UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-07820 | |||||
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. | ||||||
(Exact name of registrant as specified in charter) | ||||||
4500 MAIN STREET, KANSAS CITY, MISSOURI | 64111 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
CHARLES A. ETHERINGTON 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 | ||||||
(Name and address of agent for service) | ||||||
Registrant’s telephone number, including area code: | 816-531-5575 | |||||
Date of fiscal year end: | 03-31 | |||||
Date of reporting period: | 09-30-2010 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Semiannual Report |
September 30, 2010 |
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American Century Investments®
Equity Income Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
Equity Income | ||
Performance | 5 | |
Portfolio Commentary | 7 | |
Top Ten Holdings | 9 | |
Top Five Industries | 9 | |
Types of Investments in Portfolio | 9 | |
Shareholder Fee Example | 10 | |
Financial Statements | ||
Schedule of Investments | 12 | |
Statement of Assets and Liabilities | 16 | |
Statement of Operations | 17 | |
Statement of Changes in Net Assets | 18 | |
Notes to Financial Statements | 19 | |
Financial Highlights | 25 | |
Other Information | ||
Proxy Voting Results | 31 | |
Additional Information | 32 | |
Index Definitions | 33 |
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
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomas.jpg)
Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors – working on behalf of shareholders – to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/davidson1.jpg)
By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Equity Income
Total Returns as of September 30, 2010 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWEIX | 2.00% | 11.34% | 3.03% | 6.94% | 10.38% | 8/1/94 |
Russell 3000 Value Index | — | -2.11% | 9.15% | -0.39% | 2.96% | 8.45%(2) | — |
S&P 500 Index | — | -1.42% | 10.16% | 0.64% | -0.43% | 7.80%(2) | — |
Lipper Equity Income Index | — | -0.96% | 9.83% | 0.58% | 2.27% | 6.84%(2) | — |
Institutional Class | ACIIX | 2.25% | 11.55% | 3.26% | 7.15% | 7.12% | 7/8/98 |
A Class(3) No sales charge* With sales charge* | TWEAX | 1.87% -3.95% | 11.06% 4.71% | 2.77% 1.55% | 6.68% 6.05% | 8.09% 7.62% | 3/7/97 |
B Class No sales charge* With sales charge* | AEKBX | 1.49% -3.51% | 10.20% 6.20% | — — | — — | -4.11% -5.21% | 9/28/07 |
C Class No sales charge* With sales charge* | AEYIX | 1.65% 0.65% | 10.38% 10.38% | 2.03% 2.03% | — — | 4.57% 4.57% | 7/13/01 |
R Class | AEURX | 1.75% | 10.80% | 2.52% | — | 5.10% | 8/29/03 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 7/31/94, the date nearest the Investor Class’s inception for which data are available. |
(3) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
5
Equity Income
Growth of $10,000 Over 10 Years |
$10,000 investment made September 30, 2000 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart1.jpg)
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
0.97% | 0.77% | 1.22% | 1.97% | 1.97% | 1.47% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
6
Portfolio Commentary
Equity Income
Portfolio Managers: Phil Davidson, Kevin Toney, and Michael Liss
Performance Summary
Equity Income returned 2.00%* for the six months ended September 30, 2010. By comparison, the Lipper Equity Income Index returned -0.96%, and the average return for Morningstar’s Large Cap Value category** (its performance, like Equity Income’s, reflects operating expenses) was -2.44%. The fund’s benchmark, the Russell 3000 Value Index, and the S&P 500 Index, representative of the broad market, fell -2.11% and -1.42%, respectively. The portfolio’s return reflects operating expenses, while the indices’ returns
do not.
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. In this environment, Equity Income’s higher-quality, income-producing securities performed well on a relative basis. Many of the companies owned by the portfolio have strong balance sheets and competitive positions, which allowed them to continue paying dividends and, in some cases, increase their dividend payouts.
Equity Income is carefully managed to provide solid long-term performance. Since its inception on August 1, 1994, Equity Income has produced an average annual return of 10.38%, topping the returns for the Lipper Equity Income Index, Morningstar’s Large Cap Value category average, the Russell 3000 Value Index, and the S&P 500 Index for the same period (see performance information on pages 5 – 6 and the footnotes below).
Financials Contributed
Equity Income benefited from an underweight position and strategic stock selection in financials, the weakest sector in the benchmark. In keeping with the management team’s cautious and conservative approach, the portfolio did not own Bank of America’s common stock, which underperformed. However, it did hold the bank’s less-risky convertible preferred stock, which appreciated in price as the company stabilized its balance sheet. The portfolio had no exposure to commercial bank Wells Fargo or diversified financial services company Citigroup. Both stocks declined in the benchmark.
* | All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. |
** | The average returns for Morningstar’s Large Cap Value category were 8.02%, -0.28% and 2.47% for the one-, five- and ten-year periods ended September 30, 2010, respectively, and 7.07% since the fund’s inception. © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
7
Equity Income
Elsewhere in the sector, our investments were concentrated in the less-volatile names in the insurance industry. Equity Income was overweight shares of Ace Ltd. and Chubb Corp. Despite a difficult pricing and low interest rate environment, both companies posted attractive returns on capital and increased dividends.
Industrials Boosted Results
Security selection within industrials added to relative results. United Parcel Service (UPS) delivered strong earnings growth based on growth internationally, cost savings, and an improved competitive environment following DHL’s exit from the U.S. parcel market. General Electric (GE) contributed to relative performance despite a negative return for the period as the portfolio was substantially underweight this stock. Two overweight positions in multi-national companies Emerson Electric and Caterpillar along with positive returns for these stocks also contributed to the portfolio’s performance.
Information Technology Added Value
Select holdings within information technology enhanced performance. Equity Income owned a convertible security issued by Intel which contributed to relative returns. It was also underweight Intel’s common stock, which dropped sharply after the company lowered its third-quarter revenue forecast, citing weaker-than-expected consumer demand for personal computers. Other holdings that contributed to relative performance in this sector were two convertible bonds issued by DST Systems and Sybase. The latter company was acquired by SAP.
Energy Detracted
Although an overweight in the energy sector boosted relative results, Equity Income’s mix of large integrated oil and gas companies offset progress. One key detractor was Exxon Mobil Corp. which saw its share price decline in part due to investor disappointment over the price paid for its acquisition of XTO Energy earlier in 2010.
Outlook
We will continue to follow our disciplined, bottom-up investment process, selecting companies one at a time for the portfolio. As of September 30, 2010, we see attractive opportunities in energy and utilities, reflected by our overweight positions in these sectors. We continue to be selective in holdings of industrials, health care, financials, and consumer discretionary companies, relying on fundamental analysis to identify strong, financially sound businesses whose securities provide attractive yields.
8
Equity Income
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
Exxon Mobil Corp. | 5.0% |
AT&T, Inc. | 4.0% |
Bank of America Corp. (Convertible) | 3.9% |
U.S. Bancorp. (Convertible) | 3.5% |
Total SA | 3.0% |
Johnson & Johnson | 2.9% |
United Parcel Service, Inc., Class B | 2.7% |
Annaly Capital Management, Inc. (Convertible) | 2.5% |
Host Hotels & Resorts LP (Convertible) | 2.5% |
Chevron Corp. | 2.4% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Oil, Gas & Consumable Fuels | 12.9% |
Pharmaceuticals | 7.7% |
Real Estate Investment Trusts (REITs) | 7.1% |
Specialty Retail | 5.1% |
Insurance | 5.0% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Domestic Common Stocks | 66.4% |
Foreign Common Stocks | 6.0% |
Convertible Bonds | 20.8% |
Convertible Preferred Stocks | 4.2% |
Total Equity Exposure | 97.4% |
Temporary Cash Investments | 2.3% |
Other Assets and Liabilities | 0.3% |
9
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) regis tered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
10
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 – 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,020.00 | $4.91 | 0.97% |
Institutional Class | $1,000 | $1,022.50 | $3.90 | 0.77% |
A Class | $1,000 | $1,018.70 | $6.17 | 1.22% |
B Class | $1,000 | $1,014.90 | $9.95 | 1.97% |
C Class | $1,000 | $1,016.50 | $9.96 | 1.97% |
R Class | $1,000 | $1,017.50 | $7.43 | 1.47% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.21 | $4.91 | 0.97% |
Institutional Class | $1,000 | $1,021.21 | $3.90 | 0.77% |
A Class | $1,000 | $1,018.95 | $6.17 | 1.22% |
B Class | $1,000 | $1,015.19 | $9.95 | 1.97% |
C Class | $1,000 | $1,015.19 | $9.95 | 1.97% |
R Class | $1,000 | $1,017.70 | $7.44 | 1.47% |
* | Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. |
11
Schedule of Investments
Equity Income
SEPTEMBER 30, 2010 (UNAUDITED)
Shares/ Principal Amount | Value | |
Common Stocks — 72.4% | ||
AEROSPACE & DEFENSE — 1.2% | ||
Honeywell International, Inc. | 538,600 | $ 23,666,084 |
Raytheon Co. | 1,211,800 | 55,391,378 |
79,057,462 | ||
AIR FREIGHT & LOGISTICS — 2.7% | ||
United Parcel Service, Inc., Class B | 2,785,021 | 185,733,051 |
CAPITAL MARKETS — 2.5% | ||
AllianceBernstein Holding LP | 751,173 | 19,838,479 |
Northern Trust Corp. | 2,238,800 | 107,999,712 |
T. Rowe Price Group, Inc. | 867,600 | 43,436,394 |
171,274,585 | ||
CHEMICALS — 1.4% | ||
E.I. du Pont de Nemours & Co. | 2,162,900 | 96,508,598 |
COMMERCIAL BANKS — 0.8% | ||
Commerce Bancshares, Inc. | 1,464,549 | 55,052,397 |
COMMERCIAL SERVICES & SUPPLIES — 1.7% | ||
Pitney Bowes, Inc. | 1,280,000 | 27,366,400 |
Republic Services, Inc. | 1,725,500 | 52,610,495 |
Waste Management, Inc. | 1,106,145 | 39,533,622 |
119,510,517 | ||
CONSTRUCTION MATERIALS — 0.7% | ||
Martin Marietta Materials, Inc. | 651,095 | 50,114,782 |
DISTRIBUTORS — 1.2% | ||
Genuine Parts Co. | 1,831,900 | 81,684,421 |
DIVERSIFIED — 1.9% | ||
Standard & Poor’s 500 Depositary Receipt, Series 1 | 1,125,800 | 128,476,296 |
DIVERSIFIED TELECOMMUNICATION SERVICES — 4.9% | ||
AT&T, Inc. | 9,598,800 | 274,525,680 |
Qwest Communications International, Inc. | 9,646,900 | 60,486,063 |
335,011,743 | ||
ELECTRIC UTILITIES — 1.0% | ||
Northeast Utilities | 1,266,800 | 37,459,276 |
Portland General Electric Co. | 1,490,133 | 30,219,897 |
67,679,173 | ||
ELECTRICAL EQUIPMENT — 1.6% | ||
Emerson Electric Co. | 1,577,800 | 83,086,948 |
Rockwell Automation, Inc. | 372,900 | 23,019,117 |
106,106,065 | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.5% | ||
Molex, Inc., Class A | 1,809,100 | 31,623,068 |
FOOD & STAPLES RETAILING — 2.2% | ||
Walgreen Co. | 1,101,100 | 36,886,850 |
Wal-Mart Stores, Inc. | 2,119,116 | 113,415,088 |
150,301,938 | ||
FOOD PRODUCTS — 2.5% | ||
H.J. Heinz Co. | 2,558,700 | 121,205,619 |
Unilever NV CVA | 1,715,600 | 51,278,008 |
172,483,627 | ||
GAS UTILITIES — 3.4% | ||
AGL Resources, Inc. | 1,821,500 | 69,872,740 |
Nicor, Inc. | 1,215,000 | 55,671,300 |
Piedmont Natural Gas Co., Inc. | 296,000 | 8,584,000 |
WGL Holdings, Inc.(1) | 2,521,688 | 95,269,373 |
229,397,413 | ||
HOTELS, RESTAURANTS & LEISURE — 0.1% | ||
McDonald’s Corp. | 90,100 | 6,713,351 |
HOUSEHOLD PRODUCTS — 3.7% | ||
Clorox Co. | 888,000 | 59,282,880 |
Kimberly-Clark Corp. | 1,459,500 | 94,940,475 |
Procter & Gamble Co. (The) | 1,642,830 | 98,520,515 |
252,743,870 | ||
INSURANCE — 4.9% | ||
ACE Ltd. | 1,009,500 | 58,803,375 |
Allstate Corp. (The) | 1,930,400 | 60,904,120 |
Chubb Corp. (The) | 774,600 | 44,144,454 |
Marsh & McLennan Cos., Inc. | 4,906,489 | 118,344,515 |
MetLife, Inc. | 760,606 | 29,245,301 |
Transatlantic Holdings, Inc. | 492,804 | 25,044,299 |
336,486,064 | ||
IT SERVICES — 2.5% | ||
Accenture plc, Class A | 2,153,200 | 91,489,468 |
Automatic Data Processing, Inc. | 1,357,200 | 57,043,116 |
Paychex, Inc. | 739,200 | 20,320,608 |
168,853,192 | ||
MACHINERY — 0.3% | ||
Caterpillar, Inc. | 35,200 | 2,769,536 |
Harsco Corp. | 734,900 | 18,063,842 |
20,833,378 |
12
Equity Income
Shares/ Principal Amount | Value |
MEDIA — 0.6% | ||
Omnicom Group, Inc. | 1,040,200 | $ 41,067,096 |
METALS & MINING — 0.2% | ||
Nucor Corp. | 380,487 | 14,534,604 |
MULTI-UTILITIES — 3.5% | ||
Consolidated Edison, Inc. | 3,330,368 | 160,590,345 |
PG&E Corp. | 1,503,100 | 68,270,802 |
Wisconsin Energy Corp. | 177,300 | 10,247,940 |
239,109,087 | ||
OIL, GAS & CONSUMABLE FUELS — 11.6% | ||
Chevron Corp. | 2,028,700 | 164,426,135 |
El Paso Pipeline Partners LP | 1,604,732 | 51,463,755 |
Exxon Mobil Corp. | 5,575,029 | 344,481,042 |
Spectra Energy Partners LP | 758,354 | 26,239,048 |
Total SA | 3,989,400 | 205,604,366 |
792,214,346 | ||
PHARMACEUTICALS — 7.7% | ||
Abbott Laboratories | 321,000 | 16,769,040 |
Bristol-Myers Squibb Co. | 2,412,540 | 65,403,959 |
Eli Lilly & Co. | 1,197,900 | 43,759,287 |
Johnson & Johnson | 3,250,135 | 201,378,365 |
Merck & Co., Inc. | 3,527,200 | 129,836,232 |
Pfizer, Inc. | 3,989,024 | 68,491,542 |
525,638,425 | ||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.6% | ||
Weyerhaeuser Co. | 2,689,324 | 42,383,746 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.3% | ||
Applied Materials, Inc. | 5,369,446 | 62,715,129 |
Intel Corp. | 886,900 | 17,055,087 |
Microchip Technology, Inc. | 326,100 | 10,255,845 |
90,026,061 | ||
SPECIALTY RETAIL — 3.2% | ||
Home Depot, Inc. (The) | 3,058,000 | 96,877,440 |
Lowe’s Cos., Inc. | 5,425,100 | 120,925,479 |
217,802,919 | ||
THRIFTS & MORTGAGE FINANCE — 2.0% | ||
Capitol Federal Financial, Inc. | 537,000 | 13,263,900 |
Hudson City Bancorp., Inc. | 3,273,800 | 40,136,788 |
People’s United Financial, Inc. | 6,522,300 | 85,376,907 |
138,777,595 | ||
TOTAL COMMON STOCKS (Cost $4,404,842,466) | 4,947,198,870 | |
Convertible Bonds — 20.8% | ||
CAPITAL MARKETS — 0.8% | ||
BNP Paribas, (convertible into Charles Schwab Corp. (The)), 7.45%, 2/15/11(2)(3) | $ 1,321,400 | 19,001,732 |
Goldman Sachs Group, Inc. (The), (convertible into Charles Schwab Corp. (The)), 9.45%, 11/22/10(2)(3) | 862,000 | 12,194,516 |
Janus Capital Group, Inc., 3.25%, 7/15/14 | 20,000,000 | 22,900,000 |
54,096,248 | ||
COMMERCIAL BANKS — 4.1% | ||
BNP Paribas, (convertible into SunTrust Banks, Inc.), 15.65%, 3/3/11(2)(3) | 750,000 | 18,161,250 |
Goldman Sachs Group, Inc. (The), (convertible into SunTrust Banks, Inc.), 16.15%, 1/26/11(2)(3) | 645,000 | 16,160,197 |
U.S. Bancorp., VRN, 0.00%, 12/11/10 | 242,292,000 | 241,843,760 |
276,165,207 | ||
COMMUNICATIONS EQUIPMENT(4) | ||
Ciena Corp., 4.00%, 3/15/15(3) | 2,000,000 | 2,157,500 |
COMPUTERS & PERIPHERALS — 0.4% | ||
Cadence Design Systems, Inc., 2.625%, 6/1/15(3) | 10,000,000 | 11,887,500 |
Morgan Stanley, (convertible into Hewlett-Packard Co.), 5.85%, 2/14/11(2)(3) | 380,500 | 16,363,402 |
28,250,902 | ||
DIVERSIFIED FINANCIAL SERVICES — 0.7% | ||
BNP Paribas, (convertible into JPMorgan Chase & Co.), 9.45%, 3/3/11(2)(3) | 360,000 | 13,413,600 |
Deutsche Bank AG, (convertible into JPMorgan Chase & Co.), 9.35%, 2/23/11(2)(3) | 900,000 | 34,559,100 |
47,972,700 | ||
ENERGY EQUIPMENT & SERVICES — 0.2% | ||
Bank of America N.A., (convertible into Baker Hughes, Inc.), 11.60%, 2/9/11(2)(3) | 385,000 | 16,493,766 |
13
Equity Income
Shares/ Principal Amount | Value |
FOOD & STAPLES RETAILING — 0.2% | ||
Credit Suisse Securities USA LLC, (convertible into Walgreen Co.), 6.10%, 12/23/10(2)(3) | $ 520,000 | $ 15,826,200 |
HEALTH CARE EQUIPMENT & SUPPLIES — 0.2% | ||
Beckman Coulter, Inc., 2.50%, 12/15/36 | 11,500,000 | 11,744,375 |
HEALTH CARE PROVIDERS & SERVICES — 2.0% | ||
LifePoint Hospitals, Inc., 3.50%, 5/15/14 | 9,200,000 | 9,200,000 |
LifePoint Hospitals, Inc., 3.25%, 8/15/25 | 44,300,000 | 43,469,375 |
Lincare Holdings, Inc., 2.75%, 11/1/37 | 76,062,000 | 81,766,650 |
134,436,025 | ||
HOUSEHOLD DURABLES — 0.2% | ||
Deutsche Bank AG, (convertible into Toll Brothers, Inc.), 14.21%, 12/15/10(2)(3) | 765,000 | 14,806,957 |
LIFE SCIENCES TOOLS & SERVICES — 1.0% | ||
Life Technologies Corp., 3.25%, 6/15/25 | 58,414,000 | 65,350,663 |
METALS & MINING — 0.3% | ||
Newmont Mining Corp., 3.00%, 2/15/12 | 15,000,000 | 21,431,250 |
OIL, GAS & CONSUMABLE FUELS — 1.1% | ||
Peabody Energy Corp., 4.75%, 12/15/41 | 68,000,000 | 76,160,000 |
REAL ESTATE INVESTMENT TRUSTS (REITs) — 6.5% | ||
Annaly Capital Management, Inc., 4.00%, 2/15/15 | 153,000,000 | 169,447,500 |
Host Hotels & Resorts LP, 3.25%, 4/15/24(3) | 160,889,000 | 168,933,450 |
Rayonier TRS Holdings, Inc., 3.75%, 10/15/12 | 55,028,000 | 60,462,015 |
Rayonier TRS Holdings, Inc., 4.50%, 8/15/15(3) | 38,670,000 | 46,355,663 |
445,198,628 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.2% | ||
Linear Technology Corp., 3.125%, 5/1/27 | 34,000,000 | 34,212,500 |
Microchip Technology, Inc., 2.125%, 12/15/37 | 19,500,000 | 21,986,250 |
Verigy Ltd., 5.25%, 7/15/14 | 26,739,000 | 27,641,441 |
83,840,191 | ||
SPECIALTY RETAIL — 1.9% | ||
Best Buy Co., Inc., 2.25%, 1/15/22 | 81,659,000 | 89,926,974 |
Credit Suisse Securities USA LLC, (convertible into Lowe’s Cos., Inc.), 8.85%, 11/22/10(2)(3) | 1,000,000 | 22,385,000 |
Morgan Stanley, (convertible into Gap, Inc. (The)), 10.15%, 1/14/11(2)(3) | 732,400 | 14,164,616 |
126,476,590 | ||
TOTAL CONVERTIBLE BONDS (Cost $1,339,221,686) | 1,420,407,202 | |
Convertible Preferred Stocks — 4.2% | ||
DIVERSIFIED FINANCIAL SERVICES — 3.9% | ||
Bank of America Corp., 7.25%, 12/31/49(5) | 271,500 | 266,748,750 |
INSURANCE — 0.1% | ||
Hartford Financial Services Group, Inc., 7.25%, 4/1/13 | 255,000 | 6,048,600 |
OIL, GAS & CONSUMABLE FUELS — 0.2% | ||
Apache Corp., 6.00%, 8/1/13 | 287,183 | 16,656,614 |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $224,535,731) | 289,453,964 | |
Temporary Cash Investments — 2.3% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 47,648 | 47,648 |
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $156,751,671), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $153,700,769) | 153,700,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $153,747,648) | 153,747,648 | |
TOTAL INVESTMENT SECURITIES — 99.7% (Cost $6,122,347,531) | 6,810,807,684 | |
OTHER ASSETS AND LIABILITIES — 0.3% | 22,480,723 | |
TOTAL NET ASSETS — 100.0% | $6,833,288,407 |
14
Equity Income
Forward Foreign Currency Exchange Contracts | ||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) |
179,063,366 EUR for USD | UBS AG | 10/29/10 | $244,063,368 | $(2,669,835) |
(Value on Settlement Date $241,393,533)
Notes to Schedule of Investments
CVA = Certificaten Van Aandelen |
EUR = Euro |
USD = United States Dollar |
VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is effective at the period end. |
(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) | Equity-linked debt security. The aggregated value of these securities at the period end was $213,530,336, which represented 3.1% of total net assets. |
(3) | Security was purchased under Rule 144A of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of these securities at the period end was $442,864,449, which represented 6.5% of total net assets. |
(4) | Industry is less than 0.05% of total net assets. |
(5) | Perpetual security. These securities do not have a predetermined maturity date. The coupon rates are fixed for a period of time and may be structured to adjust thereafter. Interest reset or next call date is indicated, as applicable. |
See Notes to Financial Statements. |
15
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | |
Assets | |
Investment securities — unaffiliated, at value (cost of $6,052,727,383) | $6,715,538,311 |
Investment securities — affiliated, at value (cost of $69,620,148) | 95,269,373 |
Total investment securities, at value (cost of $6,122,347,531) | 6,810,807,684 |
Receivable for investments sold | 60,876,934 |
Receivable for capital shares sold | 14,767,589 |
Dividends and interest receivable | 23,311,975 |
6,909,764,182 | |
Liabilities | |
Payable for investments purchased | 52,769,056 |
Payable for capital shares redeemed | 15,369,997 |
Payable for forward foreign currency exchange contracts | 2,669,835 |
Accrued management fees | 5,110,051 |
Service fees (and distribution fees — A Class and R Class) payable | 408,312 |
Distribution fees payable | 148,524 |
76,475,775 | |
Net Assets | $6,833,288,407 |
Net Assets Consist of: | |
Capital (par value and paid-in surplus) | $ 7,207,812,439 |
Undistributed net investment income | 7,452,811 |
Accumulated net realized loss on investment and foreign currency transactions | (1,067,764,263) |
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies | 685,787,420 |
$ 6,833,288,407 |
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Investor Class, $0.01 Par Value | $4,071,033,652 | 600,191,309 | $6.78 | |||||||||
Institutional Class, $0.01 Par Value | $820,465,287 | 120,911,249 | $6.79 | |||||||||
A Class, $0.01 Par Value | $1,589,972,178 | 234,403,123 | $6.78 | * | ||||||||
B Class, $0.01 Par Value | $7,117,173 | 1,047,887 | $6.79 | |||||||||
C Class, $0.01 Par Value | $240,845,290 | 35,495,355 | $6.79 | |||||||||
R Class, $0.01 Par Value | $103,854,827 | 15,341,485 | $6.77 |
*Maximum offering price $7.19 (net asset value divided by 0.9425)
See Notes to Financial Statements.
16
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | |
Investment Income (Loss) | |
Income: | |
Dividends (including $1,896,324 from affiliates and net of foreign taxes withheld of $930,538) | $ 119,911,031 |
Interest | 18,624,269 |
138,535,300 | |
Expenses: | |
Management fees | 29,727,567 |
Distribution fees: | |
B Class | 26,563 |
C Class | 804,837 |
Service fees: | |
B Class | 8,855 |
C Class | 268,279 |
Distribution and service fees: | |
A Class | 1,796,180 |
R Class | 238,249 |
Directors’ fees and expenses | 127,310 |
Other expenses | 294,558 |
33,292,398 | |
Net investment income (loss) | 105,242,902 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investment transactions (including $382,364 from affiliates) | 144,335,419 |
Foreign currency transactions | (4,680,359) |
139,655,060 | |
Change in net unrealized appreciation (depreciation) on: | |
Investments | (105,198,130) |
Translation of assets and liabilities in foreign currencies | (1,852,317) |
(107,050,447) | |
Net realized and unrealized gain (loss) | 32,604,613 |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ 137,847,515 |
See Notes to Financial Statements.
17
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 |
Operations | ||
Net investment income (loss) | $ 105,242,902 | $ 155,068,579 |
Net realized gain (loss) | 139,655,060 | 229,428,715 |
Change in net unrealized appreciation (depreciation) | (107,050,447) | 917,431,499 |
Net increase (decrease) in net assets resulting from operations | 137,847,515 | 1,301,928,793 |
Distributions to Shareholders | ||
From net investment income: | ||
Investor Class | (66,428,745) | (91,538,788) |
Institutional Class | (14,074,318) | (18,672,015) |
A Class | (23,354,459) | (27,339,571) |
B Class | (84,554) | (92,764) |
C Class | (2,682,272) | (2,474,684) |
R Class | (1,420,693) | (1,479,300) |
Decrease in net assets from distributions | (108,045,041) | (141,597,122) |
Capital Share Transactions | ||
Net increase (decrease) in net assets from capital share transactions | 503,135,386 | 794,999,912 |
Net increase (decrease) in net assets | 532,937,860 | 1,955,331,583 |
Net Assets | ||
Beginning of period | 6,300,350,547 | 4,345,018,964 |
End of period | $6,833,288,407 | $6,300,350,547 |
Undistributed net investment income | $7,452,811 | $10,254,950 |
See Notes to Financial Statements.
18
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. Equity Income Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund’s investment objective is to seek current income. Capital appreciation is a secondary objective. The fund pursues its objectives by investing in securities of companies with a favorable income-paying history that have prospects for income payments to continue or increase. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of 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 expe nses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Debt securities maturing in greater than 60 days at the time of purchase are valued at current market value as provided by a commercial pricing service or at the mean of the most recent bid and asked prices. Debt securities maturing within 60 days at the time of purchase may be valued at cost, plus or minus any amortized discount or premium. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
19
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 certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
20
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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as wel l as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule ranges from 0.80% to 1.00% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended September 30, 2010 was 0.96% for the Investor Class, A Class, B Class, C Class and R Class and 0.76% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2010, are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $5,184,526,905 and $4,722,138,960, respectively.
21
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010 | |||
Shares | Amount | Shares | Amount | |
Investor Class/Shares Authorized | 1,800,000,000 | 1,800,000,000 | ||
Sold | 84,386,765 | $ 557,459,521 | 169,677,002 | $1,047,154,389 |
Issued in reinvestment of distributions | 8,757,776 | 58,449,385 | 13,016,992 | 82,056,572 |
Redeemed | (59,065,414) | (390,644,665) | (154,423,129) | (955,914,532) |
34,079,127 | 225,264,241 | 28,270,865 | 173,296,429 | |
Institutional Class/Shares Authorized | 360,000,000 | 350,000,000 | ||
Sold | 18,682,601 | 123,708,554 | 47,822,155 | 296,483,471 |
Issued in reinvestment of distributions | 1,860,161 | 12,415,010 | 2,654,543 | 16,791,045 |
Redeemed | (16,669,472) | (110,739,668) | (26,155,585) | (159,873,283) |
3,873,290 | 25,383,896 | 24,321,113 | 153,401,233 | |
A Class/Shares Authorized | 650,000,000 | 600,000,000 | ||
Sold | 54,778,387 | 361,911,189 | 107,205,616 | 663,509,713 |
Issued in reinvestment of distributions | 3,339,014 | 22,294,604 | 4,162,263 | 26,333,580 |
Redeemed | (28,513,368) | (188,284,034) | (53,208,153) | (333,546,851) |
29,604,033 | 195,921,759 | 58,159,726 | 356,296,442 | |
B Class/Shares Authorized | 5,000,000 | 10,000,000 | ||
Sold | 26,160 | 171,825 | 724,358 | 4,355,007 |
Issued in reinvestment of distributions | 10,517 | 70,295 | 11,269 | 71,783 |
Redeemed | (78,741) | (523,052) | (86,971) | (547,248) |
(42,064) | (280,932) | 648,656 | 3,879,542 | |
C Class/Shares Authorized | 105,000,000 | 100,000,000 | ||
Sold | 9,467,681 | 62,874,701 | 14,315,632 | 88,023,700 |
Issued in reinvestment of distributions | 322,953 | 2,156,759 | 325,677 | 2,055,686 |
Redeemed | (2,930,126) | (19,332,582) | (3,896,987) | (24,563,635) |
6,860,508 | 45,698,878 | 10,744,322 | 65,515,751 | |
R Class/Shares Authorized | 50,000,000 | 50,000,000 | ||
Sold | 3,021,624 | 19,921,796 | 11,210,088 | 68,808,648 |
Issued in reinvestment of distributions | 206,573 | 1,376,177 | 226,679 | 1,442,220 |
Redeemed | (1,548,274) | (10,150,429) | (4,358,485) | (27,640,353) |
1,679,923 | 11,147,544 | 7,078,282 | 42,610,515 | |
Net increase (decrease) | 76,054,817 | $ 503,135,386 | 129,222,964 | $ 794,999,912 |
5. Affiliated Company Transactions
If a fund’s holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the six months ended September 30, 2010 follows:
March 31, 2010 | September 30, 2010 | ||||||
Company | Share Balance | Purchase Cost | Sales Cost | Realized Gain (Loss) | Dividend Income | Share Balance | Market Value |
WGL Holdings, Inc. | 2,505,688 | $3,370,741 | $2,578,796 | $382,364 | $1,896,324 | 2,521,688 | $95,269,373 |
22
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $4,540,023,653 | — | — | |||||||||
Foreign Common Stocks | 150,292,843 | $256,882,374 | — | |||||||||
Convertible Bonds | — | 1,420,407,202 | — | |||||||||
Convertible Preferred Stocks | — | 289,453,964 | — | |||||||||
Temporary Cash Investments | 47,648 | 153,700,000 | — | |||||||||
Total Value of Investment Securities | $4,690,364,144 | $2,120,443,540 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(2,669,835 | ) | — |
7. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting u nrealized appreciation or depreciation are determined daily using prevailing exchange rates. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by
23
the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of foreign currency risk derivative instruments as of September 30, 2010, is disclosed on the Statement of Assets and Liabilities as a liability of $2,669,835 in payable for forward foreign currency exchange contracts. For the six months ended September 30, 2010, the effect of foreign currency risk derivative instruments on the Statement of Operations was $(4,702,326) in net realized gain (loss) on foreign currency transactions and $(1,841,759) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
8. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
9. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
10. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $6,370,394,140 | |||
Gross tax appreciation of investments | $504,196,760 | |||
Gross tax depreciation of investments | (63,783,216 | ) | ||
Net tax appreciation (depreciation) of investments | $440,413,544 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(997,492,082), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(417,263,106) and $(580,228,976) expire in 2017 and 2018, respectively.
24
Financial Highlights
Equity Income
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.76 | $5.42 | $7.30 | $8.65 | $8.11 | $8.05 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.11 | 0.18 | 0.22 | 0.23 | 0.21 | 0.20 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.02 | 1.33 | (1.87 | ) | (0.62 | ) | 1.05 | 0.36 | ||||||||||||||||
Total From Investment Operations | 0.13 | 1.51 | (1.65 | ) | (0.39 | ) | 1.26 | 0.56 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.11 | ) | (0.17 | ) | (0.23 | ) | (0.23 | ) | (0.17 | ) | (0.18 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.73 | ) | (0.55 | ) | (0.32 | ) | |||||||||||||||
Total Distributions | (0.11 | ) | (0.17 | ) | (0.23 | ) | (0.96 | ) | (0.72 | ) | (0.50 | ) | ||||||||||||
Net Asset Value, End of Period | $6.78 | $6.76 | $5.42 | $7.30 | $8.65 | $8.11 | ||||||||||||||||||
Total Return(3) | 2.00 | % | 28.04 | % | (22.98 | )% | (5.17 | )% | 15.79 | % | 7.21 | % | ||||||||||||
�� | ||||||||||||||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.97 | %(4) | 0.97 | % | 0.98 | % | 0.97 | % | 0.97 | % | 0.98 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 3.37 | %(4) | 2.93 | % | 3.36 | % | 2.68 | % | 2.43 | % | 2.53 | % | ||||||||||||
Portfolio Turnover Rate | 80 | % | 105 | % | 296 | % | 165 | % | 160 | % | 150 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $4,071,034 | $3,829,492 | $2,913,351 | $3,719,757 | $4,790,510 | $3,715,366 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
25
Equity Income
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.77 | $5.42 | $7.31 | $8.65 | $8.11 | $8.06 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.12 | 0.19 | 0.23 | 0.25 | 0.23 | 0.22 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.02 | 1.34 | (1.88 | ) | (0.61 | ) | 1.05 | 0.35 | ||||||||||||||||
Total From Investment Operations | 0.14 | 1.53 | (1.65 | ) | (0.36 | ) | 1.28 | 0.57 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.12 | ) | (0.18 | ) | (0.24 | ) | (0.25 | ) | (0.19 | ) | (0.20 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.73 | ) | (0.55 | ) | (0.32 | ) | |||||||||||||||
Total Distributions | (0.12 | ) | (0.18 | ) | (0.24 | ) | (0.98 | ) | (0.74 | ) | (0.52 | ) | ||||||||||||
Net Asset Value, End of Period | $6.79 | $6.77 | $5.42 | $7.31 | $8.65 | $8.11 | ||||||||||||||||||
Total Return(3) | 2.25 | % | 28.30 | % | (22.94 | )% | (4.85 | )% | 16.01 | % | 7.29 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.77 | %(4) | 0.77 | % | 0.78 | % | 0.77 | % | 0.77 | % | 0.78 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 3.57 | %(4) | 3.13 | % | 3.56 | % | 2.88 | % | 2.63 | % | 2.73 | % | ||||||||||||
Portfolio Turnover Rate | 80 | % | 105 | % | 296 | % | 165 | % | 160 | % | 150 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $820,465 | $792,024 | $502,435 | $496,033 | $551,202 | $382,909 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
26
Equity Income
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.76 | $5.42 | $7.30 | $8.65 | $8.11 | $8.05 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.10 | 0.17 | 0.20 | 0.20 | 0.19 | 0.18 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.02 | 1.32 | (1.86 | ) | (0.61 | ) | 1.05 | 0.36 | ||||||||||||||||
Total From Investment Operations | 0.12 | 1.49 | (1.66 | ) | (0.41 | ) | 1.24 | 0.54 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.10 | ) | (0.15 | ) | (0.22 | ) | (0.21 | ) | (0.15 | ) | (0.16 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.73 | ) | (0.55 | ) | (0.32 | ) | |||||||||||||||
Total Distributions | (0.10 | ) | (0.15 | ) | (0.22 | ) | (0.94 | ) | (0.70 | ) | (0.48 | ) | ||||||||||||
Net Asset Value, End of Period | $6.78 | $6.76 | $5.42 | $7.30 | $8.65 | $8.11 | ||||||||||||||||||
Total Return(4) | 1.87 | % | 27.71 | % | (23.18 | )% | (5.40 | )% | 15.51 | % | 6.94 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.22 | %(5) | 1.22 | % | 1.23 | % | 1.22 | % | 1.22 | % | 1.23 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 3.12 | %(5) | 2.68 | % | 3.11 | % | 2.43 | % | 2.18 | % | 2.28 | % | ||||||||||||
Portfolio Turnover Rate | 80 | % | 105 | % | 296 | % | 165 | % | 160 | % | 150 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $1,589,972 | $1,385,436 | $794,323 | $933,600 | $1,280,888 | $902,749 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended September 30, 2010 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5 | )Annualized. |
See Notes to Financial Statements. |
27
Equity Income
B Class | ||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||
2010(1) | 2010 | 2009 | 2008(2) | |||||||||||||
Per-Share Data | ||||||||||||||||
Net Asset Value, Beginning of Period | $6.77 | $5.42 | $7.30 | $8.99 | ||||||||||||
Income From Investment Operations | ||||||||||||||||
Net Investment Income (Loss)(3) | 0.08 | 0.12 | 0.15 | 0.08 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.02 | 1.33 | (1.86 | ) | (0.95 | ) | ||||||||||
Total From Investment Operations | 0.10 | 1.45 | (1.71 | ) | (0.87 | ) | ||||||||||
Distributions | ||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.10 | ) | (0.17 | ) | (0.09 | ) | ||||||||
From Net Realized Gains | — | — | — | (0.73 | ) | |||||||||||
Total Distributions | (0.08 | ) | (0.10 | ) | (0.17 | ) | (0.82 | ) | ||||||||
Net Asset Value, End of Period | $6.79 | $6.77 | $5.42 | $7.30 | ||||||||||||
Total Return(4) | 1.49 | % | 26.92 | % | (23.75 | )% | (10.28 | )% | ||||||||
Ratios/Supplemental Data | ||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.97 | %(5) | 1.97 | % | 1.98 | % | 1.97 | %(5) | ||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.37 | %(5) | 1.93 | % | 2.36 | 2.11 | %(5) | |||||||||
Portfolio Turnover Rate | 80 | % | 105 | % | 296 | % | 165 | %(6) | ||||||||
Net Assets, End of Period (in thousands) | $7,117 | $7,383 | $2,392 | $235 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through March 31, 2008. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. |
See Notes to Financial Statements. |
28
Equity Income
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.77 | $5.42 | $7.30 | $8.65 | $8.11 | $8.06 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.08 | 0.12 | 0.15 | 0.14 | 0.12 | 0.13 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.02 | 1.33 | (1.86 | ) | (0.61 | ) | 1.06 | 0.34 | ||||||||||||||||
Total From Investment Operations | 0.10 | 1.45 | (1.71 | ) | (0.47 | ) | 1.18 | 0.47 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.10 | ) | (0.17 | ) | (0.15 | ) | (0.09 | ) | (0.10 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.73 | ) | (0.55 | ) | (0.32 | ) | |||||||||||||||
Total Distributions | (0.08 | ) | (0.10 | ) | (0.17 | ) | (0.88 | ) | (0.64 | ) | (0.42 | ) | ||||||||||||
Net Asset Value, End of Period | $6.79 | $6.77 | $5.42 | $7.30 | $8.65 | $8.11 | ||||||||||||||||||
Total Return(3) | 1.65 | % | 26.74 | % | (23.75 | )% | (6.10 | )% | 14.65 | % | 6.02 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.97 | %(4) | 1.97 | % | 1.98 | % | 1.97 | % | 1.97 | % | 1.98 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.37 | %(4) | 1.93 | % | 2.36 | % | 1.68 | % | 1.43 | % | 1.53 | % | ||||||||||||
Portfolio Turnover Rate | 80 | % | 105 | % | 296 | % | 165 | % | 160 | % | 150 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $240,845 | $193,776 | $96,930 | $116,985 | $127,266 | $98,481 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
29
Equity Income
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.75 | $5.41 | $7.29 | $8.63 | $8.09 | $8.04 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.10 | 0.15 | 0.18 | 0.18 | 0.17 | 0.17 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 0.02 | 1.32 | (1.86 | ) | (0.60 | ) | 1.05 | 0.34 | ||||||||||||||||
Total From Investment Operations | 0.12 | 1.47 | (1.68 | ) | (0.42 | ) | 1.22 | 0.51 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.10 | ) | (0.13 | ) | (0.20 | ) | (0.19 | ) | (0.13 | ) | (0.14 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.73 | ) | (0.55 | ) | (0.32 | ) | |||||||||||||||
Total Distributions | (0.10 | ) | (0.13 | ) | (0.20 | ) | (0.92 | ) | (0.68 | ) | (0.46 | ) | ||||||||||||
Net Asset Value, End of Period | $6.77 | $6.75 | $5.41 | $7.29 | $8.63 | $8.09 | ||||||||||||||||||
Total Return(3) | 1.75 | % | 27.44 | % | (23.40 | )% | (5.53 | )% | 15.25 | % | 6.56 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.47 | %(4) | 1.47 | % | 1.48 | % | 1.47 | % | 1.47 | % | 1.48 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.87 | %(4) | 2.43 | % | 2.86 | % | 2.18 | % | 1.93 | % | 2.03 | % | ||||||||||||
Portfolio Turnover Rate | 80 | % | 105 | % | 296 | % | 165 | % | 160 | % | 150 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $103,855 | $92,239 | $35,588 | $42,720 | $44,767 | $24,283 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
30
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor, A, B, C and R Classes | For: | 2,743,244,733 | ||
Against: | 53,936,103 | |||
Abstain: | 140,175,807 | |||
Broker Non-Vote: | 788,737,445 | |||
Institutional Class | For: | 496,537,035 | ||
Against: | 1,495,728 | |||
Abstain: | 2,067,986 | |||
Broker Non-Vote: | 56,169,529 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
31
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
32
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Lipper Equity Income Index is an equally-weighted index of the 30 largest funds that seek high current income and growth of income through investing 60% or more of their portfolio in equity instruments.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 3000® Value Index measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell 3000 companies with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
33
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock’s weight in the index is proportionate to its market value. Created by Standard & Poor’s, it is considered to be a broad measure of U.S. stock market performance.
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 Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. American Century Investment Services, Inc., Distributor ©2010 American Century Proprietary Holdings, Inc. All rights reserved. 1011 CL-SAN-69818 |
Semiannual Report |
September 30, 2010 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/logo.jpg)
American Century Investments®
Equity Index Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
Equity Index | ||
Performance | 5 | |
Portfolio Commentary | 6 | |
Top Ten Holdings | 8 | |
Top Five Industries | 8 | |
Types of Investments in Portfolio | 8 | |
Shareholder Fee Example | 9 | |
Financial Statements | ||
Schedule of Investments | 11 | |
Statement of Assets and Liabilities | 19 | |
Statement of Operations | 20 | |
Statement of Changes in Net Assets | 21 | |
Notes to Financial Statements | 22 | |
Financial Highlights | 27 | |
Other Information | ||
Proxy Voting Results | 29 | |
Additional Information | 31 | |
Index Definitions | 32 |
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
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomas.jpg)
Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors – working on behalf of shareholders – to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chang.jpg)
By Enrique Chang, Chief Investment Officer, American Century Investments
Stocks Mixed Amid Economic Uncertainty
U.S. stocks posted mixed results for the six months ended September 30, 2010, with the broad equity indices registering modestly negative returns. The six-month period was characterized by a marked increase in volatility as the burgeoning U.S. economic recovery lost momentum.
The reporting period began on a positive note as stocks continued to advance in April, extending the broad market rally that began in March 2009. However, market conditions changed abruptly in May as persistent worries about sovereign debt problems in Europe and evidence of a slowdown in the pace of economic recovery—most notably in manufacturing, housing, and consumer spending—weighed on investor confidence. Consequently, the equity market declined sharply in May and June amid a dramatic increase in market volatility. For example, the broad S&P 500 Index moved up or down by more than 1% on nearly half of the trading days in the second quarter of 2010.
The equity market remained volatile in the third quarter, gaining ground in July and falling back in August amid a tug-of-war between favorable corporate earnings reports and an increasingly sluggish economic environment. However, stocks finished the six-month period with a furious rally in September, which proved to be the market’s best month since April 2009 and its best September in more than 70 years. Investors expressed confidence in the Federal Reserve’s plan to revive the economic recovery through another round of quantitative easing measures.
Mid-Cap and Growth Stocks Outperformed
As the table below illustrates, mid-cap stocks generated the best returns, advancing modestly for the six-month period. Small-cap stocks were largely unchanged, while large-cap issues declined overall. Meanwhile, growth-oriented stocks outpaced value shares across all market capitalizations.
From a sector perspective, the telecommunication services and utilities sectors were the top performers during the reporting period. Both sectors benefited from increased demand for stocks with relatively high dividends in an environment of historically low interest rates. On the downside, the weakest performers included the health care and financials sectors, both of which faced the uncertainty of new regulatory legislation.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Equity Index
Total Returns as of September 30, 2010 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ACIVX | -1.59% | 9.73% | 0.18% | -0.88% | 0.60% | 2/26/99 |
S&P 500 Index | — | -1.42% | 10.16% | 0.64% | -0.43% | 1.08% | — |
Institutional Class | ACQIX | -1.49% | 9.95% | 0.38% | -0.70% | 0.80% | 2/26/99 |
(1) | Total returns for periods less than one year are not annualized. |
Growth of $10,000 Over 10 Years |
$10,000 investment made September 30, 2000 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart2.jpg)
Total Annual Fund Operating Expenses | |
Investor Class | Institutional Class |
0.49% | 0.29% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
5
Portfolio Commentary
Equity Index
Subadvisor: Northern Trust Investments, N.A.
Performance Summary
Equity Index returned –1.59%* for the six months ended September 30, 2010, compared with the –1.42% return of its benchmark, the S&P 500 Index. The portfolio’s results reflected operating expenses, whereas the index return did not.
The fund’s modestly negative return for the six-month period masked significant volatility as uncertainty about the strength of the economic recovery led to dramatic fluctuations in investor confidence. From a sector perspective, the telecommunication services sector was the only sector in the S&P 500 Index to post double-digit gains, reflecting strong demand for stocks with high dividend yields. The more defensive utilities and consumer staples sectors also generated positive results during the period. On the downside, the financials and health care sectors of the index declined the most.
Telecom and Utilities Fared Best
The fund’s holdings in the telecommunication services sector—the smallest sector weighting in the portfolio—were the top performers, gaining more than 15% as a group for the six-month period. Many telecom stocks have relatively high dividend yields, which attracted strong investor demand in a low-interest-rate environment. Two of the top three performance contributors in the portfolio were telecom stocks—diversified telecom services providers AT&T and Verizon Communications, both of which offered dividend yields in excess of 5%. In addition to their dividend yields, both stocks rallied on strength in their wireless telecom businesses. AT&T benefited from its exclusive offering of the popular iPhone, while growing demand for smartphones boosted earnings for Verizon’s wireless unit.
Utilities stocks also benefited from their above-average dividend yields, as well as their defensive nature in an uncertain economic environment. The portfolio’s top contributor in this sector was Southern Co., an electric utility based in Atlanta. Southern posted earnings that exceeded expectations during the period amid a hotter-than-anticipated summer and increased industrial demand for power.
Consumer Sectors Also Advanced
Both the consumer staples and consumer discretionary sectors of the portfolio posted modestly positive returns for the six months. Tobacco companies and beverage makers led the advance in the consumer staples sector. The top contributor in this segment of the portfolio was beverage company Coca-Cola, which enjoyed solid revenue and profit growth that included an increase in long-stagnant domestic sales volume. Tobacco firm Philip Morris International also performed well during the period, boosting its earnings forecast for 2010 and increasing its dividend by 10%.
*All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized.
6
Equity Index
In the consumer discretionary sector, restaurants and internet retailers were the top performers. Fast-food chain McDonald’s was the sector’s best contributor, rallying as the company reported solid earnings, strong same-store sales growth, and market share gains. Among internet retailers, the top performers were broad retailer Amazon.com and travel agency Priceline.com. Amazon benefited from several strategic acquisitions and captured additional market share, while Priceline enjoyed robust growth in its international operations.
Technology Mixed
The information technology sector of the portfolio generated mixed results but ended the period down slightly overall. Computer hardware makers and IT services providers posted the best returns. By far, the best contributor in the technology sector—and the portfolio as a whole—was consumer electronics maker Apple, which reported very healthy earnings growth paced by robust sales of its new iPad tablet computer and a new version of the iPhone. Data storage device maker NetApp was another top contributor, rallying sharply amid rising demand and the developing trend toward cloud computing.
On the downside, software makers suffered the largest declines. Software titan Microsoft was the most significant detractor; the slowing economy and disappointing results from some of its new consumer products weighed on the stock. Network products maker Cisco Systems also fell during the period as investors fretted about the impact of the economic slowdown on the company’s sales.
Financials and Health Care Declined
The fund’s financials and health care stocks posted the biggest declines during the six-month period. Financial services companies and commercial banks detracted the most in the financials sector. The weakest performer in the portfolio was financial services firm Bank of America, which reported disappointing revenues and expressed concerns about the potential impact of recent financial reform legislation on its future profit levels. Commercial bank Wells Fargo and investment bank JPMorgan Chase also suffered notable declines for the six-month period.
In the health care sector, health care equipment makers posted double-digit declines for the period. Medical equipment maker Medtronic was the most significant decliner as the company lowered its earnings forecast for the year amid a slowdown in several of its end markets. Biotechnology firm Gilead Sciences also lowered its projections for 2010 as sales of two of its flagship medications weakened.
Outlook
Going forward, the prospects for the U.S. equity market hinge on whether the economic recovery can regain its momentum. The Federal Reserve is expected to take additional steps to stimulate economic activity, and a further stimulus package from the federal government is also a possibility. However, these efforts face an uphill battle against continued consumer deleveraging and persistently high unemployment that will likely dampen economic growth.
7
Equity Index
Top Ten Holdings | ||
% of net assets as of 9/30/10 | ||
Exxon Mobil Corp. | 3.0% | |
Apple, Inc. | 2.5% | |
Microsoft Corp. | 1.8% | |
General Electric Co. | 1.6% | |
Johnson & Johnson | 1.6% | |
Procter & Gamble Co. (The) | 1.6% | |
International Business Machines Corp. | 1.6% | |
AT&T, Inc. | 1.6% | |
Chevron Corp. | 1.5% | |
JPMorgan Chase & Co. | 1.4% | |
Top Five Industries | ||
% of net assets as of 9/30/10 | ||
Oil, Gas & Consumable Fuels | 8.9% | |
Pharmaceuticals | 6.0% | |
Computers & Peripherals | 4.3% | |
Diversified Financial Services | 4.1% | |
Insurance | 4.0% | |
Types of Investments in Portfolio | ||
% of net assets as of 9/30/10 | ||
Common Stocks and Futures | 100.0% | |
Other Assets and Liabilities | —* | |
*Category is less than 0.05% of total net assets. |
8
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) regis tered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
9
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 – 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $984.10 | $2.44 | 0.49% |
Institutional Class | $1,000 | $985.10 | $1.44 | 0.29% |
Hypothetical | ||||
Investor Class | $1,000 | $1,022.61 | $2.48 | 0.49% |
Institutional Class | $1,000 | $1,023.61 | $1.47 | 0.29% |
* Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
10
Schedule of Investments
Equity Index
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 98.1% | ||
AEROSPACE & DEFENSE — 2.7% | ||
Boeing Co. (The) | 27,058 | $ 1,800,439 |
General Dynamics Corp. | 13,982 | 878,209 |
Goodrich Corp. | 4,709 | 347,195 |
Honeywell International, Inc. | 28,400 | 1,247,896 |
ITT Corp. | 6,887 | 322,518 |
L-3 Communications Holdings, Inc. | 4,125 | 298,114 |
Lockheed Martin Corp. | 11,030 | 786,218 |
Northrop Grumman Corp. | 10,800 | 654,804 |
Precision Castparts Corp. | 5,221 | 664,894 |
Raytheon Co. | 13,980 | 639,026 |
Rockwell Collins, Inc. | 5,898 | 343,559 |
United Technologies Corp. | 34,391 | 2,449,671 |
10,432,543 | ||
AIR FREIGHT & LOGISTICS — 1.1% | ||
C.H. Robinson Worldwide, Inc. | 6,221 | 434,972 |
Expeditors International of Washington, Inc. | 7,982 | 369,008 |
FedEx Corp. | 11,565 | 988,807 |
United Parcel Service, Inc., Class B | 36,462 | 2,431,651 |
4,224,438 | ||
AIRLINES — 0.1% | ||
Southwest Airlines Co. | 27,897 | 364,614 |
AUTO COMPONENTS — 0.2% | ||
Goodyear Tire & Rubber Co. (The)(1) | 8,917 | 95,858 |
Johnson Controls, Inc. | 24,732 | 754,326 |
850,184 | ||
AUTOMOBILES — 0.5% | ||
Ford Motor Co.(1) | 127,399 | 1,559,364 |
Harley-Davidson, Inc. | 8,786 | 249,874 |
1,809,238 | ||
BEVERAGES — 2.6% | ||
Brown-Forman Corp., Class B | 3,733 | 230,102 |
Coca-Cola Co. (The) | 85,432 | 4,999,481 |
Coca-Cola Enterprises, Inc. | 12,226 | 379,006 |
Constellation Brands, Inc., Class A(1) | 6,773 | 119,814 |
Dr Pepper Snapple Group, Inc. | 8,769 | 311,475 |
Molson Coors Brewing Co., Class B | 5,950 | 280,959 |
PepsiCo, Inc. | 58,862 | 3,910,791 |
10,231,628 | ||
BIOTECHNOLOGY — 1.4% | ||
Amgen, Inc.(1) | 35,331 | 1,947,091 |
Biogen Idec, Inc.(1) | 8,838 | 495,989 |
Celgene Corp.(1) | 17,022 | 980,637 |
Cephalon, Inc.(1) | 2,848 | 177,829 |
Genzyme Corp.(1) | 9,407 | 665,922 |
Gilead Sciences, Inc.(1) | 30,972 | 1,102,913 |
5,370,381 | ||
BUILDING PRODUCTS(2) | ||
Masco Corp. | 12,426 | 136,810 |
CAPITAL MARKETS — 2.4% | ||
Ameriprise Financial, Inc. | 9,237 | 437,187 |
Bank of New York Mellon Corp. (The) | 44,819 | 1,171,120 |
Charles Schwab Corp. (The) | 36,811 | 511,673 |
E*Trade Financial Corp.(1) | 7,507 | 109,152 |
Federated Investors, Inc., Class B | 3,314 | 75,426 |
Franklin Resources, Inc. | 5,406 | 577,901 |
Goldman Sachs Group, Inc. (The) | 19,015 | 2,749,189 |
Invesco Ltd. | 17,551 | 372,608 |
Janus Capital Group, Inc. | 6,600 | 72,270 |
Legg Mason, Inc. | 5,928 | 179,678 |
Morgan Stanley | 51,751 | 1,277,215 |
Northern Trust Corp. | 9,274 | 447,378 |
State Street Corp. | 18,421 | 693,735 |
T. Rowe Price Group, Inc. | 9,442 | 472,714 |
9,147,246 | ||
CHEMICALS — 2.0% | ||
Air Products & Chemicals, Inc. | 7,795 | 645,582 |
Airgas, Inc. | 2,792 | 189,716 |
CF Industries Holdings, Inc. | 2,642 | 252,311 |
Dow Chemical Co. (The) | 42,595 | 1,169,659 |
E.I. du Pont de Nemours & Co. | 33,508 | 1,495,127 |
Eastman Chemical Co. | 2,666 | 197,284 |
Ecolab, Inc. | 8,470 | 429,768 |
FMC Corp. | 2,568 | 175,677 |
International Flavors & Fragrances, Inc. | 3,051 | 148,034 |
11
Equity Index
Shares | Value |
Monsanto Co. | 19,896 | $ 953,615 |
PPG Industries, Inc. | 6,045 | 440,076 |
Praxair, Inc. | 11,316 | 1,021,382 |
Sherwin-Williams Co. (The) | 3,311 | 248,789 |
Sigma-Aldrich Corp. | 4,510 | 272,314 |
7,639,334 | ||
COMMERCIAL BANKS — 2.7% | ||
BB&T Corp. | 25,350 | 610,428 |
Comerica, Inc. | 6,307 | 234,305 |
Fifth Third Bancorp. | 29,782 | 358,277 |
First Horizon National Corp.(1) | 8,680 | 99,044 |
Huntington Bancshares, Inc. | 27,316 | 154,882 |
KeyCorp | 32,717 | 260,427 |
M&T Bank Corp. | 3,145 | 257,292 |
Marshall & Ilsley Corp. | 19,750 | 139,040 |
PNC Financial Services Group, Inc. | 19,457 | 1,010,013 |
Regions Financial Corp. | 46,741 | 339,807 |
SunTrust Banks, Inc. | 18,225 | 470,752 |
U.S. Bancorp. | 70,992 | 1,534,847 |
Wells Fargo & Co. | 193,367 | 4,859,313 |
Zions Bancorp. | 6,252 | 133,543 |
10,461,970 | ||
COMMERCIAL SERVICES & SUPPLIES — 0.5% | ||
Avery Dennison Corp. | 4,057 | 150,596 |
Cintas Corp. | 4,931 | 135,849 |
Iron Mountain, Inc. | 7,540 | 168,444 |
Pitney Bowes, Inc. | 7,688 | 164,369 |
R.R. Donnelley & Sons Co. | 7,895 | 133,899 |
Republic Services, Inc. | 11,352 | 346,123 |
Stericycle, Inc.(1) | 3,131 | 217,542 |
Waste Management, Inc. | 17,757 | 634,635 |
1,951,457 | ||
COMMUNICATIONS EQUIPMENT — 2.3% | ||
Cisco Systems, Inc.(1) | 211,135 | 4,623,856 |
Harris Corp. | 4,809 | 212,991 |
JDS Uniphase Corp.(1) | 7,494 | 92,851 |
Juniper Networks, Inc.(1) | 19,199 | 582,690 |
Motorola, Inc.(1) | 85,370 | 728,206 |
QUALCOMM, Inc. | 59,412 | 2,680,669 |
Tellabs, Inc. | 14,706 | 109,560 |
9,030,823 | ||
COMPUTERS & PERIPHERALS — 4.3% | ||
Apple, Inc.(1) | 33,789 | 9,587,629 |
Dell, Inc.(1) | 62,082 | 804,583 |
EMC Corp.(1) | 75,893 | 1,541,387 |
Hewlett-Packard Co. | 83,895 | 3,529,462 |
Lexmark International, Inc., Class A(1) | 2,942 | 131,272 |
NetApp, Inc.(1) | 13,251 | 659,767 |
QLogic Corp.(1) | 3,542 | 62,481 |
SanDisk Corp.(1) | 8,652 | 317,096 |
Western Digital Corp.(1) | 8,519 | 241,854 |
16,875,531 | ||
CONSTRUCTION & ENGINEERING — 0.2% | ||
Fluor Corp. | 6,685 | 331,108 |
Jacobs Engineering Group, Inc.(1) | 4,797 | 185,644 |
Quanta Services, Inc.(1) | 8,103 | 154,605 |
671,357 | ||
CONSTRUCTION MATERIALS(2) | ||
Vulcan Materials Co. | 4,696 | 173,376 |
CONSUMER FINANCE — 0.7% | ||
American Express Co. | 38,911 | 1,635,429 |
Capital One Financial Corp. | 16,769 | 663,214 |
Discover Financial Services | 20,406 | 340,372 |
SLM Corp.(1) | 17,960 | 207,438 |
2,846,453 | ||
CONTAINERS & PACKAGING — 0.2% | ||
Ball Corp. | 3,448 | 202,915 |
Bemis Co., Inc. | 4,064 | 129,032 |
Owens-Illinois, Inc.(1) | 5,851 | 164,179 |
Pactiv Corp.(1) | 5,093 | 167,967 |
Sealed Air Corp. | 6,052 | 136,049 |
800,142 | ||
DISTRIBUTORS — 0.1% | ||
Genuine Parts Co. | 5,907 | 263,393 |
DIVERSIFIED CONSUMER SERVICES — 0.1% | ||
Apollo Group, Inc., Class A(1) | 4,729 | 242,834 |
DeVry, Inc. | 2,367 | 116,480 |
H&R Block, Inc. | 11,034 | 142,891 |
502,205 | ||
DIVERSIFIED FINANCIAL SERVICES — 4.1% | ||
Bank of America Corp. | 370,977 | 4,863,508 |
Citigroup, Inc.(1) | 878,198 | 3,424,972 |
CME Group, Inc. | 2,470 | 643,312 |
IntercontinentalExchange, Inc.(1) | 2,770 | 290,074 |
JPMorgan Chase & Co.(3) | 146,590 | 5,580,681 |
Leucadia National Corp.(1) | 7,329 | 173,111 |
McGraw-Hill Cos., Inc. (The) | 11,336 | 374,768 |
Moody’s Corp. | 7,523 | 187,925 |
12
Equity Index
Shares | Value |
NASDAQ OMX Group, Inc. (The)(1) | 5,488 | $ 106,632 |
NYSE Euronext | 9,768 | 279,072 |
15,924,055 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.8% | ||
AT&T, Inc. | 218,602 | 6,252,017 |
CenturyLink, Inc. | 10,881 | 429,364 |
Frontier Communications Corp. | 37,153 | 303,540 |
Qwest Communications International, Inc. | 64,227 | 402,703 |
Verizon Communications, Inc. | 104,488 | 3,405,264 |
Windstream Corp. | 18,223 | 223,961 |
11,016,849 | ||
ELECTRIC UTILITIES — 1.9% | ||
Allegheny Energy, Inc. | 6,414 | 157,271 |
American Electric Power Co., Inc. | 17,581 | 636,960 |
Duke Energy Corp. | 48,336 | 856,030 |
Edison International | 11,817 | 406,387 |
Entergy Corp. | 6,927 | 530,123 |
Exelon Corp. | 24,312 | 1,035,205 |
FirstEnergy Corp. | 11,058 | 426,175 |
NextEra Energy, Inc. | 15,249 | 829,393 |
Northeast Utilities | 6,526 | 192,974 |
Pepco Holdings, Inc. | 8,725 | 162,285 |
Pinnacle West Capital Corp. | 4,029 | 166,277 |
PPL Corp. | 17,634 | 480,174 |
Progress Energy, Inc. | 10,788 | 479,203 |
Southern Co. | 30,965 | 1,153,137 |
7,511,594 | ||
ELECTRICAL EQUIPMENT — 0.5% | ||
Emerson Electric Co. | 27,894 | 1,468,898 |
Rockwell Automation, Inc. | 5,333 | 329,206 |
Roper Industries, Inc. | 3,482 | 226,957 |
2,025,061 | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.6% | ||
Agilent Technologies, Inc.(1) | 12,575 | 419,628 |
Amphenol Corp., Class A | 6,483 | 317,537 |
Corning, Inc. | 57,701 | 1,054,774 |
FLIR Systems, Inc.(1) | 5,875 | 150,988 |
Jabil Circuit, Inc. | 7,510 | 108,219 |
Molex, Inc. | 4,999 | 104,629 |
2,155,775 | ||
ENERGY EQUIPMENT & SERVICES — 1.8% | ||
Baker Hughes, Inc. | 16,123 | 686,840 |
Cameron International Corp.(1) | 8,817 | 378,778 |
Diamond Offshore Drilling, Inc. | 2,650 | 179,590 |
FMC Technologies, Inc.(1) | 4,323 | 295,218 |
Halliburton Co. | 33,928 | 1,121,999 |
Helmerich & Payne, Inc. | 3,890 | 157,389 |
Nabors Industries Ltd.(1) | 10,581 | 191,093 |
National Oilwell Varco, Inc. | 15,357 | 682,926 |
Rowan Cos., Inc.(1) | 4,396 | 133,463 |
Schlumberger Ltd. | 50,485 | 3,110,381 |
6,937,677 | ||
FOOD & STAPLES RETAILING — 2.4% | ||
Costco Wholesale Corp. | 16,306 | 1,051,574 |
CVS Caremark Corp. | 50,013 | 1,573,909 |
Kroger Co. (The) | 23,631 | 511,847 |
Safeway, Inc. | 13,860 | 293,278 |
SUPERVALU, INC. | 7,967 | 91,860 |
SYSCO Corp. | 21,712 | 619,226 |
Walgreen Co. | 36,137 | 1,210,589 |
Wal-Mart Stores, Inc. | 74,361 | 3,979,801 |
Whole Foods Market, Inc.(1) | 5,427 | 201,396 |
9,533,480 | ||
FOOD PRODUCTS — 1.8% | ||
Archer-Daniels-Midland Co. | 23,688 | 756,121 |
Campbell Soup Co. | 6,946 | 248,319 |
ConAgra Foods, Inc. | 16,102 | 353,278 |
Dean Foods Co.(1) | 6,519 | 66,559 |
General Mills, Inc. | 23,779 | 868,885 |
H.J. Heinz Co. | 11,896 | 563,514 |
Hershey Co. (The) | 5,720 | 272,215 |
Hormel Foods Corp. | 2,560 | 114,176 |
J.M. Smucker Co. (The) | 4,450 | 269,359 |
Kellogg Co. | 9,594 | 484,593 |
Kraft Foods, Inc., Class A | 64,332 | 1,985,286 |
McCormick & Co., Inc. | 5,053 | 212,428 |
Mead Johnson Nutrition Co. | 7,440 | 423,410 |
Sara Lee Corp. | 24,880 | 334,138 |
Tyson Foods, Inc., Class A | 11,318 | 181,314 |
7,133,595 | ||
GAS UTILITIES — 0.1% | ||
Nicor, Inc. | 1,638 | 75,053 |
ONEOK, Inc. | 3,918 | 176,467 |
251,520 |
13
Equity Index
Shares | Value |
HEALTH CARE EQUIPMENT & SUPPLIES — 1.7% | ||
Baxter International, Inc. | 21,633 | $ 1,032,110 |
Becton, Dickinson & Co. | 8,564 | 634,592 |
Boston Scientific Corp.(1) | 56,901 | 348,803 |
C.R. Bard, Inc. | 3,384 | 275,559 |
CareFusion Corp.(1) | 8,220 | 204,185 |
DENTSPLY International, Inc. | 5,299 | 169,409 |
Hospira, Inc.(1) | 6,232 | 355,286 |
Intuitive Surgical, Inc.(1) | 1,474 | 418,233 |
Medtronic, Inc. | 39,955 | 1,341,689 |
St. Jude Medical, Inc.(1) | 12,299 | 483,843 |
Stryker Corp. | 12,700 | 635,635 |
Varian Medical Systems, Inc.(1) | 4,615 | 279,208 |
Zimmer Holdings, Inc.(1) | 7,334 | 383,788 |
6,562,340 | ||
HEALTH CARE PROVIDERS & SERVICES — 2.0% | ||
Aetna, Inc. | 15,451 | 488,406 |
AmerisourceBergen Corp. | 10,109 | 309,942 |
Cardinal Health, Inc. | 12,959 | 428,165 |
CIGNA Corp. | 9,949 | 355,975 |
Coventry Health Care, Inc.(1) | 5,566 | 119,836 |
DaVita, Inc.(1) | 3,870 | 267,146 |
Express Scripts, Inc.(1) | 19,968 | 972,441 |
Humana, Inc.(1) | 6,383 | 320,682 |
Laboratory Corp. of America Holdings(1) | 3,699 | 290,112 |
McKesson Corp. | 9,678 | 597,907 |
Medco Health Solutions, Inc.(1) | 15,982 | 832,023 |
Patterson Cos., Inc. | 3,512 | 100,619 |
Quest Diagnostics, Inc. | 5,336 | 269,308 |
Tenet Healthcare Corp.(1) | 16,087 | 75,931 |
UnitedHealth Group, Inc. | 41,733 | 1,465,246 |
WellPoint, Inc.(1) | 14,687 | 831,872 |
7,725,611 | ||
HOTELS, RESTAURANTS & LEISURE — 1.7% | ||
Carnival Corp. | 15,835 | 605,055 |
Darden Restaurants, Inc. | 4,995 | 213,686 |
International Game Technology | 10,981 | 158,675 |
Marriott International, Inc., Class A | 10,461 | 374,818 |
McDonald’s Corp. | 39,389 | 2,934,874 |
Starbucks Corp. | 27,361 | 699,894 |
Starwood Hotels & Resorts Worldwide, Inc. | 7,105 | 373,368 |
Wyndham Worldwide Corp. | 6,818 | 187,291 |
Wynn Resorts Ltd. | 2,762 | 239,659 |
Yum! Brands, Inc. | 17,211 | 792,739 |
6,580,059 | ||
HOUSEHOLD DURABLES — 0.4% | ||
D.R. Horton, Inc. | 10,514 | 116,916 |
Fortune Brands, Inc. | 5,699 | 280,562 |
Harman International Industries, Inc.(1) | 2,601 | 86,899 |
Leggett & Platt, Inc. | 5,572 | 126,819 |
Lennar Corp., Class A | 6,114 | 94,033 |
Newell Rubbermaid, Inc. | 10,591 | 188,626 |
Pulte Homes, Inc.(1) | 12,260 | 107,397 |
Stanley Black & Decker, Inc. | 6,014 | 368,538 |
Whirlpool Corp. | 2,800 | 226,688 |
1,596,478 | ||
HOUSEHOLD PRODUCTS — 2.3% | ||
Clorox Co. | 5,081 | 339,207 |
Colgate-Palmolive Co. | 18,016 | 1,384,710 |
Kimberly-Clark Corp. | 15,079 | 980,889 |
Procter & Gamble Co. (The) | 105,008 | 6,297,330 |
9,002,136 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS — 0.2% | ||
AES Corp. (The)(1) | 24,933 | 282,989 |
Constellation Energy Group, Inc. | 7,537 | 242,993 |
NRG Energy, Inc.(1) | 9,534 | 198,498 |
724,480 | ||
INDUSTRIAL CONGLOMERATES — 2.5% | ||
3M Co. | 26,328 | 2,282,901 |
General Electric Co. | 395,439 | 6,425,884 |
Textron, Inc. | 10,147 | 208,622 |
Tyco International Ltd. | 18,430 | 676,934 |
9,594,341 | ||
INSURANCE — 4.0% | ||
ACE Ltd. | 12,660 | 737,445 |
Aflac, Inc. | 17,305 | 894,842 |
Allstate Corp. (The) | 19,754 | 623,239 |
American International Group, Inc.(1) | 4,996 | 195,344 |
Aon Corp. | 10,147 | 396,849 |
Assurant, Inc. | 4,095 | 166,667 |
Berkshire Hathaway, Inc., Class B(1) | 64,380 | 5,322,938 |
Chubb Corp. (The) | 11,614 | 661,882 |
Cincinnati Financial Corp. | 5,991 | 172,840 |
Genworth Financial, Inc., Class A(1) | 18,233 | 222,807 |
14
Equity Index
Shares | Value |
Hartford Financial Services Group, Inc. (The) | 16,071 | $ 368,830 |
Lincoln National Corp. | 11,911 | 284,911 |
Loews Corp. | 11,707 | 443,695 |
Marsh & McLennan Cos., Inc. | 20,352 | 490,890 |
MetLife, Inc. | 33,645 | 1,293,650 |
Principal Financial Group, Inc. | 11,975 | 310,392 |
Progressive Corp. (The) | 24,437 | 510,000 |
Prudential Financial, Inc. | 17,219 | 932,926 |
Torchmark Corp. | 2,887 | 153,415 |
Travelers Cos., Inc. (The) | 17,370 | 904,977 |
Unum Group | 11,794 | 261,237 |
XL Group plc | 12,758 | 276,338 |
15,626,114 | ||
INTERNET & CATALOG RETAIL — 0.7% | ||
Amazon.com, Inc.(1) | 13,067 | 2,052,303 |
Expedia, Inc. | 7,954 | 224,382 |
priceline.com, Inc.(1) | 1,785 | 621,787 |
2,898,472 | ||
INTERNET SOFTWARE & SERVICES — 1.8% | ||
Akamai Technologies, Inc.(1) | 6,698 | 336,106 |
eBay, Inc.(1) | 42,695 | 1,041,758 |
Google, Inc., Class A(1) | 9,191 | 4,832,536 |
Monster Worldwide, Inc.(1) | 4,621 | 59,888 |
VeriSign, Inc.(1) | 6,256 | 198,565 |
Yahoo!, Inc.(1) | 49,936 | 707,593 |
7,176,446 | ||
IT SERVICES — 3.1% | ||
Automatic Data Processing, Inc. | 18,108 | 761,079 |
Cognizant Technology Solutions Corp., Class A(1) | 11,231 | 724,062 |
Computer Sciences Corp. | 5,766 | 265,236 |
Fidelity National Information Services, Inc. | 9,608 | 260,665 |
Fiserv, Inc.(1) | 5,435 | 292,512 |
International Business Machines Corp. | 46,670 | 6,260,314 |
MasterCard, Inc., Class A | 3,569 | 799,456 |
Paychex, Inc. | 12,029 | 330,677 |
SAIC, Inc.(1) | 10,820 | 172,904 |
Teradata Corp.(1) | 6,353 | 244,972 |
Total System Services, Inc. | 6,183 | 94,229 |
Visa, Inc., Class A | 18,344 | 1,362,225 |
Western Union Co. (The) | 24,374 | 430,689 |
11,999,020 | ||
LEISURE EQUIPMENT & PRODUCTS — 0.2% | ||
Eastman Kodak Co.(1) | 10,301 | 43,264 |
Hasbro, Inc. | 5,223 | 232,476 |
Mattel, Inc. | 13,143 | 308,335 |
584,075 | ||
LIFE SCIENCES TOOLS & SERVICES — 0.4% | ||
Life Technologies Corp.(1) | 6,828 | 318,799 |
PerkinElmer, Inc. | 4,385 | 101,469 |
Thermo Fisher Scientific, Inc.(1) | 15,097 | 722,844 |
Waters Corp.(1) | 3,462 | 245,041 |
1,388,153 | ||
MACHINERY — 2.0% | ||
Caterpillar, Inc. | 23,259 | 1,830,018 |
Cummins, Inc. | 7,347 | 665,491 |
Danaher Corp. | 19,849 | 806,068 |
Deere & Co. | 15,722 | 1,097,081 |
Dover Corp. | 7,006 | 365,783 |
Eaton Corp. | 6,114 | 504,344 |
Flowserve Corp. | 2,078 | 227,375 |
Illinois Tool Works, Inc. | 18,738 | 881,061 |
PACCAR, Inc. | 13,399 | 645,162 |
Pall Corp. | 4,368 | 181,884 |
Parker-Hannifin Corp. | 5,837 | 408,940 |
Snap-on, Inc. | 2,193 | 101,996 |
7,715,203 | ||
MEDIA — 2.9% | ||
CBS Corp., Class B | 24,638 | 390,759 |
Comcast Corp., Class A | 103,862 | 1,877,825 |
DirecTV, Class A(1) | 32,037 | 1,333,700 |
Discovery Communications, Inc., Class A(1) | 10,680 | 465,114 |
Gannett Co., Inc. | 8,695 | 106,340 |
Interpublic Group of Cos., Inc. (The)(1) | 18,737 | 187,932 |
Meredith Corp. | 1,504 | 50,098 |
New York Times Co. (The), Class A(1) | 4,738 | 36,672 |
News Corp., Class A | 84,511 | 1,103,714 |
Omnicom Group, Inc. | 11,147 | 440,084 |
Scripps Networks Interactive, Inc., Class A | 3,437 | 163,532 |
Time Warner Cable, Inc. | 13,027 | 703,328 |
Time Warner, Inc. | 41,642 | 1,276,327 |
Viacom, Inc., Class B | 22,255 | 805,408 |
Walt Disney Co. (The) | 70,793 | 2,343,956 |
Washington Post Co. (The), Class B | 226 | 90,267 |
11,375,056 |
15
Equity Index
Shares | Value |
METALS & MINING — 1.1% | ||
AK Steel Holding Corp. | 4,403 | $ 60,806 |
Alcoa, Inc. | 37,131 | 449,656 |
Allegheny Technologies, Inc. | 3,640 | 169,078 |
Cliffs Natural Resources, Inc. | 5,070 | 324,074 |
Freeport-McMoRan Copper & Gold, Inc. | 17,484 | 1,492,959 |
Newmont Mining Corp. | 18,193 | 1,142,702 |
Nucor Corp. | 11,446 | 437,237 |
Titanium Metals Corp.(1) | 3,087 | 61,617 |
United States Steel Corp. | 5,349 | 234,500 |
4,372,629 | ||
MULTILINE RETAIL — 0.8% | ||
Big Lots, Inc.(1) | 2,666 | 88,645 |
Family Dollar Stores, Inc. | 5,050 | 223,008 |
J.C. Penney Co., Inc. | 8,794 | 239,021 |
Kohl’s Corp.(1) | 11,271 | 593,756 |
Macy’s, Inc. | 15,136 | 349,490 |
Nordstrom, Inc. | 6,201 | 230,677 |
Sears Holdings Corp.(1) | 1,627 | 117,372 |
Target Corp. | 26,677 | 1,425,619 |
3,267,588 | ||
MULTI-UTILITIES — 1.4% | ||
Ameren Corp. | 8,886 | 252,362 |
CenterPoint Energy, Inc. | 15,591 | 245,091 |
CMS Energy Corp. | 8,915 | 160,648 |
Consolidated Edison, Inc. | 10,273 | 495,364 |
Dominion Resources, Inc. | 21,638 | 944,715 |
DTE Energy Co. | 6,305 | 289,589 |
Integrys Energy Group, Inc. | 2,953 | 153,733 |
NiSource, Inc. | 10,481 | 182,369 |
PG&E Corp. | 14,687 | 667,084 |
Public Service Enterprise Group, Inc. | 18,465 | 610,822 |
SCANA Corp. | 4,224 | 170,312 |
Sempra Energy | 9,026 | 485,599 |
TECO Energy, Inc. | 8,257 | 143,011 |
Wisconsin Energy Corp. | 4,355 | 251,719 |
Xcel Energy, Inc. | 16,607 | 381,463 |
5,433,881 | ||
OFFICE ELECTRONICS — 0.1% | ||
Xerox Corp. | 50,310 | 520,709 |
OIL, GAS & CONSUMABLE FUELS — 8.9% | ||
Anadarko Petroleum Corp. | 18,237 | 1,040,421 |
Apache Corp. | 13,450 | 1,314,872 |
Cabot Oil & Gas Corp. | 4,003 | 120,530 |
Chesapeake Energy Corp. | 24,510 | 555,152 |
Chevron Corp. | 74,341 | 6,025,338 |
ConocoPhillips | 54,828 | 3,148,772 |
CONSOL Energy, Inc. | 8,451 | 312,349 |
Denbury Resources, Inc.(1) | 14,852 | 235,998 |
Devon Energy Corp. | 16,059 | 1,039,660 |
El Paso Corp. | 26,418 | 327,055 |
EOG Resources, Inc. | 9,458 | 879,310 |
EQT Corp. | 5,381 | 194,039 |
Exxon Mobil Corp. | 188,360 | 11,638,764 |
Hess Corp. | 10,693 | 632,170 |
Marathon Oil Corp. | 26,159 | 865,863 |
Massey Energy Co. | 3,838 | 119,055 |
Murphy Oil Corp. | 6,963 | 431,149 |
Noble Energy, Inc. | 6,380 | 479,074 |
Occidental Petroleum Corp. | 29,996 | 2,348,687 |
Peabody Energy Corp. | 9,792 | 479,906 |
Pioneer Natural Resources Co. | 4,323 | 281,125 |
QEP Resources, Inc. | 6,511 | 196,242 |
Range Resources Corp. | 5,929 | 226,073 |
Southwestern Energy Co.(1) | 12,994 | 434,519 |
Spectra Energy Corp. | 23,732 | 535,157 |
Sunoco, Inc. | 4,536 | 165,564 |
Tesoro Corp. | 5,453 | 72,852 |
Valero Energy Corp. | 20,442 | 357,939 |
Williams Cos., Inc. (The) | 21,221 | 405,533 |
34,863,168 | ||
PAPER & FOREST PRODUCTS — 0.1% | ||
International Paper Co. | 15,750 | 342,563 |
MeadWestvaco Corp. | 6,517 | 158,884 |
501,447 | ||
PERSONAL PRODUCTS — 0.2% | ||
Avon Products, Inc. | 15,598 | 500,852 |
Estee Lauder Cos., Inc. (The), Class A | 4,201 | 265,629 |
766,481 | ||
PHARMACEUTICALS — 6.0% | ||
Abbott Laboratories | 57,067 | 2,981,180 |
Allergan, Inc. | 11,338 | 754,317 |
Bristol-Myers Squibb Co. | 63,282 | 1,715,575 |
Eli Lilly & Co. | 37,710 | 1,377,546 |
Forest Laboratories, Inc.(1) | 10,615 | 328,322 |
Johnson & Johnson | 101,867 | 6,311,680 |
King Pharmaceuticals, Inc.(1) | 9,496 | 94,580 |
Merck & Co., Inc. | 113,767 | 4,187,763 |
Mylan, Inc.(1) | 11,432 | 215,036 |
16
Equity Index
Shares | Value |
Pfizer, Inc. | 297,264 | $ 5,104,023 |
Watson Pharmaceuticals, Inc.(1) | 3,952 | 167,209 |
23,237,231 | ||
PROFESSIONAL SERVICES — 0.1% | ||
Dun & Bradstreet Corp. | 1,919 | 142,275 |
Equifax, Inc. | 4,348 | 135,657 |
Robert Half International, Inc. | 5,545 | 144,170 |
422,102 | ||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.4% | ||
Apartment Investment & Management Co., Class A | 4,200 | 89,796 |
AvalonBay Communities, Inc. | 3,125 | 324,781 |
Boston Properties, Inc. | 5,080 | 422,250 |
Equity Residential | 10,642 | 506,240 |
HCP, Inc. | 11,461 | 412,367 |
Health Care REIT, Inc. | 4,599 | 217,717 |
Host Hotels & Resorts, Inc. | 23,919 | 346,347 |
Kimco Realty Corp. | 15,136 | 238,392 |
Plum Creek Timber Co., Inc. | 6,089 | 214,942 |
ProLogis | 17,942 | 211,357 |
Public Storage | 5,101 | 495,001 |
Simon Property Group, Inc. | 10,911 | 1,011,886 |
Ventas, Inc. | 5,887 | 303,592 |
Vornado Realty Trust | 5,952 | 509,074 |
Weyerhaeuser Co. | 19,918 | 313,908 |
5,617,650 | ||
REAL ESTATE MANAGEMENT & DEVELOPMENT — 0.1% | ||
CB Richard Ellis Group, Inc., Class A(1) | 10,766 | 196,803 |
ROAD & RAIL — 0.8% | ||
CSX Corp. | 14,051 | 777,301 |
Norfolk Southern Corp. | 13,620 | 810,526 |
Ryder System, Inc. | 2,006 | 85,797 |
Union Pacific Corp. | 18,416 | 1,506,429 |
3,180,053 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.4% | ||
Advanced Micro Devices, Inc.(1) | 21,579 | 153,427 |
Altera Corp. | 11,349 | 342,286 |
Analog Devices, Inc. | 10,721 | 336,425 |
Applied Materials, Inc. | 49,146 | 574,025 |
Broadcom Corp., Class A | 16,506 | 584,147 |
First Solar, Inc.(1) | 1,986 | 292,637 |
Intel Corp. | 205,872 | 3,958,919 |
KLA-Tencor Corp. | 6,250 | 220,188 |
Linear Technology Corp. | 8,417 | 258,654 |
LSI Corp.(1) | 24,972 | 113,872 |
MEMC Electronic Materials, Inc.(1) | 8,419 | 100,354 |
Microchip Technology, Inc. | 6,909 | 217,288 |
Micron Technology, Inc.(1) | 31,878 | 229,840 |
National Semiconductor Corp. | 9,079 | 115,939 |
Novellus Systems, Inc.(1) | 3,632 | 96,539 |
NVIDIA Corp.(1) | 21,519 | 251,342 |
Teradyne, Inc.(1) | 6,508 | 72,499 |
Texas Instruments, Inc. | 44,172 | 1,198,828 |
Xilinx, Inc. | 9,255 | 246,276 |
9,363,485 | ||
SOFTWARE — 3.9% | ||
Adobe Systems, Inc.(1) | 19,177 | 501,479 |
Autodesk, Inc.(1) | 8,569 | 273,951 |
BMC Software, Inc.(1) | 6,400 | 259,072 |
CA, Inc. | 13,916 | 293,906 |
Cerner Corp.(1) | 2,524 | 211,991 |
Citrix Systems, Inc.(1) | 7,005 | 478,021 |
Compuware Corp.(1) | 8,747 | 74,612 |
Electronic Arts, Inc.(1) | 12,149 | 199,608 |
Intuit, Inc.(1) | 10,441 | 457,420 |
McAfee, Inc.(1) | 5,432 | 256,716 |
Microsoft Corp. | 281,652 | 6,897,658 |
Novell, Inc.(1) | 13,453 | 80,314 |
Oracle Corp. | 143,212 | 3,845,242 |
Red Hat, Inc.(1) | 7,037 | 288,517 |
salesforce.com, inc.(1) | 4,265 | 476,827 |
Symantec Corp.(1) | 29,019 | 440,218 |
15,035,552 | ||
SPECIALTY RETAIL — 2.0% | ||
Abercrombie & Fitch Co., Class A | 3,342 | 131,407 |
AutoNation, Inc.(1) | 2,437 | 56,660 |
AutoZone, Inc.(1) | 1,031 | 236,006 |
Bed Bath & Beyond, Inc.(1) | 9,885 | 429,108 |
Best Buy Co., Inc. | 12,592 | 514,131 |
CarMax, Inc.(1) | 7,908 | 220,317 |
GameStop Corp., Class A(1) | 5,772 | 113,766 |
Gap, Inc. (The) | 16,078 | 299,694 |
Home Depot, Inc. (The) | 61,633 | 1,952,534 |
Limited Brands, Inc. | 9,538 | 255,428 |
Lowe’s Cos., Inc. | 51,956 | 1,158,099 |
Office Depot, Inc.(1) | 10,884 | 50,066 |
O’Reilly Automotive, Inc.(1) | 5,162 | 274,618 |
17
Equity Index
Shares | Value |
RadioShack Corp. | 4,723 | $ 100,742 |
Ross Stores, Inc. | 4,588 | 250,597 |
Staples, Inc. | 26,641 | 557,330 |
Tiffany & Co. | 4,822 | 226,586 |
TJX Cos., Inc. (The) | 15,000 | 669,450 |
Urban Outfitters, Inc.(1) | 4,562 | 143,429 |
7,639,968 | ||
TEXTILES, APPAREL & LUXURY GOODS — 0.5% | ||
Coach, Inc. | 11,110 | 477,286 |
NIKE, Inc., Class B | 14,239 | 1,141,113 |
Polo Ralph Lauren Corp. | 2,453 | 220,426 |
VF Corp. | 3,141 | 254,484 |
2,093,309 | ||
THRIFTS & MORTGAGE FINANCE — 0.1% | ||
Hudson City Bancorp., Inc. | 19,178 | 235,122 |
People’s United Financial, Inc. | 14,129 | 184,949 |
420,071 | ||
TOBACCO — 1.7% | ||
Altria Group, Inc. | 76,789 | 1,844,472 |
Lorillard, Inc. | 5,565 | 446,925 |
Philip Morris International, Inc. | 67,840 | 3,800,397 |
Reynolds American, Inc. | 6,341 | 376,592 |
6,468,386 | ||
TRADING COMPANIES & DISTRIBUTORS — 0.1% | ||
Fastenal Co. | 5,432 | 288,928 |
W.W. Grainger, Inc. | 2,187 | 260,494 |
549,422 |
Shares/ Principal Amount | Value | |
WIRELESS TELECOMMUNICATION SERVICES — 0.4% | ||
American Tower Corp., Class A(1) | 14,831 | $ 760,237 |
MetroPCS Communications, Inc.(1) | 9,986 | 104,454 |
Sprint Nextel Corp.(1) | 108,861 | 504,026 |
1,368,717 | ||
TOTAL COMMON STOCKS (Cost $303,793,448) | 382,139,365 | |
Temporary Cash Investments — Segregated For Futures Contracts — 1.9% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 41,264 | 41,264 |
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $6,425,085), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $6,300,032) | 6,300,000 | |
U.S. Treasury Bills, 0.21%, 11/18/10(4) | $1,130,000 | 1,129,816 |
TOTAL TEMPORARY CASH INVESTMENTS — SEGREGATED FOR FUTURES CONTRACTS (Cost $7,470,946) | 7,471,080 | |
TOTAL INVESTMENT SECURITIES — 100.0% (Cost $311,264,394) | 389,610,445 | |
OTHER ASSETS AND LIABILITIES(2) | 147,907 | |
TOTAL NET ASSETS — 100.0% | $389,758,352 |
Futures Contracts | |||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Gain (Loss) |
138 S&P 500 E-Mini Futures | December 2010 | $7,843,230 | $260,714 |
Notes to Schedule of Investments
(1) | Non-income producing. |
(2) | Category is less than 0.05% of total net assets. |
(3) | Security, or a portion thereof, has been segregated for futures contracts. At the period end, the aggregate value of securities pledged was $7,844,000. |
(4) | The rate indicated is the yield to maturity at purchase. |
See Notes to Financial Statements. |
18
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | |
Assets | |
Investment securities, at value (cost of $311,264,394) | $389,610,445 |
Cash | 385 |
Receivable for capital shares sold | 39,877 |
Dividends and interest receivable | 486,943 |
390,137,650 | |
Liabilities | |
Payable for investments purchased | 35,454 |
Payable for capital shares redeemed | 190,901 |
Payable for variation margin on futures contracts | 29,708 |
Accrued management fees | 123,235 |
379,298 | |
Net Assets | $389,758,352 |
Net Assets Consist of: | |
Capital (par value and paid-in surplus) | $355,336,818 |
Undistributed net investment income | 62,480 |
Accumulated net realized loss on investment transactions | (44,247,711) |
Net unrealized appreciation on investments | 78,606,765 |
$389,758,352 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $197,339,331 | 43,556,373 | $4.53 |
Institutional Class, $0.01 Par Value | $192,419,021 | 42,457,456 | $4.53 |
See Notes to Financial Statements.
19
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | |
Investment Income (Loss) | |
Income: | |
Dividends (net of foreign taxes withheld of $627) | $ 4,182,900 |
Interest | 5,708 |
4,188,608 | |
Expenses: | |
Management fees | 784,000 |
Directors’ fees and expenses | 6,231 |
Other expenses | 7,027 |
797,258 | |
Net investment income (loss) | 3,391,350 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investment transactions | 15,560,490 |
Futures contract transactions | (272,535) |
15,287,955 | |
Change in net unrealized appreciation (depreciation) on: | |
Investments | (28,078,721) |
Futures contracts | 91,505 |
(27,987,216) | |
Net realized and unrealized gain (loss) | (12,699,261) |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ (9,307,911) |
See Notes to Financial Statements.
20
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 |
Operations | ||
Net investment income (loss) | $ 3,391,350 | $ 7,484,693 |
Net realized gain (loss) | 15,287,955 | 11,280,609 |
Change in net unrealized appreciation (depreciation) | (27,987,216) | 132,734,268 |
Net increase (decrease) in net assets resulting from operations | (9,307,911) | 151,499,570 |
Distributions to Shareholders | ||
From net investment income: | ||
Investor Class | (1,569,403) | (3,159,335) |
Institutional Class | (1,805,018) | (4,332,216) |
Decrease in net assets from distributions | (3,374,421) | (7,491,551) |
Capital Share Transactions | ||
Net increase (decrease) in net assets from capital share transactions | (38,051,031) | (23,595,176) |
Net increase (decrease) in net assets | (50,733,363) | 120,412,843 |
Net Assets | ||
Beginning of period | 440,491,715 | 320,078,872 |
End of period | $389,758,352 | $440,491,715 |
Undistributed net investment income | $62,480 | $45,551 |
See Notes to Financial Statements.
21
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. Equity Index Fund (the fund) is one fund in a series issued by the corporation. The fund is nondiversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. The fund pursues its objective by matching, as closely as possible, the investment characteristics and results of the S&P 500 Index. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class and the Institutional Class. The share classes differ principally in their respective distribution and shareholder servicing expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
22
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. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as wel l as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule for the fund ranges from 0.350% to 0.490% for the Investor Class. The Institutional Class is 0.200% less at each point within the range. The effective annual management fee for each class for the six months ended September 30, 2010 was 0.49% and 0.29% for the Investor Class and Institutional Class, respectively.
ACIM has entered into a Subadvisory Agreement with Northern Trust Investments, N.A. (NTI) (the subadvisor) on behalf of the fund. The subadvisor makes investment decisions for the fund in accordance with the fund’s investment objectives, policies and restrictions under the supervision of ACIM and the Board of Directors. ACIM pays all costs associated with retaining NTI as the subadvisor of the fund.
23
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $6,208,315 and $42,045,757, respectively.
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 150,000,000 | 150,000,000 | ||||||||||||||
Sold | 3,857,525 | $17,191,752 | 12,694,955 | $52,828,024 | ||||||||||||
Issued in reinvestment of distributions | 341,911 | 1,532,509 | 725,656 | 3,081,827 | ||||||||||||
Redeemed | (5,598,829 | ) | (24,684,216 | ) | (9,204,015 | ) | (37,281,187 | ) | ||||||||
(1,399,393 | ) | (5,959,955 | ) | 4,216,596 | 18,628,664 | |||||||||||
Institutional Class/Shares Authorized | 150,000,000 | 310,000,000 | ||||||||||||||
Sold | 1,914,166 | 8,470,968 | 10,325,912 | 39,608,523 | ||||||||||||
Issued in reinvestment of distributions | 402,935 | 1,805,018 | 1,026,830 | 4,332,216 | ||||||||||||
Redeemed | (9,762,337 | ) | (42,367,062 | ) | (21,735,881 | ) | (86,164,579 | ) | ||||||||
(7,445,236 | ) | (32,091,076 | ) | (10,383,139 | ) | (42,223,840 | ) | |||||||||
Net increase (decrease) | (8,844,629 | ) | $(38,051,031 | ) | (6,166,543 | ) | $(23,595,176 | ) |
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $382,139,365 | — | — | |||||||||
Temporary Cash Investments | 41,264 | $7,429,816 | — | |||||||||
Total Value of Investment Securities | $382,180,629 | $7,429,816 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Futures Contracts | $260,714 | — | — |
6. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and lo sses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The equity price risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of equity price risk derivative instruments as of September 30, 2010, is disclosed on the Statement of Assets and Liabilities as a liability of $29,708 in payable for variation margin on futures contracts. For the six months ended September 30, 2010, the effect of equity price risk derivative instruments on the Statement of Operations was $(272,535) in net realized gain (loss) on futures contract transactions and $91,505 in change in net unrealized appreciation (depreciation) on futures contracts.
7. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
25
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $333,517,084 | |||
Gross tax appreciation of investments | $107,088,781 | |||
Gross tax depreciation of investments | (50,995,420 | ) | ||
Net tax appreciation (depreciation) of investments | $56,093,361 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(39,137,018), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. The capital loss carryovers expire as follows:
2011 | 2012 | 2013 | 2014 | 2015 |
$(21,756,247) | $(1,957,751) | $(1,992,016) | $(5,270,954) | $(8,160,050) |
26
Financial Highlights
Equity Index
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $4.64 | $3.17 | $5.26 | $5.66 | $5.16 | $4.70 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.07 | 0.09 | 0.09 | 0.08 | 0.07 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.11 | ) | 1.47 | (2.09 | ) | (0.39 | ) | 0.50 | 0.46 | |||||||||||||||
Total From Investment Operations | (0.07 | ) | 1.54 | (2.00 | ) | (0.30 | ) | 0.58 | 0.53 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.04 | ) | (0.07 | ) | (0.09 | ) | (0.10 | ) | (0.08 | ) | (0.07 | ) | ||||||||||||
From Tax Return of Capital | — | — | — | — | (3) | — | — | |||||||||||||||||
Total Distributions | (0.04 | ) | (0.07 | ) | (0.09 | ) | (0.10 | ) | (0.08 | ) | (0.07 | ) | ||||||||||||
Net Asset Value, End of Period | $4.53 | $4.64 | $3.17 | $5.26 | $5.66 | $5.16 | ||||||||||||||||||
Total Return(4) | (1.59 | )% | 48.96 | % | (38.36 | )% | (5.46 | )% | 11.28 | % | 11.36 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.49 | %(5) | 0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | 0.49 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.58 | %(5) | 1.81 | % | 1.93 | % | 1.51 | % | 1.49 | % | 1.43 | % | ||||||||||||
Portfolio Turnover Rate | 2 | % | 12 | % | 5 | % | 9 | % | 4 | % | 17 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $197,339 | $208,726 | $129,026 | $207,571 | $232,880 | $152,799 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements. |
27
Equity Index
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $4.64 | $3.17 | $5.26 | $5.67 | $5.16 | $4.71 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.08 | 0.10 | 0.10 | 0.09 | 0.08 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.11 | ) | 1.47 | (2.09 | ) | (0.40 | ) | 0.51 | 0.45 | |||||||||||||||
Total From Investment Operations | (0.07 | ) | 1.55 | (1.99 | ) | (0.30 | ) | 0.60 | 0.53 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.04 | ) | (0.08 | ) | (0.10 | ) | (0.11 | ) | (0.09 | ) | (0.08 | ) | ||||||||||||
From Tax Return of Capital | — | — | — | — | (3) | — | — | |||||||||||||||||
Total Distributions | (0.04 | ) | (0.08 | ) | (0.10 | ) | (0.11 | ) | (0.09 | ) | (0.08 | ) | ||||||||||||
Net Asset Value, End of Period | $4.53 | $4.64 | $3.17 | $5.26 | $5.67 | $5.16 | ||||||||||||||||||
Total Return(4) | (1.49 | )% | 49.27 | % | (38.24 | )% | (5.27 | )% | 11.50 | % | 11.35 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.29 | %(5) | 0.29 | % | 0.29 | % | 0.29 | % | 0.29 | % | 0.29 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.78 | %(5) | 2.01 | % | 2.13 | % | 1.71 | % | 1.69 | % | 1.63 | % | ||||||||||||
Portfolio Turnover Rate | 2 | % | 12 | % | 5 | % | 9 | % | 4 | % | 17 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $192,419 | $231,766 | $191,053 | $599,914 | $813,571 | $662,759 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Per-share amount was less than $0.005. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements. |
28
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall,
James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor Class | For: | 121,942,461 | ||
Against: | 2,172,018 | |||
Abstain: | 2,857,151 | |||
Broker Non-Vote: | 14,451,857 | |||
Institutional Class | For: | 191,913,714 | ||
Against: | 0 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
Proposal 3:
To approve a subadvisory agreement between Northern Trust Investments, N.A. and American Century Investment Management, Inc.:
For: | 313,246,871 | |||
Against: | 2,262,156 | |||
Abstain: | 3,376,317 | |||
Broker Non-Vote: | 14,451,857 |
29
Proposal 4:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
30
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
31
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock’s weight in the index is proportionate to its market value. Created by Standard & Poor’s, it is considered to be a broad measure of U.S. stock market performance.
32
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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 Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69819
Semiannual Report September 30, 2010 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/logo.jpg)
American Century Investments®
Large Company Value Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
Large Company Value | ||
Performance | 5 | |
Portfolio Commentary | 7 | |
Top Ten Holdings | 9 | |
Top Five Industries | 9 | |
Types of Investments in Portfolio | 9 | |
Shareholder Fee Example | 10 | |
Financial Statements | ||
Schedule of Investments | 12 | |
Statement of Assets and Liabilities | 15 | |
Statement of Operations | 16 | |
Statement of Changes in Net Assets | 17 | |
Notes to Financial Statements | 18 | |
Financial Highlights | 24 | |
Other Information | ||
Proxy Voting Results | 30 | |
Additional Information | 31 | |
Index Definitions | 32 |
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
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomas.jpg)
Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors—working on behalf of shareholders—to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/davidson1.jpg)
By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Large Company Value
Total Returns as of September 30, 2010 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ALVIX | -2.82% | 5.72% | -1.62% | 3.29% | 2.62% | 7/30/99 |
Russell 1000 Value Index | — | -2.14% | 8.90% | -0.48% | 2.59% | 2.43% | — |
S&P 500 Index | — | -1.42% | 10.16% | 0.64% | -0.43% | 0.44% | — |
Institutional Class | ALVSX | -2.72% | 5.94% | -1.43% | — | 2.14% | 8/10/01 |
A Class(2) No sales charge* With sales charge* | ALPAX | -2.94% -8.53% | 5.46% -0.67% | -1.87% -3.02% | — — | 3.16% 2.54% | 10/26/00 |
B Class No sales charge* With sales charge* | ALBVX | -3.48% -8.48% | 4.43% 0.43% | -2.60% -2.82% | — — | 3.70% 3.70% | 1/31/03 |
C Class No sales charge* With sales charge* | ALPCX | -3.30% -4.27% | 4.66% 4.66% | -2.57% -2.57% | — — | 1.59% 1.59% | 11/7/01 |
R Class | ALVRX | -3.06% | 5.19% | -2.11% | — | 2.29% | 8/29/03 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Prior to December 3, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
5
Large Company Value
Growth of $10,000 Over 10 Years |
$10,000 investment made September 30, 2000 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart3.jpg)
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
0.85% | 0.65% | 1.10% | 1.85% | 1.85% | 1.35% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
6
Portfolio Commentary
Large Company Value
Portfolio Managers: Chuck Ritter and Brendan Healy
Performance Summary
Large Company Value declined -2.82%* for the six months ended September 30, 2010. By comparison, its benchmark, the Russell 1000 Value Index, fell -2.14%. The broader market, as measured by the S&P 500 Index, dropped -1.42%. The portfolio’s return reflects operating expenses, while the indices’ returns do not. The average return for Morningstar’s Large Cap Value category (its performance, like Large Company Value’s, reflects operating expenses) was -2.44%.**
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, during the third quarter, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. Against this backdrop, Large Company Value’s positions in the utilities, information technology, and financials sectors detracted from relative results. Holdings in consumer stapl es, consumer discretionary, and telecommunication services contributed positively.
We carefully manage this portfolio for long-term results. Since Large Company Value’s inception on July 30, 1999, the portfolio has produced an average annual return of 2.62%, topping the returns for Morningstar’s Large Cap Value category average, the Russell 1000 Value Index, and the S&P 500 Index for that period (see performance information on pages 5–6 and the footnotes below).
Utilities Slowed Relative Performance
Although the portfolio gained in absolute terms within the utilities sector, its underweight position hampered progress on a relative basis. We continue to believe that many of these stocks are overvalued, but this stance dampened performance during the reporting period when utilities outperformed in the benchmark.
Information Technology and Financials Detracted
Large Company Value’s complement of information technology stocks, specifically its holdings in the computers and peripherals segment, hampered progress. This segment provided key detractor Hewlett-Packard. Despite posting profit gains, the technology giant’s share prices declined after the abrupt exit of its chief executive officer and uncertainty surrounding the appointment of a successor.
* | All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. |
** | The average returns for Morningstar’s Large Cap Value category were 8.02%, -0.28% and 2.47% for the one-year, five-year and ten-year periods ended September 30, 2010, respectively, and 2.43% since July 30, 1999, the Investor Class’s inception. © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
7
Large Company Value
In financials, the weakest sector in the benchmark, the portfolio was hindered by its position in diversified financial services. Specifically, Large Company Value was modestly overweight two significant decliners, Bank of America Corp. and JPMorgan Chase. Uncertainties about the slow economic recovery and the impact on earnings of financial regulatory reform weighed on these companies’ share prices.
The portfolio was also underweight real estate investment trusts (REITs), a segment that provided a positive return for the benchmark. In our opinion, many of these stocks are overvalued as their prices do not reflect the deterioration in commercial real estate fundamentals.
Consumer Staples and Consumer Discretionary Contributed
Security selection in the consumer staples sector contributed to relative progress. The portfolio’s top contributor was tobacco company Altria Group. Its stock price rose on news of a substantial increase in earnings on the back of market share gains, cost cutting, and higher sales in its smokeless tobacco business. The beverages segment provided notable contributor Coca-Cola, which posted better-than-expected profits on higher sales volume and market-share gains internationally and in North America. The company’s purchase of Coca-Cola Enterprises’ North American bottling operations could also boost future earnings growth.
In the consumer discretionary sector, Large Company Value’s relative outperformance was largely the result of what it didn’t own rather than what it did. An underweight position and security selection in the media industry enhanced results. The portfolio’s mix of retailers also added value.
Telecommunication Services Enhanced Results
An overweight in telecommunication services, the strongest sector in the benchmark, added to relative progress. Many telecommunications companies outperformed during the period as investors sought out stocks that paid attractive dividends. Large Company Value owned two of the largest, AT&T and Verizon Communications. Both companies have benefited from the strong growth of their wireless businesses and their ability to increase earnings despite low economic growth.
Outlook
We continue to be bottom-up investment managers, evaluating each company individually and building the portfolio one stock at a time. As of September 30, 2010, Large Company Value is broadly diversified, with ongoing overweight positions in information technology, health care, and energy sectors. Our valuation work is also directing us toward smaller relative weightings in utilities and financials stocks.
8
Large Company Value
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
AT&T, Inc. | 3.7% |
Pfizer, Inc. | 3.6% |
JPMorgan Chase & Co. | 3.4% |
Chevron Corp. | 3.3% |
Bank of America Corp. | 3.2% |
General Electric Co. | 3.1% |
Johnson & Johnson | 3.1% |
Merck & Co., Inc. | 2.6% |
Verizon Communications, Inc. | 2.2% |
Wells Fargo & Co. | 2.2% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Pharmaceuticals | 10.6% |
Oil, Gas & Consumable Fuels | 10.3% |
Diversified Financial Services | 7.8% |
Insurance | 7.4% |
Diversified Telecommunication Services | 6.3% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Common Stocks & Futures | 98.9% |
Temporary Cash Investments | 0.8% |
Other Assets and Liabilities | 0.3% |
9
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) regis tered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
10
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 – 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $971.80 | $4.30 | 0.87% |
Institutional Class | $1,000 | $972.80 | $3.31 | 0.67% |
A Class | $1,000 | $970.60 | $5.53 | 1.12% |
B Class | $1,000 | $965.20 | $9.21 | 1.87% |
C Class | $1,000 | $967.00 | $9.22 | 1.87% |
R Class | $1,000 | $969.40 | $6.76 | 1.37% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.71 | $4.41 | 0.87% |
Institutional Class | $1,000 | $1,021.71 | $3.40 | 0.67% |
A Class | $1,000 | $1,019.45 | $5.67 | 1.12% |
B Class | $1,000 | $1,015.69 | $9.45 | 1.87% |
C Class | $1,000 | $1,015.69 | $9.45 | 1.87% |
R Class | $1,000 | $1,018.20 | $6.93 | 1.37% |
* Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
11
Schedule of Investments
Large Company Value
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 97.1% | ||
AEROSPACE & DEFENSE — 2.1% | ||
Honeywell International, Inc. | 77,200 | $ 3,392,168 |
Lockheed Martin Corp. | 94,200 | 6,714,576 |
Northrop Grumman Corp. | 192,700 | 11,683,401 |
21,790,145 | ||
BEVERAGES — 1.2% | ||
Coca-Cola Co. (The) | 221,300 | 12,950,476 |
BIOTECHNOLOGY — 2.0% | ||
Amgen, Inc.(1) | 282,200 | 15,552,042 |
Gilead Sciences, Inc.(1) | 159,300 | 5,672,673 |
21,224,715 | ||
CAPITAL MARKETS — 3.8% | ||
Ameriprise Financial, Inc. | 150,200 | 7,108,966 |
Bank of New York Mellon Corp. (The) | 325,700 | 8,510,541 |
Goldman Sachs Group, Inc. (The) | 112,000 | 16,192,960 |
Morgan Stanley | 300,500 | 7,416,340 |
39,228,807 | ||
CHEMICALS — 0.9% | ||
E.I. du Pont de Nemours & Co. | 151,300 | 6,751,006 |
PPG Industries, Inc. | 40,500 | 2,948,400 |
9,699,406 | ||
COMMERCIAL BANKS — 4.2% | ||
PNC Financial Services Group, Inc. | 166,600 | 8,648,206 |
U.S. Bancorp. | 586,700 | 12,684,454 |
Wells Fargo & Co. | 894,500 | 22,478,785 |
43,811,445 | ||
COMMERCIAL SERVICES & SUPPLIES — 0.6% | ||
Avery Dennison Corp. | 153,800 | 5,709,056 |
COMMUNICATIONS EQUIPMENT — 0.8% | ||
Cisco Systems, Inc.(1) | 359,800 | 7,879,620 |
COMPUTERS & PERIPHERALS — 1.4% | ||
Hewlett-Packard Co. | 246,000 | 10,349,220 |
Western Digital Corp.(1) | 163,300 | 4,636,087 |
14,985,307 | ||
CONSTRUCTION & ENGINEERING — 0.3% | ||
Shaw Group, Inc. (The)(1) | 92,300 | 3,097,588 |
DIVERSIFIED FINANCIAL SERVICES — 7.8% | ||
Bank of America Corp. | 2,534,100 | 33,222,051 |
Citigroup, Inc.(1) | 3,152,400 | 12,294,360 |
JPMorgan Chase & Co. | 932,300 | 35,492,661 |
81,009,072 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES — 6.3% | ||
AT&T, Inc. | 1,330,600 | 38,055,160 |
CenturyLink, Inc. | 121,900 | 4,810,174 |
Verizon Communications, Inc. | 695,700 | 22,672,863 |
65,538,197 | ||
ELECTRIC UTILITIES — 2.7% | ||
American Electric Power Co., Inc. | 171,700 | 6,220,691 |
Exelon Corp. | 287,700 | 12,250,266 |
PPL Corp. | 364,600 | 9,928,058 |
28,399,015 | ||
ENERGY EQUIPMENT & SERVICES — 2.2% | ||
Baker Hughes, Inc. | 175,100 | 7,459,260 |
National Oilwell Varco, Inc. | 207,000 | 9,205,290 |
Transocean Ltd.(1) | 96,400 | 6,197,556 |
22,862,106 | ||
FOOD & STAPLES RETAILING — 4.1% | ||
Kroger Co. (The) | 425,400 | 9,214,164 |
SYSCO Corp. | 218,200 | 6,223,064 |
Walgreen Co. | 281,400 | 9,426,900 |
Wal-Mart Stores, Inc. | 327,300 | 17,517,096 |
42,381,224 | ||
FOOD PRODUCTS — 1.8% | ||
Archer-Daniels-Midland Co. | 95,000 | 3,032,400 |
Kraft Foods, Inc., Class A | 343,600 | 10,603,496 |
Unilever NV New York Shares | 179,200 | 5,354,496 |
18,990,392 | ||
HEALTH CARE EQUIPMENT & SUPPLIES — 0.5% | ||
Medtronic, Inc. | 166,000 | 5,574,280 |
HEALTH CARE PROVIDERS & SERVICES — 1.4% | ||
Aetna, Inc. | 166,800 | 5,272,548 |
Quest Diagnostics, Inc. | 57,900 | 2,922,213 |
WellPoint, Inc.(1) | 110,600 | 6,264,384 |
14,459,145 | ||
HOTELS, RESTAURANTS & LEISURE — 0.6% | ||
Darden Restaurants, Inc. | 63,900 | 2,733,642 |
Starbucks Corp. | 116,500 | 2,980,070 |
5,713,712 | ||
HOUSEHOLD PRODUCTS — 2.9% | ||
Clorox Co. | 123,400 | 8,238,184 |
Energizer Holdings, Inc.(1) | 38,200 | 2,568,186 |
Procter & Gamble Co. (The) | 328,600 | 19,706,142 |
30,512,512 |
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Large Company Value
Shares | Value |
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS — 0.3% | ||
NRG Energy, Inc.(1) | 128,800 | $ 2,681,616 |
INDUSTRIAL CONGLOMERATES — 3.7% | ||
General Electric Co. | 1,992,300 | 32,374,875 |
Tyco International Ltd. | 157,000 | 5,766,610 |
38,141,485 | ||
INSURANCE — 7.4% | ||
Allstate Corp. (The) | 377,200 | 11,900,660 |
Berkshire Hathaway, Inc., Class B(1) | 129,400 | 10,698,792 |
Chubb Corp. (The) | 214,000 | 12,195,860 |
Loews Corp. | 310,900 | 11,783,110 |
Principal Financial Group, Inc. | 217,100 | 5,627,232 |
Torchmark Corp. | 127,300 | 6,764,722 |
Travelers Cos., Inc. (The) | 259,400 | 13,514,740 |
XL Group plc | 186,200 | 4,033,092 |
76,518,208 | ||
IT SERVICES — 1.7% | ||
Fiserv, Inc.(1) | 86,600 | 4,660,812 |
International Business Machines Corp. | 93,000 | 12,475,020 |
17,135,832 | ||
MACHINERY — 1.4% | ||
Dover Corp. | 102,100 | 5,330,641 |
Ingersoll-Rand plc | 251,600 | 8,984,636 |
14,315,277 | ||
MEDIA — 4.6% | ||
CBS Corp., Class B | 489,700 | 7,766,642 |
Comcast Corp., Class A | 719,700 | 13,012,176 |
Time Warner Cable, Inc. | 85,500 | 4,616,145 |
Time Warner, Inc. | 403,500 | 12,367,275 |
Viacom, Inc., Class B | 271,000 | 9,807,490 |
47,569,728 | ||
METALS & MINING — 0.8% | ||
Freeport-McMoRan Copper & Gold, Inc. | 34,400 | 2,937,416 |
Nucor Corp. | 147,800 | 5,645,960 |
8,583,376 | ||
MULTILINE RETAIL — 1.3% | ||
Kohl’s Corp.(1) | 106,300 | 5,599,884 |
Macy’s, Inc. | 355,900 | 8,217,731 |
13,817,615 | ||
MULTI-UTILITIES — 0.7% | ||
PG&E Corp. | 161,200 | 7,321,704 |
OIL, GAS & CONSUMABLE FUELS — 10.3% | ||
Apache Corp. | 163,000 | 15,934,880 |
Chevron Corp. | 425,300 | 34,470,565 |
ConocoPhillips | 301,700 | 17,326,631 |
Devon Energy Corp. | 88,400 | 5,723,016 |
Exxon Mobil Corp. | 335,200 | 20,712,008 |
Occidental Petroleum Corp. | 98,100 | 7,681,230 |
Valero Energy Corp. | 320,000 | 5,603,200 |
107,451,530 | ||
PAPER & FOREST PRODUCTS — 0.4% | ||
International Paper Co. | 196,800 | 4,280,400 |
PHARMACEUTICALS — 10.6% | ||
Abbott Laboratories | 187,300 | 9,784,552 |
Eli Lilly & Co. | 101,700 | 3,715,101 |
Johnson & Johnson | 519,800 | 32,206,808 |
Merck & Co., Inc. | 740,800 | 27,268,848 |
Pfizer, Inc. | 2,165,500 | 37,181,635 |
110,156,944 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.0% | ||
Applied Materials, Inc. | 319,600 | 3,732,928 |
Intel Corp. | 355,500 | 6,836,265 |
10,569,193 | ||
SOFTWARE — 3.0% | ||
Activision Blizzard, Inc. | 313,400 | 3,390,988 |
Microsoft Corp. | 798,400 | 19,552,816 |
Oracle Corp. | 312,900 | 8,401,365 |
31,345,169 | ||
SPECIALTY RETAIL — 0.4% | ||
Best Buy Co., Inc. | 107,900 | 4,405,557 |
TEXTILES, APPAREL & LUXURY GOODS — 0.6% | ||
VF Corp. | 73,700 | 5,971,174 |
TOBACCO — 1.3% | ||
Altria Group, Inc. | 455,200 | 10,933,904 |
Lorillard, Inc. | 36,900 | 2,963,439 |
13,897,343 | ||
TOTAL COMMON STOCKS (Cost $897,943,728) | 1,009,978,371 | |
Temporary Cash Investments — Segregated For Futures Contracts — 1.8% | ||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $19,244,659), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $18,870,094) (Cost $18,870,000) | 18,870,000 |
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Large Company Value
Shares | Value |
Temporary Cash Investments — 0.8% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 40,369 | $ 40,369 |
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $7,985,462), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $7,830,039) | 7,830,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $7,870,369) | 7,870,369 | |
TOTAL INVESTMENT SECURITIES — 99.7% (Cost $924,684,097) | 1,036,718,740 | |
OTHER ASSETS AND LIABILITIES — 0.3% | 3,120,136 | |
TOTAL NET ASSETS — 100.0% | $1,039,838,876 |
Futures Contracts | |||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Gain (Loss) |
332 S&P 500 E-Mini Futures | December 2010 | $18,869,220 | $469,914 |
Notes to Schedule of Investments
(1) | Non-income producing. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | |
Assets | |
Investment securities, at value (cost of $924,684,097) | $1,036,718,740 |
Deposits with broker for futures contracts | 1,494,000 |
Receivable for investments sold | 1,153,877 |
Receivable for capital shares sold | 935,717 |
Dividends and interest receivable | 1,643,802 |
1,041,946,136 | |
Liabilities | |
Payable for capital shares redeemed | 1,306,362 |
Payable for variation margin on futures contracts | 69,720 |
Accrued management fees | 690,173 |
Service fees (and distribution fees — A Class and R Class) payable | 30,299 |
Distribution fees payable | 10,706 |
2,107,260 | |
Net Assets | $1,039,838,876 |
Net Assets Consist of: | |
Capital (par value and paid-in surplus) | $1,464,334,564 |
Accumulated net investment loss | (124,061) |
Accumulated net realized loss on investment transactions | (536,876,184) |
Net unrealized appreciation on investments | 112,504,557 |
$1,039,838,876 |
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Investor Class, $0.01 Par Value | $633,088,152 | 125,383,105 | $5.05 | |||||||||
Institutional Class, $0.01 Par Value | $273,427,406 | 54,128,510 | $5.05 | |||||||||
A Class, $0.01 Par Value | $101,452,700 | 20,100,416 | $5.05 | * | ||||||||
B Class, $0.01 Par Value | $4,845,951 | 956,842 | $5.06 | |||||||||
C Class, $0.01 Par Value | $12,440,423 | 2,463,820 | $5.05 | |||||||||
R Class, $0.01 Par Value | $14,584,244 | 2,887,340 | $5.05 |
*Maximum offering price $5.36 (net asset value divided by 0.9425)
See Notes to Financial Statements.
15
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | |
Investment Income (Loss) | |
Income: | |
Dividends | $ 14,384,451 |
Interest | 26,761 |
14,411,212 | |
Expenses: | |
Management fees | 4,622,816 |
Distribution fees: | |
B Class | 18,973 |
C Class | 52,833 |
Service fees: | |
B Class | 6,324 |
C Class | 17,611 |
Distribution and service fees: | |
A Class | 184,592 |
R Class | 35,714 |
Directors’ fees and expenses | 21,662 |
Other expenses | 51,965 |
5,012,490 | |
Net investment income (loss) | 9,398,722 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investment transactions | (31,895,280) |
Futures contract transactions | 140,295 |
(31,754,985) | |
Change in net unrealized appreciation (depreciation) on: | |
Investments | (29,622,609) |
Futures contracts | 236,873 |
(29,385,736) | |
Net realized and unrealized gain (loss) | (61,140,721) |
Net Increase (Decrease) in Net Assets Resulting from Operations | $(51,741,999) |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 |
Operations | ||
Net investment income (loss) | $ 9,398,722 | $ 23,038,476 |
Net realized gain (loss) | (31,754,985) | (69,095,601) |
Change in net unrealized appreciation (depreciation) | (29,385,736) | 500,264,203 |
Net increase (decrease) in net assets resulting from operations | (51,741,999) | 454,207,078 |
Distributions to Shareholders | ||
From net investment income: | ||
Investor Class | (5,701,120) | (13,895,896) |
Institutional Class | (2,683,991) | (5,761,662) |
A Class | (991,453) | (3,184,128) |
B Class | (16,613) | (49,293) |
C Class | (45,009) | (153,902) |
R Class | (84,597) | (183,617) |
Decrease in net assets from distributions | (9,522,783) | (23,228,498) |
Capital Share Transactions | ||
Net increase (decrease) in net assets from capital share transactions | (167,059,078) | (202,619,467) |
Net increase (decrease) in net assets | (228,323,860) | 228,359,113 |
Net Assets | ||
Beginning of period | 1,268,162,736 | 1,039,803,623 |
End of period | $1,039,838,876 | $1,268,162,736 |
Accumulated net investment loss | $(124,061) | — |
See Notes to Financial Statements.
17
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. Large Company Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives by investing primarily in companies with larger market capitalization that management believes to be undervalued at the time of purchase. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of 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 expe nses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
18
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
19
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as wel l as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule for the fund ranges from 0.70% to 0.90% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended September 30, 2010 was 0.86% for the Investor Class, A Class, B Class, C Class and R Class and 0.66% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermedi aries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2010, are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC. Various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP) owns, in aggregate, 15% of the shares of the fund. ACAAP does not invest in the fund for the purpose of exercising management or control.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $279,027,225 and $444,060,264, respectively.
20
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010 | |||
Shares | Amount | Shares | Amount | |
Investor Class/Shares Authorized | 550,000,000 | 550,000,000 | ||
Sold | 11,083,900 | $ 54,738,375 | 31,999,754 | $ 146,769,217 |
Issued in reinvestment of distributions | 1,012,200 | 5,081,075 | 1,803,551 | 8,667,136 |
Redeemed | (36,842,807) | (174,597,665) | (40,133,547) | (188,017,635) |
(24,746,707) | (114,778,215) | (6,330,242) | (32,581,282) | |
Institutional Class/Shares Authorized | 200,000,000 | 200,000,000 | ||
Sold | 25,713,601 | 126,009,572 | 12,953,075 | 59,584,815 |
Issued in reinvestment of distributions | 333,991 | 1,676,187 | 992,901 | 4,745,792 |
Redeemed | (18,297,367) | (91,862,386) | (43,176,588) | (195,513,472) |
7,750,225 | 35,823,373 | (29,230,612) | (131,182,865) | |
A Class/Shares Authorized | 100,000,000 | 150,000,000 | ||
Sold | 2,043,280 | 10,174,817 | 8,288,328 | 38,063,429 |
Issued in reinvestment of distributions | 135,881 | 681,968 | 403,887 | 1,922,104 |
Redeemed | (20,316,248) | (94,644,317) | (15,234,522) | (71,180,263) |
(18,137,087) | (83,787,532) | (6,542,307) | (31,194,730) | |
B Class/Shares Authorized | 5,000,000 | 10,000,000 | ||
Sold | 232 | 1,171 | 12,513 | 54,852 |
Issued in reinvestment of distributions | 2,865 | 14,429 | 8,644 | 41,137 |
Redeemed | (122,996) | (623,399) | (392,323) | (1,813,191) |
(119,899) | (607,799) | (371,166) | (1,717,202) | |
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||
Sold | 95,047 | 478,733 | 289,450 | 1,380,883 |
Issued in reinvestment of distributions | 3,661 | 18,381 | 11,872 | 56,197 |
Redeemed | (918,000) | (4,645,228) | (1,757,154) | (8,012,506) |
(819,292) | (4,148,114) | (1,455,832) | (6,575,426) | |
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||
Sold | 293,828 | 1,463,016 | 835,084 | 3,697,955 |
Issued in reinvestment of distributions | 16,331 | 81,998 | 37,073 | 178,037 |
Redeemed | (225,650) | (1,105,805) | (702,319) | (3,243,954) |
84,509 | 439,209 | 169,838 | 632,038 | |
Net increase (decrease) | (35,988,251) | $(167,059,078) | (43,760,321) | $(202,619,467) |
21
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $1,009,978,371 | — | — | |||||||||
Temporary Cash Investments | 40,369 | $26,700,000 | — | |||||||||
Total Value of Investment Securities | $1,010,018,740 | $26,700,000 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Futures Contracts | $469,914 | — | — |
6. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and lo sses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The equity price risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
22
The value of equity price risk derivative instruments as of September 30, 2010, is disclosed on the Statement of Assets and Liabilities as a liability of $69,720 in payable for variation margin on futures contracts. For the six months ended September 30, 2010, the effect of equity price risk derivative instruments on the Statement of Operations was $140,295 in net realized gain (loss) on futures contract transactions and $236,873 in change in net unrealized appreciation (depreciation) on futures contracts.
7. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $958,622,547 | |||
Gross tax appreciation of investments | $146,273,648 | |||
Gross tax depreciation of investments | (68,177,455 | ) | ||
Net tax appreciation (depreciation) of investments | $78,096,193 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(478,206,635), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(176,129,535) and $(302,077,100) expire in 2017 and 2018, respectively.
The fund has elected to treat $(10,334,586) of net capital losses incurred in the five-month period ended March 31, 2010, as having been incurred in the following fiscal year for federal income tax purposes.
23
Financial Highlights
Large Company Value
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.24 | $3.64 | $6.48 | $7.55 | $6.72 | $6.39 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.09 | 0.14 | 0.14 | 0.13 | 0.12 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.19 | ) | 1.60 | (2.76 | ) | (0.85 | ) | 0.89 | 0.47 | |||||||||||||||
Total From Investment Operations | (0.15 | ) | 1.69 | (2.62 | ) | (0.71 | ) | 1.02 | 0.59 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.04 | ) | (0.09 | ) | (0.14 | ) | (0.15 | ) | (0.13 | ) | (0.11 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.08 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | ||||||||||||||
Total Distributions | (0.04 | ) | (0.09 | ) | (0.22 | ) | (0.36 | ) | (0.19 | ) | (0.26 | ) | ||||||||||||
Net Asset Value, End of Period | $5.05 | $5.24 | $3.64 | $6.48 | $7.55 | $6.72 | ||||||||||||||||||
Total Return(3) | (2.82 | )% | 46.68 | % | (41.07 | )% | (9.88 | )% | 15.37 | % | 9.44 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.87 | %(4) | 0.85 | % | 0.83 | % | 0.83 | % | 0.83 | % | 0.84 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.66 | %(4) | 1.87 | % | 2.57 | % | 1.93 | % | 1.86 | % | 1.75 | % | ||||||||||||
Portfolio Turnover Rate | 25 | % | 25 | % | 22 | % | 18 | % | 12 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $633,088 | $786,992 | $569,483 | $1,251,631 | $1,498,119 | $1,112,858 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
24
Large Company Value
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.24 | $3.64 | $6.48 | $7.55 | $6.72 | $6.39 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.05 | 0.10 | 0.15 | 0.16 | 0.15 | 0.13 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.19 | ) | 1.60 | (2.76 | ) | (0.86 | ) | 0.88 | 0.47 | |||||||||||||||
Total From Investment Operations | (0.14 | ) | 1.70 | (2.61 | ) | (0.70 | ) | 1.03 | 0.60 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.05 | ) | (0.10 | ) | (0.15 | ) | (0.16 | ) | (0.14 | ) | (0.12 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.08 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | ||||||||||||||
Total Distributions | (0.05 | ) | (0.10 | ) | (0.23 | ) | (0.37 | ) | (0.20 | ) | (0.27 | ) | ||||||||||||
Net Asset Value, End of Period | $5.05 | $5.24 | $3.64 | $6.48 | $7.55 | $6.72 | ||||||||||||||||||
Total Return(3) | (2.72 | )% | 46.97 | % | (40.95 | )% | (9.70 | )% | 15.60 | % | 9.65 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.67 | %(4) | 0.65 | % | 0.63 | % | 0.63 | % | 0.63 | % | 0.64 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.86 | %(4) | 2.07 | % | 2.77 | % | 2.13 | % | 2.06 | % | 1.95 | % | ||||||||||||
Portfolio Turnover Rate | 25 | % | 25 | % | 22 | % | 18 | % | 12 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $273,427 | $243,190 | $275,245 | $540,297 | $587,012 | $527,109 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
25
Large Company Value
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.24 | $3.64 | $6.47 | $7.55 | $6.72 | $6.39 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.04 | 0.08 | 0.12 | 0.12 | 0.12 | 0.10 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.19 | ) | 1.60 | (2.74 | ) | (0.86 | ) | 0.88 | 0.47 | |||||||||||||||
Total From Investment Operations | (0.15 | ) | 1.68 | (2.62 | ) | (0.74 | ) | 1.00 | 0.57 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.04 | ) | (0.08 | ) | (0.13 | ) | (0.13 | ) | (0.11 | ) | (0.09 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.08 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | ||||||||||||||
Total Distributions | (0.04 | ) | (0.08 | ) | (0.21 | ) | (0.34 | ) | (0.17 | ) | (0.24 | ) | ||||||||||||
Net Asset Value, End of Period | $5.05 | $5.24 | $3.64 | $6.47 | $7.55 | $6.72 | ||||||||||||||||||
Total Return(4) | (2.94 | )% | 46.31 | % | (41.12 | )% | (10.24 | )% | 15.08 | % | 9.17 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.12 | %(5) | 1.10 | % | 1.08 | % | 1.08 | % | 1.08 | % | 1.09 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.41 | %(5) | 1.62 | % | 2.32 | % | 1.68 | % | 1.61 | % | 1.50 | % | ||||||||||||
Portfolio Turnover Rate | 25 | % | 25 | % | 22 | % | 18 | % | 12 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $101,453 | $200,408 | $162,957 | $373,078 | $282,930 | $184,601 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended September 30, 2010 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements.
26
Large Company Value
B Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.26 | $3.65 | $6.49 | $7.57 | $6.74 | $6.41 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.02 | 0.04 | 0.08 | 0.07 | 0.06 | 0.05 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.20 | ) | 1.61 | (2.75 | ) | (0.87 | ) | 0.89 | 0.47 | |||||||||||||||
Total From Investment Operations | (0.18 | ) | 1.65 | (2.67 | ) | (0.80 | ) | 0.95 | 0.52 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.02 | ) | (0.04 | ) | (0.09 | ) | (0.07 | ) | (0.06 | ) | (0.04 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.08 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | ||||||||||||||
Total Distributions | (0.02 | ) | (0.04 | ) | (0.17 | ) | (0.28 | ) | (0.12 | ) | (0.19 | ) | ||||||||||||
Net Asset Value, End of Period | $5.06 | $5.26 | $3.65 | $6.49 | $7.57 | $6.74 | ||||||||||||||||||
Total Return(3) | (3.48 | )% | 45.34 | % | (41.58 | )% | (10.88 | )% | 14.18 | % | 8.33 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.87 | %(4) | 1.85 | % | 1.83 | % | 1.83 | % | 1.83 | % | 1.84 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.66 | %(4) | 0.87 | % | 1.57 | % | 0.93 | % | 0.86 | % | 0.75 | % | ||||||||||||
Portfolio Turnover Rate | 25 | % | 25 | % | 22 | % | 18 | % | 12 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $4,846 | $5,662 | $5,285 | $12,965 | $17,374 | $15,954 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
27
Large Company Value
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.24 | $3.64 | $6.47 | $7.55 | $6.72 | $6.39 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.02 | 0.04 | 0.08 | 0.07 | 0.06 | 0.05 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.19 | ) | 1.60 | (2.74 | ) | (0.87 | ) | 0.89 | 0.47 | |||||||||||||||
Total From Investment Operations | (0.17 | ) | 1.64 | (2.66 | ) | (0.80 | ) | 0.95 | 0.52 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.02 | ) | (0.04 | ) | (0.09 | ) | (0.07 | ) | (0.06 | ) | (0.04 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.08 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | ||||||||||||||
Total Distributions | (0.02 | ) | (0.04 | ) | (0.17 | ) | (0.28 | ) | (0.12 | ) | (0.19 | ) | ||||||||||||
Net Asset Value, End of Period | $5.05 | $5.24 | $3.64 | $6.47 | $7.55 | $6.72 | ||||||||||||||||||
Total Return(3) | (3.30 | )% | 45.19 | % | (41.56 | )% | (10.91 | )% | 14.22 | % | 8.35 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.87 | %(4) | 1.85 | % | 1.83 | % | 1.83 | % | 1.83 | % | 1.84 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.66 | %(4) | 0.87 | % | 1.57 | % | 0.93 | % | 0.86 | % | 0.75 | % | ||||||||||||
Portfolio Turnover Rate | 25 | % | 25 | % | 22 | % | 18 | % | 12 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $12,440 | $17,211 | $17,246 | $51,775 | $71,792 | $61,682 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
28
Large Company Value
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.24 | $3.64 | $6.48 | $7.56 | $6.72 | $6.39 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.03 | 0.06 | 0.11 | 0.11 | 0.10 | 0.09 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.19 | ) | 1.61 | (2.76 | ) | (0.87 | ) | 0.89 | 0.47 | |||||||||||||||
Total From Investment Operations | (0.16 | ) | 1.67 | (2.65 | ) | (0.76 | ) | 0.99 | 0.56 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.03 | ) | (0.07 | ) | (0.11 | ) | (0.11 | ) | (0.09 | ) | (0.08 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.08 | ) | (0.21 | ) | (0.06 | ) | (0.15 | ) | ||||||||||||||
Total Distributions | (0.03 | ) | (0.07 | ) | (0.19 | ) | (0.32 | ) | (0.15 | ) | (0.23 | ) | ||||||||||||
Net Asset Value, End of Period | $5.05 | $5.24 | $3.64 | $6.48 | $7.56 | $6.72 | ||||||||||||||||||
Total Return(3) | (3.06 | )% | 45.93 | % | (41.36 | )% | (10.45 | )% | 14.95 | % | 8.90 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.37 | %(4) | 1.35 | % | 1.33 | % | 1.33 | % | 1.33 | % | 1.34 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.16 | %(4) | 1.37 | % | 2.07 | % | 1.43 | % | 1.36 | % | 1.25 | % | ||||||||||||
Portfolio Turnover Rate | 25 | % | 25 | % | 22 | % | 18 | % | 12 | % | 16 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $14,584 | $14,699 | $9,587 | $16,675 | $17,765 | $10,984 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
29
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010 and June 30, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor, A, B, C and R Classes | For: | 678,985,495 | ||
Against: | 7,344,655 | |||
Abstain: | 12,256,409 | |||
Broker Non-Vote: | 101,612,619 | |||
Institutional Class | For: | 126,610,337 | ||
Against: | 898,087 | |||
Abstain: | 315,312 | |||
Broker Non-Vote: | 17,391,554 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
30
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
31
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock’s weight in the index is proportionate to its market value. Created by Standard & Poor’s, it is considered to be a broad measure of U.S. stock market performance.
32
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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 Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69820
Semiannual Report September 30, 2010 |
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American Century Investments®
Mid Cap Value Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
�� U.S. Stock Index Returns | 4 | |
Mid Cap Value | ||
Performance | 5 | |
Portfolio Commentary | 7 | |
Top Ten Holdings | 9 | |
Top Five Industries | 9 | |
Types of Investments in Portfolio | 9 | |
Shareholder Fee Example | 10 | |
Financial Statements | ||
Schedule of Investments | 12 | |
Statement of Assets and Liabilities | 15 | |
Statement of Operations | 16 | |
Statement of Changes in Net Assets | 17 | |
Notes to Financial Statements | 18 | |
Financial Highlights | 24 | |
Other Information | ||
Proxy Voting Results | 29 | |
Additional Information | 30 | |
Index Definitions | 31 |
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
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Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors—working on behalf of shareholders—to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
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By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Mid Cap Value
Total Returns as of September 30, 2010 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | Since Inception | Inception Date | |
Investor Class | ACMVX | 1.09% | 15.68% | 5.33% | 7.56% | 3/31/04 |
Russell Midcap Value Index | — | 1.40% | 16.93% | 1.97% | 5.76% | — |
Institutional Class | AVUAX | 1.28% | 16.02% | 5.56% | 8.06% | 8/2/04 |
A Class(2) No sales charge* With sales charge* | ACLAX | 0.96% -4.87% | 15.39% 8.78% | 5.07% 3.84% | 6.06% 4.97% | 1/13/05 |
C Class No sales charge* With sales charge* | ACCLX | 0.67% -0.32% | — — | — — | 4.80%(1) 3.80%(1) | 3/1/10 |
R Class | AMVRX | 0.84% | 15.10% | 4.81% | 4.12% | 7/29/05 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index does not.
5
Mid Cap Value
Growth of $10,000 Over Life of Class |
$10,000 investment made March 31, 2004 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart4.jpg)
*From 3/31/04, the Investor Class’s inception date. Not annualized. |
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.01% | 0.81% | 1.26% | 2.01% | 1.51% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index does not.
6
Portfolio Commentary
Mid Cap Value
Portfolio Managers: Kevin Toney, Michael Liss, and Phil Davidson
Performance Summary
Mid Cap Value returned 1.09%* for the six months ended September 30, 2010. By comparison, the average return for Morningstar’s Mid Cap Value category** (its performance, like Mid Cap Value’s, reflects operating expenses) was 0.04%. The fund’s benchmark, the Russell Midcap Value Index, was up 1.40%. Its returns do not include operating expenses.
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. In this environment, Mid Cap Value’s investment approach, which emphasizes higher-quality businesses with sound balance sheets, provided positive absolute results. On a relative basis, the portfolio was ha mpered by its investments in the financials, health care, and energy sectors. Its positions in the industrials and materials sectors enhanced performance.
We carefully manage this portfolio for long-term results. Since its inception on March 31, 2004, Mid Cap Value has produced an average annual return of 7.56%, topping the returns for that period for Morningstar’s Mid Cap Value category average and the Russell Midcap Value Index (see the performance information on pages 5-6 and the footnotes below).
Financials Dampened Performance
The financials sector was a source of relative weakness. Mid Cap Value was underweight real estate investment trusts (REITs), a segment that outperformed for the benchmark. For some time, we have been concerned about this segment’s operating trends, financial leverage, access to funding, and valuation.
In the capital markets segment, the portfolio’s mix of stocks hampered performance versus the benchmark. Two notable detractors were Northern Trust Corp. and State Street Corp. Both were negatively impacted by expectations of a prolonged period of historically low interest rates. Shares of State Street also declined on concerns about the diminished profitability of the company’s securities lending and foreign exchange businesses as well as potential litigation surrounding its foreign exchange business.
* | All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. |
** | The average returns for Morningstar’s Mid Cap Value category were 14.08% and 1.79% for the one-year and five-year periods ended September 30, 2010, respectively, and 4.43% since March 31, 2004, the Investor Class’s inception. © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
7
Mid Cap Value
Health Care and Energy Detracted
Security selection in health care, the weakest performing sector in the benchmark, hindered relative results. Mid Cap Value owned Zimmer Holdings, a maker of orthopedic reconstructive implants, which is not represented in the benchmark. As a result of the recession, Zimmer faces softening demand and potential pricing pressure for its products. Although health care reform has increased uncertainty for investors, we do not expect the legislation to have significant impact on the company.
In the energy sector, a position in EQT Corp. dampened results. A low-cost natural gas producer, EQT reported significant success with two of its experimental shale wells. We believe weak natural gas prices have temporarily pushed down the company’s share price.
Industrials Contributed Positively
Security selection in the industrials sector was advantageous. The portfolio benefited from a position in Republic Services. Waste management companies weathered the recession well due to their stable business models and strong cash flow generation. Republic Services has also successfully cut costs as part of its merger with Allied Waste Industries, and its disciplined pricing strategy coupled with a nascent recovery in business volume has boosted the profits of this well-run company.
Another notable performer was Hubbell, which manufactures electrical products. The company reported much better-than-anticipated second-quarter results. Revenue improved due to strengthening end market demand, and profit margins rose on solid productivity gains.
Materials Added to Results
In the materials sector, Mid Cap Value benefited from its focus on high-quality, stable businesses. A top contributor was Newmont Mining Corp. Newmont’s new management team continues to execute well on its strategic and operating plan. In addition, as gold prices rose during the period, the company’s profitability increased.
The portfolio also held Bemis Co., a major producer of flexible packaging, primarily for the food industry. Despite higher raw-material costs, Bemis has improved its margins and operating performance. Its acquisition of rival Alcan Packaging Food Americas is also expected to enhance growth.
Outlook
We continue to follow our disciplined, bottom-up process, selecting companies one at a time for the portfolio. As of September 30, 2010, we see opportunities in industrials, health care, and consumer discretionary stocks, reflected by overweight positions in these sectors, relative to the benchmark. Our fundamental analysis and valuation work are also directing us toward smaller relative weightings in financials, utilities, consumer staples, and materials stocks.
8
Mid Cap Value
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
Republic Services, Inc. | 3.2% |
Imperial Oil Ltd. | 2.6% |
Northern Trust Corp. | 2.4% |
Lowe’s Cos., Inc. | 2.4% |
Aon Corp. | 2.1% |
ConAgra Foods, Inc. | 2.0% |
Zimmer Holdings, Inc. | 1.9% |
EQT Corp. | 1.8% |
Marsh & McLennan Cos., Inc. | 1.8% |
NV Energy, Inc. | 1.6% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Insurance | 11.1% |
Oil, Gas & Consumable Fuels | 8.5% |
Electric Utilities | 5.6% |
Commercial Services & Supplies | 5.5% |
Health Care Equipment & Supplies | 5.1% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Domestic Common Stocks | 91.4% |
Foreign Common Stocks* | 5.8% |
Total Common Stocks | 97.2% |
Temporary Cash Investments | 3.5% |
Other Assets and Liabilities | (0.7)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares
9
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
10
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 - 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,010.90 | $5.09 | 1.01% |
Institutional Class | $1,000 | $1,012.80 | $4.09 | 0.81% |
A Class | $1,000 | $1,009.60 | $6.35 | 1.26% |
C Class | $1,000 | $1,006.70 | $10.11 | 2.01% |
R Class | $1,000 | $1,008.40 | $7.60 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.00 | $5.11 | 1.01% |
Institutional Class | $1,000 | $1,021.01 | $4.10 | 0.81% |
A Class | $1,000 | $1,018.75 | $6.38 | 1.26% |
C Class | $1,000 | $1,014.99 | $10.15 | 2.01% |
R Class | $1,000 | $1,017.50 | $7.64 | 1.51% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
11
Schedule of Investments
Mid Cap Value
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 97.2% | ||
AEROSPACE & DEFENSE — 0.6% | ||
ITT Corp. | 119,000 | $5,572,770 |
AIRLINES — 0.2% | ||
Southwest Airlines Co. | 125,300 | 1,637,671 |
BEVERAGES(1) | ||
Coca-Cola Enterprises, Inc. | 5,700 | 176,700 |
CAPITAL MARKETS — 4.4% | ||
Ameriprise Financial, Inc. | 102,901 | 4,870,304 |
Charles Schwab Corp. (The) | 266,800 | 3,708,520 |
Invesco Ltd. | 145,500 | 3,088,965 |
Northern Trust Corp. | 439,500 | 21,201,480 |
State Street Corp. | 134,100 | 5,050,206 |
T. Rowe Price Group, Inc. | 17,300 | 866,125 |
38,785,600 | ||
CHEMICALS — 0.8% | ||
Minerals Technologies, Inc. | 115,001 | 6,775,859 |
COMMERCIAL BANKS — 3.2% | ||
Comerica, Inc. | 362,728 | 13,475,345 |
Commerce Bancshares, Inc. | 234,449 | 8,812,938 |
SunTrust Banks, Inc. | 242,000 | 6,250,860 |
28,539,143 | ||
COMMERCIAL SERVICES & SUPPLIES — 5.5% | ||
Cintas Corp. | 183,400 | 5,052,670 |
Pitney Bowes, Inc. | 266,800 | 5,704,184 |
Republic Services, Inc. | 929,498 | 28,340,394 |
Waste Management, Inc. | 267,144 | 9,547,727 |
48,644,975 | ||
COMMUNICATIONS EQUIPMENT — 0.7% | ||
Emulex Corp.(2) | 596,900 | 6,231,636 |
COMPUTERS & PERIPHERALS(1) | ||
Diebold, Inc. | 14,251 | 443,064 |
CONSTRUCTION MATERIALS — 0.6% | ||
Vulcan Materials Co. | 138,400 | 5,109,728 |
CONTAINERS & PACKAGING — 1.2% | ||
Bemis Co., Inc. | 322,806 | 10,249,090 |
DISTRIBUTORS — 0.7% | ||
Genuine Parts Co. | 131,594 | 5,867,776 |
DIVERSIFIED — 1.5% | ||
iShares Russell Midcap Value Index Fund | 339,400 | 13,701,578 |
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.0% | ||
Consolidated Communications Holdings, Inc. | 225,900 | 4,217,553 |
Qwest Communications International, Inc. | 1,425,300 | 8,936,631 |
Windstream Corp. | 353,237 | 4,341,283 |
17,495,467 | ||
ELECTRIC UTILITIES — 5.6% | ||
American Electric Power Co., Inc. | 148,855 | 5,393,017 |
Great Plains Energy, Inc. | 218,959 | 4,138,325 |
IDACORP, Inc. | 56,268 | 2,021,147 |
Northeast Utilities | 238,783 | 7,060,813 |
NV Energy, Inc. | 1,092,600 | 14,367,690 |
Portland General Electric Co. | 300,036 | 6,084,730 |
Westar Energy, Inc. | 441,641 | 10,700,961 |
49,766,683 | ||
ELECTRICAL EQUIPMENT — 3.5% | ||
Emerson Electric Co. | 67,200 | 3,538,752 |
Hubbell, Inc., Class B | 279,235 | 14,171,176 |
Thomas & Betts Corp.(2) | 299,000 | 12,264,980 |
Woodward Governor Co. | 38,400 | 1,244,928 |
31,219,836 | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.9% | ||
Molex, Inc. | 364,384 | 7,626,557 |
ENERGY EQUIPMENT & SERVICES — 0.9% | ||
Baker Hughes, Inc. | 186,000 | 7,923,600 |
FOOD PRODUCTS — 4.1% | ||
ConAgra Foods, Inc. | 798,190 | 17,512,289 |
H.J. Heinz Co. | 248,500 | 11,771,445 |
Kellogg Co. | 130,700 | 6,601,657 |
35,885,391 | ||
GAS UTILITIES — 0.7% | ||
AGL Resources, Inc. | 57,300 | 2,198,028 |
Southwest Gas Corp. | 110,103 | 3,698,360 |
5,896,388 | ||
HEALTH CARE EQUIPMENT & SUPPLIES — 5.1% | ||
Beckman Coulter, Inc. | 266,456 | 13,000,388 |
Boston Scientific Corp.(2) | 665,500 | 4,079,515 |
CareFusion Corp.(2) | 184,361 | 4,579,527 |
Covidien plc | 111,900 | 4,497,261 |
Symmetry Medical, Inc.(2) | 208,571 | 2,010,625 |
Zimmer Holdings, Inc.(2) | 325,000 | 17,007,250 |
45,174,566 |
12
Mid Cap Value
Shares | Value |
HEALTH CARE PROVIDERS & SERVICES — 2.1% | ||
LifePoint Hospitals, Inc.(2) | 254,100 | $8,908,746 |
Patterson Cos., Inc. | 207,000 | 5,930,550 |
Select Medical Holdings Corp.(2) | 432,378 | 3,329,311 |
18,168,607 | ||
HOTELS, RESTAURANTS & LEISURE — 2.5% | ||
CEC Entertainment, Inc.(2) | 348,500 | 11,964,005 |
International Speedway Corp., Class A | 245,807 | 5,997,691 |
Speedway Motorsports, Inc. | 291,543 | 4,571,394 |
22,533,090 | ||
HOUSEHOLD DURABLES — 1.9% | ||
Fortune Brands, Inc. | 148,800 | 7,325,424 |
Toll Brothers, Inc.(2) | 324,700 | 6,175,794 |
Whirlpool Corp. | 44,400 | 3,594,624 |
17,095,842 | ||
HOUSEHOLD PRODUCTS — 1.8% | ||
Clorox Co. | 38,800 | 2,590,288 |
Kimberly-Clark Corp. | 207,523 | 13,499,371 |
16,089,659 | ||
INDUSTRIAL CONGLOMERATES — 0.7% | ||
Tyco International Ltd. | 176,900 | 6,497,537 |
INSURANCE — 11.1% | ||
ACE Ltd. | 191,100 | 11,131,575 |
Allstate Corp. (The) | 210,100 | 6,628,655 |
Aon Corp. | 474,900 | 18,573,339 |
Chubb Corp. (The) | 134,600 | 7,670,854 |
Hartford Financial Services Group, Inc. (The) | 18,936 | 434,581 |
HCC Insurance Holdings, Inc. | 444,060 | 11,585,525 |
Marsh & McLennan Cos., Inc. | 657,327 | 15,854,727 |
Symetra Financial Corp. | 640,878 | 6,703,584 |
Transatlantic Holdings, Inc. | 193,558 | 9,836,618 |
Travelers Cos., Inc. (The) | 191,700 | 9,987,570 |
98,407,028 | ||
IT SERVICES — 1.3% | ||
Accenture plc, Class A | 117,100 | 4,975,579 |
Automatic Data Processing, Inc. | 89,700 | 3,770,091 |
Paychex, Inc. | 110,500 | 3,037,645 |
11,783,315 | ||
LEISURE EQUIPMENT & PRODUCTS — 0.3% | ||
Mattel, Inc. | 126,000 | 2,955,960 |
MACHINERY — 3.1% | ||
Altra Holdings, Inc.(2) | 406,030 | 5,980,822 |
Harsco Corp. | 219,700 | 5,400,226 |
Kaydon Corp. | 392,456 | 13,578,977 |
Robbins & Myers, Inc. | 85,800 | 2,297,724 |
27,257,749 | ||
MEDIA — 1.1% | ||
Omnicom Group, Inc. | 169,300 | 6,683,964 |
Scholastic Corp. | 98,700 | 2,745,834 |
9,429,798 | ||
METALS & MINING — 0.9% | ||
Newmont Mining Corp. | 122,538 | 7,696,612 |
MULTI-UTILITIES — 4.1% | ||
Consolidated Edison, Inc. | 85,600 | 4,127,632 |
PG&E Corp. | 310,100 | 14,084,742 |
Wisconsin Energy Corp. | 104,000 | 6,011,200 |
Xcel Energy, Inc. | 527,268 | 12,111,346 |
36,334,920 | ||
OIL, GAS & CONSUMABLE FUELS — 8.5% | ||
Apache Corp. | 32,349 | 3,162,438 |
Devon Energy Corp. | 171,800 | 11,122,332 |
EQT Corp. | 447,357 | 16,131,693 |
Imperial Oil Ltd. | 610,800 | 23,146,168 |
Murphy Oil Corp. | 140,900 | 8,724,528 |
Noble Energy, Inc. | 73,300 | 5,504,097 |
Ultra Petroleum Corp.(2) | 125,900 | 5,285,282 |
Williams Partners LP | 41,400 | 1,755,360 |
74,831,898 | ||
PAPER & FOREST PRODUCTS — 0.5% | ||
MeadWestvaco Corp. | 190,300 | 4,639,514 |
REAL ESTATE INVESTMENT TRUSTS (REITs) — 4.6% | ||
Annaly Capital Management, Inc. | 236,226 | 4,157,578 |
Boston Properties, Inc. | 22,299 | 1,853,493 |
Government Properties Income Trust | 336,198 | 8,976,487 |
HCP, Inc. | 45,694 | 1,644,070 |
Host Hotels & Resorts, Inc. | 287,369 | 4,161,103 |
Piedmont Office Realty Trust, Inc., Class A | 594,862 | 11,248,840 |
Weyerhaeuser Co. | 533,771 | 8,412,231 |
40,453,802 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.8% | ||
Applied Materials, Inc. | 1,160,900 | 13,559,312 |
KLA-Tencor Corp. | 143,100 | 5,041,413 |
Teradyne, Inc.(2) | 439,300 | 4,893,802 |
Verigy Ltd.(2) | 140,300 | 1,140,639 |
24,635,166 |
13
Mid Cap Value
Shares | Value |
SOFTWARE — 0.5% | ||
Cadence Design Systems, Inc.(2) | 476,400 | $3,634,932 |
Synopsys, Inc.(2) | 35,700 | 884,289 |
4,519,221 | ||
SPECIALTY RETAIL — 4.8% | ||
Best Buy Co., Inc. | 121,400 | 4,956,762 |
Lowe’s Cos., Inc. | 948,000 | 21,130,920 |
PetSmart, Inc. | 200,200 | 7,007,000 |
Staples, Inc. | 426,100 | 8,914,012 |
42,008,694 | ||
THRIFTS & MORTGAGE FINANCE — 1.9% | ||
Hudson City Bancorp., Inc. | 533,000 | 6,534,580 |
People’s United Financial, Inc. | 797,889 | 10,444,367 |
16,978,947 | ||
TRADING COMPANIES & DISTRIBUTORS — 0.5% | ||
Beacon Roofing Supply, Inc.(2) | 308,800 | 4,499,216 |
TOTAL COMMON STOCKS (Cost $796,651,780) | 859,540,653 | |
Temporary Cash Investments — 3.5% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 24,963 | $24,963 |
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $31,309,540), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $30,700,154) | 30,700,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $30,724,963) | 30,724,963 | |
TOTAL INVESTMENT SECURITIES — 100.7%(Cost $827,376,743) | 890,265,616 | |
OTHER ASSETS AND LIABILITIES — (0.7)% | (6,567,816) | |
TOTAL NET ASSETS — 100.0% | $883,697,800 |
Forward Foreign Currency Exchange Contracts | ||||
Contracts to Sell | Counter Party | Settlement Date | Value | Unrealized Gain (Loss) |
18,655,940 CAD for USD | Bank of America | 10/29/10 | $18,123,121 | $(118,759) |
(Value on Settlement Date $18,004,362) |
Notes to Schedule of Investments
CAD = Canadian Dollar |
USD = United States Dollar |
(1) | Industry is less than 0.05% of total net assets. |
(2) | Non-income producing. |
See Notes to Financial Statements. |
14
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | |
Assets | |
Investment securities, at value (cost of $827,376,743) | $890,265,616 |
Receivable for investments sold | 6,318,806 |
Receivable for capital shares sold | 4,375,202 |
Dividends and interest receivable | 2,037,001 |
902,996,625 | |
Liabilities | |
Payable for investments purchased | 14,086,761 |
Payable for capital shares redeemed | 4,387,379 |
Payable for forward foreign currency exchange contracts | 118,759 |
Accrued management fees | 675,360 |
Service fees (and distribution fees – A Class and R Class) payable | 29,949 |
Distribution fees payable | 617 |
19,298,825 | |
Net Assets | $883,697,800 |
Net Assets Consist of: | |
Capital (par value and paid-in surplus) | $863,889,018 |
Undistributed net investment income | 614,520 |
Accumulated net realized loss on investment and foreign currency transactions | (43,576,597) |
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies | 62,770,859 |
$883,697,800 |
Net assets | Shares outstanding | Net asset value per share | |
Investor Class, $0.01 Par Value | $638,837,097 | 56,167,942 | $11.37 |
Institutional Class, $0.01 Par Value | $114,947,179 | 10,104,276 | $11.38 |
A Class, $0.01 Par Value | $107,125,865 | 9,418,497 | $11.37* |
C Class, $0.01 Par Value | $1,158,327 | 101,740 | $11.39 |
R Class, $0.01 Par Value | $21,629,332 | 1,901,541 | $11.37 |
*Maximum offering price $12.06 (net asset value divided by 0.9425)
See Notes to Financial Statements.
15
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | |
Investment Income (Loss) | |
Income: | |
Dividends (net of foreign taxes withheld of $25,728) | $15,252,855 |
Interest | 11,186 |
15,264,041 | |
Expenses: | |
Management fees | 3,617,106 |
Distribution fees — C Class | 2,113 |
Service fees — C Class | 704 |
Distribution and service fees: | |
A Class | 110,181 |
R Class | 46,095 |
Directors’ fees and expenses | 12,667 |
Other expenses | 43,900 |
3,832,766 | |
Net investment income (loss) | 11,431,275 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investment transactions | 24,798,098 |
Foreign currency transactions | 432,559 |
25,230,657 | |
Change in net unrealized appreciation (depreciation) on: | |
Investments | (21,054,124) |
Translation of assets and liabilities in foreign currencies | (76,911) |
(21,131,035) | |
Net realized and unrealized gain (loss) | 4,099,622 |
Net Increase (Decrease) in Net Assets Resulting from Operations | $15,530,897 |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 |
Operations | ||
Net investment income (loss) | $11,431,275 | $7,479,824 |
Net realized gain (loss) | 25,230,657 | 46,250,158 |
Change in net unrealized appreciation (depreciation) | (21,131,035) | 121,366,633 |
Net increase (decrease) in net assets resulting from operations | 15,530,897 | 175,096,615 |
Distributions to Shareholders | ||
From net investment income: | ||
Investor Class | (8,505,856) | (4,964,361) |
Institutional Class | (1,624,132) | (603,466) |
A Class | (1,333,970) | (619,938) |
C Class | (9,256) | — |
R Class | (244,535) | (93,212) |
Decrease in net assets from distributions | (11,717,749) | (6,280,977) |
Capital Share Transactions | ||
Net increase (decrease) in net assets from capital share transactions | 240,503,833 | 211,781,652 |
Net increase (decrease) in net assets | 244,316,981 | 380,597,290 |
Net Assets | ||
Beginning of period | 639,380,819 | 258,783,529 |
End of period | $883,697,800 | $639,380,819 |
Undistributed net investment income | $614,520 | $900,994 |
See Notes to Financial Statements. |
17
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company 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 is diversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives by investing primarily in stocks of medium size companies that management believes to be undervalued at the time of purchase. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class, the Institutional Class, the A Class (formerly Advisor Class), the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific e xpenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. Sale of the C Class commenced on March 1, 2010.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. 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 certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions.
18
For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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.
Exchange-Traded Funds — The fund may invest in exchange-traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. 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.
19
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The annual management fee for each class is 1.00% for the Investor Class, A Class, C Class and R Class and 0.80% for the Institutional Class .
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2010, are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $524,618,675 and $293,024,047, respectively.
20
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010(1) | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 160,000,000 | 120,000,000 | ||||||||||||||
Sold | 19,161,022 | $214,289,481 | 21,306,808 | $213,695,479 | ||||||||||||
Issued in reinvestment of distributions | 666,785 | 7,511,871 | 417,792 | 4,255,315 | ||||||||||||
Redeemed | (5,634,321 | ) | (62,845,352 | ) | (8,496,534 | ) | (82,980,087 | ) | ||||||||
14,193,486 | 158,956,000 | 13,228,066 | 134,970,707 | |||||||||||||
Institutional Class/Shares Authorized | 35,000,000 | 20,000,000 | ||||||||||||||
Sold | 4,650,945 | 50,271,633 | 4,462,654 | 46,178,288 | ||||||||||||
Issued in reinvestment of distributions | 100,813 | 1,135,701 | 46,510 | 483,302 | ||||||||||||
Redeemed | (650,616 | ) | (7,208,448 | ) | (939,061 | ) | (9,386,542 | ) | ||||||||
4,101,142 | 44,198,886 | 3,570,103 | 37,275,048 | |||||||||||||
A Class/Shares Authorized | 30,000,000 | 20,000,000 | ||||||||||||||
Sold | 4,096,953 | 45,595,109 | 4,642,922 | 46,461,341 | ||||||||||||
Issued in reinvestment of distributions | 117,434 | 1,323,064 | 60,409 | 617,612 | ||||||||||||
Redeemed | (1,408,947 | ) | (15,678,840 | ) | (1,638,412 | ) | (16,714,115 | ) | ||||||||
2,805,440 | 31,239,333 | 3,064,919 | 30,364,838 | |||||||||||||
C Class/Shares Authorized | 10,000,000 | 20,000,000 | ||||||||||||||
Sold | 97,129 | 1,089,501 | 4,468 | 50,000 | ||||||||||||
Issued in reinvestment of distributions | 769 | 8,670 | — | — | ||||||||||||
Redeemed | (626 | ) | (7,049 | ) | — | — | ||||||||||
97,272 | 1,091,122 | 4,468 | 50,000 | |||||||||||||
R Class/Shares Authorized | 10,000,000 | 10,000,000 | ||||||||||||||
Sold | 709,138 | 7,981,085 | 1,132,811 | 11,223,557 | ||||||||||||
Issued in reinvestment of distributions | 21,694 | 244,425 | 9,042 | 93,171 | ||||||||||||
Redeemed | (285,417 | ) | (3,207,018 | ) | (220,730 | ) | (2,195,669 | ) | ||||||||
445,415 | 5,018,492 | 921,123 | 9,121,059 | |||||||||||||
Net increase (decrease) | 21,642,755 | $240,503,833 | 20,788,679 | $211,781,652 |
(1) | March 1, 2010 (commencement of sale) through March 31, 2010 for the C Class. |
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (including a fund’s own assumptions). |
21
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 valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $808,151,894 | — | — | |||||||||
Foreign Common Stocks | 28,242,591 | $23,146,168 | — | |||||||||
Temporary Cash Investments | 24,963 | 30,700,000 | — | |||||||||
Total Value of Investment Securities | $836,419,448 | $53,846,168 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(118,759 | ) | — |
6. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting u nrealized appreciation or depreciation are determined daily using prevailing exchange rates. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during t he period.
The value of foreign currency risk derivative instruments as of September 30, 2010, is disclosed on the Statement of Assets and Liabilities as a liability of $118,759 in payable for forward foreign currency exchange contracts. For the six months ended September 30, 2010, the effect of foreign currency risk derivative instruments on the Statement of Operations was $403,991 in net realized gain (loss) on foreign currency transactions and $(75,634) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
22
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
8. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $848,465,372 | |||
Gross tax appreciation of investments | $63,817,833 | |||
Gross tax depreciation of investments | (22,017,589 | ) | ||
Net tax appreciation (depreciation) of investments | $41,800,244 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(45,531,078), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(37,541,838) and $(7,989,240) expire in 2017 and 2018, respectively.
23
Financial Highlights
Mid Cap Value
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.41 | $7.34 | $10.66 | $13.33 | $12.10 | $11.32 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.17 | 0.18 | 0.19 | 0.16 | 0.16 | 0.21 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.05 | ) | 4.03 | (3.32 | ) | (1.51 | ) | 1.87 | 1.70 | |||||||||||||||
Total From Investment Operations | 0.12 | 4.21 | (3.13 | ) | (1.35 | ) | 2.03 | 1.91 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.16 | ) | (0.14 | ) | (0.19 | ) | (0.16 | ) | (0.14 | ) | (0.21 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (1.16 | ) | (0.66 | ) | (0.92 | ) | |||||||||||||||
Total Distributions | (0.16 | ) | (0.14 | ) | (0.19 | ) | (1.32 | ) | (0.80 | ) | (1.13 | ) | ||||||||||||
Net Asset Value, End of Period | $11.37 | $11.41 | $7.34 | $10.66 | $13.33 | $12.10 | ||||||||||||||||||
Total Return(3) | 1.09 | % | 57.68 | % | (29.66 | )% | (10.84 | )% | 17.12 | % | 17.62 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(4) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 3.10 | %(4) | 1.79 | % | 2.10 | % | 1.25 | % | 1.30 | % | 1.77 | % | ||||||||||||
Portfolio Turnover Rate | 41 | % | 126 | % | 173 | % | 206 | % | 187 | % | 228 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $638,837 | $478,796 | $210,960 | $274,918 | $301,642 | $115,262 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
24
Mid Cap Value
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.41 | $7.34 | $10.66 | $13.33 | $12.10 | $11.33 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.20 | 0.20 | 0.21 | 0.18 | 0.19 | 0.24 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.06 | ) | 4.03 | (3.32 | ) | (1.51 | ) | 1.87 | 1.69 | |||||||||||||||
Total From Investment Operations | 0.14 | 4.23 | (3.11 | ) | (1.33 | ) | 2.06 | 1.93 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.17 | ) | (0.16 | ) | (0.21 | ) | (0.18 | ) | (0.17 | ) | (0.24 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (1.16 | ) | (0.66 | ) | (0.92 | ) | |||||||||||||||
Total Distributions | (0.17 | ) | (0.16 | ) | (0.21 | ) | (1.34 | ) | (0.83 | ) | (1.16 | ) | ||||||||||||
Net Asset Value, End of Period | $11.38 | $11.41 | $7.34 | $10.66 | $13.33 | $12.10 | ||||||||||||||||||
Total Return(3) | 1.28 | % | 58.00 | % | (29.52 | )% | (10.67 | )% | 17.36 | % | 17.74 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(4) | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 3.30 | %(4) | 1.99 | % | 2.30 | % | 1.45 | % | 1.50 | % | 1.97 | % | ||||||||||||
Portfolio Turnover Rate | 41 | % | 126 | % | 173 | % | 206 | % | 187 | % | 228 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $114,947 | $68,487 | $17,859 | $17,378 | $20,623 | $10,510 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
25
Mid Cap Value
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.41 | $7.34 | $10.66 | $13.33 | $12.10 | $11.32 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.16 | 0.15 | 0.17 | 0.13 | 0.14 | 0.16 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.05 | ) | 4.04 | (3.32 | ) | (1.51 | ) | 1.86 | 1.72 | |||||||||||||||
Total From Investment Operations | 0.11 | 4.19 | (3.15 | ) | (1.38 | ) | 2.00 | 1.88 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.15 | ) | (0.12 | ) | (0.17 | ) | (0.13 | ) | (0.11 | ) | (0.18 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (1.16 | ) | (0.66 | ) | (0.92 | ) | |||||||||||||||
Total Distributions | (0.15 | ) | (0.12 | ) | (0.17 | ) | (1.29 | ) | (0.77 | ) | (1.10 | ) | ||||||||||||
Net Asset Value, End of Period | $11.37 | $11.41 | $7.34 | $10.66 | $13.33 | $12.10 | ||||||||||||||||||
Total Return(4) | 0.96 | % | 57.28 | % | (29.84 | )% | (11.07 | )% | 16.83 | % | 17.32 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(5) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.85 | %(5) | 1.54 | % | 1.85 | % | 1.00 | % | 1.05 | % | 1.52 | % | ||||||||||||
Portfolio Turnover Rate | 41 | % | 126 | % | 173 | % | 206 | % | 187 | % | 228 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $107,126 | $75,435 | $26,039 | $25,932 | $21,412 | $8,175 |
(1) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(2) | Six months ended September 30, 2010 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements. |
26
Mid Cap Value
C Class | ||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||
2010(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $11.42 | $10.97 | ||||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | 0.14 | 0.02 | ||||||
Net Realized and Unrealized Gain (Loss) | (0.06 | ) | 0.43 | |||||
Total From Investment Operations | 0.08 | 0.45 | ||||||
Distributions | ||||||||
From Net Investment Income | (0.11 | ) | — | |||||
Net Asset Value, End of Period | $11.39 | $11.42 | ||||||
Total Return(4) | 0.67 | % | 4.10 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(5) | 2.00 | %(5) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.10 | %(5) | 2.07 | %(5) | ||||
Portfolio Turnover Rate | 41 | % | 126 | %(6) | ||||
Net Assets, End of Period (in thousands) | $1,158 | $51 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through March 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2010. |
See Notes to Financial Statements. |
27
Mid Cap Value
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006(2) | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.41 | $7.34 | $10.65 | $13.32 | $12.09 | $12.21 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.14 | 0.13 | 0.15 | 0.10 | 0.13 | 0.07 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.05 | ) | 4.03 | (3.32 | ) | (1.51 | ) | 1.84 | 0.79 | |||||||||||||||
Total From Investment Operations | 0.09 | 4.16 | (3.17 | ) | (1.41 | ) | 1.97 | 0.86 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.13 | ) | (0.09 | ) | (0.14 | ) | (0.10 | ) | (0.08 | ) | (0.06 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (1.16 | ) | (0.66 | ) | (0.92 | ) | |||||||||||||||
Total Distributions | (0.13 | ) | (0.09 | ) | (0.14 | ) | (1.26 | ) | (0.74 | ) | (0.98 | ) | ||||||||||||
Net Asset Value, End of Period | $11.37 | $11.41 | $7.34 | $10.65 | $13.32 | $12.09 | ||||||||||||||||||
Total Return(4) | 0.84 | % | 56.88 | % | (29.95 | )% | (11.30 | )% | (16.55 | )% | (7.56 | )% | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.51 | %(5) | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | % | 1.50 | %(5) | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.60 | %(5) | 1.29 | % | 1.60 | % | 0.75 | % | 0.80 | % | 0.97 | %(5) | ||||||||||||
Portfolio Turnover Rate | 41 | % | 126 | % | 173 | % | 206 | % | 187 | % | 228 | %(6) | ||||||||||||
Net Assets, End of Period (in thousands) | $21,629 | $16,611 | $3,926 | $3,172 | $820 | $27 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | July 29, 2005 (commencement of sale) through March 31, 2006. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2006. |
See Notes to Financial Statements. |
28
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor, A and R Classes | For: | 326,212,222 | ||
Against: | 5,269,357 | |||
Abstain: | 8,487,828 | |||
Broker Non-Vote: | 85,816,071 | |||
Institutional Class | For: | 34,327,103 | ||
Against: | 27,804 | |||
Abstain: | 298,999 | |||
Broker Non-Vote: | 8,442,681 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
29
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
30
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
31
Notes
32
![]() | |
Contact Us | |
americancentury.com | |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69821
Semiannual Report September 30, 2010 |
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American Century Investments®
NT Large Company Value Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
NT Large Company Value | ||
Performance | 5 | |
Portfolio Commentary | 6 | |
Top Ten Holdings | 8 | |
Top Five Industries | 8 | |
Types of Investments in Portfolio | 8 | |
Shareholder Fee Example | 9 | |
Financial Statements | ||
Schedule of Investments | 11 | |
Statement of Assets and Liabilities | 14 | |
Statement of Operations | 15 | |
Statement of Changes in Net Assets | 16 | |
Notes to Financial Statements | 17 | |
Financial Highlights | 21 | |
Other Information | ||
Proxy Voting Results | 22 | |
Additional Information | 23 | |
Index Definitions | 24 |
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
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Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors—working on behalf of shareholders—to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/davidson1.jpg)
By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
NT Large Company Value
Total Returns as of September 30, 2010 | |||||
Average Annual Returns | |||||
Ticker Symbol | 6 months(1) | 1 year | Since Inception | Inception Date | |
Institutional Class | ACLLX | -3.03% | 5.57% | -3.47% | 5/12/06 |
Russell 1000 Value Index | — | -2.14% | 8.90% | -2.67%(2) | — |
S&P 500 Index | — | -1.42% | 10.16% | -0.98%(2) | — |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 4/30/06, the date nearest the Institutional Class’s inception for which data are available. |
Growth of $10,000 Over Life of Class |
$10,000 investment made May 12, 2006 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart5.jpg)
*From 5/12/06, the Institutional Class’s inception date. Index data from 4/30/06, the date nearest the Institutional Class’s inception for which data are available. Not annualized.
Total Annual Fund Operating Expenses |
Institutional Class 0.65% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
5
Portfolio Commentary
NT Large Company Value
Portfolio Managers: Chuck Ritter and Brendan Healy
Performance Summary
NT Large Company Value declined -3.03%* for the six months ended September 30, 2010. By comparison, its benchmark, the Russell 1000 Value Index, fell -2.14%. The broader market, as measured by the S&P 500 Index, dropped -1.42%. The portfolio’s return reflects operating expenses, while the indices’ returns do not. The average return for Morningstar’s Large Cap Value category (its performance, like NT Large Company Value’s, reflects operating expenses) was -2.44%.**
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, during the third quarter, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. Against this backdrop, NT Large Company Value’s positions in the utilities, information technology, and financials sectors detracted from relative results. Holdings in consumer di scretionary, telecommunication services, and consumer staples contributed positively.
Utilities Slowed Relative Performance
Although the portfolio gained in absolute terms within the utilities sector, its underweight position hampered progress on a relative basis. We continue to believe that many of these stocks are overvalued, but this stance dampened performance during the reporting period when utilities outperformed in the benchmark.
Information Technology and Financials Detracted
NT Large Company Value’s complement of information technology stocks, specifically its holdings in the computers and peripherals segment, hampered progress. This segment provided key detractor Hewlett-Packard. Despite posting profit gains, the technology giant’s share prices declined after the abrupt exit of its chief executive officer and uncertainty surrounding the appointment of a successor.
In financials, the weakest sector in the benchmark, the portfolio was hindered by its position in diversified financial services. Specifically, NT Large Company Value was modestly overweight two significant decliners, Bank of America Corp. and JPMorgan Chase. Uncertainties about the slow economic recovery and the impact on earnings of financial regulatory reform weighed on these companies’ share prices.
* | Total returns for periods less than one year are not annualized. |
** | The average returns for Morningstar’s Large Cap Value category were 8.02% for the one-year period ended September 30, 2010 and -1.72% since May 31, 2006, the date nearest the Institutional Class’s inception for which data are available. © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
6
NT Large Company Value
The portfolio was also underweight real estate investment trusts (REITs), a segment that provided a positive return for the benchmark. In our opinion, many of these stocks are overvalued as their prices do not reflect the deterioration in commercial real estate fundamentals.
Consumer Discretionary Contributed
In the consumer discretionary sector, NT Large Company Value’s relative outperformance was largely the result of what it didn’t own rather than what it did. An underweight position and security selection in the media industry enhanced results. The portfolio’s mix of retailers also added value.
Telecommunication Services Enhanced Results
An overweight in telecommunication services, the strongest sector in the benchmark, added to relative progress. Many telecommunications companies outperformed during the period as investors sought out stocks that paid attractive dividends. NT Large Company Value owned two of the largest, AT&T and Verizon Communications. Both companies have benefited from the strong growth of their wireless businesses and their ability to increase earnings despite low economic growth.
Consumer Staples Provided Notable Contributor
Security selection in the consumer staples sector contributed to relative progress. The beverages segment provided notable contributor Coca-Cola, which posted better-than-expected profits on higher sales volume and market-share gains internationally and in North America. The company’s purchase of Coca-Cola Enterprises’ North American bottling operations could also boost future earnings growth.
Outlook
We continue to be bottom-up investment managers, evaluating each company individually and building the portfolio one stock at a time. As of September 30, 2010, NT Large Company Value is broadly diversified, with ongoing overweight positions in information technology, health care, and energy sectors. Our valuation work is also directing us toward smaller relative weightings in utilities and financials stocks.
7
NT Large Company Value
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
Pfizer, Inc. | 3.7% |
AT&T, Inc. | 3.7% |
JPMorgan Chase & Co. | 3.5% |
Chevron Corp. | 3.4% |
General Electric Co. | 3.2% |
Bank of America Corp. | 3.2% |
Johnson & Johnson | 3.1% |
Merck & Co., Inc. | 2.6% |
Verizon Communications, Inc. | 2.2% |
Wells Fargo & Co. | 2.2% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Pharmaceuticals | 10.7% |
Oil, Gas & Consumable Fuels | 10.5% |
Diversified Financial Services | 7.8% |
Insurance | 7.3% |
Diversified Telecommunication Services | 6.4% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Common Stocks and Futures | 99.2% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.5% |
8
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost
of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) regis tered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
9
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 – 9/30/10 | Annualized Expense Ratio* | |
Actual | $1,000 | $969.70 | $3.26 | 0.66% |
Hypothetical | $1,000 | $1,021.76 | $3.35 | 0.66% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
10
Schedule of Investments
NT Large Company Value
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 97.7% | ||
AEROSPACE & DEFENSE — 2.1% | ||
Honeywell International, Inc. | 28,700 | $ 1,261,078 |
Lockheed Martin Corp. | 32,600 | 2,323,728 |
Northrop Grumman Corp. | 67,400 | 4,086,462 |
7,671,268 | ||
BEVERAGES — 1.3% | ||
Coca-Cola Co. (The) | 78,700 | 4,605,524 |
BIOTECHNOLOGY — 2.0% | ||
Amgen, Inc.(1) | 99,100 | 5,461,401 |
Gilead Sciences, Inc.(1) | 56,100 | 1,997,721 |
7,459,122 | ||
CAPITAL MARKETS — 3.8% | ||
Ameriprise Financial, Inc. | 53,800 | 2,546,354 |
Bank of New York Mellon Corp. (The) | 112,000 | 2,926,560 |
Goldman Sachs Group, Inc. (The) | 40,400 | 5,841,032 |
Morgan Stanley | 106,900 | 2,638,292 |
13,952,238 | ||
CHEMICALS — 0.9% | ||
E.I. du Pont de Nemours & Co. | 53,900 | 2,405,018 |
PPG Industries, Inc. | 14,200 | 1,033,760 |
3,438,778 | ||
COMMERCIAL BANKS — 4.2% | ||
PNC Financial Services Group, Inc. | 59,900 | 3,109,409 |
U.S. Bancorp. | 202,700 | 4,382,374 |
Wells Fargo & Co. | 316,700 | 7,958,671 |
15,450,454 | ||
COMMERCIAL SERVICES & SUPPLIES — 0.6% | ||
Avery Dennison Corp. | 55,000 | 2,041,600 |
COMMUNICATIONS EQUIPMENT — 0.8% | ||
Cisco Systems, Inc.(1) | 126,200 | 2,763,780 |
COMPUTERS & PERIPHERALS — 1.4% | ||
Hewlett-Packard Co. | 87,600 | 3,685,332 |
Western Digital Corp.(1) | 57,600 | 1,635,264 |
5,320,596 | ||
CONSTRUCTION & ENGINEERING — 0.3% | ||
Shaw Group, Inc. (The)(1) | 33,200 | 1,114,192 |
DIVERSIFIED — 1.4% | ||
SPDR S&P 500 ETF Trust, Series 1 | 43,500 | 4,964,220 |
DIVERSIFIED FINANCIAL SERVICES — 7.8% | ||
Bank of America Corp. | 895,300 | 11,737,383 |
Citigroup, Inc.(1) | 1,097,700 | 4,281,030 |
JPMorgan Chase & Co. | 337,400 | 12,844,818 |
28,863,231 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES — 6.4% | ||
AT&T, Inc. | 475,900 | 13,610,740 |
CenturyLink, Inc. | 42,500 | 1,677,050 |
Verizon Communications, Inc. | 252,000 | 8,212,680 |
23,500,470 | ||
ELECTRIC UTILITIES — 2.7% | ||
American Electric Power Co., Inc. | 60,300 | 2,184,669 |
Exelon Corp. | 103,400 | 4,402,772 |
PPL Corp. | 129,600 | 3,529,008 |
10,116,449 | ||
ENERGY EQUIPMENT & SERVICES — 2.2% | ||
Baker Hughes, Inc. | 61,500 | 2,619,900 |
National Oilwell Varco, Inc. | 74,800 | 3,326,356 |
Transocean Ltd.(1) | 34,500 | 2,218,005 |
8,164,261 | ||
FOOD & STAPLES RETAILING — 4.1% | ||
Kroger Co. (The) | 149,400 | 3,236,004 |
SYSCO Corp. | 75,500 | 2,153,260 |
Walgreen Co. | 100,500 | 3,366,750 |
Wal-Mart Stores, Inc. | 121,500 | 6,502,680 |
15,258,694 | ||
FOOD PRODUCTS — 1.8% | ||
Archer-Daniels-Midland Co. | 33,600 | 1,072,512 |
Kraft Foods, Inc., Class A | 124,100 | 3,829,726 |
Unilever NV New York Shares | 62,900 | 1,879,452 |
6,781,690 | ||
HEALTH CARE EQUIPMENT & SUPPLIES — 0.5% | ||
Medtronic, Inc. | 59,500 | 1,998,010 |
HEALTH CARE PROVIDERS & SERVICES — 1.4% | ||
Aetna, Inc. | 58,000 | 1,833,380 |
Quest Diagnostics, Inc. | 19,800 | 999,306 |
WellPoint, Inc.(1) | 38,200 | 2,163,648 |
4,996,334 | ||
HOTELS, RESTAURANTS & LEISURE — 0.6% | ||
Darden Restaurants, Inc. | 23,400 | 1,001,052 |
Starbucks Corp. | 42,400 | 1,084,592 |
2,085,644 |
11
NT Large Company Value
Shares | Value |
HOUSEHOLD PRODUCTS — 3.0% | ||
Clorox Co. | 46,400 | $ 3,097,664 |
Energizer Holdings, Inc.(1) | 12,900 | 867,267 |
Procter & Gamble Co. (The) | 117,700 | 7,058,469 |
11,023,400 | ||
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS — 0.2% | ||
NRG Energy, Inc.(1) | 43,300 | 901,506 |
INDUSTRIAL CONGLOMERATES — 3.7% | ||
General Electric Co. | 722,900 | 11,747,125 |
Tyco International Ltd. | 56,100 | 2,060,553 |
13,807,678 | ||
INSURANCE — 7.3% | ||
Allstate Corp. (The) | 130,800 | 4,126,740 |
Berkshire Hathaway, Inc., Class B(1) | 44,500 | 3,679,260 |
Chubb Corp. (The) | 77,600 | 4,422,424 |
Loews Corp. | 111,400 | 4,222,060 |
Principal Financial Group, Inc. | 73,200 | 1,897,344 |
Torchmark Corp. | 45,400 | 2,412,556 |
Travelers Cos., Inc. (The) | 92,800 | 4,834,880 |
XL Group plc | 64,100 | 1,388,406 |
26,983,670 | ||
IT SERVICES — 1.7% | ||
Fiserv, Inc.(1) | 29,900 | 1,609,218 |
International Business Machines Corp. | 34,500 | 4,627,830 |
6,237,048 | ||
MACHINERY — 1.4% | ||
Dover Corp. | 35,900 | 1,874,339 |
Ingersoll-Rand plc | 88,400 | 3,156,764 |
5,031,103 | ||
MEDIA — 4.6% | ||
CBS Corp., Class B | 175,900 | 2,789,774 |
Comcast Corp., Class A | 252,100 | 4,557,968 |
Time Warner Cable, Inc. | 31,000 | 1,673,690 |
Time Warner, Inc. | 143,700 | 4,404,405 |
Viacom, Inc., Class B | 101,500 | 3,673,285 |
17,099,122 | ||
METALS & MINING — 0.8% | ||
Freeport-McMoRan Copper & Gold, Inc. | 12,100 | 1,033,219 |
Nucor Corp. | 50,900 | 1,944,380 |
2,977,599 | ||
MULTILINE RETAIL — 1.3% | ||
Kohl’s Corp.(1) | 38,200 | 2,012,376 |
Macy’s, Inc. | 127,300 | 2,939,357 |
4,951,733 | ||
MULTI-UTILITIES — 0.7% | ||
PG&E Corp. | 56,600 | 2,570,772 |
OIL, GAS & CONSUMABLE FUELS — 10.5% | ||
Apache Corp. | 56,900 | 5,562,544 |
Chevron Corp. | 153,500 | 12,441,175 |
ConocoPhillips | 108,600 | 6,236,898 |
Devon Energy Corp. | 31,000 | 2,006,940 |
Exxon Mobil Corp. | 122,000 | 7,538,380 |
Occidental Petroleum Corp. | 34,900 | 2,732,670 |
Valero Energy Corp. | 116,400 | 2,038,164 |
38,556,771 | ||
PAPER & FOREST PRODUCTS — 0.4% | ||
International Paper Co. | 71,700 | 1,559,475 |
PHARMACEUTICALS — 10.7% | ||
Abbott Laboratories | 64,200 | 3,353,808 |
Eli Lilly & Co. | 35,800 | 1,307,774 |
Johnson & Johnson | 187,300 | 11,605,108 |
Merck & Co., Inc. | 257,700 | 9,485,937 |
Pfizer, Inc. | 797,900 | 13,699,943 |
39,452,570 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.0% | ||
Applied Materials, Inc. | 111,900 | 1,306,992 |
Intel Corp. | 127,600 | 2,453,748 |
3,760,740 | ||
SOFTWARE — 3.1% | ||
Activision Blizzard, Inc. | 105,300 | 1,139,346 |
Microsoft Corp. | 291,800 | 7,146,182 |
Oracle Corp. | 112,500 | 3,020,625 |
11,306,153 | ||
SPECIALTY RETAIL — 0.4% | ||
Best Buy Co., Inc. | 37,500 | 1,531,125 |
TEXTILES, APPAREL & LUXURY GOODS — 0.6% | ||
VF Corp. | 25,600 | 2,074,112 |
TOTAL COMMON STOCKS (Cost $329,576,939) | 360,371,132 |
12
NT Large Company Value
Shares | Value |
Temporary Cash Investments — Segregated For Futures Contracts — 1.5% | ||
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $5,796,854), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $5,684,028) (Cost $5,684,000) | $ 5,684,000 | |
Temporary Cash Investments — 0.3% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 6,122 | 6,122 |
Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/19, valued at $16,318), in a joint trading account at 0.18%, dated 9/30/10, due 10/1/10 (Delivery value $16,000) | 16,000 | |
Repurchase Agreement, Goldman Sachs Group, Inc., (collateralized by various U.S. Treasury obligations, 4.875%, 7/31/11, valued at $917,548), in a joint trading account at 0.10%, dated 9/30/10, due 10/1/10 (Delivery value $900,003) | 900,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $922,122) | 922,122 | |
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $336,183,061) | 366,977,254 | |
OTHER ASSETS AND LIABILITIES — 0.5% | 1,693,720 | |
TOTAL NET ASSETS — 100.0% | $368,670,974 |
Futures Contracts | |||
Contracts Purchased | Expiration Date | Underlying Face Amount at Value | Unrealized Gain (Loss) |
100 S&P 500 E-Mini Futures | December 2010 | $5,683,500 | $5,393 |
Notes to Schedule of Investments
ETF = Exchange Traded Fund
SPDR = Standard & Poor’s Depositary Receipts
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | |
Assets | |
Investment securities, at value (cost of $336,183,061) | $366,977,254 |
Cash | 426 |
Deposits with broker for futures contracts | 450,000 |
Receivable for investments sold | 406,212 |
Receivable for capital shares sold | 524,524 |
Dividends and interest receivable | 531,298 |
368,889,714 | |
Liabilities | |
Payable for variation margin on futures contracts | 21,426 |
Accrued management fees | 197,314 |
218,740 | |
Net Assets | $368,670,974 |
Institutional Class Capital Shares, $0.01 Par Value | |
Authorized | 150,000,000 |
Shares outstanding | 47,838,615 |
Net Asset Value Per Share | $7.71 |
Net Assets Consist of: | |
Capital (par value and paid-in surplus) | $374,991,709 |
Undistributed net investment income | 37,348 |
Accumulated net realized loss on investment transactions | (37,157,669) |
Net unrealized appreciation on investments | 30,799,586 |
$368,670,974 |
See Notes to Financial Statements.
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Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | |
Investment Income (Loss) | |
Income: | |
Dividends | $ 4,086,168 |
Interest | 8,871 |
4,095,039 | |
Expenses: | |
Management fees | 1,088,080 |
Directors’ fees and expenses | 4,963 |
Other expenses | 1,024 |
1,094,067 | |
Net investment income (loss) | 3,000,972 |
Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) on: | |
Investment transactions | (2,851,015) |
Futures contract transactions | (949,134) |
(3,800,149) | |
Change in net unrealized appreciation (depreciation) on: | |
Investments | (5,726,588) |
Futures contracts | (287,341) |
(6,013,929) | |
Net realized and unrealized gain (loss) | (9,814,078) |
Net Increase (Decrease) in Net Assets Resulting from Operations | $(6,813,106) |
See Notes to Financial Statements.
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Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 |
Operations | ||
Net investment income (loss) | $ 3,000,972 | $ 4,493,862 |
Net realized gain (loss) | (3,800,149) | (6,033,508) |
Change in net unrealized appreciation (depreciation) | (6,013,929) | 80,867,345 |
Net increase (decrease) in net assets resulting from operations | (6,813,106) | 79,327,699 |
Distributions to Shareholders | ||
From net investment income | (2,965,485) | (4,435,883) |
Capital Share Transactions | ||
Proceeds from shares sold | 74,851,534 | 107,194,743 |
Proceeds from reinvestment of distributions | 2,965,485 | — |
Payments for shares redeemed | (7,401,989) | (26,729,647) |
Net increase (decrease) in net assets from capital share transactions | 70,415,030 | 80,465,096 |
Net increase (decrease) in net assets | 60,636,439 | 155,356,912 |
Net Assets | ||
Beginning of period | 308,034,535 | 152,677,623 |
End of period | $368,670,974 | $308,034,535 |
Undistributed net investment income | $37,348 | $1,861 |
Transactions in Shares of the Fund | ||
Sold | 10,037,657 | 14,774,606 |
Issued in reinvestment of distributions | 387,010 | — |
Redeemed | (980,616) | (3,882,445) |
Net increase (decrease) in shares of the fund | 9,444,051 | 10,892,161 |
See Notes to Financial Statements.
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Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. NT Large Company Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives by investing primarily in companies with larger market capitalization that management believes to be undervalued at the time of purchase. The fund is not permitted to invest in any securities issued by companies assigned the Global Industry Classification Standard for the tobac co industry. The following is a summary of the fund’s significant accounting policies.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
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Exchange Traded Funds — The fund may invest in exchange traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
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. All tax years for the fund remain subject to examination by tax authorities. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clie nts of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule for the fund ranges from 0.50% to 0.70%. The effective annual management fee for the six months ended September 30, 2010 was 0.66%.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC. The fund is wholly owned, in aggregate, by various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in the fund for the purpose of exercising management or control.
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The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $136,816,285 and $61,638,489, respectively.
4. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $360,371,132 | — | — | |||||||||
Temporary Cash Investments | 6,122 | $6,600,000 | — | |||||||||
Total Value of Investment Securities | $360,377,254 | $6,600,000 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Futures Contracts | $5,393 | — | — |
5. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and lo sses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized
19
gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The equity price risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
The value of equity price risk derivative instruments as of September 30, 2010, is disclosed on the Statement of Assets and Liabilities as a liability of $21,426 in payable for variation margin on futures contracts. For the six months ended September 30, 2010, the effect of equity price risk derivative instruments on the Statement of Operations was $(949,134) in net realized gain (loss) on futures contract transactions and $(287,341) in change in net unrealized appreciation (depreciation) on futures contracts.
6. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
7. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $345,333,513 | |||
Gross tax appreciation of investments | $27,620,659 | |||
Gross tax depreciation of investments | (5,976,918 | ) | ||
Net tax appreciation (depreciation) of investments | $21,643,741 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(26,105,024), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(10,029,955) and $(16,075,069) expire in 2017 and 2018, respectively.
The fund has elected to treat $(298,670) of net capital losses incurred in the five-month period ended March 31, 2010, as having been incurred in the following fiscal year for federal income tax purposes.
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Financial Highlights
NT Large Company Value
Institutional Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $8.02 | $5.55 | $9.71 | $11.13 | $10.00 | |||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss) | 0.07 | (3) | 0.14 | (3) | 0.20 | (3) | 0.22 | 0.18 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.31 | ) | 2.47 | (4.16 | ) | (1.29 | ) | 1.14 | ||||||||||||
Total From Investment Operations | (0.24 | ) | 2.61 | (3.96 | ) | (1.07 | ) | 1.32 | ||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | (0.07 | ) | (0.14 | ) | (0.20 | ) | (0.22 | ) | (0.18 | ) | ||||||||||
From Net Realized Gains | — | — | — | (0.13 | ) | (0.01 | ) | |||||||||||||
Total Distributions | (0.07 | ) | (0.14 | ) | (0.20 | ) | (0.35 | ) | (0.19 | ) | ||||||||||
Net Asset Value, End of Period | $7.71 | $8.02 | $5.55 | $9.71 | $11.13 | |||||||||||||||
Total Return(4) | (3.03 | )% | 47.28 | % | (41.22 | )% | (9.93 | )% | 13.26 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.66 | %(5) | 0.64 | % | 0.63 | % | 0.62 | % | 0.63 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.81 | %(5) | 1.99 | % | 2.82 | % | 2.10 | % | 2.01 | %(5) | ||||||||||
Portfolio Turnover Rate | 20 | % | 23 | % | 26 | % | 20 | % | 18 | % | ||||||||||
Net Assets, End of Period (in thousands) | $368,671 | $308,035 | $152,678 | $98,618 | $71,970 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | May 12, 2006 (fund inception) through March 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements.
21
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Institutional Class | For: | 299,533,171 | ||
Against: | 1,270,058 | |||
Abstain: | 2,747,098 | |||
Broker Non-Vote: | 0 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
22
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.co m. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
23
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, base d on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock’s weight in the index is proportionate to its market value. Created by Standard & Poor’s, it is considered to be a broad measure of U.S. stock market performance.
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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 Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69841
Semiannual Report September 30, 2010 |
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American Century Investments®
NT Mid Cap Value Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
NT Mid Cap Value | ||
Performance | 5 | |
Portfolio Commentary | 6 | |
Top Ten Holdings | 8 | |
Top Five Industries | 8 | |
Types of Investments in Portfolio | 8 | |
Shareholder Fee Example | 9 | |
Financial Statements | ||
Schedule of Investments | 11 | |
Statement of Assets and Liabilities | 14 | |
Statement of Operations | 15 | |
Statement of Changes in Net Assets | 16 | |
Notes to Financial Statements | 17 | |
Financial Highlights | 22 | |
Other Information | ||
Proxy Voting Results | 23 | |
Additional Information | 24 | |
Index Definitions | 25 |
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
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Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
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Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
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Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors—working on behalf of shareholders—to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/davidson1.jpg)
By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
NT Mid Cap Value
Total Returns as of September 30, 2010 | |||||
Average Annual Returns | |||||
Ticker Symbol | 6 months(1) | 1 year | Since Inception | Inception Date | |
Institutional Class | ACLMX | 1.21% | 15.98% | 3.71% | 5/12/06 |
Russell Midcap Value Index | — | 1.40% | 16.93% | 0.03%(2) | — |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 4/30/06, the date nearest the Institutional Class’s inception for which data are available. |
Growth of $10,000 Over Life of Class |
$10,000 investment made May 12, 2006 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart6.jpg)
*From 5/12/06, the Institutional Class’s inception date. Index data from 4/30/06, the date nearest the Institutional Class’s inception for which data are available. Not annualized.
Total Annual Fund Operating Expenses |
Institutional Class 0.81% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com.
Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index does not.
5
Portfolio Commentary
NT Mid Cap Value
Portfolio Managers: Kevin Toney, Michael Liss, and Phil Davidson
Performance Summary
NT Mid Cap Value returned 1.21%* for the six months ended September 30, 2010. By comparison, the average return for Morningstar’s Mid Cap Value category** (its performance, like NT Mid Cap Value’s, reflects operating expenses) was 0.04%. The fund’s benchmark, the Russell Midcap Value Index, was up 1.40%. Its returns do not include operating expenses.
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. In this environment, NT Mid Cap Value’s investment approach, which emphasizes higher-quality businesses with sound balance sheets, provided positive absolute results. On a relative basis, the portfolio was hampered by its investments in the financials, health care, and energy sectors. Its positions in the industrials and materials sectors enhanced performance.
Financials Dampened Performance
The financials sector was a source of relative weakness. NT Mid Cap Value was underweight real estate investment trusts (REITs), a segment that outperformed for the benchmark. For some time, we have been concerned about this segment’s operating trends, financial leverage, access to funding, and valuation.
In the capital markets segment, the portfolio’s mix of stocks hampered performance versus the benchmark. Two notable detractors were Northern Trust Corp. and State Street Corp. Both were negatively impacted by expectations of a prolonged period of historically low interest rates. Shares of State Street also declined on concerns about the diminished profitability of the company’s securities lending and foreign exchange businesses as well as potential litigation surrounding its foreign exchange business.
Health Care and Energy Detracted
Security selection in health care, the weakest performing sector in the benchmark, hindered relative results. NT Mid Cap Value owned Zimmer Holdings, a maker of orthopedic reconstructive implants, which is not represented in the benchmark. As a result of the recession, Zimmer faces
* | Total returns for periods less than one year are not annualized. |
** | The average returns for Morningstar’s Mid Cap Value category were 14.08% for the one-year period ended September 30, 2010 and 0.43% from May 31, 2006, the date nearest the Institutional Class’s inception for which data are available. © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
6
NT Mid Cap Value
softening demand and potential pricing pressure for its products. Although health care reform has increased uncertainty for investors, we do not expect the legislation to have significant impact on the company.
In the energy sector, a position in EQT Corp. dampened results. A low-cost natural gas producer, EQT reported significant success with two of its experimental shale wells. We believe weak natural gas prices have temporarily pushed down the company’s share price.
Industrials Contributed Positively
Security selection in the industrials sector was advantageous. The portfolio benefited from a position in Republic Services. Waste management companies weathered the recession well due to their stable business models and strong cash flow generation. Republic Services has also successfully cut costs as part of its merger with Allied Waste Industries, and its disciplined pricing strategy coupled with a nascent recovery in business volume has boosted the profits of this well-run company.
Another notable performer was Hubbell, which manufactures electrical products. The company reported much better-than-anticipated second-quarter results. Revenue improved due to strengthening end market demand, and profit margins rose on solid productivity gains.
Materials Added to Results
In the materials sector, NT Mid Cap Value benefited from its focus on high-quality, stable businesses. A top contributor was Newmont Mining Corp. Newmont’s new management team continues to execute well on its strategic and operating plan. In addition, as gold prices rose during the period, the company’s profitability increased.
The portfolio also held Bemis Co., a major producer of flexible packaging, primarily for the food industry. Despite higher raw-material costs, Bemis has improved its margins and operating performance. Its acquisition of rival Alcan Packaging Food Americas is also expected to enhance growth.
Outlook
We continue to follow our disciplined, bottom-up process, selecting companies one at a time for the portfolio. As of September 30, 2010, we see opportunities in industrials, health care, and consumer discretionary stocks, reflected by overweight positions in these sectors, relative to the benchmark. Our fundamental analysis and valuation work are also directing us toward smaller relative weightings in financials, utilities, consumer staples, and materials stocks.
7
NT Mid Cap Value
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
Republic Services, Inc. | 3.2% |
Imperial Oil Ltd. | 2.6% |
Lowe’s Cos., Inc. | 2.4% |
Northern Trust Corp. | 2.4% |
Aon Corp. | 2.1% |
ConAgra Foods, Inc. | 2.0% |
Zimmer Holdings, Inc. | 1.9% |
EQT Corp. | 1.8% |
Marsh & McLennan Cos., Inc. | 1.8% |
NV Energy, Inc. | 1.6% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Insurance | 11.1% |
Oil, Gas & Consumable Fuels | 8.5% |
Electric Utilities | 5.7% |
Commercial Services & Supplies | 5.5% |
Health Care Equipment & Supplies | 5.2% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Domestic Common Stocks | 91.9% |
Foreign Common Stocks* | 5.8% |
Total Common Stocks | 97.7% |
Temporary Cash Investments | 2.6% |
Other Assets and Liabilities | (0.3)% |
*Includes depositary shares, dual listed securities and foreign ordinary shares
8
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
9
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 - 9/30/10 | Annualized Expense Ratio* | |
Actual | $1,000 | $1,012.10 | $4.04 | 0.80% |
Hypothetical | $1,000 | $1,021.06 | $4.05 | 0.80% |
*Expenses are equal to the fund’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
10
Schedule of Investments
NT Mid Cap Value
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 97.7% | ||
AEROSPACE & DEFENSE — 0.6% | ||
ITT Corp. | 22,400 | $1,048,992 |
AIRLINES — 0.2% | ||
Southwest Airlines Co. | 23,600 | 308,452 |
BEVERAGES(1) | ||
Coca-Cola Enterprises, Inc. | 1,100 | 34,100 |
CAPITAL MARKETS — 4.4% | ||
Ameriprise Financial, Inc. | 19,483 | 922,130 |
Charles Schwab Corp. (The) | 50,100 | 696,390 |
Invesco Ltd. | 27,300 | 579,579 |
Northern Trust Corp. | 82,389 | 3,974,445 |
State Street Corp. | 25,300 | 952,798 |
T. Rowe Price Group, Inc. | 3,300 | 165,215 |
7,290,557 | ||
CHEMICALS — 0.8% | ||
Minerals Technologies, Inc. | 21,770 | 1,282,688 |
COMMERCIAL BANKS — 3.2% | ||
Comerica, Inc. | 68,007 | 2,526,460 |
Commerce Bancshares, Inc. | 44,106 | 1,657,945 |
SunTrust Banks, Inc. | 45,600 | 1,177,848 |
5,362,253 | ||
COMMERCIAL SERVICES & SUPPLIES — 5.5% | ||
Cintas Corp. | 34,400 | 947,720 |
Pitney Bowes, Inc. | 52,200 | 1,116,036 |
Republic Services, Inc. | 174,198 | 5,311,297 |
Waste Management, Inc. | 50,396 | 1,801,153 |
9,176,206 | ||
COMMUNICATIONS EQUIPMENT — 0.7% | ||
Emulex Corp.(2) | 114,600 | 1,196,424 |
COMPUTERS & PERIPHERALS — 0.1% | ||
Diebold, Inc. | 2,714 | 84,378 |
CONSTRUCTION MATERIALS — 0.6% | ||
Vulcan Materials Co. | 26,100 | 963,612 |
CONTAINERS & PACKAGING — 1.2% | ||
Bemis Co., Inc. | 61,679 | 1,958,308 |
DISTRIBUTORS — 0.7% | ||
Genuine Parts Co. | 24,856 | 1,108,329 |
DIVERSIFIED — 1.6% | ||
iShares Russell Midcap Value Index Fund | 63,700 | 2,571,569 |
DIVERSIFIED TELECOMMUNICATION SERVICES — 2.0% | ||
Consolidated Communications Holdings, Inc. | 42,700 | 797,209 |
Qwest Communications International, Inc. | 270,500 | 1,696,035 |
Windstream Corp. | 66,286 | 814,655 |
3,307,899 | ||
ELECTRIC UTILITIES — 5.7% | ||
American Electric Power Co., Inc. | 28,591 | 1,035,852 |
Great Plains Energy, Inc. | 41,982 | 793,460 |
IDACORP, Inc. | 10,579 | 379,997 |
Northeast Utilities | 45,430 | 1,343,365 |
NV Energy, Inc. | 204,800 | 2,693,120 |
Portland General Electric Co. | 58,171 | 1,179,708 |
Westar Energy, Inc. | 84,931 | 2,057,878 |
9,483,380 | ||
ELECTRICAL EQUIPMENT — 3.5% | ||
Emerson Electric Co. | 12,600 | 663,516 |
Hubbell, Inc., Class B | 52,696 | 2,674,322 |
Thomas & Betts Corp.(2) | 56,100 | 2,301,222 |
Woodward Governor Co. | 7,200 | 233,424 |
5,872,484 | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.9% | ||
Molex, Inc. | 68,658 | 1,437,012 |
ENERGY EQUIPMENT & SERVICES — 0.9% | ||
Baker Hughes, Inc. | 34,900 | 1,486,802 |
FOOD PRODUCTS — 4.1% | ||
ConAgra Foods, Inc. | 150,807 | 3,308,706 |
H.J. Heinz Co. | 47,000 | 2,226,390 |
Kellogg Co. | 24,600 | 1,242,546 |
6,777,642 | ||
GAS UTILITIES — 0.7% | ||
AGL Resources, Inc. | 10,800 | 414,288 |
Southwest Gas Corp. | 20,920 | 702,703 |
1,116,991 | ||
HEALTH CARE EQUIPMENT & SUPPLIES — 5.2% | ||
Beckman Coulter, Inc. | 50,255 | 2,451,941 |
Boston Scientific Corp.(2) | 127,200 | 779,736 |
CareFusion Corp.(2) | 34,988 | 869,102 |
Covidien plc | 21,000 | 843,990 |
Symmetry Medical, Inc.(2) | 40,407 | 389,524 |
Zimmer Holdings, Inc.(2) | 61,400 | 3,213,062 |
8,547,355 |
11
NT Mid Cap Value
Shares | Value |
HEALTH CARE PROVIDERS & SERVICES — 2.1% | ||
LifePoint Hospitals, Inc.(2) | 48,300 | $1,693,398 |
Patterson Cos., Inc. | 38,900 | 1,114,485 |
Select Medical Holdings Corp.(2) | 82,819 | 637,706 |
3,445,589 | ||
HOTELS, RESTAURANTS & LEISURE — 2.6% | ||
CEC Entertainment, Inc.(2) | 65,400 | 2,245,182 |
International Speedway Corp., Class A | 47,715 | 1,164,246 |
Speedway Motorsports, Inc. | 56,239 | 881,827 |
4,291,255 | ||
HOUSEHOLD DURABLES — 1.9% | ||
Fortune Brands, Inc. | 28,100 | 1,383,363 |
Toll Brothers, Inc.(2) | 61,100 | 1,162,122 |
Whirlpool Corp. | 8,300 | 671,968 |
3,217,453 | ||
HOUSEHOLD PRODUCTS — 1.8% | ||
Clorox Co. | 7,300 | 487,348 |
Kimberly-Clark Corp. | 39,095 | 2,543,130 |
3,030,478 | ||
INDUSTRIAL CONGLOMERATES — 0.7% | ||
Tyco International Ltd. | 33,300 | 1,223,109 |
INSURANCE — 11.1% | ||
ACE Ltd. | 35,800 | 2,085,350 |
Allstate Corp. (The) | 39,800 | 1,255,690 |
Aon Corp. | 89,200 | 3,488,612 |
Chubb Corp. (The) | 25,300 | 1,441,847 |
Hartford Financial Services Group, Inc. (The) | 3,555 | 81,587 |
HCC Insurance Holdings, Inc. | 83,893 | 2,188,768 |
Marsh & McLennan Cos., Inc. | 123,454 | 2,977,711 |
Symetra Financial Corp. | 120,079 | 1,256,026 |
Transatlantic Holdings, Inc. | 36,375 | 1,848,578 |
Travelers Cos., Inc. (The) | 36,000 | 1,875,600 |
18,499,769 | ||
IT SERVICES — 1.3% | ||
Accenture plc, Class A | 21,900 | 930,531 |
Automatic Data Processing, Inc. | 16,900 | 710,307 |
Paychex, Inc. | 20,800 | 571,792 |
2,212,630 | ||
LEISURE EQUIPMENT & PRODUCTS — 0.3% | ||
Mattel, Inc. | 23,700 | 556,002 |
MACHINERY — 3.1% | ||
Altra Holdings, Inc.(2) | 76,267 | 1,123,413 |
Harsco Corp. | 41,500 | 1,020,070 |
Kaydon Corp. | 73,532 | 2,544,207 |
Robbins & Myers, Inc. | 16,200 | 433,836 |
5,121,526 | ||
MEDIA — 1.1% | ||
Omnicom Group, Inc. | 32,100 | 1,267,308 |
Scholastic Corp. | 19,000 | 528,580 |
1,795,888 | ||
METALS & MINING — 0.9% | ||
Newmont Mining Corp. | 23,078 | 1,449,529 |
MULTI-UTILITIES — 4.1% | ||
Consolidated Edison, Inc. | 16,100 | 776,342 |
PG&E Corp. | 58,400 | 2,652,528 |
Wisconsin Energy Corp. | 19,560 | 1,130,568 |
Xcel Energy, Inc. | 100,381 | 2,305,752 |
6,865,190 | ||
OIL, GAS & CONSUMABLE FUELS — 8.5% | ||
Apache Corp. | 6,046 | 591,057 |
Devon Energy Corp. | 32,700 | 2,116,998 |
EQT Corp. | 83,900 | 3,025,434 |
Imperial Oil Ltd. | 114,700 | 4,346,538 |
Murphy Oil Corp. | 26,600 | 1,647,072 |
Noble Energy, Inc. | 13,800 | 1,036,242 |
Ultra Petroleum Corp.(2) | 23,700 | 994,926 |
Williams Partners LP | 7,851 | 332,882 |
14,091,149 | ||
PAPER & FOREST PRODUCTS — 0.5% | ||
MeadWestvaco Corp. | 35,900 | 875,242 |
REAL ESTATE INVESTMENT TRUSTS (REITs) — 4.6% | ||
Annaly Capital Management, Inc. | 44,427 | 781,915 |
Boston Properties, Inc. | 4,258 | 353,925 |
Government Properties Income Trust | 63,325 | 1,690,778 |
HCP, Inc. | 8,663 | 311,695 |
Host Hotels & Resorts, Inc. | 54,686 | 791,853 |
Piedmont Office Realty Trust, Inc., Class A | 111,675 | 2,111,774 |
Weyerhaeuser Co. | 101,122 | 1,593,683 |
7,635,623 |
12
NT Mid Cap Value
Shares | Value |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.8% | ||
Applied Materials, Inc. | 220,200 | $2,571,936 |
KLA-Tencor Corp. | 26,800 | 944,164 |
Teradyne, Inc.(2) | 82,500 | 919,050 |
Verigy Ltd.(2) | 26,300 | 213,819 |
4,648,969 | ||
SOFTWARE — 0.5% | ||
Cadence Design Systems, Inc.(2) | 89,900 | 685,937 |
Synopsys, Inc.(2) | 6,700 | 165,959 |
851,896 | ||
SPECIALTY RETAIL — 4.8% | ||
Best Buy Co., Inc. | 23,100 | 943,173 |
Lowe’s Cos., Inc. | 178,500 | 3,978,765 |
PetSmart, Inc. | 38,000 | 1,330,000 |
Staples, Inc. | 79,900 | 1,671,508 |
7,923,446 | ||
THRIFTS & MORTGAGE FINANCE — 1.9% | ||
Hudson City Bancorp., Inc. | 101,200 | 1,240,712 |
People’s United Financial, Inc. | 149,833 | 1,961,314 |
3,202,026 | ||
TRADING COMPANIES & DISTRIBUTORS — 0.5% | ||
Beacon Roofing Supply, Inc.(2) | 57,900 | 843,603 |
TOTAL COMMON STOCKS (Cost $146,777,778) | 162,195,805 | |
Temporary Cash Investments — 2.6% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 94,022 | 94,022 |
Repurchase Agreement, Goldman Sachs Group, Inc., (collateralized by various U.S. Treasury obligations, 4.875%, 7/31/11, valued at $4,281,891), in a joint trading account at 0.10%, dated 9/30/10, due 10/1/10 (Delivery value $4,200,012) | 4,200,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $4,294,022) | 4,294,022 | |
TOTAL INVESTMENT SECURITIES — 100.3% (Cost $151,071,800) | 166,489,827 | |
OTHER ASSETS AND LIABILITIES — (0.3)% | (563,844) | |
TOTAL NET ASSETS — 100.0% | $165,925,983 |
Forward Foreign Currency Exchange Contracts | ||||
Contracts to Sell | Counter Party | Settlement Date | Value | Unrealized Gain (Loss) |
3,518,944 CAD for USD | Bank of America | 10/29/10 | $3,418,442 | $(22,401) |
(Value on Settlement Date $3,396,041)
Notes to Schedule of Investments
CAD = Canadian Dollar |
USD = United States Dollar |
(1) | Industry is less than 0.05% of total net assets. |
(2) | Non-income producing. |
See Notes to Financial Statements. |
13
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $151,071,800) | $166,489,827 | |||
Receivable for investments sold | 1,300,770 | |||
Dividends and interest receivable | 387,927 | |||
168,178,524 | ||||
Liabilities | ||||
Payable for investments purchased | 2,124,701 | |||
Payable for forward foreign currency exchange contracts | 22,401 | |||
Accrued management fees | 105,439 | |||
2,252,541 | ||||
Net Assets | $165,925,983 | |||
Institutional Class Capital Shares, $0.01 Par Value | ||||
Authorized | 50,000,000 | |||
Shares outstanding | 17,119,129 | |||
Net Asset Value Per Share | $9.69 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $148,757,668 | |||
Undistributed net investment income | 123,815 | |||
Undistributed net realized gain on investment and foreign currency transactions | 1,648,664 | |||
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies | 15,395,836 | |||
$165,925,983 |
See Notes to Financial Statements. |
14
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $4,979) | $3,019,950 | |||
Interest | 1,635 | |||
3,021,585 | ||||
Expenses: | ||||
Management fees | 590,113 | |||
Directors’ fees and expenses | 2,207 | |||
Other expenses | 918 | |||
593,238 | ||||
Net investment income (loss) | 2,428,347 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 5,920,929 | |||
Foreign currency transactions | 91,923 | |||
6,012,852 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (5,371,939 | ) | ||
Translation of assets and liabilities in foreign currencies | (13,227 | ) | ||
(5,385,166 | ) | |||
Net realized and unrealized gain (loss) | 627,686 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $3,056,033 |
See Notes to Financial Statements. |
15
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $2,428,347 | $2,013,357 | ||||||
Net realized gain (loss) | 6,012,852 | 14,259,893 | ||||||
Change in net unrealized appreciation (depreciation) | (5,385,166 | ) | 27,097,640 | |||||
Net increase (decrease) in net assets resulting from operations | 3,056,033 | 43,370,890 | ||||||
Distributions to Shareholders | ||||||||
From net investment income | (2,532,026 | ) | (1,746,754 | ) | ||||
Capital Share Transactions | ||||||||
Proceeds from shares sold | 25,848,509 | 41,468,311 | ||||||
Proceeds from reinvestment of distributions | 2,532,026 | — | ||||||
Payments for shares redeemed | (707,782 | ) | (13,295,819 | ) | ||||
Net increase (decrease) in net assets from capital share transactions | 27,672,753 | 28,172,492 | ||||||
Net increase (decrease) in net assets | 28,196,760 | 69,796,628 | ||||||
Net Assets | ||||||||
Beginning of period | 137,729,223 | 67,932,595 | ||||||
End of period | $165,925,983 | $137,729,223 | ||||||
Undistributed net investment income | $123,815 | $227,494 | ||||||
Transactions in Shares of the Fund | ||||||||
Sold | 2,774,957 | 4,969,831 | ||||||
Issued in reinvestment of distributions | 263,817 | — | ||||||
Redeemed | (74,421 | ) | (1,675,866 | ) | ||||
Net increase (decrease) in shares of the fund | 2,964,353 | 3,293,965 |
See Notes to Financial Statements. |
16
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. NT Mid Cap Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives by investing primarily in stocks of medium size companies that management believes to be undervalued at the time of purchase. The fund is not permitted to invest in any securities issued by companies assigned the Global Industry Classification Standard for the tobacco industry. The f ollowing is a summary of the fund’s significant accounting policies.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. 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 certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates.
17
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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.
Exchange-Traded Funds — The fund may invest in exchange-traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
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. All tax years for the fund remain subject to examination by tax authorities. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
18
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The annual management fee for the fund is 0.80%.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC. The fund is wholly owned, in aggregate, by various funds in a series issued by American Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in the fund for the purpose of exercising management or control.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $97,767,467 and $72,738,738, respectively.
4. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (including a fund’s own assumptions). |
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
19
The following is a summary of the valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $152,552,468 | — | — | |||||||||
Foreign Common Stocks | 5,296,799 | $4,346,538 | — | |||||||||
Temporary Cash Investments | 94,022 | 4,200,000 | — | |||||||||
Total Value of Investment Securities | $157,943,289 | $8,546,538 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(22,401 | ) | — |
6. Derivative Instruments
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting u nrealized appreciation or depreciation are determined daily using prevailing exchange rates. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during t he period.
The value of foreign currency risk derivative instruments as of September 30, 2010, is disclosed on the Statement of Assets and Liabilities as a liability of $22,401 in payable for forward foreign currency exchange contracts. For the six months ended September 30, 2010, the effect of foreign currency risk derivative instruments on the Statement of Operations was $86,079 in net realized gain (loss) on foreign currency transactions and $(12,942) in change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies.
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
20
8. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $156,410,433 | |||
Gross tax appreciation of investments | $12,850,899 | |||
Gross tax depreciation of investments | (2,771,505 | ) | ||
Net tax appreciation (depreciation) of investments | $10,079,394 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
21
Financial Highlights
NT Mid Cap Value
Institutional Class | ||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007(2) | ||||||||||||||||
Per-Share Data | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.73 | $6.25 | $9.04 | $11.28 | $10.00 | |||||||||||||||
Income From Investment Operations | ||||||||||||||||||||
Net Investment Income (Loss) | 0.16 | (3) | 0.17 | (3) | 0.18 | (3) | 0.16 | (3) | 0.14 | |||||||||||
Net Realized and Unrealized Gain (Loss) | (0.04 | ) | 3.45 | (2.79 | ) | (1.29 | ) | 1.44 | ||||||||||||
Total From Investment Operations | 0.12 | 3.62 | (2.61 | ) | (1.13 | ) | 1.58 | |||||||||||||
Distributions | ||||||||||||||||||||
From Net Investment Income | (0.16 | ) | (0.14 | ) | (0.18 | ) | (0.15 | ) | (0.12 | ) | ||||||||||
From Net Realized Gains | — | — | — | (0.96 | ) | (0.18 | ) | |||||||||||||
Total Distributions | (0.16 | ) | (0.14 | ) | (0.18 | ) | (1.11 | ) | (0.30 | ) | ||||||||||
Net Asset Value, End of Period | $9.69 | $9.73 | $6.25 | $9.04 | $11.28 | |||||||||||||||
Total Return(4) | 1.21 | % | 58.29 | % | (29.25 | )% | (10.79 | )% | 16.03 | % | ||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.80 | %(5) | 0.80 | % | 0.80 | % | 0.80 | % | 0.80 | %(5) | ||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 3.30 | %(5) | 1.98 | % | 2.36 | % | 1.48 | % | 1.55 | %(5) | ||||||||||
Portfolio Turnover Rate | 51 | % | 143 | % | 181 | % | 208 | % | 203 | % | ||||||||||
Net Assets, End of Period (in thousands) | $165,926 | $137,729 | $67,933 | $45,832 | $33,375 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | May 12, 2006 (fund inception) through March 31, 2007. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements. |
22
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Institutional Class | For: | 134,824,277 | ||
Against: | 92,994 | |||
Abstain: | 798,533 | |||
Broker Non-Vote: | 0 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
23
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com
and, upon request, by calling 1-800-345-2021.
24
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
25
Notes
26
Notes
27
Notes
28
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Contact Us | |
americancentury.com | |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69842
Semiannual Report September 30, 2010 |
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American Century Investments®
Real Estate Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
Real Estate | ||
Performance | 5 | |
Portfolio Commentary | 7 | |
Top Ten Holdings | 9 | |
Industry Allocation | 9 | |
Types of Investments in Portfolio | 9 | |
Shareholder Fee Example | 10 | |
Financial Statements | ||
Schedule of Investments | 12 | |
Statement of Assets and Liabilities | 14 | |
Statement of Operations | 15 | |
Statement of Changes in Net Assets | 16 | |
Notes to Financial Statements | 17 | |
Financial Highlights | 23 | |
Other Information | ||
Proxy Voting Results | 29 | |
Additional Information | 30 | |
Index Definitions | 31 |
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
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Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
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Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors – working on behalf of shareholders – to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chang.jpg)
By Enrique Chang, Chief Investment Officer, American Century Investments
Stocks Mixed Amid Economic Uncertainty
U.S. stocks posted mixed results for the six months ended September 30, 2010, with the broad equity indices registering modestly negative returns. The six-month period was characterized by a marked increase in volatility as the burgeoning U.S. economic recovery lost momentum.
The reporting period began on a positive note as stocks continued to advance in April, extending the broad market rally that began in March 2009. However, market conditions changed abruptly in May as persistent worries about sovereign debt problems in Europe and evidence of a slowdown in the pace of economic recovery—most notably in manufacturing, housing, and consumer spending—weighed on investor confidence. Consequently, the equity market declined sharply in May and June amid a dramatic increase in market volatility. For example, the broad S&P 500 Index moved up or down by more than 1% on nearly half of the trading days in the second quarter of 2010.
The equity market remained volatile in the third quarter, gaining ground in July and falling back in August amid a tug-of-war between favorable corporate earnings reports and an increasingly sluggish economic environment. However, stocks finished the six-month period with a furious rally in September, which proved to be the market’s best month since April 2009 and its best September in more than 70 years. Investors expressed confidence in the Federal Reserve’s plan to revive the economic recovery through another round of quantitative easing measures.
Mid-Cap and Growth Stocks Outperformed
As the table below illustrates, mid-cap stocks generated the best returns, advancing modestly for the six-month period. Small-cap stocks were largely unchanged, while large-cap issues declined overall. Meanwhile, growth-oriented stocks outpaced value shares across all market capitalizations.
From a sector perspective, the telecommunication services and utilities sectors were the top performers during the reporting period. Both sectors benefited from increased demand for stocks with relatively high dividends in an environment of historically low interest rates. On the downside, the weakest performers included the health care and financials sectors, both of which faced the uncertainty of new regulatory legislation.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Real Estate
Total Returns as of September 30, 2010 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | REACX | 7.72% | 28.66% | 0.07% | 9.48% | 10.42% | 9/21/95(2) |
MSCI U.S. REIT Index | — | 8.66% | 30.54% | 1.88% | 10.20% | 10.22%(3) | — |
S&P 500 Index | — | -1.42% | 10.16% | 0.64% | -0.43% | 6.45%(3) | — |
Institutional Class | REAIX | 7.82% | 28.88% | 0.26% | 9.71% | 8.35% | 6/16/97 |
A Class(4) No sales charge* With sales charge* | AREEX | 7.58% 1.42% | 28.29% 20.87% | -0.19% -1.37% | 9.23% 8.58% | 9.72% 9.17% | 10/6/98 |
B Class No sales charge* With sales charge* | ARYBX | 7.16% 2.16% | 27.41% 23.41% | — — | — — | -10.48% -11.75% | 9/28/07 |
C Class No sales charge* With sales charge* | ARYCX | 7.22% 6.22% | 27.46% 27.46% | — — | — — | -10.45% -10.45% | 9/28/07 |
R Class | AREWX | 7.46% | 28.03% | — | — | -10.03% | 9/28/07 |
*Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
(1) | Total returns for periods less than one year are not annualized. |
(2) | The inception date for RREEF Real Estate Securities Fund, Real Estate’s predecessor. That fund merged with Real Estate on 6/13/97 and Real Estate was first offered to the public on 6/16/97. |
(3) | Since 9/30/95, the date nearest the Investor Class’s inception for which data are available. |
(4) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund may be subject to certain risks similar to those associated with direct investment in real estate including but not limited to: local or regional economic conditions, changes in zoning laws, changes in property values, property tax increases, overbuilding, increased competition, environmental contamination, natural disasters and interest rate risk.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
5
Real Estate
Growth of $10,000 Over 10 Years |
$10,000 investment made September 30, 2000 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart7.jpg)
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.16% | 0.96% | 1.41% | 2.16% | 2.16% | 1.66% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund may be subject to certain risks similar to those associated with direct investment in real estate including but not limited to: local or regional economic conditions, changes in zoning laws, changes in property values, property tax increases, overbuilding, increased competition, environmental contamination, natural disasters and interest rate risk.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
6
Portfolio Commentary
Real Estate
Portfolio Manager: Steven Brown
Performance Summary
The Real Estate fund posted a total return of 7.72%* for the six months ended September 30, 2010. By comparison, the Morgan Stanley Capital International U.S. REIT Index (the fund’s benchmark) returned 8.66%, while the S&P 500 Index (a broad stock market measure) returned –1.42%.
REIT Market Overview
In contrast to the modest decline in the overall stock market, real estate investment trusts (REITs) advanced during the six-month period. REITs fell in the first half of the period as sovereign debt problems in Europe threatened to harm the global credit markets, which are a key source of capital for REITs. In addition, concerns about an economic slowdown in the U.S.—which was validated by weaker economic data later in the period—weighed on the REIT market.
However, REITs rebounded sharply during the last three months of the period. The REIT rally was driven by declining interest rates, which helped reduce REIT borrowing costs, and rising real estate values. Furthermore, REITs benefited from emerging evidence of fundamental improvement in the commercial real estate sector as occupancy and rent levels appeared to reach bottom and begin to recover.
The top performers in the REIT market during the six-month period were apartment REITs, which generated returns of more than 20% as a group. Apartment owners benefited from a marked shift from home ownership to rentals amid unease about the deteriorating housing market, and they also enjoyed access to low-cost capital from government-sponsored mortgage guarantors Fannie Mae and Freddie Mac. Health care REITs, which offered the highest dividend yields in the REIT market, also posted double-digit gains during the period amid growing demand for higher-yielding investments. Retail REITs were mixed, however, as owners of regional malls produced robust returns, while shopping center REITs lagged.
The only two segments of the REIT market to decline for the six months were hotels and industrials. Volatility resulting from the uncertain economic outlook weighed on hotel REITs, while industrials faced concerns about leasing activity, development risks, and weak fundamentals.
Retail REITs Detracted
The Real Estate fund registered a solid gain for the six-month period but trailed the performance of its benchmark index. One of the key factors behind this underperformance was stock selection among retail REITs. Notable detractors included Developers Diversified Realty, which owns a mix of regional malls and shopping centers, and Kimco Realty, which focuses on community shopping centers. Both companies reported earnings that failed to meet expectations as retail sales and consumer confidence waned, leading to the highest shopping-center vacancy rate in nearly 20 years.
*All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized.
7
Real Estate
The biggest detractor in the portfolio during the period was Emeritus, which operates assisted-living facilities. Renewed weakness in the housing market caused concerns that individuals would be unable to sell their homes in order to move into assisted-living facilities. Another noteworthy detractor was title insurer PMI Group, which faced escalating losses resulting from a substantial increase in mortgage foreclosures.
Winners Among Offices and Apartments
Sector allocation contributed favorably to fund performance versus the benchmark, particularly an underweight position in the underperforming hotel segment and overweight positions in health care and apartment REITs, which outperformed during the period.
From a stock selection perspective, stock choices among office and apartment REITs added the most value to relative results during the six-month period. One of the best contributors was Digital Realty Trust, which owns and operates computer data centers. Strong demand for computing power, particularly the robust growth and increased sophistication of mobile computing, provided a boost to Digital Realty.
Other top contributors included HCP, a health care REIT, and apartment landlord AvalonBay Communities. HCP generated better-than-expected earnings thanks to above-average profit margins and a diversified portfolio of health care facilities. AvalonBay owns apartments in major metropolitan areas where the gap between the costs of renting versus home ownership is still relatively high despite the slump in the housing market. As a result, demand for its rental units was robust and profits exceeded expectations.
A Look Ahead
As we move into the final quarter of 2010, government policies designed to stimulate economic activity—including additional quantitative easing by the Federal Reserve and a potential extension of tax cuts by Congress—should bode well for stocks in general and REITs in particular. Within the REIT market, we could see a change in leadership as investors rotate into underperforming sectors that look attractive on a relative value basis. We also expect to see an increase in property acquisitions, as well as improved leasing activity for existing commercial real estate.
Our positioning for the portfolio reflects our generally optimistic economic outlook. We are emphasizing the more economically sensitive segments of the REIT market, including hotels and apartments, while underweighting defensive sectors such as health care and self-storage.
8
Real Estate
Top Ten Holdings | ||
% of net assets as of 9/30/10 | ||
Simon Property Group, Inc. | 10.0% | |
Vornado Realty Trust | 4.9% | |
Equity Residential | 4.7% | |
HCP, Inc. | 4.6% | |
Public Storage | 4.6% | |
Host Hotels & Resorts, Inc. | 4.2% | |
Boston Properties, Inc. | 4.1% | |
Kimco Realty Corp. | 3.0% | |
Digital Realty Trust, Inc. | 2.9% | |
AMB Property Corp. | 2.8% | |
Industry Allocation | ||
% of net assets as of 9/30/10 | ||
Specialized REITs | 24.8% | |
Retail REITs | 22.3% | |
Residential REITs | 20.4% | |
Office REITs | 17.5% | |
Diversified REITs | 5.4% | |
Industrial REITs | 5.4% | |
Real Estate Operating Companies | 1.6% | |
Hotels, Resorts & Cruise Lines | 0.9% | |
Diversified Real Estate Activities | 0.7% | |
Cash and Equivalents* | 1.0% | |
*Includes temporary cash investments and other assets and liabilities. | ||
Types of Investments in Portfolio | ||
% of net assets as of 9/30/10 | ||
Common Stocks | 99.0% | |
Temporary Cash Investments | 1.5% | |
Other Assets and Liabilities | (0.5)% |
9
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) regis tered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
10
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 – 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $1,077.20 | $6.09 | 1.17% |
Institutional Class | $1,000 | $1,078.20 | $5.05 | 0.97% |
A Class | $1,000 | $1,075.80 | $7.39 | 1.42% |
B Class | $1,000 | $1,071.60 | $11.27 | 2.17% |
C Class | $1,000 | $1,072.20 | $11.27 | 2.17% |
R Class | $1,000 | $1,074.60 | $8.69 | 1.67% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.20 | $5.92 | 1.17% |
Institutional Class | $1,000 | $1,020.21 | $4.91 | 0.97% |
A Class | $1,000 | $1,017.95 | $7.18 | 1.42% |
B Class | $1,000 | $1,014.19 | $10.96 | 2.17% |
C Class | $1,000 | $1,014.19 | $10.96 | 2.17% |
R Class | $1,000 | $1,016.70 | $8.44 | 1.67% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
11
Schedule of Investments
Real Estate
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 99.0% | ||
DIVERSIFIED REAL ESTATE ACTIVITIES — 0.7% | ||
Brookfield Asset Management, Inc., Class A | 227,300 | $ 6,448,501 |
DIVERSIFIED REITs — 5.4% | ||
Cousins Properties, Inc. | 766,409 | 5,472,160 |
Vornado Realty Trust | 538,532 | 46,060,642 |
51,532,802 | ||
HOTELS, RESORTS & CRUISE LINES — 0.9% | ||
Marriott International, Inc., Class A | 249,800 | 8,950,334 |
INDUSTRIAL REITs — 5.4% | ||
AMB Property Corp. | 999,300 | 26,451,471 |
DuPont Fabros Technology, Inc. | 244,993 | 6,161,574 |
ProLogis | 1,603,623 | 18,890,679 |
51,503,724 | ||
OFFICE REITs — 17.5% | ||
Alexandria Real Estate Equities, Inc. | 199,713 | 13,979,910 |
BioMed Realty Trust, Inc. | 701,641 | 12,573,407 |
Boston Properties, Inc. | 463,469 | 38,523,543 |
Corporate Office Properties Trust | 190,412 | 7,104,272 |
Digital Realty Trust, Inc. | 441,865 | 27,263,071 |
Duke Realty Corp. | 1,795,397 | 20,808,651 |
Kilroy Realty Corp. | 390,412 | 12,938,254 |
Mack-Cali Realty Corp. | 612,147 | 20,023,328 |
SL Green Realty Corp. | 188,656 | 11,947,584 |
165,162,020 | ||
REAL ESTATE OPERATING COMPANIES — 1.6% | ||
Brookfield Properties Corp. | 687,200 | 10,665,344 |
Forest City Enterprises, Inc., Class A(1) | 360,578 | 4,626,216 |
15,291,560 | ||
RESIDENTIAL REITs — 20.4% | ||
American Campus Communities, Inc. | 533,802 | 16,248,933 |
Apartment Investment & Management Co., Class A | 839,900 | 17,957,062 |
Associated Estates Realty Corp. | 525,058 | 7,340,311 |
AvalonBay Communities, Inc. | 252,626 | 26,255,420 |
Camden Property Trust | 219,608 | 10,534,596 |
Equity LifeStyle Properties, Inc. | 280,312 | 15,271,398 |
Equity Residential | 930,200 | 44,249,614 |
Essex Property Trust, Inc. | 189,984 | 20,791,849 |
Post Properties, Inc. | 392,300 | 10,953,016 |
UDR, Inc. | 1,093,431 | 23,093,262 |
192,695,461 | ||
RETAIL REITs — 22.3% | ||
Developers Diversified Realty Corp. | 1,626,478 | 18,249,083 |
Equity One, Inc. | 333,034 | 5,621,614 |
Federal Realty Investment Trust | 104,223 | 8,510,850 |
Kimco Realty Corp. | 1,804,903 | 28,427,222 |
Macerich Co. (The) | 365,420 | 15,694,789 |
Pennsylvania Real Estate Investment Trust | 419,823 | 4,979,101 |
Regency Centers Corp. | 504,100 | 19,896,827 |
Simon Property Group, Inc. | 1,017,874 | 94,397,635 |
Taubman Centers, Inc. | 338,302 | 15,091,652 |
210,868,773 | ||
SPECIALIZED REITs — 24.8% | ||
Extra Space Storage, Inc. | 580,726 | 9,314,845 |
HCP, Inc. | 1,204,145 | 43,325,137 |
Health Care REIT, Inc. | 221,862 | 10,502,947 |
Healthcare Realty Trust, Inc. | 250,100 | 5,849,839 |
Hersha Hospitality Trust | 1,500,486 | 7,772,517 |
Host Hotels & Resorts, Inc. | 2,738,662 | 39,655,826 |
LaSalle Hotel Properties | 106,520 | 2,491,503 |
Nationwide Health Properties, Inc. | 613,972 | 23,742,297 |
Omega Healthcare Investors, Inc. | 664,600 | 14,920,270 |
Pebblebrook Hotel Trust(1) | 156,280 | 2,814,603 |
Public Storage | 446,289 | 43,307,885 |
Sunstone Hotel Investors, Inc.(1) | 665,663 | 6,037,563 |
U-Store-It Trust | 373,749 | 3,120,804 |
Ventas, Inc. | 420,401 | 21,680,080 |
234,536,116 | ||
TOTAL COMMON STOCKS(Cost $673,614,316) | 936,989,291 |
12
Real Estate
Shares | Value |
Temporary Cash Investments — 1.5% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 16,901 | $ 16,901 |
Repurchase Agreement, Goldman Sachs Group, Inc., (collateralized by various U.S. Treasury obligations, 4.875%, 7/31/11, valued at $13,967,120), in a joint trading account at 0.10%, dated 9/30/10, due 10/1/10 (Delivery value $13,700,038) | 13,700,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $13,716,901) | 13,716,901 | |
TOTAL INVESTMENT SECURITIES — 100.5% (Cost $687,331,217) | 950,706,192 | |
OTHER ASSETS AND LIABILITIES — (0.5)% | (4,634,749) | |
TOTAL NET ASSETS — 100.0% | $946,071,443 |
Notes to Schedule of Investments
REIT = Real Estate Investment Trust |
(1) | Non-income producing. |
See Notes to Financial Statements |
13
Statement of Assets and Liabilities
��
SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $687,331,217) | $950,706,192 | |||
Receivable for investments sold | 26,565,466 | |||
Receivable for capital shares sold | 1,026,410 | |||
Dividends and interest receivable | 2,047,043 | |||
980,345,111 | ||||
Liabilities | ||||
Payable for investments purchased | 29,074,099 | |||
Payable for capital shares redeemed | 4,302,952 | |||
Accrued management fees | 867,579 | |||
Service fees (and distribution fees — A Class and R Class) payable | 28,297 | |||
Distribution fees payable | 741 | |||
34,273,668 | ||||
Net Assets | $946,071,443 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $1,390,409,803 | |||
Undistributed net investment income | 441,059 | |||
Accumulated net realized loss on investment and foreign currency transactions | (708,155,116 | ) | ||
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies | 263,375,697 | |||
$946,071,443 |
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Investor Class, $0.01 Par Value | $557,688,452 | 32,979,714 | $16.91 | |||||||||
Institutional Class, $0.01 Par Value | $255,741,097 | 15,102,512 | $16.93 | |||||||||
A Class, $0.01 Par Value | $130,758,046 | 7,721,235 | $16.93 | * | ||||||||
B Class, $0.01 Par Value | $83,497 | 4,958 | $16.84 | |||||||||
C Class, $0.01 Par Value | $1,199,437 | 71,156 | $16.86 | |||||||||
R Class, $0.01 Par Value | $600,914 | 35,564 | $16.90 |
*Maximum offering price $17.96 (net asset value divided by 0.9425)
See Notes to Financial Statements.
14
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $14,213) | $10,795,262 | |||
Interest | 5,821 | |||
10,801,083 | ||||
Expenses: | ||||
Management fees | 5,272,799 | |||
Distribution fees: | ||||
B Class | 305 | |||
C Class | 4,032 | |||
Service fees: | ||||
B Class | 102 | |||
C Class | 1,344 | |||
Distribution and service fees: | ||||
A Class | 170,530 | |||
R Class | 1,322 | |||
Directors’ fees and expenses | 16,819 | |||
Other expenses | 62,529 | |||
5,529,782 | ||||
Net investment income (loss) | 5,271,301 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment and foreign currency transactions | 93,746,136 | |||
Change in net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies | (30,626,145 | ) | ||
Net realized and unrealized gain (loss) | 63,119,991 | |||
Net Increase (Decrease) in Net Assets Resulting from Operations | $68,391,292 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $5,271,301 | $18,091,621 | ||||||
Net realized gain (loss) | 93,746,136 | 47,877,830 | ||||||
Change in net unrealized appreciation (depreciation) | (30,626,145 | ) | 476,236,140 | |||||
Net increase (decrease) in net assets resulting from operations | 68,391,292 | 542,205,591 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (3,396,383 | ) | (12,367,077 | ) | ||||
Institutional Class | (1,755,352 | ) | (4,550,792 | ) | ||||
A Class | (633,777 | ) | (2,618,436 | ) | ||||
B Class | (140 | ) | (820 | ) | ||||
C Class | (1,838 | ) | (8,551 | ) | ||||
R Class | (2,033 | ) | (5,149 | ) | ||||
Decrease in net assets from distributions | (5,789,523 | ) | (19,550,825 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | (51,656,642 | ) | (138,672,672 | ) | ||||
Net increase (decrease) in net assets | 10,945,127 | 383,982,094 | ||||||
Net Assets | ||||||||
Beginning of period | 935,126,316 | 551,144,222 | ||||||
End of period | $946,071,443 | $935,126,316 | ||||||
Undistributed net investment income | $441,059 | $959,281 |
See Notes to Financial Statements.
16
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. Real Estate Fund (the fund) is one fund in a series issued by the corporation. The fund is nondiversified under the 1940 Act. The fund’s investment objective is to seek high total investment return through a combination of capital appreciation and current income. The fund pursues its objective by investing primarily in securities issued by real estate investment trusts and in the securities of companies which are principally engaged in the real estate industry. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of 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 expe nses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
17
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 certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
18
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as wel l as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule for the fund ranges from 1.05% to 1.20% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended September 30, 2010 was 1.16% for the Investor Class, A Class, B Class, C Class and R Class and 0.96% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermedi aries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2010, are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $1,150,941,013 and $1,204,720,012, respectively.
19
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010 | |||
Shares | Amount | Shares | Amount | |
Investor Class/Shares Authorized | 125,000,000 | 125,000,000 | ||
Sold | 5,762,040 | $ 94,733,602 | 13,756,354 | $ 163,922,813 |
Issued in reinvestment of distributions | 184,335 | 3,165,227 | 882,720 | 10,795,798 |
Redeemed | (8,774,503) | (142,589,202) | (25,186,666) | (300,987,364) |
(2,828,128) | (44,690,373) | (10,547,592) | (126,268,753) | |
Institutional Class/Shares Authorized | 50,000,000 | 50,000,000 | ||
Sold | 2,890,918 | 47,367,997 | 4,434,279 | 53,898,381 |
Issued in reinvestment of distributions | 100,957 | 1,734,341 | 290,226 | 3,669,953 |
Redeemed | (2,440,758) | (40,101,728) | (3,562,186) | (42,977,266) |
551,117 | 9,000,610 | 1,162,319 | 14,591,068 | |
A Class/Shares Authorized | 40,000,000 | 50,000,000 | ||
Sold | 1,467,939 | 24,225,124 | 3,722,369 | 45,104,605 |
Issued in reinvestment of distributions | 36,428 | 627,278 | 208,901 | 2,564,343 |
Redeemed | (2,511,563) | (41,081,462) | (6,031,790) | (75,038,635) |
(1,007,196) | (16,229,060) | (2,100,520) | (27,369,687) | |
B Class/Shares Authorized | 5,000,000 | 10,000,000 | ||
Sold | 104 | 1,748 | 2,736 | 34,074 |
Issued in reinvestment of distributions | 8 | 140 | 70 | 811 |
Redeemed | (944) | (15,444) | (2,216) | (24,955) |
(832) | (13,556) | 590 | 9,930 | |
C Class/Shares Authorized | 5,000,000 | 10,000,000 | ||
Sold | 14,061 | 234,485 | 51,478 | 594,273 |
Issued in reinvestment of distributions | 102 | 1,769 | 621 | 7,537 |
Redeemed | (5,385) | (82,782) | (32,603) | (385,093) |
8,778 | 153,472 | 19,496 | 216,717 | |
R Class/Shares Authorized | 5,000,000 | 10,000,000 | ||
Sold | 10,038 | 165,305 | 21,462 | 271,578 |
Issued in reinvestment of distributions | 116 | 2,007 | 401 | 5,031 |
Redeemed | (2,717) | (45,047) | (10,050) | (128,556) |
7,437 | 122,265 | 11,813 | 148,053 | |
Net increase (decrease) | (3,268,824) | $ (51,656,642) | (11,453,894) | $(138,672,672) |
20
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $936,989,291 | — | — | |||||||||
Temporary Cash Investments | 16,901 | $13,700,000 | — | |||||||||
Total Value of Investment Securities | $937,006,192 | $13,700,000 | — |
6. Risk Factors
The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund is subject to certain additional risks as compared to investing in a more diversified portfolio of investments. The fund may be subject to certain risks similar to those associated with direct investment in real estate including but not limited to: local or regional economic conditions, changes in zoning laws, changes in property values, property tax increases, overbuilding, increased competition, environmental contamination, natural disasters, and interest rate risk.
7. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
21
8. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $796,162,604 | |||
Gross tax appreciation of investments | $158,783,009 | |||
Gross tax depreciation of investments | (4,239,421 | ) | ||
Net tax appreciation (depreciation) of investments | $154,543,588 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(676,594,036), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(206,620,499) and $(469,973,537) expire in 2017 and 2018, respectively.
The fund has elected to treat $(502,405) of net capital losses incurred in the five-month period ended March 31, 2010, as having been incurred in the following fiscal year for federal income tax purposes.
22
Financial Highlights
Real Estate
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.79 | $7.80 | $21.67 | $31.37 | $29.00 | $23.24 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.09 | 0.28 | 0.46 | 0.43 | 0.53 | 0.53 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.13 | 8.01 | (13.91 | ) | (5.53 | ) | 5.70 | 8.44 | ||||||||||||||||
Total From Investment Operations | 1.22 | 8.29 | (13.45 | ) | (5.10 | ) | 6.23 | 8.97 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.10 | ) | (0.30 | ) | (0.42 | ) | (0.51 | ) | (0.49 | ) | (0.49 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (4.09 | ) | (3.37 | ) | (2.72 | ) | |||||||||||||||
Total Distributions | (0.10 | ) | (0.30 | ) | (0.42 | ) | (4.60 | ) | (3.86 | ) | (3.21 | ) | ||||||||||||
Net Asset Value, End of Period | $16.91 | $15.79 | $7.80 | $21.67 | $31.37 | $29.00 | ||||||||||||||||||
Total Return(3) | 7.72 | % | 107.30 | % | (62.80 | )% | (16.60 | )% | 22.02 | % | 40.65 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.17 | %(4) | 1.16 | % | 1.15 | % | 1.14 | % | 1.13 | % | 1.15 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.09 | %(4) | 2.24 | % | 2.87 | % | 1.60 | % | 1.72 | % | 2.00 | % | ||||||||||||
Portfolio Turnover Rate | 122 | % | 236 | % | 109 | % | 153 | % | 197 | % | 177 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $557,688 | $565,463 | $361,510 | $864,011 | $1,590,428 | $986,526 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
23
Real Estate
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.81 | $7.81 | $21.71 | $31.41 | $29.03 | $23.25 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.11 | 0.30 | 0.50 | 0.48 | 0.59 | 0.59 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.13 | 8.03 | (13.94 | ) | (5.54 | ) | 5.71 | 8.45 | ||||||||||||||||
Total From Investment Operations | 1.24 | 8.33 | (13.44 | ) | (5.06 | ) | 6.30 | 9.04 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.12 | ) | (0.33 | ) | (0.46 | ) | (0.55 | ) | (0.55 | ) | (0.54 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (4.09 | ) | (3.37 | ) | (2.72 | ) | |||||||||||||||
Total Distributions | (0.12 | ) | (0.33 | ) | (0.46 | ) | (4.64 | ) | (3.92 | ) | (3.26 | ) | ||||||||||||
Net Asset Value, End of Period | $16.93 | $15.81 | $7.81 | $21.71 | $31.41 | $29.03 | ||||||||||||||||||
Total Return(3) | 7.82 | % | 107.71 | % | (62.73 | )% | (16.44 | )% | 22.27 | % | 40.99 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.97 | %(4) | 0.96 | % | 0.95 | % | 0.94 | % | 0.93 | % | 0.95 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.29 | %(4) | 2.44 | % | 3.07 | % | 1.80 | % | 1.92 | % | 2.20 | % | ||||||||||||
Portfolio Turnover Rate | 122 | % | 236 | % | 109 | % | 153 | % | 197 | % | 177 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $255,741 | $230,109 | $104,565 | $200,982 | $379,044 | $242,745 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements. |
24
Real Estate
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.81 | $7.81 | $21.69 | $31.41 | $29.04 | $23.26 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.07 | 0.24 | 0.42 | 0.36 | 0.45 | 0.46 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.13 | 8.02 | (13.94 | ) | (5.53 | ) | 5.71 | 8.46 | ||||||||||||||||
Total From Investment Operations | 1.20 | 8.26 | (13.52 | ) | (5.17 | ) | 6.16 | 8.92 | ||||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.26 | ) | (0.36 | ) | (0.46 | ) | (0.42 | ) | (0.42 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (4.09 | ) | (3.37 | ) | (2.72 | ) | |||||||||||||||
Total Distributions | (0.08 | ) | (0.26 | ) | (0.36 | ) | (4.55 | ) | (3.79 | ) | (3.14 | ) | ||||||||||||
Net Asset Value, End of Period | $16.93 | $15.81 | $7.81 | $21.69 | $31.41 | $29.04 | ||||||||||||||||||
Total Return(4) | 7.58 | % | 106.76 | % | (62.88 | )% | (16.84 | )% | 21.70 | % | 40.37 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.42 | %(5) | 1.41 | % | 1.40 | % | 1.39 | % | 1.38 | % | 1.40 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.84 | %(5) | 1.99 | % | 2.62 | % | 1.35 | % | 1.47 | % | 1.75 | % | ||||||||||||
Portfolio Turnover Rate | 122 | % | 236 | % | 109 | % | 153 | % | 197 | % | 177 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $130,758 | $138,037 | $84,568 | $253,419 | $488,277 | $331,329 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended September 30, 2010 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements. |
25
Real Estate
B Class | ||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||
2010(1) | 2010 | 2009 | 2008(2) | |||||||||||||
Per-Share Data | ||||||||||||||||
Net Asset Value, Beginning of Period | $15.74 | $7.77 | $21.62 | $29.12 | ||||||||||||
Income From Investment Operations | ||||||||||||||||
Net Investment Income (Loss)(3) | 0.01 | 0.16 | 0.37 | 0.14 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.12 | 7.97 | (13.93 | ) | (3.42 | ) | ||||||||||
Total From Investment Operations | 1.13 | 8.13 | (13.56 | ) | (3.28 | ) | ||||||||||
Distributions | ||||||||||||||||
From Net Investment Income | (0.03 | ) | (0.16 | ) | (0.29 | ) | (0.13 | ) | ||||||||
From Net Realized Gains | — | — | — | (4.09 | ) | |||||||||||
Total Distributions | (0.03 | ) | (0.16 | ) | (0.29 | ) | (4.22 | ) | ||||||||
Net Asset Value, End of Period | $16.84 | $15.74 | $7.77 | $21.62 | ||||||||||||
Total Return(4) | 7.16 | % | 105.35 | % | (63.17 | )% | (11.57 | )% | ||||||||
Ratios/Supplemental Data | ||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.17 | %(5) | 2.16 | % | 2.15 | % | 2.14 | %(5) | ||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.09 | %(5) | 1.24 | % | 1.87 | % | 1.17 | %(5) | ||||||||
Portfolio Turnover Rate | 122 | % | 236 | % | 109 | % | 153 | %(6) | ||||||||
Net Assets, End of Period (in thousands) | $83 | $91 | $40 | $33 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through March 31, 2008. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. |
See Notes to Financial Statements. |
26
Real Estate
C Class | ||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||
2010(1) | 2010 | 2009 | 2008(2) | |||||||||||||
Per-Share Data | ||||||||||||||||
Net Asset Value, Beginning of Period | $15.75 | $7.78 | $21.62 | $29.12 | ||||||||||||
Income From Investment Operations | ||||||||||||||||
Net Investment Income (Loss)(3) | 0.01 | 0.14 | 0.35 | 0.13 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.13 | 7.99 | (13.90 | ) | (3.41 | ) | ||||||||||
Total From Investment Operations | 1.14 | 8.13 | (13.55 | ) | (3.28 | ) | ||||||||||
Distributions | ||||||||||||||||
From Net Investment Income | (0.03 | ) | (0.16 | ) | (0.29 | ) | (0.13 | ) | ||||||||
From Net Realized Gains | — | — | — | (4.09 | ) | |||||||||||
Total Distributions | (0.03 | ) | (0.16 | ) | (0.29 | ) | (4.22 | ) | ||||||||
Net Asset Value, End of Period | $16.86 | $15.75 | $7.78 | $21.62 | ||||||||||||
Total Return(4) | 7.22 | % | 105.21 | % | (63.12 | )% | (11.57 | )% | ||||||||
Ratios/Supplemental Data | ||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.17 | %(5) | 2.16 | % | 2.15 | % | 2.14 | %(5) | ||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.09 | %(5) | 1.24 | % | 1.87 | % | 1.15 | %(5) | ||||||||
Portfolio Turnover Rate | 122 | % | 236 | % | 109 | % | 153 | %(6) | ||||||||
Net Assets, End of Period (in thousands) | $1,199 | $983 | $334 | $62 |
1) | Six months ended September 30, 2010 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through March 31, 2008. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. |
See Notes to Financial Statements. |
27
Real Estate
R Class | ||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||
2010(1) | 2010 | 2009 | 2008(2) | |||||||||||||
Per-Share Data | ||||||||||||||||
Net Asset Value, Beginning of Period | $15.78 | $7.79 | $21.65 | $29.12 | ||||||||||||
Income From Investment Operations | ||||||||||||||||
Net Investment Income (Loss)(3) | 0.05 | 0.21 | 0.44 | 0.19 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | 1.13 | 8.01 | (13.96 | ) | (3.41 | ) | ||||||||||
Total From Investment Operations | 1.18 | 8.22 | (13.52 | ) | (3.22 | ) | ||||||||||
Distributions | ||||||||||||||||
From Net Investment Income | (0.06 | ) | (0.23 | ) | (0.34 | ) | (0.16 | ) | ||||||||
From Net Realized Gains | — | — | — | (4.09 | ) | |||||||||||
Total Distributions | (0.06 | ) | (0.23 | ) | (0.34 | ) | (4.25 | ) | ||||||||
Net Asset Value, End of Period | $16.90 | $15.78 | $7.79 | $21.65 | ||||||||||||
Total Return(4) | 7.46 | % | 106.38 | % | (62.98 | )% | (11.37 | )% | ||||||||
Ratios/Supplemental Data | ||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.67 | %(5) | 1.66 | % | 1.65 | % | 1.64 | %(5) | ||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.59 | %(5) | 1.74 | % | 2.37 | % | 1.65 | %(5) | ||||||||
Portfolio Turnover Rate | 122 | % | 236 | % | 109 | % | 153 | %(6) | ||||||||
Net Assets, End of Period (in thousands) | $601 | $444 | $127 | $26 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | September 28, 2007 (commencement of sale) through March 31, 2008. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2008. |
See Notes to Financial Statements. |
28
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010 and June 30, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor, A, B, C and R Classes | For: | 371,289,598 | ||
Against: | 6,062,537 | |||
Abstain: | 10,928,353 | |||
Broker Non-Vote: | 67,639,103 | |||
Institutional Class | For: | 98,232,018 | ||
Against: | 3,590,737 | |||
Abstain: | 8,824,170 | |||
Broker Non-Vote: | 4,048,259 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
29
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
30
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Morgan Stanley Capital International U.S. Real Estate Investment Trust (MSCI U.S. REIT) Index broadly and fairly represents the equity REIT opportunity set with proper investability screens to ensure that the index is investable and replicable. The index represents approximately 85% of the U.S. REIT universe.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
31
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock’s weight in the index is proportionate to its market value. Created by Standard & Poor’s, it is considered to be a broad measure of U.S. stock market performance.
32
![]() | |
Contact Us | |
americancentury.com | |
Automated Information Line | 1-800-345-8765 |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 |
Investors Using Advisors | 1-800-378-9878 |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 |
Telecommunications Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69822
Semiannual Report September 30, 2010 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/logo.jpg)
American Century Investments®
Small Cap Value Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
Small Cap Value | ||
Performance | 5 | |
Portfolio Commentary | 7 | |
Top Ten Holdings | 9 | |
Top Five Industries | 9 | |
Types of Investments in Portfolio | 9 | |
Shareholder Fee Example | 10 | |
Financial Statements | ||
Schedule of Investments | 12 | |
Statement of Assets and Liabilities | 19 | |
Statement of Operations | 20 | |
Statement of Changes in Net Assets | 21 | |
Notes to Financial Statements | 22 | |
Financial Highlights | 28 | |
Other Information | ||
Proxy Voting Results | 33 | |
Additional Information | 34 | |
Index Definitions | 35 |
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
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomas.jpg)
Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors—working on behalf of shareholders—to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/davidson1.jpg)
By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Small Cap Value
Total Returns as of September 30, 2010 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ASVIX | -1.41% | 13.97% | 4.34% | 11.28% | 11.15% | 7/31/98 |
Russell 2000 Value Index | — | -1.90% | 11.84% | 0.73% | 7.72% | 7.04% | — |
Institutional Class | ACVIX | -1.31% | 14.25% | 4.54% | 11.50% | 11.93% | 10/26/98 |
A Class(2) No sales charge* With sales charge* | ACSCX | -1.53% -7.21% | 13.79% 7.30% | 4.09% 2.86% | 11.02% 10.36% | 12.20% 11.58% | 12/31/99 |
C Class No sales charge* With sales charge* | ASVNX | -1.87% -2.85% | — — | — — | — — | 3.42%(1) 2.42%(1) | 3/1/10 |
R Class | ASVRX | -1.65% | — | — | — | 3.79%(1) | 3/1/10 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund’s performance may be affected by investments in initial public offerings.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
5
Small Cap Value
Growth of $10,000 Over 10 Years |
$10,000 investment made September 30, 2000 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart8.jpg)
Total Annual Fund Operating Expenses | ||||
Investor Class | Institutional Class | A Class | C Class | R Class |
1.42% | 1.22% | 1.67% | 2.42% | 1.92% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. Historically, small company stocks have been more volatile than the stocks of larger, more established companies. The fund’s performance may be affected by investments in initial public offerings.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not.
6
Portfolio Commentary
Small Cap Value
Portfolio Managers: Ben Giele and James Pitman
Performance Summary
Small Cap Value declined -1.41%* for the six months ended September 30, 2010. By comparison, its benchmark, the Russell 2000 Value Index, dropped -1.90%. The portfolio’s returns reflect operating expenses while the index’s returns do not. The Lipper Small-Cap Value Funds Index, which includes operating expenses, fell -0.64%.**
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. Against this backdrop, Small Cap Value’s investments in the energy, information technology, and health care sectors enhanced relative performance. Holdings in the consumer discretionary and industrials sec tors detracted.
We carefully manage this portfolio for long-term results. Since Small Cap Value’s inception on July 31, 1998, the portfolio has produced an average annual return of 11.15%, outpacing the returns of the Russell 2000 Value Index and the Lipper Small-Cap Value Funds Index for the same period (see performance information on pages 5-6 and the footnotes below).
Energy Boosted Performance
The energy sector—a source of significant weakness for the benchmark—contributed to results on both an absolute and relative basis. Specifically, the portfolio benefited from security selection among oil and gas companies. A notable contributor was exploration company Mariner Energy. Its stock price rose after independent oil and gas producer Apache Corp. announced it would buy the company in a deal valued at nearly $4 billion. Share prices for several other offshore oil and gas companies rose in conjunction with the Mariner-Apache deal, including W&T Offshore, one of the portfolio’s largest holdings.
Information Technology Contributed
Strong stock selection across the information technology sector added to relative results. The software industry was a significant source of strength. Quest Software, a developer of enterprise management solutions, was the portfolio’s top contributor. The company continued to execute well on its business plan. It has experienced solid top-line revenue growth and successfully trimmed expenses, resulting in better-than-expected profitability.
* | All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. |
** | The Lipper Small-Cap Value Funds Index returned 13.43%, 1.95%, 8.40% and 7.67% for the one-, five-, ten-year and since inception periods ended September 30, 2010, respectively. |
7
Small Cap Value
Another notable contributor was Sybase, a maker of mobile and database software. Its shares increased on news that software company SAP AG agreed to buy it for approximately $5.8 billion. The acquisition was completed during the reporting period.
Small Cap Value also benefited from a position in Motricity, a provider of wireless data services. We added the stock to the portfolio during its initial public offering (IPO) because of the company’s international growth prospects.
Health Care Added Value
Security selection among biotechnology companies was a plus. The portfolio benefited from a position in Talecris Biotherapeutics Holdings, which is not represented in the benchmark. We sold the stock after the announcement that it would be acquired by Grifols SA for $3.4 billion.
Consumer Discretionary Detracted
In consumer discretionary, the weakest sector in the benchmark, the portfolio’s mix of diversified consumer services companies hampered relative performance. Key detractors were Corinthian Colleges and Lincoln Educational Services Corp., which are post-secondary career-oriented education companies. Both names sank on worries that U.S. regulators would impose tighter regulations on student loans. We also believe profits could be pressured as a result of rising delinquency rates by students.
Industrials Hindered Progress
Small Cap Value’s complement of industrials stocks dampened relative performance. The portfolio held few airlines, a segment that outperformed as passenger traffic increased during the summer. Investments in the construction and engineering industry also slowed progress. A notable detractor was Granite Construction, a well-capitalized builder of highways, dams, airport infrastructure, and mass transit facilities. The company has faced increased competition for construction projects from small and mid-sized players. However, we expect Granite to continue benefiting from increased infrastructure spending.
Outlook
We continue to be bottom-up investment managers, building the portfolio one stock at a time, a process that results in exposure to market segments based on the attractiveness of individual companies in terms of their valuation and fundamentals. As of September 30, 2010, the portfolio is broadly diversified, with larger positions than the benchmark in the information technology, industrials, health care, and consumer discretionary sectors. Our fundamental analysis and valuation work is also directing us toward a smaller relative weighting in financials and utilities stocks.
8
Small Cap Value
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
Aspen Insurance Holdings Ltd., Series AHL, 5.625%, 12/31/49 (Conv. Pref.) | 2.3% |
iShares Russell 2000 Index Fund | 2.0% |
iShares Russell 2000 Value Index Fund | 1.3% |
HCC Insurance Holdings, Inc. | 1.3% |
Granite Construction, Inc. | 1.2% |
Quest Software, Inc. | 1.1% |
Curtiss-Wright Corp. | 1.0% |
Young Innovations, Inc. | 1.0% |
Mueller Industries, Inc. | 0.9% |
W&T Offshore, Inc. | 0.8% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Commercial Banks | 9.0% |
Real Estate Investment Trusts (REITs) | 8.3% |
Insurance | 6.5% |
Oil, Gas & Consumable Fuels | 4.4% |
Health Care Providers & Services | 3.9% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Common Stocks | 94.7% |
Convertible Preferred Stocks | 3.3% |
Preferred Stocks | 0.5% |
Total Equity Exposure | 98.5% |
Temporary Cash Investments | 1.9% |
Other Assets and Liabilities | (0.4)% |
9
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
10
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 - 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $985.90 | $6.22 | 1.25% |
Institutional Class | $1,000 | $986.90 | $5.23 | 1.05% |
A Class | $1,000 | $984.70 | $7.46 | 1.50% |
C Class | $1,000 | $981.30 | $11.18 | 2.25% |
R Class | $1,000 | $983.50 | $8.70 | 1.75% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.80 | $6.33 | 1.25% |
Institutional Class | $1,000 | $1,019.80 | $5.32 | 1.05% |
A Class | $1,000 | $1,017.55 | $7.59 | 1.50% |
C Class | $1,000 | $1,013.79 | $11.36 | 2.25% |
R Class | $1,000 | $1,016.29 | $8.85 | 1.75% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
11
Schedule of Investments
Small Cap Value
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 94.7% | ||
AEROSPACE & DEFENSE — 2.9% | ||
AAR Corp.(1) | 185,000 | $3,452,100 |
AeroVironment, Inc.(1) | 120,000 | 2,670,000 |
Alliant Techsystems, Inc.(1) | 135,000 | 10,179,000 |
Ceradyne, Inc.(1) | 120,000 | 2,802,000 |
Curtiss-Wright Corp. | 690,000 | 20,907,000 |
Esterline Technologies Corp.(1) | 70,000 | 4,006,100 |
Moog, Inc., Class A(1) | 190,000 | 6,746,900 |
Orbital Sciences Corp.(1) | 210,000 | 3,213,000 |
Triumph Group, Inc. | 60,000 | 4,475,400 |
58,451,500 | ||
AIR FREIGHT & LOGISTICS — 0.1% | ||
UTi Worldwide, Inc. | 180,000 | 2,894,400 |
AIRLINES — 0.5% | ||
Allegiant Travel Co. | 65,000 | 2,750,800 |
JetBlue Airways Corp.(1) | 625,000 | 4,181,250 |
SkyWest, Inc. | 210,000 | 2,931,600 |
9,863,650 | ||
AUTO COMPONENTS — 0.4% | ||
Cooper Tire & Rubber Co. | 160,000 | 3,140,800 |
Standard Motor Products, Inc. | 380,000 | 4,001,400 |
7,142,200 | ||
BIOTECHNOLOGY — 0.4% | ||
Talecris Biotherapeutics Holdings Corp.(1) | 335,000 | 7,664,800 |
BUILDING PRODUCTS — 0.3% | ||
Apogee Enterprises, Inc. | 226,659 | 2,073,930 |
Griffon Corp.(1) | 110,000 | 1,340,900 |
Simpson Manufacturing Co., Inc. | 100,000 | 2,578,000 |
5,992,830 | ||
CAPITAL MARKETS — 3.9% | ||
Apollo Investment Corp. | 775,000 | 7,928,250 |
Ares Capital Corp. | 510,000 | 7,981,500 |
Artio Global Investors, Inc. | 520,000 | 7,956,000 |
Calamos Asset Management, Inc., Class A | 485,000 | 5,577,500 |
Fifth Street Finance Corp. | 360,000 | 4,010,400 |
HFF, Inc., Class A(1) | 495,000 | 4,593,600 |
Investment Technology Group, Inc.(1) | 285,000 | 4,052,700 |
Knight Capital Group, Inc., Class A(1) | 325,000 | 4,026,750 |
MCG Capital Corp. | 520,000 | 3,036,800 |
PennantPark Investment Corp. | 459,260 | 4,872,748 |
Piper Jaffray Cos.(1) | 170,000 | 4,952,100 |
Prospect Capital Corp. | 305,000 | 2,961,550 |
Pzena Investment Management, Inc., Class A | 295,000 | 2,026,650 |
TradeStation Group, Inc.(1) | 834,586 | 5,491,576 |
Waddell & Reed Financial, Inc., Class A | 295,000 | 8,071,200 |
77,539,324 | ||
CHEMICALS — 1.5% | ||
A. Schulman, Inc. | 110,000 | 2,216,500 |
Arch Chemicals, Inc. | 85,000 | 2,982,650 |
Cytec Industries, Inc. | 50,000 | 2,819,000 |
Georgia Gulf Corp.(1) | 250,000 | 4,085,000 |
H.B. Fuller Co. | 220,824 | 4,387,773 |
Intrepid Potash, Inc.(1) | 155,000 | 4,040,850 |
Olin Corp. | 145,000 | 2,923,200 |
OM Group, Inc.(1) | 115,000 | 3,463,800 |
Sensient Technologies Corp. | 130,000 | 3,963,700 |
30,882,473 | ||
COMMERCIAL BANKS — 9.0% | ||
American National Bankshares, Inc. | 185,000 | 4,058,900 |
Associated Banc-Corp. | 535,000 | 7,056,650 |
BancorpSouth, Inc. | 350,000 | 4,963,000 |
Boston Private Financial Holdings, Inc. | 1,225,000 | 8,011,500 |
Citizens Republic Bancorp., Inc.(1) | 975,000 | 878,573 |
Community Bank System, Inc. | 140,000 | 3,221,400 |
Cullen/Frost Bankers, Inc. | 75,000 | 4,040,250 |
CVB Financial Corp. | 365,000 | 2,741,150 |
East West Bancorp., Inc. | 175,000 | 2,849,000 |
F.N.B. Corp. | 470,000 | 4,023,200 |
First Commonwealth Financial Corp. | 330,000 | 1,798,500 |
First Horizon National Corp.(1) | 1,158,886 | 13,222,894 |
First Interstate Bancsystem, Inc. | 230,000 | 3,095,800 |
First Midwest Bancorp., Inc. | 400,000 | 4,612,000 |
FirstMerit Corp. | 530,000 | 9,709,600 |
Fulton Financial Corp. | 1,110,000 | 10,056,600 |
Hampton Roads Bankshares, Inc.(1)(2) | 1,145,000 | 1,095,192 |
Heritage Financial Corp.(1) | 350,000 | 4,900,000 |
12
Small Cap Value
Shares | Value |
IBERIABANK Corp. | 60,000 | $2,998,800 |
KeyCorp | 355,000 | 2,825,800 |
Lakeland Financial Corp. | 240,000 | 4,478,400 |
Marshall & Ilsley Corp. | 700,000 | 4,928,000 |
MB Financial, Inc. | 225,000 | 3,649,500 |
National Bankshares, Inc. | 140,000 | 3,612,000 |
Old National Bancorp. | 475,000 | 4,987,500 |
Pacific Continental Corp. | 320,000 | 2,896,000 |
Park Sterling Bank, Inc.(1) | 702,443 | 4,249,780 |
Sterling Bancshares, Inc. | 1,675,000 | 8,994,750 |
Synovus Financial Corp. | 1,725,000 | 4,243,500 |
Trico Bancshares | 310,000 | 4,764,700 |
Trustmark Corp. | 175,000 | 3,804,500 |
United Bankshares, Inc. | 135,000 | 3,360,150 |
Washington Banking Co. | 320,000 | 4,435,200 |
Webster Financial Corp. | 460,000 | 8,077,600 |
Whitney Holding Corp. | 896,452 | 7,324,013 |
Wilmington Trust Corp. | 675,000 | 6,061,500 |
Wintrust Financial Corp. | 155,000 | 5,023,550 |
181,049,452 | ||
COMMERCIAL SERVICES & SUPPLIES — 1.3% | ||
ATC Technology Corp.(1) | 110,000 | 2,721,400 |
Brink’s Co. (The) | 240,000 | 5,520,000 |
IESI-BFC Ltd. | 215,000 | 4,921,350 |
SYKES Enterprises, Inc.(1) | 495,000 | 6,722,100 |
US Ecology, Inc. | 465,000 | 7,440,000 |
27,324,850 | ||
COMMUNICATIONS EQUIPMENT — 1.3% | ||
Bel Fuse, Inc., Class B | 235,000 | 4,892,700 |
Blue Coat Systems, Inc.(1) | 170,000 | 4,090,200 |
DG FastChannel, Inc.(1) | 270,000 | 5,872,500 |
Emulex Corp.(1) | 280,000 | 2,923,200 |
Netgear, Inc.(1) | 185,000 | 4,996,850 |
Polycom, Inc.(1) | 140,000 | 3,819,200 |
26,594,650 | ||
COMPUTERS & PERIPHERALS — 0.8% | ||
Electronics for Imaging, Inc.(1) | 490,000 | 5,938,800 |
Lexmark International, Inc., Class A(1) | 90,000 | 4,015,800 |
NCR Corp.(1) | 220,000 | 2,998,600 |
Novatel Wireless, Inc.(1) | 425,000 | 3,349,000 |
16,302,200 | ||
CONSTRUCTION & ENGINEERING — 2.0% | ||
Comfort Systems USA, Inc. | 265,000 | 2,843,450 |
EMCOR Group, Inc.(1) | 350,000 | 8,606,500 |
Granite Construction, Inc. | 1,030,168 | 23,426,020 |
Pike Electric Corp.(1) | 745,000 | 5,423,600 |
40,299,570 | ||
CONSTRUCTION MATERIALS — 0.4% | ||
Martin Marietta Materials, Inc. | 60,000 | 4,618,200 |
Texas Industries, Inc. | 85,000 | 2,679,200 |
7,297,400 | ||
CONTAINERS & PACKAGING — 0.7% | ||
Silgan Holdings, Inc. | 185,000 | 5,864,500 |
Sonoco Products Co. | 230,000 | 7,691,200 |
13,555,700 | ||
DISTRIBUTORS — 0.3% | ||
Core-Mark Holding Co., Inc.(1) | 165,000 | 5,108,400 |
DIVERSIFIED — 3.5% | ||
iShares Russell 2000 Index Fund | 600,000 | 40,482,000 |
iShares Russell 2000 Value Index Fund | 420,000 | 25,998,000 |
iShares S&P SmallCap 600 Index Fund | 70,000 | 4,136,300 |
70,616,300 | ||
DIVERSIFIED CONSUMER SERVICES — 0.3% | ||
Corinthian Colleges, Inc.(1) | 430,000 | 3,018,600 |
Regis Corp. | 190,000 | 3,634,700 |
6,653,300 | ||
DIVERSIFIED FINANCIAL SERVICES — 0.2% | ||
Compass Diversified Holdings | 265,000 | 4,282,400 |
DIVERSIFIED TELECOMMUNICATION SERVICES — 0.2% | ||
Atlantic Tele-Network, Inc. | 80,000 | 3,939,200 |
ELECTRIC UTILITIES — 2.5% | ||
Central Vermont Public Service Corp. | 300,000 | 6,051,000 |
Cleco Corp. | 130,000 | 3,850,600 |
Great Plains Energy, Inc. | 620,000 | 11,718,000 |
IDACORP, Inc. | 125,000 | 4,490,000 |
Portland General Electric Co. | 800,000 | 16,224,000 |
Unitil Corp. | 180,000 | 3,951,000 |
Westar Energy, Inc. | 145,000 | 3,513,350 |
49,797,950 | ||
ELECTRICAL EQUIPMENT — 1.9% | ||
Acuity Brands, Inc. | 70,000 | 3,096,800 |
Belden, Inc. | 160,000 | 4,220,800 |
Brady Corp., Class A | 225,000 | 6,563,250 |
Encore Wire Corp. | 470,000 | 9,639,700 |
Hubbell, Inc., Class B | 75,000 | 3,806,250 |
13
Small Cap Value
Shares | Value |
II-VI, Inc.(1) | 75,000 | $2,799,750 |
LSI Industries, Inc. | 695,000 | 4,461,900 |
Thomas & Betts Corp.(1) | 70,000 | 2,871,400 |
37,459,850 | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 2.3% | ||
Benchmark Electronics, Inc.(1) | 250,000 | 4,100,000 |
Coherent, Inc.(1) | 70,000 | 2,800,700 |
Electro Scientific Industries, Inc.(1) | 525,000 | 5,832,750 |
Littelfuse, Inc.(1) | 90,000 | 3,933,000 |
Methode Electronics, Inc. | 345,000 | 3,132,600 |
Molex, Inc. | 195,000 | 4,081,350 |
Park Electrochemical Corp. | 205,000 | 5,399,700 |
PC Connection, Inc.(1) | 395,000 | 2,697,850 |
Rogers Corp.(1) | 200,000 | 6,296,000 |
Tech Data Corp.(1) | 100,000 | 4,030,000 |
Vishay Intertechnology, Inc.(1) | 340,000 | 3,291,200 |
45,595,150 | ||
ENERGY EQUIPMENT & SERVICES — 2.3% | ||
Bristow Group, Inc.(1) | 135,000 | 4,870,800 |
Cal Dive International, Inc.(1) | 850,000 | 4,649,500 |
Global Industries Ltd.(1) | 495,000 | 2,707,650 |
Helix Energy Solutions Group, Inc.(1) | 450,000 | 5,013,000 |
Key Energy Services, Inc.(1) | 515,000 | 4,897,650 |
North American Energy Partners, Inc.(1) | 310,000 | 2,526,500 |
Rowan Cos., Inc.(1) | 95,000 | 2,884,200 |
Superior Energy Services, Inc.(1) | 145,000 | 3,870,050 |
Tetra Technologies, Inc.(1) | 910,000 | 9,282,000 |
Unit Corp.(1) | 135,000 | 5,034,150 |
45,735,500 | ||
FOOD & STAPLES RETAILING — 0.8% | ||
Ruddick Corp. | 80,000 | 2,774,400 |
Village Super Market, Inc., Class A | 120,000 | 3,352,800 |
Weis Markets, Inc. | 280,000 | 10,956,400 |
17,083,600 | ||
FOOD PRODUCTS — 1.1% | ||
Farmer Bros. Co. | 245,000 | 3,920,000 |
Ralcorp Holdings, Inc.(1) | 145,000 | 8,479,600 |
Seneca Foods Corp., Class A(1) | 155,000 | 4,059,450 |
TreeHouse Foods, Inc.(1) | 110,000 | 5,071,000 |
21,530,050 | ||
GAS UTILITIES — 1.1% | ||
Atmos Energy Corp. | 170,000 | 4,972,500 |
Chesapeake Utilities Corp. | 145,000 | 5,251,900 |
Nicor, Inc. | 160,000 | 7,331,200 |
WGL Holdings, Inc. | 140,000 | 5,289,200 |
22,844,800 | ||
HEALTH CARE EQUIPMENT & SUPPLIES — 2.4% | ||
Analogic Corp. | 60,000 | 2,692,800 |
Beckman Coulter, Inc. | 105,000 | 5,122,950 |
Cooper Cos., Inc. (The) | 105,000 | 4,853,100 |
Cutera, Inc.(1)(2) | 645,000 | 5,224,500 |
ICU Medical, Inc.(1) | 85,000 | 3,169,650 |
Utah Medical Products, Inc.(2) | 174,623 | 5,116,454 |
Young Innovations, Inc.(2) | 695,000 | 19,883,950 |
Zoll Medical Corp.(1) | 85,000 | 2,742,950 |
48,806,354 | ||
HEALTH CARE PROVIDERS & SERVICES — 3.9% | ||
Alliance HealthCare Services, Inc.(1) | 1,210,000 | 5,541,800 |
Almost Family, Inc.(1) | 95,000 | 2,814,850 |
AMERIGROUP Corp.(1) | 95,000 | 4,034,650 |
Amsurg Corp.(1) | 345,000 | 6,030,600 |
Assisted Living Concepts, Inc., Class A(1) | 135,000 | 4,109,400 |
Chemed Corp. | 90,000 | 5,127,300 |
Community Health Systems, Inc.(1) | 170,000 | 5,264,900 |
Health Management Associates, Inc., Class A(1) | 575,000 | 4,404,500 |
Kindred Healthcare, Inc.(1) | 305,000 | 3,971,100 |
LifePoint Hospitals, Inc.(1) | 110,000 | 3,856,600 |
Magellan Health Services, Inc.(1) | 105,000 | 4,960,200 |
National Healthcare Corp. | 300,000 | 11,121,000 |
Owens & Minor, Inc. | 285,000 | 8,111,100 |
Sun Healthcare Group, Inc.(1) | 415,000 | 3,515,050 |
U.S. Physical Therapy, Inc.(1) | 285,000 | 4,765,200 |
77,628,250 | ||
HOTELS, RESTAURANTS & LEISURE — 0.9% | ||
Bob Evans Farms, Inc. | 155,000 | 4,350,850 |
Jack in the Box, Inc.(1) | 250,000 | 5,360,000 |
Red Robin Gourmet Burgers, Inc.(1) | 265,000 | 5,196,650 |
Ruby Tuesday, Inc.(1) | 230,000 | 2,730,100 |
17,637,600 |
14
Small Cap Value
Shares | Value |
HOUSEHOLD DURABLES — 0.8% | ||
CSS Industries, Inc. | 175,000 | $3,025,750 |
Ethan Allen Interiors, Inc. | 180,000 | 3,142,800 |
Furniture Brands International, Inc.(1) | 740,000 | 3,981,200 |
Helen of Troy Ltd.(1) | 120,000 | 3,034,800 |
M.D.C. Holdings, Inc. | 135,000 | 3,919,050 |
17,103,600 | ||
HOUSEHOLD PRODUCTS — 0.2% | ||
WD-40 Co. | 104,595 | 3,976,702 |
INDUSTRIAL CONGLOMERATES — 0.2% | ||
Tredegar Corp. | 170,000 | 3,226,600 |
INSURANCE — 4.2% | ||
Alterra Capital Holdings Ltd. | 415,000 | 8,266,800 |
American Equity Investment Life Holding Co. | 290,000 | 2,969,600 |
Aspen Insurance Holdings Ltd. | 155,000 | 4,693,400 |
Baldwin & Lyons, Inc., Class B | 225,000 | 5,726,250 |
Hanover Insurance Group, Inc. (The) | 145,000 | 6,815,000 |
HCC Insurance Holdings, Inc. | 970,000 | 25,307,300 |
Mercer Insurance Group, Inc.(2) | 400,000 | 7,120,000 |
Platinum Underwriters Holdings Ltd. | 185,000 | 8,051,200 |
ProAssurance Corp.(1) | 100,000 | 5,759,000 |
United Fire & Casualty Co. | 185,000 | 3,923,850 |
Unitrin, Inc. | 55,000 | 1,341,450 |
Validus Holdings Ltd. | 180,000 | 4,744,800 |
84,718,650 | ||
IT SERVICES — 1.8% | ||
CACI International, Inc., Class A(1) | 95,000 | 4,299,700 |
Cass Information Systems, Inc. | 115,000 | 3,945,650 |
DST Systems, Inc. | 315,000 | 14,124,600 |
NeuStar, Inc., Class A(1) | 220,000 | 5,469,200 |
Total System Services, Inc. | 535,000 | 8,153,400 |
35,992,550 | ||
LEISURE EQUIPMENT & PRODUCTS — 0.3% | ||
Arctic Cat, Inc.(1) | 380,000 | 3,895,000 |
JAKKS Pacific, Inc.(1) | 165,000 | 2,910,600 |
6,805,600 | ||
LIFE SCIENCES TOOLS & SERVICES — 0.3% | ||
Pharmaceutical Product Development, Inc. | 235,000 | 5,825,650 |
MACHINERY — 2.8% | ||
Actuant Corp., Class A | 115,000 | 2,640,400 |
Altra Holdings, Inc.(1) | 245,000 | 3,608,850 |
Barnes Group, Inc. | 225,000 | 3,957,750 |
Colfax Corp.(1) | 275,000 | 4,089,250 |
Douglas Dynamics, Inc. | 225,000 | 2,778,750 |
Dynamic Materials Corp. | 320,000 | 4,835,200 |
FreightCar America, Inc. | 95,000 | 2,337,000 |
Kadant, Inc.(1) | 90,000 | 1,701,900 |
Lincoln Electric Holdings, Inc. | 85,000 | 4,914,700 |
Mueller Industries, Inc. | 670,000 | 17,748,300 |
Mueller Water Products, Inc., Class A | 1,175,000 | 3,548,500 |
Robbins & Myers, Inc. | 185,000 | 4,954,300 |
57,114,900 | ||
MARINE — 0.8% | ||
Alexander & Baldwin, Inc. | 100,000 | 3,484,000 |
Diana Shipping, Inc.(1) | 610,000 | 7,747,000 |
Genco Shipping & Trading Ltd.(1) | 300,000 | 4,782,000 |
16,013,000 | ||
MEDIA — 2.0% | ||
E.W. Scripps Co. (The), Class A(1) | 1,435,000 | 11,307,800 |
Entravision Communications Corp., Class A(1) | 2,415,000 | 4,805,850 |
Gannett Co., Inc. | 330,000 | 4,035,900 |
Harte-Hanks, Inc. | 255,000 | 2,975,850 |
Journal Communications, Inc., Class A(1) | 850,763 | 3,836,941 |
Knology, Inc.(1) | 440,000 | 5,909,200 |
LIN TV Corp., Class A(1) | 1,490,000 | 6,615,600 |
39,487,141 | ||
METALS & MINING — 2.3% | ||
Brush Engineered Materials, Inc.(1) | 110,000 | 3,128,400 |
Century Aluminum Co.(1) | 235,000 | 3,094,950 |
Coeur d’Alene Mines Corp.(1) | 330,000 | 6,573,600 |
Commercial Metals Co. | 210,000 | 3,042,900 |
Haynes International, Inc. | 110,000 | 3,841,200 |
Hecla Mining Co.(1) | 945,000 | 5,972,400 |
Kaiser Aluminum Corp. | 70,000 | 2,995,300 |
Royal Gold, Inc. | 60,000 | 2,990,400 |
RTI International Metals, Inc.(1) | 100,000 | 3,062,000 |
15
Small Cap Value
Shares | Value |
Schnitzer Steel Industries, Inc., Class A | 60,000 | $2,896,800 |
Thompson Creek Metals Co., Inc.(1) | 575,000 | 6,198,500 |
Worthington Industries, Inc. | 190,000 | 2,855,700 |
46,652,150 | ||
MULTILINE RETAIL — 0.5% | ||
Big Lots, Inc.(1) | 180,000 | 5,985,000 |
Fred’s, Inc., Class A | 385,000 | 4,543,000 |
10,528,000 | ||
MULTI-UTILITIES — 1.1% | ||
Avista Corp. | 235,000 | 4,906,800 |
Black Hills Corp. | 90,000 | 2,808,000 |
MDU Resources Group, Inc. | 540,000 | 10,773,000 |
NorthWestern Corp. | 140,000 | 3,990,000 |
22,477,800 | ||
OFFICE ELECTRONICS — 0.2% | ||
Zebra Technologies Corp., Class A(1) | 120,000 | 4,036,800 |
OIL, GAS & CONSUMABLE FUELS — 4.4% | ||
Alpha Natural Resources, Inc.(1) | 100,000 | 4,115,000 |
Berry Petroleum Co., Class A | 195,000 | 6,187,350 |
Bill Barrett Corp.(1) | 160,000 | 5,760,000 |
DHT Holdings, Inc. | 950,000 | 3,923,500 |
Forest Oil Corp.(1) | 270,000 | 8,019,000 |
Frontier Oil Corp. | 610,000 | 8,174,000 |
Goodrich Petroleum Corp.(1) | 250,000 | 3,642,500 |
Hugoton Royalty Trust | 150,000 | 2,998,500 |
Nordic American Tanker Shipping | 405,000 | 10,837,800 |
Overseas Shipholding Group, Inc. | 115,000 | 3,946,800 |
Penn Virginia Corp. | 210,000 | 3,368,400 |
Rosetta Resources, Inc.(1) | 125,000 | 2,936,250 |
SandRidge Energy, Inc.(1) | 650,000 | 3,692,000 |
Swift Energy Co.(1) | 185,000 | 5,194,800 |
W&T Offshore, Inc. | 1,540,000 | 16,324,000 |
89,119,900 | ||
PAPER & FOREST PRODUCTS — 0.2% | ||
P.H. Glatfelter Co. | 260,000 | 3,161,600 |
PERSONAL PRODUCTS — 0.3% | ||
Prestige Brands Holdings, Inc.(1) | 425,000 | 4,203,250 |
Schiff Nutrition International, Inc. | 205,000 | 1,681,000 |
5,884,250 | ||
PHARMACEUTICALS — 0.1% | ||
Endo Pharmaceuticals Holdings, Inc.(1) | 60,000 | 1,994,400 |
PROFESSIONAL SERVICES — 1.2% | ||
CDI Corp. | 305,000 | 3,940,600 |
Heidrick & Struggles International, Inc. | 235,000 | 4,577,800 |
Korn/Ferry International(1) | 375,000 | 6,202,500 |
Mistras Group, Inc.(1) | 515,000 | 5,963,700 |
Towers Watson & Co., Class A | 85,000 | 4,180,300 |
24,864,900 | ||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 7.4% | ||
American Campus Communities, Inc. | 185,000 | 5,631,400 |
Associated Estates Realty Corp. | 505,000 | 7,059,900 |
Capstead Mortgage Corp. | 285,000 | 3,097,950 |
CBL & Associates Properties, Inc. | 295,000 | 3,852,700 |
Chimera Investment Corp. | 2,800,000 | 11,060,000 |
CommonWealth REIT | 125,000 | 3,200,000 |
DCT Industrial Trust, Inc. | 1,015,000 | 4,861,850 |
Duke Realty Corp. | 400,000 | 4,636,000 |
First Industrial Realty Trust, Inc.(1) | 775,000 | 3,929,250 |
First Potomac Realty Trust | 245,000 | 3,675,000 |
Getty Realty Corp. | 260,000 | 6,975,800 |
Government Properties Income Trust | 333,067 | 8,892,889 |
Hatteras Financial Corp. | 120,000 | 3,416,400 |
Healthcare Realty Trust, Inc. | 155,000 | 3,625,450 |
Highwoods Properties, Inc. | 230,000 | 7,468,100 |
Inland Real Estate Corp. | 355,000 | 2,950,050 |
Kilroy Realty Corp. | 170,000 | 5,633,800 |
Lexington Realty Trust | 940,000 | 6,730,400 |
Medical Properties Trust, Inc. | 290,000 | 2,940,600 |
MFA Financial, Inc. | 985,000 | 7,515,550 |
National Health Investors, Inc. | 85,000 | 3,745,100 |
National Retail Properties, Inc. | 265,000 | 6,654,150 |
Omega Healthcare Investors, Inc. | 215,000 | 4,826,750 |
Piedmont Office Realty Trust, Inc., Class A | 325,000 | 6,145,750 |
PS Business Parks, Inc. | 90,000 | 5,091,300 |
16
Small Cap Value
Shares | Value |
Saul Centers, Inc. | 80,000 | $3,356,000 |
Urstadt Biddle Properties, Inc., Class A | 220,000 | 3,977,600 |
Washington Real Estate Investment Trust | 120,000 | 3,807,600 |
Winthrop Realty Trust | 245,000 | 3,028,200 |
147,785,539 | ||
ROAD & RAIL — 0.3% | ||
Arkansas Best Corp. | 165,000 | 3,997,950 |
Old Dominion Freight Line, Inc.(1) | 112,500 | 2,859,750 |
6,857,700 | ||
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 2.5% | ||
Cymer, Inc.(1) | 120,000 | 4,449,600 |
Integrated Device Technology, Inc.(1) | 950,000 | 5,557,500 |
Intersil Corp., Class A | 375,000 | 4,383,750 |
Mattson Technology, Inc.(1) | 425,000 | 1,168,750 |
MEMC Electronic Materials, Inc.(1) | 500,000 | 5,960,000 |
MKS Instruments, Inc.(1) | 120,000 | 2,157,600 |
Sigma Designs, Inc.(1) | 560,000 | 6,434,400 |
Standard Microsystems Corp.(1) | 260,000 | 5,930,600 |
Varian Semiconductor Equipment Associates, Inc.(1) | 210,000 | 6,043,800 |
Verigy Ltd.(1) | 800,000 | 6,504,000 |
Zoran Corp.(1) | 350,000 | 2,674,000 |
51,264,000 | ||
SOFTWARE — 3.7% | ||
Aspen Technology, Inc.(1) | 110,000 | 1,140,700 |
Cadence Design Systems, Inc.(1) | 500,000 | 3,815,000 |
Compuware Corp.(1) | 330,000 | 2,814,900 |
Lawson Software, Inc.(1) | 360,000 | 3,049,200 |
Motricity, Inc.(1) | 550,571 | 6,612,358 |
Parametric Technology Corp.(1) | 565,971 | 11,059,073 |
Quest Software, Inc.(1) | 864,397 | 21,255,522 |
S1 Corp.(1) | 1,475,000 | 7,684,750 |
Synopsys, Inc.(1) | 120,000 | 2,972,400 |
TIBCO Software, Inc.(1) | 135,000 | 2,394,900 |
Ulticom, Inc.(1)(2) | 654,216 | 5,181,391 |
Websense, Inc.(1) | 360,000 | 6,386,400 |
74,366,594 | ||
SPECIALTY RETAIL — 3.8% | ||
Aaron’s, Inc. | 160,000 | 2,952,000 |
Cabela’s, Inc.(1) | 210,000 | 3,985,800 |
Cato Corp. (The), Class A | 105,000 | 2,809,800 |
Charming Shoppes, Inc.(1) | 825,000 | 2,904,000 |
Christopher & Banks Corp. | 765,000 | 6,051,150 |
Coldwater Creek, Inc.(1) | 750,000 | 3,952,500 |
Collective Brands, Inc.(1) | 605,000 | 9,764,700 |
Dress Barn, Inc. (The)(1) | 175,000 | 4,156,250 |
Finish Line, Inc. (The), Class A | 350,000 | 4,868,500 |
Genesco, Inc.(1) | 240,000 | 7,171,200 |
Group 1 Automotive, Inc.(1) | 150,000 | 4,482,000 |
Hot Topic, Inc. | 725,000 | 4,342,750 |
New York & Co., Inc.(1) | 1,175,000 | 3,019,750 |
Penske Automotive Group, Inc.(1) | 254,947 | 3,365,300 |
PEP Boys-Manny Moe & Jack | 275,000 | 2,909,500 |
Rent-A-Center, Inc. | 130,000 | 2,909,400 |
Stage Stores, Inc. | 220,000 | 2,860,000 |
Systemax, Inc. | 310,000 | 3,806,800 |
76,311,400 | ||
TEXTILES, APPAREL & LUXURY GOODS — 0.8% | ||
Culp, Inc.(1) | 340,000 | 3,332,000 |
Jones Apparel Group, Inc. | 345,000 | 6,775,800 |
True Religion Apparel, Inc.(1) | 300,000 | 6,402,000 |
16,509,800 | ||
THRIFTS & MORTGAGE FINANCE — 2.3% | ||
Brookline Bancorp., Inc. | 390,000 | 3,892,200 |
First Financial Holdings, Inc. | 381,754 | 4,252,740 |
First Financial Northwest, Inc. | 705,000 | 2,749,500 |
First Niagara Financial Group, Inc. | 685,000 | 7,980,250 |
Flagstar Bancorp, Inc.(1) | 650,000 | 1,183,000 |
Flushing Financial Corp. | 250,000 | 2,890,000 |
K-Fed Bancorp. | 375,000 | 2,958,750 |
Oritani Financial Corp. | 330,000 | 3,293,400 |
PMI Group, Inc. (The)(1) | 775,000 | 2,844,250 |
Provident Financial Services, Inc. | 485,000 | 5,994,600 |
Radian Group, Inc. | 505,000 | 3,949,100 |
Washington Federal, Inc. | 265,000 | 4,043,900 |
46,031,690 |
17
Small Cap Value
Shares | Value |
TRADING COMPANIES & DISTRIBUTORS — 0.7% | ||
GATX Corp. | 100,000 | $2,932,000 |
Kaman Corp. | 140,000 | 3,669,400 |
Lawson Products, Inc. | 250,000 | 3,817,500 |
WESCO International, Inc.(1) | 75,000 | 2,946,750 |
13,365,650 | ||
WATER UTILITIES — 0.3% | ||
Artesian Resources Corp., Class A | 270,000 | 5,148,900 |
TOTAL COMMON STOCKS(Cost $1,721,573,856) | 1,904,199,169 | |
Convertible Preferred Stocks — 3.3% | ||
INSURANCE — 2.3% | ||
Aspen Insurance Holdings Ltd., Series AHL, 5.625%, 12/31/49(3) | 825,000 | 46,101,000 |
LEISURE EQUIPMENT & PRODUCTS — 0.3% | ||
Callaway Golf Co., Series B, 7.50%, 6/15/12(3) | 45,000 | 5,248,125 |
MEDIA — 0.1% | ||
LodgeNet Interactive Corp., 10.00%, 12/31/49(3)(4) | 3,216 | 3,143,640 |
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.4% | ||
Entertainment Properties Trust, Series E, 9.00%, 4/20/13(3) | 155,000 | 4,262,500 |
Lexington Realty Trust, Series C, 6.50%, 12/31/49(3) | 75,000 | 3,206,250 |
7,468,750 | ||
TOBACCO — 0.2% | ||
Universal Corp., 6.75%, 3/15/13(3) | 5,003 | 4,885,429 |
TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $60,214,766) | 66,846,944 | |
Preferred Stocks — 0.5% | ||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 0.5% | ||
National Retail Properties, Inc., Series C, 7.375%, 10/12/11(3) | 285,000 | 7,201,950 |
PS Business Parks, Inc., Series O, 7.375%, 6/16/11(3) | 107,340 | 2,774,739 |
TOTAL PREFERRED STOCKS(Cost $9,222,258) | 9,976,689 | |
Temporary Cash Investments — 1.9% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 22,580 | $22,580 |
Repurchase Agreement, Goldman Sachs Group, Inc., (collateralized by various U.S. Treasury obligations, 4.875%, 7/31/11, valued at $38,129,217), in a joint trading account at 0.10%, dated 9/30/10, due 10/1/10 (Delivery value $37,400,104) | 37,400,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $37,422,580) | 37,422,580 | |
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $1,828,433,460) | 2,018,445,382 | |
OTHER ASSETS AND LIABILITIES — (0.4)% | (8,474,716) | |
TOTAL NET ASSETS — 100.0% | $2,009,970,666 |
Notes to Schedule of Investments
(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) | Perpetual security. These securities do not have a predetermined maturity date. The coupon rates are fixed for a period of time and may be structured to adjust thereafter. Interest reset or next call date is indicated, as applicable. |
(4) | Security was purchased under Rule 144A of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of these securities at the period end was $3,143,640, which represented 0.2% of total net assets. |
See Notes to Financial Statements. |
18
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Assets | ||||
Investment securities — unaffiliated, at value (cost of $1,774,490,697) | $1,974,823,895 | |||
Investment securities — affiliated, at value (cost of $53,942,763) | 43,621,487 | |||
Total investment securities, at value (cost of $1,828,433,460) | 2,018,445,382 | |||
Receivable for investments sold | 13,327,332 | |||
Receivable for capital shares sold | 1,889,644 | |||
Dividends and interest receivable | 3,974,364 | |||
2,037,636,722 | ||||
Liabilities | ||||
Payable for investments purchased | 22,668,035 | |||
Payable for capital shares redeemed | 3,036,421 | |||
Accrued management fees | 1,875,455 | |||
Service fees (and distribution fees — A Class and R Class) payable | 86,129 | |||
Distribution fees payable | 16 | |||
27,666,056 | ||||
Net Assets | $2,009,970,666 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $1,976,419,775 | |||
Undistributed net investment income | 1,188,848 | |||
Accumulated net realized loss on investment transactions | (157,649,879 | ) | ||
Net unrealized appreciation on investments | 190,011,922 | |||
$2,009,970,666 |
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Investor Class, $0.01 Par Value | $886,611,791 | 112,458,818 | $7.88 | |||||||||
Institutional Class, $0.01 Par Value | $689,669,076 | 87,137,665 | $7.91 | |||||||||
A Class, $0.01 Par Value | $433,249,339 | 55,134,435 | $7.86 | * | ||||||||
C Class, $0.01 Par Value | $26,041 | 3,312 | $7.86 | |||||||||
R Class, $0.01 Par Value | $414,419 | 52,606 | $7.88 |
*Maximum offering price $8.34 (net asset value divided by 0.9425)
See Notes to Financial Statements.
19
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (including $214,308 from affiliates and net of foreign taxes withheld of $11,776) | $20,252,900 | |||
Interest | 35,167 | |||
20,288,067 | ||||
Expenses: | ||||
Management fees | 11,635,433 | |||
Distribution fees — C Class | 96 | |||
Service fees — C Class | 32 | |||
Distribution and service fees: | ||||
A Class | 535,384 | |||
R Class | 367 | |||
Directors’ fees and expenses | 36,925 | |||
Other expenses | 46,838 | |||
12,255,075 | ||||
Net investment income (loss) | 8,032,992 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investment transactions (including $196,903 from affiliates) | 113,211,291 | |||
Change in net unrealized appreciation (depreciation) on investments | (153,961,332 | ) | ||
Net realized and unrealized gain (loss) | (40,750,041 | ) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $(32,717,049 | ) |
See Notes to Financial Statements.
20
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $8,032,992 | $23,127,195 | ||||||
Net realized gain (loss) | 113,211,291 | 139,774,597 | ||||||
Change in net unrealized appreciation (depreciation) | (153,961,332 | ) | 563,558,090 | |||||
Net increase (decrease) in net assets resulting from operations | (32,717,049 | ) | 726,459,882 | |||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (2,941,656 | ) | (11,478,460 | ) | ||||
Institutional Class | (2,952,422 | ) | (7,667,831 | ) | ||||
A Class | (949,652 | ) | (4,934,355 | ) | ||||
R Class | (414 | ) | — | |||||
Decrease in net assets from distributions | (6,844,144 | ) | (24,080,646 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 74,386,160 | 379,590,623 | ||||||
Net increase (decrease) in net assets | 34,824,967 | 1,081,969,859 | ||||||
Net Assets | ||||||||
Beginning of period | 1,975,145,699 | 893,175,840 | ||||||
End of period | $2,009,970,666 | $1,975,145,699 | ||||||
Undistributed net investment income | $1,188,848 | — |
See Notes to Financial Statements.
21
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company 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 is diversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives by investing in stocks of smaller market capitalization companies that management believes to be undervalued at the time of purchase. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class, the Institutional Class, the A Class (formerly Advisor Class), the C Class and the R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific e xpenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. Sale of the C Class and R Class commenced on March 1, 2010.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
22
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Exchange-Traded Funds — The fund may invest in exchange-traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have fees and expenses that reduce their value.
Business Development Companies — The fund may invest in securities of closed-end investment companies that have elected to be treated as a business development company under the 1940 Act. A business development company operates similar to an exchange-traded fund and represents a portfolio of securities. The fund may purchase a business development company to gain exposure to the securities in the underlying portfolio. The risks of owning a business development company generally reflect the risks of owning the underlying securities. Business development companies have expenses that reduce their value.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
23
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as wel l as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule for the fund ranges from 1.00% to 1.25% for the Investor Class, A Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended September 30, 2010 was 1.25% for the Investor Class, A Class, C Class and R Class and 1.05% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2010, are detailed in the Statement of Operations.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund’s assets but are reflected in the return realized by the fund on its investment in the acquired funds.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $1,044,819,474 and $964,044,832, respectively.
24
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010(1) | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 500,000,000 | 500,000,000 | ||||||||||||||
Sold | 16,741,728 | $132,917,111 | 46,301,934 | $308,457,745 | ||||||||||||
Issued in reinvestment of distributions | 365,658 | 2,830,193 | 1,843,406 | 11,250,741 | ||||||||||||
Redeemed | (15,078,108 | ) | (116,781,641 | ) | (26,949,571 | ) | (180,987,009 | ) | ||||||||
2,029,278 | 18,965,663 | 21,195,769 | 138,721,477 | |||||||||||||
Institutional Class/Shares Authorized | 270,000,000 | 210,000,000 | ||||||||||||||
Sold | 14,895,053 | 117,822,272 | 37,975,594 | 265,921,659 | ||||||||||||
Issued in reinvestment of distributions | 329,369 | 2,559,198 | 1,126,179 | 6,962,827 | ||||||||||||
Redeemed | (9,385,380 | ) | (72,282,021 | ) | (12,731,092 | ) | (89,566,167 | ) | ||||||||
5,839,042 | 48,099,449 | 26,370,681 | 183,318,319 | |||||||||||||
A Class/Shares Authorized | 190,000,000 | 190,000,000 | ||||||||||||||
Sold | 6,569,303 | 51,270,713 | 18,114,015 | 123,055,287 | ||||||||||||
Issued in reinvestment of distributions | 98,632 | 761,438 | 644,442 | 3,882,759 | ||||||||||||
Redeemed | (5,856,017 | ) | (45,082,162 | ) | (10,338,333 | ) | (69,437,219 | ) | ||||||||
811,918 | 6,949,989 | 8,420,124 | 57,500,827 | |||||||||||||
C Class/Shares Authorized | 5,000,000 | 20,000,000 | ||||||||||||||
Sold | 23 | 168 | 3,289 | 25,000 | ||||||||||||
R Class/Shares Authorized | 5,000,000 | 20,000,000 | ||||||||||||||
Sold | 50,758 | 381,498 | 3,289 | 25,000 | ||||||||||||
Issued in reinvestment of distributions | 54 | 414 | — | — | ||||||||||||
Redeemed | (1,495 | ) | (11,021 | ) | — | — | ||||||||||
49,317 | 370,891 | 3,289 | 25,000 | |||||||||||||
Net increase (decrease) | 8,729,578 | $74,386,160 | 55,993,152 | $379,590,623 |
(1) | March 1, 2010 (commencement of sale) through March 31, 2010 for the C Class and R Class. |
25
5. Affiliated Company Transactions
If a fund’s holding represents ownership of 5% or more of the voting securities of a company, the company is affiliated as defined in the 1940 Act. A summary of transactions for each company which is or was an affiliate at or during the six months ended September 30, 2010 follows:
March 31, 2010 | September 30, 2010 | ||||||
Company | Share Balance | Purchase Cost | Sales Cost | Realized Gain (Loss) | Dividend Income | Share Balance | Market Value |
Cutera, Inc. (1) | 690,000 | $902,244 | $1,641,144 | $114,343 | — | 645,000 | $5,224,500 |
Hampton Roads Bankshares, Inc.(1) | 355,000 | 1,871,130 | — | — | — | 1,145,000 | 1,095,192 |
Mercer Insurance Group, Inc. | 361,253 | 679,304 | — | — | $77,783 | 400,000 | 7,120,000 |
Ulticom, Inc.(1) | 577,353 | 699,334 | 45,686 | (36,509) | — | 654,216 | 5,181,391 |
Utah Medical Products, Inc. | 155,000 | 544,298 | — | — | 78,725 | 174,623 | 5,116,454 |
Young Innovations, Inc. | 679,235 | 2,206,311 | 1,922,638 | 119,069 | 57,800 | 695,000 | 19,883,950 |
$6,902,621 | $3,609,468 | $196,903 | $214,308 | $43,621,487 |
(1) | Non-income producing. |
6. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Common Stocks | $1,904,199,169 | — | — | |||||||||
Convertible Preferred Stocks | — | $66,846,944 | — | |||||||||
Preferred Stocks | — | 9,976,689 | — | |||||||||
Temporary Cash Investments | 22,580 | 37,400,000 | — | |||||||||
Total Value of Investment Securities | $1,904,221,749 | $114,223,633 | — |
26
7. Risk Factors
The fund generally invests in smaller companies which may be more volatile, and subject to greater short-term risk than those of larger companies. In addition, the fund’s performance may be affected by investments in initial public offerings (IPOs). The impact of IPOs on a fund’s performance depends on the strength of the IPO market and the size of the fund. IPOs may have less impact on a fund’s performance as its assets grow.
8. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $1,925,426,752 | |||
Gross tax appreciation of investments | $201,652,782 | |||
Gross tax depreciation of investments | (108,634,152 | ) | ||
Net tax appreciation (depreciation) of investments | $93,018,630 |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(164,449,952), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(77,587,982) and $(86,861,970) expire in 2017 and 2018, respectively.
27
Financial Highlights
Small Cap Value
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $8.02 | $4.70 | $7.02 | $10.01 | $10.45 | $10.07 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.03 | 0.11 | 0.12 | 0.09 | 0.06 | 0.06 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.14 | ) | 3.33 | (2.31 | ) | (1.16 | ) | 0.87 | 1.72 | |||||||||||||||
Total From Investment Operations | (0.11 | ) | 3.44 | (2.19 | ) | (1.07 | ) | 0.93 | 1.78 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.03 | ) | (0.12 | ) | (0.11 | ) | (0.09 | ) | (0.04 | ) | (0.06 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.02 | ) | (1.83 | ) | (1.33 | ) | (1.34 | ) | ||||||||||||||
Total Distributions | (0.03 | ) | (0.12 | ) | (0.13 | ) | (1.92 | ) | (1.37 | ) | (1.40 | ) | ||||||||||||
Net Asset Value, End of Period | $7.88 | $8.02 | $4.70 | $7.02 | $10.01 | $10.45 | ||||||||||||||||||
Total Return(3) | (1.41 | )% | 73.93 | % | (31.69 | )% | (12.22 | )% | 9.38 | % | 18.67 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets(4) | 1.25 | %(5) | 1.25 | % | 1.25 | % | 1.26 | % | 1.25 | % | 1.25 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.81 | %(5) | 1.60 | % | 1.93 | % | 1.01 | % | 0.57 | % | 0.58 | % | ||||||||||||
Portfolio Turnover Rate | 50 | % | 104 | % | 192 | % | 123 | % | 121 | % | 111 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $886,612 | $885,942 | $419,206 | $732,968 | $1,261,392 | $1,390,024 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(5) | Annualized. |
See Notes to Financial Statements. |
28
Small Cap Value
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $8.05 | $4.71 | $7.04 | $10.03 | $10.47 | $10.08 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.12 | 0.13 | 0.11 | 0.08 | 0.08 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.15 | ) | 3.35 | (2.32 | ) | (1.17 | ) | 0.87 | 1.73 | |||||||||||||||
Total From Investment Operations | (0.11 | ) | 3.47 | (2.19 | ) | (1.06 | ) | 0.95 | 1.81 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.03 | ) | (0.13 | ) | (0.12 | ) | (0.10 | ) | (0.06 | ) | (0.08 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.02 | ) | (1.83 | ) | (1.33 | ) | (1.34 | ) | ||||||||||||||
Total Distributions | (0.03 | ) | (0.13 | ) | (0.14 | ) | (1.93 | ) | (1.39 | ) | (1.42 | ) | ||||||||||||
Net Asset Value, End of Period | $7.91 | $8.05 | $4.71 | $7.04 | $10.03 | $10.47 | ||||||||||||||||||
Total Return(3) | (1.31 | )% | 74.47 | % | (31.61 | )% | (12.05 | )% | 9.52 | % | 18.98 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets(4) | 1.05 | %(5) | 1.05 | % | 1.05 | % | 1.06 | % | 1.05 | % | 1.05 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.01 | %(5) | 1.80 | % | 2.13 | % | 1.21 | % | 0.77 | % | 0.78 | % | ||||||||||||
Portfolio Turnover Rate | 50 | % | 104 | % | 192 | % | 123 | % | 121 | % | 111 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $689,669 | $654,738 | $258,902 | $370,422 | $443,173 | $435,327 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(5) | Annualized. |
See Notes to Financial Statements. |
29
Small Cap Value
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $8.00 | $4.69 | $7.00 | $10.00 | $10.45 | $10.06 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.02 | 0.09 | 0.10 | 0.07 | 0.03 | 0.03 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.14 | ) | 3.32 | (2.30 | ) | (1.17 | ) | 0.87 | 1.74 | |||||||||||||||
Total From Investment Operations | (0.12 | ) | 3.41 | (2.20 | ) | (1.10 | ) | 0.90 | 1.77 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.02 | ) | (0.10 | ) | (0.09 | ) | (0.07 | ) | (0.02 | ) | (0.04 | ) | ||||||||||||
From Net Realized Gains | — | — | (0.02 | ) | (1.83 | ) | (1.33 | ) | (1.34 | ) | ||||||||||||||
Total Distributions | (0.02 | ) | (0.10 | ) | (0.11 | ) | (1.90 | ) | (1.35 | ) | (1.38 | ) | ||||||||||||
Net Asset Value, End of Period | $7.86 | $8.00 | $4.69 | $7.00 | $10.00 | $10.45 | ||||||||||||||||||
Total Return(4) | (1.53 | )% | 73.53 | % | (31.82 | )% | (12.51 | )% | 9.10 | % | 18.51 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets(5) | 1.50 | %(6) | 1.50 | % | 1.50 | % | 1.51 | % | 1.50 | % | 1.50 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.56 | %(6) | 1.35 | % | 1.68 | % | 0.76 | % | 0.32 | % | 0.33 | % | ||||||||||||
Portfolio Turnover Rate | 50 | % | 104 | % | 192 | % | 123 | % | 121 | % | 111 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $433,249 | $434,413 | $215,068 | $286,227 | $434,182 | $455,001 |
(1) | Prior to March 1, 2010, the A Class was referred to as the Advisor Class. |
(2) | Six months ended September 30, 2010 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(6) | Annualized. |
See Notes to Financial Statements. |
30
Small Cap Value
C Class | ||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||
2010(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $8.01 | $7.60 | ||||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | (0.01 | ) | — | (4) | ||||
Net Realized and Unrealized Gain (Loss) | (0.14 | ) | 0.41 | |||||
Total From Investment Operations | (0.15 | ) | 0.41 | |||||
Net Asset Value, End of Period | $7.86 | $8.01 | ||||||
Total Return(5) | (1.87 | )% | 5.39 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets(6) | 2.25 | %(7) | 2.25 | %(7) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | (0.19 | )%(7) | 0.72 | %(7) | ||||
Portfolio Turnover Rate | 50 | % | 104 | %(8) | ||||
Net Assets, End of Period (in thousands) | $26 | $26 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through March 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Per-share amount was less than $0.005. |
(5) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(6) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(7) | Annualized. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2010. |
See Notes to Financial Statements. |
31
Small Cap Value
R Class | ||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||
2010(1) | 2010(2) | |||||||
Per-Share Data | ||||||||
Net Asset Value, Beginning of Period | $8.02 | $7.60 | ||||||
Income From Investment Operations | ||||||||
Net Investment Income (Loss)(3) | 0.03 | 0.01 | ||||||
Net Realized and Unrealized Gain (Loss) | (0.16 | ) | 0.41 | |||||
Total From Investment Operations | (0.13 | ) | 0.42 | |||||
Distributions | ||||||||
From Net Investment Income | (0.01 | ) | — | |||||
Net Asset Value, End of Period | $7.88 | $8.02 | ||||||
Total Return(4) | (1.65 | )% | 5.53 | % | ||||
Ratios/Supplemental Data | ||||||||
Ratio of Operating Expenses to Average Net Assets(5) | 1.75 | %(6) | 1.75 | %(6) | ||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 0.31 | %(6) | 1.22 | %(6) | ||||
Portfolio Turnover Rate | 50 | % | 104 | %(7) | ||||
Net Assets, End of Period (in thousands) | $414 | $26 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | March 1, 2010 (commencement of sale) through March 31, 2010. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(6) | Annualized. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2010. |
See Notes to Financial Statements. |
32
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor and A Classes | For: | 728,192,514 | ||
Against: | 9,189,064 | |||
Abstain: | 20,366,072 | |||
Broker Non-Vote: | 74,326,672 | |||
Institutional Class | For: | 367,608,459 | ||
Against: | 2,009,710 | |||
Abstain: | 1,701,815 | |||
Broker Non-Vote: | 10,545,455 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
33
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.com. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com
and, upon request, by calling 1-800-345-2021.
34
Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Lipper Small-Cap Value Funds Index is an equal dollar-weighted index of, typically, the 30 largest mutual funds within the Small-Cap Value fund classification, as defined by Lipper. The index is adjusted for the reinvestment of capital gains and income dividends.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
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 Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69823
Semiannual Report September 30, 2010 |
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American Century Investments®
Value Fund
Table of Contents
President’s Letter | 2 | |
Independent Chairman’s Letter | 3 | |
Market Perspective | 4 | |
U.S. Stock Index Returns | 4 | |
Value | ||
Performance | 5 | |
Portfolio Commentary | 7 | |
Top Ten Holdings | 9 | |
Top Five Industries | 9 | |
Types of Investments in Portfolio | 9 | |
Shareholder Fee Example | 10 | |
Financial Statements | ||
Schedule of Investments | 12 | |
Statement of Assets and Liabilities | 15 | |
Statement of Operations | 16 | |
Statement of Changes in Net Assets | 17 | |
Notes to Financial Statements | 18 | |
Financial Highlights | 25 | |
Other Information | ||
Proxy Voting Results | 31 | |
Additional Information | 32 | |
Index Definitions | 33 |
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
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomas.jpg)
Dear Investor:
To learn more about the capital markets, your investment, and the portfolio management strategies American Century Investments provides, we encourage you to review this shareholder report for the financial reporting period ended September 30, 2010.
On the following pages, you will find investment performance and portfolio information, presented with the expert perspective and commentary of our portfolio management team. This report remains one of our most important vehicles for conveying the information you need about your investment performance, and about the market factors and strategies that affect fund returns. For additional information on the markets, we encourage you to visit the “Insights & News” tab at our Web site, americancentury.com, for updates and further expert commentary.
The top of our Web site’s home page also provides a link to “Our Story,” which, first and foremost, outlines our commitment—since 1958—to helping clients reach their financial goals. We believe strongly that we will only be successful when our clients are successful. That’s who we are.
Another important, unique facet of our story and who we are is “Profits with a Purpose,” which describes our bond with the Stowers Institute for Medical Research (SIMR). SIMR is a world-class biomedical organization—founded by our company founder James E. Stowers, Jr. and his wife Virginia—that is dedicated to researching the causes, treatment, and prevention of gene-based diseases, including cancer. Through American Century Investments’ private ownership structure, more than 40% of our profits support SIMR.
Mr. Stowers’ example of achieving financial success and using that platform to help humanity motivates our entire American Century Investments team. His story inspires us to help each of our clients achieve success. Thank you for sharing your financial journey with us.
Sincerely,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/thomassignature.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Independent Chairman’s Letter
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/pratt.jpg)
Dear Fellow Shareholders,
As regulators and the markets continue to sort out the events of the credit crisis, a consistent theme has been that financial services firms should re-examine their risk management practices. Risk management has been a regular part of American Century Investments’ activities for many years. However, recently American Century and your mutual fund board have been spending additional time focusing on our risk oversight processes.
The board’s efforts are now organized around three categories of risk: investment risk, operational risk, and enterprise risk. This approach has facilitated a realignment of many risk oversight tasks that the board has historically conducted. Investment risk tasks include a review of portfolio risk, monitoring the use of derivatives, and performance assessment. Operational risk focuses on compliance, valuation, shareholder services, and trading activities. Enterprise risk addresses the financial condition of the advisor, human resource development, and reputational risks. Risk oversight tasks are addressed in every quarterly board meeting, and a review of the advisor’s entire risk management program is undertaken annually. We acknowledge and support the approach that American Century Investments takes to its risk management responsibilities. While the board has refocused its efforts in this important oversight area, we recognize that risk oversight is a journey and we expect to continue to improve our processes.
Our September quarterly board meeting was held in the New York offices of American Century Investments. This gave the directors an opportunity to meet with the portfolio management teams for each of the global and international funds overseen by the board. Each team uses sophisticated investment tools and daily risk analysis in managing client assets. We also were impressed with the “bench strength” that has been developed under the leadership of the Global and Non-U.S. Equity CIO Mark Kopinski. These face-to-face meetings provide an opportunity for the directors—working on behalf of shareholders—to validate the advisor’s efforts and the investment management approach being followed.
I thank you for your continued confidence in American Century during this turbulent time in the economy and investment markets. If you have thoughts or questions you would like to share with the board send them to me at dhpratt@fundboardchair.com.
Best regards,
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/prattsignature.jpg)
Don Pratt
3
Market Perspective
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By Phil Davidson, Chief Investment Officer, U.S. Value Equity
Mixed Results for U.S. Stocks
U.S. stocks were mixed but generally lower for the six months ended September 30, 2010, as market volatility increased notably. The key factor driving this volatility was increased uncertainty regarding the U.S. economic recovery, which appeared to wane following the robust growth rate it experienced in the last half of 2009.
Evidence of slowing economic activity during the six-month period included a slowdown in the manufacturing sector, further deterioration in the housing market, persistently high unemployment, and a decline in retail sales. In addition, sovereign debt problems in Europe also led to concerns about the impact of a potential fiscal crisis on global economic growth. The combination sent stocks into a tailspin in the second quarter of 2010.
The equity market rebounded in the third quarter, with the bulk of the rally occurring in September—the highest monthly return for stocks since April 2009. The Federal Reserve indicated that it would reinstate the quantitative easing measures used to stimulate economic growth in 2009, and the market rallied in the hope that these efforts would resuscitate the economic recovery. Despite a strong finish, the broad equity indices fell slightly for the six months, although mid- and small-cap issues posted modestly positive results (see the table below).
Value Stocks Lagged
Value stocks underperformed their growth-oriented counterparts across all market capitalizations during the six-month period. The primary reason was the lagging performance of the financial sector, which is the largest component in most value indices. Financial companies continued to struggle with high unemployment, continued weakness in the housing market, growing loan delinquencies and defaults, and uncertainty regarding the impact of recent financial reform legislation.
On the positive side, the recent trend of rising dividend payouts remained supportive for value stocks. The growth in dividends reflected both a significant recovery in corporate earnings (excluding financials) over the past year and increasingly healthy balance sheets. The question going forward is whether companies can sustain this level of profitability and financial strength in a slow-growth economic environment.
U.S. Stock Index Returns | ||||
For the six months ended September 30, 2010* | ||||
Russell 1000 Index (Large-Cap) | –1.21% | Russell 2000 Index (Small-Cap) | 0.25% | |
Russell 1000 Growth Index | –0.27% | Russell 2000 Growth Index | 2.43% | |
Russell 1000 Value Index | –2.14% | Russell 2000 Value Index | –1.90% | |
Russell Midcap Index | 2.12% | *Total returns for periods less than one year are not annualized. | ||
Russell Midcap Growth Index | 2.95% | |||
Russell Midcap Value Index | 1.40% |
4
Performance
Value
Total Returns as of September 30, 2010 | |||||||
Average Annual Returns | |||||||
Ticker Symbol | 6 months(1) | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWVLX | -1.44% | 9.49% | 1.12% | 5.79% | 8.86% | 9/1/93 |
Russell 3000 Value Index | — | -2.11% | 9.15% | -0.39% | 2.96% | 8.00%(2) | — |
S&P 500 Index | — | -1.42% | 10.16% | 0.64% | -0.43% | 7.45%(2) | — |
Lipper Multi-Cap Value Index | — | -2.67% | 7.96% | -0.78% | 2.95% | 7.15%(2) | — |
Institutional Class | AVLIX | -1.53% | 9.71% | 1.28% | 5.98% | 5.65% | 7/31/97 |
A Class(3) No sales charge* With sales charge* | TWADX | -1.75% -7.41% | 9.23% 2.92% | 0.83% -0.35% | 5.52% 4.89% | 6.79% 6.34% | 10/2/96 |
B Class No sales charge* With sales charge* | ACBVX | -1.94% -6.94% | 8.26% 4.26% | 0.10% -0.10% | — — | 5.53% 5.53% | 1/31/03 |
C Class No sales charge* With sales charge* | ACLCX | -1.95% -2.92% | 8.33% 8.33% | 0.10% 0.10% | — — | 2.89% 2.89% | 6/4/01 |
R Class | AVURX | -1.69% | 8.94% | 0.62% | — | 0.15% | 7/29/05 |
* | Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. |
(1) | Total returns for periods less than one year are not annualized. |
(2) | Since 8/31/93, the date nearest the Investor Class’s inception for which data are available. |
(3) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. |
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
5
Value
Growth of $10,000 Over 10 Years |
$10,000 investment made September 30, 2000 |
![](https://capedge.com/proxy/N-CSRS/0001437749-10-004319/chart9.jpg)
Total Annual Fund Operating Expenses | |||||
Investor Class | Institutional Class | A Class | B Class | C Class | R Class |
1.00% | 0.80% | 1.25% | 2.00% | 2.00% | 1.50% |
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. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund’s total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not.
6
Portfolio Commentary
Value
Portfolio Managers: Michael Liss, Kevin Toney, and Phil Davidson
Performance Summary
Value declined -1.44%* for the six months ended September 30, 2010. By comparison, the Lipper Multi-Cap Value Index fell -2.67%, while the average return for Morningstar’s Large Cap Value category** (its performance, like Value’s, reflects operating expenses) was -2.44%. The fund’s benchmark, the Russell 3000 Value Index, and the S&P 500 Index, representative of the broad market, dropped -2.11% and -1.42%, respectively. The portfolio’s return reflects operating expenses, while the indices’ returns do not.
Stocks suffered steep declines during the first three months of the reporting period as investors, unsettled by the debt crisis in Europe and softer-than-expected U.S. economic news, fled into defensive investments such as U.S. Treasuries and utilities. However, in spite of continued economic uncertainty, stock prices rose once the turmoil in Europe moderated. Counter-intuitively, both higher-risk and higher-yielding securities outperformed. Higher-risk stocks were in favor as fears of a double-dip recession eased, while investors continued to favor higher-yielding securities because of very low interest rates. Value outperformed its benchmark, largely because of its investment approach which emphasizes higher-quality businesses with sound balance sheets. The portfolio benefited from security selection in financials an d industrials. Detracting were holdings in the energy and information technology sectors.
We carefully manage this portfolio for long-term results. Since Value’s inception on September 1, 1993, the portfolio has produced an average annual return of 8.86%, topping the returns for that period for the Lipper Multi-Cap Value Index, the Russell 3000 Value Index, and the S&P 500 Index (see the performance information on pages 5–6).
Financials Contributed to Performance
An underweight position and strong stock selection in financials—the weakest performing sector in the benchmark—enhanced Value’s relative results. In particular, the portfolio benefited from our focus on the less-volatile names in the insurance industry, such as Berkshire Hathaway. The conglomerate, which owns GEICO Insurance and is managed by Warren Buffett, performed well during the period. In our opinion, it is a stable company with good prospects.
An underweight in commercial banks and diversified financial services companies also added to performance. After the passage of financial reform legislation, many of these names declined on concerns about their future earnings power. Among commercial banks, the portfolio’s lack of exposure to Wells Fargo contributed to results. In diversified financial services, an underweight in Bank of America was advantageous.
* | All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. |
** | The average returns for Morningstar’s Large Cap Value category were 8.02%, -0.28% and 2.47% for the one-, five- and ten-year periods ended September 30, 2010, respectively. © Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. |
7
Value
Industrials Boosted Results
Security selection in the industrials sector contributed to relative performance. Value benefited from a position in Republic Services. Waste management companies weathered the recession well due to their stable business models and strong cash flow generation. Republic Services has also successfully cut costs as part of its merger with Allied Waste Industries, and its disciplined pricing strategy coupled with a nascent recovery in business volume has boosted the profits of this well-run company.
Another notable contributor was United Parcel Service (UPS). The package delivery company’s international business has grown, and it stands to gain customers following DHL’s exit from the U.S. parcel market. UPS has also realized cost savings from the reorganization of its U.S. operations.
Materials Added Value
In the materials sector, Value benefited from its focus on high-quality, stable businesses. A key contributor was Newmont Mining Corp. Newmont’s new management team continues to execute well on its strategic and operating plan. In addition, as gold prices rose during the period, the company’s profitability increased.
Energy Slowed Progress
The portfolio’s mix of large, integrated oil and gas companies was a drag on relative results. A top detractor was French oil producer Total SA, which is not represented in the benchmark. Its stock traded down because of weakness in the euro. A position in EQT Corp. also dampened results. A low-cost natural gas producer, EQT reported significant success with two of its experimental shale wells. We believe weak natural gas prices have temporarily pushed down the company’s share price.
Information Technology Detracted
In information technology, Value was hindered by security selection among semiconductor companies and the makers of computers and peripherals. A notable detractor was Hewlett-Packard Co. Despite posting profit gains, the technology giant’s share prices declined after the abrupt exit of its chief executive officer and uncertainty surrounding the appointment of a successor.
Outlook
We will continue to follow our disciplined, bottom-up process, selecting securities one at a time for the portfolio. As of September 30, 2010, we see opportunities in health care and energy, reflected by overweight positions in these sectors relative to the benchmark. Our fundamental analysis and valuation work are also directing us toward relative underweights in utilities, financials, and materials stocks.
8
Value
Top Ten Holdings | |
% of net assets as of 9/30/10 | |
Johnson & Johnson | 3.3% |
Chevron Corp. | 3.2% |
AT&T, Inc. | 3.1% |
JPMorgan Chase & Co. | 3.1% |
Pfizer, Inc. | 2.8% |
General Electric Co. | 2.7% |
Total SA | 2.1% |
Exxon Mobil Corp. | 2.1% |
Beckman Coulter, Inc. | 2.0% |
Marsh & McLennan Cos., Inc. | 2.0% |
Top Five Industries | |
% of net assets as of 9/30/10 | |
Oil, Gas & Consumable Fuels | 11.8% |
Pharmaceuticals | 9.1% |
Insurance | 8.6% |
Capital Markets | 6.3% |
Diversified Financial Services | 5.1% |
Types of Investments in Portfolio | |
% of net assets as of 9/30/10 | |
Domestic Common Stocks | 90.6% |
Foreign Common Stocks* | 6.6% |
Total Common Stocks | 97.2% |
Temporary Cash Investments | 2.7% |
Other Assets and Liabilities | 0.1% |
* Includes depositary shares, dual listed securities and foreign ordinary shares.
9
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from April 1, 2010 to September 30, 2010.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments Brokerage accounts) regis tered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
10
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 4/1/10 | Ending Account Value 9/30/10 | Expenses Paid During Period* 4/1/10 – 9/30/10 | Annualized Expense Ratio* | |
Actual | ||||
Investor Class | $1,000 | $985.60 | $5.03 | 1.01% |
Institutional Class | $1,000 | $984.70 | $4.03 | 0.81% |
A Class | $1,000 | $982.50 | $6.26 | 1.26% |
B Class | $1,000 | $980.60 | $9.98 | 2.01% |
C Class | $1,000 | $980.50 | $9.98 | 2.01% |
R Class | $1,000 | $983.10 | $7.51 | 1.51% |
Hypothetical | ||||
Investor Class | $1,000 | $1,020.00 | $5.11 | 1.01% |
Institutional Class | $1,000 | $1,021.01 | $4.10 | 0.81% |
A Class | $1,000 | $1,018.75 | $6.38 | 1.26% |
B Class | $1,000 | $1,014.99 | $10.15 | 2.01% |
C Class | $1,000 | $1,014.99 | $10.15 | 2.01% |
R Class | $1,000 | $1,017.50 | $7.64 | 1.51% |
*Expenses are equal to the class’s annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period.
11
Schedule of Investments
Value
SEPTEMBER 30, 2010 (UNAUDITED)
Shares | Value | |
Common Stocks — 97.2% | ||
AEROSPACE & DEFENSE — 0.6% | ||
Northrop Grumman Corp. | 199,420 | $ 12,090,835 |
AIR FREIGHT & LOGISTICS — 0.4% | ||
United Parcel Service, Inc., Class B | 126,060 | 8,406,941 |
AIRLINES — 0.1% | ||
Southwest Airlines Co. | 141,600 | 1,850,712 |
AUTOMOBILES — 1.2% | ||
Honda Motor Co. Ltd. | 226,800 | 8,049,933 |
Toyota Motor Corp. | 447,700 | 16,078,158 |
24,128,091 | ||
BEVERAGES — 0.7% | ||
PepsiCo, Inc. | 202,920 | 13,482,005 |
CAPITAL MARKETS — 6.3% | ||
AllianceBernstein Holding LP | 109,900 | 2,902,459 |
Ameriprise Financial, Inc. | 141,990 | 6,720,387 |
Bank of New York Mellon Corp. (The) | 174,870 | 4,569,353 |
BlackRock, Inc. | 33,890 | 5,769,772 |
Charles Schwab Corp. (The) | 718,560 | 9,987,984 |
Franklin Resources, Inc. | 26,860 | 2,871,334 |
Goldman Sachs Group, Inc. (The) | 158,490 | 22,914,484 |
Invesco Ltd. | 193,490 | 4,107,793 |
Morgan Stanley | 334,320 | 8,251,018 |
Northern Trust Corp. | 727,040 | 35,072,410 |
State Street Corp. | 555,070 | 20,903,936 |
124,070,930 | ||
COMMERCIAL BANKS — 3.3% | ||
Comerica, Inc. | 356,260 | 13,235,059 |
Commerce Bancshares, Inc. | 208,600 | 7,841,274 |
PNC Financial Services Group, Inc. | 155,440 | 8,068,890 |
U.S. Bancorp. | 1,606,430 | 34,731,017 |
63,876,240 | ||
COMMERCIAL SERVICES & SUPPLIES — 2.8% | ||
Avery Dennison Corp. | 194,200 | 7,208,704 |
Cintas Corp. | 232,380 | 6,402,069 |
Republic Services, Inc. | 832,840 | 25,393,292 |
Waste Management, Inc. | 443,840 | 15,862,841 |
54,866,906 | ||
COMMUNICATIONS EQUIPMENT — 0.2% | ||
Nokia Oyj ADR | 379,520 | 3,806,586 |
COMPUTERS & PERIPHERALS — 1.3% | ||
Diebold, Inc. | 260,950 | 8,112,935 |
Hewlett-Packard Co. | 408,600 | 17,189,802 |
25,302,737 | ||
CONSTRUCTION MATERIALS — 0.3% | ||
Vulcan Materials Co. | 146,530 | 5,409,888 |
CONTAINERS & PACKAGING — 0.3% | ||
Bemis Co., Inc. | 192,990 | 6,127,432 |
DISTRIBUTORS — 0.7% | ||
Genuine Parts Co. | 293,710 | 13,096,529 |
DIVERSIFIED — 0.4% | ||
SPDR S&P 500 ETF Trust, Series 1 | 77,400 | 8,832,888 |
DIVERSIFIED FINANCIAL SERVICES — 5.1% | ||
Bank of America Corp. | 2,763,030 | 36,223,323 |
JPMorgan Chase & Co. | 1,592,520 | 60,627,237 |
McGraw-Hill Cos., Inc. (The) | 120,440 | 3,981,746 |
100,832,306 | ||
DIVERSIFIED TELECOMMUNICATION SERVICES — 4.7% | ||
AT&T, Inc. | 2,138,880 | 61,171,968 |
Qwest Communications International, Inc. | 678,880 | 4,256,578 |
Verizon Communications, Inc. | 832,900 | 27,144,211 |
92,572,757 | ||
ELECTRIC UTILITIES — 2.8% | ||
American Electric Power Co., Inc. | 317,280 | 11,495,054 |
IDACORP, Inc. | 245,080 | 8,803,274 |
NV Energy, Inc. | 305,030 | 4,011,144 |
Westar Energy, Inc. | 1,279,320 | 30,997,924 |
55,307,396 | ||
ELECTRICAL EQUIPMENT — 2.0% | ||
Emerson Electric Co. | 110,460 | 5,816,824 |
Hubbell, Inc., Class B | 488,090 | 24,770,567 |
Thomas & Betts Corp.(1) | 189,140 | 7,758,523 |
38,345,914 | ||
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS — 0.5% | ||
Molex, Inc. | 500,870 | 10,483,209 |
ENERGY EQUIPMENT & SERVICES — 0.5% | ||
Baker Hughes, Inc. | 207,860 | 8,854,836 |
12
Value
Shares | Value |
FOOD & STAPLES RETAILING — 2.4% | ||
CVS Caremark Corp. | 467,620 | $ 14,716,001 |
Walgreen Co. | 115,310 | 3,862,885 |
Wal-Mart Stores, Inc. | 546,350 | 29,240,652 |
47,819,538 | ||
FOOD PRODUCTS — 4.4% | ||
ConAgra Foods, Inc. | 936,560 | 20,548,126 |
H.J. Heinz Co. | 148,150 | 7,017,866 |
Kellogg Co. | 195,140 | 9,856,521 |
Kraft Foods, Inc., Class A | 1,157,610 | 35,723,845 |
Unilever NV CVA | 429,910 | 12,849,690 |
85,996,048 | ||
HEALTH CARE EQUIPMENT & SUPPLIES — 5.1% | ||
Beckman Coulter, Inc. | 801,700 | 39,114,943 |
Boston Scientific Corp.(1) | 2,091,070 | 12,818,259 |
CareFusion Corp.(1) | 382,160 | 9,492,854 |
Covidien plc | 201,030 | 8,079,396 |
Medtronic, Inc. | 218,980 | 7,353,348 |
Zimmer Holdings, Inc.(1) | 430,490 | 22,527,542 |
99,386,342 | ||
HEALTH CARE PROVIDERS & SERVICES — 2.5% | ||
Aetna, Inc. | 405,530 | 12,818,803 |
CIGNA Corp. | 215,050 | 7,694,489 |
LifePoint Hospitals, Inc.(1) | 330,660 | 11,592,940 |
UnitedHealth Group, Inc. | 485,170 | 17,034,319 |
49,140,551 | ||
HOTELS, RESTAURANTS & LEISURE — 1.2% | ||
International Speedway Corp., Class A | 560,990 | 13,688,156 |
Speedway Motorsports, Inc. | 671,970 | 10,536,490 |
24,224,646 | ||
HOUSEHOLD DURABLES — 0.7% | ||
Toll Brothers, Inc.(1) | 280,620 | 5,337,392 |
Whirlpool Corp. | 98,150 | 7,946,224 |
13,283,616 | ||
HOUSEHOLD PRODUCTS — 2.7% | ||
Kimberly-Clark Corp. | 295,680 | 19,233,984 |
Procter & Gamble Co. (The) | 547,660 | 32,843,170 |
52,077,154 | ||
INDUSTRIAL CONGLOMERATES — 2.7% | ||
General Electric Co. | 3,216,890 | 52,274,462 |
INSURANCE — 8.6% | ||
ACE Ltd. | 209,690 | 12,214,442 |
Allstate Corp. (The) | 574,930 | 18,139,042 |
Aon Corp. | 355,450 | 13,901,649 |
Berkshire Hathaway, Inc., Class A(1) | 260 | 32,370,000 |
Chubb Corp. (The) | 120,140 | 6,846,779 |
HCC Insurance Holdings, Inc. | 561,300 | 14,644,317 |
Marsh & McLennan Cos., Inc. | 1,583,170 | 38,186,060 |
Transatlantic Holdings, Inc. | 241,440 | 12,269,981 |
Travelers Cos., Inc. (The) | 369,040 | 19,226,984 |
167,799,254 | ||
IT SERVICES — 0.6% | ||
Accenture plc, Class A | 59,630 | 2,533,679 |
Automatic Data Processing, Inc. | 233,310 | 9,806,019 |
12,339,698 | ||
MACHINERY — 0.2% | ||
Illinois Tool Works, Inc. | 82,580 | 3,882,912 |
MEDIA — 0.7% | ||
Omnicom Group, Inc. | 183,640 | 7,250,107 |
Walt Disney Co. (The) | 166,350 | 5,507,849 |
12,757,956 | ||
METALS & MINING — 0.7% | ||
Barrick Gold Corp. | 131,920 | 6,106,577 |
Newmont Mining Corp. | 121,200 | 7,612,572 |
13,719,149 | ||
MULTILINE RETAIL — 0.3% | ||
Target Corp. | 126,100 | 6,738,784 |
MULTI-UTILITIES — 2.4% | ||
PG&E Corp. | 306,400 | 13,916,688 |
Wisconsin Energy Corp. | 250,260 | 14,465,028 |
Xcel Energy, Inc. | 782,840 | 17,981,835 |
46,363,551 | ||
OIL, GAS & CONSUMABLE FUELS — 11.8% | ||
BP plc | 774,580 | 5,205,418 |
BP plc ADR | 48,710 | 2,005,391 |
Chevron Corp. | 763,510 | 61,882,485 |
ConocoPhillips | 284,170 | 16,319,883 |
Devon Energy Corp. | 226,620 | 14,671,379 |
EQT Corp. | 776,610 | 28,004,557 |
Exxon Mobil Corp. | 651,050 | 40,228,379 |
Imperial Oil Ltd. | 310,830 | 11,778,853 |
Southwestern Energy Co.(1) | 121,920 | 4,077,005 |
Total SA | 794,780 | 40,961,106 |
Valero Energy Corp. | 350,580 | 6,138,656 |
231,273,112 | ||
PAPER & FOREST PRODUCTS — 0.2% | ||
MeadWestvaco Corp. | 200,040 | 4,876,975 |
13
Value
Shares | Value |
PHARMACEUTICALS — 9.1% | ||
Bristol-Myers Squibb Co. | 466,760 | $ 12,653,864 |
Eli Lilly & Co. | 382,640 | 13,977,839 |
Johnson & Johnson | 1,035,150 | 64,137,894 |
Merck & Co., Inc. | 907,630 | 33,409,860 |
Pfizer, Inc. | 3,162,570 | 54,301,327 |
178,480,784 | ||
REAL ESTATE INVESTMENT TRUSTS (REITs) — 1.2% | ||
Annaly Capital Management, Inc. | 281,800 | 4,959,680 |
Host Hotels & Resorts, Inc. | 203,990 | 2,953,775 |
Weyerhaeuser Co. | 957,917 | 15,096,772 |
23,010,227 | ||
ROAD & RAIL — 0.2% | ||
Heartland Express, Inc. | 267,750 | 3,981,442 |
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT — 1.9% | ||
Applied Materials, Inc. | 1,603,310 | 18,726,661 |
Intel Corp. | 829,430 | 15,949,939 |
Texas Instruments, Inc. | 64,420 | 1,748,358 |
36,424,958 | ||
SPECIALTY RETAIL — 2.7% | ||
Lowe’s Cos., Inc. | 1,618,620 | 36,079,040 |
PetSmart, Inc. | 55,490 | 1,942,150 |
Staples, Inc. | 604,450 | 12,645,094 |
Tiffany & Co. | 41,400 | 1,945,386 |
52,611,670 | ||
THRIFTS & MORTGAGE FINANCE — 0.7% | ||
Hudson City Bancorp., Inc. | 1,096,470 | 13,442,722 |
TOTAL COMMON STOCKS (Cost $1,829,576,706) | 1,903,650,689 | |
Temporary Cash Investments — 2.7% | ||
JPMorgan U.S. Treasury Plus Money Market Fund Agency Shares | 44,411 | 44,411 |
Repurchase Agreement, Goldman Sachs Group, Inc., (collateralized by various U.S. Treasury obligations, 4.875%, 7/31/11, valued at $54,033,383), in a joint trading account at 0.10%, dated 9/30/10, due 10/1/10 (Delivery value $53,000,147) | 53,000,000 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $53,044,411) | 53,044,411 | |
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $1,882,621,117) | 1,956,695,100 | |
OTHER ASSETS AND LIABILITIES — 0.1% | 1,275,238 | |
TOTAL NET ASSETS — 100.0% | $1,957,970,338 |
Forward Foreign Currency Exchange Contracts | |||||
Contracts to Sell | Counterparty | Settlement Date | Value | Unrealized Gain (Loss) | |
14,579,869 | CAD for USD | Bank of America | 10/29/10 | $14,163,464 | $ (92,812) |
31,701,572 | EUR for USD | UBS AG | 10/29/10 | 43,209,242 | (472,670) |
3,455,862 | GBP for USD | Bank of America | 10/29/10 | 5,427,949 | 15,655 |
1,526,034,600 | JPY for USD | Bank of America | 10/29/10 | 18,284,259 | (97,694) |
$81,084,914 | $(647,521) |
(Value on Settlement Date $80,437,393)
Notes to Schedule of Investments
ADR = American Depositary Receipt | GBP = British Pound |
CAD = Canadian Dollar | JPY = Japanese Yen |
CVA = Certificaten Van Aandelen | SPDR = Standard & Poor’s Depositary Receipts |
ETF = Exchange-Traded Fund | USD = United States Dollar |
EUR = Euro |
(1) | Non-income producing. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities
SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Assets | ||||
Investment securities, at value (cost of $1,882,621,117) | $1,956,695,100 | |||
Receivable for investments sold | 6,539,134 | |||
Receivable for capital shares sold | 661,141 | |||
Receivable for forward foreign currency exchange contracts | 15,655 | |||
Dividends and interest receivable | 4,334,599 | |||
1,968,245,629 | ||||
Liabilities | ||||
Payable for investments purchased | 6,189,842 | |||
Payable for capital shares redeemed | 1,819,185 | |||
Payable for forward foreign currency exchange contracts | 663,176 | |||
Accrued management fees | 1,553,379 | |||
Service fees (and distribution fees — A Class and R Class) payable | 43,771 | |||
Distribution fees payable | 5,938 | |||
10,275,291 | ||||
Net Assets | $1,957,970,338 | |||
Net Assets Consist of: | ||||
Capital (par value and paid-in surplus) | $2,437,256,454 | |||
Undistributed net investment income | 1,185,890 | |||
Accumulated net realized loss on investment and foreign currency transactions | (553,899,641 | ) | ||
Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies | 73,427,635 | |||
$1,957,970,338 |
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Investor Class, $0.01 Par Value | $1,560,444,529 | 297,458,933 | $5.25 | |||||||||
Institutional Class, $0.01 Par Value | $194,815,341 | 37,095,780 | $5.25 | |||||||||
A Class, $0.01 Par Value | $178,225,558 | 33,988,225 | $5.24 | * | ||||||||
B Class, $0.01 Par Value | $2,912,139 | 555,610 | $5.24 | |||||||||
C Class, $0.01 Par Value | $6,767,681 | 1,301,356 | $5.20 | |||||||||
R Class, $0.01 Par Value | $14,805,090 | 2,822,056 | $5.25 |
*Maximum offering price $5.56 (net asset value divided by 0.9425)
See Notes to Financial Statements.
15
Statement of Operations
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) | ||||
Investment Income (Loss) | ||||
Income: | ||||
Dividends (net of foreign taxes withheld of $190,646) | $31,132,130 | |||
Interest | 29,031 | |||
31,161,161 | ||||
Expenses: | ||||
Management fees | 8,203,227 | |||
Distribution fees: | ||||
B Class | 11,082 | |||
C Class | 25,929 | |||
Service fees: | ||||
B Class | 3,694 | |||
C Class | 8,643 | |||
Distribution and service fees: | ||||
A Class | 175,500 | |||
R Class | 14,613 | |||
Directors’ fees and expenses | 26,703 | |||
Other expenses | 41,301 | |||
8,510,692 | ||||
Net investment income (loss) | 22,650,469 | |||
Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 26,556,554 | |||
Futures contract transactions | (973,134 | ) | ||
Foreign currency transactions | (1,101,028 | ) | ||
24,482,392 | ||||
Change in net unrealized appreciation (depreciation) on: | ||||
Investments | (46,324,198 | ) | ||
Translation of assets and liabilities in foreign currencies | (619,201 | ) | ||
(46,943,399 | ) | |||
Net realized and unrealized gain (loss) | (22,461,007 | ) | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $189,462 |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets
SIX MONTHS ENDED SEPTEMBER 30, 2010 (UNAUDITED) AND YEAR ENDED MARCH 31, 2010 | ||||||||
Increase (Decrease) in Net Assets | September 30, 2010 | March 31, 2010 | ||||||
Operations | ||||||||
Net investment income (loss) | $22,650,469 | $27,929,118 | ||||||
Net realized gain (loss) | 24,482,392 | 2,211,769 | ||||||
Change in net unrealized appreciation (depreciation) | (46,943,399 | ) | 479,060,352 | |||||
Net increase (decrease) in net assets resulting from operations | 189,462 | 509,201,239 | ||||||
Distributions to Shareholders | ||||||||
From net investment income: | ||||||||
Investor Class | (19,306,575 | ) | (22,506,189 | ) | ||||
Institutional Class | (2,892,154 | ) | (2,883,160 | ) | ||||
A Class | (1,788,986 | ) | (1,666,471 | ) | ||||
B Class | (25,418 | ) | (29,104 | ) | ||||
C Class | (59,783 | ) | (63,174 | ) | ||||
R Class | (116,732 | ) | (49,343 | ) | ||||
Decrease in net assets from distributions | (24,189,648 | ) | (27,197,441 | ) | ||||
Capital Share Transactions | ||||||||
Net increase (decrease) in net assets from capital share transactions | 359,429,221 | (52,291,998 | ) | |||||
Net increase (decrease) in net assets | 335,429,035 | 429,711,800 | ||||||
Net Assets | ||||||||
Beginning of period | 1,622,541,303 | 1,192,829,503 | ||||||
End of period | $1,957,970,338 | $1,622,541,303 | ||||||
Undistributed net investment income | $1,185,890 | $2,725,069 |
See Notes to Financial Statements.
17
Notes to Financial Statements
SEPTEMBER 30, 2010 (UNAUDITED)
1. Organization and Summary of Significant Accounting Policies
Organization — American Century Capital Portfolios, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company and is organized as a Maryland corporation. Value Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund’s investment objective is to seek long-term capital growth. Income is a secondary objective. The fund pursues its objectives by investing in stocks of companies with small, medium, and large market capitalization that management believes to be undervalued at the time of purchase. The following is a summary of the fund’s significant accounting policies.
Multiple Class — The fund is authorized to issue the Investor Class, the Institutional Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and distribution and shareholder servicing expenses and arrangements. All shares of 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 expe nses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Security Valuations — Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Investments in open-end management investment companies are valued at the reported net asset value. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued as determined in accordance with procedures adopted by the Board of Directors. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security’s fair value, such security is valued as determined by the Board of Directors or its designee, in accordance with procedures adopted by the Board of Directors, if such determination would materially impact a fund’s net asset value. Certain other circumstances may cause the fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence.
Security Transactions — For financial reporting purposes, security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
18
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 certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. 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. The fund is no longer subject to examination by tax authorities for years prior to 2007. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes.
Distributions to Shareholders — Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The 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.
Use of Estimates — The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates.
19
2. Fees and Transactions with Related Parties
Management Fees — The corporation has entered into a Management Agreement (the Agreement) with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on the daily net assets of the specific class of shares of the fund and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as wel l as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that have very similar investment teams and investment strategies (strategy assets). The annual management fee schedule for the fund ranges from 0.85% to 1.00% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less at each point within the range. The effective annual management fee for each class for the six months ended September 30, 2010 was 1.00% for the Investor Class, A Class, B Class, C Class and R Class and 0.80% for the Institutional Class.
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 0.25%. The plans provide that the B Class and C Class will each pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermedi aries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended September 30, 2010, are detailed in the Statement of Operations.
Related Parties — Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC), the parent of the corporation’s investment advisor, ACIM, the distributor of the corporation, ACIS, and the corporation’s transfer agent, American Century Services, LLC.
The fund is eligible to invest in a money market fund for temporary purposes, which is managed by J.P. Morgan Investment Management, Inc. (JPMIM). The fund has a Mutual Funds Services Agreement with J.P. Morgan Investor Services Co. (JPMIS) and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund. JPMIM, JPMIS and JPMCB are wholly owned subsidiaries of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC.
3. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the six months ended September 30, 2010, were $1,004,158,148 and $686,649,451, respectively.
20
4. Capital Share Transactions
Transactions in shares of the fund were as follows:
Six months ended September 30, 2010 | Year ended March 31, 2010 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Investor Class/Shares Authorized | 900,000,000 | 880,000,000 | ||||||||||||||
Sold | 77,372,159 | $388,341,604 | 29,425,799 | $136,358,039 | ||||||||||||
Issued in reinvestment of distributions | 3,488,802 | 18,163,566 | 4,332,822 | 20,695,344 | ||||||||||||
Redeemed | (19,340,077 | ) | (99,191,689 | ) | (54,362,072 | ) | (252,065,378 | ) | ||||||||
61,520,884 | 307,313,481 | (20,603,451 | ) | (95,011,995 | ) | |||||||||||
Institutional Class/Shares Authorized | 125,000,000 | 125,000,000 | ||||||||||||||
Sold | 2,729,992 | 14,121,395 | 18,656,545 | 92,085,593 | ||||||||||||
Issued in reinvestment of distributions | 556,054 | 2,892,154 | 592,396 | 2,868,474 | ||||||||||||
Redeemed | (5,803,309 | ) | (29,842,876 | ) | (12,054,560 | ) | (53,856,923 | ) | ||||||||
(2,517,263 | ) | (12,829,327 | ) | 7,194,381 | 41,097,144 | |||||||||||
A Class/Shares Authorized | 150,000,000 | 100,000,000 | ||||||||||||||
Sold | 18,119,116 | 87,815,156 | 7,643,029 | 37,535,454 | ||||||||||||
Issued in reinvestment of distributions | 220,886 | 1,149,076 | 342,437 | 1,632,715 | ||||||||||||
Redeemed | (6,466,856 | ) | (33,720,541 | ) | (7,768,233 | ) | (37,737,001 | ) | ||||||||
11,873,146 | 55,243,691 | 217,233 | 1,431,168 | |||||||||||||
B Class/Shares Authorized | 5,000,000 | 20,000,000 | ||||||||||||||
Sold | 352 | 1,826 | 20,262 | 95,773 | ||||||||||||
Issued in reinvestment of distributions | 4,418 | 22,965 | 5,236 | 24,541 | ||||||||||||
Redeemed | (38,977 | ) | (201,671 | ) | (132,822 | ) | (634,172 | ) | ||||||||
(34,207 | ) | (176,880 | ) | (107,324 | ) | (513,858 | ) | |||||||||
C Class/Shares Authorized | 5,000,000 | 10,000,000 | ||||||||||||||
Sold | 114,707 | 590,886 | 225,800 | 1,046,952 | ||||||||||||
Issued in reinvestment of distributions | 9,120 | 47,045 | 10,522 | 49,054 | ||||||||||||
Redeemed | (184,989 | ) | (953,154 | ) | (308,499 | ) | (1,463,920 | ) | ||||||||
(61,162 | ) | (315,223 | ) | (72,177 | ) | (367,914 | ) | |||||||||
R Class/Shares Authorized | 15,000,000 | 10,000,000 | ||||||||||||||
Sold | 4,009,756 | 20,666,771 | 580,506 | 2,693,868 | ||||||||||||
Issued in reinvestment of distributions | 22,339 | 116,732 | 10,279 | 49,343 | ||||||||||||
Redeemed | (2,048,241 | ) | (10,590,024 | ) | (345,574 | ) | (1,669,754 | ) | ||||||||
1,983,854 | 10,193,479 | 245,211 | 1,073,457 | |||||||||||||
Net increase (decrease) | 72,765,252 | $359,429,221 | (13,126,127 | ) | $(52,291,998 | ) |
21
5. Fair Value Measurements
The fund’s securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows:
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical securities; |
• | Level 2 valuation inputs consist of significant direct or indirect observable market data (including quoted prices for similar securities, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.); or |
• | Level 3 valuation inputs consist of significant unobservable inputs (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 valuation inputs used to determine the fair value of the fund’s securities and other financial instruments as of September 30, 2010. The Schedule of Investments provides additional details on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||||||
Investment Securities | ||||||||||||
Domestic Common Stocks | $1,773,981,460 | — | — | |||||||||
Foreign Common Stocks | 34,746,071 | $94,923,158 | — | |||||||||
Temporary Cash Investments | 44,411 | 53,000,000 | — | |||||||||
Total Value of Investment Securities | $1,808,771,942 | $147,923,158 | — | |||||||||
Other Financial Instruments | ||||||||||||
Total Unrealized Gain (Loss) on Forward Foreign Currency Exchange Contracts | — | $(647,521 | ) | — |
6. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts based on an equity index in order to manage its exposure to changes in market conditions. A fund may purchase futures contracts to gain exposure to increases in market value or sell futures contracts to protect against a decline in market value. Upon entering into a futures contract, a fund is required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. A fund recognizes a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of net realized gain (loss) on futures contract transactions and change in net unrealized appreciation (depreciation) on futures contracts, respectively. One of the risks of entering into futures contracts is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. The fund held no equity price risk derivative instruments at period end. During the period, the fund infrequently purchased equity price risk derivative instruments for temporary investment purposes.
22
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund’s exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on foreign currency transactions and change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The risk of loss from non-performance by the counterparty may be reduced by the use of master netting agreements. The foreign currency risk derivative instruments held at period end as disclosed on the Schedule of Investments are indicative of the fund’s typical volume during the period.
Value of Derivative Instruments as of September 30, 2010
Asset Derivatives | Liability Derivatives | ||||
Type of Derivative | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | |
Foreign Currency Risk | Receivable for forward foreign currency exchange contracts | $15,655 | Payable for forward foreign currency exchange contracts | $663,176 | |
Effect of Derivative Instruments on the Statement of Operations for the Six Months Ended September 30, 2010 | |||||
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | ||||
Type of Derivative | Location on Statement of Operations | Value | Location on Statement of Operations | Value | |
Equity Price Risk | Net realized gain (loss) on futures contract transactions | $(973,134) | Change in net unrealized appreciation (depreciation) on futures contracts | — | |
Foreign Currency Risk | Net realized gain (loss) on foreign currency transactions | (1,144,006) | Change in net unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies | $(620,789) | |
$(2,117,140) | $(620,789) |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions.
23
8. Interfund Lending
The fund, along with certain other funds in the American Century Investments family of funds, may participate in an interfund lending program, pursuant to an Exemptive Order issued by the Securities and Exchange Commission (SEC). This program provides an alternative credit facility allowing the fund to borrow from or lend to other funds in the American Century Investments family of funds that permit such transactions. Interfund lending transactions are subject to each fund’s investment policies and borrowing and lending limits. The interfund loan rate earned/paid on interfund lending transactions is determined daily based on the average of certain current market rates. Interfund lending transactions normally extend only overnight, but can have a maximum duration of seven days. The program is subject to annual appr oval by the Board of Directors. During the six months ended September 30, 2010, the fund did not utilize the program.
9. Federal Tax Information
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of September 30, 2010, the components of investments for federal income tax purposes were as follows:
Federal tax cost of investments | $1,963,065,617 | |||
Gross tax appreciation of investments | $110,759,231 | |||
Gross tax depreciation of investments | (117,129,748 | ) | ||
Net tax appreciation (depreciation) of investments | $(6,370,517 | ) |
The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
As of March 31, 2010, the fund had accumulated capital losses of $(497,796,183), which represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations. Capital loss carryovers of $(292,022,390) and $(205,773,793) expire in 2017 and 2018, respectively.
24
Financial Highlights
Value
Investor Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.40 | $3.80 | $5.78 | $7.61 | $7.18 | $7.31 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.07 | 0.09 | 0.13 | 0.12 | 0.12 | 0.12 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.15 | ) | 1.60 | (1.98 | ) | (0.92 | ) | 0.93 | 0.57 | |||||||||||||||
Total From Investment Operations | (0.08 | ) | 1.69 | (1.85 | ) | (0.80 | ) | 1.05 | 0.69 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.07 | ) | (0.09 | ) | (0.13 | ) | (0.12 | ) | (0.11 | ) | (0.10 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.91 | ) | (0.51 | ) | (0.72 | ) | |||||||||||||||
Total Distributions | (0.07 | ) | (0.09 | ) | (0.13 | ) | (1.03 | ) | (0.62 | ) | (0.82 | ) | ||||||||||||
Net Asset Value, End of Period | $5.25 | $5.40 | $3.80 | $5.78 | $7.61 | $7.18 | ||||||||||||||||||
Total Return(3) | (1.44 | )% | 44.84 | % | (32.34 | )% | (11.56 | )% | 14.90 | % | 9.89 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.01 | %(4) | 1.00 | % | 1.00 | % | 1.00 | % | 0.99 | % | 0.99 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.70 | %(4) | 1.97 | % | 2.63 | % | 1.65 | % | 1.58 | % | 1.71 | % | ||||||||||||
Portfolio Turnover Rate | 42 | % | 62 | % | 91 | % | 152 | % | 140 | % | 134 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $1,560,445 | $1,274,063 | $975,772 | $1,707,366 | $2,495,067 | $2,296,153 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
25
Value
Institutional Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.41 | $3.81 | $5.79 | $7.62 | $7.19 | $7.32 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.07 | 0.10 | 0.14 | 0.13 | 0.13 | 0.14 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.15 | ) | 1.60 | (1.98 | ) | (0.91 | ) | 0.94 | 0.57 | |||||||||||||||
Total From Investment Operations | (0.08 | ) | 1.70 | (1.84 | ) | (0.78 | ) | 1.07 | 0.71 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.08 | ) | (0.10 | ) | (0.14 | ) | (0.14 | ) | (0.13 | ) | (0.12 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.91 | ) | (0.51 | ) | (0.72 | ) | |||||||||||||||
Total Distributions | (0.08 | ) | (0.10 | ) | (0.14 | ) | (1.05 | ) | (0.64 | ) | (0.84 | ) | ||||||||||||
Net Asset Value, End of Period | $5.25 | $5.41 | $3.81 | $5.79 | $7.62 | $7.19 | ||||||||||||||||||
Total Return(3) | (1.53 | )% | 45.01 | % | (32.14 | )% | (11.36 | )% | 15.11 | % | 10.10 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 0.81 | %(4) | 0.80 | % | 0.80 | % | 0.80 | % | 0.79 | % | 0.79 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.90 | %(4) | 2.17 | % | 2.83 | % | 1.85 | % | 1.78 | % | 1.91 | % | ||||||||||||
Portfolio Turnover Rate | 42 | % | 62 | % | 91 | % | 152 | % | 140 | % | 134 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $194,815 | $214,112 | $123,484 | $307,769 | $289,536 | $254,778 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
26
Value
A Class(1) | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(2) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.40 | $3.80 | $5.78 | $7.61 | $7.18 | $7.31 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.07 | 0.08 | 0.12 | 0.10 | 0.10 | 0.10 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.17 | ) | 1.60 | (1.98 | ) | (0.92 | ) | 0.93 | 0.57 | |||||||||||||||
Total From Investment Operations | (0.10 | ) | 1.68 | (1.86 | ) | (0.82 | ) | 1.03 | 0.67 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.06 | ) | (0.08 | ) | (0.12 | ) | (0.10 | ) | (0.09 | ) | (0.08 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.91 | ) | (0.51 | ) | (0.72 | ) | |||||||||||||||
Total Distributions | (0.06 | ) | (0.08 | ) | (0.12 | ) | (1.01 | ) | (0.60 | ) | (0.80 | ) | ||||||||||||
Net Asset Value, End of Period | $5.24 | $5.40 | $3.80 | $5.78 | $7.61 | $7.18 | ||||||||||||||||||
Total Return(4) | (1.75 | )% | 44.47 | % | (32.51 | )% | (11.76 | )% | 14.62 | % | 9.61 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.26 | %(5) | 1.25 | % | 1.25 | % | 1.25 | % | 1.24 | % | 1.24 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.45 | %(5) | 1.72 | % | 2.38 | % | 1.40 | % | 1.33 | % | 1.46 | % | ||||||||||||
Portfolio Turnover Rate | 42 | % | 62 | % | 91 | % | 152 | % | 140 | % | 134 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $178,226 | $119,363 | $83,254 | $191,739 | $249,265 | $214,835 |
(1) | Prior to September 4, 2007, the A Class was referred to as the Advisor Class. |
(2) | Six months ended September 30, 2010 (unaudited). |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
See Notes to Financial Statements.
27
Value
B Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.39 | $3.80 | $5.78 | $7.61 | $7.18 | $7.31 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.05 | 0.08 | 0.05 | 0.04 | 0.05 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.14 | ) | 1.59 | (1.97 | ) | (0.92 | ) | 0.94 | 0.57 | |||||||||||||||
Total From Investment Operations | (0.10 | ) | 1.64 | (1.89 | ) | (0.87 | ) | 0.98 | 0.62 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.05 | ) | (0.05 | ) | (0.09 | ) | (0.05 | ) | (0.04 | ) | (0.03 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.91 | ) | (0.51 | ) | (0.72 | ) | |||||||||||||||
Total Distributions | (0.05 | ) | (0.05 | ) | (0.09 | ) | (0.96 | ) | (0.55 | ) | (0.75 | ) | ||||||||||||
Net Asset Value, End of Period | $5.24 | $5.39 | $3.80 | $5.78 | $7.61 | $7.18 | ||||||||||||||||||
Total Return(3) | (1.94 | )% | 43.21 | % | (33.01 | )% | (12.41 | )% | 13.78 | % | 8.81 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(4) | 2.00 | % | 2.00 | % | 2.00 | % | 1.99 | % | 1.99 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.70 | %(4) | 0.97 | % | 1.63 | % | 0.65 | % | 0.58 | % | 0.71 | % | ||||||||||||
Portfolio Turnover Rate | 42 | % | 62 | % | 91 | % | 152 | % | 140 | % | 134 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $2,912 | $3,182 | $2,651 | $5,601 | $7,740 | $7,129 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
28
Value
C Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.35 | $3.77 | $5.74 | $7.56 | $7.14 | $7.27 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(2) | 0.04 | 0.05 | 0.08 | 0.05 | 0.04 | 0.05 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.14 | ) | 1.58 | (1.96 | ) | (0.91 | ) | 0.93 | 0.57 | |||||||||||||||
Total From Investment Operations | (0.10 | ) | 1.63 | (1.88 | ) | (0.86 | ) | 0.97 | 0.62 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.05 | ) | (0.05 | ) | (0.09 | ) | (0.05 | ) | (0.04 | ) | (0.03 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.91 | ) | (0.51 | ) | (0.72 | ) | |||||||||||||||
Total Distributions | (0.05 | ) | (0.05 | ) | (0.09 | ) | (0.96 | ) | (0.55 | ) | (0.75 | ) | ||||||||||||
Net Asset Value, End of Period | $5.20 | $5.35 | $3.77 | $5.74 | $7.56 | $7.14 | ||||||||||||||||||
Total Return(3) | (1.95 | )% | 43.29 | % | (33.06 | )% | (12.36 | )% | 13.71 | % | 8.87 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 2.01 | %(4) | 2.00 | % | 2.00 | % | 2.00 | % | 1.99 | % | 1.99 | % | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 1.70 | %(4) | 0.97 | % | 1.63 | % | 0.65 | % | 0.58 | % | 0.71 | % | ||||||||||||
Portfolio Turnover Rate | 42 | % | 62 | % | 91 | % | 152 | % | 140 | % | 134 | % | ||||||||||||
Net Assets, End of Period (in thousands) | $6,768 | $7,294 | $5,414 | $11,532 | $22,274 | $19,259 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | Computed using average shares outstanding throughout the period. |
(3) | Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(4) | Annualized. |
See Notes to Financial Statements.
29
Value
R Class | ||||||||||||||||||||||||
For a Share Outstanding Throughout the Years Ended March 31 (except as noted) | ||||||||||||||||||||||||
2010(1) | 2010 | 2009 | 2008 | 2007 | 2006(2) | |||||||||||||||||||
Per-Share Data | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $5.40 | $3.80 | $5.78 | $7.61 | $7.18 | $7.60 | ||||||||||||||||||
Income From Investment Operations | ||||||||||||||||||||||||
Net Investment Income (Loss)(3) | 0.06 | 0.07 | 0.11 | 0.09 | 0.08 | 0.06 | ||||||||||||||||||
Net Realized and Unrealized Gain (Loss) | (0.15 | ) | 1.60 | (1.98 | ) | (0.92 | ) | 0.94 | 0.29 | |||||||||||||||
Total From Investment Operations | (0.09 | ) | 1.67 | (1.87 | ) | (0.83 | ) | 1.02 | 0.35 | |||||||||||||||
Distributions | ||||||||||||||||||||||||
From Net Investment Income | (0.06 | ) | (0.07 | ) | (0.11 | ) | (0.09 | ) | (0.08 | ) | (0.05 | ) | ||||||||||||
From Net Realized Gains | — | — | — | (0.91 | ) | (0.51 | ) | (0.72 | ) | |||||||||||||||
Total Distributions | (0.06 | ) | (0.07 | ) | (0.11 | ) | (1.00 | ) | (0.59 | ) | (0.77 | ) | ||||||||||||
Net Asset Value, End of Period | $5.25 | $5.40 | $3.80 | $5.78 | $7.61 | $7.18 | ||||||||||||||||||
Total Return(4) | (1.69 | )% | 44.10 | % | (32.67 | )% | (11.98 | )% | 14.34 | % | 4.99 | % | ||||||||||||
Ratios/Supplemental Data | ||||||||||||||||||||||||
Ratio of Operating Expenses to Average Net Assets | 1.51 | %(5) | 1.50 | % | 1.50 | % | 1.50 | % | 1.49 | % | 1.49 | %(5) | ||||||||||||
Ratio of Net Investment Income (Loss) to Average Net Assets | 2.20 | %(5) | 1.47 | % | 2.13 | % | 1.15 | % | 1.08 | % | 1.17 | %(5) | ||||||||||||
Portfolio Turnover Rate | 42 | % | 62 | % | 91 | % | 152 | % | 140 | % | 134 | %(6) | ||||||||||||
Net Assets, End of Period (in thousands) | $14,805 | $4,527 | $2,255 | $1,625 | $331 | $43 |
(1) | Six months ended September 30, 2010 (unaudited). |
(2) | July 29, 2005 (commencement of sale) through March 31, 2006. |
(3) | Computed using average shares outstanding throughout the period. |
(4) | Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value of the last business day. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended March 31, 2006. |
See Notes to Financial Statements.
30
Proxy Voting Results
A special meeting of shareholders was held on June 16, 2010 and June 30, 2010, to vote on the following proposals. Each proposal received the required number of votes and was adopted. A summary of voting results is listed below each proposal.
Proposal 1:
To elect one Director to the Board of Directors of American Century Capital Portfolios, Inc. (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
John R. Whitten | For: | 8,909,100,602 | ||
Withhold: | 464,054,213 | |||
Abstain: | 0 | |||
Broker Non-Vote: | 0 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Thomas A. Brown, Andrea C. Hall, James A. Olson, Donald H. Pratt, and M. Jeannine Strandjord.
Proposal 2:
To approve a management agreement between the fund and American Century Investment Management, Inc.:
Investor, A, B, C and R Classes | For: | 915,790,232 | ||
Against: | 16,489,908 | |||
Abstain: | 53,485,280 | |||
Broker Non-Vote: | 68,565,645 | |||
Institutional Class | For: | 200,216,855 | ||
Against: | 353,700 | |||
Abstain: | 79,039 | |||
Broker Non-Vote: | 1,047,814 |
Proposal 3:
To approve an amendment to the Articles of Incorporation to limit certain director liability to the extent permitted by Maryland law (the proposal was voted on by all shareholders of funds issued by American Century Capital Portfolios, Inc.):
For: | 7,171,505,354 | |||
Against: | 434,482,700 | |||
Abstain: | 468,352,741 | |||
Broker Non-Vote: | 1,298,814,021 |
31
Additional Information
Retirement Account Information
As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules.
Proxy Voting Guidelines
American Century Investment Management, Inc., the fund’s investment advisor, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century Investments’ website at americancentury.com and on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the “About Us” page at americancentury.co m. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s Forms N-Q are available on the SEC’s website at sec.gov, and may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Index Definitions
The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase.
The Lipper Multi-Cap Value Index is an equally-weighted index of the 30 largest mutual funds with a value based investment strategy to purchase securities of companies of all market capitalizations.
The Russell 1000® Index is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 1000® Growth Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000® Value Index measures the performance of those Russell 1000 Index companies (the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000® Index is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell 2000® Growth Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000® Value Index measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The Russell 3000® Value Index measures the performance of the broad value segment of the U.S. equity universe. It includes those Russell 3,000 companies with lower price-to-book ratios and lower forecasted growth values.
The Russell Midcap® Index measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization.
The Russell Midcap® Growth Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values.
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The Russell Midcap® Value Index measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth values.
The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock’s weight in the index is proportionate to its market value. Created by Standard & Poor’s, it is considered to be a broad measure of U.S. stock market performance.
34
Notes
35
Notes
36
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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 Device for the Deaf | 1-800-634-4113 |
American Century Capital Portfolios, Inc. | |
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | |
This report and the statements it contains are submitted for the general information of our shareholders. The report is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. |
American Century Investment Services, Inc., Distributor
©2010 American Century Proprietary Holdings, Inc. All rights reserved.
1011
CL-SAN-69824
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) | The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. |
(b) | Not applicable. |
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) | The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. |
(b) | There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. |
ITEM 12. EXHIBITS.
(a)(1) | Not applicable for semiannual report filings. |
(a)(2) | Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT. |
(a)(3) | Not applicable. |
(b) | A certification by the registrant’s chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as EX- 99.906CERT. |
SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. | ||
By: | /s/ Jonathan S. Thomas | ||
Name: | Jonathan S. Thomas | ||
Title: | President | ||
Date: | November 29, 2010 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Jonathan S. Thomas | ||
Name: | Jonathan S. Thomas | ||
Title: | President | ||
(principal executive officer) | |||
Date: | November 29, 2010 |
By: | /s/ Robert J. Leach | ||
Name: | Robert J. Leach | ||
Title: | Vice President, Treasurer, and | ||
Chief Financial Officer | |||
(principal financial officer) | |||
Date: | November 29, 2010 |