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) | |||||||||||||||||||
JOHN PAK 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 | ||||||||||||||||||||
(Name and address of agent for service) | ||||||||||||||||||||
Registrant’s telephone number, including area code: | 816-531-5575 | |||||||||||||||||||
Date of fiscal year end: | 03-31 | |||||||||||||||||||
Date of reporting period: | 09-30-2021 |
ITEM 1. REPORTS TO STOCKHOLDERS.
(a) Provided under separate cover.
SEMIANNUAL REPORT | ![]() | ||||
SEPTEMBER 30, 2021 | |||||
AC Alternatives® Market Neutral Value Fund | |||||
Investor Class (ACVVX) | |||||
I Class (ACVKX) | |||||
A Class (ACVQX) | |||||
C Class (ACVHX) | |||||
R Class (ACVWX) |
![acaltscarrotblacknobleeda06a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/acaltscarrotblacknobleeda06a.jpg)
Table of Contents |
President’s Letter | |||||
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image27a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image27a.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended September 30, 2021. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Stocks, Bonds Advanced Amid Growing Concerns
Broad market sentiment was upbeat to start the period. Investors generally looked beyond pandemic-related challenges to improving growth and corporate earnings data. Ongoing support from leading central banks and governments helped maintain investor confidence in the financial markets and strengthen the overall global economic outlook.
However, a summer surge in COVID-19 cases arising from the delta variant triggered worries about the recovery’s sustainability. Most economic and corporate earnings data remained favorable, but the labor market was a notable exception. Despite record job openings, job growth remained weak, complicating reopening efforts for many businesses.
In this climate, U.S. Treasury yields generally declined through early August. From there, yields rose amid soaring inflation triggered by mounting supply chain disruptions and rising energy and housing prices. Congressional debate on the debt ceiling and the $3.5 trillion "human infrastructure" bill added to inflation worries. Year-over-year headline inflation reached 5.4% in September, matching a 13-year high.
Meanwhile, in September, the Federal Reserve hinted it may start scaling back its monetary support by year-end. This prompted a spike in Treasury yields and a sell-off among stocks. A credit crisis in China’s troubled property sector also weighed on stocks. Overall, though, strong performance in the first half of the reporting period led to positive six-month returns for most broad stock and bond indices.
Several Factors Shaping Market Dynamics
The return to pre-pandemic life is progressing, albeit somewhat cautiously due to COVID-19’s delta variant. As the economy and markets respond to this fluid backdrop, investors will face opportunities and ongoing challenges. Economic growth, inflation, the virus’s trajectory, supply chain normalization and fiscal and monetary policy likely will sway market dynamics.
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,
![image12.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image12.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 61.5% | ||||
Convertible Bonds | 14.1% | ||||
Exchange-Traded Funds | 6.4% | ||||
Common Stocks Sold Short | (72.0)% | ||||
Exchange-Traded Funds Sold Short | (8.5)% | ||||
Temporary Cash Investments | 14.8% | ||||
Other Assets and Liabilities | 83.7% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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.
4
Beginning Account Value 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,001.10 | $16.86 | 3.36% | ||||||||||
I Class | $1,000 | $1,002.20 | $15.86 | 3.16% | ||||||||||
A Class | $1,000 | $998.90 | $18.09 | 3.61% | ||||||||||
C Class | $1,000 | $996.30 | $21.82 | 4.36% | ||||||||||
R Class | $1,000 | $998.80 | $19.34 | 3.86% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,008.22 | $16.92 | 3.36% | ||||||||||
I Class | $1,000 | $1,009.23 | $15.92 | 3.16% | ||||||||||
A Class | $1,000 | $1,006.97 | $18.16 | 3.61% | ||||||||||
C Class | $1,000 | $1,003.21 | $21.90 | 4.36% | ||||||||||
R Class | $1,000 | $1,005.72 | $19.41 | 3.86% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, 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.
5
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares/Principal Amount | Value | |||||||
COMMON STOCKS — 61.5% | ||||||||
Aerospace and Defense — 5.0% | ||||||||
HEICO Corp., Class A(1) | 15,738 | $ | 1,863,851 | |||||
Automobiles — 1.7% | ||||||||
General Motors Co.(2) | 4,457 | 234,929 | ||||||
Toyota Motor Corp., ADR | 521 | 92,608 | ||||||
Volkswagen AG, Preference Shares | 1,351 | 301,141 | ||||||
628,678 | ||||||||
Banks — 2.9% | ||||||||
Commerce Bancshares, Inc. | 2,330 | 162,355 | ||||||
JPMorgan Chase & Co. | 2,741 | 448,674 | ||||||
Prosperity Bancshares, Inc. | 1,610 | 114,519 | ||||||
Royal Bank of Canada | 2,070 | 205,970 | ||||||
U.S. Bancorp | 2,120 | 126,013 | ||||||
1,057,531 | ||||||||
Beverages — 1.3% | ||||||||
Heineken Holding NV | 5,695 | 495,897 | ||||||
Building Products — 1.4% | ||||||||
AO Smith Corp.(1) | 2,352 | 143,637 | ||||||
Johnson Controls International plc(1) | 3,199 | 217,788 | ||||||
Masco Corp.(1) | 2,698 | 149,874 | ||||||
511,299 | ||||||||
Capital Markets — 1.6% | ||||||||
AllianceBernstein Holding LP | 6,450 | 319,791 | ||||||
Bank of New York Mellon Corp. (The) | 1,496 | 77,553 | ||||||
Morgan Stanley | 2,076 | 202,015 | ||||||
599,359 | ||||||||
Chemicals — 0.6% | ||||||||
Akzo Nobel NV | 1,273 | 139,094 | ||||||
Linde plc | 333 | 97,695 | ||||||
236,789 | ||||||||
Commercial Services and Supplies — 1.0% | ||||||||
Republic Services, Inc. | 3,224 | 387,074 | ||||||
Communications Equipment — 0.6% | ||||||||
Cisco Systems, Inc. | 3,954 | 215,216 | ||||||
Containers and Packaging — 0.6% | ||||||||
Amcor plc | 9,535 | 110,511 | ||||||
Packaging Corp. of America | 830 | 114,075 | ||||||
224,586 | ||||||||
Electric Utilities — 1.6% | ||||||||
Duke Energy Corp. | 1,381 | 134,772 | ||||||
Edison International | 2,345 | 130,077 | ||||||
Pinnacle West Capital Corp. | 2,381 | 172,289 | ||||||
Xcel Energy, Inc. | 2,322 | 145,125 | ||||||
582,263 | ||||||||
Electrical Equipment — 0.8% | ||||||||
Emerson Electric Co.(1) | 3,057 | 287,969 |
6
Shares/Principal Amount | Value | |||||||
Electronic Equipment, Instruments and Components — 0.3% | ||||||||
Anritsu Corp. | 5,700 | $ | 101,718 | |||||
Energy Equipment and Services — 0.5% | ||||||||
Baker Hughes Co. | 8,056 | 199,225 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.0% | ||||||||
Equinix, Inc. | 116 | 91,655 | ||||||
VICI Properties, Inc. | 2,943 | 83,611 | ||||||
Welltower, Inc. | 2,207 | 181,857 | ||||||
357,123 | ||||||||
Food and Staples Retailing — 2.0% | ||||||||
Koninklijke Ahold Delhaize NV | 4,288 | 142,782 | ||||||
Sysco Corp. | 5,465 | 429,003 | ||||||
Walmart, Inc. | 1,109 | 154,572 | ||||||
726,357 | ||||||||
Food Products — 0.4% | ||||||||
Conagra Brands, Inc. | 3,073 | 104,083 | ||||||
Mondelez International, Inc., Class A | 975 | 56,725 | ||||||
160,808 | ||||||||
Gas Utilities — 1.7% | ||||||||
Atmos Energy Corp. | 2,346 | 206,917 | ||||||
ONE Gas, Inc. | 4,880 | 309,246 | ||||||
Spire, Inc. | 1,906 | 116,609 | ||||||
632,772 | ||||||||
Health Care Equipment and Supplies — 1.2% | ||||||||
Becton Dickinson and Co. | 266 | 65,388 | ||||||
Hill-Rom Holdings, Inc. | 993 | 148,950 | ||||||
Medtronic plc | 1,808 | 226,633 | ||||||
440,971 | ||||||||
Health Care Providers and Services — 0.4% | ||||||||
Centene Corp.(2) | 959 | 59,756 | ||||||
Universal Health Services, Inc., Class B | 698 | 96,582 | ||||||
156,338 | ||||||||
Health Care Technology — 0.6% | ||||||||
Cerner Corp. | 3,243 | 228,696 | ||||||
Household Durables — 5.0% | ||||||||
Electrolux AB, Series B | 4,648 | 107,386 | ||||||
Lennar Corp., Class B | 22,673 | 1,759,198 | ||||||
1,866,584 | ||||||||
Industrial Conglomerates — 0.8% | ||||||||
Siemens AG(1) | 691 | 113,014 | ||||||
Siemens AG, ADR(1) | 2,232 | 183,336 | ||||||
296,350 | ||||||||
Insurance — 2.1% | ||||||||
Globe Life, Inc. | 1,877 | 167,109 | ||||||
Hartford Financial Services Group, Inc. (The) | 1,653 | 116,123 | ||||||
Marsh & McLennan Cos., Inc. | 691 | 104,638 | ||||||
MetLife, Inc. | 6,347 | 391,801 | ||||||
779,671 | ||||||||
IT Services — 0.7% | ||||||||
Automatic Data Processing, Inc. | 900 | 179,928 | ||||||
Visa, Inc., Class A | 397 | 88,432 | ||||||
268,360 |
7
Shares/Principal Amount | Value | |||||||
Machinery — 6.1% | ||||||||
Alfa Laval AB(1) | 1,913 | $ | 71,352 | |||||
Atlas Copco AB, B Shares(1) | 33,392 | 1,697,202 | ||||||
Deere & Co.(1) | 996 | 333,729 | ||||||
PACCAR, Inc.(1) | 641 | 50,588 | ||||||
Schindler Holding AG, Bearer Participation Certificate(1) | 466 | 125,107 | ||||||
2,277,978 | ||||||||
Media — 5.2% | ||||||||
Fox Corp., Class B | 51,655 | 1,917,434 | ||||||
Metals and Mining — 1.0% | ||||||||
BHP Group plc, ADR | 5,828 | 295,422 | ||||||
Freeport-McMoRan, Inc. | 2,108 | 68,573 | ||||||
363,995 | ||||||||
Multi-Utilities — 0.3% | ||||||||
CMS Energy Corp. | 1,864 | 111,337 | ||||||
Multiline Retail — 0.2% | ||||||||
Dollar Tree, Inc.(2) | 925 | 88,541 | ||||||
Oil, Gas and Consumable Fuels — 5.9% | ||||||||
Enterprise Products Partners LP | 5,527 | 119,604 | ||||||
Galp Energia SGPS SA | 7,958 | 90,387 | ||||||
Royal Dutch Shell plc, Class B ADR | 40,020 | 1,771,685 | ||||||
TotalEnergies SE, ADR | 4,103 | 196,657 | ||||||
2,178,333 | ||||||||
Paper and Forest Products — 0.3% | ||||||||
Mondi plc | 4,552 | 111,551 | ||||||
Personal Products — 1.3% | ||||||||
Unilever plc, ADR | 9,185 | 498,011 | ||||||
Pharmaceuticals — 2.0% | ||||||||
Johnson & Johnson | 1,693 | 273,419 | ||||||
Merck & Co., Inc. | 2,643 | 198,516 | ||||||
Roche Holding AG, ADR | 6,323 | 287,507 | ||||||
759,442 | ||||||||
Road and Rail — 1.1% | ||||||||
Heartland Express, Inc. | 5,429 | 86,973 | ||||||
Norfolk Southern Corp. | 528 | 126,324 | ||||||
Union Pacific Corp. | 947 | 185,621 | ||||||
398,918 | ||||||||
Semiconductors and Semiconductor Equipment — 0.6% | ||||||||
Texas Instruments, Inc. | 1,116 | 214,506 | ||||||
Software — 0.5% | ||||||||
Microsoft Corp. | 657 | 185,222 | ||||||
Specialty Retail — 0.6% | ||||||||
Advance Auto Parts, Inc. | 260 | 54,312 | ||||||
TJX Cos., Inc. (The) | 2,439 | 160,925 | ||||||
215,237 | ||||||||
Textiles, Apparel and Luxury Goods — 0.3% | ||||||||
LVMH Moet Hennessy Louis Vuitton SE | 134 | 95,979 | ||||||
Trading Companies and Distributors — 0.3% | ||||||||
Azelis Group NV(1)(2) | 3,000 | 94,521 | ||||||
TOTAL COMMON STOCKS (Cost $16,244,775) | 22,816,490 |
8
Shares/Principal Amount | Value | |||||||
CONVERTIBLE BONDS — 14.1% | ||||||||
Automobiles — 5.6% | ||||||||
Tesla, Inc., 2.00%, 5/15/24 | $ | 167,000 | $ | 2,084,496 | ||||
Semiconductors and Semiconductor Equipment — 8.5% | ||||||||
Microchip Technology, Inc., 0.125%, 11/15/24 | 1,163,000 | 1,320,522 | ||||||
Teradyne, Inc., 1.25%, 12/15/23 | 529,000 | 1,829,018 | ||||||
3,149,540 | ||||||||
TOTAL CONVERTIBLE BONDS (Cost $2,349,777) | 5,234,036 | |||||||
EXCHANGE-TRADED FUNDS — 6.4% | ||||||||
Consumer Discretionary Select Sector SPDR Fund(1) | 2,391 | 429,065 | ||||||
iShares Russell 1000 Value ETF(1) | 12,418 | 1,943,541 | ||||||
TOTAL EXCHANGE-TRADED FUNDS (Cost $1,471,114) | 2,372,606 | |||||||
TEMPORARY CASH INVESTMENTS — 14.8% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $1,020,215), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $999,892) | 999,891 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $3,399,773), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $3,333,001) | 3,333,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 1,162,995 | 1,162,995 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $5,495,886) | 5,495,886 | |||||||
TOTAL INVESTMENT SECURITIES BEFORE SECURITIES SOLD SHORT — 96.8% (Cost $25,561,552) | 35,919,018 | |||||||
SECURITIES SOLD SHORT — (80.5)% | ||||||||
COMMON STOCKS SOLD SHORT — (72.0)% | ||||||||
Aerospace and Defense — (5.1)% | ||||||||
HEICO Corp. | (14,217) | (1,874,796) | ||||||
Automobiles — (7.3)% | ||||||||
Ford Motor Co. | (16,746) | (237,123) | ||||||
Honda Motor Co. Ltd., ADR | (3,025) | (92,777) | ||||||
Tesla, Inc. | (2,696) | (2,090,694) | ||||||
Volkswagen AG | (966) | (297,918) | ||||||
(2,718,512) | ||||||||
Banks — (2.9)% | ||||||||
Bank of America Corp. | (5,484) | (232,796) | ||||||
Bank OZK | (3,767) | (161,906) | ||||||
Citigroup, Inc. | (2,995) | (210,189) | ||||||
First Financial Bankshares, Inc. | (2,524) | (115,978) | ||||||
M&T Bank Corp. | (887) | (132,464) | ||||||
National Bank of Canada | (2,717) | (208,677) | ||||||
(1,062,010) | ||||||||
Beverages — (1.3)% | ||||||||
Coca-Cola Co. (The) | (1,747) | (91,665) | ||||||
Heineken NV | (3,853) | (402,156) | ||||||
(493,821) | ||||||||
Building Products — (1.0)% | ||||||||
Carrier Global Corp. | (2,193) | (113,510) | ||||||
Daikin Industries Ltd. | (500) | (109,019) |
9
Shares/Principal Amount | Value | |||||||
Fortune Brands Home & Security, Inc. | (1,599) | $ | (142,982) | |||||
(365,511) | ||||||||
Capital Markets — (1.6)% | ||||||||
Franklin Resources, Inc. | (10,693) | (317,796) | ||||||
Goldman Sachs Group, Inc. (The) | (535) | (202,246) | ||||||
State Street Corp. | (924) | (78,281) | ||||||
(598,323) | ||||||||
Chemicals — (0.6)% | ||||||||
Air Products and Chemicals, Inc. | (387) | (99,114) | ||||||
PPG Industries, Inc. | (982) | (140,436) | ||||||
(239,550) | ||||||||
Commercial Services and Supplies — (1.0)% | ||||||||
Waste Management, Inc. | (2,602) | (388,635) | ||||||
Communications Equipment — (0.6)% | ||||||||
Arista Networks, Inc. | (623) | (214,088) | ||||||
Containers and Packaging — (0.6)% | ||||||||
International Paper Co. | (1,994) | (111,505) | ||||||
Sealed Air Corp. | (1,995) | (109,306) | ||||||
(220,811) | ||||||||
Distributors — (0.2)% | ||||||||
Genuine Parts Co. | (463) | (56,130) | ||||||
Electric Utilities — (1.0)% | ||||||||
American Electric Power Co., Inc. | (3,130) | (254,093) | ||||||
Southern Co. (The) | (2,151) | (133,298) | ||||||
(387,391) | ||||||||
Electrical Equipment — (0.3)% | ||||||||
Mitsubishi Electric Corp. | (8,400) | (116,740) | ||||||
Electronic Equipment, Instruments and Components — (0.3)% | ||||||||
Keysight Technologies, Inc. | (604) | (99,231) | ||||||
Energy Equipment and Services — (0.5)% | ||||||||
Schlumberger NV | (6,674) | (197,817) | ||||||
Entertainment — (0.3)% | ||||||||
Walt Disney Co. (The) | (578) | (97,780) | ||||||
Equity Real Estate Investment Trusts (REITs) — (0.7)% | ||||||||
SL Green Realty Corp. | (1,297) | (91,880) | ||||||
Ventas, Inc. | (3,354) | (185,174) | ||||||
(277,054) | ||||||||
Food and Staples Retailing — (1.5)% | ||||||||
Albertsons Cos., Inc., Class A | (4,582) | (142,638) | ||||||
US Foods Holding Corp. | (12,334) | (427,496) | ||||||
(570,134) | ||||||||
Food Products — (0.4)% | ||||||||
Hormel Foods Corp. | (2,533) | (103,853) | ||||||
McCormick & Co., Inc. | (667) | (54,047) | ||||||
(157,900) | ||||||||
Health Care Equipment and Supplies — (1.2)% | ||||||||
Abbott Laboratories | (558) | (65,916) | ||||||
Baxter International, Inc. | (1,837) | (147,750) | ||||||
Stryker Corp. | (850) | (224,162) | ||||||
(437,828) | ||||||||
Health Care Providers and Services — (0.4)% | ||||||||
HCA Healthcare, Inc. | (389) | (94,418) |
10
Shares/Principal Amount | Value | |||||||
UnitedHealth Group, Inc. | (149) | $ | (58,220) | |||||
(152,638) | ||||||||
Household Durables — (5.4)% | ||||||||
Husqvarna AB, B Shares | (8,587) | (102,581) | ||||||
Lennar Corp., Class A | (18,778) | (1,759,123) | ||||||
Whirlpool Corp. | (705) | (143,721) | ||||||
(2,005,425) | ||||||||
Household Products — (1.3)% | ||||||||
Procter & Gamble Co. (The) | (3,499) | (489,160) | ||||||
Industrial Conglomerates — (0.5)% | ||||||||
General Electric Co. | (1,743) | (179,581) | ||||||
Insurance — (2.2)% | ||||||||
Aon plc, Class A | (386) | (110,307) | ||||||
Prudential Financial, Inc. | (3,796) | (399,339) | ||||||
Travelers Cos., Inc. (The) | (766) | (116,440) | ||||||
Unum Group | (6,993) | (175,245) | ||||||
(801,331) | ||||||||
Internet and Direct Marketing Retail — (0.5)% | ||||||||
Amazon.com, Inc. | (58) | (190,532) | ||||||
IT Services — (0.7)% | ||||||||
Mastercard, Inc., Class A | (269) | (93,526) | ||||||
Paychex, Inc. | (1,579) | (177,558) | ||||||
(271,084) | ||||||||
Leisure Products — (0.2)% | ||||||||
Peloton Interactive, Inc., Class A | (964) | (83,916) | ||||||
Machinery — (7.0)% | ||||||||
AGCO Corp. | (2,746) | (336,467) | ||||||
Atlas Copco AB, A Shares | (29,400) | (1,775,338) | ||||||
Caterpillar, Inc. | (1,498) | (287,571) | ||||||
Kone Oyj, B Shares | (1,882) | (132,208) | ||||||
Volvo AB, B Shares | (2,496) | (55,727) | ||||||
(2,587,311) | ||||||||
Media — (5.2)% | ||||||||
Fox Corp., Class A | (47,769) | (1,916,015) | ||||||
Metals and Mining — (1.0)% | ||||||||
Antofagasta plc | (3,990) | (72,509) | ||||||
BHP Group Ltd., ADR | (5,498) | (294,253) | ||||||
(366,762) | ||||||||
Multi-Utilities — (0.5)% | ||||||||
Consolidated Edison, Inc. | (2,451) | (177,918) | ||||||
Multiline Retail — (0.2)% | ||||||||
Ollie's Bargain Outlet Holdings, Inc. | (1,428) | (86,080) | ||||||
Oil, Gas and Consumable Fuels — (5.5)% | ||||||||
Chevron Corp. | (839) | (85,117) | ||||||
Royal Dutch Shell plc, Class A ADR | (39,690) | (1,768,983) | ||||||
Valero Energy Corp. | (2,776) | (195,902) | ||||||
(2,050,002) | ||||||||
Paper and Forest Products — (0.3)% | ||||||||
UPM-Kymmene Oyj | (3,125) | (110,607) | ||||||
Pharmaceuticals — (2.1)% | ||||||||
AstraZeneca plc, ADR | (1,999) | (120,060) |
11
Shares/Principal Amount | Value | |||||||
Bristol-Myers Squibb Co. | (5,250) | $ | (310,643) | |||||
Pfizer, Inc. | (4,609) | (198,233) | ||||||
Sanofi | (1,421) | (136,791) | ||||||
(765,727) | ||||||||
Road and Rail — (1.1)% | ||||||||
CSX Corp. | (10,442) | (310,545) | ||||||
Werner Enterprises, Inc. | (1,975) | (87,433) | ||||||
(397,978) | ||||||||
Semiconductors and Semiconductor Equipment — (7.7)% | ||||||||
Intel Corp. | (4,010) | (213,653) | ||||||
Microchip Technology, Inc. | (5,374) | (824,855) | ||||||
Teradyne, Inc. | (16,779) | (1,831,764) | ||||||
(2,870,272) | ||||||||
Specialty Retail — (1.5)% | ||||||||
Burlington Stores, Inc. | (577) | (163,620) | ||||||
Carvana Co. | (571) | (172,179) | ||||||
Signet Jewelers Ltd. | (980) | (77,381) | ||||||
Tractor Supply Co. | (765) | (154,997) | ||||||
(568,177) | ||||||||
Textiles, Apparel and Luxury Goods — (0.3)% | ||||||||
VF Corp. | (1,470) | (98,475) | ||||||
TOTAL COMMON STOCKS SOLD SHORT (Proceeds $15,818,900) | (26,743,053) | |||||||
EXCHANGE-TRADED FUNDS SOLD SHORT — (8.5)% | ||||||||
Alerian MLP ETF | (3,532) | (117,722) | ||||||
ARK Innovation ETF | (933) | (103,125) | ||||||
Health Care Select Sector SPDR Fund | (1,788) | (227,612) | ||||||
iShares Russell 1000 Growth ETF | (6,757) | (1,851,688) | ||||||
iShares U.S. Real Estate ETF | (836) | (85,598) | ||||||
Utilities Select Sector SPDR Fund | (11,856) | (757,361) | ||||||
TOTAL EXCHANGE-TRADED FUNDS SOLD SHORT (Proceeds $2,087,717) | (3,143,106) | |||||||
TOTAL SECURITIES SOLD SHORT — (80.5)% (Proceeds $17,906,617) | (29,886,159) | |||||||
OTHER ASSETS AND LIABILITIES — 83.7% | 31,085,551 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 37,118,410 |
12
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CAD | 4,143 | USD | 3,275 | Morgan Stanley | 12/31/21 | $ | (4) | |||||||||||||
CAD | 424 | USD | 333 | Morgan Stanley | 12/31/21 | 2 | ||||||||||||||
USD | 137 | CAD | 174 | Bank of America N.A. | 12/31/21 | (1) | ||||||||||||||
USD | 932 | CAD | 1,186 | Morgan Stanley | 12/31/21 | (5) | ||||||||||||||
USD | 1,055 | CAD | 1,341 | Morgan Stanley | 12/31/21 | (4) | ||||||||||||||
USD | 1,177 | CAD | 1,490 | Morgan Stanley | 12/31/21 | — | ||||||||||||||
CHF | 9,676 | USD | 10,380 | Morgan Stanley | 12/30/21 | 26 | ||||||||||||||
USD | 370,915 | CHF | 341,264 | Morgan Stanley | 12/30/21 | 3,877 | ||||||||||||||
USD | 19,498 | EUR | 16,569 | Credit Suisse AG | 12/31/21 | 267 | ||||||||||||||
USD | 18,195 | EUR | 15,518 | Credit Suisse AG | 12/31/21 | 184 | ||||||||||||||
USD | 38,922 | EUR | 33,250 | Credit Suisse AG | 12/31/21 | 331 | ||||||||||||||
USD | 71,982 | EUR | 62,078 | Credit Suisse AG | 12/31/21 | (70) | ||||||||||||||
USD | 528,690 | EUR | 449,729 | Goldman Sachs & Co. | 12/31/21 | 6,709 | ||||||||||||||
USD | 183,394 | GBP | 134,325 | JPMorgan Chase Bank N.A. | 12/31/21 | 2,362 | ||||||||||||||
USD | 11,754 | GBP | 8,552 | JPMorgan Chase Bank N.A. | 12/31/21 | 229 | ||||||||||||||
USD | 50,139 | GBP | 36,655 | JPMorgan Chase Bank N.A. | 12/31/21 | 738 | ||||||||||||||
USD | 10,392 | GBP | 7,744 | JPMorgan Chase Bank N.A. | 12/31/21 | (44) | ||||||||||||||
USD | 8,099 | GBP | 6,015 | JPMorgan Chase Bank N.A. | 12/31/21 | (8) | ||||||||||||||
JPY | 12,750,170 | USD | 116,494 | Bank of America N.A. | 12/30/21 | (1,826) | ||||||||||||||
JPY | 365,840 | USD | 3,301 | Bank of America N.A. | 12/30/21 | (10) | ||||||||||||||
USD | 3,353 | JPY | 368,815 | Bank of America N.A. | 12/30/21 | 36 | ||||||||||||||
USD | 3,711 | JPY | 413,610 | Bank of America N.A. | 12/30/21 | (9) | ||||||||||||||
USD | 3,660 | JPY | 409,530 | Bank of America N.A. | 12/30/21 | (24) | ||||||||||||||
SEK | 409,435 | USD | 47,345 | UBS AG | 12/30/21 | (528) | ||||||||||||||
SEK | 21,320 | USD | 2,473 | UBS AG | 12/30/21 | (35) | ||||||||||||||
USD | 1,887 | SEK | 16,393 | UBS AG | 12/30/21 | 12 | ||||||||||||||
USD | 6,507 | SEK | 56,800 | UBS AG | 12/30/21 | 13 | ||||||||||||||
USD | 1,110 | SEK | 9,755 | UBS AG | 12/30/21 | (6) | ||||||||||||||
USD | 1,709 | SEK | 14,989 | UBS AG | 12/30/21 | (5) | ||||||||||||||
$ | 12,207 |
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)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 $6,672,263.
(2)Non-income producing.
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities, at value (cost of $25,561,552) | $ | 35,919,018 | |||
Deposits for securities sold short | 31,043,173 | ||||
Foreign currency holdings, at value (cost of $1,549) | 1,544 | ||||
Receivable for investments sold | 550,919 | ||||
Receivable for capital shares sold | 44,309 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 14,786 | ||||
Dividends and interest receivable | 61,887 | ||||
67,635,636 | |||||
Liabilities | |||||
Securities sold short, at value (proceeds of $17,906,617) | 29,886,159 | ||||
Disbursements in excess of demand deposit cash | 3,138 | ||||
Payable for investments purchased | 477,759 | ||||
Payable for capital shares redeemed | 69,887 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 2,579 | ||||
Accrued management fees | 48,408 | ||||
Distribution and service fees payable | 1,490 | ||||
Dividend expense payable on securities sold short | 16,448 | ||||
Fees and charges payable on borrowings for securities sold short | 11,358 | ||||
30,517,226 | |||||
Net Assets | $ | 37,118,410 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 84,468,387 | |||
Distributable earnings | (47,349,977) | ||||
$ | 37,118,410 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $5,593,776 | 629,157 | $8.89 | ||||||||
I Class, $0.01 Par Value | $29,142,239 | 3,217,877 | $9.06 | ||||||||
A Class, $0.01 Par Value | $693,369 | 79,657 | $8.70* | ||||||||
C Class, $0.01 Par Value | $1,487,792 | 184,825 | $8.05 | ||||||||
R Class, $0.01 Par Value | $201,234 | 23,704 | $8.49 |
*Maximum offering price $9.23 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $9,663) | $ | 305,500 | |||
Interest | 6,612 | ||||
312,112 | |||||
Expenses: | |||||
Dividend expense on securities sold short | 315,042 | ||||
Fees and charges on borrowings for securities sold short | 76,744 | ||||
Management fees | 342,558 | ||||
Distribution and service fees: | |||||
A Class | 909 | ||||
C Class | 8,273 | ||||
R Class | 482 | ||||
Directors' fees and expenses | 630 | ||||
Other expenses | 75 | ||||
744,713 | |||||
Net investment income (loss) | (432,601) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 5,251,631 | ||||
Securities sold short transactions | (4,465,549) | ||||
Forward foreign currency exchange contract transactions | 3,119 | ||||
Foreign currency translation transactions | (438) | ||||
788,763 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (3,583,136) | ||||
Securities sold short | 3,255,895 | ||||
Forward foreign currency exchange contracts | (2,628) | ||||
Translation of assets and liabilities in foreign currencies | (104) | ||||
(329,973) | |||||
Net realized and unrealized gain (loss) | 458,790 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 26,189 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | (432,601) | $ | (1,142,468) | ||||
Net realized gain (loss) | 788,763 | 578,912 | ||||||
Change in net unrealized appreciation (depreciation) | (329,973) | (3,550,523) | ||||||
Net increase (decrease) in net assets resulting from operations | 26,189 | (4,114,079) | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | — | (23,722) | ||||||
I Class | — | (207,288) | ||||||
A Class | — | (366) | ||||||
Decrease in net assets from distributions | — | (231,376) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (13,495,737) | (20,758,122) | ||||||
Net increase (decrease) in net assets | (13,469,548) | (25,103,577) | ||||||
Net Assets | ||||||||
Beginning of period | 50,587,958 | 75,691,535 | ||||||
End of period | $ | 37,118,410 | $ | 50,587,958 | ||||
See Notes to Financial Statements.
16
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. AC Alternatives 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.
17
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. For convertible bonds, the premiums attributable only to the debt instrument are amortized.
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.
18
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% |
19
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 September 30, 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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities and securities sold short, excluding short-term investments, for the period ended September 30, 2021 were $31,095,342 and $31,664,531, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2021 | Year ended March 31, 2021 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||
Sold | 48,899 | $ | 433,012 | 249,059 | $ | 2,284,342 | ||||||||
Issued in reinvestment of distributions | — | — | 2,606 | 23,476 | ||||||||||
Redeemed | (265,037) | (2,350,435) | (639,488) | (5,843,159) | ||||||||||
(216,138) | (1,917,423) | (387,823) | (3,535,341) | |||||||||||
I Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||
Sold | 447,504 | 4,037,632 | 2,865,984 | 26,725,355 | ||||||||||
Issued in reinvestment of distributions | — | — | 22,594 | 207,187 | ||||||||||
Redeemed | (1,699,163) | (15,321,608) | (4,322,747) | (40,550,020) | ||||||||||
(1,251,659) | (11,283,976) | (1,434,169) | (13,617,478) | |||||||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 7,770 | 67,518 | 44,856 | 398,075 | ||||||||||
Issued in reinvestment of distributions | — | — | 41 | 366 | ||||||||||
Redeemed | (15,527) | (134,705) | (206,377) | (1,825,909) | ||||||||||
(7,757) | (67,187) | (161,480) | (1,427,468) | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 5,379 | 43,244 | 21,045 | 175,697 | ||||||||||
Redeemed | (36,663) | (294,530) | (286,428) | (2,397,931) | ||||||||||
(31,284) | (251,286) | (265,383) | (2,222,234) | |||||||||||
R Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Sold | 3,328 | 28,191 | 21,883 | 192,879 | ||||||||||
Redeemed | (480) | (4,056) | (16,960) | (148,480) | ||||||||||
2,848 | 24,135 | 4,923 | 44,399 | |||||||||||
Net increase (decrease) | (1,503,990) | $ | (13,495,737) | (2,243,932) | $ | (20,758,122) |
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.
21
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 | $ | 327,537 | $ | 301,141 | — | ||||||
Banks | 851,561 | 205,970 | — | ||||||||
Beverages | — | 495,897 | — | ||||||||
Chemicals | 97,695 | 139,094 | — | ||||||||
Electronic Equipment, Instruments and Components | — | 101,718 | — | ||||||||
Food and Staples Retailing | 583,575 | 142,782 | — | ||||||||
Household Durables | 1,759,198 | 107,386 | — | ||||||||
Industrial Conglomerates | 183,336 | 113,014 | — | ||||||||
Machinery | 384,317 | 1,893,661 | — | ||||||||
Oil, Gas and Consumable Fuels | 2,087,946 | 90,387 | — | ||||||||
Paper and Forest Products | — | 111,551 | — | ||||||||
Textiles, Apparel and Luxury Goods | — | 95,979 | — | ||||||||
Trading Companies and Distributors | — | 94,521 | — | ||||||||
Other Industries | 12,648,224 | — | — | ||||||||
Convertible Bonds | — | 5,234,036 | — | ||||||||
Exchange-Traded Funds | 2,372,606 | — | — | ||||||||
Temporary Cash Investments | 1,162,995 | 4,332,891 | — | ||||||||
$ | 22,458,990 | $ | 13,460,028 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 14,786 | — | |||||||
Liabilities | |||||||||||
Securities Sold Short | |||||||||||
Common Stocks | |||||||||||
Automobiles | $ | 2,420,594 | $ | 297,918 | — | ||||||
Banks | 853,333 | 208,677 | — | ||||||||
Beverages | 91,665 | 402,156 | — | ||||||||
Building Products | 256,492 | 109,019 | — | ||||||||
Electrical Equipment | — | 116,740 | — | ||||||||
Household Durables | 1,902,844 | 102,581 | — | ||||||||
Machinery | 624,038 | 1,963,273 | — | ||||||||
Metals and Mining | 294,253 | 72,509 | — | ||||||||
Paper and Forest Products | — | 110,607 | — | ||||||||
Pharmaceuticals | 628,936 | 136,791 | — | ||||||||
Other Industries | 16,150,627 | — | — | ||||||||
Exchange-Traded Funds | 3,143,106 | — | — | ||||||||
$ | 26,365,888 | $ | 3,520,271 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 2,579 | — |
22
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 $2,494,129.
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $14,786 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $2,579 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $3,119 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(2,628) 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 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.
23
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 26,081,007 | |||
Gross tax appreciation of investments | $ | 10,066,333 | |||
Gross tax depreciation of investments | (228,322) | ||||
Net tax appreciation (depreciation) of investments | $ | 9,838,011 | |||
Gross tax appreciation on securities sold short | 168,526 | ||||
Gross tax depreciation on securities sold short | (12,327,693) | ||||
Net tax appreciation (depreciation) | $ | (2,321,156) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2021, the fund had accumulated short-term capital losses of $(39,283,282), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
As of March 31, 2021, the fund had late-year ordinary loss deferrals of $(245,851), which represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
24
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(3) | $8.88 | (0.09) | 0.10 | 0.01 | — | — | — | $8.89 | 0.11% | 3.36%(4) | 3.36%(4) | 1.65%(4) | (2.00)%(4) | (2.00)%(4) | 85% | $5,594 | ||||||||||||||||||||||||||||||||||
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 | —(5) | 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(3) | $9.04 | (0.08) | 0.10 | 0.02 | — | — | — | $9.06 | 0.22% | 3.16%(4) | 3.16%(4) | 1.45%(4) | (1.80)%(4) | (1.80)%(4) | 85% | $29,142 | ||||||||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $8.71 | (0.10) | 0.09 | (0.01) | — | — | — | $8.70 | (0.11)% | 3.61%(4) | 3.61%(4) | 1.90%(4) | (2.25)%(4) | (2.25)%(4) | 85% | $693 | ||||||||||||||||||||||||||||||||||
2021 | $9.34 | (0.21) | (0.42) | (0.63) | —(5) | — | —(5) | $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 | ||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $8.08 | (0.12) | 0.09 | (0.03) | — | — | — | $8.05 | (0.37)% | 4.36%(4) | 4.36%(4) | 2.65%(4) | (3.00)%(4) | (3.00)%(4) | 85% | $1,488 | ||||||||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $8.50 | (0.10) | 0.09 | (0.01) | — | — | — | $8.49 | (0.12)% | 3.86%(4) | 3.86%(4) | 2.15%(4) | (2.50)%(4) | (2.50)%(4) | 85% | $201 | ||||||||||||||||||||||||||||||||||
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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)Per-share amount was less than $0.005.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
28
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, and five-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor, including steps being taken to address underperformance, and was satisfied with the efforts being
29
undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was slightly above the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
30
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
31
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
32
![]() | ||||||||
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-SAN-90804 2111 |
![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 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 | |||||
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image27a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image27a.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended September 30, 2021. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Stocks, Bonds Advanced Amid Growing Concerns
Broad market sentiment was upbeat to start the period. Investors generally looked beyond pandemic-related challenges to improving growth and corporate earnings data. Ongoing support from leading central banks and governments helped maintain investor confidence in the financial markets and strengthen the overall global economic outlook.
However, a summer surge in COVID-19 cases arising from the delta variant triggered worries about the recovery’s sustainability. Most economic and corporate earnings data remained favorable, but the labor market was a notable exception. Despite record job openings, job growth remained weak, complicating reopening efforts for many businesses.
In this climate, U.S. Treasury yields generally declined through early August. From there, yields rose amid soaring inflation triggered by mounting supply chain disruptions and rising energy and housing prices. Congressional debate on the debt ceiling and the $3.5 trillion "human infrastructure" bill added to inflation worries. Year-over-year headline inflation reached 5.4% in September, matching a 13-year high.
Meanwhile, in September, the Federal Reserve hinted it may start scaling back its monetary support by year-end. This prompted a spike in Treasury yields and a sell-off among stocks. A credit crisis in China’s troubled property sector also weighed on stocks. Overall, though, strong performance in the first half of the reporting period led to positive six-month returns for most broad stock and bond indices.
Several Factors Shaping Market Dynamics
The return to pre-pandemic life is progressing, albeit somewhat cautiously due to COVID-19’s delta variant. As the economy and markets respond to this fluid backdrop, investors will face opportunities and ongoing challenges. Economic growth, inflation, the virus’s trajectory, supply chain normalization and fiscal and monetary policy likely will sway market dynamics.
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,
![image12.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image12.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 81.5% | ||||
Preferred Stocks | 10.0% | ||||
Convertible Bonds | 3.2% | ||||
Convertible Preferred Stocks | 1.7% | ||||
Exchange-Traded Funds | 0.5% | ||||
Corporate Bonds | 0.2% | ||||
Temporary Cash Investments | 2.8% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.6% | ||||
Other Assets and Liabilities | (0.5)% | ||||
Top Five Industries* | % of net assets | ||||
Banks | 10.3% | ||||
Pharmaceuticals | 7.7% | ||||
Health Care Equipment and Supplies | 6.3% | ||||
Insurance | 6.3% | ||||
Capital Markets | 5.6% |
*Exposure indicated excludes Exchange-Traded Funds. The Schedule of Investments provides additional information on the fund's portfolio holdings.
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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.
4
Beginning Account Value 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,040.60 | $4.60 | 0.90% | ||||||||||
I Class | $1,000 | $1,040.50 | $3.58 | 0.70% | ||||||||||
Y Class | $1,000 | $1,041.20 | $2.81 | 0.55% | ||||||||||
A Class | $1,000 | $1,039.30 | $5.88 | 1.15% | ||||||||||
C Class | $1,000 | $1,034.30 | $9.69 | 1.90% | ||||||||||
R Class | $1,000 | $1,038.10 | $7.15 | 1.40% | ||||||||||
R5 Class | $1,000 | $1,040.50 | $3.58 | 0.70% | ||||||||||
R6 Class | $1,000 | $1,042.30 | $2.82 | 0.55% | ||||||||||
G Class | $1,000 | $1,045.10 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.56 | $4.56 | 0.90% | ||||||||||
I Class | $1,000 | $1,021.56 | $3.55 | 0.70% | ||||||||||
Y Class | $1,000 | $1,022.31 | $2.79 | 0.55% | ||||||||||
A Class | $1,000 | $1,019.30 | $5.82 | 1.15% | ||||||||||
C Class | $1,000 | $1,015.54 | $9.60 | 1.90% | ||||||||||
R Class | $1,000 | $1,018.05 | $7.08 | 1.40% | ||||||||||
R5 Class | $1,000 | $1,021.56 | $3.55 | 0.70% | ||||||||||
R6 Class | $1,000 | $1,022.31 | $2.79 | 0.55% | ||||||||||
G Class | $1,000 | $1,025.07 | $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 183, 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%.
5
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares/ Principal Amount | Value | |||||||
COMMON STOCKS — 81.5% | ||||||||
Aerospace and Defense — 1.5% | ||||||||
Raytheon Technologies Corp. | 1,999,327 | $ | 171,862,149 | |||||
Air Freight and Logistics — 0.4% | ||||||||
United Parcel Service, Inc., Class B | 253,664 | 46,192,214 | ||||||
Auto Components — 0.4% | ||||||||
Bridgestone Corp. | 997,900 | 47,211,840 | ||||||
Automobiles — 0.4% | ||||||||
Toyota Motor Corp. | 2,499,500 | 44,534,557 | ||||||
Banks — 3.3% | ||||||||
Commerce Bancshares, Inc. | 550,574 | 38,363,996 | ||||||
JPMorgan Chase & Co. | 1,299,900 | 212,780,631 | ||||||
PNC Financial Services Group, Inc. (The) | 392,223 | 76,734,508 | ||||||
U.S. Bancorp | 997,300 | 59,279,512 | ||||||
387,158,647 | ||||||||
Beverages — 2.0% | ||||||||
PepsiCo, Inc. | 1,598,093 | 240,369,168 | ||||||
Building Products — 0.1% | ||||||||
Assa Abloy AB, B Shares | 516,300 | 14,976,110 | ||||||
Capital Markets — 4.1% | ||||||||
Ameriprise Financial, Inc. | 371,799 | 98,199,552 | ||||||
Bank of New York Mellon Corp. (The) | 3,294,208 | 170,771,743 | ||||||
BlackRock, Inc. | 49,875 | 41,828,167 | ||||||
Janus Henderson Group plc | 269,693 | 11,146,412 | ||||||
Northern Trust Corp. | 1,096,232 | 118,184,772 | ||||||
T. Rowe Price Group, Inc. | 199,787 | 39,298,103 | ||||||
479,428,749 | ||||||||
Chemicals — 3.3% | ||||||||
Akzo Nobel NV | 898,010 | 98,120,709 | ||||||
Linde plc | 988,731 | 290,073,901 | ||||||
388,194,610 | ||||||||
Commercial Services and Supplies — 0.8% | ||||||||
Republic Services, Inc. | 792,375 | 95,132,542 | ||||||
Communications Equipment — 2.1% | ||||||||
Cisco Systems, Inc. | 4,497,777 | 244,814,002 | ||||||
Containers and Packaging — 1.1% | ||||||||
Amcor plc | 3,999,700 | 46,356,523 | ||||||
Packaging Corp. of America | 600,021 | 82,466,886 | ||||||
128,823,409 | ||||||||
Diversified Telecommunication Services — 2.8% | ||||||||
Verizon Communications, Inc. | 5,999,155 | 324,014,361 | ||||||
Electric Utilities — 1.7% | ||||||||
Duke Energy Corp. | 998,459 | 97,439,614 | ||||||
Evergy, Inc. | 379,603 | 23,611,307 | ||||||
Eversource Energy | 993,495 | 81,228,151 | ||||||
202,279,072 | ||||||||
Electrical Equipment — 4.2% | ||||||||
ABB Ltd. | 489,642 | 16,379,413 |
6
Shares/ Principal Amount | Value | |||||||
Emerson Electric Co. | 3,494,090 | $ | 329,143,278 | |||||
Hubbell, Inc. | 798,635 | 144,289,385 | ||||||
489,812,076 | ||||||||
Electronic Equipment, Instruments and Components — 0.9% | ||||||||
Corning, Inc. | 2,998,521 | 109,416,031 | ||||||
Energy Equipment and Services — 0.2% | ||||||||
Baker Hughes Co. | 999,992 | 24,729,802 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.4% | ||||||||
American Tower Corp. | 199,779 | 53,023,345 | ||||||
Equinix, Inc. | 79,956 | 63,175,634 | ||||||
Welltower, Inc. | 597,635 | 49,245,124 | ||||||
165,444,103 | ||||||||
Food and Staples Retailing — 3.6% | ||||||||
Koninklijke Ahold Delhaize NV | 2,997,309 | 99,804,789 | ||||||
Walmart, Inc. | 2,298,895 | 320,419,985 | ||||||
420,224,774 | ||||||||
Food Products — 3.6% | ||||||||
Hershey Co. (The) | 599,163 | 101,408,338 | ||||||
Mondelez International, Inc., Class A | 2,538,596 | 147,695,515 | ||||||
Nestle SA | 1,399,836 | 168,666,266 | ||||||
417,770,119 | ||||||||
Gas Utilities — 4.5% | ||||||||
Atmos Energy Corp. | 1,974,902 | 174,186,357 | ||||||
ONE Gas, Inc.(1) | 3,099,828 | 196,436,100 | ||||||
Spire, Inc. | 2,499,896 | 152,943,637 | ||||||
523,566,094 | ||||||||
Health Care Equipment and Supplies — 5.1% | ||||||||
Becton Dickinson and Co. | 440,122 | 108,190,790 | ||||||
Medtronic plc | 3,897,604 | 488,564,661 | ||||||
596,755,451 | ||||||||
Health Care Providers and Services — 1.9% | ||||||||
Cardinal Health, Inc. | 930,100 | 46,002,746 | ||||||
Cigna Corp. | 95,779 | 19,171,125 | ||||||
Quest Diagnostics, Inc. | 651,923 | 94,730,931 | ||||||
UnitedHealth Group, Inc. | 169,900 | 66,386,726 | ||||||
226,291,528 | ||||||||
Health Care Technology — 1.2% | ||||||||
Cerner Corp. | 1,997,553 | 140,867,438 | ||||||
Household Durables — 0.1% | ||||||||
Electrolux AB, Series B(2) | 499,900 | 11,549,545 | ||||||
Household Products — 2.9% | ||||||||
Colgate-Palmolive Co. | 3,155,135 | 238,465,103 | ||||||
Procter & Gamble Co. (The) | 715,720 | 100,057,656 | ||||||
338,522,759 | ||||||||
Insurance — 5.9% | ||||||||
Aflac, Inc. | 1,385,248 | 72,212,978 | ||||||
Allstate Corp. (The) | 275,707 | 35,100,258 | ||||||
Chubb Ltd. | 992,182 | 172,123,734 | ||||||
Hartford Financial Services Group, Inc. (The) | 999,965 | 70,247,541 | ||||||
Marsh & McLennan Cos., Inc. | 2,185,641 | 330,971,617 | ||||||
MetLife, Inc. | 199,900 | 12,339,827 | ||||||
692,995,955 |
7
Shares/ Principal Amount | Value | |||||||
IT Services — 1.5% | ||||||||
Automatic Data Processing, Inc. | 873,405 | $ | 174,611,128 | |||||
Machinery — 0.3% | ||||||||
PACCAR, Inc. | 391,138 | 30,868,611 | ||||||
Oil, Gas and Consumable Fuels — 4.4% | ||||||||
Chevron Corp. | 1,999,683 | 202,867,840 | ||||||
Enterprise Products Partners LP | 8,999,756 | 194,754,720 | ||||||
TotalEnergies SE | 2,599,317 | 124,242,007 | ||||||
521,864,567 | ||||||||
Personal Products — 1.8% | ||||||||
Unilever plc | 3,999,114 | 216,016,551 | ||||||
Pharmaceuticals — 7.7% | ||||||||
Johnson & Johnson | 3,594,839 | 580,566,499 | ||||||
Merck & Co., Inc. | 499,800 | 37,539,978 | ||||||
Roche Holding AG | 799,962 | 291,961,933 | ||||||
910,068,410 | ||||||||
Road and Rail — 1.3% | ||||||||
Norfolk Southern Corp. | 655,319 | 156,785,071 | ||||||
Semiconductors and Semiconductor Equipment — 1.4% | ||||||||
Texas Instruments, Inc. | 872,913 | 167,782,608 | ||||||
Software — 2.8% | ||||||||
Microsoft Corp. | 799,706 | 225,453,115 | ||||||
Oracle Corp. (New York) | 1,251,645 | 109,055,829 | ||||||
334,508,944 | ||||||||
Thrifts and Mortgage Finance — 0.8% | ||||||||
Capitol Federal Financial, Inc.(1) | 7,914,186 | 90,933,997 | ||||||
TOTAL COMMON STOCKS (Cost $7,199,800,355) | 9,576,376,992 | |||||||
PREFERRED STOCKS — 10.0% | ||||||||
Banks — 6.5% | ||||||||
Bank of America Corp., 4.30% | 35,954,000 | 36,628,138 | ||||||
Bank of America Corp., 5.875% | 102,202,000 | 116,776,005 | ||||||
Citigroup, Inc., 5.95% | 68,062,000 | 70,997,174 | ||||||
JPMorgan Chase & Co., 3.60% | 82,210,000 | 82,660,485 | ||||||
JPMorgan Chase & Co., 4.60% | 89,013,000 | 91,127,059 | ||||||
JPMorgan Chase & Co., 5.00% | 161,224,000 | 168,378,315 | ||||||
U.S. Bancorp, 5.30% | 137,380,000 | 157,355,052 | ||||||
Wells Fargo & Co., 3.90% | 39,511,000 | 40,770,413 | ||||||
764,692,641 | ||||||||
Capital Markets — 1.5% | ||||||||
Bank of New York Mellon Corp. (The), 3.54% | 28,615,000 | 28,763,118 | ||||||
Bank of New York Mellon Corp. (The), 4.70% | 9,871,000 | 10,858,100 | ||||||
Charles Schwab Corp. (The), 5.00%(2) | 6,681,000 | 7,127,589 | ||||||
Charles Schwab Corp. (The), 5.375% | 34,310,000 | 38,212,763 | ||||||
Charles Schwab Corp. (The), Series I, 4.00% | 89,859,000 | 93,902,655 | ||||||
178,864,225 | ||||||||
Electric Utilities — 1.0% | ||||||||
Duke Energy Corp., 4.875% | 102,852,000 | 110,180,205 | ||||||
Insurance — 0.4% | ||||||||
Progressive Corp. (The), 5.375% | 40,146,000 | 41,751,840 |
8
Shares/ Principal Amount | Value | |||||||
Multi-Utilities — 0.6% | ||||||||
Dominion Energy, Inc., 4.65% | 69,238,000 | $ | 74,347,764 | |||||
TOTAL PREFERRED STOCKS (Cost $1,105,910,647) | 1,169,836,675 | |||||||
CONVERTIBLE BONDS — 3.2% | ||||||||
Airlines — 0.1% | ||||||||
Southwest Airlines Co., 1.25%, 5/1/25 | $ | 7,060,000 | 10,572,350 | |||||
Construction Materials — 0.2% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Martin Marietta Materials, Inc.), 3.43%, 2/2/22(3)(4) | 49,900 | 18,069,740 | ||||||
Diversified Financial Services — 0.8% | ||||||||
Merrill Lynch International & Co. CV, (convertible into Berkshire Hathaway, Inc., Class B), 1.30%, 1/24/22(3)(4) | 129,900 | 35,080,862 | ||||||
Merrill Lynch International & Co. CV, (convertible into Berkshire Hathaway, Inc., Class B), 4.25%, 3/24/22(3)(4) | 129,900 | 35,101,026 | ||||||
UBS AG, (convertible into Berkshire Hathaway, Inc., Class B), 0.55%, 10/4/21(3)(4) | 98,979 | 26,056,643 | ||||||
96,238,531 | ||||||||
Hotels, Restaurants and Leisure — 0.4% | ||||||||
Cracker Barrel Old Country Store, Inc., 0.625%, 6/15/26(3) | 49,969,000 | 50,624,843 | ||||||
Metals and Mining — 0.4% | ||||||||
JPMorgan Chase Bank N.A., (convertible into Freeport-McMoRan, Inc.), 18.15%, 10/26/21(3)(4) | 799,000 | 28,140,958 | ||||||
JPMorgan Chase Bank N.A., (convertible into Freeport-McMoRan, Inc.), 16.90%, 11/5/21(3)(4) | 334,500 | 12,375,712 | ||||||
JPMorgan Chase Bank N.A., (convertible into Freeport-McMoRan, Inc.), 16.61%, 12/21/21(3)(4) | 20,000 | 683,740 | ||||||
41,200,410 | ||||||||
Multiline Retail — 0.2% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Dollar Tree, Inc.), 3.36%, 12/2/21(3)(4) | 185,700 | 18,753,001 | ||||||
Oil, Gas and Consumable Fuels — 0.1% | ||||||||
Pioneer Natural Resources Co., 0.25%, 5/15/25 | 9,996,000 | 16,183,524 | ||||||
Semiconductors and Semiconductor Equipment — 0.8% | ||||||||
Microchip Technology, Inc., 0.125%, 11/15/24 | 80,983,000 | 91,951,733 | ||||||
Specialty Retail — 0.2% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Advance Auto Parts, Inc.), 7.42%, 11/18/21(3)(4) | 139,900 | 28,945,988 | ||||||
TOTAL CONVERTIBLE BONDS (Cost $357,864,245) | 372,540,120 | |||||||
CONVERTIBLE PREFERRED STOCKS — 1.7% | ||||||||
Banks — 0.5% | ||||||||
Bank of America Corp., 7.25% | 39,900 | 57,543,780 | ||||||
Health Care Equipment and Supplies — 1.2% | ||||||||
Becton Dickinson and Co., 6.00%, 6/1/23(2) | 2,716,662 | 146,645,415 | ||||||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $197,516,878) | 204,189,195 | |||||||
EXCHANGE-TRADED FUNDS — 0.5% | ||||||||
iShares Russell 1000 Value ETF (Cost $50,764,071) | 399,548 | 62,533,257 | ||||||
CORPORATE BONDS — 0.2% | ||||||||
Electric Utilities — 0.2% | ||||||||
NextEra Energy Capital Holdings, Inc., VRN, 5.65%, 5/1/79(2) (Cost $19,805,909) | $ | 19,778,000 | 23,222,140 |
9
Shares/ Principal Amount | Value | |||||||
TEMPORARY CASH INVESTMENTS — 2.8% | ||||||||
Federal Home Loan Bank Discount Notes, 0.00%, 10/1/21(5) | $ | 100,000,000 | $ | 100,000,000 | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $43,446,613), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $42,581,138) | 42,581,114 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 11/15/41, valued at $144,810,488), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $141,971,039) | 141,971,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 49,602,553 | 49,602,553 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $334,154,667) | 334,154,667 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(6) — 0.6% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $66,429,283) | 66,429,283 | 66,429,283 | ||||||
TOTAL INVESTMENT SECURITIES — 100.5% (Cost $9,332,246,055) | 11,809,282,329 | |||||||
OTHER ASSETS AND LIABILITIES — (0.5)% | (63,128,902) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 11,746,153,427 |
WRITTEN OPTIONS CONTRACTS | |||||||||||||||||||||||
Reference Entity | Contracts | Type | Exercise Price | Expiration Date | Underlying Notional Amount | Premiums Received | Value | ||||||||||||||||
Medtronic plc | 1,100 | Put | $ | 126.00 | 10/15/21 | $ | 13,788,500 | $ | (141,370) | $ | (246,400) |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
CHF | 11,446,515 | USD | 12,279,918 | Morgan Stanley | 12/30/21 | $ | 31,106 | |||||||||||||
USD | 438,254,576 | CHF | 403,220,505 | Morgan Stanley | 12/30/21 | 4,580,489 | ||||||||||||||
USD | 485,427,966 | EUR | 412,928,112 | Goldman Sachs & Co. | 12/31/21 | 6,159,850 | ||||||||||||||
USD | 84,268,401 | JPY | 9,229,833,720 | Bank of America N.A. | 12/30/21 | 1,259,954 | ||||||||||||||
USD | 2,223,009 | JPY | 247,772,160 | Bank of America N.A. | 12/30/21 | (5,328) | ||||||||||||||
USD | 24,493,177 | SEK | 211,815,522 | UBS AG | 12/30/21 | 273,200 | ||||||||||||||
$ | 12,299,271 |
10
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
CHF | - | Swiss Franc | ||||||
EUR | - | Euro | ||||||
JPY | - | Japanese Yen | ||||||
SEK | - | Swedish Krona | ||||||
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, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $69,136,619. 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)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 $253,832,513, which represented 2.2% of total net assets. Of these securities, 0.4% of total net assets were deemed illiquid under policies approved by the Board of Directors.
(4)Equity-linked debt security. The aggregated value of these securities at the period end was $203,207,670, which represented 1.7% of total net assets.
(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 $71,376,956, which includes securities collateral of $4,947,673.
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $9,026,697,481) — including $69,136,619 of securities on loan | $ | 11,455,482,949 | |||
Investment securities - affiliated, at value (cost of $239,119,291) | 287,370,097 | ||||
Investment made with cash collateral received for securities on loan, at value (cost of $66,429,283) | 66,429,283 | ||||
Total investment securities, at value (cost of $9,332,246,055) | 11,809,282,329 | ||||
Deposits with broker for options contracts | 3,780,000 | ||||
Receivable for investments sold | 12,353,829 | ||||
Receivable for capital shares sold | 3,893,508 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 12,304,599 | ||||
Dividends and interest receivable | 30,910,259 | ||||
Securities lending receivable | 44,731 | ||||
11,872,569,255 | |||||
Liabilities | |||||
Written options, at value (premiums received $141,370) | 246,400 | ||||
Payable for collateral received for securities on loan | 66,429,283 | ||||
Payable for investments purchased | 39,285,512 | ||||
Payable for capital shares redeemed | 12,276,682 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 5,328 | ||||
Accrued management fees | 7,727,101 | ||||
Distribution and service fees payable | 445,522 | ||||
126,415,828 | |||||
Net Assets | $ | 11,746,153,427 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 8,770,150,463 | |||
Distributable earnings | 2,976,002,964 | ||||
$ | 11,746,153,427 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $4,152,738,320 | 426,949,280 | $9.73 | ||||||||
I Class, $0.01 Par Value | $5,037,267,199 | 517,208,352 | $9.74 | ||||||||
Y Class, $0.01 Par Value | $277,966,749 | 28,508,388 | $9.75 | ||||||||
A Class, $0.01 Par Value | $861,936,720 | 88,625,480 | $9.73* | ||||||||
C Class, $0.01 Par Value | $283,784,859 | 29,183,661 | $9.72 | ||||||||
R Class, $0.01 Par Value | $49,905,760 | 5,152,776 | $9.69 | ||||||||
R5 Class, $0.01 Par Value | $61,068,745 | 6,276,771 | $9.73 | ||||||||
R6 Class, $0.01 Par Value | $1,021,479,033 | 104,777,019 | $9.75 | ||||||||
G Class, $0.01 Par Value | $6,042 | 619 | $9.76 |
*Maximum offering price $10.32 (net asset value divided by 0.9425).
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $8,081,251 from affiliates and net of foreign taxes withheld of $2,251,722) | $ | 134,777,481 | |||
Interest | 26,526,360 | ||||
Securities lending, net | 114,082 | ||||
161,417,923 | |||||
Expenses: | |||||
Management fees | 47,626,339 | ||||
Distribution and service fees: | |||||
A Class | 1,119,764 | ||||
C Class | 1,514,861 | ||||
R Class | 135,963 | ||||
Directors' fees and expenses | 162,508 | ||||
Other expenses | 1,747 | ||||
50,561,182 | |||||
Fees waived - G Class | (16) | ||||
50,561,166 | |||||
Net investment income (loss) | 110,856,757 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $1,643,357 from affiliates) (Note 4) | 472,447,979 | ||||
Forward foreign currency exchange contract transactions | 9,394,780 | ||||
Written options contract transactions | 701,286 | ||||
Foreign currency translation transactions | 175,920 | ||||
482,719,965 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $(57,285,591) from affiliates) | (96,852,768) | ||||
Forward foreign currency exchange contracts | (5,217,934) | ||||
Written options contracts | (153,538) | ||||
Translation of assets and liabilities in foreign currencies | (93,843) | ||||
(102,318,083) | |||||
Net realized and unrealized gain (loss) | 380,401,882 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 491,258,639 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 110,856,757 | $ | 245,864,202 | ||||
Net realized gain (loss) | 482,719,965 | 401,852,680 | ||||||
Change in net unrealized appreciation (depreciation) | (102,318,083) | 2,734,453,371 | ||||||
Net increase (decrease) in net assets resulting from operations | 491,258,639 | 3,382,170,253 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (44,929,520) | (89,824,916) | ||||||
I Class | (59,463,971) | (116,672,660) | ||||||
Y Class | (3,474,682) | (6,594,058) | ||||||
A Class | (8,206,980) | (14,576,470) | ||||||
C Class | (1,653,056) | (4,417,051) | ||||||
R Class | (429,558) | (1,002,485) | ||||||
R5 Class | (730,467) | (1,336,997) | ||||||
R6 Class | (12,869,357) | (24,137,281) | ||||||
G Class | (91) | (160) | ||||||
Decrease in net assets from distributions | (131,757,682) | (258,562,078) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (606,436,307) | (1,141,632,398) | ||||||
Net increase (decrease) in net assets | (246,935,350) | 1,981,975,777 | ||||||
Net Assets | ||||||||
Beginning of period | 11,993,088,777 | 10,011,113,000 | ||||||
End of period | $ | 11,746,153,427 | $ | 11,993,088,777 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. 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.
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. Exchange-traded options contracts are valued at a mean as provided by independent pricing services. 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.
15
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. For convertible bonds, the premiums attributable only to the debt instrument are amortized. 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,
16
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.
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.
17
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 September 30, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 10,207,333 | — | ��� | — | $ | 10,207,333 | ||||||||||
Convertible Preferred Stocks | 52,331,449 | — | — | — | 52,331,449 | ||||||||||||
Corporate Bonds | 263,241 | — | — | — | 263,241 | ||||||||||||
Preferred Stocks | 3,627,260 | — | — | — | 3,627,260 | ||||||||||||
Total Borrowings | $ | 66,429,283 | — | — | — | $ | 66,429,283 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 66,429,283 |
(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 September 30, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.80% to 1.00% | 0.90% | ||||||
I Class | 0.60% to 0.80% | 0.70% | ||||||
Y Class | 0.45% to 0.65% | 0.55% | ||||||
A Class | 0.80% to 1.00% | 0.90% | ||||||
C Class | 0.80% to 1.00% | 0.90% | ||||||
R Class | 0.80% to 1.00% | 0.90% | ||||||
R5 Class | 0.60% to 0.80% | 0.70% | ||||||
R6 Class | 0.45% to 0.65% | 0.55% | ||||||
G Class | 0.45% to 0.65% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.55%.
18
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 September 30, 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 $1,599,640 and $2,813,252, respectively. The effect of interfund transactions on the Statement of Operations was $484,712 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 September 30, 2021 were $1,432,884,688 and $1,778,294,817, respectively.
For the period ended September 30, 2021, the fund incurred net realized gains of $42,264,917 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.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2021 | Year ended March 31, 2021 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 3,600,000,000 | 3,600,000,000 | ||||||||||||
Sold | 17,198,477 | $ | 169,712,567 | 66,931,155 | $ | 558,165,028 | ||||||||
Issued in reinvestment of distributions | 4,461,420 | 43,660,742 | 10,296,106 | 86,745,797 | ||||||||||
Redeemed | (40,250,062) | (398,902,235) | (144,331,250) | (1,220,193,872) | ||||||||||
(18,590,165) | (185,528,926) | (67,103,989) | (575,283,047) | |||||||||||
I Class/Shares Authorized | 3,850,000,000 | 3,850,000,000 | ||||||||||||
Sold | 46,120,933 | 456,246,742 | 161,889,860 | 1,356,311,143 | ||||||||||
Issued in reinvestment of distributions | 5,789,577 | 56,715,697 | 13,122,030 | 110,995,416 | ||||||||||
Redeemed | (80,621,934) | (797,653,175) | (210,474,171) | (1,780,200,380) | ||||||||||
(28,711,424) | (284,690,736) | (35,462,281) | (312,893,821) | |||||||||||
Y Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||
Sold | 1,727,299 | 17,116,707 | 6,952,418 | 58,596,972 | ||||||||||
Issued in reinvestment of distributions | 339,764 | 3,331,767 | 748,529 | 6,345,832 | ||||||||||
Redeemed | (3,278,761) | (32,489,770) | (9,109,803) | (76,780,263) | ||||||||||
(1,211,698) | (12,041,296) | (1,408,856) | (11,837,459) | |||||||||||
A Class/Shares Authorized | 720,000,000 | 720,000,000 | ||||||||||||
Sold | 5,151,486 | 50,953,502 | 27,235,924 | 231,711,362 | ||||||||||
Issued in reinvestment of distributions | 782,889 | 7,661,713 | 1,610,153 | 13,580,326 | ||||||||||
Redeemed | (9,261,674) | (91,671,980) | (34,722,510) | (285,333,015) | ||||||||||
(3,327,299) | (33,056,765) | (5,876,433) | (40,041,327) | |||||||||||
C Class/Shares Authorized | 275,000,000 | 275,000,000 | ||||||||||||
Sold | 1,063,918 | 10,500,745 | 3,214,897 | 26,939,727 | ||||||||||
Issued in reinvestment of distributions | 160,673 | 1,572,578 | 494,459 | 4,109,198 | ||||||||||
Redeemed | (4,124,154) | (40,757,426) | (26,853,941) | (228,095,966) | ||||||||||
(2,899,563) | (28,684,103) | (23,144,585) | (197,047,041) | |||||||||||
R Class/Shares Authorized | 70,000,000 | 70,000,000 | ||||||||||||
Sold | 257,542 | 2,534,041 | 950,355 | 8,012,700 | ||||||||||
Issued in reinvestment of distributions | 44,067 | 429,516 | 116,317 | 968,783 | ||||||||||
Redeemed | (1,207,551) | (11,832,159) | (2,938,398) | (24,840,585) | ||||||||||
(905,942) | (8,868,602) | (1,871,726) | (15,859,102) | |||||||||||
R5 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||
Sold | 369,695 | 3,665,447 | 7,141,230 | 57,602,916 | ||||||||||
Issued in reinvestment of distributions | 74,642 | 730,467 | 157,987 | 1,336,997 | ||||||||||
Redeemed | (788,990) | (7,923,690) | (805,398) | (6,991,331) | ||||||||||
(344,653) | (3,527,776) | 6,493,819 | 51,948,582 | |||||||||||
R6 Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||||||
Sold | 16,684,779 | 163,902,172 | 25,998,150 | 221,466,928 | ||||||||||
Issued in reinvestment of distributions | 1,311,080 | 12,856,597 | 2,848,378 | 24,137,221 | ||||||||||
Redeemed | (23,065,850) | (226,796,963) | (33,581,581) | (286,223,492) | ||||||||||
(5,069,991) | (50,038,194) | (4,735,053) | (40,619,343) | |||||||||||
G Class/Shares Authorized | 65,000,000 | 65,000,000 | ||||||||||||
Issued in reinvestment of distributions | 9 | 91 | 19 | 160 | ||||||||||
Net increase (decrease) | (61,060,726) | $ | (606,436,307) | (133,109,085) | $ | (1,141,632,398) |
20
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 September 30, 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. | $ | 105,799 | — | $ | 736 | $ | (14,129) | $ | 90,934 | 7,914 | $ | 239 | $ | 4,511 | ||||||||||||
ONE Gas, Inc. | 238,361 | $ | 2,152 | 920 | (43,157) | 196,436 | 3,100 | 1,404 | 3,570 | |||||||||||||||||
$ | 344,160 | $ | 2,152 | $ | 1,656 | $ | (57,286) | $ | 287,370 | 11,014 | $ | 1,643 | $ | 8,081 |
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.
21
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 | |||||||||||
Auto Components | — | $ | 47,211,840 | — | |||||||
Automobiles | — | 44,534,557 | — | ||||||||
Building Products | — | 14,976,110 | — | ||||||||
Chemicals | $ | 290,073,901 | 98,120,709 | — | |||||||
Electrical Equipment | 473,432,663 | 16,379,413 | — | ||||||||
Food and Staples Retailing | 320,419,985 | 99,804,789 | — | ||||||||
Food Products | 249,103,853 | 168,666,266 | — | ||||||||
Household Durables | — | 11,549,545 | — | ||||||||
Oil, Gas and Consumable Fuels | 397,622,560 | 124,242,007 | — | ||||||||
Personal Products | — | 216,016,551 | — | ||||||||
Pharmaceuticals | 618,106,477 | 291,961,933 | — | ||||||||
Other Industries | 6,094,153,833 | — | — | ||||||||
Preferred Stocks | — | 1,169,836,675 | — | ||||||||
Convertible Bonds | — | 372,540,120 | — | ||||||||
Convertible Preferred Stocks | — | 204,189,195 | — | ||||||||
Exchange-Traded Funds | 62,533,257 | — | — | ||||||||
Corporate Bonds | — | 23,222,140 | — | ||||||||
Temporary Cash Investments | 49,602,553 | 284,552,114 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 66,429,283 | — | — | ||||||||
$ | 8,621,478,365 | $ | 3,187,803,964 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 12,304,599 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 5,328 | — | |||||||
Written Options Contracts | $ | 246,400 | — | — | |||||||
$ | 246,400 | $ | 5,328 | — |
22
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 1,664 written options contracts.
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 $1,180,577,723.
Value of Derivative Instruments as of September 30, 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 | $ | 246,400 | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 12,304,599 | Unrealized depreciation on forward foreign currency exchange contracts | 5,328 | |||||||||
$ | 12,304,599 | $ | 251,728 |
23
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 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 | $ | 701,286 | Change in net unrealized appreciation (depreciation) on written options contracts | $ | (153,538) | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 9,394,780 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | (5,217,934) | ||||||||||
$ | 10,096,066 | $ | (5,371,472) |
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.
10. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 9,423,847,656 | |||
Gross tax appreciation of investments | $ | 2,487,187,930 | |||
Gross tax depreciation of investments | (101,753,257) | ||||
Net tax appreciation (depreciation) of investments | $ | 2,385,434,673 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
24
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(3) | $9.45 | 0.08 | 0.30 | 0.38 | (0.10) | — | (0.10) | $9.73 | 4.06% | 0.90%(4) | 0.90%(4) | 1.73%(4) | 1.73%(4) | 12% | $4,152,738 | ||||||||||||||||||||||||||||||||
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(3) | $9.47 | 0.10 | 0.28 | 0.38 | (0.11) | — | (0.11) | $9.74 | 4.05% | 0.70%(4) | 0.70%(4) | 1.93%(4) | 1.93%(4) | 12% | $5,037,267 | ||||||||||||||||||||||||||||||||
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(3) | $9.48 | 0.10 | 0.29 | 0.39 | (0.12) | — | (0.12) | $9.75 | 4.12% | 0.55%(4) | 0.55%(4) | 2.08%(4) | 2.08%(4) | 12% | $277,967 | ||||||||||||||||||||||||||||||||
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(5) | $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%(6) | $216,014 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.45 | 0.07 | 0.30 | 0.37 | (0.09) | — | (0.09) | $9.73 | 3.93% | 1.15%(4) | 1.15%(4) | 1.48%(4) | 1.48%(4) | 12% | $861,937 | ||||||||||||||||||||||||||||||||
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(3) | $9.45 | 0.04 | 0.28 | 0.32 | (0.05) | — | (0.05) | $9.72 | 3.43% | 1.90%(4) | 1.90%(4) | 0.73%(4) | 0.73%(4) | 12% | $283,785 | ||||||||||||||||||||||||||||||||
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(3) | $9.41 | 0.06 | 0.30 | 0.36 | (0.08) | — | (0.08) | $9.69 | 3.81% | 1.40%(4) | 1.40%(4) | 1.23%(4) | 1.23%(4) | 12% | $49,906 | ||||||||||||||||||||||||||||||||
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(3) | $9.46 | 0.10 | 0.28 | 0.38 | (0.11) | – | (0.11) | $9.73 | 4.05% | 0.70%(4) | 0.70%(4) | 1.93%(4) | 1.93%(4) | 12% | $61,069 | ||||||||||||||||||||||||||||||||
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(5) | $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%(6) | $653 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.47 | 0.10 | 0.30 | 0.40 | (0.12) | — | (0.12) | $9.75 | 4.23% | 0.55%(4) | 0.55%(4) | 2.08%(4) | 2.08%(4) | 12% | $1,021,479 | ||||||||||||||||||||||||||||||||
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(3) | $9.48 | 0.14 | 0.29 | 0.43 | (0.15) | — | (0.15) | $9.76 | 4.51% | 0.00%(4)(7) | 0.55%(4) | 2.63%(4) | 2.08%(4) | 12% | $6 | ||||||||||||||||||||||||||||||||
2021 | $7.16 | 0.27 | 2.32 | 2.59 | (0.27) | — | (0.27) | $9.48 | 36.61% | 0.00%(7) | 0.56% | 3.01% | 2.45% | 52% | $6 | ||||||||||||||||||||||||||||||||
2020(8) | $9.06 | 0.18 | (1.43) | (1.25) | (0.18) | (0.47) | (0.65) | $7.16 | (15.32)% | 0.00%(4)(7) | 0.56%(4) | 3.02%(4) | 2.46%(4) | 85%(9) | $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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)April 10, 2017 (commencement of sale) through March 31, 2018.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
(7)Ratio was less than 0.005%.
(8)August 1, 2019 (commencement of sale) through March 31, 2020.
(9)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2020.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
29
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
30
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
31
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
33
Notes |
34
Notes |
35
Notes |
36
![]() | ||||||||
Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Capital Portfolios, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-90802 2111 |
![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 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 | |||||
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image27a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image27a.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended September 30, 2021. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Stocks, Bonds Advanced Amid Growing Concerns
Broad market sentiment was upbeat to start the period. Investors generally looked beyond pandemic-related challenges to improving growth and corporate earnings data. Ongoing support from leading central banks and governments helped maintain investor confidence in the financial markets and strengthen the overall global economic outlook.
However, a summer surge in COVID-19 cases arising from the delta variant triggered worries about the recovery’s sustainability. Most economic and corporate earnings data remained favorable, but the labor market was a notable exception. Despite record job openings, job growth remained weak, complicating reopening efforts for many businesses.
In this climate, U.S. Treasury yields generally declined through early August. From there, yields rose amid soaring inflation triggered by mounting supply chain disruptions and rising energy and housing prices. Congressional debate on the debt ceiling and the $3.5 trillion "human infrastructure" bill added to inflation worries. Year-over-year headline inflation reached 5.4% in September, matching a 13-year high.
Meanwhile, in September, the Federal Reserve hinted it may start scaling back its monetary support by year-end. This prompted a spike in Treasury yields and a sell-off among stocks. A credit crisis in China’s troubled property sector also weighed on stocks. Overall, though, strong performance in the first half of the reporting period led to positive six-month returns for most broad stock and bond indices.
Several Factors Shaping Market Dynamics
The return to pre-pandemic life is progressing, albeit somewhat cautiously due to COVID-19’s delta variant. As the economy and markets respond to this fluid backdrop, investors will face opportunities and ongoing challenges. Economic growth, inflation, the virus’s trajectory, supply chain normalization and fiscal and monetary policy likely will sway market dynamics.
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,
![image12.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image12.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 98.1% | ||||
Temporary Cash Investments | 1.6% | ||||
Other Assets and Liabilities | 0.3% | ||||
Top Five Industries | % of net assets | ||||
Pharmaceuticals | 10.1% | ||||
Insurance | 10.0% | ||||
Health Care Equipment and Supplies | 8.3% | ||||
Banks | 6.4% | ||||
Oil, Gas and Consumable Fuels | 5.3% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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.
4
Beginning Account Value 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,036.40 | $4.24 | 0.83% | ||||||||||
I Class | $1,000 | $1,037.40 | $3.22 | 0.63% | ||||||||||
A Class | $1,000 | $1,035.10 | $5.51 | 1.08% | ||||||||||
C Class | $1,000 | $1,031.20 | $9.32 | 1.83% | ||||||||||
R Class | $1,000 | $1,033.70 | $6.78 | 1.33% | ||||||||||
R5 Class | $1,000 | $1,038.20 | $3.22 | 0.63% | ||||||||||
R6 Class | $1,000 | $1,038.10 | $2.45 | 0.48% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.91 | $4.20 | 0.83% | ||||||||||
I Class | $1,000 | $1,021.91 | $3.19 | 0.63% | ||||||||||
A Class | $1,000 | $1,019.65 | $5.47 | 1.08% | ||||||||||
C Class | $1,000 | $1,015.89 | $9.25 | 1.83% | ||||||||||
R Class | $1,000 | $1,018.40 | $6.73 | 1.33% | ||||||||||
R5 Class | $1,000 | $1,021.91 | $3.19 | 0.63% | ||||||||||
R6 Class | $1,000 | $1,022.66 | $2.43 | 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 183, 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.
5
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares | Value | |||||||
COMMON STOCKS — 98.1% | ||||||||
Aerospace and Defense — 3.6% | ||||||||
Lockheed Martin Corp. | 39,945 | $ | 13,785,019 | |||||
Raytheon Technologies Corp. | 223,662 | 19,225,986 | ||||||
33,011,005 | ||||||||
Banks — 6.4% | ||||||||
JPMorgan Chase & Co. | 235,963 | 38,624,784 | ||||||
Truist Financial Corp. | 354,928 | 20,816,527 | ||||||
59,441,311 | ||||||||
Beverages — 1.7% | ||||||||
PepsiCo, Inc. | 102,474 | 15,413,114 | ||||||
Capital Markets — 3.0% | ||||||||
Bank of New York Mellon Corp. (The) | 532,795 | 27,620,093 | ||||||
Communications Equipment — 5.2% | ||||||||
Cisco Systems, Inc. | 664,227 | 36,153,875 | ||||||
F5 Networks, Inc.(1) | 62,014 | 12,327,143 | ||||||
48,481,018 | ||||||||
Containers and Packaging — 1.3% | ||||||||
Sonoco Products Co. | 208,348 | 12,413,374 | ||||||
Diversified Financial Services — 4.0% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 136,470 | 37,248,122 | ||||||
Diversified Telecommunication Services — 3.8% | ||||||||
Verizon Communications, Inc. | 649,967 | 35,104,718 | ||||||
Electric Utilities — 3.4% | ||||||||
Duke Energy Corp. | 147,611 | 14,405,358 | ||||||
Pinnacle West Capital Corp. | 231,679 | 16,764,292 | ||||||
31,169,650 | ||||||||
Electrical Equipment — 3.2% | ||||||||
Emerson Electric Co. | 228,458 | 21,520,744 | ||||||
Hubbell, Inc. | 45,075 | 8,143,700 | ||||||
29,664,444 | ||||||||
Electronic Equipment, Instruments and Components — 1.0% | ||||||||
TE Connectivity Ltd. | 65,830 | 9,033,193 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.7% | ||||||||
American Tower Corp. | 61,101 | 16,216,816 | ||||||
Food and Staples Retailing — 1.6% | ||||||||
Walmart, Inc. | 109,183 | 15,217,927 | ||||||
Food Products — 3.9% | ||||||||
Conagra Brands, Inc. | 556,848 | 18,860,442 | ||||||
Mondelez International, Inc., Class A | 302,393 | 17,593,224 | ||||||
36,453,666 | ||||||||
Gas Utilities — 2.9% | ||||||||
Atmos Energy Corp. | 307,572 | 27,127,850 | ||||||
Health Care Equipment and Supplies — 8.3% | ||||||||
Becton Dickinson and Co. | 84,857 | 20,859,548 | ||||||
Medtronic plc | 290,375 | 36,398,506 | ||||||
Zimmer Biomet Holdings, Inc. | 132,881 | 19,448,463 | ||||||
76,706,517 |
6
Shares | Value | |||||||
Health Care Providers and Services — 1.8% | ||||||||
UnitedHealth Group, Inc. | 43,124 | $ | 16,850,272 | |||||
Health Care Technology — 2.8% | ||||||||
Cerner Corp. | 362,287 | 25,548,479 | ||||||
Household Products — 2.6% | ||||||||
Colgate-Palmolive Co. | 152,319 | 11,512,270 | ||||||
Kimberly-Clark Corp. | 94,731 | 12,546,174 | ||||||
24,058,444 | ||||||||
Industrial Conglomerates — 2.8% | ||||||||
Siemens AG | 159,531 | 26,091,454 | ||||||
Insurance — 10.0% | ||||||||
Aflac, Inc. | 312,466 | 16,288,853 | ||||||
Allstate Corp. (The) | 111,374 | 14,179,024 | ||||||
Chubb Ltd. | 118,211 | 20,507,244 | ||||||
Marsh & McLennan Cos., Inc. | 128,037 | 19,388,643 | ||||||
Reinsurance Group of America, Inc. | 197,081 | 21,927,232 | ||||||
92,290,996 | ||||||||
Oil, Gas and Consumable Fuels — 5.3% | ||||||||
Chevron Corp. | 205,382 | 20,836,004 | ||||||
TotalEnergies SE, ADR | 583,663 | 27,974,967 | ||||||
48,810,971 | ||||||||
Personal Products — 4.2% | ||||||||
Unilever plc, ADR | 720,885 | 39,086,385 | ||||||
Pharmaceuticals — 10.1% | ||||||||
Johnson & Johnson | 324,545 | 52,414,018 | ||||||
Merck & Co., Inc. | 285,085 | 21,412,734 | ||||||
Roche Holding AG | 53,660 | 19,584,277 | ||||||
93,411,029 | ||||||||
Semiconductors and Semiconductor Equipment — 1.4% | ||||||||
Texas Instruments, Inc. | 69,129 | 13,287,285 | ||||||
Software — 2.1% | ||||||||
Open Text Corp. | 267,734 | 13,049,355 | ||||||
Oracle Corp. (New York) | 76,541 | 6,669,017 | ||||||
19,718,372 | ||||||||
TOTAL COMMON STOCKS (Cost $766,296,222) | 909,476,505 | |||||||
TEMPORARY CASH INVESTMENTS — 1.6% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $2,826,783), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $2,770,472) | 2,770,470 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $9,421,809), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $9,237,003) | 9,237,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 3,222,394 | 3,222,394 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $15,229,864) | 15,229,864 | |||||||
TOTAL INVESTMENT SECURITIES — 99.7% (Cost $781,526,086) | 924,706,369 | |||||||
OTHER ASSETS AND LIABILITIES — 0.3% | 2,553,790 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 927,260,159 |
7
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 16,515,886 | CHF | 15,195,606 | Morgan Stanley | 12/30/21 | $ | 172,618 | |||||||||||||
USD | 47,279,814 | EUR | 40,217,945 | Credit Suisse AG | 12/31/21 | 600,554 | ||||||||||||||
USD | 984,009 | GBP | 730,865 | JPMorgan Chase Bank N.A. | 12/31/21 | (993) | ||||||||||||||
USD | 33,200,473 | GBP | 24,317,275 | JPMorgan Chase Bank N.A. | 12/31/21 | 427,565 | ||||||||||||||
$ | 1,199,744 |
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.
8
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities, at value (cost of $781,526,086) | $ | 924,706,369 | |||
Receivable for investments sold | 1,785,029 | ||||
Receivable for capital shares sold | 142,592 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 1,200,737 | ||||
Dividends and interest receivable | 1,941,628 | ||||
929,776,355 | |||||
Liabilities | |||||
Payable for investments purchased | 1,033,976 | ||||
Payable for capital shares redeemed | 875,291 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 993 | ||||
Accrued management fees | 596,009 | ||||
Distribution and service fees payable | 9,927 | ||||
2,516,196 | |||||
Net Assets | $ | 927,260,159 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 667,342,681 | |||
Distributable earnings | 259,917,478 | ||||
$ | 927,260,159 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $674,403,119 | 55,629,326 | $12.12 | ||||||||
I Class, $0.01 Par Value | $42,370,900 | 3,492,095 | $12.13 | ||||||||
A Class, $0.01 Par Value | $33,520,160 | 2,766,203 | $12.12* | ||||||||
C Class, $0.01 Par Value | $1,134,748 | 93,599 | $12.12 | ||||||||
R Class, $0.01 Par Value | $4,530,751 | 373,436 | $12.13 | ||||||||
R5 Class, $0.01 Par Value | $7,257 | 598 | $12.14 | ||||||||
R6 Class, $0.01 Par Value | $171,293,224 | 14,123,970 | $12.13 |
*Maximum offering price $12.86 (net asset value divided by 0.9425).
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $169,359) | $ | 11,682,312 | |||
Interest | 1,443 | ||||
11,683,755 | |||||
Expenses: | |||||
Management fees | 3,661,385 | ||||
Distribution and service fees: | |||||
A Class | 43,999 | ||||
C Class | 6,231 | ||||
R Class | 11,068 | ||||
Directors' fees and expenses | 12,982 | ||||
3,735,665 | |||||
Net investment income (loss) | 7,948,090 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 36,198,168 | ||||
Forward foreign currency exchange contract transactions | 1,369,837 | ||||
Foreign currency translation transactions | 10,668 | ||||
37,578,673 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (9,558,051) | ||||
Forward foreign currency exchange contracts | (387,269) | ||||
Translation of assets and liabilities in foreign currencies | (1,076) | ||||
(9,946,396) | |||||
Net realized and unrealized gain (loss) | 27,632,277 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 35,580,367 |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 7,948,090 | $ | 15,051,268 | ||||
Net realized gain (loss) | 37,578,673 | 95,942,910 | ||||||
Change in net unrealized appreciation (depreciation) | (9,946,396) | 178,303,179 | ||||||
Net increase (decrease) in net assets resulting from operations | 35,580,367 | 289,297,357 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (6,171,391) | (13,444,946) | ||||||
I Class | (425,251) | (907,504) | ||||||
A Class | (261,538) | (654,706) | ||||||
C Class | (4,686) | (28,683) | ||||||
R Class | (28,465) | (65,478) | ||||||
R5 Class | (72) | (157) | ||||||
R6 Class | (1,930,714) | (4,204,577) | ||||||
Decrease in net assets from distributions | (8,822,117) | (19,306,051) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (23,334,505) | 26,038,913 | ||||||
Net increase (decrease) in net assets | 3,423,745 | 296,030,219 | ||||||
Net Assets | ||||||||
Beginning of period | 923,836,414 | 627,806,195 | ||||||
End of period | $ | 927,260,159 | $ | 923,836,414 |
See Notes to Financial Statements.
11
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Focused Large 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, 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.
12
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.
13
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, 59% 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 September 30, 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 September 30, 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.
14
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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended September 30, 2021 were $212,409,897 and $231,231,299, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2021 | Year ended March 31, 2021 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 450,000,000 | 450,000,000 | ||||||||||||
Sold | 3,134,071 | $ | 37,855,690 | 6,869,368 | $ | 71,014,401 | ||||||||
Issued in reinvestment of distributions | 502,250 | 6,102,453 | 1,275,533 | 13,275,397 | ||||||||||
Redeemed | (2,701,893) | (33,288,594) | (8,864,404) | (89,779,524) | ||||||||||
934,428 | 10,669,549 | (719,503) | (5,489,726) | |||||||||||
I Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||
Sold | 203,295 | 2,514,445 | 2,898,219 | 29,493,139 | ||||||||||
Issued in reinvestment of distributions | 32,839 | 399,330 | 80,978 | 847,978 | ||||||||||
Redeemed | (323,103) | (3,987,193) | (1,836,263) | (19,395,476) | ||||||||||
(86,969) | (1,073,418) | 1,142,934 | 10,945,641 | |||||||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 119,055 | 1,462,264 | 391,949 | 4,039,777 | ||||||||||
Issued in reinvestment of distributions | 19,166 | 232,709 | 56,411 | 586,532 | ||||||||||
Redeemed | (322,523) | (3,993,561) | (698,072) | (7,022,228) | ||||||||||
(184,302) | (2,298,588) | (249,712) | (2,395,919) | |||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Sold | 3,082 | 37,873 | 32,179 | 311,687 | ||||||||||
Issued in reinvestment of distributions | 356 | 4,332 | 2,559 | 26,555 | ||||||||||
Redeemed | (24,934) | (304,676) | (202,085) | (2,101,488) | ||||||||||
(21,496) | (262,471) | (167,347) | (1,763,246) | |||||||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 56,048 | 690,303 | 104,335 | 1,050,787 | ||||||||||
Issued in reinvestment of distributions | 2,230 | 27,114 | 5,625 | 58,475 | ||||||||||
Redeemed | (23,987) | (295,471) | (106,016) | (1,064,369) | ||||||||||
34,291 | 421,946 | 3,944 | 44,893 | |||||||||||
R5 Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Issued in reinvestment of distributions | 6 | 72 | 15 | 157 | ||||||||||
R6 Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||
Sold | 669,394 | 8,240,005 | 7,361,106 | 75,369,267 | ||||||||||
Issued in reinvestment of distributions | 158,387 | 1,924,684 | 399,917 | 4,192,187 | ||||||||||
Redeemed | (3,296,758) | (40,956,284) | (5,719,918) | (54,864,341) | ||||||||||
(2,468,977) | (30,791,595) | 2,041,105 | 24,697,113 | |||||||||||
Net increase (decrease) | (1,793,019) | $ | (23,334,505) | 2,051,436 | $ | 26,038,913 |
15
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 | $ | 863,800,774 | $ | 45,675,731 | — | ||||||
Temporary Cash Investments | 3,222,394 | 12,007,470 | — | ||||||||
$ | 867,023,168 | $ | 57,683,201 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,200,737 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 993 | — |
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 $119,744,219.
16
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $1,200,737 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $993 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $1,369,837 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(387,269) 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 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 components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 792,078,763 | |||
Gross tax appreciation of investments | $ | 143,438,815 | |||
Gross tax depreciation of investments | (10,811,209) | ||||
Net tax appreciation (depreciation) of investments | $ | 132,627,606 |
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 | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $11.80 | 0.10 | 0.33 | 0.43 | (0.11) | — | (0.11) | $12.12 | 3.64% | 0.83%(4) | 1.55%(4) | 22% | $674,403 | ||||||||||||||||||||||||||||
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(3) | $11.81 | 0.11 | 0.33 | 0.44 | (0.12) | — | (0.12) | $12.13 | 3.74% | 0.63%(4) | 1.75%(4) | 22% | $42,371 | ||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $11.80 | 0.08 | 0.33 | 0.41 | (0.09) | — | (0.09) | $12.12 | 3.51% | 1.08%(4) | 1.30%(4) | 22% | $33,520 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $11.80 | 0.03 | 0.34 | 0.37 | (0.05) | — | (0.05) | $12.12 | 3.12% | 1.83%(4) | 0.55%(4) | 22% | $1,135 | ||||||||||||||||||||||||||||
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(3) | $11.81 | 0.07 | 0.33 | 0.40 | (0.08) | — | (0.08) | $12.13 | 3.37% | 1.33%(4) | 1.05%(4) | 22% | $4,531 | ||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $11.81 | 0.11 | 0.34 | 0.45 | (0.12) | — | (0.12) | $12.14 | 3.82% | 0.63%(4) | 1.75%(4) | 22% | $7 | ||||||||||||||||||||||||||||
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(5) | $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%(6) | $5 | ||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $11.81 | 0.12 | 0.33 | 0.45 | (0.13) | — | (0.13) | $12.13 | 3.81% | 0.48%(4) | 1.90%(4) | 22% | $171,293 | ||||||||||||||||||||||||||||
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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)April 10, 2017 (commencement of sale) through March 31, 2018.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
22
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
23
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
24
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
25
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
26
Notes |
27
Notes |
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-SAN-90803 2111 |
![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 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 | |||||
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image27a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image27a.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended September 30, 2021. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Stocks, Bonds Advanced Amid Growing Concerns
Broad market sentiment was upbeat to start the period. Investors generally looked beyond pandemic-related challenges to improving growth and corporate earnings data. Ongoing support from leading central banks and governments helped maintain investor confidence in the financial markets and strengthen the overall global economic outlook.
However, a summer surge in COVID-19 cases arising from the delta variant triggered worries about the recovery’s sustainability. Most economic and corporate earnings data remained favorable, but the labor market was a notable exception. Despite record job openings, job growth remained weak, complicating reopening efforts for many businesses.
In this climate, U.S. Treasury yields generally declined through early August. From there, yields rose amid soaring inflation triggered by mounting supply chain disruptions and rising energy and housing prices. Congressional debate on the debt ceiling and the $3.5 trillion "human infrastructure" bill added to inflation worries. Year-over-year headline inflation reached 5.4% in September, matching a 13-year high.
Meanwhile, in September, the Federal Reserve hinted it may start scaling back its monetary support by year-end. This prompted a spike in Treasury yields and a sell-off among stocks. A credit crisis in China’s troubled property sector also weighed on stocks. Overall, though, strong performance in the first half of the reporting period led to positive six-month returns for most broad stock and bond indices.
Several Factors Shaping Market Dynamics
The return to pre-pandemic life is progressing, albeit somewhat cautiously due to COVID-19’s delta variant. As the economy and markets respond to this fluid backdrop, investors will face opportunities and ongoing challenges. Economic growth, inflation, the virus’s trajectory, supply chain normalization and fiscal and monetary policy likely will sway market dynamics.
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,
![image12.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image12.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 97.9% | ||||
Exchange-Traded Funds | 0.4% | ||||
Temporary Cash Investments | 1.4% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.4% | ||||
Other Assets and Liabilities | (0.1)% | ||||
Top Five Industries* | % of net assets | ||||
Health Care Providers and Services | 8.6% | ||||
Capital Markets | 7.3% | ||||
Insurance | 6.9% | ||||
Equity Real Estate Investment Trusts (REITs) | 5.7% | ||||
Health Care Equipment and Supplies | 5.6% |
*Exposure indicated excludes Exchange-Traded Funds. The Schedule of Investments provides additional information on the fund's portfolio holdings.
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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.
4
Beginning Account Value 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,024.30 | $4.92 | 0.97% | ||||||||||
I Class | $1,000 | $1,025.80 | $3.91 | 0.77% | ||||||||||
Y Class | $1,000 | $1,026.60 | $3.15 | 0.62% | ||||||||||
A Class | $1,000 | $1,023.00 | $6.19 | 1.22% | ||||||||||
C Class | $1,000 | $1,020.00 | $9.98 | 1.97% | ||||||||||
R Class | $1,000 | $1,021.80 | $7.45 | 1.47% | ||||||||||
R5 Class | $1,000 | $1,025.80 | $3.91 | 0.77% | ||||||||||
R6 Class | $1,000 | $1,026.60 | $3.15 | 0.62% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.21 | $4.91 | 0.97% | ||||||||||
I Class | $1,000 | $1,021.21 | $3.90 | 0.77% | ||||||||||
Y Class | $1,000 | $1,021.96 | $3.14 | 0.62% | ||||||||||
A Class | $1,000 | $1,018.95 | $6.17 | 1.22% | ||||||||||
C Class | $1,000 | $1,015.19 | $9.95 | 1.97% | ||||||||||
R Class | $1,000 | $1,017.70 | $7.44 | 1.47% | ||||||||||
R5 Class | $1,000 | $1,021.21 | $3.90 | 0.77% | ||||||||||
R6 Class | $1,000 | $1,021.96 | $3.14 | 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 183, 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.
5
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares | Value | |||||||
COMMON STOCKS — 97.9% | ||||||||
Aerospace and Defense — 2.6% | ||||||||
BAE Systems plc | 11,987,807 | $ | 90,796,303 | |||||
General Dynamics Corp. | 631,174 | 123,729,039 | ||||||
214,525,342 | ||||||||
Airlines — 1.8% | ||||||||
Southwest Airlines Co.(1) | 2,918,175 | 150,081,740 | ||||||
Auto Components — 1.9% | ||||||||
BorgWarner, Inc. | 2,632,065 | 113,731,528 | ||||||
Bridgestone Corp. | 864,300 | 40,891,065 | ||||||
154,622,593 | ||||||||
Automobiles — 1.0% | ||||||||
Honda Motor Co. Ltd., ADR(2) | 2,591,413 | 79,478,637 | ||||||
Banks — 5.4% | ||||||||
Commerce Bancshares, Inc. | 226,581 | 15,788,164 | ||||||
Eastern Bankshares, Inc. | 506,124 | 10,274,317 | ||||||
First Hawaiian, Inc. | 2,314,375 | 67,926,906 | ||||||
M&T Bank Corp. | 645,064 | 96,333,858 | ||||||
Prosperity Bancshares, Inc. | 889,975 | 63,303,922 | ||||||
Truist Financial Corp. | 2,484,992 | 145,744,781 | ||||||
Westamerica Bancorporation | 891,721 | 50,168,223 | ||||||
449,540,171 | ||||||||
Building Products† | ||||||||
Johnson Controls International plc | 53,744 | 3,658,892 | ||||||
Capital Markets — 7.3% | ||||||||
Ameriprise Financial, Inc. | 324,137 | 85,611,065 | ||||||
Bank of New York Mellon Corp. (The) | 4,077,885 | 211,397,558 | ||||||
Northern Trust Corp. | 1,694,543 | 182,688,681 | ||||||
State Street Corp. | 548,802 | 46,494,505 | ||||||
T. Rowe Price Group, Inc. | 395,732 | 77,840,484 | ||||||
604,032,293 | ||||||||
Chemicals — 0.9% | ||||||||
Axalta Coating Systems Ltd.(1) | 2,473,012 | 72,187,220 | ||||||
Commercial Services and Supplies — 0.8% | ||||||||
Republic Services, Inc. | 545,570 | 65,501,134 | ||||||
Communications Equipment — 1.9% | ||||||||
F5 Networks, Inc.(1) | 512,786 | 101,931,601 | ||||||
Juniper Networks, Inc. | 2,083,407 | 57,335,361 | ||||||
159,266,962 | ||||||||
Containers and Packaging — 3.1% | ||||||||
Amcor plc | 2,950,434 | 34,195,530 | ||||||
Packaging Corp. of America | 503,605 | 69,215,471 | ||||||
Sonoco Products Co. | 2,547,136 | 151,758,363 | ||||||
255,169,364 | ||||||||
Electric Utilities — 4.7% | ||||||||
Edison International | 2,584,355 | 143,354,172 | ||||||
Evergy, Inc. | 733,425 | 45,619,035 | ||||||
Eversource Energy | 640,844 | 52,395,405 |
6
Shares | Value | |||||||
Pinnacle West Capital Corp. | 1,701,789 | $ | 123,141,452 | |||||
Xcel Energy, Inc. | 339,721 | 21,232,563 | ||||||
385,742,627 | ||||||||
Electrical Equipment — 4.0% | ||||||||
Emerson Electric Co. | 1,494,789 | 140,809,124 | ||||||
Hubbell, Inc. | 357,763 | 64,637,041 | ||||||
nVent Electric plc | 3,963,754 | 128,148,167 | ||||||
333,594,332 | ||||||||
Electronic Equipment, Instruments and Components — 0.2% | ||||||||
TE Connectivity Ltd. | 146,401 | 20,089,145 | ||||||
Energy Equipment and Services — 1.0% | ||||||||
Baker Hughes Co. | 3,320,372 | 82,112,800 | ||||||
Equity Real Estate Investment Trusts (REITs) — 5.7% | ||||||||
Equinix, Inc. | 81,682 | 64,539,399 | ||||||
Essex Property Trust, Inc. | 237,385 | 75,901,480 | ||||||
Healthcare Trust of America, Inc., Class A | 3,308,313 | 98,124,564 | ||||||
Healthpeak Properties, Inc. | 3,310,091 | 110,821,847 | ||||||
MGM Growth Properties LLC, Class A | 2,088,895 | 80,004,678 | ||||||
Regency Centers Corp. | 185,086 | 12,461,840 | ||||||
Weyerhaeuser Co. | 756,963 | 26,925,174 | ||||||
468,778,982 | ||||||||
Food and Staples Retailing — 2.3% | ||||||||
Koninklijke Ahold Delhaize NV | 4,104,499 | 136,672,147 | ||||||
Sysco Corp. | 667,537 | 52,401,655 | ||||||
189,073,802 | ||||||||
Food Products — 4.9% | ||||||||
Conagra Brands, Inc. | 4,713,443 | 159,644,315 | ||||||
General Mills, Inc. | 976,240 | 58,398,677 | ||||||
J.M. Smucker Co. (The) | 543,688 | 65,258,871 | ||||||
Kellogg Co. | 901,108 | 57,598,823 | ||||||
Orkla ASA | 6,883,012 | 63,173,618 | ||||||
404,074,304 | ||||||||
Gas Utilities — 1.4% | ||||||||
Atmos Energy Corp. | 710,560 | 62,671,392 | ||||||
Spire, Inc. | 932,342 | 57,040,684 | ||||||
119,712,076 | ||||||||
Health Care Equipment and Supplies — 5.6% | ||||||||
Baxter International, Inc. | 51,927 | 4,176,489 | ||||||
Becton Dickinson and Co. | 345,537 | 84,939,905 | ||||||
Envista Holdings Corp.(1) | 1,281,666 | 53,586,456 | ||||||
Koninklijke Philips NV | 1,442,487 | 64,104,122 | ||||||
Zimmer Biomet Holdings, Inc. | 1,775,661 | 259,885,744 | ||||||
466,692,716 | ||||||||
Health Care Providers and Services — 8.6% | ||||||||
Cardinal Health, Inc. | 2,497,318 | 123,517,348 | ||||||
Centene Corp.(1) | 954,139 | 59,452,401 | ||||||
Henry Schein, Inc.(1) | 1,765,819 | 134,484,775 | ||||||
McKesson Corp. | 574,425 | 114,528,857 | ||||||
Quest Diagnostics, Inc. | 951,756 | 138,299,664 | ||||||
Universal Health Services, Inc., Class B | 1,037,575 | 143,569,253 | ||||||
713,852,298 | ||||||||
Health Care Technology — 1.8% | ||||||||
Cerner Corp. | 2,140,975 | 150,981,557 |
7
Shares | Value | |||||||
Hotels, Restaurants and Leisure — 1.5% | ||||||||
Cracker Barrel Old Country Store, Inc. | 303,193 | $ | 42,398,509 | |||||
Sodexo SA(1) | 976,474 | 85,339,561 | ||||||
127,738,070 | ||||||||
Household Products — 1.0% | ||||||||
Kimberly-Clark Corp. | 634,509 | 84,034,372 | ||||||
Insurance — 6.9% | ||||||||
Aflac, Inc. | 2,567,510 | 133,844,297 | ||||||
Allstate Corp. (The) | 598,762 | 76,228,390 | ||||||
Arthur J. Gallagher & Co. | 219,275 | 32,595,229 | ||||||
Chubb Ltd. | 1,128,771 | 195,819,193 | ||||||
Reinsurance Group of America, Inc. | 1,196,528 | 133,125,705 | ||||||
571,612,814 | ||||||||
IT Services — 1.1% | ||||||||
Amdocs Ltd. | 681,605 | 51,604,315 | ||||||
Euronet Worldwide, Inc.(1) | 316,290 | 40,257,391 | ||||||
91,861,706 | ||||||||
Leisure Products — 0.7% | ||||||||
Polaris, Inc. | 509,514 | 60,968,445 | ||||||
Machinery — 2.6% | ||||||||
Crane Co. | 157,841 | 14,964,905 | ||||||
Cummins, Inc. | 184,098 | 41,341,047 | ||||||
IMI plc | 742,724 | 16,509,959 | ||||||
Oshkosh Corp. | 678,495 | 69,457,533 | ||||||
PACCAR, Inc. | 903,699 | 71,319,925 | ||||||
213,593,369 | ||||||||
Media — 1.6% | ||||||||
Fox Corp., Class B | 3,487,782 | 129,466,468 | ||||||
Multi-Utilities — 1.4% | ||||||||
NorthWestern Corp. | 2,060,773 | 118,082,293 | ||||||
Multiline Retail — 1.4% | ||||||||
Dollar Tree, Inc.(1) | 1,186,069 | 113,530,525 | ||||||
Oil, Gas and Consumable Fuels — 3.8% | ||||||||
ConocoPhillips | 2,341,122 | 158,657,838 | ||||||
Devon Energy Corp. | 2,938,353 | 104,340,915 | ||||||
Pioneer Natural Resources Co. | 332,131 | 55,303,133 | ||||||
318,301,886 | ||||||||
Paper and Forest Products — 1.3% | ||||||||
Mondi plc | 4,492,626 | 110,096,232 | ||||||
Road and Rail — 0.7% | ||||||||
Heartland Express, Inc. | 3,445,010 | 55,189,060 | ||||||
Software — 1.6% | ||||||||
CDK Global, Inc. | 1,272,382 | 54,139,854 | ||||||
Open Text Corp. | 1,665,264 | 81,164,967 | ||||||
135,304,821 | ||||||||
Specialty Retail — 1.9% | ||||||||
Advance Auto Parts, Inc. | 769,324 | 160,704,090 | ||||||
Technology Hardware, Storage and Peripherals — 1.3% | ||||||||
HP, Inc. | 3,835,154 | 104,929,813 | ||||||
Thrifts and Mortgage Finance — 0.4% | ||||||||
Capitol Federal Financial, Inc. | 3,108,787 | 35,719,963 | ||||||
Trading Companies and Distributors — 1.8% | ||||||||
Beacon Roofing Supply, Inc.(1) | 669,937 | 31,996,191 |
8
Shares/Principal Amount | Value | |||||||
MSC Industrial Direct Co., Inc., Class A | 1,498,223 | $ | 120,142,502 | |||||
152,138,693 | ||||||||
TOTAL COMMON STOCKS (Cost $6,484,745,763) | 8,126,041,607 | |||||||
EXCHANGE-TRADED FUNDS — 0.4% | ||||||||
iShares Russell Mid-Cap Value ETF (Cost $29,069,182) | 248,437 | 28,135,490 | ||||||
TEMPORARY CASH INVESTMENTS — 1.4% | ||||||||
Federal Farm Credit Discount Notes, 0.01%, 10/1/21(3) | $ | 25,000,000 | 25,000,000 | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $17,334,804), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $16,989,487) | 16,989,478 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125% - 3.375%, 11/15/41 - 11/15/48, valued at $57,776,894), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $56,644,016) | 56,644,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 19,760,829 | 19,760,829 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $118,394,307) | 118,394,307 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(4) — 0.4% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $32,520,128) | 32,520,128 | 32,520,128 | ||||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $6,664,729,380) | 8,305,091,532 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (7,121,249) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 8,297,970,283 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 254,601,304 | EUR | 216,573,213 | Credit Suisse AG | 12/31/21 | $ | 3,233,977 | |||||||||||||
GBP | 3,333,817 | USD | 4,569,513 | JPMorgan Chase Bank N.A. | 12/31/21 | (76,457) | ||||||||||||||
GBP | 4,291,852 | USD | 5,808,520 | JPMorgan Chase Bank N.A. | 12/31/21 | (24,299) | ||||||||||||||
USD | 197,641,578 | GBP | 144,760,125 | JPMorgan Chase Bank N.A. | 12/31/21 | 2,545,281 | ||||||||||||||
JPY | 302,828,462 | USD | 2,741,637 | Bank of America N.A. | 12/30/21 | (18,152) | ||||||||||||||
USD | 109,768,066 | JPY | 12,022,786,513 | Bank of America N.A. | 12/30/21 | 1,641,217 | ||||||||||||||
USD | 52,655,918 | NOK | 454,822,550 | UBS AG | 12/30/21 | 665,493 | ||||||||||||||
$ | 7,967,060 |
9
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
JPY | - | Japanese Yen | ||||||
NOK | - | Norwegian Krone | ||||||
USD | - | United States Dollar |
†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 $40,267,563. 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 $41,574,911, which includes securities collateral of $9,054,783.
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities, at value (cost of $6,632,209,252) — including $40,267,563 of securities on loan | $ | 8,272,571,404 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $32,520,128) | 32,520,128 | ||||
Total investment securities, at value (cost of $6,664,729,380) | 8,305,091,532 | ||||
Foreign currency holdings, at value (cost of $995,900) | 995,198 | ||||
Receivable for investments sold | 37,628,001 | ||||
Receivable for capital shares sold | 3,532,756 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 8,085,968 | ||||
Dividends and interest receivable | 15,802,108 | ||||
Securities lending receivable | 10,134 | ||||
8,371,145,697 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 32,520,128 | ||||
Payable for investments purchased | 22,731,075 | ||||
Payable for capital shares redeemed | 12,227,152 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 118,908 | ||||
Accrued management fees | 5,437,338 | ||||
Distribution and service fees payable | 140,813 | ||||
73,175,414 | |||||
Net Assets | $ | 8,297,970,283 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 5,760,923,138 | |||
Distributable earnings | 2,537,047,145 | ||||
$ | 8,297,970,283 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $2,343,705,215 | 121,093,718 | $19.35 | ||||||||
I Class, $0.01 Par Value | $1,759,128,569 | 90,811,193 | $19.37 | ||||||||
Y Class, $0.01 Par Value | $193,080,562 | 9,962,727 | $19.38 | ||||||||
A Class, $0.01 Par Value | $310,031,428 | 16,052,490 | $19.31* | ||||||||
C Class, $0.01 Par Value | $44,116,769 | 2,312,711 | $19.08 | ||||||||
R Class, $0.01 Par Value | $96,762,239 | 5,025,769 | $19.25 | ||||||||
R5 Class, $0.01 Par Value | $58,973,287 | 3,043,549 | $19.38 | ||||||||
R6 Class, $0.01 Par Value | $3,492,172,214 | 180,304,765 | $19.37 |
*Maximum offering price $20.49 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $1,643,074) | $ | 104,194,302 | |||
Securities lending, net | 278,517 | ||||
Interest | 9,391 | ||||
104,482,210 | |||||
Expenses: | |||||
Management fees | 33,957,342 | ||||
Distribution and service fees: | |||||
A Class | 401,295 | ||||
C Class | 245,085 | ||||
R Class | 252,570 | ||||
Directors' fees and expenses | 116,676 | ||||
Other expenses | 217 | ||||
34,973,185 | |||||
Net investment income (loss) | 69,509,025 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 655,751,142 | ||||
Forward foreign currency exchange contract transactions | 11,418,049 | ||||
Foreign currency translation transactions | 167,449 | ||||
667,336,640 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (515,752,421) | ||||
Forward foreign currency exchange contracts | 927,892 | ||||
Translation of assets and liabilities in foreign currencies | (3,019) | ||||
(514,827,548) | |||||
Net realized and unrealized gain (loss) | 152,509,092 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 222,018,117 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 69,509,025 | $ | 121,025,382 | ||||
Net realized gain (loss) | 667,336,640 | 351,902,276 | ||||||
Change in net unrealized appreciation (depreciation) | (514,827,548) | 2,923,709,175 | ||||||
Net increase (decrease) in net assets resulting from operations | 222,018,117 | 3,396,636,833 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (18,169,987) | (45,011,916) | ||||||
I Class | (14,724,867) | (43,120,588) | ||||||
Y Class | (1,708,154) | (3,320,505) | ||||||
A Class | (1,851,223) | (4,854,461) | ||||||
C Class | (107,719) | (601,904) | ||||||
R Class | (474,473) | (1,283,728) | ||||||
R5 Class | (491,081) | (1,144,444) | ||||||
R6 Class | (31,752,428) | (68,481,912) | ||||||
Decrease in net assets from distributions | (69,279,932) | (167,819,458) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (361,413,785) | (1,047,314,553) | ||||||
Net increase (decrease) in net assets | (208,675,600) | 2,181,502,822 | ||||||
Net Assets | ||||||||
Beginning of period | 8,506,645,883 | 6,325,143,061 | ||||||
End of period | $ | 8,297,970,283 | $ | 8,506,645,883 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. 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.
14
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.
15
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 September 30, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 32,520,128 | — | — | — | $ | 32,520,128 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 32,520,128 |
(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.
16
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 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 September 30, 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 September 30, 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 $4,512 and $10,318,559, respectively. The effect of interfund transactions on the Statement of Operations was $2,844,328 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 September 30, 2021 were $2,023,344,688 and $2,383,814,057, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2021 | Year ended March 31, 2021 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 1,100,000,000 | 1,100,000,000 | ||||||||||||
Sold | 12,769,956 | $ | 252,246,094 | 25,241,110 | $ | 398,413,156 | ||||||||
Issued in reinvestment of distributions | 922,658 | 17,802,079 | 2,774,786 | 43,909,525 | ||||||||||
Redeemed | (25,042,069) | (491,200,749) | (48,256,051) | (754,357,720) | ||||||||||
(11,349,455) | (221,152,576) | (20,240,155) | (312,035,039) | |||||||||||
I Class/Shares Authorized | 1,100,000,000 | 1,100,000,000 | ||||||||||||
Sold | 8,747,673 | 172,663,169 | 28,384,245 | 438,667,055 | ||||||||||
Issued in reinvestment of distributions | 719,616 | 13,894,973 | 2,592,121 | 40,950,019 | ||||||||||
Redeemed | (12,075,527) | (238,246,128) | (88,577,519) | (1,392,791,909) | ||||||||||
(2,608,238) | (51,687,986) | (57,601,153) | (913,174,835) | |||||||||||
Y Class/Shares Authorized | 75,000,000 | 75,000,000 | ||||||||||||
Sold | 817,384 | 16,121,408 | 2,955,674 | 46,276,623 | ||||||||||
Issued in reinvestment of distributions | 87,790 | 1,695,216 | 206,142 | 3,292,573 | ||||||||||
Redeemed | (439,078) | (8,644,357) | (1,553,679) | (24,778,108) | ||||||||||
466,096 | 9,172,267 | 1,608,137 | 24,791,088 | |||||||||||
A Class/Shares Authorized | 180,000,000 | 180,000,000 | ||||||||||||
Sold | 2,548,528 | 50,072,373 | 5,494,682 | 85,957,251 | ||||||||||
Issued in reinvestment of distributions | 75,014 | 1,444,058 | 250,309 | 3,949,771 | ||||||||||
Redeemed | (3,618,465) | (71,481,637) | (6,657,741) | (103,788,427) | ||||||||||
(994,923) | (19,965,206) | (912,750) | (13,881,405) | |||||||||||
C Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||
Sold | 59,933 | 1,169,162 | 52,946 | 834,704 | ||||||||||
Issued in reinvestment of distributions | 5,589 | 106,200 | 37,293 | 579,058 | ||||||||||
Redeemed | (502,115) | (9,764,717) | (2,171,393) | (34,037,700) | ||||||||||
(436,593) | (8,489,355) | (2,081,154) | (32,623,938) | |||||||||||
R Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 592,841 | 11,614,803 | 1,237,180 | 19,151,663 | ||||||||||
Issued in reinvestment of distributions | 24,731 | 474,473 | 80,759 | 1,269,017 | ||||||||||
Redeemed | (747,866) | (14,650,620) | (1,688,280) | (26,464,381) | ||||||||||
(130,294) | (2,561,344) | (370,341) | (6,043,701) | |||||||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 248,554 | 4,913,768 | 1,653,554 | 26,031,948 | ||||||||||
Issued in reinvestment of distributions | 25,396 | 490,379 | 72,918 | 1,144,443 | ||||||||||
Redeemed | (334,812) | (6,623,445) | (3,456,564) | (53,275,869) | ||||||||||
(60,862) | (1,219,298) | (1,730,092) | (26,099,478) | |||||||||||
R6 Class/Shares Authorized | 1,300,000,000 | 1,300,000,000 | ||||||||||||
Sold | 21,773,790 | 429,976,071 | 69,425,692 | 1,090,502,531 | ||||||||||
Issued in reinvestment of distributions | 1,612,640 | 31,124,242 | 4,193,628 | 66,735,181 | ||||||||||
Redeemed | (26,641,328) | (526,610,600) | (57,415,715) | (925,484,957) | ||||||||||
(3,254,898) | (65,510,287) | 16,203,605 | 231,752,755 | |||||||||||
Net increase (decrease) | (18,369,167) | $ | (361,413,785) | (65,123,903) | $ | (1,047,314,553) |
18
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 | $ | 123,729,039 | $ | 90,796,303 | — | ||||||
Auto Components | 113,731,528 | 40,891,065 | — | ||||||||
Food and Staples Retailing | 52,401,655 | 136,672,147 | — | ||||||||
Food Products | 340,900,686 | 63,173,618 | — | ||||||||
Hotels, Restaurants and Leisure | 42,398,509 | 85,339,561 | — | ||||||||
Machinery | 197,083,410 | 16,509,959 | — | ||||||||
Paper and Forest Products | — | 110,096,232 | — | ||||||||
Other Industries | 6,712,317,895 | — | — | ||||||||
Exchange-Traded Funds | 28,135,490 | — | — | ||||||||
Temporary Cash Investments | 19,760,829 | 98,633,478 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 32,520,128 | — | — | ||||||||
$ | 7,662,979,169 | $ | 642,112,363 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 8,085,968 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 118,908 | — |
19
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 $672,475,659.
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $8,085,968 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $118,908 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $11,418,049 in net realized gain (loss) on forward foreign currency exchange contract transactions and $927,892 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 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 components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 6,793,506,873 | |||
Gross tax appreciation of investments | $ | 1,614,396,387 | |||
Gross tax depreciation of investments | (102,811,728) | ||||
Net tax appreciation (depreciation) of investments | $ | 1,511,584,659 |
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) | |||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $19.03 | 0.14 | 0.32 | 0.46 | (0.14) | — | (0.14) | $19.35 | 2.43% | 0.97%(4) | 0.97%(4) | 1.41%(4) | 1.41%(4) | 24% | $2,343,705 | ||||||||||||||||||||||||||||||||
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(3) | $19.04 | 0.16 | 0.33 | 0.49 | (0.16) | — | (0.16) | $19.37 | 2.58% | 0.77%(4) | 0.77%(4) | 1.61%(4) | 1.61%(4) | 24% | $1,759,129 | ||||||||||||||||||||||||||||||||
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(3) | $19.05 | 0.17 | 0.34 | 0.51 | (0.18) | — | (0.18) | $19.38 | 2.66% | 0.62%(4) | 0.62%(4) | 1.76%(4) | 1.76%(4) | 24% | $193,081 | ||||||||||||||||||||||||||||||||
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(5) | $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%(6) | $572 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $18.99 | 0.11 | 0.33 | 0.44 | (0.12) | — | (0.12) | $19.31 | 2.30% | 1.22%(4) | 1.22%(4) | 1.16%(4) | 1.16%(4) | 24% | $310,031 | ||||||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $18.75 | 0.04 | 0.33 | 0.37 | (0.04) | — | (0.04) | $19.08 | 2.00% | 1.97%(4) | 1.97%(4) | 0.41%(4) | 0.41%(4) | 24% | $44,117 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $18.93 | 0.09 | 0.32 | 0.41 | (0.09) | — | (0.09) | $19.25 | 2.18% | 1.47%(4) | 1.47%(4) | 0.91%(4) | 0.91%(4) | 24% | $96,762 | ||||||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $19.05 | 0.16 | 0.33 | 0.49 | (0.16) | — | (0.16) | $19.38 | 2.58% | 0.77%(4) | 0.77%(4) | 1.61%(4) | 1.61%(4) | 24% | $58,973 | ||||||||||||||||||||||||||||||||
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(5) | $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%(6) | $313 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $19.04 | 0.17 | 0.34 | 0.51 | (0.18) | — | (0.18) | $19.37 | 2.66% | 0.62%(4) | 0.62%(4) | 1.76%(4) | 1.76%(4) | 24% | $3,492,172 | ||||||||||||||||||||||||||||||||
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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)April 10, 2017 (commencement of sale) through March 31, 2018.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
26
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
27
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was at the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
28
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
30
Notes |
31
Notes |
32
![]() | ||||||||
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-SAN-90805 2111 |
![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 2021 | |||||
NT Focused Large Cap Value Fund | |||||
G Class (ACLLX) |
Table of Contents |
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 97.0% | ||||
Temporary Cash Investments | 2.8% | ||||
Other Assets and Liabilities | 0.2% | ||||
Top Five Industries | % of net assets | ||||
Pharmaceuticals | 10.0% | ||||
Insurance | 9.8% | ||||
Health Care Equipment and Supplies | 8.1% | ||||
Banks | 6.4% | ||||
Oil, Gas and Consumable Fuels | 5.2% |
2
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1)(2) | |||||||||||
Actual | ||||||||||||||
G Class | $1,000 | $1,041.20 | $0.00 | 0.00% | ||||||||||
Hypothetical | ||||||||||||||
G Class | $1,000 | $1,025.07 | $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 183, 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%.
3
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares | Value | |||||||
COMMON STOCKS — 97.0% | ||||||||
Aerospace and Defense — 3.5% | ||||||||
Lockheed Martin Corp. | 123,617 | $ | 42,660,226 | |||||
Raytheon Technologies Corp. | 684,381 | 58,829,391 | ||||||
101,489,617 | ||||||||
Banks — 6.4% | ||||||||
JPMorgan Chase & Co. | 735,245 | 120,352,254 | ||||||
Truist Financial Corp. | 1,105,933 | 64,862,970 | ||||||
185,215,224 | ||||||||
Beverages — 1.7% | ||||||||
PepsiCo, Inc. | 318,078 | 47,842,112 | ||||||
Capital Markets — 2.9% | ||||||||
Bank of New York Mellon Corp. (The) | 1,633,958 | 84,704,383 | ||||||
Communications Equipment — 5.2% | ||||||||
Cisco Systems, Inc. | 2,061,755 | 112,221,325 | ||||||
F5 Networks, Inc.(1) | 185,622 | 36,897,941 | ||||||
149,119,266 | ||||||||
Containers and Packaging — 1.3% | ||||||||
Sonoco Products Co. | 623,632 | 37,155,994 | ||||||
Diversified Financial Services — 4.0% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 421,081 | 114,929,848 | ||||||
Diversified Telecommunication Services — 3.8% | ||||||||
Verizon Communications, Inc. | 2,017,492 | 108,964,743 | ||||||
Electric Utilities — 3.3% | ||||||||
Duke Energy Corp. | 458,183 | 44,714,079 | ||||||
Pinnacle West Capital Corp. | 719,130 | 52,036,247 | ||||||
96,750,326 | ||||||||
Electrical Equipment — 3.1% | ||||||||
Emerson Electric Co. | 704,973 | 66,408,456 | ||||||
Hubbell, Inc. | 132,158 | 23,876,986 | ||||||
90,285,442 | ||||||||
Electronic Equipment, Instruments and Components — 1.0% | ||||||||
TE Connectivity Ltd. | 204,940 | 28,121,867 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.7% | ||||||||
American Tower Corp. | 190,387 | 50,530,614 | ||||||
Food and Staples Retailing — 1.6% | ||||||||
Walmart, Inc. | 338,903 | 47,236,300 | ||||||
Food Products — 3.9% | ||||||||
Conagra Brands, Inc. | 1,703,894 | 57,710,890 | ||||||
Mondelez International, Inc., Class A | 925,289 | 53,833,314 | ||||||
111,544,204 | ||||||||
Gas Utilities — 2.9% | ||||||||
Atmos Energy Corp. | 949,019 | 83,703,476 | ||||||
Health Care Equipment and Supplies — 8.1% | ||||||||
Becton Dickinson and Co. | 262,959 | 64,640,581 | ||||||
Medtronic plc | 888,767 | 111,406,944 | ||||||
Zimmer Biomet Holdings, Inc. | 406,601 | 59,510,122 | ||||||
235,557,647 | ||||||||
4
Shares/Principal Amount | Value | |||||||
Health Care Providers and Services — 1.8% | ||||||||
UnitedHealth Group, Inc. | 131,955 | $ | 51,560,097 | |||||
Health Care Technology — 2.8% | ||||||||
Cerner Corp. | 1,128,863 | 79,607,419 | ||||||
Household Products — 2.5% | ||||||||
Colgate-Palmolive Co. | 455,925 | 34,458,812 | ||||||
Kimberly-Clark Corp. | 283,551 | 37,553,494 | ||||||
72,012,306 | ||||||||
Industrial Conglomerates — 2.8% | ||||||||
Siemens AG | 488,665 | 79,921,648 | ||||||
Insurance — 9.8% | ||||||||
Aflac, Inc. | 973,624 | 50,755,019 | ||||||
Allstate Corp. (The) | 345,704 | 44,011,576 | ||||||
Chubb Ltd. | 361,713 | 62,749,972 | ||||||
Marsh & McLennan Cos., Inc. | 393,233 | 59,547,273 | ||||||
Reinsurance Group of America, Inc. | 603,527 | 67,148,414 | ||||||
284,212,254 | ||||||||
Oil, Gas and Consumable Fuels — 5.2% | ||||||||
Chevron Corp. | 638,046 | 64,729,767 | ||||||
TotalEnergies SE, ADR | 1,812,406 | 86,868,619 | ||||||
151,598,386 | ||||||||
Personal Products — 4.2% | ||||||||
Unilever plc, ADR | 2,237,621 | 121,323,811 | ||||||
Pharmaceuticals — 10.0% | ||||||||
Johnson & Johnson | 1,001,051 | 161,669,737 | ||||||
Merck & Co., Inc. | 869,574 | 65,313,703 | ||||||
Roche Holding AG | 166,582 | 60,797,391 | ||||||
287,780,831 | ||||||||
Semiconductors and Semiconductor Equipment — 1.4% | ||||||||
Texas Instruments, Inc. | 214,221 | 41,175,418 | ||||||
Software — 2.1% | ||||||||
Open Text Corp. | 831,044 | 40,505,084 | ||||||
Oracle Corp. (New York) | 238,445 | 20,775,713 | ||||||
61,280,797 | ||||||||
TOTAL COMMON STOCKS (Cost $2,405,541,322) | 2,803,624,030 | |||||||
TEMPORARY CASH INVESTMENTS — 2.8% | ||||||||
Federal Home Loan Bank Discount Notes, 0.00%, 10/1/21(2) | $ | 25,000,000 | 25,000,000 | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $10,383,418), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $10,176,576) | 10,176,570 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 11/15/41, valued at $34,608,650), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $33,930,009) | 33,930,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 11,836,589 | 11,836,589 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $80,943,159) | 80,943,159 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $2,486,484,481) | 2,884,567,189 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 6,223,273 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,890,790,462 |
5
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 50,536,737 | CHF | 46,496,830 | Morgan Stanley | 12/30/21 | $ | 528,193 | |||||||||||||
USD | 1,401,281 | CHF | 1,298,461 | Morgan Stanley | 12/30/21 | 4,752 | ||||||||||||||
USD | 144,002,785 | EUR | 122,494,054 | Credit Suisse AG | 12/31/21 | 1,829,141 | ||||||||||||||
USD | 3,528,445 | EUR | 3,006,973 | Credit Suisse AG | 12/31/21 | 38,380 | ||||||||||||||
USD | 101,144,727 | GBP | 74,082,202 | JPMorgan Chase Bank N.A. | 12/31/21 | 1,302,569 | ||||||||||||||
USD | 2,519,690 | GBP | 1,838,311 | JPMorgan Chase Bank N.A. | 12/31/21 | 42,159 | ||||||||||||||
$ | 3,745,194 |
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.
(2)The rate indicated is the yield to maturity at purchase.
See Notes to Financial Statements.
6
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities, at value (cost of $2,486,484,481) | $ | 2,884,567,189 | |||
Receivable for investments sold | 4,820,629 | ||||
Receivable for capital shares sold | 4,576 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 3,745,194 | ||||
Dividends and interest receivable | 5,812,198 | ||||
2,898,949,786 | |||||
Liabilities | |||||
Payable for investments purchased | 5,047,206 | ||||
Payable for capital shares redeemed | 3,112,118 | ||||
8,159,324 | |||||
Net Assets | $ | 2,890,790,462 | |||
G Class Capital Shares, $0.01 Par Value | |||||
Shares authorized | 1,800,000,000 | ||||
Shares outstanding | 222,889,094 | ||||
Net Asset Value Per Share | $ | 12.97 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 2,133,432,896 | |||
Distributable earnings | 757,357,566 | ||||
$ | 2,890,790,462 |
See Notes to Financial Statements.
7
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $494,193) | $ | 33,912,538 | |||
Interest | 4,856 | ||||
33,917,394 | |||||
Expenses: | |||||
Management fees | 6,779,244 | ||||
Directors' fees and expenses | 37,751 | ||||
Other expenses | 159 | ||||
6,817,154 | |||||
Fees waived | (6,779,244) | ||||
37,910 | |||||
Net investment income (loss) | 33,879,484 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 111,588,862 | ||||
Forward foreign currency exchange contract transactions | 3,965,940 | ||||
Foreign currency translation transactions | 25,199 | ||||
115,580,001 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (35,869,085) | ||||
Forward foreign currency exchange contracts | (1,081,370) | ||||
Translation of assets and liabilities in foreign currencies | 151 | ||||
(36,950,304) | |||||
Net realized and unrealized gain (loss) | 78,629,697 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 112,509,181 |
See Notes to Financial Statements.
8
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 33,879,484 | $ | 58,741,361 | ||||
Net realized gain (loss) | 115,580,001 | 277,460,747 | ||||||
Change in net unrealized appreciation (depreciation) | (36,950,304) | 443,095,057 | ||||||
Net increase (decrease) in net assets resulting from operations | 112,509,181 | 779,297,165 | ||||||
Distributions to Shareholders | ||||||||
From earnings | (36,760,025) | (81,103,305) | ||||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 208,379,508 | 1,171,869,083 | ||||||
Proceeds from reinvestment of distributions | 36,760,025 | 81,103,305 | ||||||
Payments for shares redeemed | (180,920,035) | (421,921,825) | ||||||
Net increase (decrease) in net assets from capital share transactions | 64,219,498 | 831,050,563 | ||||||
Net increase (decrease) in net assets | 139,968,654 | 1,529,244,423 | ||||||
Net Assets | ||||||||
Beginning of period | 2,750,821,808 | 1,221,577,385 | ||||||
End of period | $ | 2,890,790,462 | $ | 2,750,821,808 | ||||
Transactions in Shares of the Fund | ||||||||
Sold | 15,689,298 | 109,701,660 | ||||||
Issued in reinvestment of distributions | 2,829,948 | 7,186,059 | ||||||
Redeemed | (13,619,918) | (37,138,530) | ||||||
Net increase (decrease) in shares of the fund | 4,899,328 | 79,749,189 |
See Notes to Financial Statements.
9
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Focused Large 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.
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.
10
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.
11
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, 53% 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 September 30, 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. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended September 30, 2021 were $679,773,579 and $673,834,124, respectively.
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.
12
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 | $ | 2,662,904,991 | $ | 140,719,039 | — | ||||||
Temporary Cash Investments | 11,836,589 | 69,106,570 | — | ||||||||
$ | 2,674,741,580 | $ | 209,825,609 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 3,745,194 | — |
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 $352,053,976.
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $3,745,194 in unrealized appreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $3,965,940 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(1,081,370) 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.
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.
13
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 2,505,727,253 | |||
Gross tax appreciation of investments | $ | 409,908,875 | |||
Gross tax depreciation of investments | (31,068,939) | ||||
Net tax appreciation (depreciation) of investments | $ | 378,839,936 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
14
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(3) | $12.62 | 0.16 | 0.36 | 0.52 | (0.17) | — | (0.17) | $12.97 | 4.12% | 0.00%(4)(5) | 0.48%(4) | 2.37%(4) | 1.89%(4) | 24% | $2,890,790 | ||||||||||||||||||||||||||||||||
2021 | $8.84 | 0.31 | 3.87 | 4.18 | (0.28) | (0.12) | (0.40) | $12.62 | 47.90% | 0.00%(5) | 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%(5) | 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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)Ratio was less than 0.005%.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
16
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
17
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
18
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
19
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
20
![]() | ||||||||
Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Capital Portfolios, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2021 American Century Proprietary Holdings, Inc. All rights reserved. CL-SAN-90824 2111 |
![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 2021 | |||||
NT Mid Cap Value Fund | |||||
G Class (ACLMX) |
Table of Contents |
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 96.8% | ||||
Exchange-Traded Funds | 0.4% | ||||
Temporary Cash Investments | 3.0% | ||||
Temporary Cash Investments - Securities Lending Collateral | 0.8% | ||||
Other Assets and Liabilities | (1.0)% | ||||
Top Five Industries* | % of net assets | ||||
Health Care Providers and Services | 8.5% | ||||
Capital Markets | 7.2% | ||||
Insurance | 6.8% | ||||
Health Care Equipment and Supplies | 5.6% | ||||
Equity Real Estate Investment Trusts (REITs) | 5.6% |
*Exposure indicated excludes Exchange-Traded Funds. The Schedule of Investments provides additional information on the fund's portfolio holdings.
2
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1)(2) | |||||||||||
Actual | ||||||||||||||
G Class | $1,000 | $1,029.20 | $0.00 | 0.00% | ||||||||||
Hypothetical | ||||||||||||||
G Class | $1,000 | $1,025.07 | $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 183, 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%.
3
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares | Value | |||||||
COMMON STOCKS — 96.8% | ||||||||
Aerospace and Defense — 2.6% | ||||||||
BAE Systems plc | 2,485,998 | $ | 18,829,084 | |||||
General Dynamics Corp. | 129,178 | 25,322,764 | ||||||
44,151,848 | ||||||||
Airlines — 1.8% | ||||||||
Southwest Airlines Co.(1) | 608,006 | 31,269,748 | ||||||
Auto Components — 1.8% | ||||||||
BorgWarner, Inc. | 539,972 | 23,332,190 | ||||||
Bridgestone Corp. | 179,300 | 8,482,897 | ||||||
31,815,087 | ||||||||
Automobiles — 0.9% | ||||||||
Honda Motor Co. Ltd., ADR(2) | 530,368 | 16,266,386 | ||||||
Banks — 5.3% | ||||||||
Commerce Bancshares, Inc. | 43,508 | 3,031,637 | ||||||
Eastern Bankshares, Inc. | 95,542 | 1,939,503 | ||||||
First Hawaiian, Inc. | 479,656 | 14,077,904 | ||||||
M&T Bank Corp. | 132,021 | 19,716,016 | ||||||
Prosperity Bancshares, Inc. | 182,146 | 12,956,045 | ||||||
Truist Financial Corp. | 513,766 | 30,132,376 | ||||||
Westamerica Bancorporation | 177,711 | 9,998,021 | ||||||
91,851,502 | ||||||||
Building Products† | ||||||||
Johnson Controls International plc | 11,198 | 762,360 | ||||||
Capital Markets — 7.2% | ||||||||
Ameriprise Financial, Inc. | 67,529 | 17,835,760 | ||||||
Bank of New York Mellon Corp. (The) | 843,093 | 43,705,941 | ||||||
Northern Trust Corp. | 353,060 | 38,063,399 | ||||||
State Street Corp. | 112,320 | 9,515,750 | ||||||
T. Rowe Price Group, Inc. | 80,992 | 15,931,126 | ||||||
125,051,976 | ||||||||
Chemicals — 0.9% | ||||||||
Axalta Coating Systems Ltd.(1) | 506,136 | 14,774,110 | ||||||
Commercial Services and Supplies — 0.8% | ||||||||
Republic Services, Inc. | 111,924 | 13,437,595 | ||||||
Communications Equipment — 1.9% | ||||||||
F5 Networks, Inc.(1) | 104,949 | 20,861,762 | ||||||
Juniper Networks, Inc. | 426,398 | 11,734,473 | ||||||
32,596,235 | ||||||||
Containers and Packaging — 3.1% | ||||||||
Amcor plc | 617,047 | 7,151,575 | ||||||
Packaging Corp. of America | 103,070 | 14,165,941 | ||||||
Sonoco Products Co. | 530,699 | 31,619,046 | ||||||
52,936,562 | ||||||||
Electric Utilities — 4.6% | ||||||||
Edison International | 538,454 | 29,868,043 | ||||||
Evergy, Inc. | 145,041 | 9,021,550 | ||||||
Eversource Energy | 131,158 | 10,723,478 |
4
Shares | Value | |||||||
Pinnacle West Capital Corp. | 348,294 | $ | 25,202,554 | |||||
Xcel Energy, Inc. | 67,703 | 4,231,438 | ||||||
79,047,063 | ||||||||
Electrical Equipment — 4.0% | ||||||||
Emerson Electric Co. | 306,001 | 28,825,294 | ||||||
Hubbell, Inc. | 74,540 | 13,467,142 | ||||||
nVent Electric plc | 813,170 | 26,289,786 | ||||||
68,582,222 | ||||||||
Electronic Equipment, Instruments and Components — 0.2% | ||||||||
TE Connectivity Ltd. | 30,351 | 4,164,764 | ||||||
Energy Equipment and Services — 1.0% | ||||||||
Baker Hughes Co. | 679,560 | 16,805,519 | ||||||
Equity Real Estate Investment Trusts (REITs) — 5.6% | ||||||||
Equinix, Inc. | 16,934 | 13,380,061 | ||||||
Essex Property Trust, Inc. | 49,459 | 15,814,021 | ||||||
Healthcare Trust of America, Inc., Class A | 677,092 | 20,082,549 | ||||||
Healthpeak Properties, Inc. | 677,455 | 22,681,193 | ||||||
MGM Growth Properties LLC, Class A | 427,521 | 16,374,054 | ||||||
Regency Centers Corp. | 38,575 | 2,597,255 | ||||||
Weyerhaeuser Co. | 146,281 | 5,203,215 | ||||||
96,132,348 | ||||||||
Food and Staples Retailing — 2.3% | ||||||||
Koninklijke Ahold Delhaize NV | 855,178 | 28,475,829 | ||||||
Sysco Corp. | 140,806 | 11,053,271 | ||||||
39,529,100 | ||||||||
Food Products — 4.8% | ||||||||
Conagra Brands, Inc. | 964,896 | 32,681,028 | ||||||
General Mills, Inc. | 199,801 | 11,952,096 | ||||||
J.M. Smucker Co. (The) | 111,273 | 13,356,098 | ||||||
Kellogg Co. | 184,424 | 11,788,382 | ||||||
Orkla ASA | 1,408,703 | 12,929,349 | ||||||
82,706,953 | ||||||||
Gas Utilities — 1.4% | ||||||||
Atmos Energy Corp. | 145,426 | 12,826,573 | ||||||
Spire, Inc. | 183,747 | 11,241,642 | ||||||
24,068,215 | ||||||||
Health Care Equipment and Supplies — 5.6% | ||||||||
Baxter International, Inc. | 10,822 | 870,414 | ||||||
Becton Dickinson and Co. | 71,554 | 17,589,404 | ||||||
Envista Holdings Corp.(1) | 265,788 | 11,112,596 | ||||||
Koninklijke Philips NV | 300,544 | 13,356,175 | ||||||
Zimmer Biomet Holdings, Inc. | 369,961 | 54,147,492 | ||||||
97,076,081 | ||||||||
Health Care Providers and Services — 8.5% | ||||||||
Cardinal Health, Inc. | 511,230 | 25,285,436 | ||||||
Centene Corp.(1) | 198,796 | 12,386,979 | ||||||
Henry Schein, Inc.(1) | 365,079 | 27,804,417 | ||||||
McKesson Corp. | 117,564 | 23,439,910 | ||||||
Quest Diagnostics, Inc. | 198,300 | 28,814,973 | ||||||
Universal Health Services, Inc., Class B | 216,180 | 29,912,826 | ||||||
147,644,541 | ||||||||
Health Care Technology — 1.8% | ||||||||
Cerner Corp. | 445,840 | 31,440,637 |
5
Shares | Value | |||||||
Hotels, Restaurants and Leisure — 1.5% | ||||||||
Cracker Barrel Old Country Store, Inc. | 63,137 | $ | 8,829,078 | |||||
Sodexo SA(1) | 199,849 | 17,465,930 | ||||||
26,295,008 | ||||||||
Household Products — 1.0% | ||||||||
Kimberly-Clark Corp. | 129,861 | 17,198,791 | ||||||
Insurance — 6.8% | ||||||||
Aflac, Inc. | 525,599 | 27,399,476 | ||||||
Allstate Corp. (The) | 122,545 | 15,601,204 | ||||||
Arthur J. Gallagher & Co. | 45,408 | 6,749,899 | ||||||
Chubb Ltd. | 235,057 | 40,777,689 | ||||||
Reinsurance Group of America, Inc. | 244,943 | 27,252,358 | ||||||
117,780,626 | ||||||||
IT Services — 1.1% | ||||||||
Amdocs Ltd. | 140,920 | 10,669,053 | ||||||
Euronet Worldwide, Inc.(1) | 63,033 | 8,022,840 | ||||||
18,691,893 | ||||||||
Leisure Products — 0.7% | ||||||||
Polaris, Inc. | 105,341 | 12,605,104 | ||||||
Machinery — 2.5% | ||||||||
Crane Co. | 32,633 | 3,093,935 | ||||||
Cummins, Inc. | 36,689 | 8,238,882 | ||||||
IMI plc | 154,024 | 3,423,788 | ||||||
Oshkosh Corp. | 141,365 | 14,471,535 | ||||||
PACCAR, Inc. | 186,838 | 14,745,255 | ||||||
43,973,395 | ||||||||
Media — 1.6% | ||||||||
Fox Corp., Class B | 727,618 | 27,009,180 | ||||||
Multi-Utilities — 1.4% | ||||||||
NorthWestern Corp. | 421,765 | 24,167,134 | ||||||
Multiline Retail — 1.4% | ||||||||
Dollar Tree, Inc.(1) | 247,119 | 23,654,231 | ||||||
Oil, Gas and Consumable Fuels — 3.8% | ||||||||
ConocoPhillips | 487,776 | 33,056,580 | ||||||
Devon Energy Corp. | 601,374 | 21,354,791 | ||||||
Pioneer Natural Resources Co. | 67,975 | 11,318,517 | ||||||
65,729,888 | ||||||||
Paper and Forest Products — 1.3% | ||||||||
Mondi plc | 936,335 | 22,945,813 | ||||||
Road and Rail — 0.6% | ||||||||
Heartland Express, Inc. | 691,910 | 11,084,398 | ||||||
Software — 1.6% | ||||||||
CDK Global, Inc. | 253,573 | 10,789,531 | ||||||
Open Text Corp. | 343,384 | 16,736,536 | ||||||
27,526,067 | ||||||||
Specialty Retail — 1.9% | ||||||||
Advance Auto Parts, Inc. | 160,277 | 33,480,263 | ||||||
Technology Hardware, Storage and Peripherals — 1.3% | ||||||||
HP, Inc. | 799,059 | 21,862,254 | ||||||
Thrifts and Mortgage Finance — 0.4% | ||||||||
Capitol Federal Financial, Inc. | 642,734 | 7,385,014 |
6
Shares | Value | |||||||
Trading Companies and Distributors — 1.8% | ||||||||
Beacon Roofing Supply, Inc.(1) | 133,774 | $ | 6,389,046 | |||||
MSC Industrial Direct Co., Inc., Class A | 306,704 | 24,594,594 | ||||||
30,983,640 | ||||||||
TOTAL COMMON STOCKS (Cost $1,375,525,221) | 1,674,483,551 | |||||||
EXCHANGE-TRADED FUNDS — 0.4% | ||||||||
iShares Russell Mid-Cap Value ETF (Cost $6,025,194) | 51,489 | 5,831,129 | ||||||
TEMPORARY CASH INVESTMENTS — 3.0% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $9,628,080), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $9,436,284) | 9,436,279 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 11/15/41, valued at $32,089,234), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $31,460,009) | 31,460,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 10,975,541 | 10,975,541 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $51,871,820) | 51,871,820 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.8% | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $14,235,858) | 14,235,858 | 14,235,858 | ||||||
TOTAL INVESTMENT SECURITIES — 101.0% (Cost $1,447,658,093) | 1,746,422,358 | |||||||
OTHER ASSETS AND LIABILITIES — (1.0)% | (16,886,735) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 1,729,535,623 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 52,131,795 | EUR | 44,345,218 | Credit Suisse AG | 12/31/21 | $ | 662,184 | |||||||||||||
GBP | 1,005,398 | USD | 1,378,054 | JPMorgan Chase Bank N.A. | 12/31/21 | (23,057) | ||||||||||||||
USD | 40,456,129 | GBP | 29,631,591 | JPMorgan Chase Bank N.A. | 12/31/21 | 521,005 | ||||||||||||||
JPY | 76,169,592 | USD | 687,197 | Bank of America N.A. | 12/30/21 | (2,166) | ||||||||||||||
USD | 22,249,199 | JPY | 2,436,932,539 | Bank of America N.A. | 12/30/21 | 332,663 | ||||||||||||||
USD | 531,846 | JPY | 59,518,244 | Bank of America N.A. | 12/30/21 | (3,431) | ||||||||||||||
USD | 10,776,757 | NOK | 93,085,686 | UBS AG | 12/30/21 | 136,202 | ||||||||||||||
$ | 1,623,400 |
7
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | - | American Depositary Receipt | ||||||
EUR | - | Euro | ||||||
GBP | - | British Pound | ||||||
JPY | - | Japanese Yen | ||||||
NOK | - | Norwegian Krone | ||||||
USD | - | United States Dollar |
†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 $13,860,754. 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 $14,235,858.
See Notes to Financial Statements.
8
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities, at value (cost of $1,433,422,235) — including $13,860,754 of securities on loan | $ | 1,732,186,500 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $14,235,858) | 14,235,858 | ||||
Total investment securities, at value (cost of $1,447,658,093) | 1,746,422,358 | ||||
Foreign currency holdings, at value (cost of $196,450) | 196,312 | ||||
Receivable for investments sold | 6,542,587 | ||||
Receivable for capital shares sold | 1,120 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 1,652,054 | ||||
Dividends and interest receivable | 3,182,222 | ||||
Securities lending receivable | 1,539 | ||||
1,757,998,192 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 14,235,858 | ||||
Payable for investments purchased | 11,035,194 | ||||
Payable for capital shares redeemed | 3,162,863 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 28,654 | ||||
28,462,569 | |||||
Net Assets | $ | 1,729,535,623 | |||
G Class Capital Shares, $0.01 Par Value | |||||
Shares authorized | 850,000,000 | ||||
Shares outstanding | 118,212,063 | ||||
Net Asset Value Per Share | $ | 14.63 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,252,143,764 | |||
Distributable earnings | 477,391,859 | ||||
$ | 1,729,535,623 |
See Notes to Financial Statements.
9
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $321,044) | $ | 20,268,139 | |||
Securities lending, net | 55,426 | ||||
Interest | 2,493 | ||||
20,326,058 | |||||
Expenses: | |||||
Management fees | 5,274,099 | ||||
Directors' fees and expenses | 22,572 | ||||
Other expenses | 298 | ||||
5,296,969 | |||||
Fees waived | (5,274,099) | ||||
22,870 | |||||
Net investment income (loss) | 20,303,188 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 119,856,087 | ||||
Forward foreign currency exchange contract transactions | 2,185,058 | ||||
Foreign currency translation transactions | 26,187 | ||||
122,067,332 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (93,891,638) | ||||
Forward foreign currency exchange contracts | 234,845 | ||||
Translation of assets and liabilities in foreign currencies | (25) | ||||
(93,656,818) | |||||
Net realized and unrealized gain (loss) | 28,410,514 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 48,713,702 |
See Notes to Financial Statements.
10
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 20,303,188 | $ | 30,448,400 | ||||
Net realized gain (loss) | 122,067,332 | 74,333,116 | ||||||
Change in net unrealized appreciation (depreciation) | (93,656,818) | 450,376,032 | ||||||
Net increase (decrease) in net assets resulting from operations | 48,713,702 | 555,157,548 | ||||||
Distributions to Shareholders | ||||||||
From earnings | (20,581,726) | (50,484,807) | ||||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 128,148,707 | 691,410,013 | ||||||
Proceeds from reinvestment of distributions | 20,581,726 | 50,484,807 | ||||||
Payments for shares redeemed | (99,712,518) | (293,393,132) | ||||||
Net increase (decrease) in net assets from capital share transactions | 49,017,915 | 448,501,688 | ||||||
Net increase (decrease) in net assets | 77,149,891 | 953,174,429 | ||||||
Net Assets | ||||||||
Beginning of period | 1,652,385,732 | 699,211,303 | ||||||
End of period | $ | 1,729,535,623 | $ | 1,652,385,732 | ||||
Transactions in Shares of the Fund | ||||||||
Sold | 8,603,822 | 60,000,615 | ||||||
Issued in reinvestment of distributions | 1,410,611 | 4,102,442 | ||||||
Redeemed | (6,652,555) | (23,300,441) | ||||||
Net increase (decrease) in shares of the fund | 3,361,878 | 40,802,616 |
See Notes to Financial Statements.
11
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT 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
12
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.
13
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 September 30, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 14,235,858 | — | — | — | $ | 14,235,858 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 14,235,858 |
(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, 51% 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 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 September 30, 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.
14
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 $849 and $2,351,639, respectively. The effect of interfund transactions on the Statement of Operations was $592,890 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 September 30, 2021 were $459,006,640 and $448,779,093, respectively.
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.
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 | $ | 25,322,764 | $ | 18,829,084 | — | ||||||
Auto Components | 23,332,190 | 8,482,897 | — | ||||||||
Food and Staples Retailing | 11,053,271 | 28,475,829 | — | ||||||||
Food Products | 69,777,604 | 12,929,349 | — | ||||||||
Hotels, Restaurants and Leisure | 8,829,078 | 17,465,930 | — | ||||||||
Machinery | 40,549,607 | 3,423,788 | — | ||||||||
Paper and Forest Products | — | 22,945,813 | — | ||||||||
Other Industries | 1,383,066,347 | — | — | ||||||||
Exchange-Traded Funds | 5,831,129 | — | — | ||||||||
Temporary Cash Investments | 10,975,541 | 40,896,279 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 14,235,858 | — | — | ||||||||
$ | 1,592,973,389 | $ | 153,448,969 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,652,054 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 28,654 | — |
15
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 $131,649,217.
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $1,652,054 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $28,654 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $2,185,058 in net realized gain (loss) on forward foreign currency exchange contract transactions and $234,845 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.
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 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 components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,466,874,242 | |||
Gross tax appreciation of investments | $ | 296,420,428 | |||
Gross tax depreciation of investments | (16,872,312) | ||||
Net tax appreciation (depreciation) of investments | $ | 279,548,116 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
16
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(3) | $14.39 | 0.18 | 0.24 | 0.42 | (0.18) | — | (0.18) | $14.63 | 2.92% | 0.00%(4)(5) | 0.62%(4) | 2.38%(4) | 1.76%(4) | 27% | $1,729,536 | ||||||||||||||||||||||||||||||||
2021 | $9.44 | 0.29 | 5.13 | 5.42 | (0.29) | (0.18) | (0.47) | $14.39 | 58.28% | 0.00%(5) | 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%(5) | 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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)Ratio was less than 0.005%.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
18
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
19
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was at the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
20
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
21
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
22
Notes |
23
Notes |
24
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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-SAN-90825 2111 |
![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 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 | |||||
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image27a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image27a.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended September 30, 2021. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Stocks, Bonds Advanced Amid Growing Concerns
Broad market sentiment was upbeat to start the period. Investors generally looked beyond pandemic-related challenges to improving growth and corporate earnings data. Ongoing support from leading central banks and governments helped maintain investor confidence in the financial markets and strengthen the overall global economic outlook.
However, a summer surge in COVID-19 cases arising from the delta variant triggered worries about the recovery’s sustainability. Most economic and corporate earnings data remained favorable, but the labor market was a notable exception. Despite record job openings, job growth remained weak, complicating reopening efforts for many businesses.
In this climate, U.S. Treasury yields generally declined through early August. From there, yields rose amid soaring inflation triggered by mounting supply chain disruptions and rising energy and housing prices. Congressional debate on the debt ceiling and the $3.5 trillion "human infrastructure" bill added to inflation worries. Year-over-year headline inflation reached 5.4% in September, matching a 13-year high.
Meanwhile, in September, the Federal Reserve hinted it may start scaling back its monetary support by year-end. This prompted a spike in Treasury yields and a sell-off among stocks. A credit crisis in China’s troubled property sector also weighed on stocks. Overall, though, strong performance in the first half of the reporting period led to positive six-month returns for most broad stock and bond indices.
Several Factors Shaping Market Dynamics
The return to pre-pandemic life is progressing, albeit somewhat cautiously due to COVID-19’s delta variant. As the economy and markets respond to this fluid backdrop, investors will face opportunities and ongoing challenges. Economic growth, inflation, the virus’s trajectory, supply chain normalization and fiscal and monetary policy likely will sway market dynamics.
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,
![image12.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image12.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 98.6% | ||||
Temporary Cash Investments | 0.9% | ||||
Temporary Cash Investments - Securities Lending Collateral | —* | ||||
Other Assets and Liabilities | 0.5% | ||||
*Category is less than 0.05% of total net assets. | |||||
Top Five Industries | % of net assets | ||||
Banks | 18.8% | ||||
Electronic Equipment, Instruments and Components | 7.3% | ||||
Equity Real Estate Investment Trusts (REITs) | 6.3% | ||||
Machinery | 6.3% | ||||
Commercial Services and Supplies | 6.0% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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.
4
Beginning Account Value 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,027.30 | $5.54 | 1.09% | ||||||||||
I Class | $1,000 | $1,028.90 | $4.53 | 0.89% | ||||||||||
Y Class | $1,000 | $1,029.70 | $3.77 | 0.74% | ||||||||||
A Class | $1,000 | $1,026.90 | $6.81 | 1.34% | ||||||||||
C Class | $1,000 | $1,023.20 | $10.60 | 2.09% | ||||||||||
R Class | $1,000 | $1,024.70 | $8.07 | 1.59% | ||||||||||
R5 Class | $1,000 | $1,028.90 | $4.53 | 0.89% | ||||||||||
R6 Class | $1,000 | $1,029.70 | $3.77 | 0.74% | ||||||||||
G Class | $1,000 | $1,033.40 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.60 | $5.52 | 1.09% | ||||||||||
I Class | $1,000 | $1,020.61 | $4.51 | 0.89% | ||||||||||
Y Class | $1,000 | $1,021.36 | $3.75 | 0.74% | ||||||||||
A Class | $1,000 | $1,018.35 | $6.78 | 1.34% | ||||||||||
C Class | $1,000 | $1,014.59 | $10.56 | 2.09% | ||||||||||
R Class | $1,000 | $1,017.10 | $8.04 | 1.59% | ||||||||||
R5 Class | $1,000 | $1,020.61 | $4.51 | 0.89% | ||||||||||
R6 Class | $1,000 | $1,021.36 | $3.75 | 0.74% | ||||||||||
G Class | $1,000 | $1,025.07 | $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 183, 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%.
5
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares | Value | |||||||
COMMON STOCKS — 98.6% | ||||||||
Air Freight and Logistics — 0.1% | ||||||||
GXO Logistics, Inc.(1) | 65,000 | $ | 5,098,600 | |||||
Banks — 18.8% | ||||||||
Ameris Bancorp | 1,405,000 | 72,891,400 | ||||||
BankUnited, Inc. | 1,995,000 | 83,430,900 | ||||||
F.N.B. Corp. | 5,930,000 | 68,906,600 | ||||||
First BanCorp | 3,055,000 | 40,173,250 | ||||||
First Hawaiian, Inc. | 770,000 | 22,599,500 | ||||||
First Mid Bancshares, Inc. | 280,000 | 11,496,800 | ||||||
Home BancShares, Inc. | 2,825,000 | 66,472,250 | ||||||
Independent Bank Corp. (Massachusetts) | 465,000 | 35,409,750 | ||||||
Independent Bank Group, Inc. | 1,200,000 | 85,248,000 | ||||||
Old National Bancorp. | 4,330,000 | 73,393,500 | ||||||
Origin Bancorp, Inc. | 830,000 | 35,150,500 | ||||||
Pacific Premier Bancorp, Inc. | 1,875,000 | 77,700,000 | ||||||
QCR Holdings, Inc. | 305,000 | 15,689,200 | ||||||
Renasant Corp. | 485,000 | 17,484,250 | ||||||
Signature Bank | 7,338 | 1,997,990 | ||||||
SouthState Corp. | 1,025,000 | 76,536,750 | ||||||
Towne Bank | 1,205,000 | 37,487,550 | ||||||
UMB Financial Corp. | 1,232,208 | 119,166,836 | ||||||
Valley National Bancorp | 8,860,000 | 117,926,600 | ||||||
Veritex Holdings, Inc. | 520,000 | 20,467,200 | ||||||
1,079,628,826 | ||||||||
Building Products — 1.8% | ||||||||
Cornerstone Building Brands, Inc.(1) | 3,600,000 | 52,596,000 | ||||||
DIRTT Environmental Solutions(1)(2) | 3,195,000 | 9,904,500 | ||||||
Tecnoglass, Inc. | 1,757,806 | 38,197,124 | ||||||
100,697,624 | ||||||||
Capital Markets — 1.5% | ||||||||
Donnelley Financial Solutions, Inc.(1)(3) | 2,475,714 | 85,709,219 | ||||||
Chemicals — 1.0% | ||||||||
Minerals Technologies, Inc. | 810,000 | 56,570,400 | ||||||
Commercial Services and Supplies — 6.0% | ||||||||
Brink's Co. (The) | 1,470,000 | 93,051,000 | ||||||
CECO Environmental Corp.(1) | 1,785,000 | 12,566,400 | ||||||
Charah Solutions, Inc.(1)(2)(3) | 1,939,467 | 8,921,548 | ||||||
Deluxe Corp.(3) | 2,145,000 | 76,984,050 | ||||||
Healthcare Services Group, Inc. | 1,100,000 | 27,489,000 | ||||||
KAR Auction Services, Inc.(1) | 4,980,000 | 81,622,200 | ||||||
Loomis AB | 1,535,000 | 41,595,680 | ||||||
342,229,878 | ||||||||
Construction and Engineering — 2.6% | ||||||||
Arcosa, Inc. | 895,000 | 44,902,150 | ||||||
Dycom Industries, Inc.(1) | 910,000 | 64,828,400 | ||||||
NV5 Global, Inc.(1) | 385,000 | 37,949,450 | ||||||
147,680,000 |
6
Shares | Value | |||||||
Containers and Packaging — 3.5% | ||||||||
Graphic Packaging Holding Co. | 7,100,000 | $ | 135,184,000 | |||||
Pactiv Evergreen, Inc. | 5,090,000 | 63,726,800 | ||||||
198,910,800 | ||||||||
Diversified Financial Services — 2.5% | ||||||||
A-Mark Precious Metals, Inc. | 350,000 | 21,007,000 | ||||||
Compass Diversified Holdings(3) | 4,415,000 | 124,370,550 | ||||||
145,377,550 | ||||||||
Electronic Equipment, Instruments and Components — 7.3% | ||||||||
Advanced Energy Industries, Inc. | 270,000 | 23,692,500 | ||||||
Avnet, Inc. | 2,560,000 | 94,643,200 | ||||||
Belden, Inc. | 489,807 | 28,536,156 | ||||||
Coherent, Inc.(1) | 380,000 | 95,034,200 | ||||||
II-VI, Inc.(1) | 2,510,000 | 148,993,600 | ||||||
Vontier Corp. | 815,000 | 27,384,000 | ||||||
418,283,656 | ||||||||
Energy Equipment and Services — 1.1% | ||||||||
ChampionX Corp.(1) | 2,850,000 | 63,726,000 | ||||||
NCS Multistage Holdings, Inc.(1) | 55,000 | 1,614,250 | ||||||
65,340,250 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 6.3% | ||||||||
Brandywine Realty Trust | 4,570,000 | 61,329,400 | ||||||
CareTrust REIT, Inc. | 1,100,000 | 22,352,000 | ||||||
Cousins Properties, Inc. | 1,415,000 | 52,765,350 | ||||||
Easterly Government Properties, Inc. | 960,000 | 19,833,600 | ||||||
Four Corners Property Trust, Inc. | 1,800,000 | 48,348,000 | ||||||
Getty Realty Corp. | 805,000 | 23,594,550 | ||||||
Healthcare Realty Trust, Inc. | 710,000 | 21,143,800 | ||||||
Highwoods Properties, Inc. | 550,000 | 24,123,000 | ||||||
Kite Realty Group Trust | 1,320,000 | 26,875,200 | ||||||
Lexington Realty Trust | 175,000 | 2,231,250 | ||||||
National Health Investors, Inc. | 495,000 | 26,482,500 | ||||||
Physicians Realty Trust | 700,000 | 12,334,000 | ||||||
Sabra Health Care REIT, Inc. | 530,000 | 7,801,600 | ||||||
Summit Hotel Properties, Inc.(1) | 1,408,523 | 13,564,077 | ||||||
362,778,327 | ||||||||
Gas Utilities — 0.4% | ||||||||
South Jersey Industries, Inc. | 1,130,000 | 24,023,800 | ||||||
Health Care Providers and Services — 2.3% | ||||||||
Apria, Inc.(1) | 965,000 | 35,849,750 | ||||||
National HealthCare Corp. | 339,991 | 23,792,570 | ||||||
Patterson Cos., Inc. | 1,740,000 | 52,443,600 | ||||||
Premier, Inc., Class A | 515,000 | 19,961,400 | ||||||
132,047,320 | ||||||||
Hotels, Restaurants and Leisure — 2.9% | ||||||||
Accel Entertainment, Inc.(1) | 3,650,000 | 44,311,000 | ||||||
BJ's Restaurants, Inc.(1) | 580,000 | 24,220,800 | ||||||
Dave & Buster's Entertainment, Inc.(1) | 1,670,000 | 64,011,100 | ||||||
Red Robin Gourmet Burgers, Inc.(1)(3) | 1,555,000 | 35,858,300 | ||||||
168,401,200 | ||||||||
Household Durables — 1.7% | ||||||||
Mohawk Industries, Inc.(1) | 115,000 | 20,401,000 |
7
Shares | Value | |||||||
Skyline Champion Corp.(1) | 1,285,000 | $ | 77,177,100 | |||||
97,578,100 | ||||||||
Household Products — 2.8% | ||||||||
Spectrum Brands Holdings, Inc. | 1,705,000 | 163,117,350 | ||||||
Insurance — 2.4% | ||||||||
Axis Capital Holdings Ltd. | 1,855,000 | 85,404,200 | ||||||
James River Group Holdings Ltd. | 745,000 | 28,108,850 | ||||||
ProAssurance Corp. | 970,000 | 23,066,600 | ||||||
136,579,650 | ||||||||
IT Services — 2.7% | ||||||||
Euronet Worldwide, Inc.(1) | 245,000 | 31,183,600 | ||||||
EVERTEC, Inc. | 2,430,000 | 111,099,600 | ||||||
IBEX Holdings Ltd.(1) | 823,500 | 13,999,500 | ||||||
156,282,700 | ||||||||
Leisure Products — 2.9% | ||||||||
Brunswick Corp. | 825,000 | 78,597,750 | ||||||
Hayward Holdings, Inc.(1) | 985,000 | 21,906,400 | ||||||
Malibu Boats, Inc., Class A(1) | 975,000 | 68,230,500 | ||||||
168,734,650 | ||||||||
Machinery — 6.3% | ||||||||
Albany International Corp., Class A | 614,666 | 47,249,375 | ||||||
Colfax Corp.(1) | 2,020,000 | 92,718,000 | ||||||
EnPro Industries, Inc. | 380,000 | 33,105,600 | ||||||
Gates Industrial Corp. plc(1) | 4,080,000 | 66,381,600 | ||||||
Graham Corp.(3) | 740,839 | 9,186,404 | ||||||
Hurco Cos., Inc. | 101,153 | 3,263,196 | ||||||
Luxfer Holdings plc | 755,000 | 14,820,650 | ||||||
Timken Co. (The) | 1,445,000 | 94,531,900 | ||||||
361,256,725 | ||||||||
Media — 1.0% | ||||||||
Entravision Communications Corp., Class A(3) | 7,105,000 | 50,445,500 | ||||||
Townsquare Media, Inc., Class A(1) | 680,000 | 8,887,600 | ||||||
59,333,100 | ||||||||
Oil, Gas and Consumable Fuels — 1.0% | ||||||||
Earthstone Energy, Inc., Class A(1) | 1,165,217 | 10,719,996 | ||||||
Enviva Partners LP | 910,000 | 49,221,900 | ||||||
59,941,896 | ||||||||
Personal Products — 1.8% | ||||||||
Edgewell Personal Care Co. | 2,645,000 | 96,013,500 | ||||||
Honest Co., Inc. (The)(1)(2) | 750,000 | 7,785,000 | ||||||
103,798,500 | ||||||||
Professional Services — 3.0% | ||||||||
Barrett Business Services, Inc.(3) | 440,000 | 33,554,400 | ||||||
KBR, Inc. | 1,515,000 | 59,691,000 | ||||||
Korn Ferry | 1,090,000 | 78,872,400 | ||||||
172,117,800 | ||||||||
Semiconductors and Semiconductor Equipment — 1.7% | ||||||||
Cohu, Inc.(1) | 700,000 | 22,358,000 | ||||||
Kulicke & Soffa Industries, Inc. | 1,240,000 | 72,267,200 | ||||||
94,625,200 | ||||||||
Software — 2.9% | ||||||||
Avaya Holdings Corp.(1) | 3,510,000 | 69,462,900 |
8
Shares/Principal Amount | Value | |||||||
Kaltura, Inc.(1) | 700,838 | $ | 7,211,623 | |||||
Teradata Corp.(1) | 1,607,201 | 92,172,977 | ||||||
168,847,500 | ||||||||
Specialty Retail — 4.5% | ||||||||
MarineMax, Inc.(1)(3) | 1,560,000 | 75,691,200 | ||||||
OneWater Marine, Inc., Class A(3) | 1,235,000 | 49,659,350 | ||||||
Penske Automotive Group, Inc. | 1,290,000 | 129,774,000 | ||||||
255,124,550 | ||||||||
Textiles, Apparel and Luxury Goods — 1.6% | ||||||||
Tapestry, Inc. | 2,425,000 | 89,773,500 | ||||||
Thrifts and Mortgage Finance — 1.3% | ||||||||
Enact Holdings, Inc.(1) | 1,070,000 | 23,465,100 | ||||||
Premier Financial Corp. | 680,000 | 21,651,200 | ||||||
Provident Financial Services, Inc. | 1,185,000 | 27,811,950 | ||||||
72,928,250 | ||||||||
Trading Companies and Distributors — 2.9% | ||||||||
Beacon Roofing Supply, Inc.(1) | 1,565,000 | 74,744,400 | ||||||
DXP Enterprises, Inc.(1)(3) | 1,183,602 | 34,999,111 | ||||||
GMS, Inc.(1) | 1,045,000 | 45,771,000 | ||||||
Karat Packaging, Inc.(1) | 371,278 | 7,807,977 | ||||||
163,322,488 | ||||||||
TOTAL COMMON STOCKS (Cost $4,617,142,952) | 5,656,139,409 | |||||||
TEMPORARY CASH INVESTMENTS — 0.9% | ||||||||
Federal Farm Credit Discount Notes, 0.01%, 10/1/21(4) | $ | 10,000,000 | 10,000,000 | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $7,953,162), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $7,794,731) | 7,794,727 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $26,506,820), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $25,987,007) | 25,987,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 9,066,215 | 9,066,215 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $52,847,942) | 52,847,942 | |||||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(5)† | ||||||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $67,353) | 67,353 | 67,353 | ||||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $4,670,058,247) | 5,709,054,704 | |||||||
OTHER ASSETS AND LIABILITIES — 0.5% | 30,011,281 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 5,739,065,985 |
9
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
SEK | 7,698,025 | USD | 875,517 | UBS AG | 12/30/21 | $ | 4,711 | |||||||||||||
USD | 34,594,346 | SEK | 299,169,825 | UBS AG | 12/30/21 | 385,869 | ||||||||||||||
USD | 840,536 | SEK | 7,246,675 | UBS AG | 12/30/21 | 11,917 | ||||||||||||||
USD | 1,442,951 | SEK | 12,594,875 | UBS AG | 12/30/21 | 2,795 | ||||||||||||||
$ | 405,292 |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
SEK | - | Swedish Krona | ||||||
USD | - | United States Dollar |
†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 $7,919,215. 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)The rate indicated is the yield to maturity at purchase.
(5)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $8,199,887, which includes securities collateral of $8,132,534.
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $4,298,522,846) — including $7,919,215 of securities on loan | $ | 5,123,607,719 | |||
Investment securities - affiliated, at value (cost of $371,468,048) | 585,379,632 | ||||
Investment made with cash collateral received for securities on loan, at value (cost of $67,353) | 67,353 | ||||
Total investment securities, at value (cost of $4,670,058,247) | 5,709,054,704 | ||||
Receivable for investments sold | 16,785,535 | ||||
Receivable for capital shares sold | 41,563,209 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 405,292 | ||||
Dividends and interest receivable | 5,529,682 | ||||
Securities lending receivable | 2,557 | ||||
5,773,340,979 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 67,353 | ||||
Payable for investments purchased | 21,260,632 | ||||
Payable for capital shares redeemed | 8,948,823 | ||||
Accrued management fees | 3,952,063 | ||||
Distribution and service fees payable | 46,123 | ||||
34,274,994 | |||||
Net Assets | $ | 5,739,065,985 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 4,410,034,905 | |||
Distributable earnings | 1,329,031,080 | ||||
$ | 5,739,065,985 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $1,193,798,398 | 108,288,733 | $11.02 | ||||||||
I Class, $0.01 Par Value | $2,636,051,979 | 236,413,825 | $11.15 | ||||||||
Y Class, $0.01 Par Value | $80,253,222 | 7,186,954 | $11.17 | ||||||||
A Class, $0.01 Par Value | $112,335,148 | 10,327,364 | $10.88* | ||||||||
C Class, $0.01 Par Value | $24,853,264 | 2,454,242 | $10.13 | ||||||||
R Class, $0.01 Par Value | $6,042,775 | 560,005 | $10.79 | ||||||||
R5 Class, $0.01 Par Value | $13,294,000 | 1,191,351 | $11.16 | ||||||||
R6 Class, $0.01 Par Value | $1,300,877,627 | 116,651,067 | $11.15 | ||||||||
G Class, $0.01 Par Value | $371,559,572 | 33,236,504 | $11.18 |
*Maximum offering price $11.54 (net asset value divided by 0.9425).
See Notes to Financial Statements.
11
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $9,278,925 from affiliates and net of foreign taxes withheld of $26,652) | $ | 36,963,351 | |||
Interest | 13,356 | ||||
Securities lending, net | 12,642 | ||||
36,989,349 | |||||
Expenses: | |||||
Management fees | 24,702,011 | ||||
Distribution and service fees: | |||||
A Class | 137,745 | ||||
C Class | 106,560 | ||||
R Class | 15,628 | ||||
Directors' fees and expenses | 71,965 | ||||
Other expenses | 331 | ||||
25,034,240 | |||||
Fees waived - G Class | (1,384,384) | ||||
23,649,856 | |||||
Net investment income (loss) | 13,339,493 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $10,097,553 from affiliates) | 196,502,450 | ||||
Forward foreign currency exchange contract transactions | 1,517,316 | ||||
Foreign currency translation transactions | 71,293 | ||||
198,091,059 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $19,888,754 from affiliates) | (101,548,500) | ||||
Forward foreign currency exchange contracts | 405,292 | ||||
(101,143,208) | |||||
Net realized and unrealized gain (loss) | 96,947,851 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 110,287,344 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 13,339,493 | $ | 17,709,446 | ||||
Net realized gain (loss) | 198,091,059 | 190,771,566 | ||||||
Change in net unrealized appreciation (depreciation) | (101,143,208) | 1,587,349,837 | ||||||
Net increase (decrease) in net assets resulting from operations | 110,287,344 | 1,795,830,849 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (1,359,702) | (3,150,781) | ||||||
I Class | (5,617,494) | (6,801,236) | ||||||
Y Class | (228,391) | (339,676) | ||||||
A Class | (46,423) | (153,102) | ||||||
R Class | — | (1,916) | ||||||
R5 Class | (29,462) | (45,434) | ||||||
R6 Class | (3,585,457) | (4,992,095) | ||||||
G Class | (2,386,286) | (5,290,956) | ||||||
Decrease in net assets from distributions | (13,253,215) | (20,775,196) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 1,139,024,602 | 1,371,014,953 | ||||||
Net increase (decrease) in net assets | 1,236,058,731 | 3,146,070,606 | ||||||
Net Assets | ||||||||
Beginning of period | 4,503,007,254 | 1,356,936,648 | ||||||
End of period | $ | 5,739,065,985 | $ | 4,503,007,254 | ||||
See Notes to Financial Statements.
13
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. 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.
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.
14
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.
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).
15
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 September 30, 2021.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 67,353 | — | — | — | $ | 67,353 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 67,353 |
(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, 5% 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.
16
The management fee schedule range and the effective annual management fee for each class for the period ended September 30, 2021 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 1.00% to 1.25% | 1.09% | ||||||
I Class | 0.80% to 1.05% | 0.89% | ||||||
Y Class | 0.65% to 0.90% | 0.74% | ||||||
A Class | 1.00% to 1.25% | 1.09% | ||||||
C Class | 1.00% to 1.25% | 1.09% | ||||||
R Class | 1.00% to 1.25% | 1.09% | ||||||
R5 Class | 0.80% to 1.05% | 0.89% | ||||||
R6 Class | 0.65% to 0.90% | 0.74% | ||||||
G Class | 0.65% to 0.90% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.74%.
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 September 30, 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 were $4,489,112 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended September 30, 2021 were $2,229,180,902 and $1,050,915,214, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2021 | Year ended March 31, 2021 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 700,000,000 | 700,000,000 | ||||||||||||
Sold | 36,449,036 | $ | 408,454,722 | 40,326,653 | $ | 326,284,879 | ||||||||
Issued in reinvestment of distributions | 124,548 | 1,336,518 | 430,711 | 3,039,149 | ||||||||||
Redeemed | (17,531,351) | (195,254,128) | (35,943,298) | (261,463,817) | ||||||||||
19,042,233 | 214,537,112 | 4,814,066 | 67,860,211 | |||||||||||
I Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||||||
Sold | 97,187,207 | 1,100,946,553 | 153,121,813 | 1,350,198,944 | ||||||||||
Issued in reinvestment of distributions | 466,725 | 5,109,020 | 791,999 | 6,121,740 | ||||||||||
Redeemed | (49,912,608) | (563,014,699) | (42,625,240) | (330,844,984) | ||||||||||
47,741,324 | 543,040,874 | 111,288,572 | 1,025,475,700 | |||||||||||
Y Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 2,329,535 | 26,416,427 | 3,747,350 | 31,726,079 | ||||||||||
Issued in reinvestment of distributions | 15,341 | 168,833 | 32,693 | 251,672 | ||||||||||
Redeemed | (1,300,804) | (14,871,737) | (2,206,380) | (16,362,220) | ||||||||||
1,044,072 | 11,713,523 | 1,573,663 | 15,615,531 | |||||||||||
A Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||
Sold | 2,989,183 | 33,071,225 | 3,384,280 | 27,106,052 | ||||||||||
Issued in reinvestment of distributions | 4,182 | 43,991 | 23,213 | 149,558 | ||||||||||
Redeemed | (1,582,035) | (17,493,216) | (3,895,324) | (30,777,886) | ||||||||||
1,411,330 | 15,622,000 | (487,831) | (3,522,276) | |||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Sold | 1,033,096 | 10,691,684 | 1,205,644 | 9,721,981 | ||||||||||
Redeemed | (138,671) | (1,420,338) | (176,515) | (1,278,094) | ||||||||||
894,425 | 9,271,346 | 1,029,129 | 8,443,887 | |||||||||||
R Class/Shares Authorized | 180,000,000 | 180,000,000 | ||||||||||||
Sold | 200,000 | 2,193,758 | 184,334 | 1,574,021 | ||||||||||
Issued in reinvestment of distributions | — | — | 306 | 1,915 | ||||||||||
Redeemed | (126,389) | (1,375,510) | (149,094) | (1,179,377) | ||||||||||
73,611 | 818,248 | 35,546 | 396,559 | |||||||||||
R5 Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 626,096 | 7,062,065 | 1,441,277 | 10,417,513 | ||||||||||
Issued in reinvestment of distributions | 2,691 | 29,462 | 6,113 | 45,434 | ||||||||||
Redeemed | (345,342) | (3,859,837) | (1,180,367) | (8,588,379) | ||||||||||
283,445 | 3,231,690 | 267,023 | 1,874,568 | |||||||||||
R6 Class/Shares Authorized | 450,000,000 | 450,000,000 | ||||||||||||
Sold | 43,686,940 | 495,528,170 | 56,027,727 | 446,342,135 | ||||||||||
Issued in reinvestment of distributions | 318,050 | 3,487,466 | 652,567 | 4,948,292 | ||||||||||
Redeemed | (14,182,529) | (160,001,465) | (25,033,289) | (199,977,832) | ||||||||||
29,822,461 | 339,014,171 | 31,647,005 | 251,312,595 | |||||||||||
G Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||||||
Sold | 2,031,336 | 22,870,337 | 20,818,476 | 125,595,248 | ||||||||||
Issued in reinvestment of distributions | 215,960 | 2,386,286 | 696,920 | 5,290,956 | ||||||||||
Redeemed | (2,045,101) | (23,480,985) | (14,913,075) | (127,328,026) | ||||||||||
202,195 | 1,775,638 | 6,602,321 | 3,558,178 | |||||||||||
Net increase (decrease) | 100,515,096 | $ | 1,139,024,602 | 156,769,494 | $ | 1,371,014,953 |
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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 September 30, 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. | $ | 28,577 | $ | 1,824 | — | $ | 3,154 | $ | 33,555 | 440 | — | $ | 264 | |||||||||||||
CECO Environmental Corp.(1)(2) | 13,600 | 511 | — | (1,545) | (2) | (2) | — | — | ||||||||||||||||||
Charah Solutions, Inc.(1)(3) | 9,748 | 566 | $ | 1,986 | 594 | 8,922 | 1,939 | $ | (987) | — | ||||||||||||||||
Compass Diversified Holdings | 93,642 | 14,092 | 6,049 | 22,686 | 124,371 | 4,415 | 1,524 | 5,007 | ||||||||||||||||||
Deluxe Corp. | 87,487 | 10,488 | 9,777 | (11,214) | 76,984 | 2,145 | (1,555) | 1,270 | ||||||||||||||||||
Donnelley Financial Solutions, Inc.(1) | 86,273 | 8,253 | 23,623 | 14,806 | 85,709 | 2,476 | 6,532 | — | ||||||||||||||||||
DXP Enterprises, Inc.(1) | 33,853 | 7,749 | 6,474 | (129) | 34,999 | 1,184 | (167) | — | ||||||||||||||||||
Entravision Communications Corp., Class A | 33,027 | 1,602 | 4,846 | 20,663 | 50,446 | 7,105 | 5,009 | 388 | ||||||||||||||||||
Graham Corp. | 10,549 | — | — | (1,363) | 9,186 | 741 | — | 163 | ||||||||||||||||||
MarineMax, Inc.(1) | 57,751 | 21,426 | 1,890 | (1,596) | 75,691 | 1,560 | (258) | — | ||||||||||||||||||
OneWater Marine, Inc., Class A | 45,155 | 4,697 | — | (193) | 49,659 | 1,235 | — | 2,187 | ||||||||||||||||||
Red Robin Gourmet Burgers, Inc.(1) | 59,034 | 2,798 | — | (25,974) | 35,858 | 1,555 | — | — | ||||||||||||||||||
$ | 558,696 | $ | 74,006 | $ | 54,645 | $ | 19,889 | $ | 585,380 | 24,795 | $ | 10,098 | $ | 9,279 |
(1)Non-income producing.
(2)Company was not an affiliate at September 30, 2021.
(3)Security, or a portion thereof, is on loan.
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.
19
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 | $ | 5,614,543,729 | $ | 41,595,680 | — | ||||||
Temporary Cash Investments | 9,066,215 | 43,781,727 | — | ||||||||
Temporary Cash Investments - Securities Lending Collateral | 67,353 | — | — | ||||||||
$ | 5,623,677,297 | $ | 85,377,407 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 405,292 | — |
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 $43,976,453.
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $405,292 in unrealized appreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $1,517,316 in net realized gain (loss) on forward foreign currency exchange contract transactions and $405,292 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.
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.
10. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
20
As of period end, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 4,765,874,780 | |||
Gross tax appreciation of investments | $ | 1,063,705,053 | |||
Gross tax depreciation of investments | (120,525,129) | ||||
Net tax appreciation (depreciation) of investments | $ | 943,179,924 |
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 | 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(3) | $10.74 | 0.01 | 0.28 | 0.29 | (0.01) | — | (0.01) | $11.02 | 2.73% | 1.09%(4) | 1.09%(4) | 0.25%(4) | 0.25%(4) | 20% | $1,193,798 | ||||||||||||||||||||||||||||||||
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(3) | $10.86 | 0.03 | 0.28 | 0.31 | (0.02) | — | (0.02) | $11.15 | 2.89% | 0.89%(4) | 0.89%(4) | 0.45%(4) | 0.45%(4) | 20% | $2,636,052 | ||||||||||||||||||||||||||||||||
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(3) | $10.88 | 0.03 | 0.29 | 0.32 | (0.03) | — | (0.03) | $11.17 | 2.97% | 0.74%(4) | 0.74%(4) | 0.60%(4) | 0.60%(4) | 20% | $80,253 | ||||||||||||||||||||||||||||||||
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(5) | $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%(6) | $131 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $10.60 | —(7) | 0.28 | 0.28 | —(7) | — | —(7) | $10.88 | 2.69% | 1.34%(4) | 1.34%(4) | 0.00%(4)(8) | 0.00%(4)(8) | 20% | $112,335 | ||||||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.90 | (0.04) | 0.27 | 0.23 | — | — | — | $10.13 | 2.32% | 2.09%(4) | 2.09%(4) | (0.75)%(4) | (0.75)%(4) | 20% | $24,853 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $10.53 | (0.01) | 0.27 | 0.26 | — | — | — | $10.79 | 2.47% | 1.59%(4) | 1.59%(4) | (0.25)%(4) | (0.25)%(4) | 20% | $6,043 | ||||||||||||||||||||||||||||||||
2021 | $5.10 | —(7) | 5.43 | 5.43 | —(7) | — | —(7) | $10.53 | 106.61% | 1.69% | 1.69% | (0.04)% | (0.04)% | 72% | $5,120 | ||||||||||||||||||||||||||||||||
2020 | $6.92 | 0.01 | (1.68) | (1.67) | —(7) | (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 | —(7) | 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 |
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) | |||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $10.87 | 0.03 | 0.28 | 0.31 | (0.02) | — | (0.02) | $11.16 | 2.89% | 0.89%(4) | 0.89%(4) | 0.45%(4) | 0.45%(4) | 20% | $13,294 | ||||||||||||||||||||||||||||||||
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(5) | $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%(6) | $5 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2021(3) | $10.86 | 0.03 | 0.29 | 0.32 | (0.03) | — | (0.03) | $11.15 | 2.97% | 0.74%(4) | 0.74%(4) | 0.60%(4) | 0.60%(4) | 20% | $1,300,878 | ||||||||||||||||||||||||||||||||
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(3) | $10.89 | 0.07 | 0.29 | 0.36 | (0.07) | — | (0.07) | $11.18 | 3.34% | 0.00%(4)(8) | 0.74%(4) | 1.34%(4) | 0.60%(4) | 20% | $371,560 | ||||||||||||||||||||||||||||||||
2021 | $5.29 | 0.12 | 5.63 | 5.75 | (0.15) | — | (0.15) | $10.89 | 110.06% | 0.00%(8) | 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%(8) | 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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)April 10, 2017 (commencement of sale) through March 31, 2018.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
(7)Per-share amount was less than $0.005.
(8)Ratio was less than 0.005%.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
27
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
28
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
29
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
30
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
31
Notes |
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![image13.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image13.jpg)
Semiannual Report | |||||
September 30, 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 | |||||
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 | |||||
Approval of Management Agreement | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
![image27a.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image27a.jpg)
Dear Investor:
Thank you for reviewing this semiannual report for the period ended September 30, 2021. It provides a market overview (below), followed by a schedule of fund investments and other financial information. For additional investment insights, please visit americancentury.com.
Stocks, Bonds Advanced Amid Growing Concerns
Broad market sentiment was upbeat to start the period. Investors generally looked beyond pandemic-related challenges to improving growth and corporate earnings data. Ongoing support from leading central banks and governments helped maintain investor confidence in the financial markets and strengthen the overall global economic outlook.
However, a summer surge in COVID-19 cases arising from the delta variant triggered worries about the recovery’s sustainability. Most economic and corporate earnings data remained favorable, but the labor market was a notable exception. Despite record job openings, job growth remained weak, complicating reopening efforts for many businesses.
In this climate, U.S. Treasury yields generally declined through early August. From there, yields rose amid soaring inflation triggered by mounting supply chain disruptions and rising energy and housing prices. Congressional debate on the debt ceiling and the $3.5 trillion "human infrastructure" bill added to inflation worries. Year-over-year headline inflation reached 5.4% in September, matching a 13-year high.
Meanwhile, in September, the Federal Reserve hinted it may start scaling back its monetary support by year-end. This prompted a spike in Treasury yields and a sell-off among stocks. A credit crisis in China’s troubled property sector also weighed on stocks. Overall, though, strong performance in the first half of the reporting period led to positive six-month returns for most broad stock and bond indices.
Several Factors Shaping Market Dynamics
The return to pre-pandemic life is progressing, albeit somewhat cautiously due to COVID-19’s delta variant. As the economy and markets respond to this fluid backdrop, investors will face opportunities and ongoing challenges. Economic growth, inflation, the virus’s trajectory, supply chain normalization and fiscal and monetary policy likely will sway market dynamics.
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,
![image12.jpg](https://capedge.com/proxy/N-CSRS/0000908186-21-000087/image12.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Fund Characteristics |
SEPTEMBER 30, 2021 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 97.3% | ||||
Temporary Cash Investments | 2.5% | ||||
Other Assets and Liabilities | 0.2% | ||||
Top Five Industries | % of net assets | ||||
Banks | 12.4% | ||||
Pharmaceuticals | 8.5% | ||||
Oil, Gas and Consumable Fuels | 7.1% | ||||
Health Care Providers and Services | 5.1% | ||||
Diversified Telecommunication Services | 4.9% |
3
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2021 to September 30, 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.
4
Beginning Account Value 4/1/21 | Ending Account Value 9/30/21 | Expenses Paid During Period(1) 4/1/21 - 9/30/21 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,033.70 | $5.10 | 1.00% | ||||||||||
I Class | $1,000 | $1,034.60 | $4.08 | 0.80% | ||||||||||
Y Class | $1,000 | $1,035.40 | $3.32 | 0.65% | ||||||||||
A Class | $1,000 | $1,032.40 | $6.37 | 1.25% | ||||||||||
C Class | $1,000 | $1,029.10 | $10.17 | 2.00% | ||||||||||
R Class | $1,000 | $1,032.20 | $7.64 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,034.60 | $4.08 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,036.50 | $3.32 | 0.65% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.06 | $5.06 | 1.00% | ||||||||||
I Class | $1,000 | $1,021.06 | $4.05 | 0.80% | ||||||||||
Y Class | $1,000 | $1,021.81 | $3.29 | 0.65% | ||||||||||
A Class | $1,000 | $1,018.80 | $6.33 | 1.25% | ||||||||||
C Class | $1,000 | $1,015.04 | $10.10 | 2.00% | ||||||||||
R Class | $1,000 | $1,017.55 | $7.59 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,021.06 | $4.05 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,021.81 | $3.29 | 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 183, 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.
5
Schedule of Investments |
SEPTEMBER 30, 2021 (UNAUDITED)
Shares | Value | |||||||
COMMON STOCKS — 97.3% | ||||||||
Aerospace and Defense — 1.9% | ||||||||
BAE Systems plc | 1,620,300 | $ | 12,272,241 | |||||
Raytheon Technologies Corp. | 217,670 | 18,710,913 | ||||||
Thales SA | 129,480 | 12,553,801 | ||||||
43,536,955 | ||||||||
Airlines — 0.8% | ||||||||
Southwest Airlines Co.(1) | 337,870 | 17,376,654 | ||||||
Auto Components — 0.9% | ||||||||
BorgWarner, Inc. | 497,252 | 21,486,259 | ||||||
Automobiles — 1.2% | ||||||||
General Motors Co.(1) | 304,524 | 16,051,460 | ||||||
Honda Motor Co. Ltd. | 398,900 | 12,263,703 | ||||||
28,315,163 | ||||||||
Banks — 12.4% | ||||||||
Bank of America Corp. | 1,075,370 | 45,649,456 | ||||||
Comerica, Inc. | 97,717 | 7,866,219 | ||||||
JPMorgan Chase & Co. | 405,541 | 66,383,006 | ||||||
M&T Bank Corp. | 71,715 | 10,709,918 | ||||||
PNC Financial Services Group, Inc. (The) | 79,278 | 15,509,948 | ||||||
Royal Bank of Canada | 161,080 | 16,027,880 | ||||||
Truist Financial Corp. | 382,115 | 22,411,045 | ||||||
U.S. Bancorp | 1,024,337 | 60,886,591 | ||||||
Wells Fargo & Co. | 915,908 | 42,507,290 | ||||||
287,951,353 | ||||||||
Capital Markets — 3.8% | ||||||||
Bank of New York Mellon Corp. (The) | 723,900 | 37,526,976 | ||||||
Invesco Ltd. | 683,286 | 16,474,025 | ||||||
Northern Trust Corp. | 152,262 | 16,415,366 | ||||||
State Street Corp. | 200,940 | 17,023,637 | ||||||
87,440,004 | ||||||||
Communications Equipment — 3.3% | ||||||||
Cisco Systems, Inc. | 1,119,124 | 60,913,920 | ||||||
F5 Networks, Inc.(1) | 78,140 | 15,532,669 | ||||||
76,446,589 | ||||||||
Containers and Packaging — 0.9% | ||||||||
Sonoco Products Co. | 346,059 | 20,618,195 | ||||||
Diversified Financial Services — 3.6% | ||||||||
Berkshire Hathaway, Inc., Class A(1) | 129 | 53,067,890 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 113,485 | 30,974,596 | ||||||
84,042,486 | ||||||||
Diversified Telecommunication Services — 4.9% | ||||||||
AT&T, Inc. | 2,298,480 | 62,081,945 | ||||||
Verizon Communications, Inc. | 965,992 | 52,173,228 | ||||||
114,255,173 | ||||||||
Electric Utilities — 1.4% | ||||||||
Edison International | 303,610 | 16,841,247 | ||||||
Pinnacle West Capital Corp. | 198,950 | 14,396,022 | ||||||
31,237,269 |
6
Shares | Value | |||||||
Electrical Equipment — 2.6% | ||||||||
Emerson Electric Co. | 221,693 | $ | 20,883,481 | |||||
Hubbell, Inc. | 119,077 | 21,513,641 | ||||||
nVent Electric plc | 537,728 | 17,384,746 | ||||||
59,781,868 | ||||||||
Electronic Equipment, Instruments and Components — 0.4% | ||||||||
Anritsu Corp. | 547,100 | 9,763,180 | ||||||
Energy Equipment and Services — 2.8% | ||||||||
Baker Hughes Co. | 948,828 | 23,464,517 | ||||||
Halliburton Co. | 569,870 | 12,320,589 | ||||||
Schlumberger NV | 982,148 | 29,110,867 | ||||||
64,895,973 | ||||||||
Entertainment — 1.5% | ||||||||
Walt Disney Co. (The)(1) | 209,270 | 35,402,206 | ||||||
Equity Real Estate Investment Trusts (REITs) — 1.6% | ||||||||
Equinix, Inc. | 10,650 | 8,414,885 | ||||||
Healthpeak Properties, Inc. | 411,890 | 13,790,077 | ||||||
Weyerhaeuser Co. | 431,650 | 15,353,790 | ||||||
37,558,752 | ||||||||
Food and Staples Retailing — 1.8% | ||||||||
Koninklijke Ahold Delhaize NV | 620,095 | 20,648,005 | ||||||
Walmart, Inc. | 149,181 | 20,792,848 | ||||||
41,440,853 | ||||||||
Food Products — 4.7% | ||||||||
Conagra Brands, Inc. | 877,458 | 29,719,503 | ||||||
Danone SA | 280,300 | 19,110,270 | ||||||
J.M. Smucker Co. (The) | 68,110 | 8,175,243 | ||||||
Kellogg Co. | 256,059 | 16,367,291 | ||||||
Mondelez International, Inc., Class A | 414,401 | 24,109,850 | ||||||
Orkla ASA | 1,257,870 | 11,544,975 | ||||||
109,027,132 | ||||||||
Gas Utilities — 0.4% | ||||||||
Atmos Energy Corp. | 110,164 | 9,716,465 | ||||||
Health Care Equipment and Supplies — 3.6% | ||||||||
Medtronic plc | 347,160 | 43,516,506 | ||||||
Zimmer Biomet Holdings, Inc. | 275,357 | 40,301,250 | ||||||
83,817,756 | ||||||||
Health Care Providers and Services — 5.1% | ||||||||
Cardinal Health, Inc. | 805,715 | 39,850,664 | ||||||
Cigna Corp. | 91,130 | 18,240,581 | ||||||
CVS Health Corp. | 286,250 | 24,291,175 | ||||||
McKesson Corp. | 121,040 | 24,132,955 | ||||||
Universal Health Services, Inc., Class B | 91,260 | 12,627,646 | ||||||
119,143,021 | ||||||||
Hotels, Restaurants and Leisure — 0.7% | ||||||||
Sodexo SA(1) | 178,210 | 15,574,775 | ||||||
Household Products — 0.9% | ||||||||
Procter & Gamble Co. (The) | 147,519 | 20,623,156 | ||||||
Industrial Conglomerates — 3.4% | ||||||||
General Electric Co. | 516,808 | 53,246,728 | ||||||
Siemens AG | 161,020 | 26,334,982 | ||||||
79,581,710 |
7
Shares | Value | |||||||
Insurance — 3.6% | ||||||||
Aflac, Inc. | 217,660 | $ | 11,346,616 | |||||
Chubb Ltd. | 216,773 | 37,605,780 | ||||||
MetLife, Inc. | 243,328 | 15,020,637 | ||||||
Reinsurance Group of America, Inc. | 174,456 | 19,409,975 | ||||||
83,383,008 | ||||||||
Leisure Products — 0.4% | ||||||||
Mattel, Inc.(1) | 503,720 | 9,349,043 | ||||||
Machinery — 0.6% | ||||||||
IMI plc | 598,446 | 13,302,813 | ||||||
Metals and Mining — 0.6% | ||||||||
BHP Group Ltd. | 482,065 | 12,874,915 | ||||||
Multi-Utilities — 0.5% | ||||||||
CMS Energy Corp. | 207,330 | 12,383,821 | ||||||
Multiline Retail — 0.8% | ||||||||
Dollar Tree, Inc.(1) | 193,860 | 18,556,279 | ||||||
Oil, Gas and Consumable Fuels — 7.1% | ||||||||
Chevron Corp. | 587,274 | 59,578,947 | ||||||
ConocoPhillips | 241,323 | 16,354,460 | ||||||
Devon Energy Corp. | 578,310 | 20,535,788 | ||||||
EQT Corp.(1) | 572,521 | 11,713,780 | ||||||
Exxon Mobil Corp. | 290,840 | 17,107,209 | ||||||
Royal Dutch Shell plc, B Shares | 680,015 | 15,066,827 | ||||||
TotalEnergies SE | 483,064 | 23,089,465 | ||||||
163,446,476 | ||||||||
Paper and Forest Products — 0.7% | ||||||||
Mondi plc | 680,435 | 16,674,731 | ||||||
Personal Products — 1.2% | ||||||||
Unilever plc | 517,170 | 27,935,508 | ||||||
Pharmaceuticals — 8.5% | ||||||||
Bristol-Myers Squibb Co. | 359,250 | 21,256,823 | ||||||
Johnson & Johnson | 405,492 | 65,486,958 | ||||||
Merck & Co., Inc. | 690,192 | 51,840,321 | ||||||
Pfizer, Inc. | 692,113 | 29,767,780 | ||||||
Roche Holding AG | 41,770 | 15,244,787 | ||||||
Teva Pharmaceutical Industries Ltd., ADR(1) | 1,448,337 | 14,106,802 | ||||||
197,703,471 | ||||||||
Road and Rail — 1.0% | ||||||||
Heartland Express, Inc. | 1,440,581 | 23,078,108 | ||||||
Semiconductors and Semiconductor Equipment — 2.6% | ||||||||
Intel Corp. | 831,562 | 44,305,623 | ||||||
QUALCOMM, Inc. | 121,744 | 15,702,541 | ||||||
60,008,164 | ||||||||
Software — 1.4% | ||||||||
Open Text Corp. | 328,090 | 15,991,107 | ||||||
Oracle Corp. (New York) | 182,569 | 15,907,237 | ||||||
31,898,344 | ||||||||
Specialty Retail — 1.0% | ||||||||
Advance Auto Parts, Inc. | 105,976 | 22,137,327 | ||||||
Technology Hardware, Storage and Peripherals — 0.5% | ||||||||
HP, Inc. | 443,065 | 12,122,258 |
8
Shares | Value | |||||||
Textiles, Apparel and Luxury Goods — 1.2% | ||||||||
Ralph Lauren Corp. | 104,900 | $ | 11,648,096 | |||||
Tapestry, Inc. | 403,012 | 14,919,504 | ||||||
26,567,600 | ||||||||
Trading Companies and Distributors — 1.0% | ||||||||
MSC Industrial Direct Co., Inc., Class A | 273,089 | 21,899,007 | ||||||
TOTAL COMMON STOCKS (Cost $1,461,970,140) | 2,252,353,820 | |||||||
TEMPORARY CASH INVESTMENTS — 2.5% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 5/15/23, valued at $10,806,289), in a joint trading account at 0.02%, dated 9/30/21, due 10/1/21 (Delivery value $10,591,024) | 10,591,018 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 11/15/41, valued at $36,017,281), at 0.01%, dated 9/30/21, due 10/1/21 (Delivery value $35,311,010) | 35,311,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 12,317,845 | 12,317,845 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $58,219,863) | 58,219,863 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $1,520,190,003) | 2,310,573,683 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 5,288,081 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,315,861,764 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 9,189,603 | AUD | 12,653,847 | Bank of America N.A. | 12/31/21 | $ | 37,184 | |||||||||||||
USD | 488,027 | AUD | 676,455 | Bank of America N.A. | 12/31/21 | (1,247) | ||||||||||||||
USD | 11,892,315 | CAD | 15,141,117 | Morgan Stanley | 12/31/21 | (62,655) | ||||||||||||||
USD | 10,672,230 | CHF | 9,819,092 | Morgan Stanley | 12/30/21 | 111,543 | ||||||||||||||
USD | 915,317 | CHF | 844,789 | Morgan Stanley | 12/30/21 | 6,725 | ||||||||||||||
USD | 110,583,184 | EUR | 94,066,115 | Credit Suisse AG | 12/31/21 | 1,404,641 | ||||||||||||||
USD | 44,256,774 | GBP | 32,415,326 | JPMorgan Chase Bank N.A. | 12/31/21 | 569,951 | ||||||||||||||
USD | 16,730,058 | JPY | 1,832,426,550 | Bank of America N.A. | 12/30/21 | 250,142 | ||||||||||||||
USD | 8,490,764 | NOK | 73,340,110 | UBS AG | 12/30/21 | 107,311 | ||||||||||||||
$ | 2,423,595 |
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.
See Notes to Financial Statements.
9
Statement of Assets and Liabilities |
SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Assets | |||||
Investment securities, at value (cost of $1,520,190,003) | $ | 2,310,573,683 | |||
Foreign currency holdings, at value (cost of $156,650) | 156,539 | ||||
Receivable for investments sold | 5,638,239 | ||||
Receivable for capital shares sold | 1,035,844 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 2,487,497 | ||||
Dividends and interest receivable | 4,849,046 | ||||
Securities lending receivable | 4,086 | ||||
2,324,744,934 | |||||
Liabilities | |||||
Payable for investments purchased | 5,857,064 | ||||
Payable for capital shares redeemed | 1,060,657 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 63,902 | ||||
Accrued management fees | 1,780,455 | ||||
Distribution and service fees payable | 121,092 | ||||
8,883,170 | |||||
Net Assets | $ | 2,315,861,764 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,373,975,803 | |||
Distributable earnings | 941,885,961 | ||||
$ | 2,315,861,764 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $1,268,190,830 | 132,760,255 | $9.55 | ||||||||
I Class, $0.01 Par Value | $524,622,113 | 54,802,432 | $9.57 | ||||||||
Y Class, $0.01 Par Value | $113,234,627 | 11,826,986 | $9.57 | ||||||||
A Class, $0.01 Par Value | $67,395,050 | 7,063,603 | $9.54* | ||||||||
C Class, $0.01 Par Value | $9,621,202 | 1,028,017 | $9.36 | ||||||||
R Class, $0.01 Par Value | $239,516,743 | 25,083,723 | $9.55 | ||||||||
R5 Class, $0.01 Par Value | $2,566,489 | 268,147 | $9.57 | ||||||||
R6 Class, $0.01 Par Value | $90,714,710 | 9,472,981 | $9.58 |
*Maximum offering price $10.12 (net asset value divided by 0.9425).
See Notes to Financial Statements.
10
Statement of Operations |
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $576,742) | $ | 32,521,417 | |||
Securities lending, net | 67,513 | ||||
Interest | 2,816 | ||||
32,591,746 | |||||
Expenses: | |||||
Management fees | 11,677,325 | ||||
Distribution and service fees: | |||||
A Class | 86,111 | ||||
C Class | 49,177 | ||||
R Class | 606,589 | ||||
Directors' fees and expenses | 33,868 | ||||
Other expenses | 420 | ||||
12,453,490 | |||||
Net investment income (loss) | 20,138,256 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 192,203,258 | ||||
Forward foreign currency exchange contract transactions | 4,797,392 | ||||
Foreign currency translation transactions | (7,567) | ||||
196,993,083 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (119,892,407) | ||||
Forward foreign currency exchange contracts | (759,378) | ||||
Translation of assets and liabilities in foreign currencies | (16,181) | ||||
(120,667,966) | |||||
Net realized and unrealized gain (loss) | 76,325,117 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 96,463,373 |
See Notes to Financial Statements.
11
Statement of Changes in Net Assets |
SIX MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED) AND YEAR ENDED MARCH 31, 2021 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2021 | March 31, 2021 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 20,138,256 | $ | 42,081,542 | ||||
Net realized gain (loss) | 196,993,083 | 110,465,919 | ||||||
Change in net unrealized appreciation (depreciation) | (120,667,966) | 939,867,042 | ||||||
Net increase (decrease) in net assets resulting from operations | 96,463,373 | 1,092,414,503 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (11,122,377) | (47,389,449) | ||||||
I Class | (5,055,880) | (18,043,626) | ||||||
Y Class | (1,402,813) | (3,313,630) | ||||||
A Class | (506,309) | (1,899,039) | ||||||
C Class | (37,270) | (261,340) | ||||||
R Class | (1,484,578) | (6,184,829) | ||||||
R5 Class | (24,376) | (69,988) | ||||||
R6 Class | (955,968) | (3,640,523) | ||||||
Decrease in net assets from distributions | (20,589,571) | (80,802,424) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (369,620,257) | (300,990,460) | ||||||
Net increase (decrease) in net assets | (293,746,455) | 710,621,619 | ||||||
Net Assets | ||||||||
Beginning of period | 2,609,608,219 | 1,898,986,600 | ||||||
End of period | $ | 2,315,861,764 | $ | 2,609,608,219 |
See Notes to Financial Statements.
12
Notes to Financial Statements |
SEPTEMBER 30, 2021 (UNAUDITED)
1. Organization
American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. 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.
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. 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.
14
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.
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).
15
The management fee schedule range and the effective annual management fee for each class for the period ended September 30, 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 September 30, 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 were $481,656 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended September 30, 2021 were $451,485,199 and $807,467,189, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2021 | Year ended March 31, 2021 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 1,350,000,000 | 1,350,000,000 | ||||||||||||
Sold | 6,126,755 | $ | 59,358,750 | 20,891,001 | $ | 162,180,523 | ||||||||
Issued in reinvestment of distributions | 1,132,271 | 10,720,778 | 5,782,191 | 45,104,856 | ||||||||||
Redeemed | (40,971,808) | (400,032,388) | (91,975,737) | (668,759,186) | ||||||||||
(33,712,782) | (329,952,860) | (65,302,545) | (461,473,807) | |||||||||||
I Class/Shares Authorized | 400,000,000 | 400,000,000 | ||||||||||||
Sold | 2,759,359 | 26,634,011 | 51,227,913 | 357,034,754 | ||||||||||
Issued in reinvestment of distributions | 527,534 | 5,004,768 | 2,287,477 | 17,868,731 | ||||||||||
Redeemed | (5,142,597) | (49,942,653) | (22,514,917) | (170,343,966) | ||||||||||
(1,855,704) | (18,303,874) | 31,000,473 | 204,559,519 | |||||||||||
Y Class/Shares Authorized | 130,000,000 | 130,000,000 | ||||||||||||
Sold | 4,879,635 | 46,533,867 | 6,831,633 | 51,846,513 | ||||||||||
Issued in reinvestment of distributions | 131,300 | 1,248,854 | 350,684 | 2,783,963 | ||||||||||
Redeemed | (6,099,407) | (59,457,524) | (1,838,386) | (13,846,282) | ||||||||||
(1,088,472) | (11,674,803) | 5,343,931 | 40,784,194 | |||||||||||
A Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 761,770 | 7,334,320 | 1,553,173 | 12,101,266 | ||||||||||
Issued in reinvestment of distributions | 48,369 | 457,236 | 219,542 | 1,712,093 | ||||||||||
Redeemed | (907,050) | (8,732,024) | (2,976,521) | (22,195,383) | ||||||||||
(96,911) | (940,468) | (1,203,806) | (8,382,024) | |||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Sold | 190,537 | 1,819,463 | 205,865 | 1,602,499 | ||||||||||
Issued in reinvestment of distributions | 3,964 | 36,791 | 33,493 | 256,871 | ||||||||||
Redeemed | (175,560) | (1,663,271) | (1,011,329) | (7,680,219) | ||||||||||
18,941 | 192,983 | (771,971) | (5,820,849) | |||||||||||
R Class/Shares Authorized | 175,000,000 | 175,000,000 | ||||||||||||
Sold | 636,916 | 6,157,731 | 2,127,440 | 15,336,461 | ||||||||||
Issued in reinvestment of distributions | 156,882 | 1,484,578 | 788,342 | 6,184,619 | ||||||||||
Redeemed | (1,170,116) | (11,275,642) | (2,259,988) | (18,088,339) | ||||||||||
(376,318) | (3,633,333) | 655,794 | 3,432,741 | |||||||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 22,583 | 220,886 | 26,422 | 196,902 | ||||||||||
Issued in reinvestment of distributions | 2,571 | 24,376 | 8,910 | 69,988 | ||||||||||
Redeemed | (1,382) | (13,124) | (13,919) | (105,851) | ||||||||||
23,772 | 232,138 | 21,413 | 161,039 | |||||||||||
R6 Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||
Sold | 1,508,904 | 14,577,588 | 6,460,861 | 49,366,293 | ||||||||||
Issued in reinvestment of distributions | 99,916 | 948,470 | 445,647 | 3,462,825 | ||||||||||
Redeemed | (2,170,079) | (21,066,098) | (17,181,917) | (127,080,391) | ||||||||||
(561,259) | (5,540,040) | (10,275,409) | (74,251,273) | |||||||||||
Net increase (decrease) | (37,648,733) | $ | (369,620,257) | (40,532,120) | $ | (300,990,460) |
17
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 | $ | 18,710,913 | $ | 24,826,042 | — | ||||||
Automobiles | 16,051,460 | 12,263,703 | — | ||||||||
Banks | 271,923,473 | 16,027,880 | — | ||||||||
Electronic Equipment, Instruments and Components | — | 9,763,180 | — | ||||||||
Food and Staples Retailing | 20,792,848 | 20,648,005 | — | ||||||||
Food Products | 78,371,887 | 30,655,245 | — | ||||||||
Hotels, Restaurants and Leisure | — | 15,574,775 | — | ||||||||
Industrial Conglomerates | 53,246,728 | 26,334,982 | — | ||||||||
Machinery | — | 13,302,813 | — | ||||||||
Metals and Mining | — | 12,874,915 | — | ||||||||
Oil, Gas and Consumable Fuels | 125,290,184 | 38,156,292 | — | ||||||||
Paper and Forest Products | — | 16,674,731 | — | ||||||||
Personal Products | — | 27,935,508 | — | ||||||||
Pharmaceuticals | 182,458,684 | 15,244,787 | — | ||||||||
Other Industries | 1,205,224,785 | — | — | ||||||||
Temporary Cash Investments | 12,317,845 | 45,902,018 | — | ||||||||
$ | 1,984,388,807 | $ | 326,184,876 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 2,487,497 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 63,902 | — |
18
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 $240,565,308.
The value of foreign currency risk derivative instruments as of September 30, 2021, is disclosed on the Statement of Assets and Liabilities as an asset of $2,487,497 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $63,902 in unrealized depreciation on forward foreign currency exchange contracts. For the six months ended September 30, 2021, the effect of foreign currency risk derivative instruments on the Statement of Operations was $4,797,392 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(759,378) 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 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 components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $ | 1,597,803,879 | |||
Gross tax appreciation of investments | $ | 737,205,444 | |||
Gross tax depreciation of investments | (24,435,640) | ||||
Net tax appreciation (depreciation) of investments | $ | 712,769,804 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
19
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(3) | $9.32 | 0.08 | 0.23 | 0.31 | (0.08) | — | (0.08) | $9.55 | 3.37% | 1.00%(4) | 1.57%(4) | 18% | $1,268,191 | ||||||||||||||||||||||||||||
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(3) | $9.34 | 0.09 | 0.23 | 0.32 | (0.09) | — | (0.09) | $9.57 | 3.46% | 0.80%(4) | 1.77%(4) | 18% | $524,622 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.34 | 0.09 | 0.24 | 0.33 | (0.10) | — | (0.10) | $9.57 | 3.54% | 0.65%(4) | 1.92%(4) | 18% | $113,235 | ||||||||||||||||||||||||||||
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(5) | $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%(6) | $1,038 |
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) | |||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.31 | 0.06 | 0.24 | 0.30 | (0.07) | — | (0.07) | $9.54 | 3.24% | 1.25%(4) | 1.32%(4) | 18% | $67,395 | ||||||||||||||||||||||||||||
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(3) | $9.13 | 0.03 | 0.24 | 0.27 | (0.04) | — | (0.04) | $9.36 | 2.91% | 2.00%(4) | 0.57%(4) | 18% | $9,621 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.31 | 0.05 | 0.25 | 0.30 | (0.06) | — | (0.06) | $9.55 | 3.22% | 1.50%(4) | 1.07%(4) | 18% | $239,517 | ||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.34 | 0.09 | 0.23 | 0.32 | (0.09) | — | (0.09) | $9.57 | 3.46% | 0.80%(4) | 1.77%(4) | 18% | $2,566 | ||||||||||||||||||||||||||||
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(5) | $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%(6) | $5 | ||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||
2021(3) | $9.34 | 0.09 | 0.25 | 0.34 | (0.10) | — | (0.10) | $9.58 | 3.65% | 0.65%(4) | 1.92%(4) | 18% | $90,715 | ||||||||||||||||||||||||||||
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)Six months ended September 30, 2021 (unaudited).
(4)Annualized.
(5)April 10, 2017 (commencement of sale) through March 31, 2018.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2018.
See Notes to Financial Statements.
Approval of Management Agreement |
At a meeting held on June 30, 2021, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor and its affiliates included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund including without limitation portfolio management and trading services, shareholder and intermediary services, compliance and legal services, fund accounting and financial reporting, and fund share distribution;
•the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers;
•the Advisor’s strategic plans, COVID-19 pandemic response, vendor management practices, and social justice initiatives;
•the Advisor’s business continuity plans and cyber security practices;
•financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•possible economies of scale associated with the Advisor’s management of the Fund and other accounts;
•services provided and charges to the Advisor's other investment management clients;
•acquired fund fees and expenses;
•payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; and
•possible collateral benefits to the Advisor from the management of the Fund.
The Board held two meetings to consider the renewal. The independent Directors also met in private session three times to review and discuss the information provided in response to their request. The independent Directors held active discussions with the Advisor regarding the renewal of the management agreement, requesting supplemental information, and reviewing information provided by the Advisor in response thereto. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
23
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services which include the following:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•liquidity monitoring and management
•risk management, including cyber security
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the ten-year period and below its benchmark for the one-, three-, and five-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor, including steps being taken to address underperformance, and was satisfied with the efforts being undertaken by the Advisor. The Board
24
found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe. In addition, the Board reviewed the Fund’s position relative to the narrower set of its expense group peers. The Board and the Advisor agreed to a change in the fee schedule for the Fund that should
25
result in a reduction of the Fund's management fee beginning August 1, 2021. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the possible existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. To the extent there are potential collateral benefits, the Board has been advised and has taken this into consideration in its review of the management contract with the Fund. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
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. These portfolio holdings are available on the fund's website at
americancentury.com and, upon request, by calling 1-800-345-2021. The fund’s Form N-PORT
reports are available on the SEC’s website at sec.gov.
27
Notes |
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-SAN-90807 2111 |
(b) None.
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable for semiannual report filings.
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) Not applicable for semiannual report filings.
(a)(2) Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT.
(a)(3) Not applicable.
(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: | November 23, 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: | November 23, 2021 |
By: | /s/ R. Wes Campbell | |||||||
Name: | R. Wes Campbell | |||||||
Title: | Treasurer and | |||||||
Chief Financial Officer | ||||||||
(principal financial officer) | ||||||||
Date: | November 23, 2021 |