52% | $57,032 | ||||||||||||||||||||||||||||||||
2020 | $8.66 | 0.14 | (1.07) | (0.93) | (0.15) | (0.47) | (0.62) | $7.11 | (12.28)% | 1.41% | 1.41% | 1.57% | 1.57% | 85% | $56,388 | ||||||||||||||||||||||||||||||||
2019 | $8.57 | 0.14 | 0.56 | 0.70 | (0.14) | (0.47) | (0.61) | $8.66 | 8.57% | 1.41% | 1.41% | 1.63% | 1.63% | 80% | $88,499 | ||||||||||||||||||||||||||||||||
2018 | $9.10 | 0.13 | 0.36 | 0.49 | (0.12) | (0.90) | (1.02) | $8.57 | 5.11% | 1.41% | 1.41% | 1.36% | 1.36% | 75% | $93,154 | ||||||||||||||||||||||||||||||||
2017 | $8.39 | 0.13 | 1.22 | 1.35 | (0.12) | (0.52) | (0.64) | $9.10 | 16.48% | 1.41% | 1.41% | 1.41% | 1.41% | 93% | $114,762 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.14 | 0.19 | 2.33 | 2.52 | (0.20) | — | (0.20) | $9.46 | 35.72% | 0.71% | 0.71% | 2.30% | 2.30% | 52% | $62,610 | ||||||||||||||||||||||||||||||||
2020 | $8.70 | 0.21 | (1.09) | (0.88) | (0.21) | (0.47) | (0.68) | $7.14 | (11.74)% | 0.71% | 0.71% | 2.27% | 2.27% | 85% | $912 | ||||||||||||||||||||||||||||||||
2019 | $8.60 | 0.20 | 0.57 | 0.77 | (0.20) | (0.47) | (0.67) | $8.70 | 9.41% | 0.71% | 0.71% | 2.33% | 2.33% | 80% | $892 | ||||||||||||||||||||||||||||||||
2018(3) | $9.15 | 0.21 | 0.33 | 0.54 | (0.19) | (0.90) | (1.09) | $8.60 | 5.57% | 0.71%(4) | 0.71%(4) | 2.51%(4) | 2.51%(4) | 75%(5) | $653 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.16 | 0.21 | 2.32 | 2.53 | (0.22) | — | (0.22) | $9.47 | 35.68% | 0.56% | 0.56% | 2.45% | 2.45% | 52% | $1,040,730 | ||||||||||||||||||||||||||||||||
2020 | $8.71 | 0.22 | (1.08) | (0.86) | (0.22) | (0.47) | (0.69) | $7.16 | (11.48)% | 0.56% | 0.56% | 2.42% | 2.42% | 85% | $820,173 | ||||||||||||||||||||||||||||||||
2019 | $8.62 | 0.22 | 0.55 | 0.77 | (0.21) | (0.47) | (0.68) | $8.71 | 9.43% | 0.56% | 0.56% | 2.48% | 2.48% | 80% | $796,417 | ||||||||||||||||||||||||||||||||
2018 | $9.15 | 0.21 | 0.36 | 0.57 | (0.20) | (0.90) | (1.10) | $8.62 | 5.97% | 0.56% | 0.56% | 2.21% | 2.21% | 75% | $691,393 | ||||||||||||||||||||||||||||||||
2017 | $8.42 | 0.20 | 1.25 | 1.45 | (0.20) | (0.52) | (0.72) | $9.15 | 17.66% | 0.56% | 0.56% | 2.26% | 2.26% | 93% | $492,622 |
For a Share Outstanding Throughout the Years Ended March 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) | |||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $7.16 | 0.27 | 2.32 | 2.59 | (0.27) | — | (0.27) | $9.48 | 36.61% | 0.00%(6) | 0.56% | 3.01% | 2.45% | 52% | $6 | ||||||||||||||||||||||||||||||||
2020(7) | $9.06 | 0.18 | (1.43) | (1.25) | (0.18) | (0.47) | (0.65) | $7.16 | (15.32)% | 0.00%(4)(6) | 0.56%(4) | 3.02%(4) | 2.46%(4) | 85%(8) | $4 |
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)April 10, 2017 (commencement of sale) through March 31, 2018.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
(6)Ratio was less than 0.005%.
(7)August 1, 2019 (commencement of sale) through March 31, 2020.
(8)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2020.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Equity Income Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Equity Income Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
33
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
34
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
35
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
36
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
37
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
38
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $213,569,002, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
39
Notes |
40
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications 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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92268 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
Focused Large Cap Value Fund | |||||
Investor Class (ALVIX) | |||||
I Class (ALVSX) | |||||
A Class (ALPAX) | |||||
C Class (ALPCX) | |||||
R Class (ALVRX) | |||||
R5 Class (ALVGX) | |||||
R6 Class (ALVDX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image231.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image231.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2021. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Stocks Soared, Bonds Moderated Amid Growing Economic Optimism
March 31 marked the end of a remarkable 12-month period, as the COVID-19 pandemic wreaked havoc on global economies, governments and society. In response, states issued unprecedented lockdown orders. Unemployment surged, corporate earnings plunged and second-quarter-2020 gross domestic product sank a record 31.4% (annualized). This triggered soaring demand for safe-haven assets.
Swift and significant action from the Federal Reserve and the federal government helped reignite investor confidence and bolster the economic backdrop. Riskier assets quickly rebounded from their early 2020 lows. The economy expanded a record 33.4% in the third quarter and continued to grow amid the gradual lifting of lockdowns and the emergency approval of vaccines.
Late in the reporting period, improving vaccine distributions, additional federal coronavirus aid and ongoing reopenings bolstered the economic and earnings outlooks. This improving backdrop combined with massive monetary and fiscal support helped fuel a 12-month gain of 56% for the S&P 500 Index. These same economic dynamics lifted longer-term inflation expectations and U.S. Treasury yields, pressuring investment-grade bond returns. After rallying through most of 2020, the Bloomberg Barclays U.S. Aggregate Bond Index gained less than 1% for the 12-month period.
A Return to Normalcy in Sight
The return to pre-pandemic life appears to be on the horizon, thanks largely to expanding vaccine availability. In addition, medical professionals continue to improve treatment protocols for those afflicted with the virus. Until the U.S. is fully reopened, investors still may face the effects of regional virus-related restrictions, economic and political uncertainty and heightened market volatility. These influences can be unsettling, but they tend to be temporary.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image161.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image161.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | ALVIX | 46.64% | 10.58% | 10.23% | — | 7/30/99 | ||||||||||||||
Russell 1000 Value Index | — | 56.09% | 11.73% | 10.98% | — | — | ||||||||||||||
S&P 500 Index | — | 56.35% | 16.28% | 13.90% | — | — | ||||||||||||||
I Class | ALVSX | 47.06% | 10.82% | 10.46% | — | 8/10/01 | ||||||||||||||
A Class | ALPAX | — | 10/26/00 | |||||||||||||||||
No sales charge | 46.44% | 10.33% | 9.97% | — | ||||||||||||||||
With sales charge | 38.05% | 9.04% | 9.33% | — | ||||||||||||||||
C Class | ALPCX | 45.31% | 9.50% | 9.14% | — | 11/7/01 | ||||||||||||||
R Class | ALVRX | 46.00% | 10.04% | 9.69% | — | 8/29/03 | ||||||||||||||
R5 Class | ALVGX | 47.06% | — | — | 8.79% | 4/10/17 | ||||||||||||||
R6 Class | ALVDX | 47.29% | 10.98% | — | 9.31% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 |
Performance for other share classes will vary due to differences in fee structure.
![chart-d6416761c2754c118b31a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-d6416761c2754c118b31a.jpg)
Value on March 31, 2021 | |||||
Investor Class — $26,500 | |||||
Russell 1000 Value Index — $28,372 | |||||
S&P 500 Index — $36,788 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | R5 Class | R6 Class | ||||||||||||||
0.84% | 0.64% | 1.09% | 1.84% | 1.34% | 0.64% | 0.49% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Phillip N. Davidson, Brian Woglom, Philip Sundell, Adam Krenn, Michael Liss and Kevin Toney
Effective December 2020, Adam Krenn was promoted to portfolio manager and Michael Liss and Kevin Toney joined the fund as portfolio managers.
Performance Summary
Focused Large Cap Value (new fund name effective December 10, 2020) returned 46.64%* for the fiscal year ended March 31, 2021, compared with the 56.09% return of its benchmark, the Russell 1000 Value Index.
Broad U.S. equity markets rallied over the trailing 12-month period, fueled by increased growth expectations, positive earnings reports, additional fiscal stimulus and optimism around accelerating vaccine distributions. Focused Large Cap Value advanced during the fiscal year but underperformed its benchmark, the Russell 1000 Value Index. Stock selection in the consumer staples and financials sectors detracted from relative performance, as did an overweight position in consumer staples. Selection in industrials and information technology contributed to relative results.
Stock Selection in Consumer Staples and Financials Detracted
The combination of an overweight and stock selection resulted in material underperformance in the consumer staples sector. Holdings in the personal products and food products industries underperformed as investors favored more cyclical companies benefiting from economic reopening. The stock of Unilever underperformed after the consumer goods company reported profits for the second half of 2020 that underwhelmed investors.
Stock selection in the financials sector detracted from relative returns against a backdrop of strong equity markets and rising interest rates late in the period. Our more conservative approach in the sector, including a preference for higher-quality banks, weighed on performance.
Verizon Communications detracted. This wireless services stock underperformed as competitors AT&T and T-Mobile US announced more aggressive pricing promotions for the new iPhone 12. Verizon was also a major beneficiary of corporate tax reform, so uncertainty over the future of corporate taxes also weighed on performance.
Stock Selection in Industrials and Information Technology Contributed
Stock selection in the industrials sector contributed to relative performance. An overweight in the electrical equipment industry, including holding Emerson Electric, was also positive. Shares of Siemens outperformed as the industrial conglomerate delivered a solid quarter and further accelerated its cost-cutting program.
Stock selection in the information technology sector benefited performance. Our avoidance of several benchmark names in the IT services industry contributed along with positions in the electronic equipment, instruments and components and semiconductors and semiconductor equipment industries. Texas Instruments, the largest analog supplier in the world, was a key contributor.
Hologic contributed. Shares of this medical devices company outperformed due to significant sales for its new COVID-19 test. We exited the position on outperformance.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
The portfolio is overweight in the health care sector. According to our analysis, the portfolio’s health care holdings offer compelling valuations and risk/reward profiles, particularly in the health care equipment and supplies and pharmaceuticals industries. Similarly, companies in the consumer staples sector generally offer defensive characteristics, which were less valued by investors in the rally since successful vaccines were announced in November of last year. We believe select consumer staples stocks, with their relatively strong balance sheets, growing dividend streams and access to large numbers of consumers, are well-suited for our portfolio.
Within the financials sector, we have identified attractive value opportunities in select industries. Specifically, we hold securities in the insurance and diversified financial services industries that we believe have strong balance sheets, low levels of debt and leading market positions.
We ended the reporting period with no exposure to the consumer discretionary and real estate sectors. It has been difficult for us to find higher-quality companies with sustainable business models in consumer discretionary. Similarly, within real estate we are finding extended valuations and elevated risks due to COVID-19.
6
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Johnson & Johnson | 5.6% | ||||
Berkshire Hathaway, Inc., Class B | 4.8% | ||||
Unilever plc, ADR | 4.6% | ||||
Medtronic plc | 4.6% | ||||
JPMorgan Chase & Co. | 4.0% | ||||
Cisco Systems, Inc. | 3.8% | ||||
Bank of New York Mellon Corp. (The) | 3.8% | ||||
Verizon Communications, Inc. | 3.6% | ||||
Emerson Electric Co. | 3.0% | ||||
Atmos Energy Corp. | 3.0% | ||||
Top Five Industries | % of net assets | ||||
Pharmaceuticals | 9.7% | ||||
Health Care Equipment and Supplies | 8.3% | ||||
Insurance | 7.8% | ||||
Banks | 6.2% | ||||
Oil, Gas and Consumable Fuels | 5.5% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 82.5% | ||||
Foreign Common Stocks* | 15.1% | ||||
Total Common Stocks | 97.6% | ||||
Temporary Cash Investments | 2.4% | ||||
Other Assets and Liabilities | —** |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
**Category is less than 0.05% of total net assets.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2020 to March 31, 2021.
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 I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,217.50 | $4.59 | 0.83% | ||||||||||
I Class | $1,000 | $1,218.50 | $3.48 | 0.63% | ||||||||||
A Class | $1,000 | $1,217.30 | $5.97 | 1.08% | ||||||||||
C Class | $1,000 | $1,212.70 | $10.10 | 1.83% | ||||||||||
R Class | $1,000 | $1,215.50 | $7.35 | 1.33% | ||||||||||
R5 Class | $1,000 | $1,218.50 | $3.48 | 0.63% | ||||||||||
R6 Class | $1,000 | $1,220.70 | $2.66 | 0.48% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.79 | $4.18 | 0.83% | ||||||||||
I Class | $1,000 | $1,021.79 | $3.18 | 0.63% | ||||||||||
A Class | $1,000 | $1,019.55 | $5.44 | 1.08% | ||||||||||
C Class | $1,000 | $1,015.81 | $9.20 | 1.83% | ||||||||||
R Class | $1,000 | $1,018.30 | $6.69 | 1.33% | ||||||||||
R5 Class | $1,000 | $1,021.79 | $3.18 | 0.63% | ||||||||||
R6 Class | $1,000 | $1,022.54 | $2.42 | 0.48% |
(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 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
MARCH 31, 2021
Shares | Value | |||||||
COMMON STOCKS — 97.6% | ||||||||
Aerospace and Defense — 3.7% | ||||||||
Lockheed Martin Corp. | 42,440 | $ | 15,681,580 | |||||
Raytheon Technologies Corp. | 240,049 | 18,548,586 | ||||||
34,230,166 | ||||||||
Banks — 6.2% | ||||||||
JPMorgan Chase & Co. | 240,093 | 36,549,358 | ||||||
Truist Financial Corp. | 351,013 | 20,471,078 | ||||||
57,020,436 | ||||||||
Beverages — 1.6% | ||||||||
PepsiCo, Inc. | 101,933 | 14,418,423 | ||||||
Building Products — 0.9% | ||||||||
Johnson Controls International plc | 146,689 | 8,752,933 | ||||||
Capital Markets — 3.8% | ||||||||
Bank of New York Mellon Corp. (The) | 736,625 | 34,834,996 | ||||||
Commercial Services and Supplies — 2.1% | ||||||||
Republic Services, Inc. | 192,797 | 19,154,382 | ||||||
Communications Equipment — 3.8% | ||||||||
Cisco Systems, Inc. | 685,287 | 35,436,191 | ||||||
Containers and Packaging — 1.3% | ||||||||
Sonoco Products Co. | 185,577 | 11,747,024 | ||||||
Diversified Financial Services — 4.8% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 173,448 | 44,310,761 | ||||||
Diversified Telecommunication Services — 3.6% | ||||||||
Verizon Communications, Inc. | 578,993 | 33,668,443 | ||||||
Electric Utilities — 3.5% | ||||||||
Duke Energy Corp. | 148,203 | 14,306,035 | ||||||
Pinnacle West Capital Corp. | 216,442 | 17,607,557 | ||||||
31,913,592 | ||||||||
Electrical Equipment — 4.2% | ||||||||
Emerson Electric Co. | 302,618 | 27,302,196 | ||||||
Hubbell, Inc. | 63,677 | 11,900,595 | ||||||
39,202,791 | ||||||||
Electronic Equipment, Instruments and Components — 0.9% | ||||||||
TE Connectivity Ltd. | 67,876 | 8,763,470 | ||||||
Food and Staples Retailing — 1.6% | ||||||||
Walmart, Inc. | 109,035 | 14,810,224 | ||||||
Food Products — 5.0% | ||||||||
Conagra Brands, Inc. | 302,541 | 11,375,542 | ||||||
Mondelez International, Inc., Class A | 357,445 | 20,921,256 | ||||||
Nestle SA | 121,321 | 13,521,871 | ||||||
45,818,669 | ||||||||
Gas Utilities — 3.0% | ||||||||
Atmos Energy Corp. | 275,858 | 27,268,563 | ||||||
Health Care Equipment and Supplies — 8.3% | ||||||||
Becton Dickinson and Co. | 95,806 | 23,295,229 | ||||||
Medtronic plc | 359,533 | 42,471,633 | ||||||
Zimmer Biomet Holdings, Inc. | 66,711 | 10,679,097 | ||||||
76,445,959 |
10
Shares | Value | |||||||
Health Care Providers and Services — 1.2% | ||||||||
Universal Health Services, Inc., Class B | 83,035 | $ | 11,076,039 | |||||
Health Care Technology — 2.1% | ||||||||
Cerner Corp. | 268,541 | 19,302,727 | ||||||
Household Products — 1.1% | ||||||||
Colgate-Palmolive Co. | 128,678 | 10,143,687 | ||||||
Industrial Conglomerates — 2.5% | ||||||||
Siemens AG | 143,336 | 23,538,807 | ||||||
Insurance — 7.8% | ||||||||
Aflac, Inc. | 314,506 | 16,096,417 | ||||||
Chubb Ltd. | 90,123 | 14,236,730 | ||||||
Marsh & McLennan Cos., Inc. | 192,244 | 23,415,319 | ||||||
Reinsurance Group of America, Inc. | 142,553 | 17,968,806 | ||||||
71,717,272 | ||||||||
Oil, Gas and Consumable Fuels — 5.5% | ||||||||
Chevron Corp. | 242,584 | 25,420,377 | ||||||
TOTAL SE, ADR | 548,847 | 25,543,340 | ||||||
50,963,717 | ||||||||
Personal Products — 4.6% | ||||||||
Unilever plc, ADR | 762,794 | 42,586,789 | ||||||
Pharmaceuticals — 9.7% | ||||||||
Johnson & Johnson | 314,223 | 51,642,550 | ||||||
Merck & Co., Inc. | 200,120 | 15,427,251 | ||||||
Roche Holding AG | 70,954 | 22,935,139 | ||||||
90,004,940 | ||||||||
Semiconductors and Semiconductor Equipment — 1.9% | ||||||||
Texas Instruments, Inc. | 92,787 | 17,535,815 | ||||||
Software — 2.9% | ||||||||
Open Text Corp. | 237,798 | 11,345,343 | ||||||
Oracle Corp., (New York) | 223,109 | 15,655,558 | ||||||
27,000,901 | ||||||||
TOTAL COMMON STOCKS (Cost $748,929,383) | 901,667,717 | |||||||
TEMPORARY CASH INVESTMENTS — 2.4% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $3,966,942), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $3,889,026) | 3,889,025 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.75%, 3/31/26, valued at $13,227,445), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $12,968,000) | 12,968,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 5,027,409 | 5,027,409 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $21,884,434) | 21,884,434 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $770,813,817) | 923,552,151 | |||||||
OTHER ASSETS AND LIABILITIES† | 284,263 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 923,836,414 |
11
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 31,711,842 | CHF | 29,428,272 | Morgan Stanley | 6/30/21 | $ | 502,895 | |||||||||||||
USD | 41,358,207 | EUR | 34,602,487 | Credit Suisse AG | 6/30/21 | 706,420 | ||||||||||||||
USD | 1,559,617 | EUR | 1,326,488 | Credit Suisse AG | 6/30/21 | 1,229 | ||||||||||||||
USD | 36,473,243 | GBP | 26,176,656 | JPMorgan Chase Bank N.A. | 6/30/21 | 376,469 | ||||||||||||||
$ | 1,587,013 |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
CHF | - | Swiss Franc | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
USD | - | United States Dollar |
†Category is less than 0.05% of total net assets.
(1)Non-income producing.
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities, at value (cost of $770,813,817) | $ | 923,552,151 | |||
Receivable for investments sold | 376,446 | ||||
Receivable for capital shares sold | 140,798 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 1,587,013 | ||||
Dividends and interest receivable | 1,427,317 | ||||
927,083,725 | |||||
Liabilities | |||||
Payable for investments purchased | 1,130,681 | ||||
Payable for capital shares redeemed | 1,536,625 | ||||
Accrued management fees | 569,969 | ||||
Distribution and service fees payable | 10,036 | ||||
3,247,311 | |||||
Net Assets | $ | 923,836,414 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 690,677,186 | |||
Distributable earnings | 233,159,228 | ||||
$ | 923,836,414 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $645,488,675 | 54,694,898 | $11.80 | ||||||||
I Class, $0.01 Par Value | $42,273,348 | 3,579,064 | $11.81 | ||||||||
A Class, $0.01 Par Value | $34,805,602 | 2,950,505 | $11.80* | ||||||||
C Class, $0.01 Par Value | $1,358,244 | 115,095 | $11.80 | ||||||||
R Class, $0.01 Par Value | $4,005,556 | 339,145 | $11.81 | ||||||||
R5 Class, $0.01 Par Value | $6,992 | 592 | $11.81 | ||||||||
R6 Class, $0.01 Par Value | $195,897,997 | 16,592,947 | $11.81 |
*Maximum offering price $12.52 (net asset value divided by 0.9425).
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $498,033) | $ | 20,948,739 | |||
Interest | 7,581 | ||||
20,956,320 | |||||
Expenses: | |||||
Management fees | 5,762,358 | ||||
Distribution and service fees: | |||||
A Class | 76,507 | ||||
C Class | 21,577 | ||||
R Class | 17,118 | ||||
Directors' fees and expenses | 22,557 | ||||
Other expenses | 4,935 | ||||
5,905,052 | |||||
Net investment income (loss) | 15,051,268 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 101,283,693 | ||||
Forward foreign currency exchange contract transactions | (5,342,867) | ||||
Foreign currency translation transactions | 2,084 | ||||
95,942,910 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 175,924,699 | ||||
Forward foreign currency exchange contracts | 2,376,355 | ||||
Translation of assets and liabilities in foreign currencies | 2,125 | ||||
178,303,179 | |||||
Net realized and unrealized gain (loss) | 274,246,089 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 289,297,357 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 15,051,268 | $ | 14,706,486 | ||||
Net realized gain (loss) | 95,942,910 | 15,431,050 | ||||||
Change in net unrealized appreciation (depreciation) | 178,303,179 | (125,340,240) | ||||||
Net increase (decrease) in net assets resulting from operations | 289,297,357 | (95,202,704) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (13,444,946) | (15,279,735) | ||||||
I Class | (907,504) | (744,667) | ||||||
A Class | (654,706) | (800,623) | ||||||
C Class | (28,683) | (53,969) | ||||||
R Class | (65,478) | (82,004) | ||||||
R5 Class | (157) | (162) | ||||||
R6 Class | (4,204,577) | (4,550,760) | ||||||
Decrease in net assets from distributions | (19,306,051) | (21,511,920) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 26,038,913 | (140,934,852) | ||||||
Net increase (decrease) in net assets | 296,030,219 | (257,649,476) | ||||||
Net Assets | ||||||||
Beginning of period | 627,806,195 | 885,455,671 | ||||||
End of period | $ | 923,836,414 | $ | 627,806,195 |
See Notes to Financial Statements.
15
Notes to Financial Statements |
MARCH 31, 2021
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. Focused Large Cap Value Fund (formerly Large Company Value Fund) (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective.
The fund offers the Investor Class, I Class, A Class, C Class, R Class, R5 Class and 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.
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 (NAV) 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 NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not 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.
16
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV 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. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only 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.
17
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
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. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 56% 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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder 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 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 use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of NT Focused Large Cap Value Fund, one fund in a series issued by the corporation.
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.70% to 0.90% | 0.83% | ||||||
I Class | 0.50% to 0.70% | 0.63% | ||||||
A Class | 0.70% to 0.90% | 0.83% | ||||||
C Class | 0.70% to 0.90% | 0.83% | ||||||
R Class | 0.70% to 0.90% | 0.83% | ||||||
R5 Class | 0.50% to 0.70% | 0.63% | ||||||
R6 Class | 0.35% to 0.55% | 0.48% |
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 period ended March 31, 2021 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.
18
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $12,847,197 and $8,397,910, respectively. The effect of interfund transactions on the Statement of Operations was $2,260,879 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended March 31, 2021 were $846,091,880 and $832,183,522, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2021 | Year ended March 31, 2020 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 450,000,000 | 450,000,000 | ||||||||||||
Sold | 6,869,368 | $ | 71,014,401 | 8,165,467 | $ | 82,038,100 | ||||||||
Issued in reinvestment of distributions | 1,275,533 | 13,275,397 | 1,438,516 | 15,101,976 | ||||||||||
Redeemed | (8,864,404) | (89,779,524) | (22,533,545) | (229,321,222) | ||||||||||
(719,503) | (5,489,726) | (12,929,562) | (132,181,146) | |||||||||||
I Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||||||
Sold | 2,898,219 | 29,493,139 | 1,174,884 | 11,886,383 | ||||||||||
Issued in reinvestment of distributions | 80,978 | 847,978 | 64,360 | 675,594 | ||||||||||
Redeemed | (1,836,263) | (19,395,476) | (648,899) | (6,478,909) | ||||||||||
1,142,934 | 10,945,641 | 590,345 | 6,083,068 | |||||||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 391,949 | 4,039,777 | 359,249 | 3,620,500 | ||||||||||
Issued in reinvestment of distributions | 56,411 | 586,532 | 68,814 | 723,967 | ||||||||||
Redeemed | (698,072) | (7,022,228) | (741,730) | (7,529,513) | ||||||||||
(249,712) | (2,395,919) | (313,667) | (3,185,046) | |||||||||||
C Class/Shares Authorized | 25,000,000 | 20,000,000 | ||||||||||||
Sold | 32,179 | 311,687 | 26,367 | 267,759 | ||||||||||
Issued in reinvestment of distributions | 2,559 | 26,555 | 4,010 | 42,572 | ||||||||||
Redeemed | (202,085) | (2,101,488) | (89,562) | (882,275) | ||||||||||
(167,347) | (1,763,246) | (59,185) | (571,944) | |||||||||||
R Class/Shares Authorized | 30,000,000 | 20,000,000 | ||||||||||||
Sold | 104,335 | 1,050,787 | 138,574 | 1,428,725 | ||||||||||
Issued in reinvestment of distributions | 5,625 | 58,475 | 6,975 | 73,851 | ||||||||||
Redeemed | (106,016) | (1,064,369) | (154,121) | (1,627,818) | ||||||||||
3,944 | 44,893 | (8,572) | (125,242) | |||||||||||
R5 Class/Shares Authorized | 25,000,000 | 20,000,000 | ||||||||||||
Issued in reinvestment of distributions | 15 | 157 | 16 | 162 | ||||||||||
R6 Class/Shares Authorized | 150,000,000 | 120,000,000 | ||||||||||||
Sold | 7,361,106 | 75,369,267 | 2,774,022 | 27,791,502 | ||||||||||
Issued in reinvestment of distributions | 399,917 | 4,192,187 | 433,595 | 4,543,730 | ||||||||||
Redeemed | (5,719,918) | (54,864,341) | (4,131,818) | (43,289,936) | ||||||||||
2,041,105 | 24,697,113 | (924,201) | (10,954,704) | |||||||||||
Net increase (decrease) | 2,051,436 | $ | 26,038,913 | (13,644,826) | $ | (140,934,852) |
19
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.
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 | |||||||||||
Food Products | $ | 32,296,798 | $ | 13,521,871 | — | ||||||
Industrial Conglomerates | — | 23,538,807 | — | ||||||||
Pharmaceuticals | 67,069,801 | 22,935,139 | — | ||||||||
Other Industries | 742,305,301 | — | — | ||||||||
Temporary Cash Investments | 5,027,409 | 16,857,025 | — | ||||||||
$ | 846,699,309 | $ | 76,852,842 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,587,013 | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $92,707,559.
20
The value of foreign currency risk derivative instruments as of March 31, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $1,587,013 in unrealized appreciation on forward foreign currency exchange contracts. For the year ended March 31, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(5,342,867) in net realized gain (loss) on forward foreign currency exchange contract transactions and $2,376,355 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region 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.
9. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 14,593,775 | $ | 14,774,681 | ||||
Long-term capital gains | $ | 4,712,276 | $ | 6,737,239 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 781,291,740 | |||
Gross tax appreciation of investments | $ | 144,454,888 | |||
Gross tax depreciation of investments | (2,194,477) | ||||
Net tax appreciation (depreciation) of investments | 142,260,411 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 167 | ||||
Net tax appreciation (depreciation) | $ | 142,260,578 | |||
Undistributed ordinary income | $ | 46,038,650 | |||
Accumulated long-term gains | $ | 44,860,000 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
21
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.19 | 3.62 | 3.81 | (0.19) | (0.06) | (0.25) | $11.80 | 46.64% | 0.83% | 1.90% | 112% | $645,489 | ||||||||||||||||||||||||||||
2020 | $9.85 | 0.18 | (1.52) | (1.34) | (0.18) | (0.09) | (0.27) | $8.24 | (14.21)% | 0.84% | 1.72% | 72% | $456,382 | ||||||||||||||||||||||||||||
2019 | $9.85 | 0.18 | 0.40 | 0.58 | (0.18) | (0.40) | (0.58) | $9.85 | 6.20% | 0.83% | 1.83% | 62% | $673,365 | ||||||||||||||||||||||||||||
2018 | $10.05 | 0.21 | 0.17 | 0.38 | (0.20) | (0.38) | (0.58) | $9.85 | 3.65% | 0.83% | 2.09% | 53% | $621,874 | ||||||||||||||||||||||||||||
2017 | $8.58 | 0.18 | 1.48 | 1.66 | (0.19) | — | (0.19) | $10.05 | 19.44% | 0.83% | 1.96% | 68% | $658,031 | ||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.22 | 3.62 | 3.84 | (0.21) | (0.06) | (0.27) | $11.81 | 47.06% | 0.63% | 2.10% | 112% | $42,273 | ||||||||||||||||||||||||||||
2020 | $9.86 | 0.20 | (1.53) | (1.33) | (0.20) | (0.09) | (0.29) | $8.24 | (14.13)% | 0.64% | 1.92% | 72% | $20,080 | ||||||||||||||||||||||||||||
2019 | $9.86 | 0.20 | 0.40 | 0.60 | (0.20) | (0.40) | (0.60) | $9.86 | 6.41% | 0.63% | 2.03% | 62% | $18,196 | ||||||||||||||||||||||||||||
2018 | $10.06 | 0.22 | 0.18 | 0.40 | (0.22) | (0.38) | (0.60) | $9.86 | 3.85% | 0.63% | 2.29% | 53% | $20,213 | ||||||||||||||||||||||||||||
2017 | $8.58 | 0.19 | 1.49 | 1.68 | (0.20) | — | (0.20) | $10.06 | 19.80% | 0.63% | 2.16% | 68% | $41,746 | ||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.23 | 0.17 | 3.62 | 3.79 | (0.16) | (0.06) | (0.22) | $11.80 | 46.44% | 1.08% | 1.65% | 112% | $34,806 | ||||||||||||||||||||||||||||
2020 | $9.85 | 0.15 | (1.53) | (1.38) | (0.15) | (0.09) | (0.24) | $8.23 | (14.52)% | 1.09% | 1.47% | 72% | $26,342 | ||||||||||||||||||||||||||||
2019 | $9.85 | 0.16 | 0.40 | 0.56 | (0.16) | (0.40) | (0.56) | $9.85 | 5.94% | 1.08% | 1.58% | 62% | $34,603 | ||||||||||||||||||||||||||||
2018 | $10.05 | 0.18 | 0.17 | 0.35 | (0.17) | (0.38) | (0.55) | $9.85 | 3.39% | 1.08% | 1.84% | 53% | $40,192 | ||||||||||||||||||||||||||||
2017 | $8.57 | 0.16 | 1.48 | 1.64 | (0.16) | — | (0.16) | $10.05 | 19.28% | 1.08% | 1.71% | 68% | $56,222 |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.23 | 0.09 | 3.62 | 3.71 | (0.08) | (0.06) | (0.14) | $11.80 | 45.31% | 1.83% | 0.90% | 112% | $1,358 | ||||||||||||||||||||||||||||
2020 | $9.85 | 0.07 | (1.52) | (1.45) | (0.08) | (0.09) | (0.17) | $8.23 | (15.14)% | 1.84% | 0.72% | 72% | $2,324 | ||||||||||||||||||||||||||||
2019 | $9.85 | 0.08 | 0.40 | 0.48 | (0.08) | (0.40) | (0.48) | $9.85 | 5.15% | 1.83% | 0.83% | 62% | $3,363 | ||||||||||||||||||||||||||||
2018 | $10.05 | 0.11 | 0.17 | 0.28 | (0.10) | (0.38) | (0.48) | $9.85 | 2.63% | 1.83% | 1.09% | 53% | $6,050 | ||||||||||||||||||||||||||||
2017 | $8.57 | 0.09 | 1.48 | 1.57 | (0.09) | — | (0.09) | $10.05 | 18.36% | 1.83% | 0.96% | 68% | $8,948 | ||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.14 | 3.62 | 3.76 | (0.13) | (0.06) | (0.19) | $11.81 | 46.00% | 1.33% | 1.40% | 112% | $4,006 | ||||||||||||||||||||||||||||
2020 | $9.86 | 0.13 | (1.53) | (1.40) | (0.13) | (0.09) | (0.22) | $8.24 | (14.71)% | 1.34% | 1.22% | 72% | $2,762 | ||||||||||||||||||||||||||||
2019 | $9.86 | 0.13 | 0.40 | 0.53 | (0.13) | (0.40) | (0.53) | $9.86 | 5.67% | 1.33% | 1.33% | 62% | $3,389 | ||||||||||||||||||||||||||||
2018 | $10.06 | 0.16 | 0.17 | 0.33 | (0.15) | (0.38) | (0.53) | $9.86 | 3.13% | 1.33% | 1.59% | 53% | $4,291 | ||||||||||||||||||||||||||||
2017 | $8.58 | 0.14 | 1.48 | 1.62 | (0.14) | — | (0.14) | $10.06 | 18.95% | 1.33% | 1.46% | 68% | $5,806 | ||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.21 | 3.63 | 3.84 | (0.21) | (0.06) | (0.27) | $11.81 | 47.06% | 0.63% | 2.10% | 112% | $7 | ||||||||||||||||||||||||||||
2020 | $9.86 | 0.20 | (1.53) | (1.33) | (0.20) | (0.09) | (0.29) | $8.24 | (14.13)% | 0.64% | 1.92% | 72% | $5 | ||||||||||||||||||||||||||||
2019 | $9.86 | 0.20 | 0.40 | 0.60 | (0.20) | (0.40) | (0.60) | $9.86 | 6.40% | 0.63% | 2.03% | 62% | $6 | ||||||||||||||||||||||||||||
2018(3) | $10.04 | 0.23 | 0.19 | 0.42 | (0.22) | (0.38) | (0.60) | $9.86 | 4.05% | 0.63%(4) | 2.28%(4) | 53%(5) | $5 |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.23 | 3.62 | 3.85 | (0.22) | (0.06) | (0.28) | $11.81 | 47.29% | 0.48% | 2.25% | 112% | $195,898 | ||||||||||||||||||||||||||||
2020 | $9.86 | 0.21 | (1.52) | (1.31) | (0.22) | (0.09) | (0.31) | $8.24 | (14.01)% | 0.49% | 2.07% | 72% | $119,911 | ||||||||||||||||||||||||||||
2019 | $9.86 | 0.22 | 0.40 | 0.62 | (0.22) | (0.40) | (0.62) | $9.86 | 6.57% | 0.48% | 2.18% | 62% | $152,534 | ||||||||||||||||||||||||||||
2018 | $10.06 | 0.25 | 0.16 | 0.41 | (0.23) | (0.38) | (0.61) | $9.86 | 4.01% | 0.48% | 2.44% | 53% | $121,935 | ||||||||||||||||||||||||||||
2017 | $8.58 | 0.22 | 1.48 | 1.70 | (0.22) | — | (0.22) | $10.06 | 19.98% | 0.48% | 2.31% | 68% | $132,608 |
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)April 10, 2017 (commencement of sale) through March 31, 2018.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities of Focused Large Cap Value Fund (formerly, Large Company Value Fund) (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., including the schedule of investments as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Focused Large Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
25
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
26
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
27
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
28
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
29
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
30
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $14,593,775, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
The fund hereby designates $4,712,276, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2021.
31
Notes |
32
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications 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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92269 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
Mid Cap Value Fund | |||||
Investor Class (ACMVX) | |||||
I Class (AVUAX) | |||||
Y Class (AMVYX) | |||||
A Class (ACLAX) | |||||
C Class (ACCLX) | |||||
R Class (AMVRX) | |||||
R5 Class (AMVGX) | |||||
R6 Class (AMDVX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image231.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image231.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2021. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Stocks Soared, Bonds Moderated Amid Growing Economic Optimism
March 31 marked the end of a remarkable 12-month period, as the COVID-19 pandemic wreaked havoc on global economies, governments and society. In response, states issued unprecedented lockdown orders. Unemployment surged, corporate earnings plunged and second-quarter-2020 gross domestic product sank a record 31.4% (annualized). This triggered soaring demand for safe-haven assets.
Swift and significant action from the Federal Reserve and the federal government helped reignite investor confidence and bolster the economic backdrop. Riskier assets quickly rebounded from their early 2020 lows. The economy expanded a record 33.4% in the third quarter and continued to grow amid the gradual lifting of lockdowns and the emergency approval of vaccines.
Late in the reporting period, improving vaccine distributions, additional federal coronavirus aid and ongoing reopenings bolstered the economic and earnings outlooks. This improving backdrop combined with massive monetary and fiscal support helped fuel a 12-month gain of 56% for the S&P 500 Index. These same economic dynamics lifted longer-term inflation expectations and U.S. Treasury yields, pressuring investment-grade bond returns. After rallying through most of 2020, the Bloomberg Barclays U.S. Aggregate Bond Index gained less than 1% for the 12-month period.
A Return to Normalcy in Sight
The return to pre-pandemic life appears to be on the horizon, thanks largely to expanding vaccine availability. In addition, medical professionals continue to improve treatment protocols for those afflicted with the virus. Until the U.S. is fully reopened, investors still may face the effects of regional virus-related restrictions, economic and political uncertainty and heightened market volatility. These influences can be unsettling, but they tend to be temporary.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image161.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image161.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | ACMVX | 57.22% | 10.73% | 11.15% | — | 3/31/04 | ||||||||||||||
Russell Midcap Value Index | — | 73.76% | 11.59% | 11.05% | — | — | ||||||||||||||
I Class | AVUAX | 57.50% | 10.94% | 11.36% | — | 8/2/04 | ||||||||||||||
Y Class | AMVYX | 57.69% | — | — | 8.82% | 4/10/17 | ||||||||||||||
A Class | ACLAX | 1/13/05 | ||||||||||||||||||
No sales charge | 56.87% | 10.45% | 10.87% | — | ||||||||||||||||
With sales charge | 47.87% | 9.15% | 10.22% | — | ||||||||||||||||
C Class | ACCLX | 55.65% | 9.62% | 10.04% | — | 3/1/10 | ||||||||||||||
R Class | AMVRX | 56.48% | 10.18% | 10.59% | — | 7/29/05 | ||||||||||||||
R5 Class | AMVGX | 57.58% | — | — | 8.66% | 4/10/17 | ||||||||||||||
R6 Class | AMDVX | 57.74% | 11.11% | — | 10.89% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available.
Fund returns would have been lower if a portion of the fees had not been waived. Extraordinary performance
is attributable in part to unusually favorable market conditions and may not be repeated or consistently
achieved in the future.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-c45f44310e344a60ad01a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-c45f44310e344a60ad01a.jpg)
Value on March 31, 2021 | |||||
Investor Class — $28,797 | |||||
Russell Midcap Value Index — $28,535 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | ||||||||||||||||
0.98% | 0.78% | 0.63% | 1.23% | 1.98% | 1.48% | 0.78% | 0.63% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Phillip N. Davidson, Michael Liss, Kevin Toney and Brian Woglom
Performance Summary
Mid Cap Value returned 57.22%* for the fiscal year ended March 31, 2021, compared with the 73.76% return of its benchmark, the Russell Midcap Value Index. Fund returns reflect operating expenses, while index returns do not.
Broad U.S. equity markets rallied over the trailing 12-month period, fueled by increased growth expectations, positive earnings reports, additional fiscal stimulus and optimism around accelerating vaccine distributions. Mid Cap Value advanced in the fiscal year but underperformed its benchmark, the Russell Midcap Value Index. Security selection in the financials, materials and consumer discretionary sectors detracted from relative performance, as did an underweight allocation to materials and consumer discretionary. Our relative underweight in real estate and stock selection in information technology contributed.
Stock Selection in Financials and Materials Detracted
Security selection in the financials sector detracted from relative returns against a backdrop of strong equity markets and rising interest rates late in the period. Our more conservative approach in the sector, including a preference for higher-quality banks, weighed on performance. Property and casualty insurance holding ProAssurance was a detractor. The stock underperformed as investors moved away from the more defensive insurance industry and into banks and cyclical stocks. Losses tied to ProAssurance’s medical malpractice business put additional pressure on company shares. We exited the position during the period.
Stock selection and an underweight in the materials sector detracted from the portfolio’s performance. Notably, the portfolio’s lack of exposure to the cyclical metals and mining industry weighed on results.
Pinnacle West Capital was another notable detractor from performance. This Arizona-based utility underperformed as investors shifted away from defensive names and toward cyclical stocks.
Real Estate and Information Technology Contributed
The portfolio’s underweight and stock selection in the real estate sector positively impacted performance. Standing out was Weyerhaeuser, a timber real estate investment trust (REIT), which supplies lumber and engineered wood products used in new home construction. Shares of the stock rose as better-than-expected housing demand and mill closures due to the pandemic caused prices for lumber and wood products to rebound.
Strong security selection in the information technology sector also benefited performance, driven by positions in the communications equipment as well as the semiconductors and semiconductor equipment industries. Semiconductor equipment company Applied Materials was a key contributor. The company continued to execute on its product road map and benefited from strong demand.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Elsewhere, Envista Holdings contributed. This dental products company was spun out of Danaher in 2019. The stock outperformed due to margin improvements, new product launches and demand for Envista’s infection prevention products. Additionally, Envista stands to benefit from economic reopening post-pandemic.
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
We ended the reporting period with an overweight in consumer staples. Within the sector, we have identified companies that fit our investment process well due to their attractive valuations and stable business models. The vast majority of our consumer staples holdings are in the food products and food and staples retailing industries. Our portfolio is also overweight in industrials where we have identified higher-quality companies selling at attractive valuations. We are focused on higher-quality companies and remain cautious of companies with end markets that we think are unfavorable, such as energy and construction.
On the other hand, the portfolio is underweight in real estate and information technology. We continue to hold a limited number of real estate stocks due to valuations that we believe are extended. While we are underweight the information technology sector, we have found select stocks that meet our investment criteria.
6
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Zimmer Biomet Holdings, Inc. | 2.6% | ||||
Northern Trust Corp. | 2.4% | ||||
Bank of New York Mellon Corp. (The) | 2.3% | ||||
Emerson Electric Co. | 2.1% | ||||
Conagra Brands, Inc. | 1.8% | ||||
nVent Electric plc | 1.8% | ||||
Advance Auto Parts, Inc. | 1.8% | ||||
Sonoco Products Co. | 1.8% | ||||
Chubb Ltd. | 1.8% | ||||
Pinnacle West Capital Corp. | 1.8% | ||||
Top Five Industries | % of net assets | ||||
Health Care Providers and Services | 8.6% | ||||
Capital Markets | 7.7% | ||||
Insurance | 5.6% | ||||
Electrical Equipment | 5.5% | ||||
Food Products | 5.2% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 88.8% | ||||
Foreign Common Stocks* | 8.5% | ||||
Exchange-Traded Funds | 1.2% | ||||
Total Equity Exposure | 98.5% | ||||
Temporary Cash Investments | 1.6% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.2% | ||||
Other Assets and Liabilities | (0.3)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2020 to March 31, 2021.
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 I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,308.30 | $5.58 | 0.97% | ||||||||||
I Class | $1,000 | $1,309.40 | $4.43 | 0.77% | ||||||||||
Y Class | $1,000 | $1,310.20 | $3.57 | 0.62% | ||||||||||
A Class | $1,000 | $1,306.60 | $7.02 | 1.22% | ||||||||||
C Class | $1,000 | $1,300.80 | $11.30 | 1.97% | ||||||||||
R Class | $1,000 | $1,305.30 | $8.45 | 1.47% | ||||||||||
R5 Class | $1,000 | $1,309.20 | $4.43 | 0.77% | ||||||||||
R6 Class | $1,000 | $1,310.40 | $3.57 | 0.62% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.10 | $4.89 | 0.97% | ||||||||||
I Class | $1,000 | $1,021.09 | $3.88 | 0.77% | ||||||||||
Y Class | $1,000 | $1,021.84 | $3.13 | 0.62% | ||||||||||
A Class | $1,000 | $1,018.85 | $6.14 | 1.22% | ||||||||||
C Class | $1,000 | $1,015.11 | $9.90 | 1.97% | ||||||||||
R Class | $1,000 | $1,017.60 | $7.39 | 1.47% | ||||||||||
R5 Class | $1,000 | $1,021.09 | $3.88 | 0.77% | ||||||||||
R6 Class | $1,000 | $1,021.84 | $3.13 | 0.62% |
(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 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
MARCH 31, 2021
Shares | Value | |||||||
COMMON STOCKS — 97.3% | ||||||||
Aerospace and Defense — 3.1% | ||||||||
BAE Systems plc | 12,453,780 | $ | 86,694,481 | |||||
General Dynamics Corp. | 611,826 | 111,083,129 | ||||||
Textron, Inc. | 1,128,330 | 63,276,746 | ||||||
261,054,356 | ||||||||
Airlines — 1.7% | ||||||||
Southwest Airlines Co.(1) | 2,394,608 | 146,214,764 | ||||||
Auto Components — 1.5% | ||||||||
Aptiv plc(1) | 242,803 | 33,482,534 | ||||||
BorgWarner, Inc. | 1,953,217 | 90,551,140 | ||||||
124,033,674 | ||||||||
Automobiles — 1.0% | ||||||||
Honda Motor Co. Ltd., ADR(2) | 2,822,089 | 85,227,088 | ||||||
Banks — 4.9% | ||||||||
Commerce Bancshares, Inc. | 941,406 | 72,121,114 | ||||||
Eastern Bankshares, Inc. | 2,016,735 | 38,902,818 | ||||||
M&T Bank Corp. | 514,238 | 77,963,623 | ||||||
PNC Financial Services Group, Inc. (The) | 278,270 | 48,811,341 | ||||||
Truist Financial Corp. | 2,169,129 | 126,503,603 | ||||||
Westamerica Bancorporation | 891,721 | 55,982,244 | ||||||
420,284,743 | ||||||||
Building Products — 0.9% | ||||||||
Johnson Controls International plc | 1,267,121 | 75,609,110 | ||||||
Capital Markets — 7.7% | ||||||||
Ameriprise Financial, Inc. | 501,957 | 116,679,904 | ||||||
Bank of New York Mellon Corp. (The) | 4,128,699 | 195,246,176 | ||||||
Northern Trust Corp. | 1,903,774 | 200,105,685 | ||||||
State Street Corp. | 666,000 | 55,950,660 | ||||||
T. Rowe Price Group, Inc. | 493,980 | 84,766,968 | ||||||
652,749,393 | ||||||||
Chemicals — 0.8% | ||||||||
Axalta Coating Systems Ltd.(1) | 2,244,966 | 66,406,094 | ||||||
Commercial Services and Supplies — 1.5% | ||||||||
Republic Services, Inc. | 1,280,265 | 127,194,328 | ||||||
Communications Equipment — 1.5% | ||||||||
F5 Networks, Inc.(1) | 392,926 | 81,972,222 | ||||||
Juniper Networks, Inc. | 1,840,437 | 46,618,269 | ||||||
128,590,491 | ||||||||
Containers and Packaging — 3.3% | ||||||||
Graphic Packaging Holding Co. | 4,210,267 | 76,458,449 | ||||||
Packaging Corp. of America | 390,126 | 52,464,144 | ||||||
Sonoco Products Co. | 2,393,390 | 151,501,587 | ||||||
280,424,180 | ||||||||
Distributors — 1.1% | ||||||||
Genuine Parts Co. | 827,460 | 95,646,101 | ||||||
Electric Utilities — 4.3% | ||||||||
Edison International | 2,326,044 | 136,306,178 |
10
Shares | Value | |||||||
Evergy, Inc. | 840,860 | $ | 50,056,396 | |||||
Pinnacle West Capital Corp. | 1,837,772 | 149,502,752 | ||||||
Xcel Energy, Inc. | 490,715 | 32,637,455 | ||||||
368,502,781 | ||||||||
Electrical Equipment — 5.5% | ||||||||
Emerson Electric Co. | 1,943,157 | 175,311,624 | ||||||
Hubbell, Inc. | 747,393 | 139,680,278 | ||||||
nVent Electric plc | 5,558,371 | 155,134,135 | ||||||
470,126,037 | ||||||||
Electronic Equipment, Instruments and Components — 0.6% | ||||||||
TE Connectivity Ltd. | 400,835 | 51,751,807 | ||||||
Energy Equipment and Services — 0.5% | ||||||||
Baker Hughes Co. | 1,955,426 | 42,256,756 | ||||||
Equity Real Estate Investment Trusts (REITs) — 4.5% | ||||||||
Equinix, Inc. | 66,206 | 44,992,936 | ||||||
Essex Property Trust, Inc. | 209,702 | 57,005,392 | ||||||
Healthcare Trust of America, Inc., Class A | 1,868,419 | 51,530,996 | ||||||
Healthpeak Properties, Inc. | 3,047,649 | 96,732,379 | ||||||
MGM Growth Properties LLC, Class A | 2,705,668 | 88,258,890 | ||||||
Weyerhaeuser Co. | 1,292,800 | 46,023,680 | ||||||
384,544,273 | ||||||||
Food and Staples Retailing — 2.3% | ||||||||
Koninklijke Ahold Delhaize NV | 5,063,004 | 141,025,157 | ||||||
Sysco Corp. | 653,409 | 51,449,425 | ||||||
192,474,582 | ||||||||
Food Products — 5.2% | ||||||||
Conagra Brands, Inc. | 4,173,527 | 156,924,615 | ||||||
J.M. Smucker Co. (The) | 886,608 | 112,182,510 | ||||||
Kellogg Co. | 1,361,871 | 86,206,435 | ||||||
Mondelez International, Inc., Class A | 358,998 | 21,012,153 | ||||||
Orkla ASA | 7,009,874 | 68,729,346 | ||||||
445,055,059 | ||||||||
Gas Utilities — 1.7% | ||||||||
Atmos Energy Corp. | 737,254 | 72,877,558 | ||||||
Spire, Inc. | 1,017,726 | 75,199,774 | ||||||
148,077,332 | ||||||||
Health Care Equipment and Supplies — 5.0% | ||||||||
Becton Dickinson and Co. | 373,388 | 90,789,292 | ||||||
Envista Holdings Corp.(1) | 1,836,761 | 74,939,849 | ||||||
Hill-Rom Holdings, Inc. | 317,499 | 35,077,289 | ||||||
Zimmer Biomet Holdings, Inc. | 1,389,571 | 222,442,526 | ||||||
423,248,956 | ||||||||
Health Care Providers and Services — 8.6% | ||||||||
Cardinal Health, Inc. | 2,437,611 | 148,084,868 | ||||||
Cigna Corp. | 272,203 | 65,802,353 | ||||||
Henry Schein, Inc.(1) | 1,608,086 | 111,343,875 | ||||||
McKesson Corp. | 548,293 | 106,939,067 | ||||||
Quest Diagnostics, Inc. | 1,161,204 | 149,028,921 | ||||||
Universal Health Services, Inc., Class B | 1,099,108 | 146,610,016 | ||||||
727,809,100 | ||||||||
Health Care Technology — 1.6% | ||||||||
Cerner Corp. | 1,912,310 | 137,456,843 |
11
Shares | Value | |||||||
Hotels, Restaurants and Leisure — 0.9% | ||||||||
Sodexo SA(1) | 842,036 | $ | 80,787,553 | |||||
Household Durables — 0.3% | ||||||||
Mohawk Industries, Inc.(1) | 111,108 | 21,367,179 | ||||||
Household Products — 0.9% | ||||||||
Kimberly-Clark Corp. | 530,080 | 73,707,624 | ||||||
Insurance — 5.6% | ||||||||
Aflac, Inc. | 2,567,510 | 131,405,162 | ||||||
Arthur J. Gallagher & Co. | 382,029 | 47,665,758 | ||||||
Brown & Brown, Inc. | 181,630 | 8,302,307 | ||||||
Chubb Ltd. | 958,215 | 151,369,224 | ||||||
Reinsurance Group of America, Inc. | 1,094,712 | 137,988,448 | ||||||
476,730,899 | ||||||||
IT Services — 0.3% | ||||||||
Amdocs Ltd. | 403,366 | 28,296,125 | ||||||
Leisure Products — 0.6% | ||||||||
Polaris, Inc. | 374,753 | 50,029,525 | ||||||
Machinery — 3.9% | ||||||||
Crane Co. | 486,268 | 45,665,428 | ||||||
Cummins, Inc. | 184,098 | 47,701,633 | ||||||
IMI plc | 4,236,297 | 77,920,605 | ||||||
Oshkosh Corp. | 802,414 | 95,214,445 | ||||||
PACCAR, Inc. | 657,805 | 61,123,241 | ||||||
327,625,352 | ||||||||
Media — 1.4% | ||||||||
Fox Corp., Class B | 3,320,844 | 115,997,081 | ||||||
Multi-Utilities — 1.8% | ||||||||
Ameren Corp. | 183,857 | 14,958,605 | ||||||
NorthWestern Corp. | 2,095,478 | 136,625,166 | ||||||
151,583,771 | ||||||||
Multiline Retail — 1.2% | ||||||||
Dollar Tree, Inc.(1) | 927,436 | 106,154,325 | ||||||
Oil, Gas and Consumable Fuels — 2.8% | ||||||||
Cimarex Energy Co. | 764,032 | 45,375,860 | ||||||
ConocoPhillips | 2,595,439 | 137,480,404 | ||||||
Pioneer Natural Resources Co. | 358,647 | 56,960,317 | ||||||
239,816,581 | ||||||||
Paper and Forest Products — 1.4% | ||||||||
Mondi plc | 4,617,179 | 117,799,432 | ||||||
Road and Rail — 0.9% | ||||||||
Heartland Express, Inc. | 3,445,010 | 67,453,296 | ||||||
Norfolk Southern Corp. | 28,701 | 7,706,792 | ||||||
75,160,088 | ||||||||
Semiconductors and Semiconductor Equipment — 0.2% | ||||||||
Applied Materials, Inc. | 158,997 | 21,241,999 | ||||||
Software — 1.3% | ||||||||
CDK Global, Inc. | 877,896 | 47,459,058 | ||||||
Open Text Corp. | 1,356,769 | 64,731,449 | ||||||
112,190,507 | ||||||||
Specialty Retail — 1.8% | ||||||||
Advance Auto Parts, Inc. | 836,346 | 153,461,128 | ||||||
Technology Hardware, Storage and Peripherals — 1.3% | ||||||||
HP, Inc. | 3,376,209 | 107,194,636 |
12
Shares/Principal Amount | Value | |||||||
Thrifts and Mortgage Finance — 0.4% | ||||||||
Capitol Federal Financial, Inc. | 2,892,743 | $ | 38,314,381 | |||||
Trading Companies and Distributors — 1.5% | ||||||||
Beacon Roofing Supply, Inc.(1) | 144,331 | 7,551,398 | ||||||
MSC Industrial Direct Co., Inc., Class A | 1,288,107 | 116,174,370 | ||||||
123,725,768 | ||||||||
TOTAL COMMON STOCKS (Cost $6,118,406,789) | 8,275,921,802 | |||||||
EXCHANGE-TRADED FUNDS — 1.2% | ||||||||
iShares Russell Mid-Cap Value ETF (Cost $100,338,254) | 905,195 | 98,937,814 | ||||||
TEMPORARY CASH INVESTMENTS — 1.6% | ||||||||
Federal Farm Credit Discount Notes, 0.02%, 4/1/21(3) | $ | 27,491,000 | 27,491,000 | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $19,506,026), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $19,122,897) | 19,122,894 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 1.625%, 3/31/26 - 5/15/26, valued at $65,042,485), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $63,767,000) | 63,767,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 24,720,551 | 24,720,551 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $135,101,445) | 135,101,445 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(4) — 0.2% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $20,550,148) | 20,550,148 | 20,550,148 | ||||||
TOTAL INVESTMENT SECURITIES — 100.3% (Cost $6,374,396,636) | 8,530,511,209 | |||||||
OTHER ASSETS AND LIABILITIES — (0.3)% | (23,865,326) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 8,506,645,883 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 4,225,303 | USD | 3,379,190 | Morgan Stanley | 6/30/21 | $ | (16,553) | |||||||||||||
CAD | 7,552,670 | USD | 6,028,212 | Morgan Stanley | 6/30/21 | (17,545) | ||||||||||||||
CAD | 12,056,884 | USD | 9,651,375 | Morgan Stanley | 6/30/21 | (56,105) | ||||||||||||||
USD | 19,145,232 | CAD | 23,834,857 | Morgan Stanley | 6/30/21 | 176,659 | ||||||||||||||
USD | 187,732,535 | EUR | 157,067,074 | Credit Suisse AG | 6/30/21 | 3,206,573 | ||||||||||||||
USD | 4,516,637 | EUR | 3,841,498 | Credit Suisse AG | 6/30/21 | 3,558 | ||||||||||||||
USD | 239,441,516 | GBP | 171,845,923 | JPMorgan Chase Bank N.A. | 6/30/21 | 2,471,464 | ||||||||||||||
USD | 7,439,730 | GBP | 5,391,753 | JPMorgan Chase Bank N.A. | 6/30/21 | 4,674 | ||||||||||||||
JPY | 351,855,516 | USD | 3,234,092 | Bank of America N.A. | 6/30/21 | (53,628) | ||||||||||||||
USD | 51,773,446 | JPY | 5,641,105,200 | Bank of America N.A. | 6/30/21 | 782,820 | ||||||||||||||
USD | 2,130,469 | JPY | 231,615,308 | Bank of America N.A. | 6/30/21 | 36,870 | ||||||||||||||
USD | 58,569,018 | NOK | 496,691,632 | UBS AG | 6/30/21 | 500,381 | ||||||||||||||
$ | 7,039,168 |
13
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
CAD | - | Canadian Dollar | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
JPY | - | Japanese Yen | ||||||
NOK | - | Norwegian Krone | ||||||
USD | - | United States Dollar |
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $30,496,202. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(3)The rate indicated is the yield to maturity at purchase.
(4)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $31,311,595, which includes securities collateral of $10,761,447.
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities, at value (cost of $6,353,846,488) — including $30,496,202 of securities on loan | $ | 8,509,961,061 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $20,550,148) | 20,550,148 | ||||
Total investment securities, at value (cost of $6,374,396,636) | 8,530,511,209 | ||||
Receivable for investments sold | 32,287,724 | ||||
Receivable for capital shares sold | 7,576,444 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 7,182,999 | ||||
Dividends and interest receivable | 14,907,471 | ||||
Securities lending receivable | 14,328 | ||||
8,592,480,175 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 20,550,148 | ||||
Payable for investments purchased | 49,528,226 | ||||
Payable for capital shares redeemed | 9,932,269 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 143,831 | ||||
Accrued management fees | 5,526,065 | ||||
Distribution and service fees payable | 153,753 | ||||
85,834,292 | |||||
Net Assets | $ | 8,506,645,883 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 6,122,336,923 | |||
Distributable earnings | 2,384,308,960 | ||||
$ | 8,506,645,883 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $2,519,908,608 | 132,443,173 | $19.03 | ||||||||
I Class, $0.01 Par Value | $1,778,955,579 | 93,419,431 | $19.04 | ||||||||
Y Class, $0.01 Par Value | $180,923,407 | 9,496,631 | $19.05 | ||||||||
A Class, $0.01 Par Value | $323,669,381 | 17,047,413 | $18.99* | ||||||||
C Class, $0.01 Par Value | $51,558,035 | 2,749,304 | $18.75 | ||||||||
R Class, $0.01 Par Value | $97,590,239 | 5,156,063 | $18.93 | ||||||||
R5 Class, $0.01 Par Value | $59,132,063 | 3,104,411 | $19.05 | ||||||||
R6 Class, $0.01 Par Value | $3,494,908,571 | 183,559,663 | $19.04 |
*Maximum offering price $20.15 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $268,757 from affiliates and net of foreign taxes withheld of $1,715,271) | $ | 181,147,407 | |||
Securities lending, net | 736,419 | ||||
Interest | 74,970 | ||||
181,958,796 | |||||
Expenses: | |||||
Management fees | 59,018,577 | ||||
Distribution and service fees: | |||||
A Class | 680,637 | ||||
C Class | 584,886 | ||||
R Class | 418,062 | ||||
Directors' fees and expenses | 224,552 | ||||
Other expenses | 6,700 | ||||
60,933,414 | |||||
Net investment income (loss) | 121,025,382 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $(271,624) from affiliates) (Note 4) | 425,685,329 | ||||
Forward foreign currency exchange contract transactions | (73,514,003) | ||||
Foreign currency translation transactions | (269,050) | ||||
351,902,276 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $5,470,659 from affiliates) | 2,898,918,306 | ||||
Forward foreign currency exchange contracts | 24,759,383 | ||||
Translation of assets and liabilities in foreign currencies | 31,486 | ||||
2,923,709,175 | |||||
Net realized and unrealized gain (loss) | 3,275,611,451 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 3,396,636,833 |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 121,025,382 | $ | 135,537,530 | ||||
Net realized gain (loss) | 351,902,276 | 52,589,458 | ||||||
Change in net unrealized appreciation (depreciation) | 2,923,709,175 | (1,505,753,058) | ||||||
Net increase (decrease) in net assets resulting from operations | 3,396,636,833 | (1,317,626,070) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (45,011,916) | (37,683,895) | ||||||
I Class | (43,120,588) | (38,542,329) | ||||||
Y Class | (3,320,505) | (1,169,265) | ||||||
A Class | (4,854,461) | (3,920,068) | ||||||
C Class | (601,904) | (423,132) | ||||||
R Class | (1,283,728) | (911,293) | ||||||
R5 Class | (1,144,444) | (1,175,543) | ||||||
R6 Class | (68,481,912) | (42,327,290) | ||||||
Decrease in net assets from distributions | (167,819,458) | (126,152,815) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (1,047,314,553) | 156,328,013 | ||||||
Net increase (decrease) in net assets | 2,181,502,822 | (1,287,450,872) | ||||||
Net Assets | ||||||||
Beginning of period | 6,325,143,061 | 7,612,593,933 | ||||||
End of period | $ | 8,506,645,883 | $ | 6,325,143,061 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
MARCH 31, 2021
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. Mid Cap Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective.
The fund offers the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and 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.
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 (NAV) per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities 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. U.S. Treasury and Government Agency securities 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.
Open-end management investment companies are valued at the reported NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not 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.
18
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV 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. 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 lending income is net of fees and rebates earned by the lending agent for its services.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. 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 collateral requirements.
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.
19
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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 20,550,148 | — | — | — | $ | 20,550,148 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 20,550,148 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule
20
12b-1 shareholder 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. From April 1, 2020 through July 31, 2020, the annual management fee was 0.97% for the Investor Class, A Class, C Class and R Class, 0.77% for the I Class and R5 Class and 0.62% for the Y Class and R6 Class. Effective August 1, 2020, 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 use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of NT Mid Cap Value Fund, one fund in a series issued by the corporation.
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.95% to 0.97% | 0.97% | ||||||
I Class | 0.75% to 0.77% | 0.77% | ||||||
Y Class | 0.60% to 0.62% | 0.62% | ||||||
A Class | 0.95% to 0.97% | 0.97% | ||||||
C Class | 0.95% to 0.97% | 0.97% | ||||||
R Class | 0.95% to 0.97% | 0.97% | ||||||
R5 Class | 0.75% to 0.77% | 0.77% | ||||||
R6 Class | 0.60% to 0.62% | 0.62% |
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 period ended March 31, 2021 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $5,380,235 and $9,198,737, respectively. The effect of interfund transactions on the Statement of Operations was $708,686 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended March 31, 2021 were $4,774,480,463 and $5,881,657,172, respectively.
For the period ended March 31, 2021, the fund incurred net realized gains of $843,953 from redemptions in kind. A redemption in kind occurs when a fund delivers securities from its portfolio in lieu of cash as payment to a redeeming shareholder.
21
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2021 | Year ended March 31, 2020 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 1,100,000,000 | 1,500,000,000 | ||||||||||||
Sold | 25,241,110 | $ | 398,413,156 | 20,088,394 | $ | 311,201,364 | ||||||||
Issued in reinvestment of distributions | 2,774,786 | 43,909,525 | 2,317,924 | 36,976,343 | ||||||||||
Redeemed | (48,256,051) | (754,357,720) | (100,996,222) | (1,577,566,569) | ||||||||||
(20,240,155) | (312,035,039) | (78,589,904) | (1,229,388,862) | |||||||||||
I Class/Shares Authorized | 1,100,000,000 | 1,100,000,000 | ||||||||||||
Sold | 28,384,245 | 438,667,055 | 94,376,421 | 1,450,628,400 | ||||||||||
Issued in reinvestment of distributions | 2,592,121 | 40,950,019 | 2,293,117 | 36,571,490 | ||||||||||
Redeemed | (88,577,519) | (1,392,791,909) | (46,632,054) | (725,767,160) | ||||||||||
(57,601,153) | (913,174,835) | 50,037,484 | 761,432,730 | |||||||||||
Y Class/Shares Authorized | 75,000,000 | 40,000,000 | ||||||||||||
Sold | 2,955,674 | 46,276,623 | 7,040,258 | 109,174,391 | ||||||||||
Issued in reinvestment of distributions | 206,142 | 3,292,573 | 72,447 | 1,152,523 | ||||||||||
Redeemed | (1,553,679) | (24,778,108) | (280,091) | (4,247,714) | ||||||||||
1,608,137 | 24,791,088 | 6,832,614 | 106,079,200 | |||||||||||
A Class/Shares Authorized | 180,000,000 | 180,000,000 | ||||||||||||
Sold | 5,494,682 | 85,957,251 | 4,084,537 | 63,101,608 | ||||||||||
Issued in reinvestment of distributions | 250,309 | 3,949,771 | 218,963 | 3,488,204 | ||||||||||
Redeemed | (6,657,741) | (103,788,427) | (9,987,643) | (157,210,586) | ||||||||||
(912,750) | (13,881,405) | (5,684,143) | (90,620,774) | |||||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||
Sold | 52,946 | 834,704 | 100,022 | 1,500,175 | ||||||||||
Issued in reinvestment of distributions | 37,293 | 579,058 | 24,922 | 395,739 | ||||||||||
Redeemed | (2,171,393) | (34,037,700) | (1,628,718) | (24,798,234) | ||||||||||
(2,081,154) | (32,623,938) | (1,503,774) | (22,902,320) | |||||||||||
R Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 1,237,180 | 19,151,663 | 1,141,041 | 17,475,694 | ||||||||||
Issued in reinvestment of distributions | 80,759 | 1,269,017 | 56,966 | 906,380 | ||||||||||
Redeemed | (1,688,280) | (26,464,381) | (2,069,212) | (32,195,094) | ||||||||||
(370,341) | (6,043,701) | (871,205) | (13,813,020) | |||||||||||
R5 Class/Shares Authorized | 30,000,000 | 40,000,000 | ||||||||||||
Sold | 1,653,554 | 26,031,948 | 1,635,426 | 26,015,321 | ||||||||||
Issued in reinvestment of distributions | 72,918 | 1,144,443 | 73,681 | 1,175,543 | ||||||||||
Redeemed | (3,456,564) | (53,275,869) | (722,530) | (11,084,354) | ||||||||||
(1,730,092) | (26,099,478) | 986,577 | 16,106,510 | |||||||||||
R6 Class/Shares Authorized | 1,300,000,000 | 1,100,000,000 | ||||||||||||
Sold | 69,425,692 | 1,090,502,531 | 71,545,043 | 1,127,211,933 | ||||||||||
Issued in reinvestment of distributions | 4,193,628 | 66,735,181 | 2,640,445 | 42,128,044 | ||||||||||
Redeemed | (57,415,715) | (925,484,957) | (34,320,704) | (539,905,428) | ||||||||||
16,203,605 | 231,752,755 | 39,864,784 | 629,434,549 | |||||||||||
Net increase (decrease) | (65,123,903) | $ | (1,047,314,553) | 11,072,433 | $ | 156,328,013 |
22
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.
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 | $ | 174,359,875 | $ | 86,694,481 | — | ||||||
Food and Staples Retailing | 51,449,425 | 141,025,157 | — | ||||||||
Food Products | 376,325,713 | 68,729,346 | — | ||||||||
Hotels, Restaurants and Leisure | — | 80,787,553 | — | ||||||||
Machinery | 249,704,747 | 77,920,605 | — | ||||||||
Paper and Forest Products | — | 117,799,432 | — | ||||||||
Other Industries | 6,851,125,468 | — | — | ||||||||
Exchange-Traded Funds | 98,937,814 | — | — | ||||||||
Temporary Cash Investments | 24,720,551 | 110,380,894 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 20,550,148 | — | — | ||||||||
$ | 7,847,173,741 | $ | 683,337,468 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 7,182,999 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 143,831 | — |
23
7. Affiliated Company Transactions
If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the period ended March 31, 2021 follows (amounts in thousands):
Company | Beginning Value | Purchase Cost | Sales Cost | Change in Net Unrealized Appreciation (Depreciation) | Ending Value | Ending Shares | Net Realized Gain (Loss) | Income | ||||||||||||||||||
Heartland Express, Inc. | $ | 73,716 | $ | 8,035 | $ | 19,769 | $ | 5,471 | (1) | (1) | $ | (272) | $ | 269 |
(1)Company was not an affiliate at March 31, 2021.
8. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $693,304,606.
The value of foreign currency risk derivative instruments as of March 31, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $7,182,999 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $143,831 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(73,514,003) in net realized gain (loss) on forward foreign currency exchange contract transactions and $24,759,383 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
9. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
24
10. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 126,596,525 | $ | 126,149,383 | ||||
Long-term capital gains | $ | 41,222,933 | $ | 3,432 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 6,520,351,535 | |||
Gross tax appreciation of investments | $ | 2,014,589,245 | |||
Gross tax depreciation of investments | (4,429,571) | ||||
Net tax appreciation (depreciation) of investments | 2,010,159,674 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 12,005 | ||||
Net tax appreciation (depreciation) | $ | 2,010,171,679 | |||
Undistributed ordinary income | $ | 112,344,238 | |||
Accumulated long-term gains | $ | 261,793,043 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
25
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.35 | 0.22 | 6.78 | 7.00 | (0.23) | (0.09) | (0.32) | $19.03 | 57.22% | 0.97% | 0.97% | 1.43% | 1.43% | 65% | $2,519,909 | ||||||||||||||||||||||||||||||||
2020 | $15.19 | 0.24 | (2.85) | (2.61) | (0.23) | — | (0.23) | $12.35 | (17.52)% | 0.98% | 0.99% | 1.56% | 1.55% | 55% | $1,885,286 | ||||||||||||||||||||||||||||||||
2019 | $17.09 | 0.23 | (0.21) | 0.02 | (0.21) | (1.71) | (1.92) | $15.19 | 0.81% | 0.96% | 1.00% | 1.38% | 1.34% | 53% | $3,514,131 | ||||||||||||||||||||||||||||||||
2018 | $17.76 | 0.28 | 0.71 | 0.99 | (0.27) | (1.39) | (1.66) | $17.09 | 5.51% | 0.96% | 1.00% | 1.57% | 1.53% | 47% | $4,223,276 | ||||||||||||||||||||||||||||||||
2017 | $15.32 | 0.22 | 2.93 | 3.15 | (0.23) | (0.48) | (0.71) | $17.76 | 20.71% | 0.98% | 1.00% | 1.32% | 1.30% | 49% | $4,706,704 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.36 | 0.25 | 6.79 | 7.04 | (0.27) | (0.09) | (0.36) | $19.04 | 57.50% | 0.77% | 0.77% | 1.63% | 1.63% | 65% | $1,778,956 | ||||||||||||||||||||||||||||||||
2020 | $15.21 | 0.28 | (2.87) | (2.59) | (0.26) | — | (0.26) | $12.36 | (17.40)% | 0.78% | 0.79% | 1.76% | 1.75% | 55% | $1,866,460 | ||||||||||||||||||||||||||||||||
2019 | $17.10 | 0.26 | (0.20) | 0.06 | (0.24) | (1.71) | (1.95) | $15.21 | 1.07% | 0.76% | 0.80% | 1.58% | 1.54% | 53% | $1,535,449 | ||||||||||||||||||||||||||||||||
2018 | $17.77 | 0.32 | 0.71 | 1.03 | (0.31) | (1.39) | (1.70) | $17.10 | 5.72% | 0.76% | 0.80% | 1.77% | 1.73% | 47% | $1,793,037 | ||||||||||||||||||||||||||||||||
2017 | $15.33 | 0.26 | 2.93 | 3.19 | (0.27) | (0.48) | (0.75) | $17.77 | 20.95% | 0.78% | 0.80% | 1.52% | 1.50% | 49% | $1,628,060 |
For a Share Outstanding Throughout the Years Ended March 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) | |||||||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.36 | 0.28 | 6.79 | 7.07 | (0.29) | (0.09) | (0.38) | $19.05 | 57.69% | 0.62% | 0.62% | 1.78% | 1.78% | 65% | $180,923 | ||||||||||||||||||||||||||||||||
2020 | $15.21 | 0.32 | (2.89) | (2.57) | (0.28) | — | (0.28) | $12.36 | (17.22)% | 0.63% | 0.64% | 1.91% | 1.90% | 55% | $97,541 | ||||||||||||||||||||||||||||||||
2019 | $17.11 | 0.31 | (0.24) | 0.07 | (0.26) | (1.71) | (1.97) | $15.21 | 1.16% | 0.61% | 0.65% | 1.73% | 1.69% | 53% | $16,061 | ||||||||||||||||||||||||||||||||
2018(3) | $17.76 | 0.32 | 0.75 | 1.07 | (0.33) | (1.39) | (1.72) | $17.11 | 5.97% | 0.61%(4) | 0.65%(4) | 1.89%(4) | 1.85%(4) | 47%(5) | $572 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.32 | 0.19 | 6.76 | 6.95 | (0.19) | (0.09) | (0.28) | $18.99 | 56.87% | 1.22% | 1.22% | 1.18% | 1.18% | 65% | $323,669 | ||||||||||||||||||||||||||||||||
2020 | $15.16 | 0.20 | (2.85) | (2.65) | (0.19) | — | (0.19) | $12.32 | (17.76)% | 1.23% | 1.24% | 1.31% | 1.30% | 55% | $221,284 | ||||||||||||||||||||||||||||||||
2019 | $17.06 | 0.18 | (0.20) | (0.02) | (0.17) | (1.71) | (1.88) | $15.16 | 0.57% | 1.21% | 1.25% | 1.13% | 1.09% | 53% | $358,500 | ||||||||||||||||||||||||||||||||
2018 | $17.73 | 0.22 | 0.73 | 0.95 | (0.23) | (1.39) | (1.62) | $17.06 | 5.26% | 1.21% | 1.25% | 1.32% | 1.28% | 47% | $540,108 | ||||||||||||||||||||||||||||||||
2017 | $15.30 | 0.18 | 2.92 | 3.10 | (0.19) | (0.48) | (0.67) | $17.73 | 20.37% | 1.23% | 1.25% | 1.07% | 1.05% | 49% | $989,014 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.17 | 0.07 | 6.67 | 6.74 | (0.07) | (0.09) | (0.16) | $18.75 | 55.65% | 1.97% | 1.97% | 0.43% | 0.43% | 65% | $51,558 | ||||||||||||||||||||||||||||||||
2020 | $14.98 | 0.08 | (2.81) | (2.73) | (0.08) | — | (0.08) | $12.17 | (18.37)% | 1.98% | 1.99% | 0.56% | 0.55% | 55% | $58,796 | ||||||||||||||||||||||||||||||||
2019 | $16.89 | 0.06 | (0.21) | (0.15) | (0.05) | (1.71) | (1.76) | $14.98 | (0.23)% | 1.96% | 2.00% | 0.38% | 0.34% | 53% | $94,910 | ||||||||||||||||||||||||||||||||
2018 | $17.58 | 0.10 | 0.71 | 0.81 | (0.11) | (1.39) | (1.50) | $16.89 | 4.48% | 1.96% | 2.00% | 0.57% | 0.53% | 47% | $135,133 | ||||||||||||||||||||||||||||||||
2017 | $15.17 | 0.06 | 2.90 | 2.96 | (0.07) | (0.48) | (0.55) | $17.58 | 19.56% | 1.98% | 2.00% | 0.32% | 0.30% | 49% | $160,893 |
For a Share Outstanding Throughout the Years Ended March 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.28 | 0.15 | 6.74 | 6.89 | (0.15) | (0.09) | (0.24) | $18.93 | 56.48% | 1.47% | 1.47% | 0.93% | 0.93% | 65% | $97,590 | ||||||||||||||||||||||||||||||||
2020 | $15.12 | 0.17 | (2.86) | (2.69) | (0.15) | — | (0.15) | $12.28 | (18.00)% | 1.48% | 1.49% | 1.06% | 1.05% | 55% | $67,874 | ||||||||||||||||||||||||||||||||
2019 | $17.02 | 0.14 | (0.20) | (0.06) | (0.13) | (1.71) | (1.84) | $15.12 | 0.33% | 1.46% | 1.50% | 0.88% | 0.84% | 53% | $96,701 | ||||||||||||||||||||||||||||||||
2018 | $17.69 | 0.19 | 0.71 | 0.90 | (0.18) | (1.39) | (1.57) | $17.02 | 5.02% | 1.46% | 1.50% | 1.07% | 1.03% | 47% | $120,024 | ||||||||||||||||||||||||||||||||
2017 | $15.26 | 0.14 | 2.92 | 3.06 | (0.15) | (0.48) | (0.63) | $17.69 | 20.12% | 1.48% | 1.50% | 0.82% | 0.80% | 49% | $151,705 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.36 | 0.25 | 6.80 | 7.05 | (0.27) | (0.09) | (0.36) | $19.05 | 57.58% | 0.77% | 0.77% | 1.63% | 1.63% | 65% | $59,132 | ||||||||||||||||||||||||||||||||
2020 | $15.21 | 0.28 | (2.87) | (2.59) | (0.26) | — | (0.26) | $12.36 | (17.40)% | 0.78% | 0.79% | 1.76% | 1.75% | 55% | $59,766 | ||||||||||||||||||||||||||||||||
2019 | $17.11 | 0.28 | (0.23) | 0.05 | (0.24) | (1.71) | (1.95) | $15.21 | 1.01% | 0.76% | 0.80% | 1.58% | 1.54% | 53% | $58,526 | ||||||||||||||||||||||||||||||||
2018(3) | $17.76 | 0.29 | 0.76 | 1.05 | (0.31) | (1.39) | (1.70) | $17.11 | 5.83% | 0.76%(4) | 0.80%(4) | 1.70%(4) | 1.66%(4) | 47%(5) | $313 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $12.36 | 0.28 | 6.78 | 7.06 | (0.29) | (0.09) | (0.38) | $19.04 | 57.74% | 0.62% | 0.62% | 1.78% | 1.78% | 65% | $3,494,909 | ||||||||||||||||||||||||||||||||
2020 | $15.20 | 0.31 | (2.87) | (2.56) | (0.28) | — | (0.28) | $12.36 | (17.23)% | 0.63% | 0.64% | 1.91% | 1.90% | 55% | $2,068,136 | ||||||||||||||||||||||||||||||||
2019 | $17.10 | 0.29 | (0.22) | 0.07 | (0.26) | (1.71) | (1.97) | $15.20 | 1.16% | 0.61% | 0.65% | 1.73% | 1.69% | 53% | $1,938,315 | ||||||||||||||||||||||||||||||||
2018 | $17.77 | 0.34 | 0.72 | 1.06 | (0.34) | (1.39) | (1.73) | $17.10 | 5.88% | 0.61% | 0.65% | 1.92% | 1.88% | 47% | $1,578,125 | ||||||||||||||||||||||||||||||||
2017 | $15.33 | 0.29 | 2.92 | 3.21 | (0.29) | (0.48) | (0.77) | $17.77 | 21.13% | 0.63% | 0.65% | 1.67% | 1.65% | 49% | $1,302,074 |
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)April 10, 2017 (commencement of sale) through March 31, 2018.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Mid Cap Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Mid Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
30
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
31
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
32
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
33
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
34
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
35
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $126,596,525, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
The fund hereby designates $43,298,481, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2021.
The fund hereby designates $851,289 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2021.
The fund utilized earnings and profits of $3,847,179 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92271 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
NT Focused Large Cap Value Fund | |||||
G Class (ACLLX) |
Table of Contents |
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | ||||||||||||||||
G Class | ACLLX | 47.90% | 11.32% | 10.54% | 5/12/06 | |||||||||||||||
Russell 1000 Value Index | — | 56.09% | 11.73% | 10.98% | — | |||||||||||||||
S&P 500 Index | — | 56.35% | 16.28% | 13.90% | — |
Fund returns would have been lower if a portion of the fees had not been waived. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 |
![chart-6540ae7bd86243c28591a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-6540ae7bd86243c28591a.jpg)
Value on March 31, 2021 | |||||
G Class — $27,263 | |||||
Russell 1000 Value Index — $28,372 | |||||
S&P 500 Index — $36,788 | |||||
Ending value of G Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||
G Class | 0.49% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Phillip N. Davidson, Brian Woglom, Philip Sundell, Adam Krenn, Michael Liss and Kevin Toney
Effective December 2020, Adam Krenn was promoted to portfolio manager and Michael Liss and Kevin Toney joined the fund as portfolio managers.
Performance Summary
NT Focused Large Cap Value (new fund name effective December 10, 2020) returned 47.90%* for the fiscal year ended March 31, 2021, compared with the 56.09% return of its benchmark, the Russell 1000 Value Index.
Broad U.S. equity markets rallied over the trailing 12-month period, fueled by increased growth expectations, positive earnings reports, additional fiscal stimulus and optimism around accelerating vaccine distributions. NT Focused Large Cap Value advanced during the fiscal year but underperformed its benchmark, the Russell 1000 Value Index. Stock selection in the consumer staples and financials sectors detracted from relative performance, as did an overweight position in consumer staples. Selection in industrials and information technology contributed to relative results.
Stock Selection in Consumer Staples and Financials Detracted
The combination of an overweight and stock selection resulted in material underperformance in the consumer staples sector. Holdings in the personal products and food products industries underperformed as investors favored more cyclical companies benefiting from economic reopening. The stock of Unilever underperformed after the consumer goods company reported profits for the second half of 2020 that underwhelmed investors.
Stock selection in the financials sector detracted from relative returns against a backdrop of strong equity markets and rising interest rates late in the period. Our more conservative approach in the sector, including a preference for higher-quality banks, weighed on performance.
Verizon Communications detracted. This wireless services stock underperformed as competitors AT&T and T-Mobile US announced more aggressive pricing promotions for the new iPhone 12. Verizon was also a major beneficiary of corporate tax reform, so uncertainty over the future of corporate taxes also weighed on performance.
Stock Selection in Industrials and Information Technology Contributed
Stock selection in the industrials sector contributed to relative performance. An overweight in the electrical equipment industry, including holding Emerson Electric, was also positive. Shares of Siemens outperformed as the industrial conglomerate delivered a solid quarter and further accelerated its cost-cutting program.
Stock selection in the information technology sector benefited performance. Our avoidance of several benchmark names in the IT services industry contributed along with positions in the electronic equipment, instruments and components and semiconductors and semiconductor equipment industries. Texas Instruments, the largest analog supplier in the world, was a key contributor.
Hologic contributed. Shares of this medical devices company outperformed due to significant sales for its new COVID-19 test. We exited the position on outperformance.
*Fund returns would have been lower if a portion of the fees had not been waived.
3
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
The portfolio is overweight in the health care sector. According to our analysis, the portfolio’s health care holdings offer compelling valuations and risk/reward profiles, particularly in the health care equipment and supplies and pharmaceuticals industries. Similarly, companies in the consumer staples sector generally offer defensive characteristics, which were less valued by investors in the rally since successful vaccines were announced in November of last year. We believe select consumer staples stocks, with their relatively strong balance sheets, growing dividend streams and access to large numbers of consumers, are well-suited for our portfolio.
Within the financials sector, we have identified attractive value opportunities in select industries. Specifically, we hold securities in the insurance and diversified financial services industries that we believe have strong balance sheets, low levels of debt and leading market positions.
We ended the reporting period with no exposure to the consumer discretionary and real estate sectors. It has been difficult for us to find higher-quality companies with sustainable business models in consumer discretionary. Similarly, within real estate we are finding extended valuations and elevated risks due to COVID-19.
4
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Johnson & Johnson | 5.7% | ||||
Berkshire Hathaway, Inc., Class B | 4.8% | ||||
Medtronic plc | 4.7% | ||||
Unilever plc, ADR | 4.6% | ||||
JPMorgan Chase & Co. | 4.0% | ||||
Cisco Systems, Inc. | 3.9% | ||||
Bank of New York Mellon Corp. (The) | 3.8% | ||||
Verizon Communications, Inc. | 3.7% | ||||
Emerson Electric Co. | 3.0% | ||||
Atmos Energy Corp. | 3.0% | ||||
Top Five Industries | % of net assets | ||||
Pharmaceuticals | 9.9% | ||||
Health Care Equipment and Supplies | 8.4% | ||||
Insurance | 7.9% | ||||
Banks | 6.3% | ||||
Oil, Gas and Consumable Fuels | 5.6% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 83.7% | ||||
Foreign Common Stocks* | 15.3% | ||||
Total Common Stocks | 99.0% | ||||
Temporary Cash Investments | 1.4% | ||||
Other Assets and Liabilities | (0.4)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
5
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 October 1, 2020 to March 31, 2021.
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.
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1)(2) | |||||||||||
Actual | ||||||||||||||
G Class | $1,000 | $1,224.00 | $0.00 | 0.00% | ||||||||||
Hypothetical | ||||||||||||||
G Class | $1,000 | $1,024.93 | $0.00 | 0.00% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any underlying fund fees and expenses.
(2)Other expenses, which include directors' fees and expenses, did not exceed 0.005%.
6
Schedule of Investments |
MARCH 31, 2021
Shares | Value | |||||||
COMMON STOCKS — 99.0% | ||||||||
Aerospace and Defense — 3.8% | ||||||||
Lockheed Martin Corp. | 127,575 | $ | 47,138,963 | |||||
Raytheon Technologies Corp. | 729,211 | 56,346,134 | ||||||
103,485,097 | ||||||||
Banks — 6.3% | ||||||||
JPMorgan Chase & Co. | 725,472 | 110,438,603 | ||||||
Truist Financial Corp. | 1,061,317 | 61,896,007 | ||||||
172,334,610 | ||||||||
Beverages — 1.6% | ||||||||
PepsiCo, Inc. | 310,220 | 43,880,619 | ||||||
Building Products — 1.0% | ||||||||
Johnson Controls International plc | 446,555 | 26,645,937 | ||||||
Capital Markets — 3.8% | ||||||||
Bank of New York Mellon Corp. (The) | 2,225,093 | 105,224,648 | ||||||
Commercial Services and Supplies — 2.1% | ||||||||
Republic Services, Inc. | 579,556 | 57,578,889 | ||||||
Communications Equipment — 3.9% | ||||||||
Cisco Systems, Inc. | 2,059,883 | 106,516,550 | ||||||
Containers and Packaging — 1.3% | ||||||||
Sonoco Products Co. | 559,120 | 35,392,296 | ||||||
Diversified Financial Services — 4.8% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 522,120 | 133,385,996 | ||||||
Diversified Telecommunication Services — 3.7% | ||||||||
Verizon Communications, Inc. | 1,747,962 | 101,643,990 | ||||||
Electric Utilities — 3.5% | ||||||||
Duke Energy Corp. | 453,490 | 43,775,390 | ||||||
Pinnacle West Capital Corp. | 650,633 | 52,928,994 | ||||||
96,704,384 | ||||||||
Electrical Equipment — 4.3% | ||||||||
Emerson Electric Co. | 909,630 | 82,066,819 | ||||||
Hubbell, Inc. | 191,405 | 35,771,680 | ||||||
117,838,499 | ||||||||
Electronic Equipment, Instruments and Components — 1.0% | ||||||||
TE Connectivity Ltd. | 205,634 | 26,549,406 | ||||||
Food and Staples Retailing — 1.6% | ||||||||
Walmart, Inc. | 330,101 | 44,837,619 | ||||||
Food Products — 5.0% | ||||||||
Conagra Brands, Inc. | 914,168 | 34,372,717 | ||||||
Mondelez International, Inc., Class A | 1,069,838 | 62,617,618 | ||||||
Nestle SA | 366,121 | 40,806,135 | ||||||
137,796,470 | ||||||||
Gas Utilities — 3.0% | ||||||||
Atmos Energy Corp. | 829,238 | 81,970,176 | ||||||
Health Care Equipment and Supplies — 8.4% | ||||||||
Becton Dickinson and Co. | 290,331 | 70,593,983 | ||||||
Medtronic plc | 1,085,959 | 128,284,337 | ||||||
Zimmer Biomet Holdings, Inc. | 200,991 | 32,174,639 | ||||||
231,052,959 |
7
Shares | Value | |||||||
Health Care Providers and Services — 1.2% | ||||||||
Universal Health Services, Inc., Class B | 251,545 | $ | 33,553,588 | |||||
Health Care Technology — 2.1% | ||||||||
Cerner Corp. | 802,731 | 57,700,304 | ||||||
Household Products — 1.1% | ||||||||
Colgate-Palmolive Co. | 398,507 | 31,414,307 | ||||||
Industrial Conglomerates — 2.6% | ||||||||
Siemens AG | 438,515 | 72,013,451 | ||||||
Insurance — 7.9% | ||||||||
Aflac, Inc. | 963,088 | 49,290,844 | ||||||
Chubb Ltd. | 269,738 | 42,610,512 | ||||||
Marsh & McLennan Cos., Inc. | 577,861 | 70,383,470 | ||||||
Reinsurance Group of America, Inc. | 429,992 | 54,200,491 | ||||||
216,485,317 | ||||||||
Oil, Gas and Consumable Fuels — 5.6% | ||||||||
Chevron Corp. | 730,872 | 76,588,077 | ||||||
TOTAL SE, ADR | 1,653,605 | 76,958,777 | ||||||
153,546,854 | ||||||||
Personal Products — 4.6% | ||||||||
Unilever plc, ADR | 2,291,392 | 127,928,415 | ||||||
Pharmaceuticals — 9.9% | ||||||||
Johnson & Johnson | 948,253 | 155,845,381 | ||||||
Merck & Co., Inc. | 618,461 | 47,677,158 | ||||||
Roche Holding AG | 213,280 | 68,940,533 | ||||||
272,463,072 | ||||||||
Semiconductors and Semiconductor Equipment — 1.9% | ||||||||
Texas Instruments, Inc. | 278,905 | 52,710,256 | ||||||
Software — 3.0% | ||||||||
Open Text Corp. | 711,774 | 33,958,737 | ||||||
Oracle Corp. (New York) | 675,170 | 47,376,679 | ||||||
81,335,416 | ||||||||
TOTAL COMMON STOCKS (Cost $2,288,037,332) | 2,721,989,125 | |||||||
TEMPORARY CASH INVESTMENTS — 1.4% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $7,128,037), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $6,988,032) | 6,988,030 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.75%, 3/31/26, valued at $23,768,092), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $23,302,000) | 23,302,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 9,034,167 | 9,034,167 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $39,324,197) | 39,324,197 | |||||||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $2,327,361,529) | 2,761,313,322 | |||||||
OTHER ASSETS AND LIABILITIES — (0.4)% | (10,491,514) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,750,821,808 |
8
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CHF | 2,408,830 | USD | 2,572,408 | Morgan Stanley | 6/30/21 | $ | (17,822) | |||||||||||||
USD | 96,712,824 | CHF | 89,748,534 | Morgan Stanley | 6/30/21 | 1,533,698 | ||||||||||||||
USD | 123,412,464 | EUR | 103,253,464 | Credit Suisse AG | 6/30/21 | 2,107,951 | ||||||||||||||
USD | 3,302,446 | EUR | 2,766,980 | Credit Suisse AG | 6/30/21 | 51,735 | ||||||||||||||
USD | 3,559,961 | EUR | 3,027,824 | Credit Suisse AG | 6/30/21 | 2,805 | ||||||||||||||
USD | 111,240,203 | GBP | 79,836,511 | JPMorgan Chase Bank N.A. | 6/30/21 | 1,148,197 | ||||||||||||||
$ | 4,826,564 |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
CHF | - | Swiss Franc | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
USD | - | United States Dollar |
(1)Non-income producing.
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities, at value (cost of $2,327,361,529) | $ | 2,761,313,322 | |||
Receivable for investments sold | 1,408,800 | ||||
Receivable for capital shares sold | 2,782 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 4,844,386 | ||||
Dividends and interest receivable | 4,386,385 | ||||
2,771,955,675 | |||||
Liabilities | |||||
Payable for investments purchased | 2,831,647 | ||||
Payable for capital shares redeemed | 18,284,398 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 17,822 | ||||
21,133,867 | |||||
Net Assets | $ | 2,750,821,808 | |||
G Class Capital Shares, $0.01 Par Value | |||||
Shares authorized | 1,800,000,000 | ||||
Shares outstanding | 217,989,766 | ||||
Net Asset Value Per Share | $ | 12.62 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 2,069,213,398 | |||
Distributable earnings | 681,608,410 | ||||
$ | 2,750,821,808 |
See Notes to Financial Statements.
10
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $1,398,995) | $ | 58,790,557 | |||
Interest | 19,212 | ||||
58,809,769 | |||||
Expenses: | |||||
Management fees | 10,128,457 | ||||
Directors' fees and expenses | 58,957 | ||||
Other expenses | 9,451 | ||||
10,196,865 | |||||
Fees waived | (10,128,457) | ||||
68,408 | |||||
Net investment income (loss) | 58,741,361 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 288,668,599 | ||||
Forward foreign currency exchange contract transactions | (11,213,734) | ||||
Foreign currency translation transactions | 5,882 | ||||
277,460,747 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 436,716,059 | ||||
Forward foreign currency exchange contracts | 6,378,484 | ||||
Translation of assets and liabilities in foreign currencies | 514 | ||||
443,095,057 | |||||
Net realized and unrealized gain (loss) | 720,555,804 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 779,297,165 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 58,741,361 | $ | 39,512,449 | ||||
Net realized gain (loss) | 277,460,747 | 73,458,300 | ||||||
Change in net unrealized appreciation (depreciation) | 443,095,057 | (270,019,284) | ||||||
Net increase (decrease) in net assets resulting from operations | 779,297,165 | (157,048,535) | ||||||
Distributions to Shareholders | ||||||||
From earnings | (81,103,305) | (81,816,130) | ||||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 1,171,869,083 | 154,491,376 | ||||||
Proceeds from reinvestment of distributions | 81,103,305 | 81,816,130 | ||||||
Payments for shares redeemed | (421,921,825) | (400,513,336) | ||||||
Net increase (decrease) in net assets from capital share transactions | 831,050,563 | (164,205,830) | ||||||
Net increase (decrease) in net assets | 1,529,244,423 | (403,070,495) | ||||||
Net Assets | ||||||||
Beginning of period | 1,221,577,385 | 1,624,647,880 | ||||||
End of period | $ | 2,750,821,808 | $ | 1,221,577,385 | ||||
Transactions in Shares of the Fund | ||||||||
Sold | 109,701,660 | 15,332,181 | ||||||
Issued in reinvestment of distributions | 7,186,059 | 7,139,722 | ||||||
Redeemed | (37,138,530) | (35,218,837) | ||||||
Net increase (decrease) in shares of the fund | 79,749,189 | (12,746,934) |
See Notes to Financial Statements.
12
Notes to Financial Statements |
MARCH 31, 2021
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 Focused Large Cap Value Fund (formerly NT Large Company Value Fund) (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund offers the G Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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 (NAV) 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 NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not 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.
13
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV 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. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
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.
14
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, 56% 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). The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of Focused Large Cap Value Fund, one fund in a series issued by the corporation. The management fee schedule ranges from 0.35% to 0.55%. The investment advisor agreed to waive the fund's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended March 31, 2021 was 0.48% before waiver and 0.00% after waiver.
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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $30,636,282 and $24,980,645, respectively. The effect of interfund transactions on the Statement of Operations was $6,139,185 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended March 31, 2021 were $2,206,527,132 and $2,373,038,991, respectively.
On August 5, 2020, the fund received investment securities valued at $967,707,883 from a purchase in kind from other products managed by the fund's investment advisor. A purchase in kind occurs when a fund receives securities into its portfolio in lieu of cash as payment from a purchasing shareholder.
5. 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.
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 | |||||||||||
Food Products | $ | 96,990,335 | $ | 40,806,135 | — | ||||||
Industrial Conglomerates | — | 72,013,451 | — | ||||||||
Pharmaceuticals | 203,522,539 | 68,940,533 | — | ||||||||
Other Industries | 2,239,716,132 | — | — | ||||||||
Temporary Cash Investments | 9,034,167 | 30,290,030 | — | ||||||||
$ | 2,549,263,173 | $ | 212,050,149 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 4,844,386 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 17,822 | — |
6. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $262,614,962.
The value of foreign currency risk derivative instruments as of March 31, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $4,844,386 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $17,822 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(11,213,734) in net realized gain (loss) on forward foreign currency exchange contract transactions and $6,378,484 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
16
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region 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 tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 55,983,919 | $ | 39,461,060 | ||||
Long-term capital gains | $ | 25,119,386 | $ | 42,355,070 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 2,348,594,431 | |||
Gross tax appreciation of investments | $ | 421,443,194 | |||
Gross tax depreciation of investments | (8,724,303) | ||||
Net tax appreciation (depreciation) of investments | 412,718,891 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (3,567) | ||||
Net tax appreciation (depreciation) | $ | 412,715,324 | |||
Undistributed ordinary income | $ | 159,038,311 | |||
Accumulated long-term gains | $ | 109,854,775 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
17
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 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) | |||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $8.84 | 0.31 | 3.87 | 4.18 | (0.28) | (0.12) | (0.40) | $12.62 | 47.90% | 0.00%(3) | 0.48% | 2.76% | 2.28% | 109% | $2,750,822 | ||||||||||||||||||||||||||||||||
2020 | $10.76 | 0.28 | (1.59) | (1.31) | (0.29) | (0.32) | (0.61) | $8.84 | (13.40)% | 0.01% | 0.49% | 2.55% | 2.07% | 76% | $1,221,577 | ||||||||||||||||||||||||||||||||
2019 | $11.17 | 0.30 | 0.41 | 0.71 | (0.30) | (0.82) | (1.12) | $10.76 | 7.02% | 0.00%(3) | 0.48% | 2.64% | 2.16% | 56% | $1,624,648 | ||||||||||||||||||||||||||||||||
2018 | $11.87 | 0.32 | 0.21 | 0.53 | (0.30) | (0.93) | (1.23) | $11.17 | 4.23% | 0.20% | 0.53% | 2.68% | 2.35% | 57% | $1,886,327 | ||||||||||||||||||||||||||||||||
2017 | $10.58 | 0.25 | 1.80 | 2.05 | (0.24) | (0.52) | (0.76) | $11.87 | 19.67% | 0.63% | 0.63% | 2.17% | 2.17% | 79% | $1,703,216 |
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)Ratio was less than 0.005%.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT Focused Large Cap Value Fund (formerly, NT Large Company Value Fund) (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of NT Focused Large Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
19
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
20
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
21
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
22
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
23
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
24
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $38,526,793, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
The fund hereby designates $25,119,386, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2021.
25
Notes |
26
Notes |
27
Notes |
28
![]() | ||||||||
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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92290 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
NT Mid Cap Value Fund | |||||
G Class (ACLMX) |
Table of Contents |
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | ||||||||||||||||
G Class | ACLMX | 58.28% | 11.59% | 11.72% | 5/12/06 | |||||||||||||||
Russell Midcap Value Index | — | 73.76% | 11.59% | 11.05% | — |
Fund returns would have been lower if a portion of the fees had not been waived. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 | ||
![chart-5032c2ef4bc34276b081a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-5032c2ef4bc34276b081a.jpg)
Value on March 31, 2021 | |||||
G Class — $30,329 | |||||
Russell Midcap Value Index — $28,535 | |||||
Ending value of G Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||
G Class | 0.63% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Phillip N. Davidson, Michael Liss, Kevin Toney and Brian Woglom
Performance Summary
NT Mid Cap Value returned 58.28%* for the fiscal year ended March 31, 2021, compared with the 73.76% return of its benchmark, the Russell Midcap Value Index.
Broad U.S. equity markets rallied over the trailing 12-month period, fueled by increased growth expectations, positive earnings reports, additional fiscal stimulus and optimism around accelerating vaccine distributions. NT Mid Cap Value advanced in the fiscal year but underperformed its benchmark, the Russell Midcap Value Index. Security selection in the financials, materials and consumer discretionary sectors detracted from relative performance, as did an underweight allocation to materials and consumer discretionary. Our relative underweight in real estate and stock selection in information technology contributed.
Stock Selection in Financials and Materials Detracted
Security selection in the financials sector detracted from relative returns against a backdrop of strong equity markets and rising interest rates late in the period. Our more conservative approach in the sector, including a preference for higher-quality banks, weighed on performance. Property and casualty insurance holding ProAssurance was a detractor. The stock underperformed as investors moved away from the more defensive insurance industry and into banks and cyclical stocks. Losses tied to ProAssurance’s medical malpractice business put additional pressure on company shares. We exited the position during the period.
Stock selection and an underweight in the materials sector detracted from the portfolio’s performance. Notably, the portfolio’s lack of exposure to the cyclical metals and mining industry weighed on results.
Pinnacle West Capital was another notable detractor from performance. This Arizona-based utility underperformed as investors shifted away from defensive names and toward cyclical stocks.
Real Estate and Information Technology Contributed
The portfolio’s underweight and stock selection in the real estate sector positively impacted performance. Standing out was Weyerhaeuser, a timber real estate investment trust (REIT), which supplies lumber and engineered wood products used in new home construction. Shares of the stock rose as better-than-expected housing demand and mill closures due to the pandemic caused prices for lumber and wood products to rebound.
Strong security selection in the information technology sector also benefited performance, driven by positions in the communications equipment as well as the semiconductors and semiconductor equipment industries. Semiconductor equipment company Applied Materials was a key contributor. The company continued to execute on its product road map and benefited from strong demand.
Elsewhere, Envista Holdings contributed. This dental products company was spun out of Danaher in 2019. The stock outperformed due to margin improvements, new product launches and demand for Envista’s infection prevention products. Additionally, Envista stands to benefit from economic reopening post-pandemic.
*Fund returns would have been lower if a portion of the fees had not been waived.
3
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
We ended the reporting period with an overweight in consumer staples. Within the sector, we have identified companies that fit our investment process well due to their attractive valuations and stable business models. The vast majority of our consumer staples holdings are in the food products and food and staples retailing industries. Our portfolio is also overweight in industrials where we have identified higher-quality companies selling at attractive valuations. We are focused on higher-quality companies and remain cautious of companies with end markets that we think are unfavorable, such as energy and construction.
On the other hand, the portfolio is underweight in real estate and information technology. We continue to hold a limited number of real estate stocks due to valuations that we believe are extended. While we are underweight the information technology sector, we have found select stocks that meet our investment criteria.
4
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Zimmer Biomet Holdings, Inc. | 2.6% | ||||
Bank of New York Mellon Corp. (The) | 2.4% | ||||
Northern Trust Corp. | 2.3% | ||||
Emerson Electric Co. | 2.1% | ||||
Conagra Brands, Inc. | 1.9% | ||||
nVent Electric plc | 1.8% | ||||
Advance Auto Parts, Inc. | 1.8% | ||||
Pinnacle West Capital Corp. | 1.8% | ||||
Sonoco Products Co. | 1.8% | ||||
Chubb Ltd. | 1.8% | ||||
Top Five Industries | % of net assets | ||||
Health Care Providers and Services | 8.6% | ||||
Capital Markets | 7.8% | ||||
Insurance | 5.7% | ||||
Electrical Equipment | 5.5% | ||||
Food Products | 5.3% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 89.7% | ||||
Foreign Common Stocks* | 8.6% | ||||
Exchange-Traded Funds | 1.2% | ||||
Total Equity Exposure | 99.5% | ||||
Temporary Cash Investments | 1.0% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.9% | ||||
Other Assets and Liabilities | (1.4)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
5
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 October 1, 2020 to March 31, 2021.
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.
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1)(2) | |||||||||||
Actual | ||||||||||||||
G Class | $1,000 | $1,315.00 | $0.00 | 0.00% | ||||||||||
Hypothetical | ||||||||||||||
G Class | $1,000 | $1,024.93 | $0.00 | 0.00% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
(2)Other expenses, which include directors' fees and expenses, did not exceed 0.005%.
6
Schedule of Investments |
MARCH 31, 2021
Shares | Value | |||||||
COMMON STOCKS — 98.3% | ||||||||
Aerospace and Defense — 3.1% | ||||||||
BAE Systems plc | 2,407,264 | $ | 16,757,684 | |||||
General Dynamics Corp. | 120,943 | 21,958,411 | ||||||
Textron, Inc. | 222,150 | 12,458,172 | ||||||
51,174,267 | ||||||||
Airlines — 1.7% | ||||||||
Southwest Airlines Co.(1) | 473,214 | 28,894,447 | ||||||
Auto Components — 1.5% | ||||||||
Aptiv plc(1) | 47,366 | 6,531,772 | ||||||
BorgWarner, Inc. | 380,881 | 17,657,643 | ||||||
24,189,415 | ||||||||
Automobiles — 1.0% | ||||||||
Honda Motor Co. Ltd., ADR(2) | 567,553 | 17,140,101 | ||||||
Banks — 5.0% | ||||||||
Commerce Bancshares, Inc. | 183,855 | 14,085,131 | ||||||
Eastern Bankshares, Inc. | 379,347 | 7,317,604 | ||||||
M&T Bank Corp. | 103,282 | 15,658,584 | ||||||
PNC Financial Services Group, Inc. (The) | 54,252 | 9,516,343 | ||||||
Truist Financial Corp. | 428,302 | 24,978,573 | ||||||
Westamerica Bancorporation | 174,108 | 10,930,500 | ||||||
82,486,735 | ||||||||
Building Products — 0.9% | ||||||||
Johnson Controls International plc | 247,467 | 14,766,356 | ||||||
Capital Markets — 7.8% | ||||||||
Ameriprise Financial, Inc. | 100,949 | 23,465,595 | ||||||
Bank of New York Mellon Corp. (The) | 827,189 | 39,117,768 | ||||||
Northern Trust Corp. | 371,065 | 39,002,642 | ||||||
State Street Corp. | 133,859 | 11,245,494 | ||||||
T. Rowe Price Group, Inc. | 96,253 | 16,517,015 | ||||||
129,348,514 | ||||||||
Chemicals — 0.8% | ||||||||
Axalta Coating Systems Ltd.(1) | 438,439 | 12,969,026 | ||||||
Commercial Services and Supplies — 1.5% | ||||||||
Republic Services, Inc. | 249,602 | 24,797,959 | ||||||
Communications Equipment — 1.5% | ||||||||
F5 Networks, Inc.(1) | 77,585 | 16,185,783 | ||||||
Juniper Networks, Inc. | 359,435 | 9,104,488 | ||||||
25,290,271 | ||||||||
Containers and Packaging — 3.3% | ||||||||
Graphic Packaging Holding Co. | 845,607 | 15,356,223 | ||||||
Packaging Corp. of America | 76,191 | 10,246,166 | ||||||
Sonoco Products Co. | 467,426 | 29,588,066 | ||||||
55,190,455 | ||||||||
Distributors — 1.1% | ||||||||
Genuine Parts Co. | 163,407 | 18,888,215 | ||||||
Electric Utilities — 4.4% | ||||||||
Edison International | 453,068 | 26,549,785 | ||||||
Evergy, Inc. | 168,882 | 10,053,546 |
7
Shares | Value | |||||||
Pinnacle West Capital Corp. | 364,406 | $ | 29,644,428 | |||||
Xcel Energy, Inc. | 95,836 | 6,374,052 | ||||||
72,621,811 | ||||||||
Electrical Equipment — 5.5% | ||||||||
Emerson Electric Co. | 377,028 | 34,015,466 | ||||||
Hubbell, Inc. | 146,608 | 27,399,569 | ||||||
nVent Electric plc | 1,082,326 | 30,207,719 | ||||||
91,622,754 | ||||||||
Electronic Equipment, Instruments and Components — 0.6% | ||||||||
TE Connectivity Ltd. | 78,103 | 10,083,878 | ||||||
Energy Equipment and Services — 0.5% | ||||||||
Baker Hughes Co. | 374,175 | 8,085,922 | ||||||
Equity Real Estate Investment Trusts (REITs) — 4.6% | ||||||||
Equinix, Inc. | 12,927 | 8,785,060 | ||||||
Essex Property Trust, Inc. | 40,940 | 11,129,130 | ||||||
Healthcare Trust of America, Inc., Class A | 362,318 | 9,992,730 | ||||||
Healthpeak Properties, Inc. | 602,979 | 19,138,554 | ||||||
MGM Growth Properties LLC, Class A | 528,279 | 17,232,461 | ||||||
Weyerhaeuser Co. | 252,099 | 8,974,724 | ||||||
75,252,659 | ||||||||
Food and Staples Retailing — 2.3% | ||||||||
Koninklijke Ahold Delhaize NV | 988,797 | 27,541,999 | ||||||
Sysco Corp. | 127,390 | 10,030,689 | ||||||
37,572,688 | ||||||||
Food Products — 5.3% | ||||||||
Conagra Brands, Inc. | 811,922 | 30,528,267 | ||||||
J.M. Smucker Co. (The) | 175,208 | 22,169,068 | ||||||
Kellogg Co. | 268,095 | 16,970,414 | ||||||
Mondelez International, Inc., Class A | 70,885 | 4,148,899 | ||||||
Orkla ASA | 1,374,210 | 13,473,645 | ||||||
87,290,293 | ||||||||
Gas Utilities — 1.7% | ||||||||
Atmos Energy Corp. | 148,168 | 14,646,407 | ||||||
Spire, Inc. | 188,368 | 13,918,511 | ||||||
28,564,918 | ||||||||
Health Care Equipment and Supplies — 5.0% | ||||||||
Becton Dickinson and Co. | 72,811 | 17,703,995 | ||||||
Envista Holdings Corp.(1) | 362,683 | 14,797,466 | ||||||
Hill-Rom Holdings, Inc. | 64,042 | 7,075,360 | ||||||
Zimmer Biomet Holdings, Inc. | 271,381 | 43,442,671 | ||||||
83,019,492 | ||||||||
Health Care Providers and Services — 8.6% | ||||||||
Cardinal Health, Inc. | 480,748 | 29,205,441 | ||||||
Cigna Corp. | 53,792 | 13,003,678 | ||||||
Henry Schein, Inc.(1) | 313,515 | 21,707,779 | ||||||
McKesson Corp. | 107,402 | 20,947,686 | ||||||
Quest Diagnostics, Inc. | 226,437 | 29,060,924 | ||||||
Universal Health Services, Inc., Class B | 214,161 | 28,566,936 | ||||||
142,492,444 | ||||||||
Health Care Technology — 1.6% | ||||||||
Cerner Corp. | 373,471 | 26,845,095 |
8
Shares | Value | |||||||
Hotels, Restaurants and Leisure — 1.0% | ||||||||
Sodexo SA(1) | 166,400 | $ | 15,964,933 | |||||
Household Durables — 0.3% | ||||||||
Mohawk Industries, Inc.(1) | 22,381 | 4,304,090 | ||||||
Household Products — 0.9% | ||||||||
Kimberly-Clark Corp. | 103,287 | 14,362,057 | ||||||
Insurance — 5.7% | ||||||||
Aflac, Inc. | 515,669 | 26,391,939 | ||||||
Arthur J. Gallagher & Co. | 74,439 | 9,287,754 | ||||||
Brown & Brown, Inc. | 35,472 | 1,621,425 | ||||||
Chubb Ltd. | 186,584 | 29,474,675 | ||||||
Reinsurance Group of America, Inc. | 213,796 | 26,948,986 | ||||||
93,724,779 | ||||||||
IT Services — 0.3% | ||||||||
Amdocs Ltd. | 79,648 | 5,587,307 | ||||||
Leisure Products — 0.6% | ||||||||
Polaris, Inc. | 73,783 | 9,850,031 | ||||||
Machinery — 3.9% | ||||||||
Crane Co. | 94,750 | 8,897,972 | ||||||
Cummins, Inc. | 35,945 | 9,313,709 | ||||||
IMI plc | 834,060 | 15,341,337 | ||||||
Oshkosh Corp. | 156,710 | 18,595,209 | ||||||
PACCAR, Inc. | 132,116 | 12,276,219 | ||||||
64,424,446 | ||||||||
Media — 1.4% | ||||||||
Fox Corp., Class B | 648,556 | 22,654,061 | ||||||
Multi-Utilities — 1.8% | ||||||||
Ameren Corp. | 36,199 | 2,945,151 | ||||||
NorthWestern Corp. | 419,831 | 27,372,981 | ||||||
30,318,132 | ||||||||
Multiline Retail — 1.3% | ||||||||
Dollar Tree, Inc.(1) | 181,127 | 20,731,796 | ||||||
Oil, Gas and Consumable Fuels — 2.8% | ||||||||
Cimarex Energy Co. | 149,214 | 8,861,819 | ||||||
ConocoPhillips | 512,901 | 27,168,366 | ||||||
Pioneer Natural Resources Co. | 69,768 | 11,080,554 | ||||||
47,110,739 | ||||||||
Paper and Forest Products — 1.4% | ||||||||
Mondi plc | 911,699 | 23,260,442 | ||||||
Road and Rail — 0.9% | ||||||||
Heartland Express, Inc. | 691,910 | 13,547,598 | ||||||
Norfolk Southern Corp. | 5,605 | 1,505,054 | ||||||
15,052,652 | ||||||||
Semiconductors and Semiconductor Equipment — 0.3% | ||||||||
Applied Materials, Inc. | 31,052 | 4,148,547 | ||||||
Software — 1.3% | ||||||||
CDK Global, Inc. | 171,192 | 9,254,639 | ||||||
Open Text Corp. | 263,591 | 12,575,927 | ||||||
21,830,566 | ||||||||
Specialty Retail — 1.8% | ||||||||
Advance Auto Parts, Inc. | 164,026 | 30,097,131 |
9
Shares | Value | |||||||
Technology Hardware, Storage and Peripherals — 1.3% | ||||||||
HP, Inc. | 668,569 | $ | 21,227,066 | |||||
Thrifts and Mortgage Finance — 0.5% | ||||||||
Capitol Federal Financial, Inc. | 564,091 | 7,471,385 | ||||||
Trading Companies and Distributors — 1.5% | ||||||||
Beacon Roofing Supply, Inc.(1) | 28,139 | 1,472,232 | ||||||
MSC Industrial Direct Co., Inc., Class A | 251,183 | 22,654,195 | ||||||
24,126,427 | ||||||||
TOTAL COMMON STOCKS (Cost $1,231,904,240) | 1,624,834,302 | |||||||
EXCHANGE-TRADED FUNDS — 1.2% | ||||||||
iShares Russell Mid-Cap Value ETF (Cost $19,563,205) | 176,478 | 19,289,046 | ||||||
TEMPORARY CASH INVESTMENTS — 1.0% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $3,040,830), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $2,981,104) | 2,981,103 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.75%, 3/31/26, valued at $10,138,884), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $9,940,000) | 9,940,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 3,853,875 | 3,853,875 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $16,774,978) | 16,774,978 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.9% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $14,302,098) | 14,302,098 | 14,302,098 | ||||||
TOTAL INVESTMENT SECURITIES — 101.4% (Cost $1,282,544,521) | 1,675,200,424 | |||||||
OTHER ASSETS AND LIABILITIES — (1.4)% | (22,814,692) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 1,652,385,732 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 823,618 | USD | 658,689 | Morgan Stanley | 6/30/21 | $ | (3,226) | |||||||||||||
CAD | 1,475,044 | USD | 1,177,316 | Morgan Stanley | 6/30/21 | (3,427) | ||||||||||||||
CAD | 2,354,078 | USD | 1,884,408 | Morgan Stanley | 6/30/21 | (10,954) | ||||||||||||||
USD | 3,737,290 | CAD | 4,652,740 | Morgan Stanley | 6/30/21 | 34,485 | ||||||||||||||
USD | 36,927,034 | EUR | 30,895,130 | Credit Suisse AG | 6/30/21 | 630,734 | ||||||||||||||
USD | 1,071,802 | EUR | 911,591 | Credit Suisse AG | 6/30/21 | 844 | ||||||||||||||
USD | 47,200,094 | GBP | 33,875,260 | JPMorgan Chase Bank N.A. | 6/30/21 | 487,189 | ||||||||||||||
USD | 1,198,049 | GBP | 868,255 | JPMorgan Chase Bank N.A. | 6/30/21 | 753 | ||||||||||||||
JPY | 70,761,997 | USD | 650,411 | Bank of America N.A. | 6/30/21 | (10,785) | ||||||||||||||
USD | 10,412,207 | JPY | 1,134,488,026 | Bank of America N.A. | 6/30/21 | 157,434 | ||||||||||||||
USD | 428,461 | JPY | 46,580,375 | Bank of America N.A. | 6/30/21 | 7,414 | ||||||||||||||
USD | 11,481,823 | NOK | 97,371,024 | UBS AG | 6/30/21 | 98,094 | ||||||||||||||
$ | 1,388,555 |
10
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
CAD | - | Canadian Dollar | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
JPY | - | Japanese Yen | ||||||
NOK | - | Norwegian Krone | ||||||
USD | - | United States Dollar |
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $13,933,012. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(3)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $14,302,098.
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities, at value (cost of $1,268,242,423) — including $13,933,012 of securities on loan | $ | 1,660,898,326 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $14,302,098) | 14,302,098 | ||||
Total investment securities, at value (cost of $1,282,544,521) | 1,675,200,424 | ||||
Receivable for investments sold | 6,923,914 | ||||
Receivable for capital shares sold | 313 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 1,416,947 | ||||
Dividends and interest receivable | 2,916,507 | ||||
Securities lending receivable | 4,773 | ||||
1,686,462,878 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 14,302,098 | ||||
Payable for investments purchased | 9,333,896 | ||||
Payable for capital shares redeemed | 10,412,760 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 28,392 | ||||
34,077,146 | |||||
Net Assets | $ | 1,652,385,732 | |||
G Class Capital Shares, $0.01 Par Value | |||||
Shares authorized | 850,000,000 | ||||
Shares outstanding | 114,850,185 | ||||
Net Asset Value Per Share | $ | 14.39 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,203,125,849 | |||
Distributable earnings | 449,259,883 | ||||
$ | 1,652,385,732 |
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $260,276) | $ | 30,391,839 | |||
Securities lending, net | 79,070 | ||||
Interest | 12,376 | ||||
30,483,285 | |||||
Expenses: | |||||
Management fees | 7,727,038 | ||||
Directors' fees and expenses | 34,475 | ||||
Other expenses | 410 | ||||
7,761,923 | |||||
Fees waived | (7,727,038) | ||||
34,885 | |||||
Net investment income (loss) | 30,448,400 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 83,912,827 | ||||
Forward foreign currency exchange contract transactions | (9,539,699) | ||||
Foreign currency translation transactions | (40,012) | ||||
74,333,116 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 447,017,620 | ||||
Forward foreign currency exchange contracts | 3,355,086 | ||||
Translation of assets and liabilities in foreign currencies | 3,326 | ||||
450,376,032 | |||||
Net realized and unrealized gain (loss) | 524,709,148 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 555,157,548 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 30,448,400 | $ | 22,477,808 | ||||
Net realized gain (loss) | 74,333,116 | 22,436,326 | ||||||
Change in net unrealized appreciation (depreciation) | 450,376,032 | (160,234,587) | ||||||
Net increase (decrease) in net assets resulting from operations | 555,157,548 | (115,320,453) | ||||||
Distributions to Shareholders | ||||||||
From earnings | (50,484,807) | (21,546,170) | ||||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 691,410,013 | 100,328,415 | ||||||
Proceeds from reinvestment of distributions | 50,484,807 | 21,546,170 | ||||||
Payments for shares redeemed | (293,393,132) | (215,922,753) | ||||||
Net increase (decrease) in net assets from capital share transactions | 448,501,688 | (94,048,168) | ||||||
Net increase (decrease) in net assets | 953,174,429 | (230,914,791) | ||||||
Net Assets | ||||||||
Beginning of period | 699,211,303 | 930,126,094 | ||||||
End of period | $ | 1,652,385,732 | $ | 699,211,303 | ||||
Transactions in Shares of the Fund | ||||||||
Sold | 60,000,615 | 9,350,950 | ||||||
Issued in reinvestment of distributions | 4,102,442 | 1,776,012 | ||||||
Redeemed | (23,300,441) | (17,339,936) | ||||||
Net increase (decrease) in shares of the fund | 40,802,616 | (6,212,974) |
See Notes to Financial Statements.
14
Notes to Financial Statements |
MARCH 31, 2021
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 Mid Cap Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund offers the G Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The 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 (NAV) 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 NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not 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 NAV 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
15
Directors, or its delegate, deems appropriate. 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 lending income is net of fees and rebates earned by the lending agent for its services.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. 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 collateral requirements.
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.
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.
16
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 14,302,098 | — | — | — | $ | 14,302,098 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 14,302,098 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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, 54% 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). The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. From April 1, 2020 through July 31, 2020, the annual management fee was 0.62%. Effective August 1, 2020, 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 use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of Mid Cap Value Fund, one fund in a series issued by the corporation. The management fee schedule ranges from 0.60% to 0.62%. The investment advisor agreed to waive the fund's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended March 31, 2021 was 0.62% before waiver and 0.00% after waiver.
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.
17
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $722,176 and $1,426,460, respectively. The effect of interfund transactions on the Statement of Operations was $78,576 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended March 31, 2021 were $825,631,652 and $965,270,186, respectively.
On August 5, 2020, the fund received investment securities valued at $569,469,820 from a purchase in kind from other products managed by the fund's investment advisor. A purchase in kind occurs when a fund receives securities into its portfolio in lieu of cash as payment from a purchasing shareholder.
5. 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.
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The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | |||||||||||
Aerospace and Defense | $ | 34,416,583 | $ | 16,757,684 | — | ||||||
Food and Staples Retailing | 10,030,689 | 27,541,999 | — | ||||||||
Food Products | 73,816,648 | 13,473,645 | — | ||||||||
Hotels, Restaurants and Leisure | — | 15,964,933 | — | ||||||||
Machinery | 49,083,109 | 15,341,337 | — | ||||||||
Paper and Forest Products | — | 23,260,442 | — | ||||||||
Other Industries | 1,345,147,233 | — | — | ||||||||
Exchange-Traded Funds | 19,289,046 | — | — | ||||||||
Temporary Cash Investments | 3,853,875 | 12,921,103 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 14,302,098 | — | — | ||||||||
$ | 1,549,939,281 | $ | 125,261,143 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,416,947 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 28,392 | — |
6. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $110,478,182.
The value of foreign currency risk derivative instruments as of March 31, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $1,416,947 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $28,392 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(9,539,699) in net realized gain (loss) on forward foreign currency exchange contract transactions and $3,355,086 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
19
7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
8. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 30,109,881 | $ | 21,546,170 | ||||
Long-term capital gains | $ | 20,374,926 | — |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,304,017,299 | |||
Gross tax appreciation of investments | $ | 371,770,863 | |||
Gross tax depreciation of investments | (587,738) | ||||
Net tax appreciation (depreciation) of investments | 371,183,125 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 1,579 | ||||
Net tax appreciation (depreciation) | $ | 371,184,704 | |||
Undistributed ordinary income | $ | 53,146,117 | |||
Accumulated long-term gains | $ | 24,929,062 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
20
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 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) | |||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $9.44 | 0.29 | 5.13 | 5.42 | (0.29) | (0.18) | (0.47) | $14.39 | 58.28% | 0.00%(3) | 0.62% | 2.44% | 1.82% | 69% | $1,652,386 | ||||||||||||||||||||||||||||||||
2020 | $11.59 | 0.30 | (2.15) | (1.85) | (0.30) | — | (0.30) | $9.44 | (16.54)% | 0.01% | 0.64% | 2.53% | 1.90% | 59% | $699,211 | ||||||||||||||||||||||||||||||||
2019 | $13.24 | 0.30 | (0.17) | 0.13 | (0.29) | (1.49) | (1.78) | $11.59 | 1.87% | 0.00%(3) | 0.65% | 2.32% | 1.67% | 58% | $930,126 | ||||||||||||||||||||||||||||||||
2018 | $13.79 | 0.31 | 0.55 | 0.86 | (0.30) | (1.11) | (1.41) | $13.24 | 6.30% | 0.24% | 0.70% | 2.27% | 1.81% | 51% | $1,021,630 | ||||||||||||||||||||||||||||||||
2017 | $11.97 | 0.20 | 2.30 | 2.50 | (0.22) | (0.46) | (0.68) | $13.79 | 20.98% | 0.78% | 0.80% | 1.55% | 1.53% | 60% | $935,804 |
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)Ratio was less than 0.005%.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT Mid Cap Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of NT Mid Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
22
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
24
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
25
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
26
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
27
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $22,513,473, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
The fund hereby designates $20,374,926, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2021.
28
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications 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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92291 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
Small Cap Value Fund | |||||
Investor Class (ASVIX) | |||||
I Class (ACVIX) | |||||
Y Class (ASVYX) | |||||
A Class (ACSCX) | |||||
C Class (ASVNX) | |||||
R Class (ASVRX) | |||||
R5 Class (ASVGX) | |||||
R6 Class (ASVDX) | |||||
G Class (ASVHX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image231.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image231.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2021. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Stocks Soared, Bonds Moderated Amid Growing Economic Optimism
March 31 marked the end of a remarkable 12-month period, as the COVID-19 pandemic wreaked havoc on global economies, governments and society. In response, states issued unprecedented lockdown orders. Unemployment surged, corporate earnings plunged and second-quarter-2020 gross domestic product sank a record 31.4% (annualized). This triggered soaring demand for safe-haven assets.
Swift and significant action from the Federal Reserve and the federal government helped reignite investor confidence and bolster the economic backdrop. Riskier assets quickly rebounded from their early 2020 lows. The economy expanded a record 33.4% in the third quarter and continued to grow amid the gradual lifting of lockdowns and the emergency approval of vaccines.
Late in the reporting period, improving vaccine distributions, additional federal coronavirus aid and ongoing reopenings bolstered the economic and earnings outlooks. This improving backdrop combined with massive monetary and fiscal support helped fuel a 12-month gain of 56% for the S&P 500 Index. These same economic dynamics lifted longer-term inflation expectations and U.S. Treasury yields, pressuring investment-grade bond returns. After rallying through most of 2020, the Bloomberg Barclays U.S. Aggregate Bond Index gained less than 1% for the 12-month period.
A Return to Normalcy in Sight
The return to pre-pandemic life appears to be on the horizon, thanks largely to expanding vaccine availability. In addition, medical professionals continue to improve treatment protocols for those afflicted with the virus. Until the U.S. is fully reopened, investors still may face the effects of regional virus-related restrictions, economic and political uncertainty and heightened market volatility. These influences can be unsettling, but they tend to be temporary.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image161.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image161.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Class | Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||
Investor Class | ASVIX | 107.63% | 15.99% | 11.46% | — | 7/31/98 | ||||||||||||||
Russell 2000 Value Index | — | 97.05% | 13.55% | 10.05% | — | — | ||||||||||||||
I Class | ACVIX | 108.04% | 16.22% | 11.68% | — | 10/26/98 | ||||||||||||||
Y Class | ASVYX | 108.41% | — | — | 13.44% | 4/10/17 | ||||||||||||||
A Class | ACSCX | 12/31/99 | ||||||||||||||||||
No sales charge | 107.16% | 15.69% | 11.19% | — | ||||||||||||||||
With sales charge | 95.35% | 14.32% | 10.53% | — | ||||||||||||||||
C Class | ASVNX | 105.39% | 14.83% | 10.35% | — | 3/1/10 | ||||||||||||||
R Class | ASVRX | 106.61% | 15.41% | 10.92% | — | 3/1/10 | ||||||||||||||
R5 Class | ASVGX | 108.23% | — | — | 13.25% | 4/10/17 | ||||||||||||||
R6 Class | ASVDX | 108.42% | 16.37% | — | 12.12% | 7/26/13 | ||||||||||||||
G Class | ASVHX | 110.06% | — | — | 25.87% | 4/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available. G Class returns would have been lower if a portion of the fees had not been waived. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-c649dff05c3f4e53b751a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-c649dff05c3f4e53b751a.jpg)
Value on March 31, 2021 | |||||
Investor Class — $29,627 | |||||
Russell 2000 Value Index — $26,079 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
1.25% | 1.05% | 0.90% | 1.50% | 2.25% | 1.75% | 1.05% | 0.90% | 0.90% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Jeff John and Ryan Cope
Performance Summary
Small Cap Value rose 107.63%* for the 12-month period ended March 31, 2021. The fund’s benchmark, the Russell 2000 Value Index, rose 97.05% for the same time period. The fund’s return reflects operating expenses, while the index’s return does not.
Several of the portfolio’s holdings in the financials sector outperformed during the market rally, particularly in the banking and capital markets industries. Our underweight in the utilities sector relative to the benchmark was also beneficial. Furthermore, strong security selection and an overweight in the information technology sector buoyed relative results. On the other hand, stock selection in the materials sector and an underweight in the consumer discretionary sector negatively impacted performance.
Financials, Utilities and Information Technology Contributed
Within the financials sector, several of our bank holdings, including Signature Bank, rallied on rising yields, an improved economic outlook and tempered concerns around COVID-19-driven credit losses. Signature Bank, a higher-quality New York-based commercial bank, was also supported by strong earnings, loan and deposit growth, and by its sizable cryptocurrency deposits. Donnelley Financial Solutions, a provider of risk and compliance solutions, was a notable contributor within the capital markets industry. Given the pandemic’s initial impact on capital markets activity, investor sentiment had grown pessimistic on Donnelley’s fundamentals. However, the stock rebounded after a rapid acceleration of capital markets activity resulted in strong financial results.
Throughout the trailing 12-month period, our exposure to the utilities sector was limited due to valuations throughout the sector that we believe were extended. This underweight positively impacted performance as hopes for economic reopening led investors away from defensive sectors, including utilities, and toward more cyclical areas of the market.
Information technology was another area of strength. Several holdings in the sector delivered strong performance, including II-VI. This engineered materials company develops building block elements for technologies such as 5G and electric vehicles. II-VI reported profits that were well ahead of expectations and announced a positive outlook. This provided insight into the company’s earnings power potential, driven by new product areas like 3D sensing. Coherent, a leader in laser technology used in various end markets, was also a notable contributor. Coherent’s strong market position and technology leadership were recognized when three separate companies, including
II-VI, entered into a bidding war with escalating offers to acquire the company. Coherent ultimately accepted II-VI’s acquisition proposal.
Materials and Consumer Discretionary Detracted
Within the materials sector, lack of exposure to several of the benchmark’s metals and mining stocks detracted from performance. In addition, a few of our higher-quality holdings in the containers and packaging industry negatively impacted relative results. Investors rotated away from these names and into more cyclical, lower-quality materials stocks.
* All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Optimism around accelerating vaccine distribution and improving economic data caused investors to favor many consumer discretionary stocks. However, our bottom-up investment process resulted in an underweight in the consumer discretionary sector, which detracted from relative results. A notable benchmark name that we did not hold was GameStop. Lack of exposure to this video game and consumer electronics retailer weighed on the portfolio’s performance as a group of Reddit traders pushed up the price of GameStop’s stock.
While security selection in the financials sector was quite strong overall, property and casualty insurance holdings ProAssurance and Axis Capital Holdings were key detractors. Both stocks underperformed as investors moved away from the more defensive insurance industry and into banks and cyclical stocks. ProAssurance was also pressured by losses tied to its medical malpractice business.
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
We ended the year with a notable overweight in information technology. Our analysis led us to holdings in the sector that were driven down to compelling valuations due to cyclical factors, trade war fears or operational miscues. In addition, we believe we are invested in attractive businesses, particularly in the electronic equipment, instruments and components industry and the software industry. The portfolio also has a notable weight in the financials sector, and the majority of that exposure is in the banking industry. Although banks rallied materially, we believe our bank holdings remain attractive on a relative basis, trading below historical norms on normalized earnings. We have also identified opportunities in specialty insurers, where we see attractive risk/reward profiles for select names.
On the other hand, our bottom-up approach has led to notable underweights in the health care and utilities sectors. After a long period of having no exposure to the utilities sector due to valuation concerns, we initiated a position in South Jersey Industries in the first quarter of 2021. South Jersey announced a large capital raise, which pressured the shares and allowed us to build a position as part of the stock offering. Significant sector underperformance has begun to drive valuations down toward more attractive levels, which may allow us to find more opportunities within utilities.
6
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Coherent, Inc. | 2.6% | ||||
Spectrum Brands Holdings, Inc. | 2.6% | ||||
Graphic Packaging Holding Co. | 2.5% | ||||
Valley National Bancorp | 2.5% | ||||
Penske Automotive Group, Inc. | 2.4% | ||||
Avnet, Inc. | 2.4% | ||||
UMB Financial Corp. | 2.3% | ||||
Axis Capital Holdings Ltd. | 2.2% | ||||
Compass Diversified Holdings | 2.1% | ||||
Edgewell Personal Care Co. | 2.0% | ||||
Top Five Industries | % of net assets | ||||
Banks | 20.5% | ||||
Electronic Equipment, Instruments and Components | 7.6% | ||||
Equity Real Estate Investment Trusts (REITs) | 7.4% | ||||
Commercial Services and Supplies | 6.3% | ||||
Machinery | 5.3% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 97.9% | ||||
Temporary Cash Investments | 1.4% | ||||
Temporary Cash Investments - Securities Lending Collateral | —* | ||||
Other Assets and Liabilities | 0.7% |
*Category is less than 0.05% of total net assets.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2020 to March 31, 2021.
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 I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,656.60 | $7.68 | 1.16% | ||||||||||
I Class | $1,000 | $1,656.30 | $6.36 | 0.96% | ||||||||||
Y Class | $1,000 | $1,658.10 | $5.37 | 0.81% | ||||||||||
A Class | $1,000 | $1,653.80 | $9.33 | 1.41% | ||||||||||
C Class | $1,000 | $1,647.30 | $14.26 | 2.16% | ||||||||||
R Class | $1,000 | $1,653.10 | $10.98 | 1.66% | ||||||||||
R5 Class | $1,000 | $1,657.90 | $6.36 | 0.96% | ||||||||||
R6 Class | $1,000 | $1,657.60 | $5.37 | 0.81% | ||||||||||
G Class | $1,000 | $1,664.60 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.15 | $5.84 | 1.16% | ||||||||||
I Class | $1,000 | $1,020.15 | $4.84 | 0.96% | ||||||||||
Y Class | $1,000 | $1,020.89 | $4.08 | 0.81% | ||||||||||
A Class | $1,000 | $1,017.90 | $7.09 | 1.41% | ||||||||||
C Class | $1,000 | $1,014.16 | $10.85 | 2.16% | ||||||||||
R Class | $1,000 | $1,016.65 | $8.35 | 1.66% | ||||||||||
R5 Class | $1,000 | $1,020.15 | $4.84 | 0.96% | ||||||||||
R6 Class | $1,000 | $1,020.89 | $4.08 | 0.81% | ||||||||||
G Class | $1,000 | $1,024.93 | $0.00 | 0.00%(2) |
(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 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
(2)Other expenses, which include directors' fees and expenses, did not exceed 0.005%.
9
Schedule of Investments |
MARCH 31, 2021
Shares | Value | |||||||
COMMON STOCKS — 97.9% | ||||||||
Banks — 20.5% | ||||||||
Ameris Bancorp | 1,120,000 | $ | 58,811,200 | |||||
BankUnited, Inc. | 1,550,000 | 68,122,500 | ||||||
F.N.B. Corp. | 3,800,000 | 48,260,000 | ||||||
First Hawaiian, Inc. | 635,000 | 17,379,950 | ||||||
First Mid Bancshares, Inc. | 172,114 | 7,560,968 | ||||||
Hilltop Holdings, Inc. | 640,000 | 21,843,200 | ||||||
Home BancShares, Inc. | 3,080,000 | 83,314,000 | ||||||
Independent Bank Group, Inc. | 910,000 | 65,738,400 | ||||||
Old National Bancorp | 2,370,000 | 45,835,800 | ||||||
Origin Bancorp, Inc. | 930,000 | 39,441,300 | ||||||
Pacific Premier Bancorp, Inc. | 1,580,000 | 68,635,200 | ||||||
QCR Holdings, Inc. | 305,000 | 14,402,100 | ||||||
Renasant Corp. | 435,000 | 18,000,300 | ||||||
Signature Bank | 305,000 | 68,960,500 | ||||||
South State Corp. | 575,000 | 45,143,250 | ||||||
Towne Bank | 1,235,000 | 37,544,000 | ||||||
UMB Financial Corp. | 1,145,000 | 105,717,850 | ||||||
Valley National Bancorp | 8,045,000 | 110,538,300 | ||||||
925,248,818 | ||||||||
Building Products — 1.4% | ||||||||
DIRTT Environmental Solutions(1)(2) | 2,720,000 | 8,404,800 | ||||||
Hayward Holdings, Inc.(1) | 1,535,000 | 25,910,800 | ||||||
Tecnoglass, Inc. | 2,205,000 | 26,504,100 | ||||||
60,819,700 | ||||||||
Capital Markets — 1.9% | ||||||||
Donnelley Financial Solutions, Inc.(1)(3) | 3,100,000 | 86,273,000 | ||||||
Chemicals — 1.2% | ||||||||
Minerals Technologies, Inc. | 710,000 | 53,477,200 | ||||||
Commercial Services and Supplies — 6.3% | ||||||||
Brink's Co. (The) | 1,070,000 | 84,776,100 | ||||||
CECO Environmental Corp.(1) | 1,715,000 | 13,599,950 | ||||||
Charah Solutions, Inc.(1)(3) | 2,005,862 | 9,748,489 | ||||||
Deluxe Corp. | 2,085,000 | 87,486,600 | ||||||
Healthcare Services Group, Inc. | 740,000 | 20,742,200 | ||||||
KAR Auction Services, Inc.(1) | 4,100,000 | 61,500,000 | ||||||
UniFirst Corp. | 30,000 | 6,711,300 | ||||||
284,564,639 | ||||||||
Construction and Engineering — 1.9% | ||||||||
Arcosa, Inc. | 340,000 | 22,130,600 | ||||||
Dycom Industries, Inc.(1) | 430,000 | 39,925,500 | ||||||
NV5 Global, Inc.(1) | 265,000 | 25,591,050 | ||||||
87,647,150 | ||||||||
Containers and Packaging — 3.9% | ||||||||
Graphic Packaging Holding Co. | 6,165,000 | 111,956,400 | ||||||
Pactiv Evergreen, Inc. | 4,685,000 | 64,371,900 | ||||||
176,328,300 |
10
Shares | Value | |||||||
Diversified Financial Services — 2.3% | ||||||||
A-Mark Precious Metals, Inc. | 230,000 | $ | 8,280,000 | |||||
Compass Diversified Holdings(3) | 4,045,000 | 93,641,750 | ||||||
101,921,750 | ||||||||
Electronic Equipment, Instruments and Components — 7.6% | ||||||||
Avnet, Inc. | 2,590,000 | 107,510,900 | ||||||
Belden, Inc. | 1,465,000 | 65,002,050 | ||||||
Coherent, Inc.(1) | 465,000 | 117,593,850 | ||||||
II-VI, Inc.(1) | 730,000 | 49,910,100 | ||||||
340,016,900 | ||||||||
Energy Equipment and Services — 1.1% | ||||||||
ChampionX Corp.(1) | 2,155,000 | 46,828,150 | ||||||
NCS Multistage Holdings, Inc.(1) | 90,235 | 2,504,021 | ||||||
49,332,171 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 7.4% | ||||||||
Brandywine Realty Trust | 4,385,000 | 56,610,350 | ||||||
Cousins Properties, Inc. | 1,490,000 | 52,671,500 | ||||||
Four Corners Property Trust, Inc. | 1,370,000 | 37,538,000 | ||||||
Getty Realty Corp. | 765,000 | 21,664,800 | ||||||
Highwoods Properties, Inc. | 530,000 | 22,758,200 | ||||||
Kite Realty Group Trust | 1,865,000 | 35,975,850 | ||||||
Lexington Realty Trust | 2,020,000 | 22,442,200 | ||||||
National Health Investors, Inc. | 245,000 | 17,708,600 | ||||||
Physicians Realty Trust | 975,000 | 17,228,250 | ||||||
Sabra Health Care REIT, Inc. | 470,000 | 8,159,200 | ||||||
Summit Hotel Properties, Inc.(1) | 1,005,000 | 10,210,800 | ||||||
Weingarten Realty Investors | 1,120,000 | 30,139,200 | ||||||
333,106,950 | ||||||||
Gas Utilities — 0.6% | ||||||||
South Jersey Industries, Inc. | 1,170,000 | 26,418,600 | ||||||
Health Care Providers and Services — 1.0% | ||||||||
Magellan Health, Inc.(1) | 45,000 | 4,195,800 | ||||||
National HealthCare Corp. | 251,885 | 19,624,360 | ||||||
Premier, Inc., Class A | 660,000 | 22,341,000 | ||||||
46,161,160 | ||||||||
Hotels, Restaurants and Leisure — 2.7% | ||||||||
Accel Entertainment, Inc.(1) | 3,458,569 | 37,802,159 | ||||||
BJ's Restaurants, Inc.(1) | 410,000 | 23,812,800 | ||||||
Red Robin Gourmet Burgers, Inc.(1)(3) | 1,479,916 | 59,033,850 | ||||||
120,648,809 | ||||||||
Household Durables — 2.0% | ||||||||
Mohawk Industries, Inc.(1) | 95,000 | 18,269,450 | ||||||
Skyline Champion Corp.(1) | 1,545,000 | 69,926,700 | ||||||
88,196,150 | ||||||||
Household Products — 2.6% | ||||||||
Spectrum Brands Holdings, Inc. | 1,355,000 | 115,175,000 | ||||||
Insurance — 3.7% | ||||||||
Axis Capital Holdings Ltd. | 2,025,000 | 100,379,250 | ||||||
James River Group Holdings Ltd. | 765,000 | 34,899,300 | ||||||
ProAssurance Corp. | 620,000 | 16,591,200 | ||||||
ProSight Global, Inc.(1) | 1,325,440 | 16,700,544 | ||||||
168,570,294 |
11
Shares | Value | |||||||
IT Services — 2.1% | ||||||||
EVERTEC, Inc. | 2,150,000 | $ | 80,023,000 | |||||
IBEX Holdings Ltd.(1) | 740,000 | 16,280,000 | ||||||
96,303,000 | ||||||||
Leisure Products — 2.4% | ||||||||
Brunswick Corp. | 560,000 | 53,407,200 | ||||||
Malibu Boats, Inc., Class A(1) | 660,000 | 52,588,800 | ||||||
105,996,000 | ||||||||
Machinery — 5.3% | ||||||||
Albany International Corp., Class A | 440,000 | 36,726,800 | ||||||
Colfax Corp.(1) | 1,310,000 | 57,391,100 | ||||||
EnPro Industries, Inc. | 330,000 | 28,139,100 | ||||||
Gates Industrial Corp. plc(1) | 1,520,000 | 24,304,800 | ||||||
Graham Corp.(3) | 740,839 | 10,549,547 | ||||||
Hurco Cos., Inc. | 170,000 | 6,001,000 | ||||||
Luxfer Holdings plc | 785,000 | 16,704,800 | ||||||
Timken Co. (The) | 700,000 | 56,819,000 | ||||||
236,636,147 | ||||||||
Media — 0.9% | ||||||||
Entravision Communications Corp., Class A(3) | 8,175,000 | 33,027,000 | ||||||
Townsquare Media, Inc., Class A | 717,340 | 7,697,058 | ||||||
40,724,058 | ||||||||
Oil, Gas and Consumable Fuels — 1.0% | ||||||||
Earthstone Energy, Inc., Class A(1) | 885,000 | 6,327,750 | ||||||
Enviva Partners LP | 840,000 | 40,597,200 | ||||||
46,924,950 | ||||||||
Personal Products — 2.0% | ||||||||
Edgewell Personal Care Co. | 2,259,749 | 89,486,061 | ||||||
Professional Services — 2.1% | ||||||||
Barrett Business Services, Inc.(3) | 415,000 | 28,576,900 | ||||||
Korn Ferry | 1,070,000 | 66,735,900 | ||||||
95,312,800 | ||||||||
Semiconductors and Semiconductor Equipment — 2.0% | ||||||||
Advanced Energy Industries, Inc. | 250,000 | 27,292,500 | ||||||
Kulicke & Soffa Industries, Inc. | 1,290,000 | 63,351,900 | ||||||
90,644,400 | ||||||||
Software — 3.3% | ||||||||
Avaya Holdings Corp.(1) | 1,120,000 | 31,393,600 | ||||||
CDK Global, Inc. | 660,000 | 35,679,600 | ||||||
Teradata Corp.(1) | 2,090,000 | 80,548,600 | ||||||
147,621,800 | ||||||||
Specialty Retail — 4.7% | ||||||||
MarineMax, Inc.(1)(3) | 1,170,000 | 57,751,200 | ||||||
OneWater Marine, Inc., Class A(1)(3) | 1,130,000 | 45,154,800 | ||||||
Penske Automotive Group, Inc. | 1,360,000 | 109,126,400 | ||||||
212,032,400 | ||||||||
Textiles, Apparel and Luxury Goods — 1.2% | ||||||||
Tapestry, Inc.(1) | 1,365,000 | 56,251,650 | ||||||
Thrifts and Mortgage Finance — 0.5% | ||||||||
Premier Financial Corp. | 625,000 | 20,787,500 | ||||||
Provident Financial Services, Inc. | 67,471 | 1,503,254 | ||||||
22,290,754 |
12
Shares | Value | |||||||
Trading Companies and Distributors — 2.3% | ||||||||
Beacon Roofing Supply, Inc.(1) | 642,386 | $ | 33,609,635 | |||||
DXP Enterprises, Inc.(1)(3) | 1,122,065 | 33,852,701 | ||||||
GMS, Inc.(1) | 909,221 | 37,959,977 | ||||||
105,422,313 | ||||||||
TOTAL COMMON STOCKS (Cost $3,269,007,967) | 4,409,552,924 | |||||||
TEMPORARY CASH INVESTMENTS — 1.4% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $10,970,924), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $10,755,439) | 10,755,436 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 1.625%, 5/15/26, valued at $36,582,302), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $35,865,000) | 35,865,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 13,903,738 | 13,903,738 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $60,524,174) | 60,524,174 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(4)† | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $1,339,982) | 1,339,982 | 1,339,982 | ||||||
TOTAL INVESTMENT SECURITIES — 99.3% (Cost $3,330,872,123) | 4,471,417,080 | |||||||
OTHER ASSETS AND LIABILITIES — 0.7% | 31,590,174 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 4,503,007,254 |
NOTES TO SCHEDULE OF INVESTMENTS |
†Category is less than 0.05% of total net assets.
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $1,274,013. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(3)Affiliated Company: the fund’s holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940.
(4)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $1,339,982.
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $3,049,432,876) — including $1,274,013 of securities on loan | $ | 4,012,467,861 | |||
Investment securities - affiliated, at value (cost of $280,099,265) | 457,609,237 | ||||
Investment made with cash collateral received for securities on loan, at value (cost of $1,339,982) | 1,339,982 | ||||
Total investment securities, at value (cost of $3,330,872,123) | 4,471,417,080 | ||||
Receivable for investments sold | 64,218,619 | ||||
Receivable for capital shares sold | 22,285,328 | ||||
Dividends and interest receivable | 5,347,921 | ||||
Securities lending receivable | 617 | ||||
4,563,269,565 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 1,339,982 | ||||
Payable for investments purchased | 42,893,864 | ||||
Payable for capital shares redeemed | 12,956,541 | ||||
Accrued management fees | 3,037,048 | ||||
Distribution and service fees payable | 34,876 | ||||
60,262,311 | |||||
Net Assets | $ | 4,503,007,254 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 3,271,010,303 | |||
Distributable earnings | 1,231,996,951 | ||||
$ | 4,503,007,254 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $958,579,437 | 89,246,500 | $10.74 | ||||||||
I Class, $0.01 Par Value | $2,049,526,589 | 188,672,501 | $10.86 | ||||||||
Y Class, $0.01 Par Value | $66,827,426 | 6,142,882 | $10.88 | ||||||||
A Class, $0.01 Par Value | $94,533,424 | 8,916,034 | $10.60* | ||||||||
C Class, $0.01 Par Value | $15,447,745 | 1,559,817 | $9.90 | ||||||||
R Class, $0.01 Par Value | $5,120,061 | 486,394 | $10.53 | ||||||||
R5 Class, $0.01 Par Value | $9,870,238 | 907,906 | $10.87 | ||||||||
R6 Class, $0.01 Par Value | $943,344,130 | 86,828,606 | $10.86 | ||||||||
G Class, $0.01 Par Value | $359,758,204 | 33,034,309 | $10.89 |
*Maximum offering price $11.25 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $6,207,394 from affiliates and net of foreign taxes withheld of $10,150) | $ | 39,775,142 | |||
Interest | 23,217 | ||||
Securities lending, net | 22,017 | ||||
39,820,376 | |||||
Expenses: | |||||
Management fees | 24,166,517 | ||||
Distribution and service fees: | |||||
A Class | 168,182 | ||||
C Class | 59,591 | ||||
R Class | 16,351 | ||||
Directors' fees and expenses | 66,977 | ||||
24,477,618 | |||||
Fees waived - G Class | (2,366,688) | ||||
22,110,930 | |||||
Net investment income (loss) | 17,709,446 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on investment transactions (including $(19,425,355) from affiliates) | 190,771,566 | ||||
Change in net unrealized appreciation (depreciation) on investments (including $280,315,617 from affiliates) | 1,587,349,837 | ||||
Net realized and unrealized gain (loss) | 1,778,121,403 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,795,830,849 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 17,709,446 | $ | 13,315,021 | ||||
Net realized gain (loss) | 190,771,566 | (11,619,799) | ||||||
Change in net unrealized appreciation (depreciation) | 1,587,349,837 | (440,805,106) | ||||||
Net increase (decrease) in net assets resulting from operations | 1,795,830,849 | (439,109,884) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (3,150,781) | (15,619,335) | ||||||
I Class | (6,801,236) | (11,408,593) | ||||||
Y Class | (339,676) | (629,409) | ||||||
A Class | (153,102) | (1,735,034) | ||||||
C Class | — | (75,193) | ||||||
R Class | (1,916) | (76,868) | ||||||
R5 Class | (45,434) | (36,655) | ||||||
R6 Class | (4,992,095) | (10,640,774) | ||||||
G Class | (5,290,956) | (4,520,287) | ||||||
Decrease in net assets from distributions | (20,775,196) | (44,742,148) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 1,371,014,953 | 484,798,524 | ||||||
Net increase (decrease) in net assets | 3,146,070,606 | 946,492 | ||||||
Net Assets | ||||||||
Beginning of period | 1,356,936,648 | 1,355,990,156 | ||||||
End of period | $ | 4,503,007,254 | $ | 1,356,936,648 | ||||
See Notes to Financial Statements.
16
Notes to Financial Statements |
MARCH 31, 2021
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. Small Cap Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective.
The fund offers the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class, R6 Class and G 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.
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 (NAV) 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 NAV 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 NAV 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. 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.
17
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 lending income is net of fees and rebates earned by the lending agent for its services.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. 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 collateral requirements.
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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
18
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 1,339,982 | — | — | — | $ | 1,339,982 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 1,339,982 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 6% of the shares of the fund.
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder 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 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 use very similar investment teams and strategies (strategy assets). The investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
19
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 1.00% to 1.25% | 1.19% | ||||||
I Class | 0.80% to 1.05% | 0.99% | ||||||
Y Class | 0.65% to 0.90% | 0.84% | ||||||
A Class | 1.00% to 1.25% | 1.19% | ||||||
C Class | 1.00% to 1.25% | 1.19% | ||||||
R Class | 1.00% to 1.25% | 1.19% | ||||||
R5 Class | 0.80% to 1.05% | 0.99% | ||||||
R6 Class | 0.65% to 0.90% | 0.84% | ||||||
G Class | 0.65% to 0.90% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.84%.
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 period ended March 31, 2021 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $5,339,270 and $2,046,520, respectively. The effect of interfund transactions on the Statement of Operations was $306,978 in net realized gain (loss) on investment transactions.
4.Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended March 31, 2021 were $2,943,838,659 and $1,710,956,685, respectively.
On July 9, 2020, the fund received investment securities valued at $108,764,472 from a purchase in kind from other products managed by the fund's investment advisor. A purchase in kind occurs when a fund receives securities into its portfolio in lieu of cash as payment from a purchasing shareholder.
20
5.Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2021 | Year ended March 31, 2020 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 700,000,000 | 680,000,000 | ||||||||||||
Sold | 40,326,653 | $ | 326,284,879 | 24,802,353 | $ | 178,829,074 | ||||||||
Issued in reinvestment of distributions | 430,711 | 3,039,149 | 1,941,566 | 15,339,631 | ||||||||||
Redeemed | (35,943,298) | (261,463,817) | (26,667,305) | (193,532,060) | ||||||||||
4,814,066 | 67,860,211 | 76,614 | 636,645 | |||||||||||
I Class/Shares Authorized | 800,000,000 | 380,000,000 | ||||||||||||
Sold | 153,121,813 | 1,350,198,944 | 47,812,059 | 324,176,300 | ||||||||||
Issued in reinvestment of distributions | 791,999 | 6,121,740 | 1,189,766 | 9,479,116 | ||||||||||
Redeemed | (42,625,240) | (330,844,984) | (21,024,656) | (151,420,025) | ||||||||||
111,288,572 | 1,025,475,700 | 27,977,169 | 182,235,391 | |||||||||||
Y Class/Shares Authorized | 60,000,000 | 30,000,000 | ||||||||||||
Sold | 3,747,350 | 31,726,079 | 4,385,038 | 30,678,538 | ||||||||||
Issued in reinvestment of distributions | 32,693 | 251,672 | 47,887 | 383,589 | ||||||||||
Redeemed | (2,206,380) | (16,362,220) | (328,638) | (2,346,193) | ||||||||||
1,573,663 | 15,615,531 | 4,104,287 | 28,715,934 | |||||||||||
A Class/Shares Authorized | 80,000,000 | 90,000,000 | ||||||||||||
Sold | 3,384,280 | 27,106,052 | 1,467,411 | 10,408,675 | ||||||||||
Issued in reinvestment of distributions | 23,213 | 149,558 | 219,701 | 1,721,197 | ||||||||||
Redeemed | (3,895,324) | (30,777,886) | (4,174,800) | (30,205,959) | ||||||||||
(487,831) | (3,522,276) | (2,487,688) | (18,076,087) | |||||||||||
C Class/Shares Authorized | 25,000,000 | 20,000,000 | ||||||||||||
Sold | 1,205,644 | 9,721,981 | 218,176 | 1,509,618 | ||||||||||
Issued in reinvestment of distributions | — | — | 10,147 | 75,193 | ||||||||||
Redeemed | (176,515) | (1,278,094) | (83,461) | (527,591) | ||||||||||
1,029,129 | 8,443,887 | 144,862 | 1,057,220 | |||||||||||
R Class/Shares Authorized | 180,000,000 | 20,000,000 | ||||||||||||
Sold | 184,334 | 1,574,021 | 140,015 | 898,698 | ||||||||||
Issued in reinvestment of distributions | 306 | 1,915 | 9,830 | 76,868 | ||||||||||
Redeemed | (149,094) | (1,179,377) | (195,765) | (1,296,089) | ||||||||||
35,546 | 396,559 | (45,920) | (320,523) | |||||||||||
R5 Class/Shares Authorized | 40,000,000 | 20,000,000 | ||||||||||||
Sold | 1,441,277 | 10,417,513 | 714,209 | 5,601,944 | ||||||||||
Issued in reinvestment of distributions | 6,113 | 45,434 | 4,565 | 36,655 | ||||||||||
Redeemed | (1,180,367) | (8,588,379) | (146,743) | (984,692) | ||||||||||
267,023 | 1,874,568 | 572,031 | 4,653,907 | |||||||||||
R6 Class/Shares Authorized | 450,000,000 | 350,000,000 | ||||||||||||
Sold | 56,027,727 | 446,342,135 | 21,118,101 | 155,686,526 | ||||||||||
Issued in reinvestment of distributions | 652,567 | 4,948,292 | 1,337,122 | 10,637,549 | ||||||||||
Redeemed | (25,033,289) | (199,977,832) | (11,643,022) | (83,178,433) | ||||||||||
31,647,005 | 251,312,595 | 10,812,201 | 83,145,642 | |||||||||||
G Class/Shares Authorized | 300,000,000 | 210,000,000 | ||||||||||||
Sold | 20,818,476 | 125,595,248 | 27,210,975 | 208,991,201 | ||||||||||
Issued in reinvestment of distributions | 696,920 | 5,290,956 | 559,457 | 4,520,287 | ||||||||||
Redeemed | (14,913,075) | (127,328,026) | (1,338,444) | (10,761,093) | ||||||||||
6,602,321 | 3,558,178 | 26,431,988 | 202,750,395 | |||||||||||
Net increase (decrease) | 156,769,494 | $ | 1,371,014,953 | 67,585,544 | $ | 484,798,524 |
21
6.Affiliated Company Transactions
If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the period ended March 31, 2021 follows (amounts in thousands):
Company | Beginning Value | Purchase Cost | Sales Cost | Change in Net Unrealized Appreciation (Depreciation) | Ending Value | Ending Shares | Net Realized Gain (Loss) | Income | ||||||||||||||||||
Barrett Business Services, Inc. | — | $ | 25,235 | — | $ | 3,342 | $ | 28,577 | 415 | — | $ | 277 | ||||||||||||||
Charah Solutions, Inc.(1) | $ | 3,503 | 1,010 | $ | 4,640 | 9,875 | 9,748 | 2,006 | $ | (2,999) | — | |||||||||||||||
Compass Diversified Holdings | 34,185 | 34,164 | 7,520 | 32,813 | 93,642 | 4,045 | (1,569) | 4,600 | ||||||||||||||||||
Donnelley Financial Solutions, Inc.(1) | 12,671 | 19,227 | 5,772 | 60,147 | 86,273 | 3,100 | (1,933) | — | ||||||||||||||||||
DXP Enterprises, Inc.(1) | 3,249 | 17,295 | 2,322 | 15,631 | 33,853 | 1,122 | (224) | — | ||||||||||||||||||
Entravision Communications Corp., Class A | 12,515 | 4,416 | 1,141 | 17,237 | 33,027 | 8,175 | (591) | 744 | ||||||||||||||||||
Graham Corp. | 5,403 | 4,796 | 1,559 | 1,909 | 10,549 | 741 | (437) | 324 | ||||||||||||||||||
InnerWorkings, Inc.(1) | 3,048 | 610 | 17,622 | 13,964 | — | — | (8,591) | — | ||||||||||||||||||
MarineMax, Inc.(1) | 6,150 | 28,863 | 5,382 | 28,120 | 57,751 | 1,170 | 2,176 | — | ||||||||||||||||||
OneWater Marine, Inc., Class A(1) | 3,378 | 15,766 | 927 | 26,938 | 45,155 | 1,130 | 467 | — | ||||||||||||||||||
Red Robin Gourmet Burgers, Inc.(1) | 6,177 | 20,355 | 19,147 | 51,649 | 59,034 | 1,480 | (7,088) | — | ||||||||||||||||||
Tecnoglass, Inc. | 6,114 | 4,799 | 3,100 | 18,691 | (2) | (2) | 1,364 | 262 | ||||||||||||||||||
$ | 96,393 | $ | 176,536 | $ | 69,132 | $ | 280,316 | $ | 457,609 | 23,384 | $ | (19,425) | $ | 6,207 |
(1)Non-income producing.
(2) Company was not an affiliate at March 31, 2021.
7.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.
22
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 | $ | 4,409,552,924 | — | — | |||||||
Temporary Cash Investments | 13,903,738 | $ | 46,620,436 | — | |||||||
Temporary Cash Investments - Securities Lending Collateral | 1,339,982 | — | — | ||||||||
$ | 4,424,796,644 | $ | 46,620,436 | — | |||||||
8.Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
9.Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 20,775,196 | $ | 16,295,777 | ||||
Long-term capital gains | — | $ | 28,446,371 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 3,421,317,516 | |||
Gross tax appreciation of investments | $ | 1,076,138,593 | |||
Gross tax depreciation of investments | (26,039,029) | ||||
Net tax appreciation (depreciation) of investments | $ | 1,050,099,564 | |||
Undistributed ordinary income | $ | 119,419,947 | |||
Accumulated long-term gains | $ | 62,477,440 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
23
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.20 | 0.03 | 5.55 | 5.58 | (0.04) | — | (0.04) | $10.74 | 107.63% | 1.19% | 1.19% | 0.46% | 0.46% | 72% | $958,579 | ||||||||||||||||||||||||||||||||
2020 | $7.05 | 0.05 | (1.71) | (1.66) | (0.04) | (0.15) | (0.19) | $5.20 | (24.44)% | 1.25% | 1.25% | 0.71% | 0.71% | 71% | $439,030 | ||||||||||||||||||||||||||||||||
2019 | $8.64 | 0.06 | (0.44) | (0.38) | (0.05) | (1.16) | (1.21) | $7.05 | (3.15)% | 1.25% | 1.25% | 0.68% | 0.68% | 90% | $594,650 | ||||||||||||||||||||||||||||||||
2018 | $9.39 | 0.04 | 0.47 | 0.51 | (0.03) | (1.23) | (1.26) | $8.64 | 5.41% | 1.26% | 1.26% | 0.42% | 0.42% | 90% | $687,877 | ||||||||||||||||||||||||||||||||
2017 | $7.55 | 0.04 | 2.28 | 2.32 | (0.06) | (0.42) | (0.48) | $9.39 | 31.15% | 1.25% | 1.25% | 0.47% | 0.47% | 90% | $770,415 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.26 | 0.05 | 5.61 | 5.66 | (0.06) | — | (0.06) | $10.86 | 108.04% | 0.99% | 0.99% | 0.66% | 0.66% | 72% | $2,049,527 | ||||||||||||||||||||||||||||||||
2020 | $7.13 | 0.07 | (1.74) | (1.67) | (0.05) | (0.15) | (0.20) | $5.26 | (24.30)% | 1.05% | 1.05% | 0.91% | 0.91% | 71% | $407,147 | ||||||||||||||||||||||||||||||||
2019 | $8.72 | 0.07 | (0.44) | (0.37) | (0.06) | (1.16) | (1.22) | $7.13 | (2.95)% | 1.05% | 1.05% | 0.88% | 0.88% | 90% | $352,298 | ||||||||||||||||||||||||||||||||
2018 | $9.47 | 0.06 | 0.46 | 0.52 | (0.04) | (1.23) | (1.27) | $8.72 | 5.57% | 1.06% | 1.06% | 0.62% | 0.62% | 90% | $411,986 | ||||||||||||||||||||||||||||||||
2017 | $7.61 | 0.06 | 2.29 | 2.35 | (0.07) | (0.42) | (0.49) | $9.47 | 31.43% | 1.05% | 1.05% | 0.67% | 0.67% | 90% | $463,119 |
For a Share Outstanding Throughout the Years Ended March 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) | |||||||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.27 | 0.06 | 5.62 | 5.68 | (0.07) | — | (0.07) | $10.88 | 108.41% | 0.84% | 0.84% | 0.81% | 0.81% | 72% | $66,827 | ||||||||||||||||||||||||||||||||
2020 | $7.14 | 0.09 | (1.75) | (1.66) | (0.06) | (0.15) | (0.21) | $5.27 | (24.15)% | 0.90% | 0.90% | 1.06% | 1.06% | 71% | $24,079 | ||||||||||||||||||||||||||||||||
2019 | $8.73 | 0.10 | (0.45) | (0.35) | (0.08) | (1.16) | (1.24) | $7.14 | (2.80)% | 0.90% | 0.90% | 1.03% | 1.03% | 90% | $3,320 | ||||||||||||||||||||||||||||||||
2018(3) | $9.32 | 0.08 | 0.61 | 0.69 | (0.05) | (1.23) | (1.28) | $8.73 | 7.43% | 0.91%(4) | 0.91%(4) | 0.95%(4) | 0.95%(4) | 90%(5) | $131 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.13 | 0.02 | 5.47 | 5.49 | (0.02) | — | (0.02) | $10.60 | 107.16% | 1.44% | 1.44% | 0.21% | 0.21% | 72% | $94,533 | ||||||||||||||||||||||||||||||||
2020 | $6.96 | 0.03 | (1.69) | (1.66) | (0.02) | (0.15) | (0.17) | $5.13 | (24.66)% | 1.50% | 1.50% | 0.46% | 0.46% | 71% | $48,260 | ||||||||||||||||||||||||||||||||
2019 | $8.54 | 0.03 | (0.42) | (0.39) | (0.03) | (1.16) | (1.19) | $6.96 | (3.32)% | 1.50% | 1.50% | 0.43% | 0.43% | 90% | $82,755 | ||||||||||||||||||||||||||||||||
2018 | $9.31 | 0.01 | 0.46 | 0.47 | (0.01) | (1.23) | (1.24) | $8.54 | 5.02% | 1.51% | 1.51% | 0.17% | 0.17% | 90% | $116,763 | ||||||||||||||||||||||||||||||||
2017 | $7.49 | 0.02 | 2.26 | 2.28 | (0.04) | (0.42) | (0.46) | $9.31 | 30.82% | 1.50% | 1.50% | 0.22% | 0.22% | 90% | $141,505 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $4.82 | (0.04) | 5.12 | 5.08 | — | — | — | $9.90 | 105.39% | 2.19% | 2.19% | (0.54)% | (0.54)% | 72% | $15,448 | ||||||||||||||||||||||||||||||||
2020 | $6.57 | (0.02) | (1.58) | (1.60) | — | (0.15) | (0.15) | $4.82 | (25.11)% | 2.25% | 2.25% | (0.29)% | (0.29)% | 71% | $2,556 | ||||||||||||||||||||||||||||||||
2019 | $8.18 | (0.02) | (0.43) | (0.45) | — | (1.16) | (1.16) | $6.57 | (4.19)% | 2.25% | 2.25% | (0.32)% | (0.32)% | 90% | $2,536 | ||||||||||||||||||||||||||||||||
2018 | $9.01 | (0.05) | 0.45 | 0.40 | — | (1.23) | (1.23) | $8.18 | 4.41% | 2.26% | 2.26% | (0.58)% | (0.58)% | 90% | $2,688 | ||||||||||||||||||||||||||||||||
2017 | $7.29 | (0.05) | 2.20 | 2.15 | (0.01) | (0.42) | (0.43) | $9.01 | 29.78% | 2.25% | 2.25% | (0.53)% | (0.53)% | 90% | $1,234 |
For a Share Outstanding Throughout the Years Ended March 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 | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.10 | —(6) | 5.43 | 5.43 | —(6) | — | —(6) | $10.53 | 106.61% | 1.69% | 1.69% | (0.04)% | (0.04)% | 72% | $5,120 | ||||||||||||||||||||||||||||||||
2020 | $6.92 | 0.01 | (1.68) | (1.67) | —(6) | (0.15) | (0.15) | $5.10 | (24.80)% | 1.75% | 1.75% | 0.21% | 0.21% | 71% | $2,299 | ||||||||||||||||||||||||||||||||
2019 | $8.50 | 0.02 | (0.43) | (0.41) | (0.01) | (1.16) | (1.17) | $6.92 | (3.58)% | 1.75% | 1.75% | 0.18% | 0.18% | 90% | $3,437 | ||||||||||||||||||||||||||||||||
2018 | $9.28 | (0.01) | 0.46 | 0.45 | — | (1.23) | (1.23) | $8.50 | 4.82% | 1.76% | 1.76% | (0.08)% | (0.08)% | 90% | $3,284 | ||||||||||||||||||||||||||||||||
2017 | $7.48 | —(6) | 2.25 | 2.25 | (0.03) | (0.42) | (0.45) | $9.28 | 30.41% | 1.75% | 1.75% | (0.03)% | (0.03)% | 90% | $3,275 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.26 | 0.05 | 5.62 | 5.67 | (0.06) | — | (0.06) | $10.87 | 108.23% | 0.99% | 0.99% | 0.66% | 0.66% | 72% | $9,870 | ||||||||||||||||||||||||||||||||
2020 | $7.14 | 0.06 | (1.74) | (1.68) | (0.05) | (0.15) | (0.20) | $5.26 | (24.41)% | 1.05% | 1.05% | 0.91% | 0.91% | 71% | $3,373 | ||||||||||||||||||||||||||||||||
2019 | $8.73 | 0.11 | (0.48) | (0.37) | (0.06) | (1.16) | (1.22) | $7.14 | (2.92)% | 1.05% | 1.05% | 0.88% | 0.88% | 90% | $491 | ||||||||||||||||||||||||||||||||
2018(3) | $9.32 | 0.06 | 0.62 | 0.68 | (0.04) | (1.23) | (1.27) | $8.73 | 7.32% | 1.06%(4) | 1.06%(4) | 0.65%(4) | 0.65%(4) | 90%(5) | $5 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.26 | 0.06 | 5.61 | 5.67 | (0.07) | — | (0.07) | $10.86 | 108.42% | 0.84% | 0.84% | 0.81% | 0.81% | 72% | $943,344 | ||||||||||||||||||||||||||||||||
2020 | $7.13 | 0.08 | (1.74) | (1.66) | (0.06) | (0.15) | (0.21) | $5.26 | (24.19)% | 0.90% | 0.90% | 1.06% | 1.06% | 71% | $290,444 | ||||||||||||||||||||||||||||||||
2019 | $8.72 | 0.09 | (0.44) | (0.35) | (0.08) | (1.16) | (1.24) | $7.13 | (2.80)% | 0.90% | 0.90% | 1.03% | 1.03% | 90% | $316,502 | ||||||||||||||||||||||||||||||||
2018 | $9.47 | 0.07 | 0.47 | 0.54 | (0.06) | (1.23) | (1.29) | $8.72 | 5.73% | 0.91% | 0.91% | 0.77% | 0.77% | 90% | $278,351 | ||||||||||||||||||||||||||||||||
2017 | $7.62 | 0.07 | 2.28 | 2.35 | (0.08) | (0.42) | (0.50) | $9.47 | 31.45% | 0.90% | 0.90% | 0.82% | 0.82% | 90% | $176,015 | ||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021 | $5.29 | 0.12 | 5.63 | 5.75 | (0.15) | — | (0.15) | $10.89 | 110.06% | 0.00%(7) | 0.84% | 1.65% | 0.81% | 72% | $359,758 | ||||||||||||||||||||||||||||||||
2020 | $7.25 | 0.15 | (1.85) | (1.70) | (0.11) | (0.15) | (0.26) | $5.29 | (24.58)% | 0.00%(7) | 0.90% | 1.96% | 1.06% | 71% | $139,749 |
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)April 10, 2017 (commencement of sale) through March 31, 2018.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
(6)Per-share amount was less than $0.005.
(7)Ratio was less than 0.005%.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Small Cap Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Small Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
28
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
29
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
30
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
31
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
32
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
33
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $20,775,196, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
The fund hereby designates $3,114,505 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2021.
The fund hereby designates $1,491,676, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2021.
The fund utilized earnings and profits of $4,746,571 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
34
Notes |
35
Notes |
36
![]() | ||||||||
Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century 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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92272 2105 |
![image101.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image101.jpg)
Annual Report | |||||
March 31, 2021 | |||||
Value Fund | |||||
Investor Class (TWVLX) | |||||
I Class (AVLIX) | |||||
Y Class (AVUYX) | |||||
A Class (TWADX) | |||||
C Class (ACLCX) | |||||
R Class (AVURX) | |||||
R5 Class (AVUGX) | |||||
R6 Class (AVUDX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image231.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image231.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2021. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Stocks Soared, Bonds Moderated Amid Growing Economic Optimism
March 31 marked the end of a remarkable 12-month period, as the COVID-19 pandemic wreaked havoc on global economies, governments and society. In response, states issued unprecedented lockdown orders. Unemployment surged, corporate earnings plunged and second-quarter-2020 gross domestic product sank a record 31.4% (annualized). This triggered soaring demand for safe-haven assets.
Swift and significant action from the Federal Reserve and the federal government helped reignite investor confidence and bolster the economic backdrop. Riskier assets quickly rebounded from their early 2020 lows. The economy expanded a record 33.4% in the third quarter and continued to grow amid the gradual lifting of lockdowns and the emergency approval of vaccines.
Late in the reporting period, improving vaccine distributions, additional federal coronavirus aid and ongoing reopenings bolstered the economic and earnings outlooks. This improving backdrop combined with massive monetary and fiscal support helped fuel a 12-month gain of 56% for the S&P 500 Index. These same economic dynamics lifted longer-term inflation expectations and U.S. Treasury yields, pressuring investment-grade bond returns. After rallying through most of 2020, the Bloomberg Barclays U.S. Aggregate Bond Index gained less than 1% for the 12-month period.
A Return to Normalcy in Sight
The return to pre-pandemic life appears to be on the horizon, thanks largely to expanding vaccine availability. In addition, medical professionals continue to improve treatment protocols for those afflicted with the virus. Until the U.S. is fully reopened, investors still may face the effects of regional virus-related restrictions, economic and political uncertainty and heightened market volatility. These influences can be unsettling, but they tend to be temporary.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image161.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/image161.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2021 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWVLX | 63.17% | 10.97% | 10.39% | — | 9/1/93 | ||||||||||||||
Russell 1000 Value Index | — | 56.09% | 11.73% | 10.98% | — | — | ||||||||||||||
S&P 500 Index | — | 56.35% | 16.28% | 13.90% | — | — | ||||||||||||||
I Class | AVLIX | 63.29% | 11.16% | 10.60% | — | 7/31/97 | ||||||||||||||
Y Class | AVUYX | 63.54% | — | — | 9.34% | 4/10/17 | ||||||||||||||
A Class | TWADX | 10/2/96 | ||||||||||||||||||
No sales charge | 62.58% | 10.67% | 10.11% | — | ||||||||||||||||
With sales charge | 53.26% | 9.37% | 9.46% | — | ||||||||||||||||
C Class | ACLCX | 61.27% | 9.84% | 9.27% | — | 6/4/01 | ||||||||||||||
R Class | AVURX | 62.15% | 10.39% | 9.83% | — | 7/29/05 | ||||||||||||||
R5 Class | AVUGX | 63.29% | — | — | 9.19% | 4/10/17 | ||||||||||||||
R6 Class | AVUDX | 63.54% | 11.33% | — | 9.74% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2011 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-cf4941c635b14f8db1c1a.jpg](https://capedge.com/proxy/N-CSR/0000908186-21-000037/chart-cf4941c635b14f8db1c1a.jpg)
Value on March 31, 2021 | |||||
Investor Class — $26,888 | |||||
Russell 1000 Value Index — $28,372 | |||||
S&P 500 Index — $36,788 | |||||
Total Annual Fund Operating Expenses | |||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | ||||||||||||||||
1.00% | 0.80% | 0.65% | 1.25% | 2.00% | 1.50% | 0.80% | 0.65% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Michael Liss, Kevin Toney, Phil Davidson, Brian Woglom and Philip Sundell
Performance Summary
Value returned 63.17%* for the fiscal year ended March 31, 2021, compared with the 56.09% return of its benchmark, the Russell 1000 Value Index. The fund’s return reflects operating expenses, while the index’s return does not.
The fund’s outperformance relative to the benchmark was led by stock selection and an overweight allocation in the energy sector. An underweight and stock decisions in the utilities sector also added value to relative performance. Stock selection in the communication services sector was a top detractor, while stock decisions and an underweight allocation in materials dampened performance.
Energy and Utilities Contributed
Several of our energy positions outperformed. In particular, overweight positions and stock decisions in the energy equipment and services and oil, gas and consumable fuels industries benefited from rising oil prices due to increased demand for oil. Better production discipline from publicly traded oil and gas producers in the U.S. and OPEC’s efforts to limit the supply of oil also boosted the group’s performance.
Halliburton, one of the largest oil field services companies in the world, had a strong year as commodity markets rose. Investors began to look through Halliburton’s depressed earnings and cash flow generation and began to price in higher, more normalized levels of profitability into the stock. Shares of Devon Energy, a shale-focused exploration and production company, benefited from higher oil and gas prices, boosting Devon’s free cash flow generation potential. Also, the company’s management team reiterated its commitment to capital discipline by stating that it does not plan to increase capital expenditures in a higher commodity price environment.
An underweight led to outperformance in utilities, as the sector was among the benchmark’s weaker performers. Utilities stocks generally lagged as many investors shifted away from defensive stocks and the distribution of COVID-19 vaccines improved the economic outlook. We took advantage of this shift and initiated a position in CMS Energy late in the period. This large combined electric and natural gas utility has operations in all of Michigan’s lower peninsula counties, which we consider a favorable regulatory environment. Our analysis shows the company has delivered superior growth and lower volatility compared to industry peers.
Among individual top contributors, Germany-based industrial conglomerate Siemens delivered solid performance and further accelerated its cost-cutting program.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the index, other share classes may not. See page 3 for returns for all share classes.
5
Stock Selection in Communication Services and Materials Detracted
Stock selection in the communication services sector hindered performance. An overweight to diversified telecommunication services, including overweight holdings AT&T and Verizon Communications, detracted. The wireless service providers underperformed due in part to competing pricing promotions for the new iPhone 12 and an extremely competitive U.S. government spectrum auction. Both companies spent more on spectrum purchases than expected by investors, increasing the balance sheet leverage of both. Uncertainty over the future of corporate tax rates put additional pressure on the stocks. We maintain positions in the stocks as we think they can manage the higher debt levels and view their fundamentals as solid.
Stock selection and an underweight in the materials sector detracted from the portfolio’s performance. Notably, the portfolio’s lack of exposure to the chemicals industry weighed on results.
Elsewhere, Merck & Co. detracted from performance. This large pharmaceutical company lagged the market as investors considered the potential impacts of the Biden administration’s drug policies. Merck also halted work on two potential COVID-19 vaccines. We view these issues as transitory.
Portfolio Positioning
The portfolio seeks to invest in companies where we believe the valuation does not reflect the quality and normal earnings power of the company. Our process is based on individual security selection, but broad themes have emerged.
Energy is our largest overweight as our research has led us to higher-quality energy companies with solid assets, strong balance sheets and management teams focused on returns on capital and return of capital to shareholders. The fund is also overweight in financials. Banks represent the majority of our financials exposure, but we also hold select positions in the capital markets, insurance and diversified financial services industries. In health care, we are finding quality companies with attractive risk/reward profiles, particularly in the pharmaceuticals and health care providers and services industries.
We hold a limited number of utilities sector stocks due to valuations that we believe are extended. However, we did add exposure to the sector this period when our bottom-up analysis identified select companies at attractive valuations.
6
Fund Characteristics |
MARCH 31, 2021 | |||||
Top Ten Holdings | % of net assets | ||||
Berkshire Hathaway, Inc.* | 3.4% | ||||
JPMorgan Chase & Co. | 3.0% | ||||
AT&T, Inc. | 2.8% | ||||
Johnson & Johnson | 2.7% | ||||
U.S. Bancorp | 2.7% | ||||
Cisco Systems, Inc. | 2.6% | ||||
Chevron Corp. | 2.5% | ||||
Pfizer, Inc. | 2.5% | ||||
Verizon Communications, Inc. | 2.3% | ||||
General Electric Co. | 2.3% | ||||
*Includes all classes of the issuer held by the fund. | |||||
Top Five Industries | % of net assets | ||||
Banks | 12.6% | ||||
Pharmaceuticals | 7.7% | ||||
Oil, Gas and Consumable Fuels | 7.4% | ||||
Diversified Telecommunication Services | 5.1% | ||||
Food Products | 4.8% | ||||
Types of Investments in Portfolio | % of net assets | ||||
Domestic Common Stocks | 84.8% | ||||
Foreign Common Stocks* | 11.9% | ||||
Exchange-Traded Funds | 0.5% | ||||
Total Equity Exposure | 97.2% | ||||
Temporary Cash Investments | 2.8% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.7% | ||||
Other Assets and Liabilities | (0.7)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2020 to March 31, 2021.
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 I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual 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 $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 10/1/20 | Ending Account Value 3/31/21 | Expenses Paid During Period(1) 10/1/20 - 3/31/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,379.00 | $5.93 | 1.00% | ||||||||||
I Class | $1,000 | $1,379.20 | $4.75 | 0.80% | ||||||||||
Y Class | $1,000 | $1,380.30 | $3.86 | 0.65% | ||||||||||
A Class | $1,000 | $1,375.80 | $7.40 | 1.25% | ||||||||||
C Class | $1,000 | $1,370.30 | $11.82 | 2.00% | ||||||||||
R Class | $1,000 | $1,374.00 | $8.88 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,379.20 | $4.75 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,380.30 | $3.86 | 0.65% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.95 | $5.04 | 1.00% | ||||||||||
I Class | $1,000 | $1,020.94 | $4.03 | 0.80% | ||||||||||
Y Class | $1,000 | $1,021.69 | $3.28 | 0.65% | ||||||||||
A Class | $1,000 | $1,018.70 | $6.29 | 1.25% | ||||||||||
C Class | $1,000 | $1,014.96 | $10.05 | 2.00% | ||||||||||
R Class | $1,000 | $1,017.45 | $7.54 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,020.94 | $4.03 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,021.69 | $3.28 | 0.65% |
(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 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
MARCH 31, 2021
Shares | Value | |||||||
COMMON STOCKS — 96.7% | ||||||||
Aerospace and Defense — 0.7% | ||||||||
Raytheon Technologies Corp. | 240,640 | $ | 18,594,254 | |||||
Airlines — 0.7% | ||||||||
Southwest Airlines Co.(1) | 286,740 | 17,508,344 | ||||||
Auto Components — 0.9% | ||||||||
BorgWarner, Inc. | 488,822 | 22,661,788 | ||||||
Automobiles — 1.1% | ||||||||
General Motors Co.(1) | 256,794 | 14,755,383 | ||||||
Honda Motor Co. Ltd. | 499,500 | 15,035,419 | ||||||
29,790,802 | ||||||||
Banks — 12.6% | ||||||||
Bank of America Corp. | 1,354,780 | 52,416,438 | ||||||
Comerica, Inc. | 134,367 | 9,639,489 | ||||||
JPMorgan Chase & Co. | 517,221 | 78,736,553 | ||||||
M&T Bank Corp. | 82,425 | 12,496,454 | ||||||
PNC Financial Services Group, Inc. (The) | 105,518 | 18,508,912 | ||||||
Toronto-Dominion Bank (The)(2) | 266,550 | 17,383,972 | ||||||
Truist Financial Corp. | 407,075 | 23,740,614 | ||||||
U.S. Bancorp | 1,259,957 | 69,688,222 | ||||||
Wells Fargo & Co. | 1,160,358 | 45,335,187 | ||||||
327,945,841 | ||||||||
Capital Markets — 4.0% | ||||||||
Bank of New York Mellon Corp. (The) | 996,920 | 47,144,347 | ||||||
Franklin Resources, Inc. | 159,051 | 4,707,910 | ||||||
Invesco Ltd. | 542,086 | 13,671,409 | ||||||
Northern Trust Corp. | 168,112 | 17,670,252 | ||||||
State Street Corp. | 262,530 | 22,055,145 | ||||||
105,249,063 | ||||||||
Communications Equipment — 3.3% | ||||||||
Cisco Systems, Inc. | 1,321,024 | 68,310,151 | ||||||
F5 Networks, Inc.(1) | 90,300 | 18,838,386 | ||||||
87,148,537 | ||||||||
Containers and Packaging — 0.9% | ||||||||
Sonoco Products Co. | 375,289 | 23,755,794 | ||||||
Diversified Financial Services — 3.4% | ||||||||
Berkshire Hathaway, Inc., Class A(1)(2) | 149 | 57,469,598 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 126,935 | 32,428,084 | ||||||
89,897,682 | ||||||||
Diversified Telecommunication Services — 5.1% | ||||||||
AT&T, Inc. | 2,393,000 | 72,436,110 | ||||||
Verizon Communications, Inc. | 1,032,582 | 60,044,643 | ||||||
132,480,753 | ||||||||
Electric Utilities — 1.3% | ||||||||
Edison International | 289,430 | 16,960,598 | ||||||
Pinnacle West Capital Corp. | 192,340 | 15,646,859 | ||||||
32,607,457 | ||||||||
Electrical Equipment — 3.6% | ||||||||
Emerson Electric Co. | 338,023 | 30,496,435 |
10
Shares | Value | |||||||
Hubbell, Inc. | 183,207 | $ | 34,239,556 | |||||
nVent Electric plc | 1,047,748 | 29,242,647 | ||||||
93,978,638 | ||||||||
Electronic Equipment, Instruments and Components — 0.5% | ||||||||
TE Connectivity Ltd. | 103,489 | 13,361,465 | ||||||
Energy Equipment and Services — 2.9% | ||||||||
Baker Hughes Co. | 985,018 | 21,286,239 | ||||||
Halliburton Co. | 756,080 | 16,225,477 | ||||||
NOV, Inc.(1) | 331,398 | 4,546,781 | ||||||
Schlumberger NV | 1,189,286 | 32,336,686 | ||||||
74,395,183 | ||||||||
Entertainment — 1.6% | ||||||||
Walt Disney Co. (The)(1) | 224,440 | 41,413,669 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.7% | ||||||||
Equinix, Inc. | 15,840 | 10,764,705 | ||||||
Healthpeak Properties, Inc. | 446,120 | 14,159,849 | ||||||
Weyerhaeuser Co. | 552,880 | 19,682,528 | ||||||
44,607,082 | ||||||||
Food and Staples Retailing — 1.8% | ||||||||
Koninklijke Ahold Delhaize NV | 814,695 | 22,692,554 | ||||||
Walmart, Inc. | 173,071 | 23,508,234 | ||||||
46,200,788 | ||||||||
Food Products — 4.8% | ||||||||
Conagra Brands, Inc. | 744,448 | 27,991,245 | ||||||
Danone SA | 316,190 | 21,695,168 | ||||||
J.M. Smucker Co. (The) | 70,700 | 8,945,671 | ||||||
Kellogg Co. | 306,949 | 19,429,871 | ||||||
Mondelez International, Inc., Class A | 588,141 | 34,423,893 | ||||||
Orkla ASA | 1,360,500 | 13,339,223 | ||||||
125,825,071 | ||||||||
Gas Utilities — 0.5% | ||||||||
Atmos Energy Corp. | 129,084 | 12,759,953 | ||||||
Health Care Equipment and Supplies — 3.5% | ||||||||
Medtronic plc | 409,850 | 48,415,581 | ||||||
Zimmer Biomet Holdings, Inc. | 265,777 | 42,545,582 | ||||||
90,961,163 | ||||||||
Health Care Providers and Services — 4.6% | ||||||||
Cardinal Health, Inc. | 654,215 | 39,743,561 | ||||||
Cigna Corp. | 54,900 | 13,271,526 | ||||||
CVS Health Corp. | 331,150 | 24,912,415 | ||||||
McKesson Corp. | 116,730 | 22,767,019 | ||||||
Universal Health Services, Inc., Class B | 153,370 | 20,458,024 | ||||||
121,152,545 | ||||||||
Hotels, Restaurants and Leisure — 0.6% | ||||||||
Sodexo SA(1) | 169,420 | 16,254,682 | ||||||
Household Products — 0.9% | ||||||||
Procter & Gamble Co. (The) | 176,209 | 23,863,985 | ||||||
Industrial Conglomerates — 3.3% | ||||||||
General Electric Co. | 4,561,469 | 59,892,088 | ||||||
Siemens AG | 164,630 | 27,035,733 | ||||||
86,927,821 | ||||||||
Insurance — 3.6% | ||||||||
Aflac, Inc. | 250,470 | 12,819,054 |
11
Shares | Value | |||||||
Chubb Ltd. | 250,543 | $ | 39,578,278 | |||||
MetLife, Inc. | 328,768 | 19,985,807 | ||||||
Reinsurance Group of America, Inc. | 178,596 | 22,512,026 | ||||||
94,895,165 | ||||||||
Leisure Products — 0.4% | ||||||||
Mattel, Inc.(1) | 473,360 | 9,429,331 | ||||||
Machinery — 0.9% | ||||||||
IMI plc | 1,208,096 | 22,221,193 | ||||||
Metals and Mining — 0.7% | ||||||||
BHP Group Ltd. | 498,975 | 17,260,151 | ||||||
Multi-Utilities — 0.5% | ||||||||
CMS Energy Corp. | 221,070 | 13,533,905 | ||||||
Multiline Retail — 0.5% | ||||||||
Dollar Tree, Inc.(1) | 113,770 | 13,022,114 | ||||||
Oil, Gas and Consumable Fuels — 7.4% | ||||||||
Chevron Corp. | 618,864 | 64,850,759 | ||||||
Cimarex Energy Co. | 197,971 | 11,757,498 | ||||||
ConocoPhillips | 388,083 | 20,556,756 | ||||||
Devon Energy Corp. | 1,006,950 | 22,001,857 | ||||||
EQT Corp.(1) | 710,961 | 13,209,655 | ||||||
Exxon Mobil Corp. | 311,590 | 17,396,070 | ||||||
Royal Dutch Shell plc, B Shares | 856,595 | 15,755,351 | ||||||
TOTAL SE | 611,904 | 28,498,697 | ||||||
194,026,643 | ||||||||
Paper and Forest Products — 0.8% | ||||||||
Mondi plc | 771,455 | 19,682,356 | ||||||
Personal Products — 1.2% | ||||||||
Unilever plc | 572,270 | 31,929,869 | ||||||
Pharmaceuticals — 7.7% | ||||||||
Johnson & Johnson | 426,392 | 70,077,525 | ||||||
Merck & Co., Inc. | 510,282 | 39,337,639 | ||||||
Pfizer, Inc. | 1,765,353 | 63,958,739 | ||||||
Roche Holding AG | 33,940 | 10,970,751 | ||||||
Teva Pharmaceutical Industries Ltd., ADR(1) | 1,456,227 | 16,804,860 | ||||||
201,149,514 | ||||||||
Road and Rail — 1.1% | ||||||||
Heartland Express, Inc. | 1,420,491 | 27,813,214 | ||||||
Semiconductors and Semiconductor Equipment — 2.8% | ||||||||
Applied Materials, Inc. | 49,834 | 6,657,822 | ||||||
Intel Corp. | 780,882 | 49,976,448 | ||||||
QUALCOMM, Inc. | 126,574 | 16,782,447 | ||||||
73,416,717 | ||||||||
Software — 1.4% | ||||||||
Open Text Corp. | 283,950 | 13,547,255 | ||||||
Oracle Corp., (New York) | 329,889 | 23,148,311 | ||||||
36,695,566 | ||||||||
Specialty Retail — 1.1% | ||||||||
Advance Auto Parts, Inc. | 154,116 | 28,278,745 | ||||||
Technology Hardware, Storage and Peripherals — 0.3% | ||||||||
HP, Inc. | 279,845 | 8,885,079 | ||||||
Textiles, Apparel and Luxury Goods — 1.1% | ||||||||
Ralph Lauren Corp.(1) | 87,000 | 10,714,920 |
12
Shares | Value | |||||||
Tapestry, Inc.(1) | 409,942 | $ | 16,893,710 | |||||
27,608,630 | ||||||||
Trading Companies and Distributors — 0.9% | ||||||||
MSC Industrial Direct Co., Inc., Class A | 265,639 | 23,957,981 | ||||||
TOTAL COMMON STOCKS (Cost $1,612,837,992) | 2,523,148,533 | |||||||
EXCHANGE-TRADED FUNDS — 0.5% | ||||||||
iShares Russell 1000 Value ETF (Cost $13,070,785) | 86,020 | 13,036,331 | ||||||
TEMPORARY CASH INVESTMENTS — 2.8% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.875% - 2.50%, 11/30/21 - 2/15/46, valued at $13,118,482), in a joint trading account at 0.01%, dated 3/31/21, due 4/1/21 (Delivery value $12,860,817) | 12,860,813 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.125%, 5/31/26, valued at $43,743,723), at 0.00%, dated 3/31/21, due 4/1/21 (Delivery value $42,886,000) | 42,886,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 16,625,395 | 16,625,395 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $72,372,208) | 72,372,208 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.7% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $19,277,396) | 19,277,396 | 19,277,396 | ||||||
TOTAL INVESTMENT SECURITIES — 100.7% (Cost $1,717,558,381) | 2,627,834,468 | |||||||
OTHER ASSETS AND LIABILITIES — (0.7)% | (18,226,249) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,609,608,219 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 532,103 | AUD | 698,670 | Bank of America N.A. | 6/30/21 | $ | 1,237 | |||||||||||||
USD | 12,602,782 | AUD | 16,199,421 | Bank of America N.A. | 6/30/21 | 294,082 | ||||||||||||||
USD | 13,207,601 | CAD | 16,442,803 | Morgan Stanley | 6/30/21 | 121,870 | ||||||||||||||
USD | 8,128,649 | CHF | 7,543,305 | Morgan Stanley | 6/30/21 | 128,906 | ||||||||||||||
USD | 220,906 | CHF | 207,743 | Morgan Stanley | 6/30/21 | 593 | ||||||||||||||
USD | 112,132,912 | EUR | 93,816,388 | Credit Suisse AG | 6/30/21 | 1,915,291 | ||||||||||||||
GBP | 911,776 | USD | 1,250,230 | JPMorgan Chase Bank N.A. | 6/30/21 | 7,079 | ||||||||||||||
USD | 1,389,577 | GBP | 1,007,060 | JPMorgan Chase Bank N.A. | 6/30/21 | 873 | ||||||||||||||
USD | 44,318,817 | GBP | 31,807,383 | JPMorgan Chase Bank N.A. | 6/30/21 | 457,449 | ||||||||||||||
JPY | 47,202,750 | USD | 434,938 | Bank of America N.A. | 6/30/21 | (8,267) | ||||||||||||||
JPY | 37,087,875 | USD | 340,204 | Bank of America N.A. | 6/30/21 | (4,962) | ||||||||||||||
USD | 11,318,776 | JPY | 1,233,265,500 | Bank of America N.A. | 6/30/21 | 171,141 | ||||||||||||||
USD | 616,819 | JPY | 67,057,875 | Bank of America N.A. | 6/30/21 | 10,675 | ||||||||||||||
USD | 10,183,957 | NOK | 86,364,540 | UBS AG | 6/30/21 | 87,006 | ||||||||||||||
$ | 3,182,973 |
13
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
AUD | - | Australian Dollar | ||||||
CAD | - | Canadian Dollar | ||||||
CHF | - | Swiss Franc | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
JPY | - | Japanese Yen | ||||||
NOK | - | Norwegian Krone | ||||||
USD | - | United States Dollar |
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $19,234,099. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers.
(3)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $19,631,063, which includes securities collateral of $353,667.
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
MARCH 31, 2021 | |||||
Assets | |||||
Investment securities, at value (cost of $1,698,280,985) — including $19,234,099 of securities on loan | $ | 2,608,557,072 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $19,277,396) | 19,277,396 | ||||
Total investment securities, at value (cost of $1,717,558,381) | 2,627,834,468 | ||||
Receivable for investments sold | 7,082,709 | ||||
Receivable for capital shares sold | 1,348,980 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 3,196,202 | ||||
Dividends and interest receivable | 4,003,639 | ||||
Securities lending receivable | 4,056 | ||||
2,643,470,054 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 19,277,396 | ||||
Payable for investments purchased | 9,514,171 | ||||
Payable for capital shares redeemed | 2,907,057 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 13,229 | ||||
Accrued management fees | 2,028,342 | ||||
Distribution and service fees payable | 121,640 | ||||
33,861,835 | |||||
Net Assets | $ | 2,609,608,219 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,743,596,060 | |||
Distributable earnings | 866,012,159 | ||||
$ | 2,609,608,219 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $1,550,992,061 | 166,473,037 | $9.32 | ||||||||
I Class, $0.01 Par Value | $529,023,848 | 56,658,136 | $9.34 | ||||||||
Y Class, $0.01 Par Value | $120,606,558 | 12,915,458 | $9.34 | ||||||||
A Class, $0.01 Par Value | $66,639,383 | 7,160,514 | $9.31* | ||||||||
C Class, $0.01 Par Value | $9,212,090 | 1,009,076 | $9.13 | ||||||||
R Class, $0.01 Par Value | $237,129,109 | 25,460,041 | $9.31 | ||||||||
R5 Class, $0.01 Par Value | $2,281,308 | 244,375 | $9.34 | ||||||||
R6 Class, $0.01 Par Value | $93,723,862 | 10,034,240 | $9.34 |
*Maximum offering price $9.88 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED MARCH 31, 2021 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $909,765) | $ | 63,848,140 | |||
Securities lending, net | 287,232 | ||||
Interest | 15,831 | ||||
64,151,203 | |||||
Expenses: | |||||
Management fees | 20,792,121 | ||||
Distribution and service fees: | |||||
A Class | 142,476 | ||||
C Class | 102,482 | ||||
R Class | 960,705 | ||||
Directors' fees and expenses | 65,994 | ||||
Other expenses | 5,883 | ||||
22,069,661 | |||||
Net investment income (loss) | 42,081,542 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 130,452,457 | ||||
Forward foreign currency exchange contract transactions | (19,940,575) | ||||
Foreign currency translation transactions | (45,963) | ||||
110,465,919 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | 931,878,639 | ||||
Forward foreign currency exchange contracts | 7,975,656 | ||||
Translation of assets and liabilities in foreign currencies | 12,747 | ||||
939,867,042 | |||||
Net realized and unrealized gain (loss) | 1,050,332,961 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,092,414,503 |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2021 AND MARCH 31, 2020 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2021 | March 31, 2020 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 42,081,542 | $ | 50,307,342 | ||||
Net realized gain (loss) | 110,465,919 | 196,555,178 | ||||||
Change in net unrealized appreciation (depreciation) | 939,867,042 | (679,095,406) | ||||||
Net increase (decrease) in net assets resulting from operations | 1,092,414,503 | (432,232,886) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (47,389,449) | (156,548,236) | ||||||
I Class | (18,043,626) | (26,048,771) | ||||||
Y Class | (3,313,630) | (5,017,939) | ||||||
A Class | (1,899,039) | (5,830,033) | ||||||
C Class | (261,340) | (1,340,535) | ||||||
R Class | (6,184,829) | (15,893,297) | ||||||
R5 Class | (69,988) | (156,799) | ||||||
R6 Class | (3,640,523) | (18,128,963) | ||||||
Decrease in net assets from distributions | (80,802,424) | (228,964,573) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (300,990,460) | (419,784,613) | ||||||
Net increase (decrease) in net assets | 710,621,619 | (1,080,982,072) | ||||||
Net Assets | ||||||||
Beginning of period | 1,898,986,600 | 2,979,968,672 | ||||||
End of period | $ | 2,609,608,219 | $ | 1,898,986,600 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
MARCH 31, 2021
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. Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective.
The fund offers the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and 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.
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 (NAV) 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 NAV per share. Repurchase agreements are valued at cost, which approximates fair value. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not 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.
18
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s NAV 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. 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 lending income is net of fees and rebates earned by the lending agent for its services.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. 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 collateral requirements.
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.
19
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 19,277,396 | — | — | — | $ | 19,277,396 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 19,277,396 |
(1)Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand.
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.
20
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 ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder 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 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 use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.85% to 1.00% | 1.00% | ||||||
I Class | 0.65% to 0.80% | 0.80% | ||||||
Y Class | 0.50% to 0.65% | 0.65% | ||||||
A Class | 0.85% to 1.00% | 1.00% | ||||||
C Class | 0.85% to 1.00% | 1.00% | ||||||
R Class | 0.85% to 1.00% | 1.00% | ||||||
R5 Class | 0.65% to 0.80% | 0.80% | ||||||
R6 Class | 0.50% to 0.65% | 0.65% |
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 period ended March 31, 2021 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.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $2,311,496 and $4,922,146, respectively. The effect of interfund transactions on the Statement of Operations was $(19,454) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended March 31, 2021 were $1,151,915,264 and $1,548,760,506, respectively.
21
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2021 | Year ended March 31, 2020 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 1,350,000,000 | 1,820,000,000 | ||||||||||||
Sold | 20,891,001 | $ | 162,180,523 | 29,272,355 | $ | 213,199,987 | ||||||||
Issued in connection with reorganization (Note 10) | — | — | 16,039,644 | 125,799,668 | ||||||||||
Issued in reinvestment of distributions | 5,782,191 | 45,104,856 | 19,666,710 | 153,089,005 | ||||||||||
Redeemed | (91,975,737) | (668,759,186) | (61,058,411) | (487,125,152) | ||||||||||
(65,302,545) | (461,473,807) | 3,920,298 | 4,963,508 | |||||||||||
I Class/Shares Authorized | 400,000,000 | 360,000,000 | ||||||||||||
Sold | 51,227,913 | 357,034,754 | 8,091,149 | 65,301,383 | ||||||||||
Issued in connection with reorganization (Note 10) | — | — | 430,430 | 3,380,413 | ||||||||||
Issued in reinvestment of distributions | 2,287,477 | 17,868,731 | 3,251,431 | 25,431,132 | ||||||||||
Redeemed | (22,514,917) | (170,343,966) | (24,692,309) | (197,176,656) | ||||||||||
31,000,473 | 204,559,519 | (12,919,299) | (103,063,728) | |||||||||||
Y Class/Shares Authorized | 130,000,000 | 180,000,000 | ||||||||||||
Sold | 6,831,633 | 51,846,513 | 5,271,316 | 40,767,413 | ||||||||||
Issued in reinvestment of distributions | 350,684 | 2,783,963 | 353,593 | 2,753,320 | ||||||||||
Redeemed | (1,838,386) | (13,846,282) | (35,960,559) | (296,231,643) | ||||||||||
5,343,931 | 40,784,194 | (30,335,650) | (252,710,910) | |||||||||||
A Class/Shares Authorized | 60,000,000 | 95,000,000 | ||||||||||||
Sold | 1,553,173 | 12,101,266 | 1,358,276 | 10,446,059 | ||||||||||
Issued in connection with reorganization (Note 10) | — | — | 381,042 | 2,984,395 | ||||||||||
Issued in reinvestment of distributions | 219,542 | 1,712,093 | 673,563 | 5,235,111 | ||||||||||
Redeemed | (2,976,521) | (22,195,383) | (3,946,290) | (31,558,928) | ||||||||||
(1,203,806) | (8,382,024) | (1,533,409) | (12,893,363) | |||||||||||
C Class/Shares Authorized | 25,000,000 | 30,000,000 | ||||||||||||
Sold | 205,865 | 1,602,499 | 161,982 | 1,214,757 | ||||||||||
Issued in reinvestment of distributions | 33,493 | 256,871 | 167,993 | 1,280,656 | ||||||||||
Redeemed | (1,011,329) | (7,680,219) | (1,109,494) | (8,486,082) | ||||||||||
(771,971) | (5,820,849) | (779,519) | (5,990,669) | |||||||||||
R Class/Shares Authorized | 175,000,000 | 170,000,000 | ||||||||||||
Sold | 2,127,440 | 15,336,461 | 2,844,443 | 21,840,299 | ||||||||||
Issued in reinvestment of distributions | 788,342 | 6,184,619 | 2,044,745 | 15,893,297 | ||||||||||
Redeemed | (2,259,988) | (18,088,339) | (1,795,945) | (14,117,103) | ||||||||||
655,794 | 3,432,741 | 3,093,243 | 23,616,493 | |||||||||||
R5 Class/Shares Authorized | 30,000,000 | 20,000,000 | ||||||||||||
Sold | 26,422 | 196,902 | 251,863 | 2,108,251 | ||||||||||
Issued in reinvestment of distributions | 8,910 | 69,988 | 20,109 | 156,799 | ||||||||||
Redeemed | (13,919) | (105,851) | (257,484) | (2,073,807) | ||||||||||
21,413 | 161,039 | 14,488 | 191,243 | |||||||||||
R6 Class/Shares Authorized | 150,000,000 | 200,000,000 | ||||||||||||
Sold | 6,460,861 | 49,366,293 | 6,504,588 | 51,165,979 | ||||||||||
Issued in reinvestment of distributions | 445,647 | 3,462,825 | 2,156,473 | 16,866,940 | ||||||||||
Redeemed | (17,181,917) | (127,080,391) | (17,294,031) | (141,930,106) | ||||||||||
(10,275,409) | (74,251,273) | (8,632,970) | (73,897,187) | |||||||||||
Net increase (decrease) | (40,532,120) | $ | (300,990,460) | (47,172,818) | $ | (419,784,613) |
22
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.
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 | |||||||||||
Automobiles | $ | 14,755,383 | $ | 15,035,419 | — | ||||||
Banks | 310,561,869 | 17,383,972 | — | ||||||||
Food and Staples Retailing | 23,508,234 | 22,692,554 | — | ||||||||
Food Products | 90,790,680 | 35,034,391 | — | ||||||||
Hotels, Restaurants and Leisure | — | 16,254,682 | — | ||||||||
Industrial Conglomerates | 59,892,088 | 27,035,733 | — | ||||||||
Machinery | — | 22,221,193 | — | ||||||||
Metals and Mining | — | 17,260,151 | — | ||||||||
Oil, Gas and Consumable Fuels | 149,772,595 | 44,254,048 | — | ||||||||
Paper and Forest Products | — | 19,682,356 | — | ||||||||
Personal Products | — | 31,929,869 | — | ||||||||
Pharmaceuticals | 190,178,763 | 10,970,751 | — | ||||||||
Other Industries | 1,403,933,802 | — | — | ||||||||
Exchange-Traded Funds | 13,036,331 | — | — | ||||||||
Temporary Cash Investments | 16,625,395 | 55,746,813 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 19,277,396 | — | — | ||||||||
$ | 2,292,332,536 | $ | 335,501,932 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 3,196,202 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 13,229 | — |
23
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon settlement 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 forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, 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 $204,509,285.
The value of foreign currency risk derivative instruments as of March 31, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $3,196,202 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $13,229 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(19,940,575) in net realized gain (loss) on forward foreign currency exchange contract transactions and $7,975,656 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from 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. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
9. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2021 and March 31, 2020 were as follows:
2021 | 2020 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 53,037,015 | $ | 71,485,353 | ||||
Long-term capital gains | $ | 27,765,409 | $ | 157,479,220 |
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.
24
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,829,438,572 | |||
Gross tax appreciation of investments | $ | 815,989,058 | |||
Gross tax depreciation of investments | (17,593,162) | ||||
Net tax appreciation (depreciation) of investments | 798,395,896 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 9,349 | ||||
Net tax appreciation (depreciation) | $ | 798,405,245 | |||
Undistributed ordinary income | $ | 57,939,496 | |||
Accumulated long-term gains | $ | 9,667,418 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
10. Reorganization
On September 30, 2019, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of Capital Value Fund, one fund in a series issued by American Century Mutual Funds, Inc., were transferred to Value Fund in exchange for shares of Value Fund. The purpose of the transaction was to combine two funds with substantially similar investment objectives and strategies. The financial statements and performance history of Value Fund survived after the reorganization. The reorganization was effective at the close of the NYSE on October 25, 2019.
The reorganization was accomplished by a tax-free exchange of shares. On October 25, 2019, Capital Value Fund exchanged its shares for shares of Value Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||||||||
Capital Value Fund – Investor Class | 15,563,219 | Value Fund – Investor Class | 16,039,644 | ||||||||
Capital Value Fund – I Class | 417,145 | Value Fund – I Class | 430,430 | ||||||||
Capital Value Fund – A Class | 370,169 | Value Fund – A Class | 381,042 |
The net assets of Capital Value Fund and Value Fund immediately before the reorganization were $132,164,476 and $2,589,619,628, respectively. Capital Value Fund's unrealized appreciation of $40,158,609 was combined with that of Value Fund. Immediately after the reorganization, the combined net assets were $2,721,784,104.
Assuming the reorganization had been completed on April 1, 2019, the beginning of the annual reporting period, the pro forma results of operations for the period ended March 31, 2020 are as follows:
Net investment income (loss) | $ | 51,635,999 | |||
Net realized and unrealized gain (loss) | (474,993,661) | ||||
Net increase (decrease) in net assets resulting from operations | $ | (423,357,662) |
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of Capital Value Fund that have been included in the fund’s Statement of Operations since October 25, 2019.
25
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.92 | 0.14 | 3.55 | 3.69 | (0.15) | (0.14) | (0.29) | $9.32 | 63.17% | 1.00% | 1.88% | 53% | $1,550,992 | ||||||||||||||||||||||||||||
2020 | $8.10 | 0.15 | (1.60) | (1.45) | (0.14) | (0.59) | (0.73) | $5.92 | (19.92)% | 1.00% | 1.90% | 46% | $1,373,039 | ||||||||||||||||||||||||||||
2019 | $8.65 | 0.15 | 0.15 | 0.30 | (0.14) | (0.71) | (0.85) | $8.10 | 4.01% | 0.98% | 1.70% | 48% | $1,845,967 | ||||||||||||||||||||||||||||
2018 | $8.98 | 0.14 | 0.17 | 0.31 | (0.13) | (0.51) | (0.64) | $8.65 | 3.38% | 0.98% | 1.59% | 35% | $2,043,212 | ||||||||||||||||||||||||||||
2017 | $7.73 | 0.13 | 1.39 | 1.52 | (0.12) | (0.15) | (0.27) | $8.98 | 19.79% | 0.98% | 1.48% | 46% | $2,380,747 | ||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.94 | 0.16 | 3.54 | 3.70 | (0.16) | (0.14) | (0.30) | $9.34 | 63.29% | 0.80% | 2.08% | 53% | $529,024 | ||||||||||||||||||||||||||||
2020 | $8.12 | 0.17 | (1.60) | (1.43) | (0.16) | (0.59) | (0.75) | $5.94 | (19.71)% | 0.80% | 2.10% | 46% | $152,349 | ||||||||||||||||||||||||||||
2019 | $8.67 | 0.16 | 0.15 | 0.31 | (0.15) | (0.71) | (0.86) | $8.12 | 4.21% | 0.78% | 1.90% | 48% | $313,183 | ||||||||||||||||||||||||||||
2018 | $9.00 | 0.16 | 0.17 | 0.33 | (0.15) | (0.51) | (0.66) | $8.67 | 3.58% | 0.78% | 1.79% | 35% | $648,241 | ||||||||||||||||||||||||||||
2017 | $7.75 | 0.14 | 1.40 | 1.54 | (0.14) | (0.15) | (0.29) | $9.00 | 19.98% | 0.78% | 1.68% | 46% | $524,448 |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.94 | 0.17 | 3.55 | 3.72 | (0.18) | (0.14) | (0.32) | $9.34 | 63.54% | 0.65% | 2.23% | 53% | $120,607 | ||||||||||||||||||||||||||||
2020 | $8.12 | 0.18 | (1.60) | (1.42) | (0.17) | (0.59) | (0.76) | $5.94 | (19.60)% | 0.65% | 2.25% | 46% | $44,963 | ||||||||||||||||||||||||||||
2019 | $8.67 | 0.19 | 0.14 | 0.33 | (0.17) | (0.71) | (0.88) | $8.12 | 4.36% | 0.63% | 2.05% | 48% | $307,792 | ||||||||||||||||||||||||||||
2018(3) | $8.98 | 0.19 | 0.17 | 0.36 | (0.16) | (0.51) | (0.67) | $8.67 | 3.94% | 0.63%(4) | 2.15%(4) | 35%(5) | $1,038 | ||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.92 | 0.12 | 3.54 | 3.66 | (0.13) | (0.14) | (0.27) | $9.31 | 62.58% | 1.25% | 1.63% | 53% | $66,639 | ||||||||||||||||||||||||||||
2020 | $8.09 | 0.13 | (1.59) | (1.46) | (0.12) | (0.59) | (0.71) | $5.92 | (20.01)% | 1.25% | 1.65% | 46% | $49,497 | ||||||||||||||||||||||||||||
2019 | $8.65 | 0.12 | 0.15 | 0.27 | (0.12) | (0.71) | (0.83) | $8.09 | 3.63% | 1.23% | 1.45% | 48% | $80,120 | ||||||||||||||||||||||||||||
2018 | $8.98 | 0.12 | 0.17 | 0.29 | (0.11) | (0.51) | (0.62) | $8.65 | 3.13% | 1.23% | 1.34% | 35% | $116,377 | ||||||||||||||||||||||||||||
2017 | $7.73 | 0.11 | 1.39 | 1.50 | (0.10) | (0.15) | (0.25) | $8.98 | 19.49% | 1.23% | 1.23% | 46% | $158,200 | ||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.81 | 0.07 | 3.46 | 3.53 | (0.07) | (0.14) | (0.21) | $9.13 | 61.27% | 2.00% | 0.88% | 53% | $9,212 | ||||||||||||||||||||||||||||
2020 | $7.95 | 0.07 | (1.56) | (1.49) | (0.06) | (0.59) | (0.65) | $5.81 | (20.58)% | 2.00% | 0.90% | 46% | $10,340 | ||||||||||||||||||||||||||||
2019 | $8.51 | 0.06 | 0.14 | 0.20 | (0.05) | (0.71) | (0.76) | $7.95 | 2.92% | 1.98% | 0.70% | 48% | $20,369 | ||||||||||||||||||||||||||||
2018 | $8.84 | 0.05 | 0.17 | 0.22 | (0.04) | (0.51) | (0.55) | $8.51 | 2.40% | 1.98% | 0.59% | 35% | $28,948 | ||||||||||||||||||||||||||||
2017 | $7.62 | 0.04 | 1.36 | 1.40 | (0.03) | (0.15) | (0.18) | $8.84 | 18.45% | 1.98% | 0.48% | 46% | $35,124 |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.92 | 0.10 | 3.54 | 3.64 | (0.11) | (0.14) | (0.25) | $9.31 | 62.15% | 1.50% | 1.38% | 53% | $237,129 | ||||||||||||||||||||||||||||
2020 | $8.10 | 0.11 | (1.60) | (1.49) | (0.10) | (0.59) | (0.69) | $5.92 | (20.31)% | 1.50% | 1.40% | 46% | $146,876 | ||||||||||||||||||||||||||||
2019 | $8.65 | 0.10 | 0.15 | 0.25 | (0.09) | (0.71) | (0.80) | $8.10 | 3.50% | 1.48% | 1.20% | 48% | $175,855 | ||||||||||||||||||||||||||||
2018 | $8.98 | 0.10 | 0.16 | 0.26 | (0.08) | (0.51) | (0.59) | $8.65 | 2.87% | 1.48% | 1.09% | 35% | $158,220 | ||||||||||||||||||||||||||||
2017 | $7.73 | 0.08 | 1.40 | 1.48 | (0.08) | (0.15) | (0.23) | $8.98 | 19.18% | 1.48% | 0.98% | 46% | $116,917 | ||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.94 | 0.16 | 3.54 | 3.70 | (0.16) | (0.14) | (0.30) | $9.34 | 63.29% | 0.80% | 2.08% | 53% | $2,281 | ||||||||||||||||||||||||||||
2020 | $8.12 | 0.17 | (1.60) | (1.43) | (0.16) | (0.59) | (0.75) | $5.94 | (19.71)% | 0.80% | 2.10% | 46% | $1,324 | ||||||||||||||||||||||||||||
2019 | $8.67 | 0.18 | 0.13 | 0.31 | (0.15) | (0.71) | (0.86) | $8.12 | 4.21% | 0.78% | 1.90% | 48% | $1,692 | ||||||||||||||||||||||||||||
2018(3) | $8.98 | 0.16 | 0.19 | 0.35 | (0.15) | (0.51) | (0.66) | $8.67 | 3.80% | 0.78%(4) | 1.78%(4) | 35%(5) | $5 | ||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||
2021 | $5.94 | 0.17 | 3.55 | 3.72 | (0.18) | (0.14) | (0.32) | $9.34 | 63.54% | 0.65% | 2.23% | 53% | $93,724 | ||||||||||||||||||||||||||||
2020 | $8.12 | 0.18 | (1.60) | (1.42) | (0.17) | (0.59) | (0.76) | $5.94 | (19.59)% | 0.65% | 2.25% | 46% | $120,598 | ||||||||||||||||||||||||||||
2019 | $8.67 | 0.18 | 0.15 | 0.33 | (0.17) | (0.71) | (0.88) | $8.12 | 4.36% | 0.63% | 2.05% | 48% | $234,991 | ||||||||||||||||||||||||||||
2018 | $9.00 | 0.17 | 0.17 | 0.34 | (0.16) | (0.51) | (0.67) | $8.67 | 3.74% | 0.63% | 1.94% | 35% | $200,518 | ||||||||||||||||||||||||||||
2017 | $7.75 | 0.16 | 1.39 | 1.55 | (0.15) | (0.15) | (0.30) | $9.00 | 20.16% | 0.63% | 1.83% | 46% | $170,432 |
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)April 10, 2017 (commencement of sale) through March 31, 2018.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2021, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2021, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2021, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
May 17, 2021
We have served as the auditor of one or more American Century investment companies since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 72 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 72 | None | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 72 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 72 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 72 | MGP Ingredients, Inc. | ||||||||||||
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 72 | None | ||||||||||||
John R. Whitten (1946) | Director | Since 2008 | Retired | 72 | Onto Innovation Inc. (2019 to 2020); Rudolph Technologies, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 100 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 138 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2019 through December 31, 2020. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
34
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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 and change your withholding percentage for future distributions.
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.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they 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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. 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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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2021.
For corporate taxpayers, the fund hereby designates $40,139,312, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2021 as qualified for the corporate dividends received deduction.
The fund hereby designates $9,763,660 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2021.
The fund hereby designates $27,765,409, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2021.
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications 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. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92273 2105 |
(b) None.
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions.
(b) No response required.
(c) None.
(d) None.
(e) Not applicable.
(f) The registrant’s Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.’s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant’s board has determined that the registrant has at least one audit committee financial expert serving on its audit committee.
(a)(2) John R. Whitten, Chris H. Cheesman and Lynn M. Jenkins are the registrant’s designated audit committee financial experts. They are “independent” as defined in Item 3 of Form N-CSR.
(a)(3) Not applicable.
(b) No response required.
(c) No response required.
(d) No response required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees.
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows:
FY 2020: $181,100
FY 2021: $181,090
(b) Audit-Related Fees.
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were as follows:
For services rendered to the registrant:
FY 2020: $0
FY 2021: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2020: $0
FY 2021: $0
(c) Tax Fees.
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows:
For services rendered to the registrant:
FY 2020: $0
FY 2021: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2020: $0
FY 2021: $0
(d) All Other Fees.
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows:
For services rendered to the registrant:
FY 2020: $0
FY 2021: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2020: $0
FY 2021: $0
(e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant’s audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant’s audit committee also pre-approves its accountant’s engagements for non-audit services with the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.
(e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant’s audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C).
(f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than 50%.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows:
FY 2020: $59,500
FY 2021: $0
(h) The registrant’s investment adviser and accountant have notified the registrant’s audit committee of all non-audit services that were rendered by the registrant’s accountant to the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant’s audit committee included sufficient details regarding such services to allow the registrant’s audit committee to consider the continuing independence of its principal accountant.
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 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. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Registrant’s Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.’s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005.
(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.
(a)(4) 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/ Patrick Bannigan | ||||||||||
Name: | Patrick Bannigan | ||||||||||
Title: | President | ||||||||||
Date: | May 26, 2021 |
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/ Patrick Bannigan | |||||||
Name: | Patrick Bannigan | |||||||
Title: | President | |||||||
(principal executive officer) | ||||||||
Date: | May 26, 2021 |
By: | /s/ R. Wes Campbell | |||||||
Name: | R. Wes Campbell | |||||||
Title: | Treasurer and | |||||||
Chief Financial Officer | ||||||||
(principal financial officer) | ||||||||
Date: | May 26, 2021 |