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: | 03-31-2023 |
ITEM 1. REPORTS TO STOCKHOLDERS.
(a) Provided under separate cover.
![image25.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image25.jpg)
Annual Report | |||||
March 31, 2023 | |||||
Equity Income Fund | |||||
Investor Class (TWEIX) | |||||
I Class (ACIIX) | |||||
Y Class (AEIYX) | |||||
A Class (TWEAX) | |||||
C Class (AEYIX) | |||||
R Class (AEURX) | |||||
R5 Class (AEIUX) | |||||
R6 Class (AEUDX) | |||||
G Class (AEIMX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Proxy Voting Results | |||||
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 |
![image23.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image23.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2023. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Challenging Conditions Weighed on Asset Class Returns
Prevailing headwinds early in the reporting period continued to challenge U.S. financial markets throughout the 12 months. Asset class performance seesawed but declined overall amid mixed economic data, elevated inflation and anticipated monetary policy responses. By period-end, a new headwind emerged: banking industry uncertainty.
After launching its inflation-fighting rate-hike campaign in March 2022, the Federal Reserve (Fed) lifted rates eight more times by period-end. The federal funds target rate ended the reporting period at 4.75% to 5%, its highest level since 2007, while Treasury yields climbed to multiyear highs. Amid the Fed’s efforts, the annual inflation rate peaked at 9.1% in June, a 40-year high, before easing to 5% by March.
In addition to helping tame inflation, rapidly rising rates also fueled recession worries and led to expectations for the Fed to change course. This sentiment helped spark a rebound among stock and bond indices in the second half of the reporting period. The collapse of two U.S. regional banks late in the period and fears of a looming credit crunch and likely recession also contributed to market expectations for a Fed policy change. Nevertheless, the Fed indicated a near-term course change was unlikely.
Despite delivering strong gains in the second half of the reporting period, stock returns succumbed to first-half losses and declined for the 12 months. Similarly, weakness in the first half of the period overwhelmed second-half gains, and bond returns were negative for the 12-month period.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of still-high inflation, tighter financial conditions, banking industry turbulence and economic uncertainty. In addition, increasingly tense geopolitical considerations complicate the market backdrop.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image16a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWEIX | -3.22% | 7.07% | 8.65% | — | 8/1/94 | ||||||||||||||
Russell 3000 Value Index | — | -6.35% | 7.30% | 8.99% | — | — | ||||||||||||||
S&P 500 Index | — | -7.73% | 11.18% | 12.23% | — | — | ||||||||||||||
I Class | ACIIX | -3.03% | 7.28% | 8.86% | — | 7/8/98 | ||||||||||||||
Y Class | AEIYX | -2.87% | 7.45% | — | 7.21% | 4/10/17 | ||||||||||||||
A Class | TWEAX | 3/7/97 | ||||||||||||||||||
No sales charge | -3.46% | 6.81% | 8.38% | — | ||||||||||||||||
With sales charge | -9.01% | 5.55% | 7.74% | — | ||||||||||||||||
C Class | AEYIX | -4.17% | 6.01% | 7.58% | — | 7/13/01 | ||||||||||||||
R Class | AEURX | -3.71% | 6.55% | 8.12% | — | 8/29/03 | ||||||||||||||
R5 Class | AEIUX | -3.03% | 7.29% | — | 7.03% | 4/10/17 | ||||||||||||||
R6 Class | AEUDX | -2.88% | 7.43% | — | 8.66% | 7/26/13 | ||||||||||||||
G Class | AEIMX | -2.34% | — | — | 6.81% | 8/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available.
G Class returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
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Value on March 31, 2023 | |||||
Investor Class — $22,933 | |||||
Russell 3000 Value Index — $23,660 | |||||
S&P 500 Index — $31,736 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
0.94% | 0.74% | 0.59% | 1.19% | 1.94% | 1.44% | 0.74% | 0.59% | 0.59% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Brian Woglom, Paul Howanitz, Kevin Toney and Michael Liss
Phil Davidson stepped down as a portfolio manager of Equity Income on December 31, 2022, and retired from American Century on March 31, 2023.
Performance Summary
Equity Income returned -3.22%* for the fiscal year ended March 31, 2023, outperforming the Russell 3000 Value Index, which returned -6.35%. The fund’s return reflects operating expenses, while the index’s return does not.
The consumer staples sector contributed to performance relative to the benchmark due to security selection and an overweight allocation. Security selection in financials also boosted performance. In contrast, security selection in health care and an underweight to consumer discretionary detracted.
Consumer Staples and Financials Contributed
Our security selection and overweight in the consumer staples sector helped relative performance. Several holdings in the food products, personal care products and beverages industries outperformed as investors favored these relatively defensive companies amid market volatility and macroeconomic uncertainties. Unilever and PepsiCo outperformed.
Security selection in the financials sector contributed to returns, particularly in the banking industry. We did not own some of the benchmark’s bank names that were pressured by concerns about the banking system, including Bank of America and Wells Fargo & Co.
Elsewhere, Hubbell was a notable contributor. This industrial company’s margin exceeded expectations for its recent quarter, driven by solid price realization and restructuring benefits in its electrical division. In addition, utility demand remained strong.
Health Care and Consumer Discretionary Detracted
Security selection in the health care sector hindered relative performance. Selections in the health care equipment and supplies industry, including a position in medical device maker Medtronic, limited returns. Pharmaceuticals company Roche Holding also underperformed.
An underweight allocation to the consumer discretionary sector overall, and to the hotels, restaurants and leisure industry in particular, limited relative results.
Our position in Norfolk Southern detracted from performance. Shares of this transportation company underperformed following a high-profile train derailment that involved hazardous chemicals in East Palestine, Ohio. We view this as a short-term operational issue, and most of the associated financial impacts should be covered by the company’s insurance.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
MARCH 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 78.4% | ||||
Preferred Stocks | 7.5% | ||||
Equity-Linked Notes | 3.4% | ||||
Exchange-Traded Funds | 2.6% | ||||
Convertible Preferred Stocks | 2.4% | ||||
Convertible Bonds | 2.2% | ||||
Short-Term Investments | 5.2% | ||||
Other Assets and Liabilities | (1.7)% | ||||
Top Five Industries* | % of net assets | ||||
Banks | 8.8% | ||||
Pharmaceuticals | 7.2% | ||||
Capital Markets | 7.0% | ||||
Oil, Gas and Consumable Fuels | 6.7% | ||||
Health Care Equipment and Supplies | 5.9% |
*Exposure indicated excludes Exchange-Traded Funds. The Schedule of Investments provides additional information on the fund's portfolio holdings.
6
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2022 to March 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 10/1/22 | Ending Account Value 3/31/23 | Expenses Paid During Period(1) 10/1/22 - 3/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,105.70 | $4.83 | 0.92% | ||||||||||
I Class | $1,000 | $1,105.40 | $3.78 | 0.72% | ||||||||||
Y Class | $1,000 | $1,107.30 | $2.99 | 0.57% | ||||||||||
A Class | $1,000 | $1,104.40 | $6.14 | 1.17% | ||||||||||
C Class | $1,000 | $1,100.30 | $10.05 | 1.92% | ||||||||||
R Class | $1,000 | $1,102.20 | $7.44 | 1.42% | ||||||||||
R5 Class | $1,000 | $1,105.50 | $3.78 | 0.72% | ||||||||||
R6 Class | $1,000 | $1,106.10 | $2.99 | 0.57% | ||||||||||
G Class | $1,000 | $1,110.30 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.34 | $4.63 | 0.92% | ||||||||||
I Class | $1,000 | $1,021.34 | $3.63 | 0.72% | ||||||||||
Y Class | $1,000 | $1,022.09 | $2.87 | 0.57% | ||||||||||
A Class | $1,000 | $1,019.10 | $5.89 | 1.17% | ||||||||||
C Class | $1,000 | $1,015.36 | $9.65 | 1.92% | ||||||||||
R Class | $1,000 | $1,017.85 | $7.14 | 1.42% | ||||||||||
R5 Class | $1,000 | $1,021.34 | $3.63 | 0.72% | ||||||||||
R6 Class | $1,000 | $1,022.09 | $2.87 | 0.57% | ||||||||||
G Class | $1,000 | $1,024.93 | $0.00 | 0.00%(2) |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
(2)Other expenses did not exceed 0.005%.
8
Schedule of Investments |
MARCH 31, 2023
Shares/ Principal Amount | Value | |||||||
COMMON STOCKS — 78.4% | ||||||||
Aerospace and Defense — 2.5% | ||||||||
Raytheon Technologies Corp. | 2,581,639 | $ | 252,819,907 | |||||
Air Freight and Logistics — 0.5% | ||||||||
United Parcel Service, Inc., Class B | 260,437 | 50,522,174 | ||||||
Banks — 3.3% | ||||||||
Capitol Federal Financial, Inc.(1) | 7,876,086 | 53,006,059 | ||||||
Commerce Bancshares, Inc. | 628,264 | 36,659,204 | ||||||
JPMorgan Chase & Co. | 1,010,213 | 131,640,856 | ||||||
PNC Financial Services Group, Inc. | 391,447 | 49,752,914 | ||||||
Truist Financial Corp. | 607,015 | 20,699,211 | ||||||
U.S. Bancorp | 999,800 | 36,042,790 | ||||||
327,801,034 | ||||||||
Beverages — 2.1% | ||||||||
PepsiCo, Inc. | 1,170,261 | 213,338,580 | ||||||
Capital Markets — 4.6% | ||||||||
AllianceBernstein Holding LP | 1,491,030 | 54,512,057 | ||||||
Ameriprise Financial, Inc. | 141,838 | 43,473,347 | ||||||
Bank of New York Mellon Corp. | 1,200,304 | 54,541,814 | ||||||
BlackRock, Inc. | 112,258 | 75,114,073 | ||||||
Charles Schwab Corp. | 1,168,488 | 61,205,401 | ||||||
Northern Trust Corp. | 627,862 | 55,333,478 | ||||||
T. Rowe Price Group, Inc. | 1,041,435 | 117,578,011 | ||||||
461,758,181 | ||||||||
Chemicals — 2.9% | ||||||||
Akzo Nobel NV | 1,170,979 | 91,587,655 | ||||||
Linde PLC | 548,833 | 195,077,202 | ||||||
286,664,857 | ||||||||
Commercial Services and Supplies — 1.0% | ||||||||
Republic Services, Inc. | 734,965 | 99,381,967 | ||||||
Communications Equipment — 1.7% | ||||||||
Cisco Systems, Inc. | 3,314,164 | 173,247,923 | ||||||
Consumer Staples Distribution & Retail — 2.4% | ||||||||
Koninklijke Ahold Delhaize NV | 2,882,245 | 98,472,211 | ||||||
Walmart, Inc. | 938,996 | 138,454,960 | ||||||
236,927,171 | ||||||||
Containers and Packaging — 1.5% | ||||||||
Amcor PLC | 4,284,777 | 48,760,762 | ||||||
Packaging Corp. of America | 715,121 | 99,280,249 | ||||||
148,041,011 | ||||||||
Diversified Telecommunication Services — 2.0% | ||||||||
Verizon Communications, Inc. | 5,191,181 | 201,885,029 | ||||||
Electric Utilities — 1.6% | ||||||||
Duke Energy Corp. | 928,568 | 89,578,955 | ||||||
Eversource Energy | 864,173 | 67,630,179 | ||||||
157,209,134 | ||||||||
Electrical Equipment — 2.4% | ||||||||
Emerson Electric Co. | 1,115,023 | 97,163,104 |
9
Shares/ Principal Amount | Value | |||||||
Hubbell, Inc. | 379,980 | $ | 92,452,934 | |||||
Legrand SA | 544,355 | 49,738,978 | ||||||
239,355,016 | ||||||||
Electronic Equipment, Instruments and Components — 1.9% | ||||||||
Corning, Inc. | 3,568,612 | 125,900,632 | ||||||
TE Connectivity Ltd. | 508,202 | 66,650,692 | ||||||
192,551,324 | ||||||||
Energy Equipment and Services — 0.3% | ||||||||
Baker Hughes Co. | 999,992 | 28,859,769 | ||||||
Food Products — 4.9% | ||||||||
Hershey Co. | 525,590 | 133,715,352 | ||||||
Mondelez International, Inc., Class A | 3,046,670 | 212,413,832 | ||||||
Nestle SA | 1,142,618 | 139,319,988 | ||||||
485,449,172 | ||||||||
Gas Utilities — 5.1% | ||||||||
Atmos Energy Corp. | 1,287,405 | 144,652,826 | ||||||
ONE Gas, Inc. | 2,156,441 | 170,854,820 | ||||||
Spire, Inc.(1) | 2,772,727 | 194,479,072 | ||||||
509,986,718 | ||||||||
Ground Transportation — 1.5% | ||||||||
Norfolk Southern Corp. | 707,302 | 149,948,024 | ||||||
Health Care Equipment and Supplies — 4.5% | ||||||||
Becton Dickinson & Co. | 245,922 | 60,875,532 | ||||||
Medtronic PLC | 4,838,965 | 390,117,358 | ||||||
450,992,890 | ||||||||
Health Care Providers and Services — 1.1% | ||||||||
Quest Diagnostics, Inc. | 486,869 | 68,882,226 | ||||||
UnitedHealth Group, Inc. | 93,608 | 44,238,205 | ||||||
113,120,431 | ||||||||
Household Products — 5.0% | ||||||||
Colgate-Palmolive Co. | 2,636,108 | 198,103,516 | ||||||
Henkel AG & Co. KGaA, Preference Shares | 599,600 | 46,909,066 | ||||||
Kimberly-Clark Corp. | 1,192,044 | 159,996,146 | ||||||
Procter & Gamble Co. | 639,638 | 95,107,774 | ||||||
500,116,502 | ||||||||
Insurance — 3.6% | ||||||||
Aflac, Inc. | 691,847 | 44,637,968 | ||||||
Allstate Corp. | 880,157 | 97,530,197 | ||||||
Chubb Ltd. | 268,698 | 52,175,778 | ||||||
Marsh & McLennan Cos., Inc. | 862,341 | 143,622,894 | ||||||
MetLife, Inc. | 444,211 | 25,737,585 | ||||||
363,704,422 | ||||||||
Machinery — 0.3% | ||||||||
Atlas Copco AB, B Shares | 2,204,167 | 25,353,951 | ||||||
Media — 0.5% | ||||||||
Omnicom Group, Inc. | 547,292 | 51,631,527 | ||||||
Oil, Gas and Consumable Fuels — 6.7% | ||||||||
Chevron Corp. | 799,883 | 130,508,910 | ||||||
Enterprise Products Partners LP | 6,937,331 | 179,676,873 | ||||||
Exxon Mobil Corp. | 2,547,482 | 279,356,876 | ||||||
TotalEnergies SE(2) | 1,302,667 | 76,810,029 | ||||||
666,352,688 |
10
Shares/ Principal Amount | Value | |||||||
Personal Care Products — 1.8% | ||||||||
Unilever PLC | 3,503,271 | $ | 181,349,733 | |||||
Pharmaceuticals — 7.2% | ||||||||
Johnson & Johnson | 3,016,132 | 467,500,460 | ||||||
Roche Holding AG | 708,868 | 202,553,686 | ||||||
Sanofi, ADR | 906,685 | 49,341,798 | ||||||
719,395,944 | ||||||||
Professional Services — 2.3% | ||||||||
Automatic Data Processing, Inc. | 1,017,996 | 226,636,449 | ||||||
Semiconductors and Semiconductor Equipment — 0.9% | ||||||||
Texas Instruments, Inc. | 482,166 | 89,687,698 | ||||||
Software — 0.9% | ||||||||
Microsoft Corp. | 324,329 | 93,504,051 | ||||||
Specialized REITs — 1.4% | ||||||||
American Tower Corp. | 369,808 | 75,566,567 | ||||||
Public Storage | 219,555 | 66,336,347 | ||||||
141,902,914 | ||||||||
TOTAL COMMON STOCKS (Cost $6,118,150,143) | 7,839,496,191 | |||||||
PREFERRED STOCKS — 7.5% | ||||||||
Banks — 5.1% | ||||||||
Bank of America Corp., 6.30%(2) | 91,186,000 | 91,527,947 | ||||||
Citigroup, Inc., 8.87% | 74,851,000 | 74,476,745 | ||||||
JPMorgan Chase & Co., 4.60% | 79,669,000 | 74,291,343 | ||||||
JPMorgan Chase & Co., 5.00% | 112,767,000 | 108,338,076 | ||||||
Truist Financial Corp., 4.95% | 138,674,000 | 128,520,516 | ||||||
Truist Financial Corp., 5.10%(2) | 39,892,000 | 35,127,084 | ||||||
512,281,711 | ||||||||
Capital Markets — 2.4% | ||||||||
Bank of New York Mellon Corp., 4.70% | 69,976,000 | 66,391,068 | ||||||
Charles Schwab Corp., 4.00%(2) | 67,244,000 | 54,906,071 | ||||||
Charles Schwab Corp., 5.375%(2) | 124,754,000 | 118,828,185 | ||||||
240,125,324 | ||||||||
TOTAL PREFERRED STOCKS (Cost $795,280,333) | 752,407,035 | |||||||
EQUITY-LINKED NOTES — 3.4% | ||||||||
Building Products — 0.2% | ||||||||
Royal Bank of Canada, (convertible into Masco Corp.), 11.00%, 4/26/23(3) | $ | 396,800 | 18,890,816 | |||||
Consumer Staples Distribution & Retail — 0.2% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Dollar Tree, Inc.), 11.64%, 7/24/23(3) | 135,600 | 19,169,845 | ||||||
Entertainment — 0.3% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Walt Disney Co.), 15.47%, 7/10/23(3) | 288,800 | 27,143,262 | ||||||
Financial Services — 2.2% | ||||||||
Goldman Sachs International, (convertible into Berkshire Hathaway, Inc., Class B), 4.37%, 7/27/23(3) | 73,200 | 22,623,012 | ||||||
Goldman Sachs International, (convertible into Berkshire Hathaway, Inc., Class B), 4.99%, 9/6/23(3) | 76,197 | 23,054,760 | ||||||
Goldman Sachs International, (convertible into Berkshire Hathaway, Inc., Class B), 5.82%, 9/13/23(3) | 74,426 | 22,506,695 | ||||||
JPMorgan Chase Bank N.A., (convertible into Berkshire Hathaway, Inc., Class B), 4.96%, 9/19/23(3) | 74,886 | 23,395,765 |
11
Shares/ Principal Amount | Value | |||||||
JPMorgan Chase Bank N.A., (convertible into Berkshire Hathaway, Inc., Class B), 5.75%, 9/19/23(3) | $ | 73,814 | $ | 22,044,273 | ||||
Merrill Lynch International & Co. C.V., (convertible into Berkshire Hathaway, Inc., Class B), 4.94%, 8/17/23(3) | 59,764 | 18,474,612 | ||||||
Merrill Lynch International & Co. C.V., (convertible into Berkshire Hathaway, Inc., Class B), 7.82%, 5/8/23(3) | 88,200 | 25,681,775 | ||||||
Merrill Lynch International & Co. C.V., (convertible into Berkshire Hathaway, Inc., Class B), 8.68%, 4/24/23(3) | 109,700 | 31,338,860 | ||||||
UBS AG, (convertible into Berkshire Hathaway, Inc., Class B), 6.10%, 6/15/23(3) | 109,900 | 34,015,976 | ||||||
223,135,728 | ||||||||
Machinery — 0.2% | ||||||||
UBS AG, (convertible into Stanley Black & Decker, Inc.), 19.75%, 4/17/23(3) | 249,900 | 19,422,700 | ||||||
Semiconductors and Semiconductor Equipment — 0.2% | ||||||||
JPMorgan Chase Bank N.A., (convertible into Applied Materials, Inc.), 17.40%, 8/22/23(3) | 157,512 | 18,739,494 | ||||||
Specialty Retail — 0.1% | ||||||||
Citigroup Global Markets Holdings, Inc., (convertible into Advance Auto Parts, Inc.), 13.12%, 9/7/23(3) | 125,542 | 15,814,778 | ||||||
TOTAL EQUITY-LINKED NOTES (Cost $342,257,701) | 342,316,623 | |||||||
EXCHANGE-TRADED FUNDS — 2.6% | ||||||||
iShares Russell 1000 Value ETF (Cost $234,459,363) | 1,681,414 | 256,012,096 | ||||||
CONVERTIBLE PREFERRED STOCKS — 2.4% | ||||||||
Banks — 0.4% | ||||||||
Bank of America Corp., 7.25% | 37,357 | 43,534,354 | ||||||
Electric Utilities — 0.6% | ||||||||
NextEra Energy, Inc., 6.93%, 9/1/25 | 1,295,835 | 59,938,848 | ||||||
Health Care Equipment and Supplies — 1.4% | ||||||||
Becton Dickinson & Co., 6.00%, 6/1/23(2) | 2,799,928 | 139,212,420 | ||||||
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $260,162,291) | 242,685,622 | |||||||
CONVERTIBLE BONDS — 2.2% | ||||||||
Hotels, Restaurants and Leisure — 0.7% | ||||||||
Cracker Barrel Old Country Store, Inc., 0.625%, 6/15/26 | $ | 79,969,000 | 72,172,022 | |||||
Passenger Airlines — 0.3% | ||||||||
Southwest Airlines Co., 1.25%, 5/1/25(2) | 22,999,000 | 26,213,110 | ||||||
Semiconductors and Semiconductor Equipment — 1.2% | ||||||||
Microchip Technology, Inc., 0.125%, 11/15/24(2) | 109,857,000 | 123,184,866 | ||||||
TOTAL CONVERTIBLE BONDS (Cost $223,122,461) | 221,569,998 | |||||||
SHORT-TERM INVESTMENTS — 5.2% | ||||||||
Discount Notes(4) — 0.9% | ||||||||
Federal Home Loan Bank Discount Notes, 4.46%, 4/3/23 | 90,000,000 | 89,999,999 | ||||||
Money Market Funds — 2.1% | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 39,115 | 39,115 | ||||||
State Street Navigator Securities Lending Government Money Market Portfolio(5) | 211,328,551 | 211,328,551 | ||||||
211,367,666 | ||||||||
12
Shares/ Principal Amount | Value | |||||||
Repurchase Agreements — 2.2% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.125% - 4.375%, 8/15/40 - 5/15/49, valued at $57,965,453), in a joint trading account at 4.67%, dated 3/31/23, due 4/3/23 (Delivery value $55,931,291) | $ | 55,909,533 | ||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 3/31/28, valued at $164,956,510), at 4.81%, dated 3/31/23, due 4/3/23 (Delivery value $161,786,824) | 161,722,000 | |||||||
217,631,533 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $518,977,448) | 518,999,198 | |||||||
TOTAL INVESTMENT SECURITIES — 101.7% (Cost $8,492,409,740) | 10,173,486,763 | |||||||
OTHER ASSETS AND LIABILITIES — (1.7)% | (165,650,491) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 10,007,836,272 |
WRITTEN OPTIONS CONTRACTS | |||||||||||||||||||||||
Reference Equity | Contracts | Type | Exercise Price | Expiration Date | Underlying Notional Amount | Premiums Received | Value | ||||||||||||||||
AllianceBernstein Holding LP | 3,239 | Put | $ | 30.00 | 4/21/23 | $ | 11,841,784 | $ | (66,092) | $ | (16,195) | ||||||||||||
Charles Schwab Corp. | 2,777 | Put | 35.00 | 4/21/23 | $ | 14,545,926 | (152,800) | (40,267) | |||||||||||||||
Johnson & Johnson | 679 | Put | 145.00 | 4/21/23 | $ | 10,524,500 | (73,176) | (27,839) | |||||||||||||||
Kimberly-Clark Corp. | 404 | Put | 120.00 | 4/21/23 | $ | 5,422,488 | (33,823) | (4,040) | |||||||||||||||
Medtronic PLC | 1,308 | Put | 75.00 | 4/21/23 | $ | 10,545,096 | (84,079) | (53,628) | |||||||||||||||
Norfolk Southern Corp. | 524 | Put | 185.00 | 4/21/23 | $ | 11,108,800 | (101,493) | (22,270) | |||||||||||||||
$ | (511,463) | $ | (164,239) |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 294,113,029 | CHF | 266,750,224 | Morgan Stanley | 6/30/23 | $ | (164,395) | |||||||||||||
EUR | 12,734,764 | USD | 13,818,683 | JPMorgan Chase Bank N.A. | 6/30/23 | 59,730 | ||||||||||||||
USD | 513,086,260 | EUR | 474,947,941 | JPMorgan Chase Bank N.A. | 6/30/23 | (4,514,528) | ||||||||||||||
SEK | 29,268,850 | USD | 2,829,871 | UBS AG | 6/30/23 | 2,806 | ||||||||||||||
USD | 23,101,246 | SEK | 239,658,799 | UBS AG | 6/30/23 | (93,243) | ||||||||||||||
USD | 551,848 | SEK | 5,686,215 | UBS AG | 6/30/23 | 1,529 | ||||||||||||||
USD | 1,762 | SEK | 18,165 | UBS AG | 6/30/23 | 4 | ||||||||||||||
$ | (4,708,097) |
13
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | – | American Depositary Receipt | ||||||
CHF | – | Swiss Franc | ||||||
EUR | – | Euro | ||||||
SEK | – | Swedish Krona | ||||||
USD | – | United States Dollar |
(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 $206,367,056. 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 $342,316,623, which represented 3.4% of total net assets.
(4)The rate indicated is the yield to maturity at purchase for non-interest bearing securities. For interest bearing securities, the stated coupon rate is shown.
(5)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $212,607,246, which includes securities collateral of $1,278,695.
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
MARCH 31, 2023 | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $7,996,322,597) — including $206,367,056 of securities on loan | $ | 9,714,673,081 | |||
Investment securities - affiliated, at value (cost of $284,758,592) | 247,485,131 | ||||
Investment made with cash collateral received for securities on loan, at value (cost of $211,328,551) | 211,328,551 | ||||
Total investment securities, at value (cost of $8,492,409,740) | 10,173,486,763 | ||||
Deposits with broker for options contracts | 16,090,200 | ||||
Receivable for investments sold | 14,829,228 | ||||
Receivable for capital shares sold | 8,003,706 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 64,069 | ||||
Dividends and interest receivable | 33,329,363 | ||||
Securities lending receivable | 227,555 | ||||
10,246,030,884 | |||||
Liabilities | |||||
Written options, at value (premiums received $511,463) | 164,239 | ||||
Payable for collateral received for securities on loan | 211,328,551 | ||||
Payable for investments purchased | 3,971,967 | ||||
Payable for capital shares redeemed | 10,967,418 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 4,772,166 | ||||
Accrued management fees | 6,643,620 | ||||
Distribution and service fees payable | 346,651 | ||||
238,194,612 | |||||
Net Assets | $ | 10,007,836,272 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 8,226,271,064 | |||
Distributable earnings (loss) | 1,781,565,208 | ||||
$ | 10,007,836,272 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $3,635,179,168 | 414,974,815 | $8.76 | ||||||||
I Class, $0.01 Par Value | $4,265,425,052 | 486,191,276 | $8.77 | ||||||||
Y Class, $0.01 Par Value | $227,226,837 | 25,864,001 | $8.79 | ||||||||
A Class, $0.01 Par Value | $747,365,011 | 85,325,043 | $8.76 | ||||||||
C Class, $0.01 Par Value | $204,407,119 | 23,342,473 | $8.76 | ||||||||
R Class, $0.01 Par Value | $40,524,699 | 4,648,869 | $8.72 | ||||||||
R5 Class, $0.01 Par Value | $64,341,393 | 7,342,630 | $8.76 | ||||||||
R6 Class, $0.01 Par Value | $823,360,626 | 93,742,506 | $8.78 | ||||||||
G Class, $0.01 Par Value | $6,367 | 724 | $8.79 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except Class A, for which the maximum offering price per share was $9.29 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of Class A and Class C.
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED MARCH 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $20,734,915 from affiliates and net of foreign taxes withheld of $3,902,299) | $ | 275,915,385 | |||
Interest | 60,276,148 | ||||
Securities lending, net | 1,587,370 | ||||
337,778,903 | |||||
Expenses: | |||||
Management fees | 82,833,073 | ||||
Distribution and service fees: | |||||
A Class | 1,952,961 | ||||
C Class | 2,332,977 | ||||
R Class | 211,764 | ||||
Directors' fees and expenses | 323,828 | ||||
Other expenses | 589,624 | ||||
88,244,227 | |||||
Fees waived - G Class | (35) | ||||
88,244,192 | |||||
Net investment income (loss) | 249,534,711 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $5,852,763 from affiliates) | 393,029,421 | ||||
Forward foreign currency exchange contract transactions | 33,900,053 | ||||
Written options contract transactions | 7,940,789 | ||||
Foreign currency translation transactions | (221,054) | ||||
434,649,209 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $(66,121,237) from affiliates) | (1,068,829,762) | ||||
Forward foreign currency exchange contracts | 198,411 | ||||
Written options contracts | 302,508 | ||||
Translation of assets and liabilities in foreign currencies | (49,124) | ||||
(1,068,377,967) | |||||
Net realized and unrealized gain (loss) | (633,728,758) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (384,194,047) |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2023 AND MARCH 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2023 | March 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 249,534,711 | $ | 228,936,656 | ||||
Net realized gain (loss) | 434,649,209 | 960,066,639 | ||||||
Change in net unrealized appreciation (depreciation) | (1,068,377,967) | 153,576,031 | ||||||
Net increase (decrease) in net assets resulting from operations | (384,194,047) | 1,342,579,326 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (310,571,931) | (282,936,433) | ||||||
I Class | (377,999,062) | (351,310,719) | ||||||
Y Class | (20,583,258) | (19,904,820) | ||||||
A Class | (62,428,465) | (56,093,134) | ||||||
C Class | (16,563,683) | (16,328,252) | ||||||
R Class | (3,252,890) | (3,104,626) | ||||||
R5 Class | (5,326,994) | (4,527,186) | ||||||
R6 Class | (73,084,105) | (73,621,920) | ||||||
G Class | (575) | (476) | ||||||
Decrease in net assets from distributions | (869,810,963) | (807,827,566) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (384,538,047) | (881,461,208) | ||||||
Net increase (decrease) in net assets | (1,638,543,057) | (346,709,448) | ||||||
Net Assets | ||||||||
Beginning of period | 11,646,379,329 | 11,993,088,777 | ||||||
End of period | $ | 10,007,836,272 | $ | 11,646,379,329 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
MARCH 31, 2023
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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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.
18
Open-end management investment companies are valued at the reported NAV per share. Equity-linked notes are valued at the mean using market models that consider quotations from dealer and active market makers. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded options contracts are valued at a mean as provided by independent pricing services. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
If the valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
The valuation designee 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; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 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.
19
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. 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.
20
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2023.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 75,561,403 | — | — | — | $ | 75,561,403 | ||||||||||
Convertible Bonds | $ | 82,387,583 | — | — | — | $ | 82,387,583 | ||||||||||
Convertible Preferred Stocks | $ | 723,717 | — | — | — | $ | 723,717 | ||||||||||
Preferred Stocks | $ | 52,655,848 | — | — | — | $ | 52,655,848 | ||||||||||
Total Borrowings | $ | 211,328,551 | — | — | — | $ | 211,328,551 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 211,328,551 |
(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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets). The investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.80% to 1.00% | 0.91% | ||||||
I Class | 0.60% to 0.80% | 0.71% | ||||||
Y Class | 0.45% to 0.65% | 0.56% | ||||||
A Class | 0.80% to 1.00% | 0.91% | ||||||
C Class | 0.80% to 1.00% | 0.91% | ||||||
R Class | 0.80% to 1.00% | 0.91% | ||||||
R5 Class | 0.60% to 0.80% | 0.71% | ||||||
R6 Class | 0.45% to 0.65% | 0.56% | ||||||
G Class | 0.45% to 0.65% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.56%.
21
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended March 31, 2023 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 $4,838,214 and $9,210,681, respectively. The effect of interfund transactions on the Statement of Operations was $4,519,436 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended March 31, 2023 were $2,843,123,202 and $3,921,928,580, respectively.
22
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2023 | Year ended March 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 3,900,000,000 | 3,600,000,000 | ||||||||||||
Sold | 28,747,919 | $ | 264,128,611 | 33,470,395 | $ | 329,446,877 | ||||||||
Issued in reinvestment of distributions | 34,321,374 | 301,750,127 | 28,470,849 | 275,292,827 | ||||||||||
Redeemed | (73,189,590) | (668,637,245) | (82,385,577) | (814,231,066) | ||||||||||
(10,120,297) | (102,758,507) | (20,444,333) | (209,491,362) | |||||||||||
I Class/Shares Authorized | 4,500,000,000 | 3,850,000,000 | ||||||||||||
Sold | 87,993,965 | 804,477,327 | 83,497,773 | 824,814,991 | ||||||||||
Issued in reinvestment of distributions | 40,885,907 | 359,903,834 | 34,687,065 | 335,831,117 | ||||||||||
Redeemed | (140,189,168) | (1,280,211,740) | (166,604,042) | (1,645,207,735) | ||||||||||
(11,309,296) | (115,830,579) | (48,419,204) | (484,561,627) | |||||||||||
Y Class/Shares Authorized | 200,000,000 | 200,000,000 | ||||||||||||
Sold | 3,533,151 | 32,599,997 | 3,006,421 | 29,772,413 | ||||||||||
Issued in reinvestment of distributions | 2,235,584 | 19,721,230 | 1,970,619 | 19,101,347 | ||||||||||
Redeemed | (7,824,058) | (71,897,428) | (6,777,802) | (66,943,223) | ||||||||||
(2,055,323) | (19,576,201) | (1,800,762) | (18,069,463) | |||||||||||
A Class/Shares Authorized | 920,000,000 | 720,000,000 | ||||||||||||
Sold | 10,291,287 | 94,176,513 | 10,243,100 | 100,942,790 | ||||||||||
Issued in reinvestment of distributions | 6,621,291 | 58,207,626 | 5,416,057 | 52,355,264 | ||||||||||
Redeemed | (18,656,364) | (169,693,705) | (20,543,107) | (203,100,842) | ||||||||||
(1,743,786) | (17,309,566) | (4,883,950) | (49,802,788) | |||||||||||
C Class/Shares Authorized | 275,000,000 | 275,000,000 | ||||||||||||
Sold | 1,787,336 | 16,420,882 | 2,059,118 | 20,283,318 | ||||||||||
Issued in reinvestment of distributions | 1,802,032 | 15,837,408 | 1,614,770 | 15,594,055 | ||||||||||
Redeemed | (7,916,820) | (72,119,278) | (8,087,187) | (79,697,877) | ||||||||||
(4,327,452) | (39,860,988) | (4,413,299) | (43,820,504) | |||||||||||
R Class/Shares Authorized | 60,000,000 | 70,000,000 | ||||||||||||
Sold | 567,081 | 5,158,279 | 660,105 | 6,445,056 | ||||||||||
Issued in reinvestment of distributions | 371,752 | 3,252,874 | 322,570 | 3,104,583 | ||||||||||
Redeemed | (1,163,434) | (10,591,388) | (2,167,923) | (21,239,748) | ||||||||||
(224,601) | (2,180,235) | (1,185,248) | (11,690,109) | |||||||||||
R5 Class/Shares Authorized | 80,000,000 | 50,000,000 | ||||||||||||
Sold | 1,004,015 | 9,132,981 | 922,859 | 9,138,075 | ||||||||||
Issued in reinvestment of distributions | 605,940 | 5,326,994 | 468,144 | 4,527,186 | ||||||||||
Redeemed | (972,211) | (8,869,421) | (1,307,541) | (12,993,195) | ||||||||||
637,744 | 5,590,554 | 83,462 | 672,066 | |||||||||||
R6 Class/Shares Authorized | 800,000,000 | 800,000,000 | ||||||||||||
Sold | 20,354,605 | 186,771,660 | 24,925,775 | 245,778,944 | ||||||||||
Issued in reinvestment of distributions | 8,292,491 | 73,084,105 | 7,593,972 | 73,609,160 | ||||||||||
Redeemed | (38,237,774) | (352,468,865) | (39,033,573) | (384,086,001) | ||||||||||
(9,590,678) | (92,613,100) | (6,513,826) | (64,697,897) | |||||||||||
G Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Issued in reinvestment of distributions | 65 | 575 | 49 | 476 | ||||||||||
Net increase (decrease) | (38,733,624) | $ | (384,538,047) | (87,577,111) | $ | (881,461,208) |
23
6. Affiliated Company Transactions
If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the period ended March 31, 2023 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. | $ | 86,106 | $ | 116 | $ | 602 | $ | (32,614) | $ | 53,006 | 7,876 | $ | (240) | $ | 6,498 | |||||||||||
ONE Gas, Inc.(1) | 260,206 | 2,357 | 62,487 | (29,221) | (1) | (1) | 6,440 | 6,568 | ||||||||||||||||||
Spire, Inc. | 179,393 | 21,642 | 2,270 | (4,286) | 194,479 | 2,773 | (347) | 7,669 | ||||||||||||||||||
$ | 525,705 | $ | 24,115 | $ | 65,359 | $ | (66,121) | $ | 247,485 | 10,649 | $ | 5,853 | $ | 20,735 |
(1)Company was not an affiliate at March 31, 2023
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.
24
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 | |||||||||||
Chemicals | $ | 195,077,202 | $ | 91,587,655 | — | ||||||
Consumer Staples Distribution & Retail | 138,454,960 | 98,472,211 | — | ||||||||
Electrical Equipment | 189,616,038 | 49,738,978 | — | ||||||||
Food Products | 346,129,184 | 139,319,988 | — | ||||||||
Household Products | 453,207,436 | 46,909,066 | — | ||||||||
Machinery | — | 25,353,951 | — | ||||||||
Oil, Gas and Consumable Fuels | 589,542,659 | 76,810,029 | — | ||||||||
Personal Care Products | — | 181,349,733 | — | ||||||||
Pharmaceuticals | 516,842,258 | 202,553,686 | — | ||||||||
Other Industries | 4,498,531,157 | — | — | ||||||||
Preferred Stocks | — | 752,407,035 | — | ||||||||
Equity-Linked Notes | — | 342,316,623 | — | ||||||||
Exchange-Traded Funds | 256,012,096 | — | — | ||||||||
Convertible Preferred Stocks | 139,212,420 | 103,473,202 | — | ||||||||
Convertible Bonds | — | 221,569,998 | — | ||||||||
Short-Term Investments | 211,367,666 | 307,631,532 | — | ||||||||
$ | 7,533,993,076 | $ | 2,639,493,687 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 64,069 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 4,772,166 | — | |||||||
Written Options Contracts | $ | 164,239 | — | — | |||||||
$ | 164,239 | $ | 4,772,166 | — |
25
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 will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 6,144 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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 $918,583,905.
Value of Derivative Instruments as of March 31, 2023
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 | $ | 164,239 | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | $ | 64,069 | Unrealized depreciation on forward foreign currency exchange contracts | 4,772,166 | |||||||||
$ | 64,069 | $ | 4,936,405 |
26
Effect of Derivative Instruments on the Statement of Operations for the Year Ended March 31, 2023
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 | $ | 7,940,789 | Change in net unrealized appreciation (depreciation) on written options contracts | $ | 302,508 | ||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | 33,900,053 | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 198,411 | ||||||||||
$ | 41,840,842 | $ | 500,919 |
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, war, 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 tax character of distributions paid during the years ended March 31, 2023 and March 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 334,595,885 | $ | 349,809,542 | ||||
Long-term capital gains | $ | 535,215,078 | $ | 458,018,024 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 8,505,598,390 | |||
Gross tax appreciation of investments | $ | 1,942,036,870 | |||
Gross tax depreciation of investments | (274,148,497) | ||||
Net tax appreciation (depreciation) of investments | 1,667,888,373 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 440,400 | ||||
Net tax appreciation (depreciation) | $ | 1,668,328,773 | |||
Undistributed ordinary income | $ | 7,463,904 | |||
Accumulated long-term gains | $ | 105,772,531 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, the realization for tax purposes of unrealized gain (losses) on certain foreign currency exchange contracts and the timing and recognition of partnership income.
27
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.86 | 0.21 | (0.53) | (0.32) | (0.21) | (0.57) | (0.78) | $8.76 | (3.22)% | 0.92% | 0.92% | 2.29% | 2.29% | 29% | $3,635,179 | ||||||||||||||||||||||||||||||||
2022 | $9.45 | 0.18 | 0.91 | 1.09 | (0.19) | (0.49) | (0.68) | $9.86 | 11.74% | 0.93% | 0.93% | 1.83% | 1.83% | 24% | $4,191,544 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.87 | 0.23 | (0.53) | (0.30) | (0.23) | (0.57) | (0.80) | $8.77 | (3.03)% | 0.72% | 0.72% | 2.49% | 2.49% | 29% | $4,265,425 | ||||||||||||||||||||||||||||||||
2022 | $9.47 | 0.20 | 0.90 | 1.10 | (0.21) | (0.49) | (0.70) | $9.87 | 11.83% | 0.73% | 0.73% | 2.03% | 2.03% | 24% | $4,912,267 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.89 | 0.24 | (0.53) | (0.29) | (0.24) | (0.57) | (0.81) | $8.79 | (2.87)% | 0.57% | 0.57% | 2.64% | 2.64% | 29% | $227,227 | ||||||||||||||||||||||||||||||||
2022 | $9.48 | 0.22 | 0.90 | 1.12 | (0.22) | (0.49) | (0.71) | $9.89 | 12.10% | 0.58% | 0.58% | 2.18% | 2.18% | 24% | $276,001 | ||||||||||||||||||||||||||||||||
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 |
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) | |||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.86 | 0.19 | (0.53) | (0.34) | (0.19) | (0.57) | (0.76) | $8.76 | (3.46)% | 1.17% | 1.17% | 2.04% | 2.04% | 29% | $747,365 | ||||||||||||||||||||||||||||||||
2022 | $9.45 | 0.16 | 0.90 | 1.06 | (0.16) | (0.49) | (0.65) | $9.86 | 11.46% | 1.18% | 1.18% | 1.58% | 1.58% | 24% | $858,437 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.86 | 0.12 | (0.53) | (0.41) | (0.12) | (0.57) | (0.69) | $8.76 | (4.17)% | 1.92% | 1.92% | 1.29% | 1.29% | 29% | $204,407 | ||||||||||||||||||||||||||||||||
2022 | $9.45 | 0.08 | 0.91 | 0.99 | (0.09) | (0.49) | (0.58) | $9.86 | 10.63% | 1.93% | 1.93% | 0.83% | 0.83% | 24% | $272,764 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.82 | 0.16 | (0.53) | (0.37) | (0.16) | (0.57) | (0.73) | $8.72 | (3.71)% | 1.42% | 1.42% | 1.79% | 1.79% | 29% | $40,525 | ||||||||||||||||||||||||||||||||
2022 | $9.41 | 0.13 | 0.91 | 1.04 | (0.14) | (0.49) | (0.63) | $9.82 | 11.23% | 1.43% | 1.43% | 1.33% | 1.33% | 24% | $47,839 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.86 | 0.23 | (0.53) | (0.30) | (0.23) | (0.57) | (0.80) | $8.76 | (3.03)% | 0.72% | 0.72% | 2.49% | 2.49% | 29% | $64,341 | ||||||||||||||||||||||||||||||||
2022 | $9.46 | 0.20 | 0.90 | 1.10 | (0.21) | (0.49) | (0.70) | $9.86 | 11.84% | 0.73% | 0.73% | 2.03% | 2.03% | 24% | $66,131 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.88 | 0.24 | (0.53) | (0.29) | (0.24) | (0.57) | (0.81) | $8.78 | (2.88)% | 0.57% | 0.57% | 2.64% | 2.64% | 29% | $823,361 | ||||||||||||||||||||||||||||||||
2022 | $9.47 | 0.22 | 0.90 | 1.12 | (0.22) | (0.49) | (0.71) | $9.88 | 12.10% | 0.58% | 0.58% | 2.18% | 2.18% | 24% | $1,021,389 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.89 | 0.29 | (0.53) | (0.24) | (0.29) | (0.57) | (0.86) | $8.79 | (2.34)% | 0.01% | 0.57% | 3.20% | 2.64% | 29% | $6 | ||||||||||||||||||||||||||||||||
2022 | $9.48 | 0.26 | 0.92 | 1.18 | (0.28) | (0.49) | (0.77) | $9.89 | 12.72% | 0.03% | 0.58% | 2.73% | 2.18% | 24% | $7 | ||||||||||||||||||||||||||||||||
2021 | $7.16 | 0.27 | 2.32 | 2.59 | (0.27) | — | (0.27) | $9.48 | 36.61% | 0.00%(3) | 0.56% | 3.01% | 2.45% | 52% | $6 | ||||||||||||||||||||||||||||||||
2020(4) | $9.06 | 0.18 | (1.43) | (1.25) | (0.18) | (0.47) | (0.65) | $7.16 | (15.32)% | 0.00%(3)(5) | 0.56%(5) | 3.02%(5) | 2.46%(5) | 85%(6) | $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)Ratio was less than 0.005%.
(4)August 1, 2019 (commencement of sale) through March 31, 2020.
(5)Annualized.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2020.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Equity Income Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Equity Income Fund of the American Century Capital Portfolios, Inc. as of March 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
May 16, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
32
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 64 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 64 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 64 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 64 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 64 | None |
33
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 64 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 64 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 64 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 109 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 141 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
34
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present); Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
35
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates, including members of ACIM’s Investment Oversight Committee who are members of ACIM’s Investment Management and Global Analytics departments, conduct the day-to-day operation of the program pursuant to the program.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain investments held by the Fund is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2022 through December 31, 2022. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
36
Proxy Voting Results |
A special meeting of shareholders was held on October 13, 2022, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect five directors to the Board of Directors of American Century Capital Portfolios, Inc.:
Affirmative | Withhold | ||||||||||
Brian Bulatao | $ | 17,572,790,908 | $ | 417,511,059 | |||||||
Chris H. Cheesman | $ | 17,634,906,815 | $ | 355,395,152 | |||||||
Rajesh K. Gupta | $ | 17,620,399,260 | $ | 369,902,707 | |||||||
Lynn M. Jenkins | $ | 17,600,718,699 | $ | 389,583,268 | |||||||
Gary C. Meltzer | $ | 17,633,346,402 | $ | 356,955,565 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas W. Bunn, Barry Fink, Jan M. Lewis, and Stephen E. Yates.
37
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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.
38
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2023.
For corporate taxpayers, the fund hereby designates $201,678,992, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $66,244,611 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2023.
The fund hereby designates $567,050,277, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2023.
The fund utilized earnings and profits of $31,835,199 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
39
Notes |
40
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Capital Portfolios, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92268 2305 |
![image25.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image25.jpg)
Annual Report | |||||
March 31, 2023 | |||||
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) | |||||
G Class (ACFLX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Proxy Voting Results | |||||
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 |
![image23.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image23.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2023. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Challenging Conditions Weighed on Asset Class Returns
Prevailing headwinds early in the reporting period continued to challenge U.S. financial markets throughout the 12 months. Asset class performance seesawed but declined overall amid mixed economic data, elevated inflation and anticipated monetary policy responses. By period-end, a new headwind emerged: banking industry uncertainty.
After launching its inflation-fighting rate-hike campaign in March 2022, the Federal Reserve (Fed) lifted rates eight more times by period-end. The federal funds target rate ended the reporting period at 4.75% to 5%, its highest level since 2007, while Treasury yields climbed to multiyear highs. Amid the Fed’s efforts, the annual inflation rate peaked at 9.1% in June, a 40-year high, before easing to 5% by March.
In addition to helping tame inflation, rapidly rising rates also fueled recession worries and led to expectations for the Fed to change course. This sentiment helped spark a rebound among stock and bond indices in the second half of the reporting period. The collapse of two U.S. regional banks late in the period and fears of a looming credit crunch and likely recession also contributed to market expectations for a Fed policy change. Nevertheless, the Fed indicated a near-term course change was unlikely.
Despite delivering strong gains in the second half of the reporting period, stock returns succumbed to first-half losses and declined for the 12 months. Similarly, weakness in the first half of the period overwhelmed second-half gains, and bond returns were negative for the 12-month period.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of still-high inflation, tighter financial conditions, banking industry turbulence and economic uncertainty. In addition, increasingly tense geopolitical considerations complicate the market backdrop.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image16a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | ALVIX | -0.18% | 8.32% | 9.10% | — | 7/30/99 | ||||||||||||||
Russell 1000 Value Index | — | -5.91% | 7.49% | 9.12% | — | — | ||||||||||||||
S&P 500 Index | — | -7.73% | 11.18% | 12.23% | — | — | ||||||||||||||
I Class | ALVSX | 0.02% | 8.53% | 9.31% | — | 8/10/01 | ||||||||||||||
A Class | ALPAX | 10/26/00 | ||||||||||||||||||
No sales charge | -0.32% | 8.05% | 8.82% | — | ||||||||||||||||
With sales charge | -6.06% | 6.78% | 8.18% | — | ||||||||||||||||
C Class | ALPCX | -1.17% | 7.24% | 8.01% | — | 11/7/01 | ||||||||||||||
R Class | ALVRX | -0.67% | 7.77% | 8.56% | — | 8/29/03 | ||||||||||||||
R5 Class | ALVGX | 0.13% | 8.55% | — | 7.82% | 4/10/17 | ||||||||||||||
R6 Class | ALVDX | 0.27% | 8.69% | — | 8.62% | 7/26/13 | ||||||||||||||
G Class | ACFLX | 0.75% | — | — | 3.97% | 3/15/22 |
Average annual returns since inception are presented when ten years of performance history is not available.
G Class returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2013 |
Performance for other share classes will vary due to differences in fee structure.
![chart-7241cbb081684cb4a66a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/chart-7241cbb081684cb4a66a.jpg)
Value on March 31, 2023 | |||||
Investor Class — $23,884 | |||||
Russell 1000 Value Index — $23,952 | |||||
S&P 500 Index — $31,736 | |||||
Total Annual Fund Operating Expenses | |||||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||
0.83% | 0.63% | 1.08% | 1.83% | 1.33% | 0.63% | 0.48% | 0.48% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Brian Woglom, Adam Krenn, Kevin Toney, Michael Liss and Philip Sundell
Phil Davidson stepped down as a portfolio manager of Focused Large Cap Value on December 31, 2022, and retired from American Century on March 31, 2023.
Performance Summary
Focused Large Cap Value returned -0.18%* for the fiscal year ended March 31, 2023, compared with the -5.91% return of its benchmark, the Russell 1000 Value Index.
Focused Large Cap Value declined during the fiscal year but outperformed its benchmark, the Russell 1000 Value Index. Stock selection overall, in the consumer staples and financials sectors in particular, contributed to relative performance. Selection in health care and information technology detracted from relative results.
Stock Selection in Consumer Staples and Financials Contributed
Consumer staples was an area of strength. A few of our consumer staples positions across a variety of industries outperformed. Amid banking industry turmoil and macroeconomic uncertainty later in the period, investors favored these relatively defensive stocks. Unilever, a consumer goods company based in the U.K., was a top performer in this environment.
Stock selection in the financials sector contributed to relative performance. Selection in the insurance industry was additive as Reinsurance Group of America outperformed. Also beneficial was not owning some of the benchmark’s bank names that were pressured by concerns about the banking system, including Bank of America and Wells Fargo & Co.
TotalEnergies contributed. This is one of the largest integrated energy companies. France-based TotalEnergies has balanced near-term cash returns to shareholders with an attractive dividend and has positioned its business to address the upcoming transition to cleaner energy.
Stock Selection in Health Care and Information Technology Detracted
Security selection in the health care sector hindered relative performance. Selections in the health care equipment and supplies industry, including a position in Medtronic, limited returns. Supply chain constraints led to lower-than-expected quarterly revenues and earnings for this medical device company.
Information technology weighed on results. As banking industry fears mounted, the market rotated toward growth, including the information technology sector. The portfolio’s lack of exposure to several benchmark names in the sector detracted from relative performance. A position in F5, an application services company, underperformed due to initial signs of an information technology spending slowdown in Europe.
Truist Financial detracted. In general, bank stocks underperformed amid the failure of two mid-capitalization banks in the first quarter of 2023. Along with many other large banks, Truist Financial underperformed in this environment.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
MARCH 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 98.5% | ||||
Short-Term Investments | 2.8% | ||||
Other Assets and Liabilities | (1.3)% | ||||
Top Five Industries | % of net assets | ||||
Health Care Equipment and Supplies | 10.1% | ||||
Pharmaceuticals | 8.1% | ||||
Oil, Gas and Consumable Fuels | 7.6% | ||||
Household Products | 5.8% | ||||
Insurance | 5.5% |
6
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2022 to March 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 10/1/22 | Ending Account Value 3/31/23 | Expenses Paid During Period(1) 10/1/22 - 3/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,135.50 | $4.42 | 0.83% | ||||||||||
I Class | $1,000 | $1,136.50 | $3.36 | 0.63% | ||||||||||
A Class | $1,000 | $1,135.40 | $5.75 | 1.08% | ||||||||||
C Class | $1,000 | $1,129.90 | $9.72 | 1.83% | ||||||||||
R Class | $1,000 | $1,132.60 | $7.07 | 1.33% | ||||||||||
R5 Class | $1,000 | $1,137.70 | $3.36 | 0.63% | ||||||||||
R6 Class | $1,000 | $1,138.70 | $2.56 | 0.48% | ||||||||||
G Class | $1,000 | $1,141.20 | $0.05 | 0.01% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.79 | $4.18 | 0.83% | ||||||||||
I Class | $1,000 | $1,021.79 | $3.18 | 0.63% | ||||||||||
A Class | $1,000 | $1,019.55 | $5.44 | 1.08% | ||||||||||
C Class | $1,000 | $1,015.81 | $9.20 | 1.83% | ||||||||||
R Class | $1,000 | $1,018.30 | $6.69 | 1.33% | ||||||||||
R5 Class | $1,000 | $1,021.79 | $3.18 | 0.63% | ||||||||||
R6 Class | $1,000 | $1,022.54 | $2.42 | 0.48% | ||||||||||
G Class | $1,000 | $1,024.88 | $0.05 | 0.01% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
8
Schedule of Investments |
MARCH 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 98.5% | ||||||||
Aerospace and Defense — 3.8% | ||||||||
Raytheon Technologies Corp. | 1,226,446 | $ | 120,105,857 | |||||
Banks — 4.1% | ||||||||
JPMorgan Chase & Co. | 599,686 | 78,145,083 | ||||||
Truist Financial Corp. | 1,504,231 | 51,294,277 | ||||||
129,439,360 | ||||||||
Capital Markets — 4.5% | ||||||||
Bank of New York Mellon Corp. | 1,357,185 | 61,670,486 | ||||||
BlackRock, Inc. | 71,783 | 48,031,441 | ||||||
Charles Schwab Corp. | 602,084 | 31,537,160 | ||||||
141,239,087 | ||||||||
Communications Equipment — 3.7% | ||||||||
Cisco Systems, Inc. | 1,062,814 | 55,558,602 | ||||||
F5, Inc.(1) | 410,101 | 59,747,614 | ||||||
115,306,216 | ||||||||
Consumer Staples Distribution & Retail — 2.9% | ||||||||
Koninklijke Ahold Delhaize NV | 1,457,268 | 49,787,718 | ||||||
Walmart, Inc. | 276,042 | 40,702,393 | ||||||
90,490,111 | ||||||||
Containers and Packaging — 3.5% | ||||||||
Packaging Corp. of America | 449,611 | 62,419,495 | ||||||
Sonoco Products Co. | 782,662 | 47,742,382 | ||||||
110,161,877 | ||||||||
Diversified Telecommunication Services — 2.6% | ||||||||
Verizon Communications, Inc. | 2,094,336 | 81,448,727 | ||||||
Electric Utilities — 4.0% | ||||||||
Duke Energy Corp. | 953,614 | 91,995,143 | ||||||
Pinnacle West Capital Corp. | 427,392 | 33,866,542 | ||||||
125,861,685 | ||||||||
Electrical Equipment — 2.1% | ||||||||
Emerson Electric Co. | 353,605 | 30,813,140 | ||||||
nVent Electric PLC | 845,530 | 36,307,058 | ||||||
67,120,198 | ||||||||
Electronic Equipment, Instruments and Components — 1.5% | ||||||||
TE Connectivity Ltd. | 371,358 | 48,703,602 | ||||||
Entertainment — 1.7% | ||||||||
Walt Disney Co.(1) | 548,045 | 54,875,746 | ||||||
Financial Services — 4.8% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 493,281 | 152,310,374 | ||||||
Food Products — 4.1% | ||||||||
Conagra Brands, Inc. | 1,598,816 | 60,051,529 | ||||||
Mondelez International, Inc., Class A | 976,605 | 68,088,901 | ||||||
128,140,430 | ||||||||
Gas Utilities — 2.9% | ||||||||
Atmos Energy Corp. | 813,454 | 91,399,691 | ||||||
Health Care Equipment and Supplies — 10.1% | ||||||||
Becton Dickinson & Co. | 161,311 | 39,930,925 |
9
Shares | Value | |||||||
Medtronic PLC | 1,916,302 | $ | 154,492,267 | |||||
Zimmer Biomet Holdings, Inc. | 951,882 | 122,983,155 | ||||||
317,406,347 | ||||||||
Health Care Providers and Services — 4.0% | ||||||||
Henry Schein, Inc.(1) | 738,364 | 60,206,201 | ||||||
Quest Diagnostics, Inc. | 466,350 | 65,979,198 | ||||||
126,185,399 | ||||||||
Household Products — 5.8% | ||||||||
Colgate-Palmolive Co. | 1,216,459 | 91,416,894 | ||||||
Kimberly-Clark Corp. | 681,675 | 91,494,418 | ||||||
182,911,312 | ||||||||
Industrial Conglomerates — 0.9% | ||||||||
Siemens AG | 175,742 | 28,470,888 | ||||||
Insurance — 5.5% | ||||||||
Allstate Corp. | 657,319 | 72,837,518 | ||||||
Marsh & McLennan Cos., Inc. | 297,780 | 49,595,259 | ||||||
Reinsurance Group of America, Inc. | 376,773 | 50,020,384 | ||||||
172,453,161 | ||||||||
Machinery — 1.3% | ||||||||
Oshkosh Corp. | 488,980 | 40,673,356 | ||||||
Oil, Gas and Consumable Fuels — 7.6% | ||||||||
Exxon Mobil Corp. | 1,180,280 | 129,429,505 | ||||||
TotalEnergies SE, ADR | 1,859,778 | 109,819,891 | ||||||
239,249,396 | ||||||||
Passenger Airlines — 1.3% | ||||||||
Southwest Airlines Co. | 1,232,843 | 40,116,711 | ||||||
Personal Care Products — 3.7% | ||||||||
Unilever PLC, ADR | 2,271,010 | 117,933,549 | ||||||
Pharmaceuticals — 8.1% | ||||||||
Johnson & Johnson | 1,226,160 | 190,054,800 | ||||||
Roche Holding AG | 234,151 | 66,906,883 | ||||||
256,961,683 | ||||||||
Semiconductors and Semiconductor Equipment — 1.1% | ||||||||
Texas Instruments, Inc. | 184,765 | 34,368,138 | ||||||
Software — 0.9% | ||||||||
Microsoft Corp. | 95,509 | 27,535,245 | ||||||
Specialized REITs — 2.0% | ||||||||
Public Storage | 207,853 | 62,800,705 | ||||||
TOTAL COMMON STOCKS (Cost $2,792,246,637) | 3,103,668,851 | |||||||
SHORT-TERM INVESTMENTS — 2.8% | ||||||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 17,690 | 17,690 | ||||||
Repurchase Agreements — 2.8% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.125% - 4.375%, 8/15/40 - 5/15/49, valued at $23,490,233), in a joint trading account at 4.67%, dated 3/31/23, due 4/3/23 (Delivery value $22,665,898) | 22,657,081 |
10
Value | ||||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 3/31/28, valued at $66,847,791), at 4.81%, dated 3/31/23, due 4/3/23 (Delivery value $65,563,269) | $ | 65,537,000 | ||||||
88,194,081 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $88,211,771) | 88,211,771 | |||||||
TOTAL INVESTMENT SECURITIES — 101.3% (Cost $2,880,458,408) | 3,191,880,622 | |||||||
OTHER ASSETS AND LIABILITIES — (1.3)% | (39,652,616) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 3,152,228,006 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 56,447,907 | CHF | 51,196,276 | Morgan Stanley | 6/30/23 | $ | (31,552) | |||||||||||||
EUR | 3,952,736 | USD | 4,289,173 | JPMorgan Chase Bank N.A. | 6/30/23 | 18,540 | ||||||||||||||
USD | 155,207,938 | EUR | 143,671,145 | JPMorgan Chase Bank N.A. | 6/30/23 | (1,365,639) | ||||||||||||||
USD | 4,329,863 | EUR | 3,974,867 | JPMorgan Chase Bank N.A. | 6/30/23 | (1,969) | ||||||||||||||
GBP | 2,126,785 | USD | 2,632,215 | Bank of America N.A. | 6/30/23 | (4,196) | ||||||||||||||
USD | 102,114,222 | GBP | 83,108,206 | Bank of America N.A. | 6/30/23 | (580,698) | ||||||||||||||
$ | (1,965,514) |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | – | American Depositary Receipt | ||||||
CHF | – | Swiss Franc | ||||||
EUR | – | Euro | ||||||
GBP | – | British Pound | ||||||
USD | – | United States Dollar |
†Category is less than 0.05% of total net assets.
(1)Non-income producing.
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
MARCH 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $2,880,458,408) | $ | 3,191,880,622 | |||
Receivable for investments sold | 1,261,255 | ||||
Receivable for capital shares sold | 495,153 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 18,540 | ||||
Dividends and interest receivable | 8,291,688 | ||||
3,201,947,258 | |||||
Liabilities | |||||
Payable for investments purchased | 632,161 | ||||
Payable for capital shares redeemed | 46,552,953 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 1,984,054 | ||||
Accrued management fees | 523,774 | ||||
Distribution and service fees payable | 10,157 | ||||
Accrued other expenses | 16,153 | ||||
49,719,252 | |||||
Net Assets | $ | 3,152,228,006 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 2,858,585,789 | |||
Distributable earnings (loss) | 293,642,217 | ||||
$ | 3,152,228,006 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $581,006,823 | 60,141,677 | $9.66 | ||||||||
I Class, $0.01 Par Value | $35,788,909 | 3,700,239 | $9.67 | ||||||||
A Class, $0.01 Par Value | $31,310,000 | 3,242,470 | $9.66 | ||||||||
C Class, $0.01 Par Value | $1,087,985 | 112,602 | $9.66 | ||||||||
R Class, $0.01 Par Value | $6,347,920 | 656,323 | $9.67 | ||||||||
R5 Class, $0.01 Par Value | $7,837 | 810 | $9.68 | ||||||||
R6 Class, $0.01 Par Value | $147,303,322 | 15,237,977 | $9.67 | ||||||||
G Class, $0.01 Par Value | $2,349,375,210 | 242,762,527 | $9.68 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except Class A, for which the maximum offering price per share was $10.25 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of Class A and Class C.
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED MARCH 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $2,052,410) | $ | 87,638,905 | |||
Interest | 2,326,057 | ||||
89,964,962 | |||||
Expenses: | |||||
Management fees | 17,829,881 | ||||
Distribution and service fees: | |||||
A Class | 78,993 | ||||
C Class | 10,472 | ||||
R Class | 28,460 | ||||
Directors' fees and expenses | 100,926 | ||||
Other expenses | 274,281 | ||||
18,323,013 | |||||
Fees waived - G Class | (11,606,968) | ||||
6,716,045 | |||||
Net investment income (loss) | 83,248,917 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 136,563,520 | ||||
Forward foreign currency exchange contract transactions | 18,791,796 | ||||
Foreign currency translation transactions | (58,404) | ||||
155,296,912 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (231,479,485) | ||||
Forward foreign currency exchange contracts | (35,873) | ||||
Translation of assets and liabilities in foreign currencies | 8,676 | ||||
(231,506,682) | |||||
Net realized and unrealized gain (loss) | (76,209,770) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 7,039,147 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2023 AND MARCH 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2023 | March 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 83,248,917 | $ | 16,253,729 | ||||
Net realized gain (loss) | 155,296,912 | 109,218,956 | ||||||
Change in net unrealized appreciation (depreciation) | (231,506,682) | (31,062,054) | ||||||
Net increase (decrease) in net assets resulting from operations | 7,039,147 | 94,410,631 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (38,327,833) | (134,586,683) | ||||||
I Class | (2,716,287) | (9,868,498) | ||||||
A Class | (1,991,093) | (7,614,654) | ||||||
C Class | (62,895) | (243,135) | ||||||
R Class | (362,128) | (1,076,171) | ||||||
R5 Class | (523) | (1,724) | ||||||
R6 Class | (12,670,353) | (39,666,740) | ||||||
G Class | (175,533,919) | (138) | ||||||
Decrease in net assets from distributions | (231,665,031) | (193,057,743) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (237,481,293) | 2,789,145,881 | ||||||
Net increase (decrease) in net assets | (462,107,177) | 2,690,498,769 | ||||||
Net Assets | ||||||||
Beginning of period | 3,614,335,183 | 923,836,414 | ||||||
End of period | $ | 3,152,228,006 | $ | 3,614,335,183 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
MARCH 31, 2023
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, R6 Class and G Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. Sale of the G Class commenced on March 15, 2022.
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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
15
The valuation designee 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; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
16
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. 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) 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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets). The investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2023 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% | ||||||
G Class | 0.35% to 0.55% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.48%.
17
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended March 31, 2023 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 $8,270,449 and $692,922, respectively. The effect of interfund transactions on the Statement of Operations was $128,242 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended March 31, 2023 were $1,482,925,975 and $1,794,501,160, respectively.
18
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2023 | Year ended March 31, 2022(1) | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 450,000,000 | 450,000,000 | ||||||||||||
Sold | 3,451,206 | $ | 34,184,846 | 4,811,577 | $ | 56,167,255 | ||||||||
Issued in reinvestment of distributions | 3,924,017 | 37,917,689 | 12,635,341 | 132,775,626 | ||||||||||
Redeemed | (6,561,325) | (65,104,444) | (12,814,037) | (155,539,000) | ||||||||||
813,898 | 6,998,091 | 4,632,881 | 33,403,881 | |||||||||||
I Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||
Sold | 1,763,695 | 17,533,084 | 642,235 | 7,493,119 | ||||||||||
Issued in reinvestment of distributions | 266,688 | 2,580,465 | 877,335 | 9,230,917 | ||||||||||
Redeemed | (2,056,974) | (20,239,098) | (1,371,804) | (15,358,986) | ||||||||||
(26,591) | (125,549) | 147,766 | 1,365,050 | |||||||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||
Sold | 613,956 | 6,071,000 | 299,823 | 3,423,386 | ||||||||||
Issued in reinvestment of distributions | 184,811 | 1,786,572 | 651,652 | 6,837,534 | ||||||||||
Redeemed | (779,204) | (7,649,167) | (679,073) | (7,905,565) | ||||||||||
19,563 | 208,405 | 272,402 | 2,355,355 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 69,102 | 670,411 | 13,377 | 151,603 | ||||||||||
Issued in reinvestment of distributions | 6,024 | 58,405 | 21,307 | 223,501 | ||||||||||
Redeemed | (56,641) | (542,026) | (55,662) | (637,122) | ||||||||||
18,485 | 186,790 | (20,978) | (262,018) | |||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 237,386 | 2,333,631 | 132,998 | 1,540,553 | ||||||||||
Issued in reinvestment of distributions | 35,619 | 344,977 | 97,783 | 1,026,225 | ||||||||||
Redeemed | (126,948) | (1,231,738) | (59,660) | (695,773) | ||||||||||
146,057 | 1,446,870 | 171,121 | 1,871,005 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Issued in reinvestment of distributions | 54 | 523 | 164 | 1,724 | ||||||||||
R6 Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||
Sold | 5,099,217 | 50,393,354 | 1,695,134 | 19,418,913 | ||||||||||
Issued in reinvestment of distributions | 1,306,863 | 12,626,998 | 3,755,823 | 39,527,794 | ||||||||||
Redeemed | (7,687,775) | (75,070,659) | (5,524,232) | (65,868,809) | ||||||||||
(1,281,695) | (12,050,307) | (73,275) | (6,922,102) | |||||||||||
G Class/Shares Authorized | 1,800,000,000 | 1,800,000,000 | ||||||||||||
Sold | 15,924,302 | 154,075,038 | 4,523,509 | 46,999,503 | ||||||||||
Issued in connection with reorganization (Note 10) | — | — | 262,828,937 | 2,729,819,489 | ||||||||||
Issued in reinvestment of distributions | 18,173,029 | 175,533,919 | 13 | 138 | ||||||||||
Redeemed | (56,812,843) | (563,755,073) | (1,874,420) | (19,486,144) | ||||||||||
(22,715,512) | (234,146,116) | 265,478,039 | 2,757,332,986 | |||||||||||
Net increase (decrease) | (23,025,741) | $ | (237,481,293) | 270,608,120 | $ | 2,789,145,881 |
(1)March 15, 2022 (commencement of sale) through March 31, 2022 for the G Class.
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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 | $ | 2,958,503,362 | $ | 145,165,489 | — | ||||||
Short-Term Investments | 17,690 | 88,194,081 | — | ||||||||
$ | 2,958,521,052 | $ | 233,359,570 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 18,540 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,984,054 | — |
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 $379,841,924.
20
The value of foreign currency risk derivative instruments as of March 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $18,540 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $1,984,054 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $18,791,796 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(35,873) 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, war, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
9. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2023 and March 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 96,269,988 | $ | 85,283,842 | ||||
Long-term capital gains | $ | 135,395,043 | $ | 107,773,901 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 2,919,362,884 | |||
Gross tax appreciation of investments | $ | 372,814,875 | |||
Gross tax depreciation of investments | (100,297,137) | ||||
Net tax appreciation (depreciation) of investments | 272,517,738 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (9,521) | ||||
Net tax appreciation (depreciation) | $ | 272,508,217 | |||
Undistributed ordinary income | $ | 6,259,937 | |||
Accumulated long-term gains | $ | 14,874,063 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
21
10. Reorganization
On December 2, 2021, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of NT Focused Large Cap Value Fund, one fund in a series issued by the corporation, were transferred to Focused Large Cap Value Fund in exchange for shares of Focused Large Cap Value Fund. The purpose of the transaction was to combine two funds with substantially similar investment objectives and strategies. The financial statements and performance history of Focused Large Cap Value Fund survived after the reorganization. The reorganization was effective at the close of the NYSE on March 25, 2022.
The reorganization was accomplished by a tax-free exchange of shares. On March 25, 2022, NT Focused Large Cap Value Fund exchanged its shares for shares of Focused Large Cap Value Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||||||||
NT Focused Large Cap Value Fund – G Class | 241,023,182 | Focused Large Cap Value Fund – G Class | 262,828,937 |
The net assets of NT Focused Large Cap Value Fund and Focused Large Cap Value Fund immediately before the reorganization were $2,729,819,489 and $865,609,421, respectively. NT Focused Large Cap Value Fund's unrealized appreciation of $417,690,402 was combined with that of Focused Large Cap Value Fund. Immediately after the reorganization, the combined net assets were $3,595,428,910.
Assuming the reorganization had been completed on April 1, 2021, the beginning of the annual reporting period, the pro forma results of operations for the period ended March 31, 2022 are as follows:
Net investment income (loss) | $ | 86,447,923 | |||
Net realized and unrealized gain (loss) | 356,071,110 | ||||
Net increase (decrease) in net assets resulting from operations | $ | 442,519,033 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of NT Focused Large Cap Value Fund that have been included in the fund’s Statement of Operations since March 25, 2022.
22
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.35 | 0.19 | (0.22) | (0.03) | (0.18) | (0.48) | (0.66) | $9.66 | (0.18)% | 0.84% | 0.84% | 1.91% | 1.91% | 47% | $581,007 | ||||||||||||||||||||||||||||||||
2022 | $11.80 | 0.19 | 1.11 | 1.30 | (0.20) | (2.55) | (2.75) | $10.35 | 11.82% | 0.83% | 0.83% | 1.59% | 1.59% | 42% | $613,873 | ||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.19 | 3.62 | 3.81 | (0.19) | (0.06) | (0.25) | $11.80 | 46.64% | 0.83% | 0.83% | 1.90% | 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% | 0.84% | 1.72% | 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% | 0.83% | 1.83% | 1.83% | 62% | $673,365 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.36 | 0.21 | (0.22) | (0.01) | (0.20) | (0.48) | (0.68) | $9.67 | 0.02% | 0.64% | 0.64% | 2.11% | 2.11% | 47% | $35,789 | ||||||||||||||||||||||||||||||||
2022 | $11.81 | 0.22 | 1.10 | 1.32 | (0.22) | (2.55) | (2.77) | $10.36 | 12.03% | 0.63% | 0.63% | 1.79% | 1.79% | 42% | $38,604 | ||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.22 | 3.62 | 3.84 | (0.21) | (0.06) | (0.27) | $11.81 | 47.06% | 0.63% | 0.63% | 2.10% | 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% | 0.64% | 1.92% | 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% | 0.63% | 2.03% | 2.03% | 62% | $18,196 |
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) | |||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.34 | 0.16 | (0.20) | (0.04) | (0.16) | (0.48) | (0.64) | $9.66 | (0.32)% | 1.09% | 1.09% | 1.66% | 1.66% | 47% | $31,310 | ||||||||||||||||||||||||||||||||
2022 | $11.80 | 0.17 | 1.09 | 1.26 | (0.17) | (2.55) | (2.72) | $10.34 | 11.44% | 1.08% | 1.08% | 1.34% | 1.34% | 42% | $33,334 | ||||||||||||||||||||||||||||||||
2021 | $8.23 | 0.17 | 3.62 | 3.79 | (0.16) | (0.06) | (0.22) | $11.80 | 46.44% | 1.08% | 1.08% | 1.65% | 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% | 1.09% | 1.47% | 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% | 1.08% | 1.58% | 1.58% | 62% | $34,603 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.35 | 0.09 | (0.21) | (0.12) | (0.09) | (0.48) | (0.57) | $9.66 | (1.17)% | 1.84% | 1.84% | 0.91% | 0.91% | 47% | $1,088 | ||||||||||||||||||||||||||||||||
2022 | $11.80 | 0.07 | 1.11 | 1.18 | (0.08) | (2.55) | (2.63) | $10.35 | 10.69% | 1.83% | 1.83% | 0.59% | 0.59% | 42% | $974 | ||||||||||||||||||||||||||||||||
2021 | $8.23 | 0.09 | 3.62 | 3.71 | (0.08) | (0.06) | (0.14) | $11.80 | 45.31% | 1.83% | 1.83% | 0.90% | 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% | 1.84% | 0.72% | 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% | 1.83% | 0.83% | 0.83% | 62% | $3,363 | ||||||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.36 | 0.14 | (0.22) | (0.08) | (0.13) | (0.48) | (0.61) | $9.67 | (0.67)% | 1.34% | 1.34% | 1.41% | 1.41% | 47% | $6,348 | ||||||||||||||||||||||||||||||||
2022 | $11.81 | 0.14 | 1.10 | 1.24 | (0.14) | (2.55) | (2.69) | $10.36 | 11.24% | 1.33% | 1.33% | 1.09% | 1.09% | 42% | $5,286 | ||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.14 | 3.62 | 3.76 | (0.13) | (0.06) | (0.19) | $11.81 | 46.00% | 1.33% | 1.33% | 1.40% | 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% | 1.34% | 1.22% | 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% | 1.33% | 1.33% | 62% | $3,389 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.36 | 0.21 | (0.21) | — | (0.20) | (0.48) | (0.68) | $9.68 | 0.13% | 0.64% | 0.64% | 2.11% | 2.11% | 47% | $8 | ||||||||||||||||||||||||||||||||
2022 | $11.81 | 0.22 | 1.10 | 1.32 | (0.22) | (2.55) | (2.77) | $10.36 | 12.01% | 0.63% | 0.63% | 1.79% | 1.79% | 42% | $8 | ||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.21 | 3.63 | 3.84 | (0.21) | (0.06) | (0.27) | $11.81 | 47.06% | 0.63% | 0.63% | 2.10% | 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% | 0.64% | 1.92% | 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% | 0.63% | 2.03% | 2.03% | 62% | $6 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.35 | 0.22 | (0.20) | 0.02 | (0.22) | (0.48) | (0.70) | $9.67 | 0.27% | 0.49% | 0.49% | 2.26% | 2.26% | 47% | $147,303 | ||||||||||||||||||||||||||||||||
2022 | $11.81 | 0.24 | 1.09 | 1.33 | (0.24) | (2.55) | (2.79) | $10.35 | 12.10% | 0.48% | 0.48% | 1.94% | 1.94% | 42% | $171,044 | ||||||||||||||||||||||||||||||||
2021 | $8.24 | 0.23 | 3.62 | 3.85 | (0.22) | (0.06) | (0.28) | $11.81 | 47.29% | 0.48% | 0.48% | 2.25% | 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% | 0.49% | 2.07% | 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% | 0.48% | 2.18% | 2.18% | 62% | $152,534 | ||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.36 | 0.27 | (0.21) | 0.06 | (0.26) | (0.48) | (0.74) | $9.68 | 0.75% | 0.01% | 0.49% | 2.74% | 2.26% | 47% | $2,349,375 | ||||||||||||||||||||||||||||||||
2022(3) | $10.59 | 0.01 | 0.34 | 0.35 | (0.03) | (0.55) | (0.58) | $10.36 | 3.38% | 0.00%(4)(5) | 0.47%(4) | 1.68%(4) | 1.21%(4) | 42%(6) | $2,751,213 |
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)March 15, 2022 (commencement of sale) through March 31, 2022.
(4)Annualized.
(5)Ratio was less than 0.005%.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2022.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Focused Large Cap Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Focused Large Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
May 16, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
27
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 64 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 64 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 64 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 64 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 64 | None |
28
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 64 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 64 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 64 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 109 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 141 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
29
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present); Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
30
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates, including members of ACIM’s Investment Oversight Committee who are members of ACIM’s Investment Management and Global Analytics departments, conduct the day-to-day operation of the program pursuant to the program.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain investments held by the Fund is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2022 through December 31, 2022. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
31
Proxy Voting Results |
A special meeting of shareholders was held on October 13, 2022, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect five directors to the Board of Directors of American Century Capital Portfolios, Inc.:
Affirmative | Withhold | ||||||||||
Brian Bulatao | $ | 17,572,790,908 | $ | 417,511,059 | |||||||
Chris H. Cheesman | $ | 17,634,906,815 | $ | 355,395,152 | |||||||
Rajesh K. Gupta | $ | 17,620,399,260 | $ | 369,902,707 | |||||||
Lynn M. Jenkins | $ | 17,600,718,699 | $ | 389,583,268 | |||||||
Gary C. Meltzer | $ | 17,633,346,402 | $ | 356,955,565 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas W. Bunn, Barry Fink, Jan M. Lewis, and Stephen E. Yates.
32
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2023.
For corporate taxpayers, the fund hereby designates $63,169,409, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $16,932,278 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2023.
The fund hereby designates $135,395,043, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2023.
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. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92269 2305 |
![image25.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image25.jpg)
Annual Report | |||||
March 31, 2023 | |||||
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) | |||||
G Class (ACIPX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Proxy Voting Results | |||||
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 |
![image23.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image23.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2023. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Challenging Conditions Weighed on Asset Class Returns
Prevailing headwinds early in the reporting period continued to challenge U.S. financial markets throughout the 12 months. Asset class performance seesawed but declined overall amid mixed economic data, elevated inflation and anticipated monetary policy responses. By period-end, a new headwind emerged: banking industry uncertainty.
After launching its inflation-fighting rate-hike campaign in March 2022, the Federal Reserve (Fed) lifted rates eight more times by period-end. The federal funds target rate ended the reporting period at 4.75% to 5%, its highest level since 2007, while Treasury yields climbed to multiyear highs. Amid the Fed’s efforts, the annual inflation rate peaked at 9.1% in June, a 40-year high, before easing to 5% by March.
In addition to helping tame inflation, rapidly rising rates also fueled recession worries and led to expectations for the Fed to change course. This sentiment helped spark a rebound among stock and bond indices in the second half of the reporting period. The collapse of two U.S. regional banks late in the period and fears of a looming credit crunch and likely recession also contributed to market expectations for a Fed policy change. Nevertheless, the Fed indicated a near-term course change was unlikely.
Despite delivering strong gains in the second half of the reporting period, stock returns succumbed to first-half losses and declined for the 12 months. Similarly, weakness in the first half of the period overwhelmed second-half gains, and bond returns were negative for the 12-month period.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of still-high inflation, tighter financial conditions, banking industry turbulence and economic uncertainty. In addition, increasingly tense geopolitical considerations complicate the market backdrop.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image16a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | ACMVX | -2.58% | 7.45% | 9.84% | — | 3/31/04 | ||||||||||||||
Russell Midcap Value Index | — | -9.22% | 6.53% | 8.79% | — | — | ||||||||||||||
I Class | AVUAX | -2.38% | 7.67% | 10.07% | — | 8/2/04 | ||||||||||||||
Y Class | AMVYX | -2.23% | 7.83% | — | 7.55% | 4/10/17 | ||||||||||||||
A Class | ACLAX | 1/13/05 | ||||||||||||||||||
No sales charge | -2.89% | 7.17% | 9.57% | — | ||||||||||||||||
With sales charge | -8.47% | 5.91% | 8.92% | — | ||||||||||||||||
C Class | ACCLX | -3.53% | 6.37% | 8.75% | — | 3/1/10 | ||||||||||||||
R Class | AMVRX | -3.08% | 6.91% | 9.30% | — | 7/29/05 | ||||||||||||||
R5 Class | AMVGX | -2.39% | 7.66% | — | 7.38% | 4/10/17 | ||||||||||||||
R6 Class | AMDVX | -2.30% | 7.82% | — | 9.66% | 7/26/13 | ||||||||||||||
G Class | ACIPX | -1.63% | — | — | 1.78% | 3/15/22 |
Average annual returns since inception are presented when ten years of performance history is not available.
Fund returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-5b32ae9bc3dc4cdfbeba.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/chart-5b32ae9bc3dc4cdfbeba.jpg)
Value on March 31, 2023 | |||||
Investor Class — $25,571 | |||||
Russell Midcap Value Index — $23,237 | |||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
0.97% | 0.77% | 0.62% | 1.22% | 1.97% | 1.47% | 0.77% | 0.62% | 0.62% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Kevin Toney, Brian Woglom, Michael Liss and Nathan Rawlins
Phil Davidson stepped down as a portfolio manager of Mid Cap Value on December 31, 2022, and retired from American Century on March 31, 2023.
Performance Summary
Mid Cap Value returned -2.58%* for the fiscal year ended March 31, 2023, compared with the -9.22% return of its benchmark, the Russell Midcap Value Index. The fund’s return reflects operating expenses, while the index’s return does not.
Mid Cap Value declined in the fiscal year but outperformed its benchmark, the Russell Midcap Value Index. Security selection in the consumer staples and real estate sectors contributed to relative performance. Our stock selection in industrials and energy limited returns.
Stock Selection in Consumer Staples and Real Estate Contributed
Security selection in the consumer staples sector positively impacted performance. Selections and an overweight in the food products industry contributed, with Conagra Brands outperforming. Shares of this food products company bounced back as inflation-related fears subsided. In addition, Conagra reported strong quarterly results that revealed solid pricing power.
Security selection in the real estate sector benefited relative results. An underweight, including no exposure to office real estate investment trusts, also supported performance.
Reinsurance Group of America contributed. This global life and health reinsurance company recently reported quarterly revenues that exceeded analysts’ estimates due in part to strong performance by its core businesses.
BorgWarner contributed. Automotive suppliers like BorgWarner are benefiting from the start of an automotive production cycle, which should lead to better incremental margins. The market also rewarded the stock for BorgWarner’s significant progress on its electrification strategy.
Stock Selection in Industrials Detracted
Stock selection in the industrials sector and not owning several benchmark names in the machinery industry detracted from relative performance. An overweight position in Southwest Airlines limited performance. This airline company experienced significant operational issues during the holiday travel season following a severe winter storm. These issues caused flight cancellations and the inability to accommodate passengers during peak holiday demand days. While Southwest posted a net loss for the fourth quarter, it expects to be profitable for 2023.
Individual detractors included Truist Financial. In general, bank stocks underperformed amid the failure of two mid-capitalization banks in the first quarter of 2023. Along with many other large banks, Truist Financial underperformed in this environment.
Advance Auto Parts also detracted. Shares of this automotive replacement parts retailer underperformed as the market recently worried about the potential impact on earnings from warmer winter weather in the Midwest and Northeast. Investors were also concerned that earnings could be pressured by lower tax refunds. Weaker-than-expected quarterly earnings and a reduced cash flow outlook for fiscal year 2023 also pressured the stock.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
MARCH 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 95.0% | ||||
Exchange-Traded Funds | 2.4% | ||||
Short-Term Investments | 2.5% | ||||
Other Assets and Liabilities | 0.1% | ||||
Top Five Industries* | % of net assets | ||||
Health Care Providers and Services | 8.3% | ||||
Capital Markets | 6.9% | ||||
Diversified REITs | 6.6% | ||||
Insurance | 6.1% | ||||
Health Care Equipment and Supplies | 6.0% |
*Exposure indicated excludes Exchange-Traded Funds. The Schedule of Investments provides additional information on the fund's portfolio holdings.
6
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2022 to March 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 10/1/22 | Ending Account Value 3/31/23 | Expenses Paid During Period(1) 10/1/22 - 3/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,150.40 | $5.25 | 0.98% | ||||||||||
I Class | $1,000 | $1,151.30 | $4.18 | 0.78% | ||||||||||
Y Class | $1,000 | $1,152.10 | $3.38 | 0.63% | ||||||||||
A Class | $1,000 | $1,147.90 | $6.59 | 1.23% | ||||||||||
C Class | $1,000 | $1,144.10 | $10.58 | 1.98% | ||||||||||
R Class | $1,000 | $1,147.10 | $7.92 | 1.48% | ||||||||||
R5 Class | $1,000 | $1,150.50 | $4.18 | 0.78% | ||||||||||
R6 Class | $1,000 | $1,151.50 | $3.38 | 0.63% | ||||||||||
G Class | $1,000 | $1,155.60 | $0.05 | 0.01% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.05 | $4.94 | 0.98% | ||||||||||
I Class | $1,000 | $1,021.04 | $3.93 | 0.78% | ||||||||||
Y Class | $1,000 | $1,021.79 | $3.18 | 0.63% | ||||||||||
A Class | $1,000 | $1,018.80 | $6.19 | 1.23% | ||||||||||
C Class | $1,000 | $1,015.06 | $9.95 | 1.98% | ||||||||||
R Class | $1,000 | $1,017.55 | $7.44 | 1.48% | ||||||||||
R5 Class | $1,000 | $1,021.04 | $3.93 | 0.78% | ||||||||||
R6 Class | $1,000 | $1,021.79 | $3.18 | 0.63% | ||||||||||
G Class | $1,000 | $1,024.88 | $0.05 | 0.01% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
8
Schedule of Investments |
MARCH 31, 2023
Shares/ Principal Amount | Value | |||||||
COMMON STOCKS — 95.0% | ||||||||
Aerospace and Defense — 1.2% | ||||||||
Huntington Ingalls Industries, Inc. | 564,086 | $ | 116,777,084 | |||||
Automobile Components — 2.2% | ||||||||
BorgWarner, Inc. | 2,862,248 | 140,564,999 | ||||||
Cie Generale des Etablissements Michelin SCA | 2,210,937 | 67,584,520 | ||||||
208,149,519 | ||||||||
Banks — 5.0% | ||||||||
Capitol Federal Financial, Inc. | 4,181,461 | 28,141,233 | ||||||
First Hawaiian, Inc. | 5,256,826 | 108,448,320 | ||||||
Prosperity Bancshares, Inc. | 1,685,004 | 103,661,446 | ||||||
Truist Financial Corp. | 3,846,727 | 131,173,391 | ||||||
U.S. Bancorp | 1,885,901 | 67,986,731 | ||||||
Westamerica BanCorp | 682,088 | 30,216,498 | ||||||
469,627,619 | ||||||||
Building Products — 1.2% | ||||||||
Cie de Saint-Gobain | 1,991,026 | 113,177,016 | ||||||
Capital Markets — 6.9% | ||||||||
Ameriprise Financial, Inc. | 105,771 | 32,418,811 | ||||||
Bank of New York Mellon Corp. | 4,455,441 | 202,455,239 | ||||||
Northern Trust Corp. | 3,048,713 | 268,683,077 | ||||||
T. Rowe Price Group, Inc. | 1,254,489 | 141,631,808 | ||||||
645,188,935 | ||||||||
Chemicals — 2.1% | ||||||||
Akzo Nobel NV | 1,462,524 | 114,390,731 | ||||||
Axalta Coating Systems Ltd.(1) | 2,686,208 | 81,365,240 | ||||||
195,755,971 | ||||||||
Commercial Services and Supplies — 0.4% | ||||||||
Republic Services, Inc. | 314,569 | 42,536,020 | ||||||
Communications Equipment — 1.9% | ||||||||
F5, Inc.(1) | 707,898 | 103,133,660 | ||||||
Juniper Networks, Inc. | 2,124,968 | 73,141,398 | ||||||
176,275,058 | ||||||||
Construction and Engineering — 0.9% | ||||||||
Vinci SA | 741,352 | 84,990,314 | ||||||
Consumer Staples Distribution & Retail — 2.1% | ||||||||
Koninklijke Ahold Delhaize NV | 5,674,775 | 193,879,298 | ||||||
Containers and Packaging — 3.3% | ||||||||
Amcor PLC | 8,582,341 | 97,667,040 | ||||||
Packaging Corp. of America | 1,174,314 | 163,030,013 | ||||||
Sonoco Products Co. | 776,868 | 47,388,948 | ||||||
308,086,001 | ||||||||
Diversified REITs — 6.6% | ||||||||
Equinix, Inc. | 103,058 | 74,308,940 | ||||||
Essex Property Trust, Inc. | 460,738 | 96,358,745 | ||||||
Healthpeak Properties, Inc. | 5,262,779 | 115,623,255 | ||||||
Realty Income Corp. | 2,095,801 | 132,706,120 | ||||||
Regency Centers Corp. | 1,916,968 | 117,280,102 |
9
Shares/ Principal Amount | Value | |||||||
VICI Properties, Inc. | 341,203 | $ | 11,130,042 | |||||
Weyerhaeuser Co. | 811,097 | 24,438,353 | ||||||
WP Carey, Inc. | 667,214 | 51,675,724 | ||||||
623,521,281 | ||||||||
Electric Utilities — 5.1% | ||||||||
Duke Energy Corp. | 1,027,235 | 99,097,360 | ||||||
Edison International | 2,981,839 | 210,488,015 | ||||||
Evergy, Inc. | 811,736 | 49,613,304 | ||||||
Eversource Energy | 544,356 | 42,601,301 | ||||||
Pinnacle West Capital Corp. | 937,028 | 74,250,099 | ||||||
476,050,079 | ||||||||
Electrical Equipment — 2.7% | ||||||||
Emerson Electric Co. | 1,729,956 | 150,748,366 | ||||||
Legrand SA | 457,988 | 41,847,425 | ||||||
nVent Electric PLC | 1,435,047 | 61,620,918 | ||||||
254,216,709 | ||||||||
Electronic Equipment, Instruments and Components — 1.6% | ||||||||
Corning, Inc. | 1,358,349 | 47,922,553 | ||||||
TE Connectivity Ltd. | 780,169 | 102,319,164 | ||||||
150,241,717 | ||||||||
Energy Equipment and Services — 1.0% | ||||||||
Baker Hughes Co. | 3,392,457 | 97,906,309 | ||||||
Entertainment — 0.5% | ||||||||
Electronic Arts, Inc. | 401,457 | 48,355,496 | ||||||
Food Products — 2.9% | ||||||||
Conagra Brands, Inc. | 5,056,462 | 189,920,713 | ||||||
J M Smucker Co. | 516,926 | 81,348,644 | ||||||
271,269,357 | ||||||||
Gas Utilities — 2.5% | ||||||||
Atmos Energy Corp. | 435,285 | 48,908,623 | ||||||
Spire, Inc.(2) | 2,641,336 | 185,263,307 | ||||||
234,171,930 | ||||||||
Ground Transportation — 0.7% | ||||||||
Heartland Express, Inc.(2) | 4,090,808 | 65,125,664 | ||||||
Health Care Equipment and Supplies — 6.0% | ||||||||
Baxter International, Inc. | 619,581 | 25,130,205 | ||||||
Becton Dickinson & Co. | 171,131 | 42,361,768 | ||||||
DENTSPLY SIRONA, Inc. | 1,756,173 | 68,982,476 | ||||||
Embecta Corp. | 2,206,247 | 62,039,666 | ||||||
Envista Holdings Corp.(1) | 1,534,215 | 62,718,709 | ||||||
Hologic, Inc.(1) | 305,426 | 24,647,878 | ||||||
Zimmer Biomet Holdings, Inc. | 2,172,050 | 280,628,862 | ||||||
566,509,564 | ||||||||
Health Care Providers and Services — 8.3% | ||||||||
AmerisourceBergen Corp. | 773,616 | 123,863,658 | ||||||
Cardinal Health, Inc. | 838,533 | 63,309,241 | ||||||
Centene Corp.(1) | 779,645 | 49,281,360 | ||||||
Henry Schein, Inc.(1) | 2,061,183 | 168,068,862 | ||||||
Laboratory Corp. of America Holdings | 477,279 | 109,497,348 | ||||||
Quest Diagnostics, Inc. | 946,272 | 133,878,563 | ||||||
Universal Health Services, Inc., Class B | 1,048,200 | 133,226,220 | ||||||
781,125,252 |
10
Shares/ Principal Amount | Value | |||||||
Hotels, Restaurants and Leisure — 0.8% | ||||||||
Sodexo SA | 821,682 | $ | 80,254,132 | |||||
Household Products — 2.5% | ||||||||
Henkel AG & Co. KGaA, Preference Shares | 1,266,832 | 99,109,249 | ||||||
Kimberly-Clark Corp. | 995,048 | 133,555,342 | ||||||
232,664,591 | ||||||||
Insurance — 6.1% | ||||||||
Aflac, Inc. | 1,118,157 | 72,143,490 | ||||||
Allstate Corp. | 1,823,803 | 202,095,611 | ||||||
Chubb Ltd. | 69,743 | 13,542,696 | ||||||
Hanover Insurance Group, Inc. | 605,900 | 77,858,150 | ||||||
Reinsurance Group of America, Inc. | 692,214 | 91,898,331 | ||||||
Willis Towers Watson PLC | 481,541 | 111,900,497 | ||||||
569,438,775 | ||||||||
IT Services — 1.2% | ||||||||
Amdocs Ltd. | 1,135,010 | 108,995,010 | ||||||
Machinery — 2.9% | ||||||||
Cummins, Inc. | 214,027 | 51,126,770 | ||||||
IMI PLC | 3,509,858 | 66,437,354 | ||||||
Oshkosh Corp. | 1,924,885 | 160,111,934 | ||||||
277,676,058 | ||||||||
Media — 1.9% | ||||||||
Fox Corp., Class B | 3,676,039 | 115,096,781 | ||||||
Omnicom Group, Inc. | 705,282 | 66,536,304 | ||||||
181,633,085 | ||||||||
Multiline Retail — 1.7% | ||||||||
Dollar Tree, Inc.(1) | 1,105,448 | 158,687,061 | ||||||
Multi-Utilities — 1.6% | ||||||||
NorthWestern Corp. | 2,558,042 | 148,008,310 | ||||||
Oil, Gas and Consumable Fuels — 3.9% | ||||||||
Devon Energy Corp. | 1,260,495 | 63,793,652 | ||||||
Diamondback Energy, Inc. | 541,392 | 73,179,957 | ||||||
Enterprise Products Partners LP | 4,935,027 | 127,817,199 | ||||||
EQT Corp. | 2,246,355 | 71,681,188 | ||||||
Phillips 66 | 270,593 | 27,432,718 | ||||||
363,904,714 | ||||||||
Passenger Airlines — 1.6% | ||||||||
Southwest Airlines Co. | 4,554,906 | 148,216,641 | ||||||
Semiconductors and Semiconductor Equipment — 0.5% | ||||||||
Applied Materials, Inc. | 173,035 | 21,253,889 | ||||||
Teradyne, Inc. | 249,867 | 26,863,201 | ||||||
48,117,090 | ||||||||
Specialized REITs — 1.0% | ||||||||
Public Storage | 302,290 | 91,333,901 | ||||||
Specialty Retail — 0.9% | ||||||||
Advance Auto Parts, Inc. | 731,571 | 88,966,349 | ||||||
Technology Hardware, Storage and Peripherals — 0.9% | ||||||||
HP, Inc. | 2,827,489 | 82,986,802 | ||||||
Trading Companies and Distributors — 2.4% | ||||||||
Beacon Roofing Supply, Inc.(1) | 1,217,261 | 71,635,810 |
11
Shares/ Principal Amount | Value | |||||||
MSC Industrial Direct Co., Inc., Class A | 1,785,348 | $ | 149,969,232 | |||||
221,605,042 | ||||||||
TOTAL COMMON STOCKS (Cost $8,098,713,687) | 8,925,423,754 | |||||||
EXCHANGE-TRADED FUNDS — 2.4% | ||||||||
iShares Russell Mid-Cap Value ETF (Cost $222,855,695) | 2,136,138 | 226,857,852 | ||||||
SHORT-TERM INVESTMENTS — 2.5% | ||||||||
Discount Notes(3) — 1.2% | ||||||||
Federal Home Loan Bank Discount Notes, 4.46%, 4/3/23 | $ | 112,749,000 | 112,749,000 | |||||
Money Market Funds† | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 4,888 | 4,888 | ||||||
Repurchase Agreements — 1.3% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.125% - 4.375%, 8/15/40 - 5/15/49, valued at $32,064,071), in a joint trading account at 4.67%, dated 3/31/23, due 4/3/23 (Delivery value $30,938,858) | 30,926,822 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 3/31/28, valued at $91,247,245), at 4.81%, dated 3/31/23, due 4/3/23 (Delivery value $89,493,858) | 89,458,000 | |||||||
120,384,822 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $233,111,460) | 233,138,710 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $8,554,680,842) | 9,385,420,316 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 10,478,521 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 9,395,898,837 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
EUR | 26,300,266 | USD | 28,538,813 | JPMorgan Chase Bank N.A. | 6/30/23 | $ | 123,356 | |||||||||||||
USD | 678,709,356 | EUR | 628,260,073 | JPMorgan Chase Bank N.A. | 6/30/23 | (5,971,807) | ||||||||||||||
USD | 54,911,412 | GBP | 44,691,022 | Bank of America N.A. | 6/30/23 | (312,267) | ||||||||||||||
USD | 1,550,799 | GBP | 1,253,019 | Bank of America N.A. | 6/30/23 | 2,472 | ||||||||||||||
$ | (6,158,246) |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
EUR | – | Euro | ||||||
GBP | – | British Pound | ||||||
USD | – | United States Dollar |
†Category is less than 0.05% of total net assets.
(1)Non-income producing.
(2)Affiliated Company: the fund’s holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940.
(3)The rate indicated is the yield to maturity at purchase for non-interest bearing securities. For interest bearing securities, the stated coupon rate is shown.
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
MARCH 31, 2023 | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $8,309,682,410) | $ | 9,135,031,345 | |||
Investment securities - affiliated, at value (cost of $244,998,432) | 250,388,971 | ||||
Total investment securities, at value (cost of $8,554,680,842) | 9,385,420,316 | ||||
Receivable for investments sold | 8,461,983 | ||||
Receivable for capital shares sold | 10,368,616 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 125,828 | ||||
Dividends and interest receivable | 20,215,015 | ||||
9,424,591,758 | |||||
Liabilities | |||||
Payable for investments purchased | 12,068,399 | ||||
Payable for capital shares redeemed | 5,049,894 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 6,284,074 | ||||
Accrued management fees | 5,178,545 | ||||
Distribution and service fees payable | 112,009 | ||||
28,692,921 | |||||
Net Assets | $ | 9,395,898,837 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 8,523,613,793 | |||
Distributable earnings (loss) | 872,285,044 | ||||
$ | 9,395,898,837 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $2,150,798,307 | 137,967,091 | $15.59 | ||||||||
I Class, $0.01 Par Value | $1,779,889,839 | 114,043,738 | $15.61 | ||||||||
Y Class, $0.01 Par Value | $168,199,803 | 10,770,404 | $15.62 | ||||||||
A Class, $0.01 Par Value | $232,651,048 | 14,965,605 | $15.55 | ||||||||
C Class, $0.01 Par Value | $27,561,329 | 1,803,788 | $15.28 | ||||||||
R Class, $0.01 Par Value | $95,535,784 | 6,170,863 | $15.48 | ||||||||
R5 Class, $0.01 Par Value | $31,520,521 | 2,018,606 | $15.61 | ||||||||
R6 Class, $0.01 Par Value | $3,653,939,844 | 234,163,988 | $15.60 | ||||||||
G Class, $0.01 Par Value | $1,255,802,362 | 80,405,560 | $15.62 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except Class A, for which the maximum offering price per share was $16.50 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of Class A and Class C.
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED MARCH 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $6,792,378 from affiliates and net of foreign taxes withheld of $2,919,582) | $ | 245,227,243 | |||
Interest | 5,465,308 | ||||
Securities lending, net | 257,459 | ||||
250,950,010 | |||||
Expenses: | |||||
Management fees | 69,529,268 | ||||
Distribution and service fees: | |||||
A Class | 614,363 | ||||
C Class | 316,866 | ||||
R Class | 483,294 | ||||
Directors' fees and expenses | 288,529 | ||||
Other expenses | 409,896 | ||||
71,642,216 | |||||
Fees waived - G Class | (8,696,191) | ||||
62,946,025 | |||||
Net investment income (loss) | 188,003,985 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $89,964 from affiliates) | 682,762,263 | ||||
Forward foreign currency exchange contract transactions | 31,916,613 | ||||
Foreign currency translation transactions | (432,300) | ||||
714,246,576 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $2,225,538 from affiliates) | (1,125,580,487) | ||||
Forward foreign currency exchange contracts | (6,216,295) | ||||
Translation of assets and liabilities in foreign currencies | (1,292) | ||||
(1,131,798,074) | |||||
Net realized and unrealized gain (loss) | (417,551,498) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (229,547,513) |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2023 AND MARCH 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2023 | March 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 188,003,985 | $ | 129,941,675 | ||||
Net realized gain (loss) | 714,246,576 | 1,418,781,422 | ||||||
Change in net unrealized appreciation (depreciation) | (1,131,798,074) | (547,954,389) | ||||||
Net increase (decrease) in net assets resulting from operations | (229,547,513) | 1,000,768,708 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (163,533,056) | (465,761,885) | ||||||
I Class | (132,402,340) | (361,957,976) | ||||||
Y Class | (13,302,433) | (40,681,870) | ||||||
A Class | (17,324,396) | (61,620,484) | ||||||
C Class | (2,079,138) | (8,077,770) | ||||||
R Class | (7,033,716) | (19,500,726) | ||||||
R5 Class | (3,342,554) | (10,442,981) | ||||||
R6 Class | (277,728,457) | (724,687,721) | ||||||
G Class | (108,624,508) | (156) | ||||||
Decrease in net assets from distributions | (725,370,598) | (1,692,731,569) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 370,300,610 | 2,165,833,316 | ||||||
Net increase (decrease) in net assets | (584,617,501) | 1,473,870,455 | ||||||
Net Assets | ||||||||
Beginning of period | 9,980,516,338 | 8,506,645,883 | ||||||
End of period | $ | 9,395,898,837 | $ | 9,980,516,338 |
See Notes to Financial Statements.
15
Notes to Financial Statements |
MARCH 31, 2023
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, R6 Class and G Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. Sale of the G Class commenced on March 15, 2022.
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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
16
The valuation designee 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; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 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.
17
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.
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, 9% 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), as well as exchange-traded funds managed by the investment advisor, 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.
18
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2023 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% | ||||||
G Class | 0.60% to 0.62% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.62%.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended March 31, 2023 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 $9,862,157 and $300,724, respectively. The effect of interfund transactions on the Statement of Operations was $9,453 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended March 31, 2023 were $5,851,171,097 and $5,997,452,943, respectively.
For the period ended March 31, 2023, the fund incurred net realized gains of $8,858,047 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:
Year ended March 31, 2023 | Year ended March 31, 2022(1) | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 1,100,000,000 | 1,100,000,000 | ||||||||||||
Sold | 21,818,393 | $ | 355,780,320 | 18,108,052 | $ | 350,635,375 | ||||||||
Issued in reinvestment of distributions | 10,330,219 | 159,831,389 | 26,136,073 | 455,845,806 | ||||||||||
Redeemed | (28,629,576) | (460,474,594) | (42,239,243) | (814,867,789) | ||||||||||
3,519,036 | 55,137,115 | 2,004,882 | (8,386,608) | |||||||||||
I Class/Shares Authorized | 1,060,000,000 | 1,060,000,000 | ||||||||||||
Sold | 34,585,466 | 553,921,267 | 16,228,589 | 311,159,957 | ||||||||||
Issued in reinvestment of distributions | 8,070,921 | 125,019,353 | 19,530,997 | 340,984,702 | ||||||||||
Redeemed | (29,938,431) | (482,746,841) | (27,853,235) | (528,757,255) | ||||||||||
12,717,956 | 196,193,779 | 7,906,351 | 123,387,404 | |||||||||||
Y Class/Shares Authorized | 80,000,000 | 75,000,000 | ||||||||||||
Sold | 1,597,527 | 25,593,863 | 1,529,090 | 29,487,698 | ||||||||||
Issued in reinvestment of distributions | 845,403 | 13,097,260 | 2,318,448 | 40,505,206 | ||||||||||
Redeemed | (2,777,722) | (44,536,640) | (2,238,973) | (40,980,409) | ||||||||||
(334,792) | (5,845,517) | 1,608,565 | 29,012,495 | |||||||||||
A Class/Shares Authorized | 165,000,000 | 170,000,000 | ||||||||||||
Sold | 4,278,604 | 68,600,837 | 5,208,055 | 98,308,670 | ||||||||||
Issued in reinvestment of distributions | 942,859 | 14,552,674 | 2,597,648 | 45,171,721 | ||||||||||
Redeemed | (7,830,830) | (127,784,808) | (7,278,144) | (139,165,202) | ||||||||||
(2,609,367) | (44,631,297) | 527,559 | 4,315,189 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 25,000,000 | ||||||||||||
Sold | 217,753 | 3,433,599 | 115,107 | 2,158,890 | ||||||||||
Issued in reinvestment of distributions | 134,021 | 2,034,861 | 467,742 | 8,003,740 | ||||||||||
Redeemed | (846,455) | (13,393,499) | (1,033,684) | (19,475,968) | ||||||||||
(494,681) | (7,925,039) | (450,835) | (9,313,338) | |||||||||||
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||
Sold | 1,455,170 | 23,600,630 | 1,019,656 | 19,514,146 | ||||||||||
Issued in reinvestment of distributions | 457,380 | 7,033,684 | 1,126,093 | 19,500,704 | ||||||||||
Redeemed | (1,402,574) | (22,405,750) | (1,640,925) | (31,014,293) | ||||||||||
509,976 | 8,228,564 | 504,824 | 8,000,557 | |||||||||||
R5 Class/Shares Authorized | 25,000,000 | 30,000,000 | ||||||||||||
Sold | 748,302 | 12,185,993 | 475,463 | 9,105,307 | ||||||||||
Issued in reinvestment of distributions | 214,738 | 3,326,913 | 595,277 | 10,406,295 | ||||||||||
Redeemed | (1,632,216) | (25,872,916) | (1,487,369) | (28,280,353) | ||||||||||
(669,176) | (10,360,010) | (416,629) | (8,768,751) | |||||||||||
R6 Class/Shares Authorized | 2,000,000,000 | 1,300,000,000 | ||||||||||||
Sold | 61,849,513 | 991,987,137 | 41,383,112 | 793,447,536 | ||||||||||
Issued in reinvestment of distributions | 17,395,448 | 269,283,605 | 40,644,059 | 709,744,760 | ||||||||||
Redeemed | (52,483,143) | (844,848,766) | (58,184,664) | (1,117,550,420) | ||||||||||
26,761,818 | 416,421,976 | 23,842,507 | 385,641,876 | |||||||||||
G Class/Shares Authorized | 850,000,000 | 850,000,000 | ||||||||||||
Sold | 6,113,268 | 96,438,643 | 36,467 | 636,327 | ||||||||||
Issued in connection with reorganization (Note 11) | — | — | 99,974,219 | 1,744,376,569 | ||||||||||
Issued in reinvestment of distributions | 7,015,615 | 108,624,508 | 9 | 156 | ||||||||||
Redeemed | (26,789,545) | (441,982,112) | (5,944,473) | (103,068,560) | ||||||||||
(13,660,662) | (236,918,961) | 94,066,222 | 1,641,944,492 | |||||||||||
Net increase (decrease) | 25,740,108 | $ | 370,300,610 | 129,593,446 | $ | 2,165,833,316 |
(1)March 15, 2022 (commencement of sale) through March 31, 2022 for the G Class.
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 March 31, 2023 follows (amounts in thousands):
Company | Beginning Value | Purchase Cost | Sales Cost | Change in Net Unrealized Appreciation (Depreciation) | Ending Value | Ending Shares | Net Realized Gain (Loss) | Income | ||||||||||||||||||
Heartland Express, Inc. | $ | 57,740 | — | $ | 207 | $ | 7,593 | $ | 65,126 | 4,091 | $ | 9 | $ | 328 | ||||||||||||
Spire, Inc. | 79,372 | $ | 112,668 | 1,410 | (5,367) | 185,263 | 2,641 | 81 | 6,464 | |||||||||||||||||
$ | 137,112 | $ | 112,668 | $ | 1,617 | $ | 2,226 | $ | 250,389 | 6,732 | $ | 90 | $ | 6,792 |
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.
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 | |||||||||||
Automobile Components | $ | 140,564,999 | $ | 67,584,520 | — | ||||||
Building Products | — | 113,177,016 | — | ||||||||
Chemicals | 81,365,240 | 114,390,731 | — | ||||||||
Construction and Engineering | — | 84,990,314 | — | ||||||||
Consumer Staples Distribution & Retail | — | 193,879,298 | — | ||||||||
Electrical Equipment | 212,369,284 | 41,847,425 | — | ||||||||
Hotels, Restaurants and Leisure | — | 80,254,132 | — | ||||||||
Household Products | 133,555,342 | 99,109,249 | — | ||||||||
Machinery | 211,238,704 | 66,437,354 | — | ||||||||
Other Industries | 7,284,660,146 | — | — | ||||||||
Exchange-Traded Funds | 226,857,852 | — | — | ||||||||
Short-Term Investments | 4,888 | 233,133,822 | — | ||||||||
$ | 8,290,616,455 | $ | 1,094,803,861 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 125,828 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 6,284,074 | — |
21
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 $777,705,413.
The value of foreign currency risk derivative instruments as of March 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $125,828 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $6,284,074 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $31,916,613 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(6,216,295) 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, war, 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 tax character of distributions paid during the years ended March 31, 2023 and March 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 208,055,357 | $ | 459,052,286 | ||||
Long-term capital gains | $ | 517,315,241 | $ | 1,233,679,283 |
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.
22
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 8,688,089,848 | |||
Gross tax appreciation of investments | $ | 1,120,753,925 | |||
Gross tax depreciation of investments | (423,423,457) | ||||
Net tax appreciation (depreciation) of investments | 697,330,468 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (1,629) | ||||
Net tax appreciation (depreciation) | $ | 697,328,839 | |||
Undistributed ordinary income | $ | 60,459,600 | |||
Accumulated long-term gains | $ | 114,496,605 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
11. Reorganization
On December 2, 2021, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of NT Mid Cap Value Fund, one fund in a series issued by the corporation, were transferred to Mid Cap Value Fund in exchange for shares of Mid Cap Value Fund. The purpose of the transaction was to combine two funds with substantially similar investment objectives and strategies. The financial statements and performance history of Mid Cap Value Fund survived after the reorganization. The reorganization was effective at the close of the NYSE on March 25, 2022.
The reorganization was accomplished by a tax-free exchange of shares. On March 25, 2022, NT Mid Cap Value Fund exchanged its shares for shares of Mid Cap Value Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||||||||
NT Mid Cap Value Fund – G Class | 131,763,604 | Mid Cap Value Fund – G Class | 99,974,219 |
The net assets of NT Mid Cap Value Fund and Mid Cap Value Fund immediately before the reorganization were $1,744,376,569 and $8,436,268,301, respectively. NT Mid Cap Value Fund's unrealized appreciation of $341,168,071 was combined with that of Mid Cap Value Fund. Immediately after the reorganization, the combined net assets were $10,180,644,870.
Assuming the reorganization had been completed on April 1, 2021, the beginning of the annual reporting period, the pro forma results of operations for the period ended March 31, 2022 are as follows:
Net investment income (loss) | $ | 168,573,861 | |||
Net realized and unrealized gain (loss) | 1,061,829,759 | ||||
Net increase (decrease) in net assets resulting from operations | $ | 1,230,403,620 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of NT Mid Cap Value Fund that have been included in the fund’s Statement of Operations since March 25, 2022.
23
Financial Highlights |
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.30 | 0.28 | (0.75) | (0.47) | (0.28) | (0.96) | (1.24) | $15.59 | (2.58)% | 0.98% | 0.98% | 1.70% | 1.70% | 64% | $2,150,798 | ||||||||||||||||||||||||||||||||
2022 | $19.03 | 0.26 | 1.95 | 2.21 | (0.25) | (3.69) | (3.94) | $17.30 | 12.48% | 0.97% | 0.97% | 1.33% | 1.33% | 50% | $2,325,957 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.32 | 0.31 | (0.75) | (0.44) | (0.31) | (0.96) | (1.27) | $15.61 | (2.38)% | 0.78% | 0.78% | 1.90% | 1.90% | 64% | $1,779,890 | ||||||||||||||||||||||||||||||||
2022 | $19.04 | 0.29 | 1.96 | 2.25 | (0.28) | (3.69) | (3.97) | $17.32 | 12.75% | 0.77% | 0.77% | 1.53% | 1.53% | 50% | $1,754,741 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.33 | 0.33 | (0.75) | (0.42) | (0.33) | (0.96) | (1.29) | $15.62 | (2.23)% | 0.63% | 0.63% | 2.05% | 2.05% | 64% | $168,200 | ||||||||||||||||||||||||||||||||
2022 | $19.05 | 0.32 | 1.96 | 2.28 | (0.31) | (3.69) | (4.00) | $17.33 | 12.91% | 0.62% | 0.62% | 1.68% | 1.68% | 50% | $192,430 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.26 | 0.23 | (0.74) | (0.51) | (0.24) | (0.96) | (1.20) | $15.55 | (2.89)% | 1.23% | 1.23% | 1.45% | 1.45% | 64% | $232,651 | ||||||||||||||||||||||||||||||||
2022 | $18.99 | 0.21 | 1.95 | 2.16 | (0.20) | (3.69) | (3.89) | $17.26 | 12.23% | 1.22% | 1.22% | 1.08% | 1.08% | 50% | $303,260 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $16.98 | 0.11 | (0.72) | (0.61) | (0.13) | (0.96) | (1.09) | $15.28 | (3.53)% | 1.98% | 1.98% | 0.70% | 0.70% | 64% | $27,561 | ||||||||||||||||||||||||||||||||
2022 | $18.75 | 0.06 | 1.93 | 1.99 | (0.07) | (3.69) | (3.76) | $16.98 | 11.37% | 1.97% | 1.97% | 0.33% | 0.33% | 50% | $39,037 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.19 | 0.19 | (0.74) | (0.55) | (0.20) | (0.96) | (1.16) | $15.48 | (3.08)% | 1.48% | 1.48% | 1.20% | 1.20% | 64% | $95,536 | ||||||||||||||||||||||||||||||||
2022 | $18.93 | 0.16 | 1.94 | 2.10 | (0.15) | (3.69) | (3.84) | $17.19 | 11.92% | 1.47% | 1.47% | 0.83% | 0.83% | 50% | $97,311 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.32 | 0.31 | (0.75) | (0.44) | (0.31) | (0.96) | (1.27) | $15.61 | (2.39)% | 0.78% | 0.78% | 1.90% | 1.90% | 64% | $31,521 | ||||||||||||||||||||||||||||||||
2022 | $19.05 | 0.29 | 1.95 | 2.24 | (0.28) | (3.69) | (3.97) | $17.32 | 12.68% | 0.77% | 0.77% | 1.53% | 1.53% | 50% | $46,565 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.32 | 0.33 | (0.76) | (0.43) | (0.33) | (0.96) | (1.29) | $15.60 | (2.30)% | 0.63% | 0.63% | 2.05% | 2.05% | 64% | $3,653,940 | ||||||||||||||||||||||||||||||||
2022 | $19.04 | 0.32 | 1.96 | 2.28 | (0.31) | (3.69) | (4.00) | $17.32 | 12.92% | 0.62% | 0.62% | 1.68% | 1.68% | 50% | $3,591,180 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $17.33 | 0.43 | (0.75) | (0.32) | (0.43) | (0.96) | (1.39) | $15.62 | (1.63)% | 0.01% | 0.63% | 2.67% | 2.05% | 64% | $1,255,802 | ||||||||||||||||||||||||||||||||
2022(3) | $17.81 | 0.02 | 0.61 | 0.63 | (0.03) | (1.08) | (1.11) | $17.33 | 3.55% | 0.00%(4)(5) | 0.62%(4) | 2.11%(4) | 1.49%(4) | 50%(6) | $1,630,035 |
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)March 15, 2022 (commencement of sale) through March 31, 2022.
(4)Annualized.
(5)Ratio was less than 0.005%.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2022.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Mid Cap Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Mid Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
May 16, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
28
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 64 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 64 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 64 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 64 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 64 | None |
29
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 64 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 64 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 64 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 109 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 141 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
30
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present); Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
31
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates, including members of ACIM’s Investment Oversight Committee who are members of ACIM’s Investment Management and Global Analytics departments, conduct the day-to-day operation of the program pursuant to the program.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain investments held by the Fund is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2022 through December 31, 2022. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
32
Proxy Voting Results |
A special meeting of shareholders was held on October 13, 2022, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect five directors to the Board of Directors of American Century Capital Portfolios, Inc.:
Affirmative | Withhold | ||||||||||
Brian Bulatao | $ | 17,572,790,908 | $ | 417,511,059 | |||||||
Chris H. Cheesman | $ | 17,634,906,815 | $ | 355,395,152 | |||||||
Rajesh K. Gupta | $ | 17,620,399,260 | $ | 369,902,707 | |||||||
Lynn M. Jenkins | $ | 17,600,718,699 | $ | 389,583,268 | |||||||
Gary C. Meltzer | $ | 17,633,346,402 | $ | 356,955,565 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas W. Bunn, Barry Fink, Jan M. Lewis, and Stephen E. Yates.
33
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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.
34
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2023.
For corporate taxpayers, the fund hereby designates $186,309,182, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $560,554,965, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2023.
The fund hereby designates $32,697,712 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2023.
The fund utilized earnings and profits of $54,405,771 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92271 2305 |
![image25.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image25.jpg)
Annual Report | |||||
March 31, 2023 | |||||
Small Cap Dividend Fund | |||||
Investor Class (AMAEX) | |||||
I Class (AMAFX) | |||||
A Class (AMAHX) | |||||
R Class (AMAJX) | |||||
R6 Class (AMAKX) | |||||
G Class (AMALX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Proxy Voting Results | |||||
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 |
![image23.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image23.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2023. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Challenging Conditions Weighed on Asset Class Returns
Prevailing headwinds early in the reporting period continued to challenge U.S. financial markets throughout the 12 months. Asset class performance seesawed but declined overall amid mixed economic data, elevated inflation and anticipated monetary policy responses. By period-end, a new headwind emerged: banking industry uncertainty.
After launching its inflation-fighting rate-hike campaign in March 2022, the Federal Reserve (Fed) lifted rates eight more times by period-end. The federal funds target rate ended the reporting period at 4.75% to 5%, its highest level since 2007, while Treasury yields climbed to multiyear highs. Amid the Fed’s efforts, the annual inflation rate peaked at 9.1% in June, a 40-year high, before easing to 5% by March.
In addition to helping tame inflation, rapidly rising rates also fueled recession worries and led to expectations for the Fed to change course. This sentiment helped spark a rebound among stock and bond indices in the second half of the reporting period. The collapse of two U.S. regional banks late in the period and fears of a looming credit crunch and likely recession also contributed to market expectations for a Fed policy change. Nevertheless, the Fed indicated a near-term course change was unlikely.
Despite delivering strong gains in the second half of the reporting period, stock returns succumbed to first-half losses and declined for the 12 months. Similarly, weakness in the first half of the period overwhelmed second-half gains, and bond returns were negative for the 12-month period.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of still-high inflation, tighter financial conditions, banking industry turbulence and economic uncertainty. In addition, increasingly tense geopolitical considerations complicate the market backdrop.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image16a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2023 | ||||||||||||||||||||
Ticker Symbol | Since Inception | Inception Date | ||||||||||||||||||
Investor Class | AMAEX | -5.40% | 4/5/22 | |||||||||||||||||
Russell 2000 Value Index | — | -11.61% | — | |||||||||||||||||
I Class | AMAFX | -5.22% | 4/5/22 | |||||||||||||||||
A Class | AMAHX | |||||||||||||||||||
No sales charge | -5.62% | 4/5/22 | ||||||||||||||||||
With sales charge | -11.05% | 4/5/22 | ||||||||||||||||||
R Class | AMAJX | -5.85% | 4/5/22 | |||||||||||||||||
R6 Class | AMAKX | -5.08% | 4/5/22 | |||||||||||||||||
G Class | AMALX | -4.31% | 4/5/22 |
G Class returns would have been lower if a portion of the fees had not been waived.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over Life of Class | ||
$10,000 investment made April 5, 2022 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-9122aa15cf7d46dcb8aa.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/chart-9122aa15cf7d46dcb8aa.jpg)
Value on March 31, 2023 | |||||
Investor Class — $9,460 | |||||
Russell 2000 Value Index — $8,839 | |||||
Total Annual Fund Operating Expenses | |||||||||||||||||
Investor Class | I Class | A Class | R Class | R6 Class | G Class | ||||||||||||
1.09% | 0.89% | 1.34% | 1.59% | 0.74% | 0.74% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Jeff John and Ryan Cope
Performance Summary
Small Cap Dividend returned -5.40%* for the period from inception (April 5, 2022) through March 31, 2023. The fund’s benchmark, the Russell 2000 Value Index, returned -11.61% for the same time period. The fund’s return reflects operating expenses, while the index’s return does not.
Performance versus the benchmark was helped primarily by strong security selection in the industrials sector. Favorable choices in the consumer discretionary sector and positive allocation decisions in the health care sector also contributed to relative results. On the other hand, selections in the energy and consumer staples sectors and an underweight in utilities hurt performance.
Industrials, Consumer Discretionary and Health Care Contributed
Favorable stock selection was the primary contributor to the fund’s outperformance. In the industrials sector, selections in the aerospace and defense industry were a primary driver. A position in Leonardo DRS, which is not in the index, was the leading contributor, followed by Cadre Holdings and Park Aerospace. We exited Cadre Holdings to take advantage of opportunities with more favorable risk/reward profiles. In the building products industry, Tecnoglass, which is not in the index, contributed most, while in the machinery industry, Timken Co. led all other holdings in the sector and was the top contributor overall.
In the consumer discretionary sector, our selections, especially those not in the index, were beneficial. Positions in Tapestry, a luxury goods company, and Ralph Lauren, a clothing manufacturer, were leading contributors in the textile, apparel and luxury goods industry. In the specialty retail industry, Penske Automotive Group added to returns, and in diversified consumer services, H&R Block accounted for most of the performance, but we exited this position to capitalize on opportunities with more attractive risk/reward profiles.
In the health care sector, performance benefited from a lack of exposure to the biotechnology and health care technology industries. In the health care equipment and supplies industry, our position in Embecta, a provider of injection systems for diabetics, performed well, adding to the outperformance.
Energy, Consumer Staples and Utilities Detracted
In the energy sector, stock selection was the primary hindrance. In the oil, gas and consumable fuels industry, a position in Enviva, which is not in the index, was the leading detractor. The company is not a traditional energy producer but is a provider of biomass fuels to the electric utility and industrial power markets. These shares performed poorly on weak quarterly results and a capital raise that diluted existing shareholders.
In the consumer staples sector, underperformance resulted mostly from stock selection. In the household products industry, Spectrum Brands Holdings, in particular, detracted. Shares of this household goods company have been hindered by uncertainty surrounding the sale of the hardware and home improvement business. In the utilities sector, an underweight position weighed on relative returns. In addition, in the gas utilities industry, a lack of exposure to a number of companies was the primary detractor.
*All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
MARCH 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 93.3% | ||||
Convertible Preferred Stocks | 2.9% | ||||
Preferred Stocks | 2.6% | ||||
Convertible Bonds | 0.1% | ||||
Short-Term Investments | 4.6% | ||||
Other Assets and Liabilities | (3.5)% | ||||
Top Five Industries | % of net assets | ||||
Banks | 21.1% | ||||
Electronic Equipment, Instruments and Components | 6.6% | ||||
Diversified REITs | 6.3% | ||||
Insurance | 5.5% | ||||
Machinery | 5.1% |
6
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2022 to March 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 10/1/22 | Ending Account Value 3/31/23 | Expenses Paid During Period(1) 10/1/22 - 3/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,115.70 | $5.70 | 1.08% | ||||||||||
I Class | $1,000 | $1,116.80 | $4.64 | 0.88% | ||||||||||
A Class | $1,000 | $1,114.30 | $7.01 | 1.33% | ||||||||||
R Class | $1,000 | $1,112.90 | $8.32 | 1.58% | ||||||||||
R6 Class | $1,000 | $1,117.60 | $3.85 | 0.73% | ||||||||||
G Class | $1,000 | $1,122.80 | $0.00 | 0.00%(2) | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.55 | $5.44 | 1.08% | ||||||||||
I Class | $1,000 | $1,020.54 | $4.43 | 0.88% | ||||||||||
A Class | $1,000 | $1,018.30 | $6.69 | 1.33% | ||||||||||
R Class | $1,000 | $1,017.05 | $7.95 | 1.58% | ||||||||||
R6 Class | $1,000 | $1,021.29 | $3.68 | 0.73% | ||||||||||
G Class | $1,000 | $1,024.93 | $0.00 | 0.00%(2) |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
(2)Other expenses, which include directors' fees and expenses, did not exceed 0.005%.
8
Schedule of Investments |
MARCH 31, 2023
Shares/ Principal Amount | Value | ||||||||||
COMMON STOCKS — 93.3% | |||||||||||
Aerospace and Defense — 2.6% | |||||||||||
Leonardo DRS, Inc.(1) | 6,206 | $ | 80,492 | ||||||||
Park Aerospace Corp. | 5,862 | 78,844 | |||||||||
159,336 | |||||||||||
Banks — 19.2% | |||||||||||
Columbia Banking System, Inc. | 5,024 | 107,614 | |||||||||
F.N.B. Corp. | 10,409 | 120,744 | |||||||||
Financial Institutions, Inc. | 2,766 | 53,329 | |||||||||
First Interstate BancSystem, Inc., Class A | 2,516 | 75,128 | |||||||||
First Merchants Corp. | 864 | 28,469 | |||||||||
HBT Financial, Inc. | 1,203 | 23,723 | |||||||||
Home BancShares, Inc. | 7,011 | 152,209 | |||||||||
Pacific Premier Bancorp, Inc. | 5,039 | 121,037 | |||||||||
Popular, Inc. | 2,184 | 125,383 | |||||||||
Premier Financial Corp. | 2,184 | 45,274 | |||||||||
Towne Bank | 1,747 | 46,558 | |||||||||
United Bankshares, Inc. | 3,652 | 128,550 | |||||||||
Valley National Bancorp | 7,445 | 68,792 | |||||||||
Webster Financial Corp. | 2,453 | 96,697 | |||||||||
1,193,507 | |||||||||||
Building Products — 2.3% | |||||||||||
Fortune Brands Innovations, Inc. | 1,241 | 72,884 | |||||||||
Tecnoglass, Inc. | 1,709 | 71,710 | |||||||||
144,594 | |||||||||||
Capital Markets — 3.9% | |||||||||||
Carlyle Group, Inc. | 2,668 | 82,868 | |||||||||
Patria Investments Ltd., Class A | 6,793 | 100,537 | |||||||||
Sculptor Capital Management, Inc. | 7,140 | 61,475 | |||||||||
244,880 | |||||||||||
Chemicals — 4.2% | |||||||||||
Chase Corp. | 878 | 91,953 | |||||||||
Mativ Holdings, Inc. | 616 | 13,225 | |||||||||
RPM International, Inc. | 380 | 33,151 | |||||||||
Valvoline, Inc. | 3,474 | 121,382 | |||||||||
259,711 | |||||||||||
Commercial Services and Supplies — 2.7% | |||||||||||
Brink's Co. | 2,041 | 136,339 | |||||||||
Deluxe Corp. | 2,081 | 33,296 | |||||||||
169,635 | |||||||||||
Containers and Packaging — 3.7% | |||||||||||
Graphic Packaging Holding Co. | 6,725 | 171,420 | |||||||||
Sonoco Products Co. | 936 | 57,096 | |||||||||
228,516 | |||||||||||
Diversified REITs — 6.3% | |||||||||||
CareTrust REIT, Inc. | 3,492 | 68,373 | |||||||||
Cousins Properties, Inc. | 2,811 | 60,099 | |||||||||
Easterly Government Properties, Inc. | 4,356 | 59,852 |
9
Shares/ Principal Amount | Value | ||||||||||
Four Corners Property Trust, Inc. | 3,733 | $ | 100,269 | ||||||||
LTC Properties, Inc. | 808 | 28,385 | |||||||||
NETSTREIT Corp. | 2,622 | 47,930 | |||||||||
Urstadt Biddle Properties, Inc., Class A | 1,449 | 25,459 | |||||||||
390,367 | |||||||||||
Electric Utilities — 0.9% | |||||||||||
ALLETE, Inc. | 882 | 56,774 | |||||||||
Electronic Equipment, Instruments and Components — 3.7% | |||||||||||
Avnet, Inc. | 2,531 | 114,401 | |||||||||
Vishay Intertechnology, Inc. | 5,166 | 116,855 | |||||||||
231,256 | |||||||||||
Energy Equipment and Services — 1.9% | |||||||||||
ChampionX Corp. | 4,317 | 117,120 | |||||||||
Financial Services — 2.6% | |||||||||||
Alerus Financial Corp. | 1,120 | 17,976 | |||||||||
Compass Diversified Holdings(2) | 5,032 | 96,011 | |||||||||
Enact Holdings, Inc. | 955 | 21,831 | |||||||||
Provident Financial Services, Inc. | 1,528 | 29,307 | |||||||||
165,125 | |||||||||||
Gas Utilities — 1.2% | |||||||||||
Northwest Natural Holding Co. | 254 | 12,080 | |||||||||
Southwest Gas Holdings, Inc. | 1,045 | 65,261 | |||||||||
77,341 | |||||||||||
Health Care Equipment and Supplies — 1.0% | |||||||||||
Embecta Corp. | 2,320 | 65,238 | |||||||||
Health Care Providers and Services — 1.1% | |||||||||||
Patterson Cos., Inc. | 2,651 | 70,967 | |||||||||
Household Durables — 1.9% | |||||||||||
Leggett & Platt, Inc. | 3,654 | 116,490 | |||||||||
Household Products — 2.2% | |||||||||||
Spectrum Brands Holdings, Inc. | 2,044 | 135,354 | |||||||||
Insurance — 5.5% | |||||||||||
AMERISAFE, Inc. | 665 | 32,552 | |||||||||
Axis Capital Holdings Ltd. | 2,116 | 115,364 | |||||||||
RenaissanceRe Holdings Ltd. | 550 | 110,187 | |||||||||
Selective Insurance Group, Inc. | 877 | 83,604 | |||||||||
341,707 | |||||||||||
IT Services — 2.2% | |||||||||||
EVERTEC, Inc. | 3,970 | 133,988 | |||||||||
Leisure Products — 0.8% | |||||||||||
Brunswick Corp. | 573 | 46,986 | |||||||||
Machinery — 5.1% | |||||||||||
Hurco Cos., Inc. | 803 | 20,332 | |||||||||
IMI PLC | 2,519 | 47,682 | |||||||||
Luxfer Holdings PLC | 6,369 | 107,636 | |||||||||
Timken Co. | 1,734 | 141,702 | |||||||||
317,352 | |||||||||||
Media — 3.3% | |||||||||||
Entravision Communications Corp., Class A | 19,668 | 118,991 | |||||||||
John Wiley & Sons, Inc., Class A | 2,188 | 84,829 | |||||||||
203,820 |
10
Shares/ Principal Amount | Value | ||||||||||
Multi-Utilities — 1.0% | |||||||||||
NorthWestern Corp. | 1,100 | $ | 63,646 | ||||||||
Oil, Gas and Consumable Fuels — 4.5% | |||||||||||
Enviva, Inc. | 2,564 | 74,048 | |||||||||
Hess Midstream LP, Class A | 2,366 | 68,472 | |||||||||
TXO Energy Partners LP(1) | 6,001 | 138,683 | |||||||||
281,203 | |||||||||||
Professional Services — 0.2% | |||||||||||
Public Policy Holding Co., Inc. | 8,115 | 13,765 | |||||||||
Semiconductors and Semiconductor Equipment — 3.2% | |||||||||||
Kulicke & Soffa Industries, Inc. | 2,072 | 109,174 | |||||||||
MKS Instruments, Inc. | 995 | 88,177 | |||||||||
197,351 | |||||||||||
Specialty Retail — 1.1% | |||||||||||
Penske Automotive Group, Inc. | 485 | 68,778 | |||||||||
Textiles, Apparel and Luxury Goods — 3.5% | |||||||||||
Ralph Lauren Corp. | 901 | 105,120 | |||||||||
Tapestry, Inc. | 2,650 | 114,241 | |||||||||
219,361 | |||||||||||
Trading Companies and Distributors — 1.5% | |||||||||||
Applied Industrial Technologies, Inc. | 667 | 94,801 | |||||||||
TOTAL COMMON STOCKS (Cost $5,786,875) | 5,808,969 | ||||||||||
CONVERTIBLE PREFERRED STOCKS — 2.9% | |||||||||||
Electronic Equipment, Instruments and Components — 2.9% | |||||||||||
Coherent Corp., 6.00%, 7/1/23 (Cost $189,521) | 1,041 | 180,045 | |||||||||
PREFERRED STOCKS — 2.6% | |||||||||||
Banks — 1.9% | |||||||||||
F.N.B. Corp., 7.25% | 1,100 | 26,609 | |||||||||
PacWest Bancorp, 7.75% | 2,826 | 41,853 | |||||||||
Valley National Bancorp, 6.25% | 2,536 | 53,712 | |||||||||
122,174 | |||||||||||
Financial Services — 0.7% | |||||||||||
Compass Diversified Holdings, 7.875% | 1,667 | 41,342 | |||||||||
TOTAL PREFERRED STOCKS (Cost $179,280) | 163,516 | ||||||||||
CONVERTIBLE BONDS — 0.1% | |||||||||||
Building Products — 0.1% | |||||||||||
DIRTT Environmental Solutions, 6.00%, 1/31/26 (Cost $12,747) | CAD | 19,000 | 6,428 | ||||||||
SHORT-TERM INVESTMENTS — 4.6% | |||||||||||
Money Market Funds — 0.7% | |||||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 355 | 355 | |||||||||
State Street Navigator Securities Lending Government Money Market Portfolio(3) | 41,925 | 41,925 | |||||||||
42,280 | |||||||||||
Repurchase Agreements — 3.9% | |||||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.125% - 4.375%, 8/15/40 - 5/15/49, valued at $65,702), in a joint trading account at 4.67%, dated 3/31/23, due 4/3/23 (Delivery value $63,396) | 63,371 |
11
Shares/ Principal Amount | Value | ||||||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 3/31/28, valued at $186,735), at 4.81%, dated 3/31/23, due 4/3/23 (Delivery value $183,073) | $ | 183,000 | |||||||||
246,371 | |||||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $288,651) | 288,651 | ||||||||||
TOTAL INVESTMENT SECURITIES — 103.5% (Cost $6,457,074) | 6,447,609 | ||||||||||
OTHER ASSETS AND LIABILITIES — (3.5)% | (216,707) | ||||||||||
TOTAL NET ASSETS — 100.0% | $ | 6,230,902 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 49,637 | GBP | 40,398 | Bank of America N.A. | 6/30/23 | $ | (282) | |||||||||||||
USD | 2,549 | GBP | 2,060 | Bank of America N.A. | 6/30/23 | 4 | ||||||||||||||
$ | (278) |
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
CAD | – | Canadian Dollar | ||||||
GBP | – | British Pound | ||||||
USD | – | United States Dollar |
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $41,022. 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 $41,925.
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
MARCH 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $6,415,149) — including $41,022 of securities on loan | $ | 6,405,684 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $41,925) | 41,925 | ||||
Total investment securities, at value (cost of $6,457,074) | 6,447,609 | ||||
Receivable for investments sold | 25,498 | ||||
Receivable for capital shares sold | 10,050 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 4 | ||||
Dividends and interest receivable | 12,049 | ||||
Securities lending receivable | 349 | ||||
6,495,559 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 41,925 | ||||
Payable for investments purchased | 216,765 | ||||
Payable for capital shares redeemed | 2,810 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 282 | ||||
Accrued management fees | 2,816 | ||||
Distribution and service fees payable | 59 | ||||
264,657 | |||||
Net Assets | $ | 6,230,902 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 6,308,634 | |||
Distributable earnings (loss) | (77,732) | ||||
$ | 6,230,902 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $2,603,654 | 282,903 | $9.20 | ||||||||
I Class, $0.01 Par Value | $3,419,841 | 371,479 | $9.21 | ||||||||
A Class, $0.01 Par Value | $23,603 | 2,565 | $9.20 | ||||||||
R Class, $0.01 Par Value | $123,732 | 13,445 | $9.20 | ||||||||
R6 Class, $0.01 Par Value | $36,155 | 3,927 | $9.21 | ||||||||
G Class, $0.01 Par Value | $23,917 | 2,597 | $9.21 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except Class A, for which the maximum offering price per share was $9.76 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of Class A.
See Notes to Financial Statements.
13
Statement of Operations |
PERIOD ENDED MARCH 31, 2023(1) | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $130) | $ | 62,690 | |||
Interest | 3,858 | ||||
Securities lending, net | 425 | ||||
66,973 | |||||
Expenses: | |||||
Management fees | 19,845 | ||||
Distribution and service fees: | |||||
A Class | 59 | ||||
R Class | 291 | ||||
Directors' fees and expenses | 53 | ||||
Other expenses | 154 | ||||
20,402 | |||||
Fees waived - G Class | (175) | ||||
20,227 | |||||
Net investment income (loss) | 46,746 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | (63,167) | ||||
Forward foreign currency exchange contract transactions | 1,093 | ||||
Foreign currency translation transactions | (198) | ||||
(62,272) | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (9,465) | ||||
Forward foreign currency exchange contracts | (278) | ||||
Translation of assets and liabilities in foreign currencies | (3) | ||||
(9,746) | |||||
Net realized and unrealized gain (loss) | (72,018) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (25,272) |
(1)April 5, 2022 (fund inception) through March 31, 2023.
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
PERIOD ENDED MARCH 31, 2023(1) | |||||
Increase (Decrease) in Net Assets | |||||
Operations | |||||
Net investment income (loss) | $ | 46,746 | |||
Net realized gain (loss) | (62,272) | ||||
Change in net unrealized appreciation (depreciation) | (9,746) | ||||
Net increase (decrease) in net assets resulting from operations | (25,272) | ||||
Distributions to Shareholders | |||||
From earnings: | |||||
Investor Class | (47,865) | ||||
I Class | (730) | ||||
A Class | (588) | ||||
R Class | (1,361) | ||||
R6 Class | (1,030) | ||||
G Class | (886) | ||||
Decrease in net assets from distributions | (52,460) | ||||
Capital Share Transactions | |||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 6,308,634 | ||||
Net increase (decrease) in net assets | 6,230,902 | ||||
Net Assets | |||||
End of period | $ | 6,230,902 |
(1)April 5, 2022 (fund inception) through March 31, 2023.
See Notes to Financial Statements.
15
Notes to Financial Statements |
MARCH 31, 2023
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 Dividend 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, R Class, R6 Class and G Class. The A Class may incur an initial sales charge and may be subject to a contingent deferred sales charge. All classes of the fund commenced sale on April 5, 2022, the fund's inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value (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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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. 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. Fixed income securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
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.
16
If the valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
The valuation designee 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; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that ACIM has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
17
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2023.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 41,925 | — | — | — | $ | 41,925 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 41,925 |
(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. ACIM owns 15% of the shares of the fund.
18
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 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 annual management fee for each class is as follows:
Investor Class | I Class | A Class | R Class | R6 Class | G Class | ||||||||||||
1.09% | 0.89% | 1.09% | 1.09% | 0.74% | 0.00%(1) |
(1)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 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 R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended March 31, 2023 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, excluding short-term investments, for the period April 5, 2022 (fund inception) through March 31, 2023 were $7,179,946 and $1,090,844, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Period ended March 31, 2023(1) | ||||||||
Shares | Amount | |||||||
Investor Class/Shares Authorized | 20,000,000 | |||||||
Sold | 351,045 | $ | 3,386,267 | |||||
Issued in reinvestment of distributions | 5,220 | 47,546 | ||||||
Redeemed | (73,362) | (675,248) | ||||||
282,903 | 2,758,565 | |||||||
I Class/Shares Authorized | 20,000,000 | |||||||
Sold | 371,699 | 3,331,728 | ||||||
Issued in reinvestment of distributions | 80 | 730 | ||||||
Redeemed | (300) | (2,760) | ||||||
371,479 | 3,329,698 | |||||||
A Class/Shares Authorized | 20,000,000 | |||||||
Sold | 2,500 | 25,000 | ||||||
Issued in reinvestment of distributions | 65 | 588 | ||||||
2,565 | 25,588 | |||||||
R Class/Shares Authorized | 20,000,000 | |||||||
Sold | 19,540 | 187,164 | ||||||
Issued in reinvestment of distributions | 149 | 1,361 | ||||||
Redeemed | (6,244) | (58,335) | ||||||
13,445 | 130,190 | |||||||
R6 Class/Shares Authorized | 20,000,000 | |||||||
Sold | 3,935 | 38,710 | ||||||
Issued in reinvestment of distributions | 113 | 1,030 | ||||||
Redeemed | (121) | (1,033) | ||||||
3,927 | 38,707 | |||||||
G Class/Shares Authorized | 20,000,000 | |||||||
Sold | 2,500 | 25,000 | ||||||
Issued in reinvestment of distributions | 97 | 886 | ||||||
2,597 | 25,886 | |||||||
Net increase (decrease) | 676,916 | $ | 6,308,634 |
(1)April 5, 2022 (fund inception) through March 31, 2023.
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.
20
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 | $ | 5,747,522 | $ | 61,447 | — | ||||||
Convertible Preferred Stocks | — | 180,045 | — | ||||||||
Preferred Stocks | 163,516 | — | — | ||||||||
Convertible Bonds | — | 6,428 | — | ||||||||
Short-Term Investments | 42,280 | 246,371 | — | ||||||||
$ | 5,953,318 | $ | 494,291 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 4 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 282 | — |
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 $25,999.
The value of foreign currency risk derivative instruments as of March 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $4 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $282 in unrealized depreciation on forward foreign currency exchange contracts. For the period April 5, 2022 (fund inception) through March 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $1,093 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(278) 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, war, 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.
21
9. Federal Tax Information
The tax character of distributions paid during the period April 5, 2022 (fund inception) through March 31, 2023 were as follows:
2023 | |||||
Distributions Paid From | |||||
Ordinary income | $ | 52,460 | |||
Long-term capital gains | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 6,519,857 | |||
Gross tax appreciation of investments | $ | 181,449 | |||
Gross tax depreciation of investments | (253,697) | ||||
Net tax appreciation (depreciation) of investments | (72,248) | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (3) | ||||
Net tax appreciation (depreciation) | $ | (72,251) | |||
Undistributed ordinary income | — | ||||
Post-October capital loss deferral | $ | (5,481) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Loss deferrals represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
22
Financial Highlights |
For a Share Outstanding Throughout the Period Indicated | |||||||||||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023(3) | $10.00 | 0.23 | (0.78) | (0.55) | (0.20) | (0.05) | (0.25) | $9.20 | (5.40)% | 1.10%(4) | 1.10%(4) | 2.52%(4) | 2.52%(4) | 54% | $2,604 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023(3) | $10.00 | 0.46 | (0.98) | (0.52) | (0.22) | (0.05) | (0.27) | $9.21 | (5.22)% | 0.90%(4) | 0.90%(4) | 2.72%(4) | 2.72%(4) | 54% | $3,420 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023(3) | $10.00 | 0.19 | (0.76) | (0.57) | (0.18) | (0.05) | (0.23) | $9.20 | (5.62)% | 1.35%(4) | 1.35%(4) | 2.27%(4) | 2.27%(4) | 54% | $24 | ||||||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023(3) | $10.00 | 0.20 | (0.79) | (0.59) | (0.16) | (0.05) | (0.21) | $9.20 | (5.85)% | 1.60%(4) | 1.60%(4) | 2.02%(4) | 2.02%(4) | 54% | $124 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023(3) | $10.00 | 0.25 | (0.76) | (0.51) | (0.23) | (0.05) | (0.28) | $9.21 | (5.08)% | 0.75%(4) | 0.75%(4) | 2.87%(4) | 2.87%(4) | 54% | $36 | ||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023(3) | $10.00 | 0.31 | (0.75) | (0.44) | (0.30) | (0.05) | (0.35) | $9.21 | (4.31)% | 0.01%(4) | 0.75%(4) | 3.61%(4) | 2.87%(4) | 54% | $24 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)April 5, 2022 (fund inception) through March 31, 2023.
(4)Annualized.
* The amount shown for a share outstanding throughout the period may not correlate with the Statement of Operations or precisely reflect the class expense differentials due to the timing of transactions in
shares of the fund in relation to income earned and/or fluctuations in the fair value of the fund's investments.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Small Cap Dividend Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2023, the related statement of operations, statement of changes in net assets, and financial highlights for the period from April 5, 2022 (fund inception) through March 31, 2023, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Small Cap Dividend Fund of the American Century Capital Portfolios, Inc. as of March 31, 2023, and the results of its operations, the changes in its net assets, and the financial highlights for the period from April 5, 2022 (fund inception) through March 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audit provides a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
May 16, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
25
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 64 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 64 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 64 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 64 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 64 | None |
26
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 64 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 64 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 64 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 109 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 141 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
27
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present); Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
28
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates, including members of ACIM’s Investment Oversight Committee who are members of ACIM’s Investment Management and Global Analytics departments, conduct the day-to-day operation of the program pursuant to the program.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain investments held by the Fund is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2022 through December 31, 2022. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
29
Proxy Voting Results |
A special meeting of shareholders was held on October 13, 2022, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect five directors to the Board of Directors of American Century Capital Portfolios, Inc.:
Affirmative | Withhold | ||||||||||
Brian Bulatao | $ | 17,572,790,908 | $ | 417,511,059 | |||||||
Chris H. Cheesman | $ | 17,634,906,815 | $ | 355,395,152 | |||||||
Rajesh K. Gupta | $ | 17,620,399,260 | $ | 369,902,707 | |||||||
Lynn M. Jenkins | $ | 17,600,718,699 | $ | 389,583,268 | |||||||
Gary C. Meltzer | $ | 17,633,346,402 | $ | 356,955,565 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas W. Bunn, Barry Fink, Jan M. Lewis, and Stephen E. Yates.
30
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2023.
For corporate taxpayers, the fund hereby designates $52,460, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $5,116 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2023.
32
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Contact Us | americancentury.com | |||||||
Automated Information Line | 1-800-345-8765 | |||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |||||||
Investors Using Advisors | 1-800-378-9878 | |||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |||||||
Telecommunications Relay Service for the Deaf | 711 | |||||||
American Century Capital Portfolios, Inc. | ||||||||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||||||||
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-97903 2305 |
![image25.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image25.jpg)
Annual Report | |||||
March 31, 2023 | |||||
Small Cap Value Fund | |||||
Investor Class (ASVIX) | |||||
I Class (ACVIX) | |||||
Y Class (ASVYX) | |||||
A Class (ACSCX) | |||||
C Class (ASVNX) | |||||
R Class (ASVRX) | |||||
R5 Class (ASVGX) | |||||
R6 Class (ASVDX) | |||||
G Class (ASVHX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Proxy Voting Results | |||||
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 |
![image23.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image23.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2023. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Challenging Conditions Weighed on Asset Class Returns
Prevailing headwinds early in the reporting period continued to challenge U.S. financial markets throughout the 12 months. Asset class performance seesawed but declined overall amid mixed economic data, elevated inflation and anticipated monetary policy responses. By period-end, a new headwind emerged: banking industry uncertainty.
After launching its inflation-fighting rate-hike campaign in March 2022, the Federal Reserve (Fed) lifted rates eight more times by period-end. The federal funds target rate ended the reporting period at 4.75% to 5%, its highest level since 2007, while Treasury yields climbed to multiyear highs. Amid the Fed’s efforts, the annual inflation rate peaked at 9.1% in June, a 40-year high, before easing to 5% by March.
In addition to helping tame inflation, rapidly rising rates also fueled recession worries and led to expectations for the Fed to change course. This sentiment helped spark a rebound among stock and bond indices in the second half of the reporting period. The collapse of two U.S. regional banks late in the period and fears of a looming credit crunch and likely recession also contributed to market expectations for a Fed policy change. Nevertheless, the Fed indicated a near-term course change was unlikely.
Despite delivering strong gains in the second half of the reporting period, stock returns succumbed to first-half losses and declined for the 12 months. Similarly, weakness in the first half of the period overwhelmed second-half gains, and bond returns were negative for the 12-month period.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of still-high inflation, tighter financial conditions, banking industry turbulence and economic uncertainty. In addition, increasingly tense geopolitical considerations complicate the market backdrop.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image16a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | ASVIX | -8.04% | 7.85% | 9.49% | — | 7/31/98 | ||||||||||||||
Russell 2000 Value Index | — | -12.96% | 4.54% | 7.21% | — | — | ||||||||||||||
I Class | ACVIX | -7.86% | 8.08% | 9.70% | — | 10/26/98 | ||||||||||||||
Y Class | ASVYX | -7.72% | 8.23% | — | 8.13% | 4/10/17 | ||||||||||||||
A Class | ACSCX | 12/31/99 | ||||||||||||||||||
No sales charge | -8.30% | 7.59% | 9.21% | — | ||||||||||||||||
With sales charge | -13.57% | 6.32% | 8.57% | — | ||||||||||||||||
C Class | ASVNX | -8.99% | 6.78% | 8.40% | — | 3/1/10 | ||||||||||||||
R Class | ASVRX | -8.44% | 7.34% | 8.94% | — | 3/1/10 | ||||||||||||||
R5 Class | ASVGX | -7.85% | 8.07% | — | 7.98% | 4/10/17 | ||||||||||||||
R6 Class | ASVDX | -7.73% | 8.24% | — | 9.13% | 7/26/13 | ||||||||||||||
G Class | ASVHX | -7.04% | — | — | 11.68% | 4/1/19 |
Average annual returns since inception are presented when ten years of performance history is not available.
G Class returns would have been lower if a portion of the fees had not been waived.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-ce8011d62bb74aa683aa.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/chart-ce8011d62bb74aa683aa.jpg)
Value on March 31, 2023 | |||||
Investor Class — $24,754 | |||||
Russell 2000 Value Index — $20,076 | |||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | G Class | ||||||||||||||||||
1.09% | 0.89% | 0.74% | 1.34% | 2.09% | 1.59% | 0.89% | 0.74% | 0.74% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Jeff John and Ryan Cope
Performance Summary
Small Cap Value returned -8.04%* for the 12-month period ended March 31, 2023. The fund’s benchmark, the Russell 2000 Value Index, returned -12.96% for the same time period. The fund’s return reflects operating expenses, while the index’s return does not.
Performance versus the benchmark was helped primarily by strong security selection in the industrials sector. Favorable choices in the consumer discretionary sector and positive allocation decisions in the health care sector also contributed to relative results. On the other hand, positioning in the energy sector and an underweight in utilities hurt performance.
Industrials, Consumer Discretionary and Health Care Contributed
Favorable stock selection was the primary contributor to the fund’s outperformance. In the industrials sector, selections in the machinery industry were a primary driver. A position in The Timken Co., which is not in the index, was the leading contributor. In the trading companies and distributors industry, shares of GMS and Beacon Roofing Supply were the leaders, while in the building products industry, Tecnoglass, which is not in the index, contributed most. This manufacturer of architectural and residential glass benefited from production efficiencies and gains in market share.
In the consumer discretionary sector, our selections, including several not in the index, were beneficial. In textiles, apparel and luxury goods, Tapestry, a luxury goods maker, was the leading contributor, while in the household durables industry, shares of Skyline Champion, a maker of modular homes, contributed most. In the specialty retail industry, Penske Automotive Group led. In leisure products, Brunswick, a maker of boats and outboard motors, enjoyed strong recurring revenues and cash flows, and we believe is well positioned for future growth.
In the health care sector, performance benefited from a lack of exposure to the biotechnology industry, which generally continues to lack profitability. In the health care providers and services industry, the fund’s lack of exposure to Tenet Healthcare and Owens & Minor, among others, contributed positively.
Energy, Utilities and Information Technology Detracted
In the energy sector, a large underweight was detrimental, especially in the oil, gas and consumable fuels industry. A position in Enviva, which is not in the index, also detracted. The company is not a traditional energy producer but is a provider of biomass fuels to the electric utility and industrial power markets. These shares performed poorly on weak quarterly results and a capital raise that diluted existing shareholders.
In the utilities sector, an underweight position weighed on relative returns. In addition, in the gas utilities industry, a lack of exposure to a number of companies was the primary detractor. In the information technology sector, stock selection was the primary hindrance. Software company Avaya Holdings was a leading detractor, and we exited this position.
* All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
MARCH 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 99.1% | ||||
Short-Term Investments | 0.9% | ||||
Other Assets and Liabilities | —* | ||||
*Category is less than 0.05% of total net assets. | |||||
Top Five Industries | % of net assets | ||||
Banks | 20.3% | ||||
Electronic Equipment, Instruments and Components | 6.4% | ||||
Diversified REITs | 5.7% | ||||
Machinery | 4.5% | ||||
Commercial Services and Supplies | 4.3% |
6
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2022 to March 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 10/1/22 | Ending Account Value 3/31/23 | Expenses Paid During Period(1) 10/1/22 - 3/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,131.30 | $5.85 | 1.10% | ||||||||||
I Class | $1,000 | $1,133.20 | $4.79 | 0.90% | ||||||||||
Y Class | $1,000 | $1,132.50 | $3.99 | 0.75% | ||||||||||
A Class | $1,000 | $1,129.40 | $7.17 | 1.35% | ||||||||||
C Class | $1,000 | $1,126.40 | $11.13 | 2.10% | ||||||||||
R Class | $1,000 | $1,128.60 | $8.49 | 1.60% | ||||||||||
R5 Class | $1,000 | $1,133.00 | $4.79 | 0.90% | ||||||||||
R6 Class | $1,000 | $1,132.70 | $3.99 | 0.75% | ||||||||||
G Class | $1,000 | $1,137.60 | $0.11 | 0.02% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.45 | $5.54 | 1.10% | ||||||||||
I Class | $1,000 | $1,020.44 | $4.53 | 0.90% | ||||||||||
Y Class | $1,000 | $1,021.19 | $3.78 | 0.75% | ||||||||||
A Class | $1,000 | $1,018.20 | $6.79 | 1.35% | ||||||||||
C Class | $1,000 | $1,014.46 | $10.55 | 2.10% | ||||||||||
R Class | $1,000 | $1,016.95 | $8.05 | 1.60% | ||||||||||
R5 Class | $1,000 | $1,020.44 | $4.53 | 0.90% | ||||||||||
R6 Class | $1,000 | $1,021.19 | $3.78 | 0.75% | ||||||||||
G Class | $1,000 | $1,024.83 | $0.10 | 0.02% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
8
Schedule of Investments |
MARCH 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 99.1% | ||||||||
Aerospace and Defense — 0.3% | ||||||||
Leonardo DRS, Inc.(1) | 1,125,000 | $ | 14,591,250 | |||||
Banks — 20.3% | ||||||||
Ameris Bancorp | 1,440,000 | 52,675,200 | ||||||
BankUnited, Inc. | 1,705,000 | 38,498,900 | ||||||
Comerica, Inc. | 315,000 | 13,677,300 | ||||||
ConnectOne Bancorp, Inc. | 1,120,000 | 19,801,600 | ||||||
CVB Financial Corp. | 1,415,000 | 23,602,200 | ||||||
F.N.B. Corp. | 8,720,000 | 101,152,000 | ||||||
First BanCorp | 7,965,000 | 90,960,300 | ||||||
First Interstate BancSystem, Inc., Class A | 1,510,000 | 45,088,600 | ||||||
First Merchants Corp. | 715,000 | 23,559,250 | ||||||
First Mid Bancshares, Inc. | 290,000 | 7,893,800 | ||||||
Home BancShares, Inc. | 4,310,000 | 93,570,100 | ||||||
Independent Bank Group, Inc. | 762,400 | 35,337,240 | ||||||
Old National Bancorp | 8,185,000 | 118,027,700 | ||||||
Origin Bancorp, Inc. | 775,000 | 24,916,250 | ||||||
Pacific Premier Bancorp, Inc. | 2,410,000 | 57,888,200 | ||||||
PacWest Bancorp | 665,000 | 6,470,450 | ||||||
Premier Financial Corp. | 735,000 | 15,236,550 | ||||||
QCR Holdings, Inc. | 410,000 | 18,003,100 | ||||||
SouthState Corp. | 1,470,000 | 104,752,200 | ||||||
Towne Bank | 830,000 | 22,119,500 | ||||||
UMB Financial Corp. | 1,120,000 | 64,646,400 | ||||||
Valley National Bancorp | 8,315,000 | 76,830,600 | ||||||
Veritex Holdings, Inc. | 1,775,000 | 32,411,500 | ||||||
1,087,118,940 | ||||||||
Building Products — 1.3% | ||||||||
DIRTT Environmental Solutions(1) | 3,909,691 | 2,083,865 | ||||||
Hayward Holdings, Inc.(1) | 2,361,323 | 27,674,706 | ||||||
Tecnoglass, Inc. | 992,719 | 41,654,489 | ||||||
71,413,060 | ||||||||
Capital Markets — 1.3% | ||||||||
Donnelley Financial Solutions, Inc.(1) | 1,280,000 | 52,300,800 | ||||||
Patria Investments Ltd., Class A | 1,198,946 | 17,744,401 | ||||||
70,045,201 | ||||||||
Chemicals — 1.4% | ||||||||
Element Solutions, Inc. | 945,000 | 18,247,950 | ||||||
Minerals Technologies, Inc. | 895,000 | 54,075,900 | ||||||
72,323,850 | ||||||||
Commercial Services and Supplies — 4.3% | ||||||||
Brink's Co. | 1,645,000 | 109,886,000 | ||||||
CECO Environmental Corp.(1) | 606,953 | 8,491,272 | ||||||
Deluxe Corp.(2) | 2,286,583 | 36,585,328 | ||||||
KAR Auction Services, Inc.(1) | 2,930,000 | 40,082,400 | ||||||
Loomis AB | 1,005,000 | 34,432,002 | ||||||
229,477,002 |
9
Shares | Value | |||||||
Construction and Engineering — 0.5% | ||||||||
Dycom Industries, Inc.(1) | 295,000 | $ | 27,626,750 | |||||
Containers and Packaging — 3.2% | ||||||||
Graphic Packaging Holding Co. | 5,270,000 | 134,332,300 | ||||||
Pactiv Evergreen, Inc. | 4,408,326 | 35,266,608 | ||||||
169,598,908 | ||||||||
Diversified REITs — 5.7% | ||||||||
CareTrust REIT, Inc. | 1,350,000 | 26,433,000 | ||||||
Easterly Government Properties, Inc. | 1,235,000 | 16,968,900 | ||||||
Four Corners Property Trust, Inc. | 1,810,000 | 48,616,600 | ||||||
Getty Realty Corp. | 145,644 | 5,247,553 | ||||||
Highwoods Properties, Inc. | 1,460,000 | 33,857,400 | ||||||
Kite Realty Group Trust | 2,190,000 | 45,814,800 | ||||||
National Health Investors, Inc. | 500,000 | 25,790,000 | ||||||
NETSTREIT Corp.(3) | 905,000 | 16,543,400 | ||||||
Physicians Realty Trust | 2,700,000 | 40,311,000 | ||||||
Summit Hotel Properties, Inc. | 2,665,000 | 18,655,000 | ||||||
UMH Properties, Inc. | 1,700,000 | 25,143,000 | ||||||
303,380,653 | ||||||||
Electric Utilities — 0.5% | ||||||||
ALLETE, Inc. | 405,000 | 26,069,850 | ||||||
Electronic Equipment, Instruments and Components — 6.4% | ||||||||
Advanced Energy Industries, Inc. | 80,000 | 7,840,000 | ||||||
Avnet, Inc. | 2,165,000 | 97,858,000 | ||||||
Belden, Inc. | 300,000 | 26,031,000 | ||||||
Coherent Corp.(1) | 3,820,000 | 145,465,600 | ||||||
Vontier Corp. | 2,415,000 | 66,026,100 | ||||||
343,220,700 | ||||||||
Energy Equipment and Services — 1.6% | ||||||||
ChampionX Corp. | 3,220,000 | 87,358,600 | ||||||
Financial Services — 3.2% | ||||||||
A-Mark Precious Metals, Inc.(2) | 1,345,000 | 46,604,250 | ||||||
Compass Diversified Holdings(2)(3) | 4,650,000 | 88,722,000 | ||||||
Enact Holdings, Inc.(3) | 425,000 | 9,715,500 | ||||||
Provident Financial Services, Inc. | 1,270,000 | 24,358,600 | ||||||
169,400,350 | ||||||||
Gas Utilities — 1.1% | ||||||||
Northwest Natural Holding Co. | 225,000 | 10,701,000 | ||||||
Southwest Gas Holdings, Inc. | 740,000 | 46,213,000 | ||||||
56,914,000 | ||||||||
Health Care Equipment and Supplies — 1.9% | ||||||||
Embecta Corp. | 1,210,000 | 34,025,200 | ||||||
Enovis Corp.(1) | 820,000 | 43,861,800 | ||||||
Envista Holdings Corp.(1) | 470,000 | 19,213,600 | ||||||
Zimvie, Inc.(1) | 743,374 | 5,374,594 | ||||||
102,475,194 | ||||||||
Health Care Providers and Services — 0.7% | ||||||||
AMN Healthcare Services, Inc.(1) | 90,000 | 7,466,400 | ||||||
Patterson Cos., Inc. | 1,195,000 | 31,990,150 | ||||||
39,456,550 | ||||||||
Hotels, Restaurants and Leisure — 3.6% | ||||||||
Accel Entertainment, Inc.(1) | 3,995,000 | 36,394,450 |
10
Shares | Value | |||||||
Boyd Gaming Corp. | 525,000 | $ | 33,663,000 | |||||
Dave & Buster's Entertainment, Inc.(1) | 1,670,000 | 61,439,300 | ||||||
Everi Holdings, Inc.(1) | 1,275,000 | 21,866,250 | ||||||
Penn Entertainment, Inc.(1) | 985,000 | 29,215,100 | ||||||
Red Robin Gourmet Burgers, Inc.(1)(3) | 755,000 | 10,811,600 | ||||||
193,389,700 | ||||||||
Household Durables — 3.6% | ||||||||
Cavco Industries, Inc.(1) | 65,000 | 20,653,100 | ||||||
Mohawk Industries, Inc.(1) | 190,000 | 19,041,800 | ||||||
Skyline Champion Corp.(1) | 1,850,000 | 139,175,500 | ||||||
Vizio Holding Corp., Class A(1) | 1,705,000 | 15,651,900 | ||||||
194,522,300 | ||||||||
Household Products — 2.1% | ||||||||
Spectrum Brands Holdings, Inc. | 1,690,000 | 111,911,800 | ||||||
Insurance — 2.3% | ||||||||
Axis Capital Holdings Ltd. | 1,695,000 | 92,411,400 | ||||||
Selective Insurance Group, Inc. | 325,000 | 30,982,250 | ||||||
123,393,650 | ||||||||
IT Services — 3.5% | ||||||||
Euronet Worldwide, Inc.(1) | 530,000 | 59,307,000 | ||||||
EVERTEC, Inc.(2) | 3,300,000 | 111,375,000 | ||||||
IBEX Holdings Ltd.(1) | 730,000 | 17,812,000 | ||||||
188,494,000 | ||||||||
Leisure Products — 3.4% | ||||||||
Brunswick Corp. | 1,380,000 | 113,160,000 | ||||||
Malibu Boats, Inc., Class A(1) | 995,000 | 56,167,750 | ||||||
Solo Brands, Inc., Class A(1) | 1,793,632 | 12,878,278 | ||||||
182,206,028 | ||||||||
Machinery — 4.5% | ||||||||
Esab Corp. | 315,000 | 18,607,050 | ||||||
Gates Industrial Corp. PLC(1) | 4,735,000 | 65,769,150 | ||||||
Hillman Solutions Corp.(1) | 6,055,386 | 50,986,350 | ||||||
Luxfer Holdings PLC | 750,000 | 12,675,000 | ||||||
Timken Co. | 1,120,000 | 91,526,400 | ||||||
239,563,950 | ||||||||
Media — 2.0% | ||||||||
Cable One, Inc. | 80,000 | 56,160,000 | ||||||
Entravision Communications Corp., Class A(2) | 7,736,758 | 46,807,386 | ||||||
Townsquare Media, Inc., Class A | 714,089 | 5,712,712 | ||||||
108,680,098 | ||||||||
Oil, Gas and Consumable Fuels — 1.7% | ||||||||
Earthstone Energy, Inc., Class A(1) | 1,650,000 | 21,466,500 | ||||||
Enviva, Inc.(3) | 1,260,000 | 36,388,800 | ||||||
Magnolia Oil & Gas Corp., Class A | 1,475,000 | 32,273,000 | ||||||
90,128,300 | ||||||||
Personal Care Products — 1.9% | ||||||||
Edgewell Personal Care Co. | 2,370,000 | 100,535,400 | ||||||
Professional Services — 1.9% | ||||||||
Barrett Business Services, Inc. | 306,578 | 27,175,074 | ||||||
Korn Ferry | 1,438,590 | 74,432,646 | ||||||
101,607,720 |
11
Shares | Value | |||||||
Semiconductors and Semiconductor Equipment — 3.0% | ||||||||
Cohu, Inc.(1) | 840,000 | $ | 32,247,600 | |||||
Kulicke & Soffa Industries, Inc. | 1,800,000 | 94,842,000 | ||||||
MKS Instruments, Inc. | 365,000 | 32,346,300 | ||||||
159,435,900 | ||||||||
Software — 2.8% | ||||||||
Digital Turbine, Inc.(1) | 2,015,000 | 24,905,400 | ||||||
Teradata Corp.(1) | 3,030,000 | 122,048,400 | ||||||
146,953,800 | ||||||||
Specialty Retail — 2.6% | ||||||||
MarineMax, Inc.(1)(2) | 1,725,000 | 49,593,750 | ||||||
OneWater Marine, Inc., Class A(1)(2)(3) | 1,440,000 | 40,276,800 | ||||||
Penske Automotive Group, Inc. | 345,000 | 48,924,450 | ||||||
138,795,000 | ||||||||
Textiles, Apparel and Luxury Goods — 2.4% | ||||||||
Capri Holdings Ltd.(1) | 1,075,000 | 50,525,000 | ||||||
Tapestry, Inc. | 1,770,000 | 76,304,700 | ||||||
126,829,700 | ||||||||
Trading Companies and Distributors — 4.1% | ||||||||
Beacon Roofing Supply, Inc.(1) | 1,905,000 | 112,109,250 | ||||||
DXP Enterprises, Inc.(1) | 880,481 | 23,702,549 | ||||||
GMS, Inc.(1) | 1,369,060 | 79,254,883 | ||||||
Karat Packaging, Inc. | 373,624 | 4,980,408 | ||||||
220,047,090 | ||||||||
TOTAL COMMON STOCKS (Cost $4,899,477,729) | 5,296,965,294 | |||||||
SHORT-TERM INVESTMENTS — 0.9% | ||||||||
Money Market Funds — 0.2% | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 7,571 | 7,571 | ||||||
State Street Navigator Securities Lending Government Money Market Portfolio(4) | 9,329,755 | 9,329,755 | ||||||
9,337,326 | ||||||||
Repurchase Agreements — 0.7% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.125% - 4.375%, 8/15/40 - 5/15/49, valued at $9,476,608), in a joint trading account at 4.67%, dated 3/31/23, due 4/3/23 (Delivery value $9,144,049) | 9,140,492 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 3/31/28, valued at $26,967,829), at 4.81%, dated 3/31/23, due 4/3/23 (Delivery value $26,449,598) | 26,439,000 | |||||||
35,579,492 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $44,916,818) | 44,916,818 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $4,944,394,547) | 5,341,882,112 | |||||||
OTHER ASSETS AND LIABILITIES† | 2,060,453 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 5,343,942,565 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 28,925,574 | SEK | 298,768,200 | UBS AG | 6/30/23 | $ | 10,400 |
12
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)Affiliated Company: the fund’s holding represents ownership of 5% or more of the voting securities of the company; therefore, the company is affiliated as defined in the Investment Company Act of 1940.
(3)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $9,326,098. 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.
(4)Investment of cash collateral from securities on loan. At the period end, the aggregate value of the collateral held by the fund was $9,559,955, which includes securities collateral of $230,200.
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
MARCH 31, 2023 | |||||
Assets | |||||
Investment securities - unaffiliated, at value (cost of $4,529,345,073) — including $6,682,670 of securities on loan | $ | 4,912,587,843 | |||
Investment securities - affiliated, at value (cost of $405,719,719) — including $2,643,428 of securities on loan | 419,964,514 | ||||
Investment made with cash collateral received for securities on loan, at value (cost of $9,329,755) | 9,329,755 | ||||
Total investment securities, at value (cost of $4,944,394,547) | 5,341,882,112 | ||||
Receivable for investments sold | 15,455,106 | ||||
Receivable for capital shares sold | 9,230,547 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 10,400 | ||||
Dividends and interest receivable | 6,003,810 | ||||
Securities lending receivable | 3,066 | ||||
5,372,585,041 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 9,329,755 | ||||
Payable for investments purchased | 12,538,746 | ||||
Payable for capital shares redeemed | 3,004,784 | ||||
Accrued management fees | 3,728,846 | ||||
Distribution and service fees payable | 40,345 | ||||
28,642,476 | |||||
Net Assets | $ | 5,343,942,565 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 5,096,594,895 | |||
Distributable earnings (loss) | 247,347,670 | ||||
$ | 5,343,942,565 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $869,441,100 | 94,096,339 | $9.24 | ||||||||
I Class, $0.01 Par Value | $1,982,751,687 | 211,880,326 | $9.36 | ||||||||
Y Class, $0.01 Par Value | $67,230,818 | 7,171,805 | $9.37 | ||||||||
A Class, $0.01 Par Value | $89,314,940 | 9,811,819 | $9.10 | ||||||||
C Class, $0.01 Par Value | $21,276,982 | 2,542,406 | $8.37 | ||||||||
R Class, $0.01 Par Value | $7,017,156 | 778,321 | $9.02 | ||||||||
R5 Class, $0.01 Par Value | $14,369,314 | 1,533,910 | $9.37 | ||||||||
R6 Class, $0.01 Par Value | $1,992,368,365 | 212,856,716 | $9.36 | ||||||||
G Class, $0.01 Par Value | $300,172,203 | 31,983,749 | $9.39 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except Class A, for which the maximum offering price per share was $9.66 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of Class A and Class C.
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED MARCH 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (including $16,325,662 from affiliates and net of foreign taxes withheld of $591,118) | $ | 99,326,017 | |||
Interest | 1,871,176 | ||||
Securities lending, net | 214,852 | ||||
101,412,045 | |||||
Expenses: | |||||
Management fees | 47,691,771 | ||||
Distribution and service fees: | |||||
A Class | 243,825 | ||||
C Class | 230,226 | ||||
R Class | 35,163 | ||||
Directors' fees and expenses | 171,519 | ||||
Other expenses | 287,914 | ||||
48,660,418 | |||||
Fees waived - G Class | (2,274,905) | ||||
46,385,513 | |||||
Net investment income (loss) | 55,026,532 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions (including $(111,332,616) from affiliates) | (59,577,699) | ||||
Forward foreign currency exchange contract transactions | 3,955,513 | ||||
Foreign currency translation transactions | (657) | ||||
(55,622,843) | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments (including $(17,374,845) from affiliates) | (479,472,715) | ||||
Forward foreign currency exchange contracts | 220,766 | ||||
Translation of assets and liabilities in foreign currencies | 147 | ||||
(479,251,802) | |||||
Net realized and unrealized gain (loss) | (534,874,645) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (479,848,113) |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2023 AND MARCH 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2023 | March 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 55,026,532 | $ | 35,057,458 | ||||
Net realized gain (loss) | (55,622,843) | 427,967,295 | ||||||
Change in net unrealized appreciation (depreciation) | (479,251,802) | (263,795,043) | ||||||
Net increase (decrease) in net assets resulting from operations | (479,848,113) | 199,229,710 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (29,896,742) | (85,394,553) | ||||||
I Class | (70,126,881) | (200,774,759) | ||||||
Y Class | (2,671,405) | (6,566,926) | ||||||
A Class | (2,894,436) | (8,624,080) | ||||||
C Class | (640,169) | (1,964,123) | ||||||
R Class | (207,698) | (504,032) | ||||||
R5 Class | (499,693) | (1,031,885) | ||||||
R6 Class | (70,027,970) | (116,741,559) | ||||||
G Class | (12,849,969) | (33,912,858) | ||||||
Decrease in net assets from distributions | (189,814,963) | (455,514,775) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (176,532,473) | 1,943,415,925 | ||||||
Net increase (decrease) in net assets | (846,195,549) | 1,687,130,860 | ||||||
Net Assets | ||||||||
Beginning of period | 6,190,138,114 | 4,503,007,254 | ||||||
End of period | $ | 5,343,942,565 | $ | 6,190,138,114 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
MARCH 31, 2023
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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
17
The valuation designee 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; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 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.
18
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2023.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 9,329,755 | — | — | — | $ | 9,329,755 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 9,329,755 |
(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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets). The investment advisor agreed to waive the G Class's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
19
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 1.00% to 1.25% | 1.08% | ||||||
I Class | 0.80% to 1.05% | 0.88% | ||||||
Y Class | 0.65% to 0.90% | 0.73% | ||||||
A Class | 1.00% to 1.25% | 1.08% | ||||||
C Class | 1.00% to 1.25% | 1.08% | ||||||
R Class | 1.00% to 1.25% | 1.08% | ||||||
R5 Class | 0.80% to 1.05% | 0.88% | ||||||
R6 Class | 0.65% to 0.90% | 0.73% | ||||||
G Class | 0.65% to 0.90% | 0.00%(1) |
(1)Effective annual management fee before waiver was 0.73%.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended March 31, 2023 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, excluding short-term investments, for the period ended March 31, 2023 were $2,442,320,845 and $2,688,831,280, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2023 | Year ended March 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 700,000,000 | 700,000,000 | ||||||||||||
Sold | 14,251,588 | $ | 137,881,169 | 47,898,248 | $ | 535,098,036 | ||||||||
Issued in reinvestment of distributions | 3,212,283 | 29,038,526 | 7,868,332 | 83,518,740 | ||||||||||
Redeemed | (29,908,807) | (285,710,982) | (38,471,805) | (427,162,341) | ||||||||||
(12,444,936) | (118,791,287) | 17,294,775 | 191,454,435 | |||||||||||
I Class/Shares Authorized | 1,555,000,000 | 1,500,000,000 | ||||||||||||
Sold | 51,322,647 | 499,388,644 | 155,758,028 | 1,745,410,740 | ||||||||||
Issued in reinvestment of distributions | 6,754,334 | 61,867,774 | 16,588,074 | 178,302,193 | ||||||||||
Redeemed | (101,851,127) | (1,000,065,274) | (105,364,131) | (1,175,678,794) | ||||||||||
(43,774,146) | (438,808,856) | 66,981,971 | 748,034,139 | |||||||||||
Y Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 1,590,739 | 15,556,177 | 6,199,280 | 68,661,686 | ||||||||||
Issued in reinvestment of distributions | 162,372 | 1,489,213 | 434,498 | 4,680,071 | ||||||||||
Redeemed | (4,686,713) | (44,958,358) | (2,671,253) | (29,656,559) | ||||||||||
(2,933,602) | (27,912,968) | 3,962,525 | 43,685,198 | |||||||||||
A Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||
Sold | 1,898,157 | 17,855,235 | 4,942,951 | 54,328,984 | ||||||||||
Issued in reinvestment of distributions | 297,099 | 2,646,312 | 774,979 | 8,107,973 | ||||||||||
Redeemed | (3,472,058) | (32,852,281) | (3,545,343) | (38,455,376) | ||||||||||
(1,276,802) | (12,350,734) | 2,172,587 | 23,981,581 | |||||||||||
C Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||
Sold | 231,550 | 2,002,426 | 1,325,224 | 13,600,276 | ||||||||||
Issued in reinvestment of distributions | 64,257 | 526,295 | 171,921 | 1,662,626 | ||||||||||
Redeemed | (530,913) | (4,567,703) | (279,450) | (2,797,652) | ||||||||||
(235,106) | (2,038,982) | 1,217,695 | 12,465,250 | |||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 205,984 | 1,925,307 | 414,495 | 4,529,516 | ||||||||||
Issued in reinvestment of distributions | 23,535 | 207,698 | 48,597 | 504,032 | ||||||||||
Redeemed | (171,010) | (1,582,378) | (229,674) | (2,479,922) | ||||||||||
58,509 | 550,627 | 233,418 | 2,553,626 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 813,486 | 7,845,594 | 1,088,366 | 12,203,841 | ||||||||||
Issued in reinvestment of distributions | 54,500 | 499,693 | 95,911 | 1,031,885 | ||||||||||
Redeemed | (724,082) | (7,080,246) | (702,177) | (7,852,962) | ||||||||||
143,904 | 1,265,041 | 482,100 | 5,382,764 | |||||||||||
R6 Class/Shares Authorized | 1,750,000,000 | 900,000,000 | ||||||||||||
Sold | 75,168,927 | 733,702,437 | 105,191,783 | 1,180,480,567 | ||||||||||
Issued in reinvestment of distributions | 7,423,893 | 68,007,755 | 10,500,337 | 112,884,267 | ||||||||||
Redeemed | (38,706,063) | (372,848,209) | (33,550,767) | (376,237,451) | ||||||||||
43,886,757 | 428,861,983 | 82,141,353 | 917,127,383 | |||||||||||
G Class/Shares Authorized | 300,000,000 | 300,000,000 | ||||||||||||
Sold | 2,239,981 | 21,138,275 | 11,418,982 | 129,340,781 | ||||||||||
Issued in reinvestment of distributions | 1,399,058 | 12,849,969 | 3,142,112 | 33,912,858 | ||||||||||
Redeemed | (4,173,625) | (41,295,541) | (15,077,068) | (164,522,090) | ||||||||||
(534,586) | (7,307,297) | (515,974) | (1,268,451) | |||||||||||
Net increase (decrease) | (17,110,008) | $ | (176,532,473) | 173,970,450 | $ | 1,943,415,925 |
21
6. Affiliated Company Transactions
If a fund's holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the period ended March 31, 2023 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 | ||||||||||||||||||
A-Mark Precious Metals, Inc. | $ | 34,179 | $ | 19,735 | $ | 5,598 | $ | (1,712) | $ | 46,604 | 1,345 | $ | 200 | $ | 1,763 | |||||||||||
Avaya Holdings Corp.(1) | 62,279 | 532 | 113,431 | 50,620 | — | — | (107,605) | — | ||||||||||||||||||
Barrett Business Services, Inc.(2) | 31,702 | 80 | 7,208 | 2,601 | (2) | (2) | 1,967 | 422 | ||||||||||||||||||
CECO Environmental Corp.(1)(2) | 9,663 | — | 8,692 | 7,520 | (2) | (2) | 4,664 | — | ||||||||||||||||||
Charah Solutions, Inc.(1) | 9,610 | — | 11,699 | 2,089 | — | — | (10,563) | — | ||||||||||||||||||
Compass Diversified Holdings(3) | 116,958 | 2,667 | 11,328 | (19,575) | 88,722 | 4,650 | (1,924) | 4,695 | ||||||||||||||||||
Deluxe Corp. | 69,178 | 1,576 | 3,353 | (30,816) | 36,585 | 2,287 | (1,439) | 2,726 | ||||||||||||||||||
Donnelley Financial Solutions, Inc. (1)(2) | 59,853 | 4,680 | 12,782 | 550 | (2) | (2) | 13,988 | — | ||||||||||||||||||
DXP Enterprises, Inc.(1)(2) | 31,921 | 4,797 | 13,294 | 279 | (2) | (2) | 1,813 | — | ||||||||||||||||||
Edgewell Personal Care Co.(2) | 96,182 | 13,293 | 23,269 | 14,329 | (2) | (2) | 979 | 1,457 | ||||||||||||||||||
Entravision Communications Corp., Class A | 50,343 | — | 809 | (2,726) | 46,808 | 7,737 | (145) | 967 | ||||||||||||||||||
EVERTEC, Inc. | 121,279 | 39,397 | 35,106 | (14,195) | 111,375 | 3,300 | (5,305) | 615 | ||||||||||||||||||
Graham Corp.(1) | 5,632 | — | 10,895 | 5,263 | — | — | (3,605) | — | ||||||||||||||||||
IBEX Holdings Ltd.(1)(2) | 14,548 | 1,860 | 5,596 | 7,001 | (2) | (2) | 388 | — | ||||||||||||||||||
Malibu Boats, Inc., Class A(1)(2) | 59,489 | 7,362 | 11,965 | 1,282 | (2) | (2) | (2,189) | — | ||||||||||||||||||
MarineMax, Inc. (1) | 63,120 | 11,654 | 9,657 | (15,523) | 49,594 | 1,725 | (2,064) | — | ||||||||||||||||||
OneWater Marine, Inc., Class A(1)(3) | 48,067 | 2,462 | 1,521 | (8,731) | 40,277 | 1,440 | (489) | — | ||||||||||||||||||
Red Robin Gourmet Burgers, Inc. (1)(2)(3) | 25,852 | — | 15,328 | 288 | (2) | (2) | (6,687) | — | ||||||||||||||||||
Spectrum Brands Holdings, Inc.(2) | 165,342 | 26,047 | 56,862 | (22,615) | (2) | (2) | (13,968) | 3,142 | ||||||||||||||||||
Tecnoglass, Inc.(2) | 55,873 | 5,396 | 26,311 | 6,696 | (2) | (2) | 20,651 | 539 | ||||||||||||||||||
$ | 1,131,070 | $ | 141,538 | $ | 384,704 | $ | (17,375) | $ | 419,965 | 22,484 | $ | (111,333) | $ | 16,326 |
(1)Non-income producing.
(2)Company was not an affiliate at March 31, 2023.
(3)Security, or a portion thereof, is on loan.
22
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.
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 | $ | 5,262,533,292 | $ | 34,432,002 | — | ||||||
Short-Term Investments | 9,337,326 | 35,579,492 | — | ||||||||
$ | 5,271,870,618 | $ | 70,011,494 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 10,400 | — |
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. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 $40,883,684.
The value of foreign currency risk derivative instruments as of March 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $10,400 in unrealized appreciation on forward foreign currency exchange contracts. For the year ended March 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $3,955,513 in net realized gain (loss) on forward foreign currency exchange contract transactions and $220,766 in change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts.
23
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, war, 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 tax character of distributions paid during the years ended March 31, 2023 and March 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 78,893,563 | $ | 300,112,544 | ||||
Long-term capital gains | $ | 110,921,400 | $ | 155,402,231 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 5,075,594,060 | |||
Gross tax appreciation of investments | $ | 729,231,670 | |||
Gross tax depreciation of investments | (462,943,618) | ||||
Net tax appreciation (depreciation) of investments | 266,288,052 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | 148 | ||||
Net tax appreciation (depreciation) | $ | 266,288,200 | |||
Undistributed ordinary income | $ | 1,949,970 | |||
Accumulated short-term capital losses | $ | (20,890,500) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.40 | 0.07 | (0.92) | (0.85) | (0.06) | (0.25) | (0.31) | $9.24 | (8.04)% | 1.09% | 1.09% | 0.74% | 0.74% | 44% | $869,441 | ||||||||||||||||||||||||||||||||
2022 | $10.74 | 0.04 | 0.45 | 0.49 | (0.06) | (0.77) | (0.83) | $10.40 | 4.45% | 1.09% | 1.09% | 0.35% | 0.35% | 43% | $1,107,942 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.53 | 0.09 | (0.93) | (0.84) | (0.08) | (0.25) | (0.33) | $9.36 | (7.86)% | 0.89% | 0.89% | 0.94% | 0.94% | 44% | $1,982,752 | ||||||||||||||||||||||||||||||||
2022 | $10.86 | 0.06 | 0.46 | 0.52 | (0.08) | (0.77) | (0.85) | $10.53 | 4.70% | 0.89% | 0.89% | 0.55% | 0.55% | 43% | $2,691,383 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.54 | 0.10 | (0.92) | (0.82) | (0.10) | (0.25) | (0.35) | $9.37 | (7.72)% | 0.74% | 0.74% | 1.09% | 1.09% | 44% | $67,231 | ||||||||||||||||||||||||||||||||
2022 | $10.88 | 0.08 | 0.45 | 0.53 | (0.10) | (0.77) | (0.87) | $10.54 | 4.75% | 0.74% | 0.74% | 0.70% | 0.70% | 43% | $106,557 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.25 | 0.05 | (0.91) | (0.86) | (0.04) | (0.25) | (0.29) | $9.10 | (8.30)% | 1.34% | 1.34% | 0.49% | 0.49% | 44% | $89,315 | ||||||||||||||||||||||||||||||||
2022 | $10.60 | 0.01 | 0.45 | 0.46 | (0.04) | (0.77) | (0.81) | $10.25 | 4.20% | 1.34% | 1.34% | 0.10% | 0.10% | 43% | $113,658 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $9.48 | (0.02) | (0.84) | (0.86) | —(3) | (0.25) | (0.25) | $8.37 | (8.99)% | 2.09% | 2.09% | (0.26)% | (0.26)% | 44% | $21,277 | ||||||||||||||||||||||||||||||||
2022 | $9.90 | (0.06) | 0.42 | 0.36 | (0.01) | (0.77) | (0.78) | $9.48 | 3.49% | 2.09% | 2.09% | (0.65)% | (0.65)% | 43% | $26,317 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.16 | 0.02 | (0.89) | (0.87) | (0.02) | (0.25) | (0.27) | $9.02 | (8.44)% | 1.59% | 1.59% | 0.24% | 0.24% | 44% | $7,017 | ||||||||||||||||||||||||||||||||
2022 | $10.53 | (0.02) | 0.44 | 0.42 | (0.02) | (0.77) | (0.79) | $10.16 | 3.87% | 1.59% | 1.59% | (0.15)% | (0.15)% | 43% | $7,314 | ||||||||||||||||||||||||||||||||
2021 | $5.10 | —(3) | 5.43 | 5.43 | —(3) | — | —(3) | $10.53 | 106.61% | 1.69% | 1.69% | (0.04)% | (0.04)% | 72% | $5,120 | ||||||||||||||||||||||||||||||||
2020 | $6.92 | 0.01 | (1.68) | (1.67) | —(3) | (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 | ||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.54 | 0.09 | (0.93) | (0.84) | (0.08) | (0.25) | (0.33) | $9.37 | (7.85)% | 0.89% | 0.89% | 0.94% | 0.94% | 44% | $14,369 | ||||||||||||||||||||||||||||||||
2022 | $10.87 | 0.06 | 0.46 | 0.52 | (0.08) | (0.77) | (0.85) | $10.54 | 4.70% | 0.89% | 0.89% | 0.55% | 0.55% | 43% | $14,646 | ||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.53 | 0.11 | (0.93) | (0.82) | (0.10) | (0.25) | (0.35) | $9.36 | (7.73)% | 0.74% | 0.74% | 1.09% | 1.09% | 44% | $1,992,368 | ||||||||||||||||||||||||||||||||
2022 | $10.86 | 0.08 | 0.46 | 0.54 | (0.10) | (0.77) | (0.87) | $10.53 | 4.86% | 0.74% | 0.74% | 0.70% | 0.70% | 43% | $1,779,113 | ||||||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | $10.55 | 0.18 | (0.93) | (0.75) | (0.16) | (0.25) | (0.41) | $9.39 | (7.04)% | 0.01% | 0.74% | 1.82% | 1.09% | 44% | $300,172 | ||||||||||||||||||||||||||||||||
2022 | $10.89 | 0.16 | 0.45 | 0.61 | (0.18) | (0.77) | (0.95) | $10.55 | 5.62% | 0.00%(4) | 0.74% | 1.44% | 0.70% | 43% | $343,209 | ||||||||||||||||||||||||||||||||
2021 | $5.29 | 0.12 | 5.63 | 5.75 | (0.15) | — | (0.15) | $10.89 | 110.06% | 0.00%(4) | 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%(4) | 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)Per-share amount was less than $0.005.
(4)Ratio was less than 0.005%.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Small Cap Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Small Cap Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
May 16, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
29
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 64 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 64 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 64 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 64 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 64 | None |
30
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 64 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 64 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 64 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 109 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 141 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
31
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present); Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
32
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates, including members of ACIM’s Investment Oversight Committee who are members of ACIM’s Investment Management and Global Analytics departments, conduct the day-to-day operation of the program pursuant to the program.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain investments held by the Fund is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2022 through December 31, 2022. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
33
Proxy Voting Results |
A special meeting of shareholders was held on October 13, 2022, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect five directors to the Board of Directors of American Century Capital Portfolios, Inc.:
Affirmative | Withhold | ||||||||||
Brian Bulatao | $ | 17,572,790,908 | $ | 417,511,059 | |||||||
Chris H. Cheesman | $ | 17,634,906,815 | $ | 355,395,152 | |||||||
Rajesh K. Gupta | $ | 17,620,399,260 | $ | 369,902,707 | |||||||
Lynn M. Jenkins | $ | 17,600,718,699 | $ | 389,583,268 | |||||||
Gary C. Meltzer | $ | 17,633,346,402 | $ | 356,955,565 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas W. Bunn, Barry Fink, Jan M. Lewis, and Stephen E. Yates.
34
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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.
35
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2023.
For corporate taxpayers, the fund hereby designates $50,030,901, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $110,921,400, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2023.
The fund hereby designates $28,862,662 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2023.
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. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92272 2305 |
![image25.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image25.jpg)
Annual Report | |||||
March 31, 2023 | |||||
Value Fund | |||||
Investor Class (TWVLX) | |||||
I Class (AVLIX) | |||||
Y Class (AVUYX) | |||||
A Class (TWADX) | |||||
C Class (ACLCX) | |||||
R Class (AVURX) | |||||
R5 Class (AVUGX) | |||||
R6 Class (AVUDX) |
Table of Contents |
President’s Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Liquidity Risk Management Program | |||||
Proxy Voting Results | |||||
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 |
![image23.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image23.jpg)
Dear Investor:
Thank you for reviewing this annual report for the period ended March 31, 2023. Annual reports help convey important information about fund returns, including market factors that affected performance. For additional investment insights, please visit americancentury.com.
Challenging Conditions Weighed on Asset Class Returns
Prevailing headwinds early in the reporting period continued to challenge U.S. financial markets throughout the 12 months. Asset class performance seesawed but declined overall amid mixed economic data, elevated inflation and anticipated monetary policy responses. By period-end, a new headwind emerged: banking industry uncertainty.
After launching its inflation-fighting rate-hike campaign in March 2022, the Federal Reserve (Fed) lifted rates eight more times by period-end. The federal funds target rate ended the reporting period at 4.75% to 5%, its highest level since 2007, while Treasury yields climbed to multiyear highs. Amid the Fed’s efforts, the annual inflation rate peaked at 9.1% in June, a 40-year high, before easing to 5% by March.
In addition to helping tame inflation, rapidly rising rates also fueled recession worries and led to expectations for the Fed to change course. This sentiment helped spark a rebound among stock and bond indices in the second half of the reporting period. The collapse of two U.S. regional banks late in the period and fears of a looming credit crunch and likely recession also contributed to market expectations for a Fed policy change. Nevertheless, the Fed indicated a near-term course change was unlikely.
Despite delivering strong gains in the second half of the reporting period, stock returns succumbed to first-half losses and declined for the 12 months. Similarly, weakness in the first half of the period overwhelmed second-half gains, and bond returns were negative for the 12-month period.
Remaining Diligent in Uncertain Times
We expect market volatility to linger as investors navigate a complex environment of still-high inflation, tighter financial conditions, banking industry turbulence and economic uncertainty. In addition, increasingly tense geopolitical considerations complicate the market backdrop.
We appreciate your confidence in us during these extraordinary times. Our firm has a long history of helping clients weather unpredictable and volatile markets, and we’re confident we will continue to meet today’s challenges.
Sincerely,
![image16a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/image16a.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of March 31, 2023 | ||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||
Investor Class | TWVLX | -2.23% | 8.32% | 9.12% | — | 9/1/93 | ||||||||||||||
Russell 1000 Value Index | — | -5.91% | 7.49% | 9.12% | — | — | ||||||||||||||
S&P 500 Index | — | -7.73% | 11.18% | 12.23% | — | — | ||||||||||||||
I Class | AVLIX | -2.03% | 8.52% | 9.33% | — | 7/31/97 | ||||||||||||||
Y Class | AVUYX | -1.89% | 8.68% | — | 7.91% | 4/10/17 | ||||||||||||||
A Class | TWADX | 10/2/96 | ||||||||||||||||||
No sales charge | -2.58% | 8.02% | 8.85% | — | ||||||||||||||||
With sales charge | -8.18% | 6.74% | 8.20% | — | ||||||||||||||||
C Class | ACLCX | -3.28% | 7.22% | 8.02% | — | 6/4/01 | ||||||||||||||
R Class | AVURX | -2.72% | 7.76% | 8.58% | — | 7/29/05 | ||||||||||||||
R5 Class | AVUGX | -2.01% | 8.53% | — | 7.76% | 4/10/17 | ||||||||||||||
R6 Class | AVUDX | -1.89% | 8.68% | — | 8.76% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available.
C Class shares will automatically convert to A Class shares after being held for approximately eight years. C Class average annual returns do not reflect this conversion.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made March 31, 2013 | ||
Performance for other share classes will vary due to differences in fee structure. |
![chart-4a3946d78d704ab1b92a.jpg](https://capedge.com/proxy/N-CSR/0000908186-23-000021/chart-4a3946d78d704ab1b92a.jpg)
Value on March 31, 2023 | |||||
Investor Class — $23,934 | |||||
Russell 1000 Value Index — $23,952 | |||||
S&P 500 Index — $31,736 | |||||
Total Annual Fund Operating Expenses | |||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | ||||||||||||||||
1.01% | 0.81% | 0.66% | 1.26% | 2.01% | 1.51% | 0.81% | 0.66% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Michael Liss, David Byrns, Philip Sundell, Kevin Toney and Brian Woglom
Phil Davidson stepped down as a portfolio manager of Value on December 31, 2022, and retired from American Century on March 31, 2023.
Performance Summary
Value returned -2.23%* for the fiscal year ended March 31, 2023, compared with the -5.91% return of its benchmark, the Russell 1000 Value Index. The fund’s return reflects operating expenses, while the index’s return does not.
Value’s outperformance relative to the benchmark was led by stock selections and overweight allocations in both the industrials and consumer staples sectors. Stock selection in the information technology sector was a top detractor, while stock decisions and an overweight allocation in financials dampened performance.
Industrials and Consumer Staples Contributed
Our choice of investments in the industrials sector buoyed performance. General Electric was a notable contributor, driven by solid financial results, a positive outlook and the completion of its long-awaited health care spin-off.
Several of our consumer staples positions across a variety of industries outperformed during the period. Amid banking industry concerns and macroeconomic uncertainty, investors favored these relatively defensive stocks. Conagra Brands, U.K.-based Unilever and Netherlands-based Koninklijke Ahold Delhaize were among the portfolio’s top individual contributors.
Cardinal Health was a top individual performer. Shares of this health care company outperformed following involvement by an activist investor. The company also provided three-year guidance on its medical segment, which has been an underperformer, and announced an increase in its share buyback authorization.
Information Technology and Financials Detracted
Information technology weighed on results. As banking industry fears mounted, the market rotated toward growth, including the information technology sector. The portfolio’s lack of exposure to several benchmark names in the sector detracted from relative performance.
Financials limited results. Amid the turmoil in the banking industry, several of our bank holdings, including U.S. Bancorp, underperformed and negatively impacted performance.
Elsewhere, Medtronic detracted from performance. Shares of this medical device company underperformed, due in part to disappointing results for its renal denervation trial. In our view, Medtronic offers a strong balance sheet and a history of solid product launches. It is a market leader in most medical device end markets in which it competes and offers industry-leading returns on capital.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the index, other share classes may not. See page 3 for returns for all share classes.
5
Fund Characteristics |
MARCH 31, 2023 | |||||
Types of Investments in Portfolio | % of net assets | ||||
Common Stocks | 98.3% | ||||
Short-Term Investments | 2.4% | ||||
Other Assets and Liabilities | (0.7)% | ||||
Top Five Industries | % of net assets | ||||
Banks | 10.5% | ||||
Pharmaceuticals | 9.3% | ||||
Oil, Gas and Consumable Fuels | 7.6% | ||||
Health Care Equipment and Supplies | 5.3% | ||||
Capital Markets | 4.7% |
6
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from October 1, 2022 to March 31, 2023.
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 mutual 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 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 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.
7
Beginning Account Value 10/1/22 | Ending Account Value 3/31/23 | Expenses Paid During Period(1) 10/1/22 - 3/31/23 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,157.10 | $5.38 | 1.00% | ||||||||||
I Class | $1,000 | $1,157.80 | $4.30 | 0.80% | ||||||||||
Y Class | $1,000 | $1,158.60 | $3.50 | 0.65% | ||||||||||
A Class | $1,000 | $1,154.50 | $6.71 | 1.25% | ||||||||||
C Class | $1,000 | $1,150.90 | $10.73 | 2.00% | ||||||||||
R Class | $1,000 | $1,154.40 | $8.06 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,158.00 | $4.30 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,158.60 | $3.50 | 0.65% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.95 | $5.04 | 1.00% | ||||||||||
I Class | $1,000 | $1,020.94 | $4.03 | 0.80% | ||||||||||
Y Class | $1,000 | $1,021.69 | $3.28 | 0.65% | ||||||||||
A Class | $1,000 | $1,018.70 | $6.29 | 1.25% | ||||||||||
C Class | $1,000 | $1,014.96 | $10.05 | 2.00% | ||||||||||
R Class | $1,000 | $1,017.45 | $7.54 | 1.50% | ||||||||||
R5 Class | $1,000 | $1,020.94 | $4.03 | 0.80% | ||||||||||
R6 Class | $1,000 | $1,021.69 | $3.28 | 0.65% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
8
Schedule of Investments |
MARCH 31, 2023
Shares | Value | |||||||
COMMON STOCKS — 98.3% | ||||||||
Aerospace and Defense — 1.9% | ||||||||
L3Harris Technologies, Inc. | 48,210 | $ | 9,460,730 | |||||
Raytheon Technologies Corp. | 268,330 | 26,277,557 | ||||||
Thales SA | 27,370 | 4,046,565 | ||||||
39,784,852 | ||||||||
Automobile Components — 1.3% | ||||||||
BorgWarner, Inc. | 312,752 | 15,359,251 | ||||||
Cie Generale des Etablissements Michelin SCA | 414,200 | 12,661,377 | ||||||
28,020,628 | ||||||||
Automobiles — 0.8% | ||||||||
General Motors Co. | 474,144 | 17,391,602 | ||||||
Banks — 10.5% | ||||||||
Bank of America Corp. | 1,353,200 | 38,701,520 | ||||||
Comerica, Inc. | 197,857 | 8,590,951 | ||||||
JPMorgan Chase & Co. | 392,441 | 51,138,987 | ||||||
PNC Financial Services Group, Inc. | 91,860 | 11,675,406 | ||||||
Prosperity Bancshares, Inc. | 178,996 | 11,011,834 | ||||||
Truist Financial Corp. | 681,745 | 23,247,504 | ||||||
U.S. Bancorp | 1,290,265 | 46,514,053 | ||||||
Wells Fargo & Co. | 871,828 | 32,588,931 | ||||||
223,469,186 | ||||||||
Broadline Retail — 1.1% | ||||||||
Dollar Tree, Inc.(1) | 162,490 | 23,325,440 | ||||||
Capital Markets — 4.7% | ||||||||
Bank of New York Mellon Corp. | 704,690 | 32,021,114 | ||||||
BlackRock, Inc. | 16,360 | 10,946,803 | ||||||
Charles Schwab Corp. | 238,060 | 12,469,583 | ||||||
Invesco Ltd. | 990,996 | 16,252,334 | ||||||
Northern Trust Corp. | 204,452 | 18,018,355 | ||||||
State Street Corp. | 154,500 | 11,694,105 | ||||||
101,402,294 | ||||||||
Chemicals — 0.6% | ||||||||
Akzo Nobel NV | 154,000 | 12,045,049 | ||||||
Communications Equipment — 3.7% | ||||||||
Cisco Systems, Inc. | 1,169,164 | 61,118,048 | ||||||
F5, Inc.(1) | 126,397 | 18,414,779 | ||||||
79,532,827 | ||||||||
Consumer Staples Distribution & Retail — 1.4% | ||||||||
Koninklijke Ahold Delhaize NV | 875,865 | 29,924,022 | ||||||
Containers and Packaging — 0.7% | ||||||||
Packaging Corp. of America | 107,820 | 14,968,651 | ||||||
Diversified REITs — 3.2% | ||||||||
Agree Realty Corp. | 185,360 | 12,717,550 | ||||||
Equinix, Inc. | 16,060 | 11,579,902 | ||||||
Healthpeak Properties, Inc. | 757,660 | 16,645,790 | ||||||
Realty Income Corp. | 196,230 | 12,425,284 |
9
Shares | Value | |||||||
Regency Centers Corp. | 231,090 | $ | 14,138,086 | |||||
67,506,612 | ||||||||
Diversified Telecommunication Services — 4.1% | ||||||||
AT&T, Inc. | 1,983,276 | 38,178,064 | ||||||
Verizon Communications, Inc. | 1,282,172 | 49,863,669 | ||||||
88,041,733 | ||||||||
Electric Utilities — 2.0% | ||||||||
Duke Energy Corp. | 216,250 | 20,861,637 | ||||||
Edison International | 294,700 | 20,802,873 | ||||||
41,664,510 | ||||||||
Electrical Equipment — 1.5% | ||||||||
Emerson Electric Co. | 227,903 | 19,859,468 | ||||||
Signify NV | 382,890 | 12,767,497 | ||||||
32,626,965 | ||||||||
Electronic Equipment, Instruments and Components — 0.3% | ||||||||
Anritsu Corp. | 663,400 | 6,132,386 | ||||||
Energy Equipment and Services — 2.2% | ||||||||
Baker Hughes Co. | 770,278 | 22,230,223 | ||||||
Halliburton Co. | 314,818 | 9,960,841 | ||||||
Schlumberger NV | 321,396 | 15,780,544 | ||||||
47,971,608 | ||||||||
Entertainment — 1.4% | ||||||||
Walt Disney Co.(1) | 307,270 | 30,766,945 | ||||||
Financial Services — 4.4% | ||||||||
Berkshire Hathaway, Inc., Class A(1) | 129 | 60,062,400 | ||||||
Berkshire Hathaway, Inc., Class B(1) | 113,485 | 35,040,763 | ||||||
95,103,163 | ||||||||
Food Products — 3.6% | ||||||||
Conagra Brands, Inc. | 677,738 | 25,455,839 | ||||||
Danone SA | 311,670 | 19,393,231 | ||||||
JDE Peet's NV | 405,568 | 11,785,909 | ||||||
Mondelez International, Inc., Class A | 290,111 | 20,226,539 | ||||||
76,861,518 | ||||||||
Gas Utilities — 0.6% | ||||||||
Atmos Energy Corp. | 109,174 | 12,266,791 | ||||||
Ground Transportation — 1.0% | ||||||||
Heartland Express, Inc. | 1,336,609 | 21,278,815 | ||||||
Health Care Equipment and Supplies — 5.3% | ||||||||
GE HealthCare Technologies, Inc.(1) | 104,566 | 8,577,549 | ||||||
Medtronic PLC | 826,830 | 66,659,035 | ||||||
Zimmer Biomet Holdings, Inc. | 291,217 | 37,625,236 | ||||||
112,861,820 | ||||||||
Health Care Providers and Services — 4.0% | ||||||||
Cardinal Health, Inc. | 339,505 | 25,632,628 | ||||||
CVS Health Corp. | 390,910 | 29,048,522 | ||||||
Laboratory Corp. of America Holdings | 58,570 | 13,437,129 | ||||||
Universal Health Services, Inc., Class B | 130,800 | 16,624,680 | ||||||
84,742,959 | ||||||||
Hotels, Restaurants and Leisure — 0.8% | ||||||||
Sodexo SA | 172,020 | 16,801,288 | ||||||
Household Products — 1.8% | ||||||||
Colgate-Palmolive Co. | 149,740 | 11,252,961 | ||||||
Henkel AG & Co. KGaA | 165,970 | 12,073,774 |
10
Shares | Value | |||||||
Kimberly-Clark Corp. | 119,060 | $ | 15,980,233 | |||||
39,306,968 | ||||||||
Industrial Conglomerates — 2.4% | ||||||||
General Electric Co. | 361,988 | 34,606,053 | ||||||
Siemens AG | 102,950 | 16,678,301 | ||||||
51,284,354 | ||||||||
Insurance — 1.2% | ||||||||
Allstate Corp. | 163,420 | 18,108,570 | ||||||
Reinsurance Group of America, Inc. | 63,976 | 8,493,454 | ||||||
26,602,024 | ||||||||
Interactive Media and Services — 0.5% | ||||||||
Alphabet, Inc., Class A(1) | 96,630 | 10,023,430 | ||||||
Leisure Products — 0.6% | ||||||||
Mattel, Inc.(1) | 750,750 | 13,821,308 | ||||||
Machinery — 1.2% | ||||||||
IMI PLC | 816,196 | 15,449,600 | ||||||
Oshkosh Corp. | 116,830 | 9,717,919 | ||||||
25,167,519 | ||||||||
Media — 0.5% | ||||||||
Interpublic Group of Cos., Inc. | 285,600 | 10,635,744 | ||||||
Metals and Mining — 0.8% | ||||||||
BHP Group Ltd. | 526,315 | 16,638,885 | ||||||
Multi-Utilities — 0.5% | ||||||||
Engie SA | 727,960 | 11,519,740 | ||||||
Oil, Gas and Consumable Fuels — 7.6% | ||||||||
Chevron Corp. | 200,394 | 32,696,285 | ||||||
ConocoPhillips | 163,803 | 16,250,896 | ||||||
Devon Energy Corp. | 237,830 | 12,036,576 | ||||||
EQT Corp. | 346,001 | 11,040,892 | ||||||
Exxon Mobil Corp. | 499,250 | 54,747,755 | ||||||
Shell PLC | 639,715 | 18,230,963 | ||||||
TotalEnergies SE(2) | 302,984 | 17,865,049 | ||||||
162,868,416 | ||||||||
Paper and Forest Products — 0.7% | ||||||||
Mondi PLC | 946,435 | 15,026,553 | ||||||
Passenger Airlines — 0.9% | ||||||||
Southwest Airlines Co. | 592,880 | 19,292,315 | ||||||
Personal Care Products — 1.4% | ||||||||
Unilever PLC | 573,880 | 29,707,375 | ||||||
Pharmaceuticals — 9.3% | ||||||||
Bristol-Myers Squibb Co. | 372,560 | 25,822,134 | ||||||
Johnson & Johnson | 429,732 | 66,608,460 | ||||||
Merck & Co., Inc. | 204,492 | 21,755,904 | ||||||
Pfizer, Inc. | 984,563 | 40,170,170 | ||||||
Roche Holding AG | 72,900 | 20,830,625 | ||||||
Sanofi | 114,600 | 12,431,661 | ||||||
Teva Pharmaceutical Industries Ltd., ADR(1) | 1,224,207 | 10,834,232 | ||||||
198,453,186 | ||||||||
Semiconductors and Semiconductor Equipment — 2.6% | ||||||||
Intel Corp. | 1,148,672 | 37,527,114 | ||||||
QUALCOMM, Inc. | 139,064 | 17,741,785 | ||||||
55,268,899 |
11
Shares | Value | |||||||
Software — 1.3% | ||||||||
Open Text Corp.(2) | 164,950 | $ | 6,358,822 | |||||
Oracle Corp. (New York) | 219,779 | 20,421,865 | ||||||
26,780,687 | ||||||||
Specialty Retail — 1.1% | ||||||||
Advance Auto Parts, Inc. | 198,596 | 24,151,259 | ||||||
Technology Hardware, Storage and Peripherals — 0.5% | ||||||||
HP, Inc. | 331,695 | 9,735,248 | ||||||
Textiles, Apparel and Luxury Goods — 1.2% | ||||||||
Ralph Lauren Corp. | 91,510 | 10,676,472 | ||||||
Tapestry, Inc. | 339,302 | 14,627,309 | ||||||
25,303,781 | ||||||||
Trading Companies and Distributors — 1.1% | ||||||||
MSC Industrial Direct Co., Inc., Class A | 285,169 | 23,954,196 | ||||||
TOTAL COMMON STOCKS (Cost $1,582,283,979) | 2,100,033,551 | |||||||
SHORT-TERM INVESTMENTS — 2.4% | ||||||||
Money Market Funds — 0.8% | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 3,329 | 3,329 | ||||||
State Street Navigator Securities Lending Government Money Market Portfolio(3) | 16,986,255 | 16,986,255 | ||||||
16,989,584 | ||||||||
Repurchase Agreements — 1.6% | ||||||||
BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.125% - 4.375%, 8/15/40 - 5/15/49, valued at $9,224,970), in a joint trading account at 4.67%, dated 3/31/23, due 4/3/23 (Delivery value $8,901,241) | 8,897,778 | |||||||
Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.625%, 3/31/28, valued at $26,251,830), at 4.81%, dated 3/31/23, due 4/3/23 (Delivery value $25,747,316) | 25,737,000 | |||||||
34,634,778 | ||||||||
TOTAL SHORT-TERM INVESTMENTS (Cost $51,624,362) | 51,624,362 | |||||||
TOTAL INVESTMENT SECURITIES — 100.7% (Cost $1,633,908,341) | 2,151,657,913 | |||||||
OTHER ASSETS AND LIABILITIES — (0.7)% | (14,073,809) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,137,584,104 |
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS | ||||||||||||||||||||
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||
USD | 11,458,456 | AUD | 17,174,974 | Bank of America N.A. | 6/30/23 | $ | (58,666) | |||||||||||||
USD | 395,147 | AUD | 588,157 | Bank of America N.A. | 6/30/23 | 743 | ||||||||||||||
USD | 15,574,235 | CHF | 14,125,286 | Morgan Stanley | 6/30/23 | (8,705) | ||||||||||||||
USD | 161,210,448 | EUR | 149,227,481 | JPMorgan Chase Bank N.A. | 6/30/23 | (1,418,454) | ||||||||||||||
USD | 35,984,866 | GBP | 29,287,181 | Bank of America N.A. | 6/30/23 | (204,637) | ||||||||||||||
USD | 4,680,043 | JPY | 607,011,000 | UBS AG | 6/30/23 | 49,767 | ||||||||||||||
$ | (1,639,952) |
12
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||
ADR | – | American Depositary Receipt | ||||||
AUD | – | Australian Dollar | ||||||
CHF | – | Swiss Franc | ||||||
EUR | – | Euro | ||||||
GBP | – | British Pound | ||||||
JPY | – | Japanese Yen | ||||||
USD | – | United States Dollar |
(1)Non-income producing.
(2)Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $16,224,015. 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 $16,986,255.
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
MARCH 31, 2023 | |||||
Assets | |||||
Investment securities, at value (cost of $1,616,922,086) — including $16,224,015 of securities on loan | $ | 2,134,671,658 | |||
Investment made with cash collateral received for securities on loan, at value (cost of $16,986,255) | 16,986,255 | ||||
Total investment securities, at value (cost of $1,633,908,341) | 2,151,657,913 | ||||
Receivable for investments sold | 4,536,350 | ||||
Receivable for capital shares sold | 602,405 | ||||
Unrealized appreciation on forward foreign currency exchange contracts | 50,510 | ||||
Dividends and interest receivable | 5,431,492 | ||||
Securities lending receivable | 4,416 | ||||
2,162,283,086 | |||||
Liabilities | |||||
Payable for collateral received for securities on loan | 16,986,255 | ||||
Payable for investments purchased | 3,185,642 | ||||
Payable for capital shares redeemed | 1,062,350 | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 1,690,462 | ||||
Accrued management fees | 1,658,780 | ||||
Distribution and service fees payable | 115,493 | ||||
24,698,982 | |||||
Net Assets | $ | 2,137,584,104 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,642,049,224 | |||
Distributable earnings (loss) | 495,534,880 | ||||
$ | 2,137,584,104 |
Net Assets | Shares Outstanding | Net Asset Value Per Share* | |||||||||
Investor Class, $0.01 Par Value | $1,193,571,084 | 153,677,262 | $7.77 | ||||||||
I Class, $0.01 Par Value | $454,801,703 | 58,389,554 | $7.79 | ||||||||
Y Class, $0.01 Par Value | $109,655,352 | 14,075,960 | $7.79 | ||||||||
A Class, $0.01 Par Value | $55,295,413 | 7,131,233 | $7.75 | ||||||||
C Class, $0.01 Par Value | $8,718,491 | 1,152,583 | $7.56 | ||||||||
R Class, $0.01 Par Value | $230,444,943 | 29,689,852 | $7.76 | ||||||||
R5 Class, $0.01 Par Value | $2,658,840 | 341,511 | $7.79 | ||||||||
R6 Class, $0.01 Par Value | $82,438,278 | 10,580,316 | $7.79 |
*Maximum offering price per share was equal to the net asset value per share for all share classes, except Class A, for which the maximum offering price per share was $8.22 (net asset value divided by 0.9425). A contingent deferred sales charge may be imposed on redemptions of Class A and Class C.
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED MARCH 31, 2023 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends (net of foreign taxes withheld of $1,127,680) | $ | 63,453,357 | |||
Interest | 1,410,664 | ||||
Securities lending, net | 105,641 | ||||
64,969,662 | |||||
Expenses: | |||||
Management fees | 20,230,465 | ||||
Distribution and service fees: | |||||
A Class | 156,038 | ||||
C Class | 90,587 | ||||
R Class | 1,167,177 | ||||
Directors' fees and expenses | 67,489 | ||||
Other expenses | 416,810 | ||||
22,128,566 | |||||
Net investment income (loss) | 42,841,096 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 143,386,959 | ||||
Forward foreign currency exchange contract transactions | 13,531,017 | ||||
Foreign currency translation transactions | (223,665) | ||||
156,694,311 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (258,907,940) | ||||
Forward foreign currency exchange contracts | (1,414,039) | ||||
Translation of assets and liabilities in foreign currencies | (11,578) | ||||
(260,333,557) | |||||
Net realized and unrealized gain (loss) | (103,639,246) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (60,798,150) |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED MARCH 31, 2023 AND MARCH 31, 2022 | ||||||||
Increase (Decrease) in Net Assets | March 31, 2023 | March 31, 2022 | ||||||
Operations | ||||||||
Net investment income (loss) | $ | 42,841,096 | $ | 37,592,317 | ||||
Net realized gain (loss) | 156,694,311 | 390,990,005 | ||||||
Change in net unrealized appreciation (depreciation) | (260,333,557) | (137,049,213) | ||||||
Net increase (decrease) in net assets resulting from operations | (60,798,150) | 291,533,109 | ||||||
Distributions to Shareholders | ||||||||
From earnings: | ||||||||
Investor Class | (163,229,349) | (161,082,877) | ||||||
I Class | (61,548,378) | (67,705,351) | ||||||
Y Class | (14,921,885) | (15,323,017) | ||||||
A Class | (8,034,893) | (8,557,994) | ||||||
C Class | (1,150,070) | (1,151,149) | ||||||
R Class | (29,966,055) | (29,698,860) | ||||||
R5 Class | (350,956) | (318,549) | ||||||
R6 Class | (11,600,026) | (12,133,497) | ||||||
Decrease in net assets from distributions | (290,801,612) | (295,971,294) | ||||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 87,088,979 | (203,075,147) | ||||||
Net increase (decrease) in net assets | (264,510,783) | (207,513,332) | ||||||
Net Assets | ||||||||
Beginning of period | 2,402,094,887 | 2,609,608,219 | ||||||
End of period | $ | 2,137,584,104 | $ | 2,402,094,887 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
MARCH 31, 2023
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 value of investments of the fund is determined by American Century Investment Management, Inc. (ACIM) (the investment advisor), as the valuation designee, pursuant to its valuation policies and procedures. The Board of Directors oversees the valuation designee and reviews its valuation policies and procedures at least annually.
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 valuation designee determines that the market price for a portfolio security is not readily available or is believed by the valuation designee to be unreliable, such security is valued at fair value as determined in good faith by the valuation designee, in accordance with its policies and procedures. Circumstances that may cause the fund to determine that market quotations are not available or reliable include, but are not limited to: when there is a significant event subsequent to the market quotation; trading in a security has been halted during the trading day; or trading in a security is insufficient or did not take place due to a closure or holiday.
17
The valuation designee 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; regulatory news, 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 valuation designee also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that it deems appropriate. The valuation designee 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 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.
18
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of March 31, 2023.
Remaining Contractual Maturity of Agreements | |||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | |||||||||||||
Securities Lending Transactions(1) | |||||||||||||||||
Common Stocks | $ | 16,986,255 | — | — | — | $ | 16,986,255 | ||||||||||
Gross amount of recognized liabilities for securities lending transactions | $ | 16,986,255 |
(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.
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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), as well as exchange-traded funds managed by the investment advisor, that use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended March 31, 2023 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |||||||
Investor Class | 0.85% to 1.00% | 1.00% | ||||||
I Class | 0.65% to 0.80% | 0.80% | ||||||
Y Class | 0.50% to 0.65% | 0.65% | ||||||
A Class | 0.85% to 1.00% | 1.00% | ||||||
C Class | 0.85% to 1.00% | 1.00% | ||||||
R Class | 0.85% to 1.00% | 1.00% | ||||||
R5 Class | 0.65% to 0.80% | 0.80% | ||||||
R6 Class | 0.50% to 0.65% | 0.65% |
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended March 31, 2023 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 $623,789 and $1,253,147, respectively. The effect of interfund transactions on the Statement of Operations was $(114,996) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended March 31, 2023 were $907,215,504 and $1,043,847,824, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended March 31, 2023 | Year ended March 31, 2022 | |||||||||||||
Shares | Amount | Shares | Amount | |||||||||||
Investor Class/Shares Authorized | 1,350,000,000 | 1,350,000,000 | ||||||||||||
Sold | 10,745,631 | $ | 91,169,369 | 13,559,184 | $ | 128,574,461 | ||||||||
Issued in reinvestment of distributions | 20,174,667 | 156,844,553 | 17,680,147 | 155,206,819 | ||||||||||
Redeemed | (20,195,051) | (167,915,882) | (54,760,353) | (529,042,949) | ||||||||||
10,725,247 | 80,098,040 | (23,521,022) | (245,261,669) | |||||||||||
I Class/Shares Authorized | 600,000,000 | 400,000,000 | ||||||||||||
Sold | 6,120,526 | 50,880,844 | 4,660,313 | 44,504,194 | ||||||||||
Issued in reinvestment of distributions | 7,829,154 | 61,050,338 | 7,604,075 | 67,010,969 | ||||||||||
Redeemed | (12,231,446) | (104,231,464) | (12,251,204) | (115,844,231) | ||||||||||
1,718,234 | 7,699,718 | 13,184 | (4,329,068) | |||||||||||
Y Class/Shares Authorized | 130,000,000 | 130,000,000 | ||||||||||||
Sold | 3,273,398 | 26,648,390 | 6,719,308 | 63,586,908 | ||||||||||
Issued in reinvestment of distributions | 1,712,806 | 13,357,592 | 1,521,680 | 13,435,978 | ||||||||||
Redeemed | (4,927,994) | (40,656,012) | (7,138,696) | (69,231,624) | ||||||||||
58,210 | (650,030) | 1,102,292 | 7,791,262 | |||||||||||
A Class/Shares Authorized | 60,000,000 | 60,000,000 | ||||||||||||
Sold | 987,536 | 8,288,338 | 1,631,731 | 15,351,982 | ||||||||||
Issued in reinvestment of distributions | 948,819 | 7,357,420 | 880,127 | 7,709,724 | ||||||||||
Redeemed | (2,445,657) | (20,410,746) | (2,031,837) | (19,138,683) | ||||||||||
(509,302) | (4,764,988) | 480,021 | 3,923,023 | |||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 201,859 | 1,680,412 | 254,435 | 2,393,777 | ||||||||||
Issued in reinvestment of distributions | 149,033 | 1,127,402 | 132,544 | 1,133,934 | ||||||||||
Redeemed | (302,952) | (2,491,424) | (291,412) | (2,706,195) | ||||||||||
47,940 | 316,390 | 95,567 | 821,516 | |||||||||||
R Class/Shares Authorized | 325,000,000 | 175,000,000 | ||||||||||||
Sold | 1,057,020 | 8,832,488 | 1,486,468 | 14,108,754 | ||||||||||
Issued in reinvestment of distributions | 3,861,761 | 29,966,055 | 3,389,739 | 29,698,860 | ||||||||||
Redeemed | (3,025,877) | (25,568,330) | (2,539,300) | (24,001,845) | ||||||||||
1,892,904 | 13,230,213 | 2,336,907 | 19,805,769 | |||||||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||
Sold | 32,262 | 268,580 | 32,133 | 310,289 | ||||||||||
Issued in reinvestment of distributions | 45,080 | 350,956 | 36,178 | 318,549 | ||||||||||
Redeemed | (21,048) | (177,366) | (27,469) | (263,806) | ||||||||||
56,294 | 442,170 | 40,842 | 365,032 | |||||||||||
R6 Class/Shares Authorized | 120,000,000 | 125,000,000 | ||||||||||||
Sold | 2,922,287 | 24,312,297 | 3,922,544 | 36,833,008 | ||||||||||
Issued in reinvestment of distributions | 1,462,449 | 11,408,553 | 1,366,401 | 12,049,360 | ||||||||||
Redeemed | (5,455,685) | (45,003,384) | (3,671,920) | (35,073,380) | ||||||||||
(1,070,949) | (9,282,534) | 1,617,025 | 13,808,988 | |||||||||||
Net increase (decrease) | 12,918,578 | $ | 87,088,979 | (17,835,184) | $ | (203,075,147) |
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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 | $ | 35,738,287 | $ | 4,046,565 | — | ||||||
Automobile Components | 15,359,251 | 12,661,377 | — | ||||||||
Chemicals | — | 12,045,049 | — | ||||||||
Consumer Staples Distribution & Retail | — | 29,924,022 | — | ||||||||
Electrical Equipment | 19,859,468 | 12,767,497 | — | ||||||||
Electronic Equipment, Instruments and Components | — | 6,132,386 | — | ||||||||
Food Products | 45,682,378 | 31,179,140 | — | ||||||||
Hotels, Restaurants and Leisure | — | 16,801,288 | — | ||||||||
Household Products | 27,233,194 | 12,073,774 | — | ||||||||
Industrial Conglomerates | 34,606,053 | 16,678,301 | — | ||||||||
Machinery | 9,717,919 | 15,449,600 | — | ||||||||
Metals and Mining | — | 16,638,885 | — | ||||||||
Multi-Utilities | — | 11,519,740 | — | ||||||||
Oil, Gas and Consumable Fuels | 126,772,404 | 36,096,012 | — | ||||||||
Paper and Forest Products | — | 15,026,553 | — | ||||||||
Personal Care Products | — | 29,707,375 | — | ||||||||
Pharmaceuticals | 165,190,900 | 33,262,286 | — | ||||||||
Other Industries | 1,307,863,847 | — | — | ||||||||
Short-Term Investments | 16,989,584 | 34,634,778 | — | ||||||||
$ | 1,805,013,285 | $ | 346,644,628 | — | |||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 50,510 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 1,690,462 | — |
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7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 $252,347,822.
The value of foreign currency risk derivative instruments as of March 31, 2023, is disclosed on the Statement of Assets and Liabilities as an asset of $50,510 in unrealized appreciation on forward foreign currency exchange contracts and a liability of $1,690,462 in unrealized depreciation on forward foreign currency exchange contracts. For the year ended March 31, 2023, the effect of foreign currency risk derivative instruments on the Statement of Operations was $13,531,017 in net realized gain (loss) on forward foreign currency exchange contract transactions and $(1,414,039) 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, war, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region may accentuate these risks.
9. Federal Tax Information
The tax character of distributions paid during the years ended March 31, 2023 and March 31, 2022 were as follows:
2023 | 2022 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 73,081,399 | $ | 120,901,348 | ||||
Long-term capital gains | $ | 217,720,213 | $ | 175,069,946 |
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 federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,703,444,373 | |||
Gross tax appreciation of investments | $ | 503,029,156 | |||
Gross tax depreciation of investments | (54,815,616) | ||||
Net tax appreciation (depreciation) of investments | 448,213,540 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (24,293) | ||||
Net tax appreciation (depreciation) | $ | 448,189,247 | |||
Undistributed ordinary income | $ | 4,452,907 | |||
Accumulated long-term gains | $ | 42,892,726 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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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 | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.16 | 0.16 | (0.38) | (0.22) | (0.16) | (1.01) | (1.17) | $7.77 | (2.23)% | 1.02% | 1.95% | 42% | $1,193,571 | ||||||||||||||||||||||||||||
2022 | $9.32 | 0.14 | 0.94 | 1.08 | (0.15) | (1.09) | (1.24) | $9.16 | 12.26% | 1.01% | 1.52% | 41% | $1,309,198 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.18 | 0.18 | (0.39) | (0.21) | (0.17) | (1.01) | (1.18) | $7.79 | (2.03)% | 0.82% | 2.15% | 42% | $454,802 | ||||||||||||||||||||||||||||
2022 | $9.34 | 0.16 | 0.94 | 1.10 | (0.17) | (1.09) | (1.26) | $9.18 | 12.44% | 0.81% | 1.72% | 41% | $520,321 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.18 | 0.19 | (0.38) | (0.19) | (0.19) | (1.01) | (1.20) | $7.79 | (1.89)% | 0.67% | 2.30% | 42% | $109,655 | ||||||||||||||||||||||||||||
2022 | $9.34 | 0.18 | 0.93 | 1.11 | (0.18) | (1.09) | (1.27) | $9.18 | 12.61% | 0.66% | 1.87% | 41% | $128,721 | ||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.15 | 0.14 | (0.39) | (0.25) | (0.14) | (1.01) | (1.15) | $7.75 | (2.58)% | 1.27% | 1.70% | 42% | $55,295 | ||||||||||||||||||||||||||||
2022 | $9.31 | 0.12 | 0.93 | 1.05 | (0.12) | (1.09) | (1.21) | $9.15 | 12.00% | 1.26% | 1.27% | 41% | $69,880 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $8.95 | 0.08 | (0.38) | (0.30) | (0.08) | (1.01) | (1.09) | $7.56 | (3.28)% | 2.02% | 0.95% | 42% | $8,718 | ||||||||||||||||||||||||||||
2022 | $9.13 | 0.05 | 0.91 | 0.96 | (0.05) | (1.09) | (1.14) | $8.95 | 11.15% | 2.01% | 0.52% | 41% | $9,886 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.15 | 0.12 | (0.38) | (0.26) | (0.12) | (1.01) | (1.13) | $7.76 | (2.72)% | 1.52% | 1.45% | 42% | $230,445 | ||||||||||||||||||||||||||||
2022 | $9.31 | 0.10 | 0.93 | 1.03 | (0.10) | (1.09) | (1.19) | $9.15 | 11.70% | 1.51% | 1.02% | 41% | $254,460 | ||||||||||||||||||||||||||||
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 |
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 | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.18 | 0.18 | (0.39) | (0.21) | (0.17) | (1.01) | (1.18) | $7.79 | (2.01)% | 0.82% | 2.15% | 42% | $2,659 | ||||||||||||||||||||||||||||
2022 | $9.34 | 0.16 | 0.94 | 1.10 | (0.17) | (1.09) | (1.26) | $9.18 | 12.45% | 0.81% | 1.72% | 41% | $2,618 | ||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
R6 Class | |||||||||||||||||||||||||||||||||||||||||
2023 | $9.18 | 0.19 | (0.38) | (0.19) | (0.19) | (1.01) | (1.20) | $7.79 | (1.89)% | 0.67% | 2.30% | 42% | $82,438 | ||||||||||||||||||||||||||||
2022 | $9.34 | 0.18 | 0.93 | 1.11 | (0.18) | (1.09) | (1.27) | $9.18 | 12.61% | 0.66% | 1.87% | 41% | $107,011 | ||||||||||||||||||||||||||||
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 |
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.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century Capital Portfolios, Inc.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Value Fund (the “Fund”), one of the funds constituting the American Century Capital Portfolios, Inc., as of March 31, 2023, the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Value Fund of the American Century Capital Portfolios, Inc. as of March 31, 2023, and the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of March 31, 2023, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Kansas City, Missouri
May 16, 2023
We have served as the auditor of one or more American Century investment companies since 1997.
28
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire on December 31 of the year in which they reach their 75th birthday.
Jonathan S. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Jonathan S. Thomas, 16; and Stephen E. Yates, 8) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Brian Bulatao (1964) | Director | Since 2022 | Chief Administrative Officer, Activision Blizzard, Inc. (2021 to present); Under Secretary of State for Management, U.S. Department of State (2018 to 2021); Chief Operating Officer, Central Intelligence Agency (2017 to 2018) | 64 | None | ||||||||||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 64 | None | ||||||||||||
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 64 | Alleghany Corporation (2021 to 2022) | ||||||||||||
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 64 | None | ||||||||||||
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 64 | None |
29
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | ||||||||||||
Independent Directors | |||||||||||||||||
Lynn Jenkins (1963) | Director | Since 2019 | Consultant, LJ Strategies (2019 to present); United States Representative, U.S. House of Representatives (2009 to 2018) | 64 | MGP Ingredients, Inc. (2019 to 2021) | ||||||||||||
Jan M. Lewis (1957) | Director and Board Chair | Since 2011 (Board Chair since 2022) | Retired | 64 | None | ||||||||||||
Gary C. Meltzer (1963) | Director | Since 2022 | Advisor, Pontoro (2021 to present); Executive Advisor, Consultant and Investor, Harris Ariel Advisory LLC (2020 to present); Managing Partner, PricewaterhouseCoopers LLP (1985 to 2020) | 64 | ExcelFin Acquisition Corp., Apollo Realty Income Solutions, Inc. | ||||||||||||
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 109 | None | ||||||||||||
Interested Director | |||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Director, ACC and other ACC subsidiaries | 141 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
30
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for 16 investment companies in the American Century family of funds. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
John Pak (1968) | General Counsel and Senior Vice President since 2021 | General Counsel and Senior Vice President, ACC (2021 to present); Also serves as General Counsel and Senior Vice President, ACIM, ACS and ACIS. Chief Legal Officer of Investment and Wealth Management, The Bank of New York Mellon (2014 to 2021) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
31
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates, including members of ACIM’s Investment Oversight Committee who are members of ACIM’s Investment Management and Global Analytics departments, conduct the day-to-day operation of the program pursuant to the program.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of certain investments held by the Fund is supported by a third-party liquidity assessment vendor.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period January 1, 2022 through December 31, 2022. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
32
Proxy Voting Results |
A special meeting of shareholders was held on October 13, 2022, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect five directors to the Board of Directors of American Century Capital Portfolios, Inc.:
Affirmative | Withhold | ||||||||||
Brian Bulatao | $ | 17,572,790,908 | $ | 417,511,059 | |||||||
Chris H. Cheesman | $ | 17,634,906,815 | $ | 355,395,152 | |||||||
Rajesh K. Gupta | $ | 17,620,399,260 | $ | 369,902,707 | |||||||
Lynn M. Jenkins | $ | 17,600,718,699 | $ | 389,583,268 | |||||||
Gary C. Meltzer | $ | 17,633,346,402 | $ | 356,955,565 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas W. Bunn, Barry Fink, Jan M. Lewis, and Stephen E. Yates.
33
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding at the IRS default rate of 10%.* 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.
You may elect a different withholding rate, or request zero withholding, by submitting an acceptable IRS Form W-4R election with your distribution request. You may notify us of your W-4R election by telephone, on our distribution forms, on IRS Form W-4R, or through other acceptable electronic means. If your withholding election is for an automatic withdrawal plan, you have the right to revoke your election at any time and any election you make will remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. 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 according to state regulations if, at the time of your distribution, your tax residency is within one of the mandatory withholding states.
*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.
34
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended March 31, 2023.
For corporate taxpayers, the fund hereby designates $43,350,427, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended March 31, 2023 as qualified for the corporate dividends received deduction.
The fund hereby designates $32,517,297 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended March 31, 2023.
The fund hereby designates $217,720,213 or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended March 31, 2023.
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. | ||||||||
©2023 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92273 2305 |
(b) None.
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions.
(b) No response required.
(c) None.
(d) None.
(e) Not applicable.
(f) The registrant’s Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.’s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant’s board has determined that the registrant has at least one audit committee financial expert serving on its audit committee.
(a)(2) Chris H. Cheesman, Lynn M. Jenkins and Barry Fink are the registrant’s designated audit committee financial experts. They are “independent” as defined in Item 3 of Form N-CSR.
(a)(3) Not applicable.
(b) No response required.
(c) No response required.
(d) No response required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees.
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows:
FY 2022: $117,220
FY 2023: $121,305
(b) Audit-Related Fees.
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were as follows:
For services rendered to the registrant:
FY 2022: $0
FY 2023: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2022: $0
FY 2023: $0
(c) Tax Fees.
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows:
For services rendered to the registrant:
FY 2022: $0
FY 2023: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2022: $0
FY 2023: $0
(d) All Other Fees.
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows:
For services rendered to the registrant:
FY 2022: $0
FY 2023: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2022: $0
FY 2023: $0
(e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant’s audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant’s audit committee also pre-approves its accountant’s engagements for non-audit services with the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.
(e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant’s audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C).
(f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than 50%.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows:
FY 2022: $2,832,126
FY 2023: $98,325
(h) The registrant’s investment adviser and accountant have notified the registrant’s audit committee of all non-audit services that were rendered by the registrant’s accountant to the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant’s audit committee included sufficient details regarding such services to allow the registrant’s audit committee to consider the continuing independence of its principal accountant.
(i) Not applicable.
(j) Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Registrant’s Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.’s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005.
(a)(2) Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) A certification by the registrant’s chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | American Century Capital Portfolios, Inc. | ||||||||||
By: | /s/ Patrick Bannigan | ||||||||||
Name: | Patrick Bannigan | ||||||||||
Title: | President | ||||||||||
Date: | May 25, 2023 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Patrick Bannigan | |||||||
Name: | Patrick Bannigan | |||||||
Title: | President | |||||||
(principal executive officer) | ||||||||
Date: | May 25, 2023 |
By: | /s/ R. Wes Campbell | |||||||
Name: | R. Wes Campbell | |||||||
Title: | Treasurer and | |||||||
Chief Financial Officer | ||||||||
(principal financial officer) | ||||||||
Date: | May 25, 2023 |