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 | 811-05447 | |||||||||||||||||||||||||||||||||||||
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, 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: | 06-30 | |||||||||||||||||||||||||||||||||||||
Date of reporting period: | 06-30-2020 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report | |||||
June 30, 2020 | |||||
Disciplined Growth Fund | |||||
Investor Class (ADSIX) | |||||
I Class (ADCIX) | |||||
Y Class (ADCYX) | |||||
A Class (ADCVX) | |||||
C Class (ADCCX) | |||||
R Class (ADRRX) | |||||
R5 Class (ADGGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||||||||||||||||||||
Investor Class | ADSIX | 22.13% | 12.84% | 15.64% | — | 9/30/05 | |||||||||||||||||||||||||||||||||||
Russell 1000 Growth Index | — | 23.28% | 15.87% | 17.22% | — | — | |||||||||||||||||||||||||||||||||||
I Class | ADCIX | 22.38% | 13.06% | 15.87% | — | 9/30/05 | |||||||||||||||||||||||||||||||||||
Y Class | ADCYX | 22.42% | — | — | 15.81% | 4/10/17 | |||||||||||||||||||||||||||||||||||
A Class | ADCVX | 9/30/05 | |||||||||||||||||||||||||||||||||||||||
No sales charge | 21.84% | 12.56% | 15.36% | — | |||||||||||||||||||||||||||||||||||||
With sales charge | 14.85% | 11.24% | 14.68% | — | |||||||||||||||||||||||||||||||||||||
C Class | ADCCX | 20.94% | 11.72% | 14.49% | — | 9/28/07 | |||||||||||||||||||||||||||||||||||
R Class | ADRRX | 21.56% | 12.28% | 15.06% | — | 9/30/05 | |||||||||||||||||||||||||||||||||||
R5 Class | ADGGX | 22.37% | — | — | 15.76% | 4/10/17 |
Average annual returns since inception are presented when ten years of performance history is not available.
Fund returns would have been lower if a portion of the fees had not been waived.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $42,802 | ||||||||
Russell 1000 Growth Index — $49,029 | ||||||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||||||||||||||||||||||||||||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | |||||||||||||||||||||||||||||
1.02% | 0.82% | 0.77% | 1.27% | 2.02% | 1.52% | 0.82% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Yulin Long and Tsuyoshi Ozaki
Performance Summary
Disciplined Growth returned 22.13%* for the fiscal year ended June 30, 2020, compared with the 23.28% return of its benchmark, the Russell 1000 Growth Index.
Disciplined Growth advanced during the fiscal year, but underperformed its benchmark, the Russell 1000 Growth Index. Stock selection in the information technology and consumer discretionary sectors detracted, while positioning in consumer staples and health care benefited relative performance.
Positioning Across Several Sectors Detracted From Relative Returns
Security selections in the information technology sector were the largest drivers of relative underperformance. Stock choices in the semiconductors and semiconductor equipment industry were the main headwind. An underweight to chipmaker NVIDIA was among the leading individual detractors from relative performance. Demand for NVIDIA’s gaming chips was high throughout the period but spiked starting in March, when widespread pandemic lockdown measures caused game manufacturers to purchase large amounts of the chips out of fear that production would stop. Elsewhere in the sector, positions in communications equipment company Motorola Solutions and software company Cornerstone OnDemand also weighed on returns. We have since exited our position in Cornerstone.
Stock selection within consumer discretionary also detracted from relative returns. A lack of exposure to automobile manufacturer Tesla was a leading detractor from performance compared with the benchmark for the period. The stock began a significant upward trend in March after the company’s automobile deliveries for the quarter shattered analysts’ expectations. The manufacturer also rolled out a new model in early 2020 and reduced pricing on older models. Both developments are expected to bolster demand. Within textiles, apparel and luxury goods, a position in Deckers Outdoor provided a headwind to results, as did stakes in specialty retailers Ross Stores and AutoZone. Specialty retailers, especially those that rely heavily on foot traffic for sales, experienced sales setbacks during the COVID-19 lockdown. We have since closed our position in AutoZone.
Security choices within the materials sector also detracted. Factory closures due to the pandemic constrained some companies’ abilities to produce their products. Within containers and packaging, Ball Corp. weighed on results, as did construction materials company Eagle Materials. We have since closed these positions.
Positioning within Consumer Staples and Health Care was Additive
Within the consumer staples sector, positioning in the beverages industry was the leading driver, as an underweight to The Coca-Cola Co. was among the top individual contributors for the period. It was beneficial to be underrepresented in the stock of the soft drink company as widespread lockdown measures hurt key markets, such as sporting events and restaurants. Conversely, adult beverage manufacturer The Boston Beer Co. enjoyed increased demand for its products during the lockdown, boosting its stock price. Its seltzer product, Truly, enjoyed strong demand throughout the reporting period. We have since sold out of both Coca-Cola and Boston Beer. Within the sector, it was also beneficial to have no exposure to tobacco companies and an underweight allocation in food and staples retailing companies.
*All fund returns referenced in this commentary are for Investor Class shares. Fund returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Within the health care sector, security selections within the health care equipment and supplies industry bolstered relative returns. Masimo and DexCom were among the leading individual contributors to performance during the 12 months. Overweights to these patient-monitoring device manufacturers were beneficial during the period. The COVID-19 outbreak increased demand for remote patient-monitoring devices, which Masimo makes, and patient self-monitoring devices for chronic diseases, such as diabetes, which are provided by DexCom. Within the biotechnology industry, an overweight in Vertex Pharmaceuticals was also among the leading contributors to overall performance.
A Look Ahead
Our disciplined, objective and systematic investment strategy is designed to take advantage of opportunities at the individual company level. We believe this approach is an effective way to capitalize on market inefficiencies that lead to the mispricing of individual stocks. As a result of this approach, our sector and industry allocations reflect where we are finding the greatest opportunities among individual companies at a given time.
At period-end, financials was the most overweight sector. We increased our relative overweight position during the year in order to take advantage of opportunities our models identified in the capital markets industry. Communication services is also among our largest active weights as of period-end. Based on our factor model, we believe there are significant opportunities in the entertainment industry. Conversely, we are underweight the consumer staples and real estate sectors. Beverages and food and staples companies show a lack of opportunity and are comparatively unattractive in terms of our model metrics. In the real estate sector, our underweight is driven by a lack of exposure to equity real estate investment trusts (REITs).
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Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Microsoft Corp. | 9.2% | |||||||
Apple, Inc. | 8.5% | |||||||
Amazon.com, Inc. | 7.4% | |||||||
Alphabet, Inc., Class A | 4.3% | |||||||
Facebook, Inc., Class A | 4.1% | |||||||
Mastercard, Inc., Class A | 1.8% | |||||||
Vertex Pharmaceuticals, Inc. | 1.7% | |||||||
S&P Global, Inc. | 1.7% | |||||||
Merck & Co., Inc. | 1.6% | |||||||
Broadcom, Inc. | 1.6% | |||||||
Top Five Industries | % of net assets | |||||||
Software | 18.7% | |||||||
Technology Hardware, Storage and Peripherals | 9.0% | |||||||
Interactive Media and Services | 8.4% | |||||||
Internet and Direct Marketing Retail | 7.9% | |||||||
IT Services | 6.2% | |||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 95.2% | |||||||
Temporary Cash Investments | 4.7% | |||||||
Other Assets and Liabilities | 0.1% | |||||||
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,119.80 | $5.32 | 1.01% | ||||||||||
I Class | $1,000 | $1,121.10 | $4.27 | 0.81% | ||||||||||
Y Class | $1,000 | $1,120.90 | $4.01 | 0.76% | ||||||||||
A Class | $1,000 | $1,118.10 | $6.64 | 1.26% | ||||||||||
C Class | $1,000 | $1,114.50 | $10.57 | 2.01% | ||||||||||
R Class | $1,000 | $1,116.80 | $7.95 | 1.51% | ||||||||||
R5 Class | $1,000 | $1,120.50 | $4.27 | 0.81% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.84 | $5.07 | 1.01% | ||||||||||
I Class | $1,000 | $1,020.84 | $4.07 | 0.81% | ||||||||||
Y Class | $1,000 | $1,021.08 | $3.82 | 0.76% | ||||||||||
A Class | $1,000 | $1,018.60 | $6.32 | 1.26% | ||||||||||
C Class | $1,000 | $1,014.87 | $10.07 | 2.01% | ||||||||||
R Class | $1,000 | $1,017.36 | $7.57 | 1.51% | ||||||||||
R5 Class | $1,000 | $1,020.84 | $4.07 | 0.81% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 95.2% | ||||||||
Aerospace and Defense — 0.8% | ||||||||
Axon Enterprise, Inc.(1) | 13,782 | $ | 1,352,428 | |||||
Lockheed Martin Corp. | 4,929 | 1,798,691 | ||||||
Mercury Systems, Inc.(1) | 6,952 | 546,844 | ||||||
3,697,963 | ||||||||
Auto Components — 0.1% | ||||||||
Aptiv plc | 5,355 | 417,262 | ||||||
Beverages — 0.1% | ||||||||
Monster Beverage Corp.(1) | 7,148 | 495,499 | ||||||
Biotechnology — 3.3% | ||||||||
AbbVie, Inc. | 30,963 | 3,039,947 | ||||||
Biogen, Inc.(1) | 150 | 40,133 | ||||||
Exelixis, Inc.(1) | 87,099 | 2,067,730 | ||||||
Incyte Corp.(1) | 5,108 | 531,079 | ||||||
Neurocrine Biosciences, Inc.(1) | 11,633 | 1,419,226 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 25,707 | 7,462,999 | ||||||
14,561,114 | ||||||||
Building Products — 1.4% | ||||||||
AAON, Inc. | 8,429 | 457,610 | ||||||
AO Smith Corp. | 22,685 | 1,068,917 | ||||||
Fortune Brands Home & Security, Inc. | 17,828 | 1,139,744 | ||||||
Simpson Manufacturing Co., Inc. | 20,868 | 1,760,425 | ||||||
UFP Industries, Inc. | 32,596 | 1,613,828 | ||||||
6,040,524 | ||||||||
Capital Markets — 4.5% | ||||||||
FactSet Research Systems, Inc. | 12,544 | 4,120,328 | ||||||
MarketAxess Holdings, Inc. | 4,372 | 2,190,022 | ||||||
Moody's Corp. | 1,796 | 493,415 | ||||||
MSCI, Inc. | 12,028 | 4,015,187 | ||||||
S&P Global, Inc. | 22,560 | 7,433,069 | ||||||
SEI Investments Co. | 30,802 | 1,693,494 | ||||||
19,945,515 | ||||||||
Chemicals — 0.5% | ||||||||
NewMarket Corp. | 5,075 | 2,032,436 | ||||||
Commercial Services and Supplies — 0.1% | ||||||||
IAA, Inc.(1) | 5,991 | 231,073 | ||||||
Communications Equipment — 1.3% | ||||||||
Arista Networks, Inc.(1) | 1,578 | 331,427 | ||||||
Cisco Systems, Inc. | 23,745 | 1,107,467 | ||||||
Motorola Solutions, Inc. | 30,935 | 4,334,922 | ||||||
5,773,816 | ||||||||
Distributors — 0.3% | ||||||||
LKQ Corp.(1) | 49,692 | 1,301,930 | ||||||
Diversified Consumer Services — 0.1% | ||||||||
Chegg, Inc.(1) | 5,078 | 341,546 | ||||||
Diversified Telecommunication Services — 0.4% | ||||||||
Cogent Communications Holdings, Inc. | 23,515 | 1,819,120 |
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Shares | Value | |||||||
Electronic Equipment, Instruments and Components — 1.0% | ||||||||
Trimble, Inc.(1) | 35,036 | $ | 1,513,205 | |||||
Zebra Technologies Corp., Class A(1) | 11,005 | 2,816,730 | ||||||
4,329,935 | ||||||||
Entertainment — 2.4% | ||||||||
Electronic Arts, Inc.(1) | 19,980 | 2,638,359 | ||||||
Netflix, Inc.(1) | 3,793 | 1,725,967 | ||||||
Spotify Technology SA(1) | 11,208 | 2,893,794 | ||||||
Take-Two Interactive Software, Inc.(1) | 7,874 | 1,098,974 | ||||||
Zynga, Inc., Class A(1) | 235,197 | 2,243,779 | ||||||
10,600,873 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 1.0% | ||||||||
American Tower Corp. | 6,267 | 1,620,270 | ||||||
Crown Castle International Corp. | 13,854 | 2,318,467 | ||||||
Public Storage | 1,817 | 348,664 | ||||||
4,287,401 | ||||||||
Food and Staples Retailing — 0.3% | ||||||||
Costco Wholesale Corp. | 1,560 | 473,008 | ||||||
Sprouts Farmers Market, Inc.(1) | 33,248 | 850,816 | ||||||
1,323,824 | ||||||||
Food Products — 0.9% | ||||||||
Hershey Co. (The) | 30,146 | 3,907,525 | ||||||
Health Care Equipment and Supplies — 4.1% | ||||||||
ABIOMED, Inc.(1) | 4,496 | 1,086,054 | ||||||
Align Technology, Inc.(1) | 16,860 | 4,627,058 | ||||||
DexCom, Inc.(1) | 5,267 | 2,135,242 | ||||||
IDEXX Laboratories, Inc.(1) | 16,604 | 5,481,977 | ||||||
Masimo Corp.(1) | 1,216 | 277,236 | ||||||
NuVasive, Inc.(1) | 16,934 | 942,546 | ||||||
ResMed, Inc. | 15,944 | 3,061,248 | ||||||
Tandem Diabetes Care, Inc.(1) | 6,094 | 602,818 | ||||||
18,214,179 | ||||||||
Health Care Providers and Services — 1.5% | ||||||||
Amedisys, Inc.(1) | 8,242 | 1,636,367 | ||||||
Chemed Corp. | 5,038 | 2,272,491 | ||||||
HCA Healthcare, Inc. | 6,965 | 676,023 | ||||||
UnitedHealth Group, Inc. | 6,488 | 1,913,635 | ||||||
6,498,516 | ||||||||
Health Care Technology — 2.0% | ||||||||
Cerner Corp. | 46,716 | 3,202,382 | ||||||
Omnicell, Inc.(1) | 28,712 | 2,027,641 | ||||||
Veeva Systems, Inc., Class A(1) | 15,817 | 3,707,821 | ||||||
8,937,844 | ||||||||
Hotels, Restaurants and Leisure — 0.8% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 1,836 | 1,932,133 | ||||||
Domino's Pizza, Inc. | 3,341 | 1,234,299 | ||||||
Yum! Brands, Inc. | 4,621 | 401,611 | ||||||
3,568,043 | ||||||||
Household Durables — 0.2% | ||||||||
Tempur Sealy International, Inc.(1) | 10,255 | 737,847 | ||||||
Household Products — 0.7% | ||||||||
Procter & Gamble Co. (The) | 22,488 | 2,688,890 |
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Shares | Value | |||||||
Reynolds Consumer Products, Inc. | 12,118 | $ | 420,979 | |||||
3,109,869 | ||||||||
Industrial Conglomerates — 0.6% | ||||||||
3M Co. | 18,176 | 2,835,274 | ||||||
Insurance — 0.6% | ||||||||
Aon plc, Class A | 9,839 | 1,894,991 | ||||||
Erie Indemnity Co., Class A | 2,711 | 520,241 | ||||||
Kinsale Capital Group, Inc. | 2,565 | 398,114 | ||||||
2,813,346 | ||||||||
Interactive Media and Services — 8.4% | ||||||||
Alphabet, Inc., Class A(1) | 13,313 | 18,878,499 | ||||||
Facebook, Inc., Class A(1) | 80,667 | 18,317,056 | ||||||
37,195,555 | ||||||||
Internet and Direct Marketing Retail — 7.9% | ||||||||
Amazon.com, Inc.(1) | 11,847 | 32,683,740 | ||||||
eBay, Inc. | 46,315 | 2,429,222 | ||||||
35,112,962 | ||||||||
IT Services — 6.2% | ||||||||
Accenture plc, Class A | 15,111 | 3,244,634 | ||||||
International Business Machines Corp. | 8,697 | 1,050,337 | ||||||
Jack Henry & Associates, Inc. | 12,397 | 2,281,420 | ||||||
Mastercard, Inc., Class A | 26,679 | 7,888,980 | ||||||
PayPal Holdings, Inc.(1) | 24,857 | 4,330,835 | ||||||
Square, Inc., Class A(1) | 19,690 | 2,066,268 | ||||||
VeriSign, Inc.(1) | 15,813 | 3,270,603 | ||||||
Visa, Inc., Class A | 18,129 | 3,501,979 | ||||||
27,635,056 | ||||||||
Leisure Products — 0.2% | ||||||||
Polaris, Inc. | 7,587 | 702,177 | ||||||
Life Sciences Tools and Services — 0.1% | ||||||||
Illumina, Inc.(1) | 677 | 250,727 | ||||||
Machinery — 0.8% | ||||||||
Graco, Inc. | 29,350 | 1,408,506 | ||||||
Lincoln Electric Holdings, Inc. | 24,120 | 2,031,869 | ||||||
3,440,375 | ||||||||
Media — 0.5% | ||||||||
Cable One, Inc. | 486 | 862,577 | ||||||
Sirius XM Holdings, Inc. | 205,969 | 1,209,038 | ||||||
2,071,615 | ||||||||
Multiline Retail — 0.1% | ||||||||
Dollar General Corp. | 1,668 | 317,771 | ||||||
Pharmaceuticals — 2.9% | ||||||||
Bristol-Myers Squibb Co. | 44,808 | 2,634,710 | ||||||
Eli Lilly & Co. | 9,648 | 1,584,009 | ||||||
Merck & Co., Inc. | 93,391 | 7,221,926 | ||||||
Zoetis, Inc. | 10,698 | 1,466,054 | ||||||
12,906,699 | ||||||||
Road and Rail — 1.5% | ||||||||
J.B. Hunt Transport Services, Inc. | 9,245 | 1,112,543 | ||||||
Landstar System, Inc. | 32,328 | 3,630,758 | ||||||
Union Pacific Corp. | 12,281 | 2,076,349 | ||||||
6,819,650 |
12
Shares | Value | |||||||
Semiconductors and Semiconductor Equipment — 5.6% | ||||||||
Advanced Micro Devices, Inc.(1) | 32,047 | $ | 1,685,993 | |||||
Applied Materials, Inc. | 48,198 | 2,913,569 | ||||||
Broadcom, Inc. | 21,770 | 6,870,830 | ||||||
Lattice Semiconductor Corp.(1) | 9,876 | 280,380 | ||||||
Monolithic Power Systems, Inc. | 6,724 | 1,593,588 | ||||||
NVIDIA Corp. | 8,208 | 3,118,301 | ||||||
QUALCOMM, Inc. | 31,199 | 2,845,661 | ||||||
Texas Instruments, Inc. | 41,034 | 5,210,087 | ||||||
Universal Display Corp. | 3,312 | 495,541 | ||||||
25,013,950 | ||||||||
Software — 18.7% | ||||||||
Adobe, Inc.(1) | 3,500 | 1,523,585 | ||||||
ANSYS, Inc.(1) | 445 | 129,820 | ||||||
Atlassian Corp. plc, Class A(1) | 9,657 | 1,740,867 | ||||||
Autodesk, Inc.(1) | 19,921 | 4,764,904 | ||||||
Blackline, Inc.(1) | 6,536 | 541,900 | ||||||
Box, Inc., Class A(1) | 36,765 | 763,241 | ||||||
Cadence Design Systems, Inc.(1) | 39,783 | 3,817,577 | ||||||
DocuSign, Inc.(1) | 7,521 | 1,295,191 | ||||||
Dropbox, Inc., Class A(1) | 79,890 | 1,739,205 | ||||||
Fair Isaac Corp.(1) | 4,044 | 1,690,554 | ||||||
Fortinet, Inc.(1) | 29,136 | 3,999,499 | ||||||
Intuit, Inc. | 18,065 | 5,350,672 | ||||||
Microsoft Corp. | 199,618 | 40,624,259 | ||||||
Oracle Corp. (New York) | 24,259 | 1,340,795 | ||||||
Palo Alto Networks, Inc.(1) | 12,992 | 2,983,873 | ||||||
Pegasystems, Inc. | 1,939 | 196,169 | ||||||
Proofpoint, Inc.(1) | 28,037 | 3,115,471 | ||||||
ServiceNow, Inc.(1) | 3,026 | 1,225,712 | ||||||
Synopsys, Inc.(1) | 23,473 | 4,577,235 | ||||||
Workday, Inc., Class A(1) | 6,967 | 1,305,337 | ||||||
82,725,866 | ||||||||
Specialty Retail — 2.4% | ||||||||
Advance Auto Parts, Inc. | 9,094 | 1,295,440 | ||||||
Best Buy Co., Inc. | 11,982 | 1,045,669 | ||||||
Floor & Decor Holdings, Inc., Class A(1) | 4,723 | 272,281 | ||||||
Home Depot, Inc. (The) | 15,303 | 3,833,555 | ||||||
Lowe's Cos., Inc. | 9,590 | 1,295,801 | ||||||
O'Reilly Automotive, Inc.(1) | 4,442 | 1,873,058 | ||||||
Ross Stores, Inc. | 12,189 | 1,038,990 | ||||||
10,654,794 | ||||||||
Technology Hardware, Storage and Peripherals — 9.0% | ||||||||
Apple, Inc. | 102,522 | 37,400,026 | ||||||
Pure Storage, Inc., Class A(1) | 128,309 | 2,223,595 | ||||||
39,623,621 | ||||||||
Textiles, Apparel and Luxury Goods — 1.8% | ||||||||
Deckers Outdoor Corp.(1) | 7,130 | 1,400,261 | ||||||
lululemon athletica, Inc.(1) | 1,379 | 430,262 | ||||||
NIKE, Inc., Class B | 62,007 | 6,079,786 | ||||||
7,910,309 |
13
Shares | Value | |||||||
Trading Companies and Distributors — 0.1% | ||||||||
SiteOne Landscape Supply, Inc.(1) | 6,033 | $ | 687,581 | |||||
TOTAL COMMON STOCKS
(Cost $262,543,165) | 420,890,982 | |||||||
TEMPORARY CASH INVESTMENTS — 4.7% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $9,137,214), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $8,961,728) | 8,961,723 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $11,904,467), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $11,671,016) | 11,671,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 29,013 | 29,013 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $20,661,736) | 20,661,736 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9%
(Cost $283,204,901) | 441,552,718 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 624,523 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 442,177,241 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
NASDAQ 100 E-Mini | 18 | September 2020 | $ | 360 | $ | 3,653,010 | $ | 61,785 | ||||||||||||||||||||||||
S&P 500 E-Mini | 62 | September 2020 | $ | 3,100 | 9,579,620 | (25,418) | ||||||||||||||||||||||||||
$ | 13,232,630 | $ | 36,367 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
JUNE 30, 2020 | |||||
Assets | |||||
Investment securities, at value (cost of $283,204,901) | $ | 441,552,718 | |||
Deposits with broker for futures contracts | 1,014,000 | ||||
Receivable for capital shares sold | 173,405 | ||||
Receivable for variation margin on futures contracts | 194,210 | ||||
Dividends and interest receivable | 136,508 | ||||
443,070,841 | |||||
Liabilities | |||||
Payable for capital shares redeemed | 530,453 | ||||
Accrued management fees | 334,264 | ||||
Distribution and service fees payable | 28,883 | ||||
893,600 | |||||
Net Assets | $ | 442,177,241 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 227,469,023 | |||
Distributable earnings | 214,708,218 | ||||
$ | 442,177,241 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $238,407,815 | 9,774,431 | $24.39 | ||||||||
I Class, $0.01 Par Value | $136,351,419 | 5,556,801 | $24.54 | ||||||||
Y Class, $0.01 Par Value | $231,659 | 9,431 | $24.56 | ||||||||
A Class, $0.01 Par Value | $34,139,001 | 1,419,477 | $24.05* | ||||||||
C Class, $0.01 Par Value | $22,346,463 | 1,016,381 | $21.99 | ||||||||
R Class, $0.01 Par Value | $9,548,129 | 407,676 | $23.42 | ||||||||
R5 Class, $0.01 Par Value | $1,152,755 | 46,951 | $24.55 |
*Maximum offering price $25.52 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends | $ | 4,160,244 | |||
Interest | 108,524 | ||||
4,268,768 | |||||
Expenses: | |||||
Management fees | 4,379,853 | ||||
Distribution and service fees: | |||||
A Class | 77,703 | ||||
C Class | 226,556 | ||||
R Class | 46,626 | ||||
Directors' fees and expenses | 35,841 | ||||
Other expenses | 2,729 | ||||
4,769,308 | |||||
Fees waived(1) | (42,127) | ||||
4,727,181 | |||||
Net investment income (loss) | (458,413) | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 99,990,010 | ||||
Futures contract transactions | (458,884) | ||||
99,531,126 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (12,954,123) | ||||
Futures contracts | 36,367 | ||||
(12,917,756) | |||||
Net realized and unrealized gain (loss) | 86,613,370 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 86,154,957 |
(1)Amount consists of $21,225, $15,066, $34, $2,827, $2,050, $846 and $79 for Investor Class, I Class, Y Class, A Class, C Class, R Class and R5 Class, respectively.
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | (458,413) | $ | 1,351,051 | ||||||||||
Net realized gain (loss) | 99,531,126 | 45,932,096 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (12,917,756) | (14,402,286) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 86,154,957 | 32,880,861 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (19,742,797) | (45,161,834) | ||||||||||||
I Class | (14,515,555) | (29,157,974) | ||||||||||||
Y Class | (29,840) | (64,786) | ||||||||||||
A Class | (2,597,617) | (4,846,907) | ||||||||||||
C Class | (2,101,210) | (5,520,779) | ||||||||||||
R Class | (775,728) | (1,329,846) | ||||||||||||
R5 Class | (64,578) | (174,914) | ||||||||||||
Decrease in net assets from distributions | (39,827,325) | (86,257,040) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (138,096,911) | (96,661,652) | ||||||||||||
Net increase (decrease) in net assets | (91,769,279) | (150,037,831) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 533,946,520 | 683,984,351 | ||||||||||||
End of period | $ | 442,177,241 | $ | 533,946,520 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Disciplined Growth Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, I Class, Y Class, A Class, C Class, R Class and R5 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
18
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid semiannually. Distributions from net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
19
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds. Effective August 1, 2019, the investment advisor agreed to waive 0.01% of the fund's management fee. The investment advisor expects this waiver to continue until July 31, 2021 and cannot terminate it prior to such date without the approval of the Board of Directors.
The Investment Category Fee range, the Complex Fee range and the effective annual management fee before and after waiver for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||||||||
Before Waiver | After Waiver | ||||||||||||||||
Investor Class | 0.6880% to 0.8700% | 0.2500% to 0.3100% | 1.01% | 1.00% | |||||||||||||
I Class | 0.0500% to 0.1100% | 0.81% | 0.80% | ||||||||||||||
Y Class | 0.0000% to 0.0600% | 0.76% | 0.75% | ||||||||||||||
A Class | 0.2500% to 0.3100% | 1.01% | 1.00% | ||||||||||||||
C Class | 0.2500% to 0.3100% | 1.01% | 1.00% | ||||||||||||||
R Class | 0.2500% to 0.3100% | 1.01% | 1.00% | ||||||||||||||
R5 Class | 0.0500% to 0.1100% | 0.81% | 0.80% |
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended June 30, 2020 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $29,107,332 and $26,197,056, respectively. The effect of interfund transactions on the Statement of Operations was $4,418,761 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $646,205,288 and $843,646,404, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 170,000,000 | 170,000,000 | ||||||||||||||||||
Sold | 1,261,048 | $ | 27,858,757 | 1,724,795 | $ | 38,178,631 | ||||||||||||||
Issued in reinvestment of distributions | 889,315 | 19,280,340 | 2,313,663 | 44,454,539 | ||||||||||||||||
Redeemed | (3,908,883) | (85,287,974) | (7,593,146) | (167,211,561) | ||||||||||||||||
(1,758,520) | (38,148,877) | (3,554,688) | (84,578,391) | |||||||||||||||||
I Class/Shares Authorized | 100,000,000 | 100,000,000 | ||||||||||||||||||
Sold | 947,512 | 20,998,104 | 3,351,906 | 73,682,578 | ||||||||||||||||
Issued in reinvestment of distributions | 664,465 | 14,478,684 | 1,504,817 | 29,065,330 | ||||||||||||||||
Redeemed | (5,846,700) | (126,745,336) | (4,650,312) | (102,481,992) | ||||||||||||||||
(4,234,723) | (91,268,548) | 206,411 | 265,916 | |||||||||||||||||
Y Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 547 | 12,143 | 23,311 | 576,397 | ||||||||||||||||
Issued in reinvestment of distributions | 1,368 | 29,840 | 3,350 | 64,786 | ||||||||||||||||
Redeemed | (18,978) | (429,123) | (421) | (9,234) | ||||||||||||||||
(17,063) | (387,140) | 26,240 | 631,949 | |||||||||||||||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 238,636 | 5,163,120 | 230,717 | 4,997,549 | ||||||||||||||||
Issued in reinvestment of distributions | 111,662 | 2,390,694 | 228,295 | 4,338,081 | ||||||||||||||||
Redeemed | (400,827) | (8,643,889) | (573,977) | (12,456,674) | ||||||||||||||||
(50,529) | (1,090,075) | (114,965) | (3,121,044) | |||||||||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 53,988 | 1,039,561 | 48,617 | 973,637 | ||||||||||||||||
Issued in reinvestment of distributions | 102,058 | 2,005,435 | 300,837 | 5,318,801 | ||||||||||||||||
Redeemed | (445,546) | (8,913,381) | (828,976) | (16,048,707) | ||||||||||||||||
(289,500) | (5,868,385) | (479,522) | (9,756,269) | |||||||||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 82,972 | 1,773,737 | 106,184 | 2,301,204 | ||||||||||||||||
Issued in reinvestment of distributions | 37,170 | 775,728 | 71,536 | 1,329,846 | ||||||||||||||||
Redeemed | (184,733) | (3,945,878) | (158,256) | (3,624,503) | ||||||||||||||||
(64,591) | (1,396,413) | 19,464 | 6,547 | |||||||||||||||||
R5 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 20,945 | 454,916 | 30,933 | 631,619 | ||||||||||||||||
Issued in reinvestment of distributions | 2,962 | 64,578 | 9,057 | 174,914 | ||||||||||||||||
Redeemed | (20,777) | (456,967) | (43,479) | (916,893) | ||||||||||||||||
3,130 | 62,527 | (3,489) | (110,360) | |||||||||||||||||
Net increase (decrease) | (6,411,796) | $ | (138,096,911) | (3,900,549) | $ | (96,661,652) |
21
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 420,890,982 | — | — | |||||||
Temporary Cash Investments | 29,013 | $ | 20,632,723 | — | |||||||
$ | 420,919,995 | $ | 20,632,723 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 61,785 | — | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 25,418 | — | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts 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's average notional exposure to equity price risk derivative instruments held during the period was $1,987 futures contracts purchased.
The value of equity price risk derivative instruments as of June 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $194,210 in receivable for variation margin on futures contracts*. For the year ended June 30, 2020, the effect of equity price risk derivative instruments on the Statement of Operations was $(458,884) in net realized gain (loss) on futures contract transactions and $36,367 in change in net unrealized appreciation (depreciation) on futures contracts.
*Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
22
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
9. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 4,359,897 | $ | 18,056,173 | ||||
Long-term capital gains | $ | 35,467,428 | $ | 68,200,867 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
The reclassifications, which are primarily due to tax equalization, were made to capital $12,128,326 and distributable earnings $(12,128,326).
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 285,914,028 | |||
Gross tax appreciation of investments | $ | 159,613,716 | |||
Gross tax depreciation of investments | (3,975,026) | ||||
Net tax appreciation (depreciation) of investments | $ | 155,638,690 | |||
Undistributed ordinary income | $ | 3,687,984 | |||
Accumulated long-term gains | $ | 55,381,544 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
23
Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $21.76 | (0.02) | 4.59 | 4.57 | — | (1.94) | (1.94) | $24.39 | 22.13% | 1.01% | 1.02% | (0.10)% | (0.11)% | 142% | $238,408 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $24.05 | 0.05 | 1.08 | 1.13 | (0.04) | (3.38) | (3.42) | $21.76 | 6.61% | 1.02% | 1.02% | 0.24% | 0.24% | 105% | $250,920 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $22.10 | 0.05 | 3.97 | 4.02 | (0.03) | (2.04) | (2.07) | $24.05 | 18.80% | 1.02% | 1.02% | 0.21% | 0.21% | 97% | $362,865 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $18.36 | 0.11 | 3.74 | 3.85 | (0.11) | — | (0.11) | $22.10 | 20.88% | 1.02% | 1.02% | 0.51% | 0.51% | 124% | $434,242 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $19.15 | 0.12 | (0.53) | (0.41) | (0.12) | (0.26) | (0.38) | $18.36 | (2.08)% | 1.03% | 1.03% | 0.64% | 0.64% | 113% | $370,901 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $21.84 | 0.02 | 4.62 | 4.64 | — | (1.94) | (1.94) | $24.54 | 22.38% | 0.81% | 0.82% | 0.10% | 0.09% | 142% | $136,351 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $24.13 | 0.10 | 1.08 | 1.18 | (0.09) | (3.38) | (3.47) | $21.84 | 6.82% | 0.82% | 0.82% | 0.44% | 0.44% | 105% | $213,805 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $22.16 | 0.10 | 3.99 | 4.09 | (0.08) | (2.04) | (2.12) | $24.13 | 19.01% | 0.82% | 0.82% | 0.41% | 0.41% | 97% | $231,261 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $18.41 | 0.15 | 3.75 | 3.90 | (0.15) | — | (0.15) | $22.16 | 21.18% | 0.82% | 0.82% | 0.71% | 0.71% | 124% | $238,480 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $19.20 | 0.16 | (0.53) | (0.37) | (0.16) | (0.26) | (0.42) | $18.41 | (1.95)% | 0.83% | 0.83% | 0.84% | 0.84% | 113% | $318,576 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Y Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $21.85 | 0.04 | 4.61 | 4.65 | — | (1.94) | (1.94) | $24.56 | 22.42% | 0.76% | 0.77% | 0.15% | 0.14% | 142% | $232 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $24.14 | 0.12 | 1.07 | 1.19 | (0.10) | (3.38) | (3.48) | $21.85 | 6.87% | 0.77% | 0.77% | 0.49% | 0.49% | 105% | $579 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $22.17 | 0.11 | 3.99 | 4.10 | (0.09) | (2.04) | (2.13) | $24.14 | 19.06% | 0.77% | 0.77% | 0.46% | 0.46% | 97% | $6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017(3) | $21.62 | 0.04 | 0.63 | 0.67 | (0.12) | — | (0.12) | $22.17 | 3.07% | 0.77%(4) | 0.77%(4) | 0.74%(4) | 0.74%(4) | 124%(5) | $5 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $21.53 | (0.08) | 4.54 | 4.46 | — | (1.94) | (1.94) | $24.05 | 21.84% | 1.26% | 1.27% | (0.35)% | (0.36)% | 142% | $34,139 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $23.87 | —(6) | 1.06 | 1.06 | (0.02) | (3.38) | (3.40) | $21.53 | 6.32% | 1.27% | 1.27% | (0.01)% | (0.01)% | 105% | $31,650 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $21.97 | (0.01) | 3.95 | 3.94 | — | (2.04) | (2.04) | $23.87 | 18.48% | 1.27% | 1.27% | (0.04)% | (0.04)% | 97% | $37,832 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $18.28 | 0.05 | 3.72 | 3.77 | (0.08) | — | (0.08) | $21.97 | 20.61% | 1.27% | 1.27% | 0.26% | 0.26% | 124% | $58,469 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $19.09 | 0.07 | (0.52) | (0.45) | (0.10) | (0.26) | (0.36) | $18.28 | (2.35)% | 1.28% | 1.28% | 0.39% | 0.39% | 113% | $133,042 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $19.98 | (0.22) | 4.17 | 3.95 | — | (1.94) | (1.94) | $21.99 | 20.94% | 2.01% | 2.02% | (1.10)% | (1.11)% | 142% | $22,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $22.55 | (0.16) | 0.97 | 0.81 | — | (3.38) | (3.38) | $19.98 | 5.57% | 2.02% | 2.02% | (0.76)% | (0.76)% | 105% | $26,088 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $21.00 | (0.17) | 3.76 | 3.59 | — | (2.04) | (2.04) | $22.55 | 17.57% | 2.02% | 2.02% | (0.79)% | (0.79)% | 97% | $40,253 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $17.54 | (0.09) | 3.55 | 3.46 | — | — | — | $21.00 | 19.73% | 2.02% | 2.02% | (0.49)% | (0.49)% | 124% | $44,456 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $18.41 | (0.06) | (0.51) | (0.57) | (0.04) | (0.26) | (0.30) | $17.54 | (3.11)% | 2.03% | 2.03% | (0.36)% | (0.36)% | 113% | $45,050 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $21.06 | (0.13) | 4.43 | 4.30 | — | (1.94) | (1.94) | $23.42 | 21.56% | 1.51% | 1.52% | (0.60)% | (0.61)% | 142% | $9,548 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $23.47 | (0.06) | 1.03 | 0.97 | — | (3.38) | (3.38) | $21.06 | 6.03% | 1.52% | 1.52% | (0.26)% | (0.26)% | 105% | $9,948 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $21.68 | (0.06) | 3.89 | 3.83 | — | (2.04) | (2.04) | $23.47 | 18.20% | 1.52% | 1.52% | (0.29)% | (0.29)% | 97% | $10,626 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $18.06 | —(6) | 3.67 | 3.67 | (0.05) | — | (0.05) | $21.68 | 20.33% | 1.52% | 1.52% | 0.01% | 0.01% | 124% | $11,184 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $18.89 | 0.03 | (0.52) | (0.49) | (0.08) | (0.26) | (0.34) | $18.06 | (2.60)% | 1.53% | 1.53% | 0.14% | 0.14% | 113% | $12,778 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R5 Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $21.85 | 0.02 | 4.62 | 4.64 | — | (1.94) | (1.94) | $24.55 | 22.37% | 0.81% | 0.82% | 0.10% | 0.09% | 142% | $1,153 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $24.14 | 0.10 | 1.08 | 1.18 | (0.09) | (3.38) | (3.47) | $21.85 | 6.82% | 0.82% | 0.82% | 0.44% | 0.44% | 105% | $957 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $22.17 | 0.10 | 3.99 | 4.09 | (0.08) | (2.04) | (2.12) | $24.14 | 19.00% | 0.82% | 0.82% | 0.41% | 0.41% | 97% | $1,142 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017(3) | $21.62 | 0.03 | 0.63 | 0.66 | (0.11) | — | (0.11) | $22.17 | 3.06% | 0.82%(4) | 0.82%(4) | 0.69%(4) | 0.69%(4) | 124%(5) | $5 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)April 10, 2017 (commencement of sale) through June 30, 2017.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended June 30, 2017.
(6)Per-share amount was less than $0.005.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Disciplined Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Disciplined Growth Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
27
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
30
Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
31
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board discussed the Fund’s performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor.
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The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
33
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was at the median of the total expense ratios of the Fund’s peer group.The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.01% (e.g., the Investor Class unified fee will be reduced from 1.01% to 1.00%) for at least one year, beginning August 1, 2020.The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
34
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
35
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
36
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $3,829,422, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as qualified for the corporate dividends received deduction.
The fund hereby designates $46,701,545, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended June 30, 2020.
The fund hereby designates $5,254,106 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended June 30, 2020.
The fund utilized earnings and profits of $12,128,326 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
37
Notes |
38
Notes |
39
Notes |
40
Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92989 2008 |
Annual Report | |||||
June 30, 2020 | |||||
Equity Growth Fund | |||||
Investor Class (BEQGX) | |||||
I Class (AMEIX) | |||||
A Class (BEQAX) | |||||
C Class (AEYCX) | |||||
R Class (AEYRX) | |||||
R5 Class (AEYGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||||||||||||||||||||
Investor Class | BEQGX | 5.86% | 8.51% | 12.88% | — | 5/9/91 | |||||||||||||||||||||||||||||||||||
S&P 500 Index | — | 7.51% | 10.72% | 13.98% | — | — | |||||||||||||||||||||||||||||||||||
I Class | AMEIX | 6.10% | 8.73% | 13.10% | — | 1/2/98 | |||||||||||||||||||||||||||||||||||
A Class | BEQAX | 10/9/97 | |||||||||||||||||||||||||||||||||||||||
No sales charge | 5.57% | 8.24% | 12.59% | — | |||||||||||||||||||||||||||||||||||||
With sales charge | -0.49% | 6.97% | 11.93% | — | |||||||||||||||||||||||||||||||||||||
C Class | AEYCX | 4.80% | 7.44% | 11.76% | — | 7/18/01 | |||||||||||||||||||||||||||||||||||
R Class | AEYRX | 5.31% | 7.97% | 12.31% | — | 7/29/05 | |||||||||||||||||||||||||||||||||||
R5 Class | AEYGX | 6.06% | — | — | 9.86% | 4/10/17 |
Average annual returns since inception are presented when ten years of performance history is not available.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $33,612 | ||||||||
S&P 500 Index — $37,031 | ||||||||
Total Annual Fund Operating Expenses | |||||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | R5 Class | ||||||||||||||||||
0.67% | 0.47% | 0.92% | 1.67% | 1.17% | 0.47% |
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. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Claudia Musat and Steven Rossi
Effective August 2020, portfolio manager Claudia Musat will leave the fund’s portfolio management team, and Guan Wang will join the fund as a portfolio manager.
Performance Summary
Equity Growth returned 5.86%* for the fiscal year ended June 30, 2020, compared with the 7.51% return of its benchmark, the S&P 500 Index.
Equity Growth advanced during the fiscal year, but underperformed its benchmark, the S&P 500 Index. Security selection in the information technology, consumer discretionary and materials sectors detracted the most from fund performance compared with the benchmark, while positioning in energy and communication services were most additive.
Stock Choices Across Several Sectors Detracted From Relative Returns
Stock choices in the information technology sector weighed most heavily on the fund’s 12-month results. Selections in the semiconductors and semiconductor equipment industry were the main headwind. An underweight to chipmaker NVIDIA was among the leading individual detractors from relative performance. Demand for NVIDIA’s gaming chips was high throughout the period but spiked starting in March, when widespread pandemic lockdown measures caused game manufacturers to purchase large amounts of the chips out of fear that production would stop. Positioning within the communications equipment industry also detracted, as did stock selection in IT services, where an underweight to PayPal Holdings was another leading individual detractor. We have since exited our position in PayPal Holdings.
Within the consumer discretionary sector, security selections in the textiles, apparel and luxury goods industry weighed most heavily on relative results. Within the specialty retail industry, an underweight compared with the benchmark in The Home Depot was among the leading individual detractors for the year. The price increased early in the period but fell during the March 2020 volatility. However, the stock rose heartily during the second quarter of 2020 as people under lockdown turned to home improvement projects to pass the time, stoking demand for the store’s products. Within the internet and direct marketing retail industry, a position in Amazon was also among the top detractors from overall performance.
Stock selections within the metals and mining industry provided the largest headwind for the materials sector. Security picks within the chemicals industry also weighed on results, as did a position in Domtar within the paper and forest products industry. We have since sold the stock. Many areas of the materials sector performed poorly during the 12 months as the economy entered recession and sapped demand for basic materials.
Energy and Communication Services were Additive
Positioning within the energy sector was the largest tailwind to relative returns during the period reflecting reduced exposure to several areas of the sector. Amid the spring lockdown, energy demand fell sharply, which weighed on the price of oil. In addition, a price war between Saudi Arabia and Russia further exacerbated the drop. Many energy companies, such as drillers and refiners, were hurt by the price decrease. Within the oil, gas and consumable fuels industry, underweight exposure to Exxon Mobil boosted returns and was among the leading contributors to relative performance.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Reduced exposure to other companies such as Phillips 66, Occidental Petroleum and ConocoPhillips also helped performance compared with the benchmark. As of the end of the period, we have exited our positions in Phillips 66, Occidental Petroleum and ConocoPhillips. Limited exposure to several companies within the energy equipment and services industry also bolstered results.
Stock selection within the communication services sector was also helpful, particularly within the entertainment industry. Video game companies did well during the period, with demand for their products surging during the lockdown. An overweight to Activision Blizzard was among the leading individual contributors for the period. A position in Electronic Arts was also beneficial. Both companies boasted strong revenues and earnings beats during the period, especially in the first quarter of 2020. An underweight to The Walt Disney Co. also drove relative returns, as the company’s revenues were hurt by park closures due to the pandemic. We have since exited the stock. Positioning within the interactive media and services industry also provided a tailwind.
A Look Ahead
Our disciplined, objective and systematic investment strategy is designed to take advantage of opportunities at the individual company level. We believe this approach is an effective way to capitalize on market inefficiencies that lead to the mispricing of individual stocks. Our strategy is designed to provide investors with well-diversified and risk-managed exposure to broad U.S. equities. As such, we do not see significant deviations in sector weightings versus the S&P 500 Index. Nevertheless, we can point to select sectors and industries where we are finding more or less investment opportunity.
At period-end, health care was the largest sector overweight. Our model detects opportunities within the biotechnology, health care technology and life sciences tools and services industries. The information technology sector was the largest absolute weighting and second-largest relative overweight. Software and communications equipment represent some of the most attractive industry groups we see. Conversely, our real estate sector underweight position reflects a lack of opportunity within REITs across most factors in the stock selection model. A relative lack of exposure to financials reflects the fact that we see a number of stocks in the capital markets, diversified financial services and banks industries that do not score well across our models in the current environment.
6
Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Apple, Inc. | 5.0% | |||||||
Microsoft Corp. | 4.5% | |||||||
Amazon.com, Inc. | 3.7% | |||||||
Facebook, Inc., Class A | 2.9% | |||||||
Alphabet, Inc., Class A | 2.8% | |||||||
Adobe, Inc. | 2.0% | |||||||
Merck & Co., Inc. | 1.5% | |||||||
Bristol-Myers Squibb Co. | 1.4% | |||||||
Broadcom, Inc. | 1.4% | |||||||
Verizon Communications, Inc. | 1.2% | |||||||
Top Five Industries | % of net assets | |||||||
Software | 12.4% | |||||||
Technology Hardware, Storage and Peripherals | 5.9% | |||||||
Interactive Media and Services | 5.7% | |||||||
Pharmaceuticals | 5.3% | |||||||
Semiconductors and Semiconductor Equipment | 4.7% | |||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 97.0% | |||||||
Temporary Cash Investments | 2.8% | |||||||
Other Assets and Liabilities | 0.2% |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $975.50 | $3.29 | 0.67% | ||||||||||
I Class | $1,000 | $976.70 | $2.31 | 0.47% | ||||||||||
A Class | $1,000 | $974.40 | $4.52 | 0.92% | ||||||||||
C Class | $1,000 | $971.10 | $8.18 | 1.67% | ||||||||||
R Class | $1,000 | $973.30 | $5.74 | 1.17% | ||||||||||
R5 Class | $1,000 | $976.40 | $2.31 | 0.47% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,021.53 | $3.37 | 0.67% | ||||||||||
I Class | $1,000 | $1,022.53 | $2.36 | 0.47% | ||||||||||
A Class | $1,000 | $1,020.29 | $4.62 | 0.92% | ||||||||||
C Class | $1,000 | $1,016.56 | $8.37 | 1.67% | ||||||||||
R Class | $1,000 | $1,019.05 | $5.87 | 1.17% | ||||||||||
R5 Class | $1,000 | $1,022.53 | $2.36 | 0.47% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 97.0% | ||||||||
Aerospace and Defense — 0.8% | ||||||||
Huntington Ingalls Industries, Inc. | 23,104 | $ | 4,031,417 | |||||
Lockheed Martin Corp. | 42,468 | 15,497,423 | ||||||
19,528,840 | ||||||||
Banks — 2.4% | ||||||||
Bank of America Corp. | 561,206 | 13,328,642 | ||||||
Citigroup, Inc. | 61,757 | 3,155,783 | ||||||
East West Bancorp, Inc. | 72,722 | 2,635,445 | ||||||
JPMorgan Chase & Co. | 232,450 | 21,864,247 | ||||||
Regions Financial Corp. | 206,385 | 2,295,001 | ||||||
Truist Financial Corp. | 101,702 | 3,818,910 | ||||||
Wells Fargo & Co. | 117,991 | 3,020,570 | ||||||
Zions Bancorp N.A. | 147,796 | 5,025,064 | ||||||
55,143,662 | ||||||||
Beverages — 1.1% | ||||||||
Coca-Cola Co. (The) | 101,896 | 4,552,713 | ||||||
Molson Coors Beverage Co., Class B | 256,483 | 8,812,756 | ||||||
Monster Beverage Corp.(1) | 158,655 | 10,997,965 | ||||||
24,363,434 | ||||||||
Biotechnology — 2.7% | ||||||||
AbbVie, Inc. | 129,249 | 12,689,667 | ||||||
Amgen, Inc. | 23,432 | 5,526,672 | ||||||
Biogen, Inc.(1) | 53,444 | 14,298,942 | ||||||
Exelixis, Inc.(1) | 94,457 | 2,242,409 | ||||||
Incyte Corp.(1) | 61,964 | 6,442,397 | ||||||
Neurocrine Biosciences, Inc.(1) | 18,708 | 2,282,376 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 22,114 | 13,791,396 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 15,885 | 4,611,574 | ||||||
61,885,433 | ||||||||
Building Products — 1.4% | ||||||||
Fortune Brands Home & Security, Inc. | 152,181 | 9,728,931 | ||||||
Masco Corp. | 464,974 | 23,346,345 | ||||||
33,075,276 | ||||||||
Capital Markets — 2.3% | ||||||||
Ameriprise Financial, Inc. | 43,374 | 6,507,835 | ||||||
Eaton Vance Corp. | 44,738 | 1,726,887 | ||||||
FactSet Research Systems, Inc. | 37,342 | 12,265,727 | ||||||
LPL Financial Holdings, Inc. | 67,573 | 5,297,723 | ||||||
Moody's Corp. | 45,646 | 12,540,326 | ||||||
Morgan Stanley | 79,133 | 3,822,124 | ||||||
SEI Investments Co. | 135,381 | 7,443,247 | ||||||
State Street Corp. | 38,291 | 2,433,393 | ||||||
52,037,262 | ||||||||
Chemicals — 0.6% | ||||||||
Eastman Chemical Co. | 82,105 | 5,717,792 |
10
Shares | Value | |||||||
LyondellBasell Industries NV, Class A | 121,086 | $ | 7,957,772 | |||||
13,675,564 | ||||||||
Communications Equipment — 0.9% | ||||||||
Cisco Systems, Inc. | 176,792 | 8,245,579 | ||||||
Motorola Solutions, Inc. | 85,614 | 11,997,090 | ||||||
20,242,669 | ||||||||
Consumer Finance — 0.1% | ||||||||
Capital One Financial Corp. | 50,233 | 3,144,083 | ||||||
Containers and Packaging — 1.0% | ||||||||
International Paper Co. | 231,657 | 8,156,643 | ||||||
Packaging Corp. of America | 102,253 | 10,204,850 | ||||||
WestRock Co. | 156,005 | 4,408,701 | ||||||
22,770,194 | ||||||||
Distributors — 0.2% | ||||||||
LKQ Corp.(1) | 179,034 | 4,690,691 | ||||||
Diversified Financial Services — 1.1% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 139,465 | 24,895,897 | ||||||
Diversified Telecommunication Services — 2.6% | ||||||||
AT&T, Inc. | 630,550 | 19,061,526 | ||||||
CenturyLink, Inc. | 1,226,353 | 12,300,321 | ||||||
Verizon Communications, Inc. | 497,926 | 27,450,660 | ||||||
58,812,507 | ||||||||
Electric Utilities — 2.0% | ||||||||
Duke Energy Corp. | 81,744 | 6,530,528 | ||||||
Evergy, Inc. | 183,445 | 10,876,454 | ||||||
Exelon Corp. | 122,100 | 4,431,009 | ||||||
NextEra Energy, Inc. | 6,841 | 1,643,003 | ||||||
NRG Energy, Inc. | 337,849 | 11,000,363 | ||||||
PPL Corp. | 377,989 | 9,767,236 | ||||||
Southern Co. (The) | 32,737 | 1,697,414 | ||||||
45,946,007 | ||||||||
Electrical Equipment — 1.3% | ||||||||
Emerson Electric Co. | 380,210 | 23,584,426 | ||||||
Hubbell, Inc. | 55,253 | 6,926,516 | ||||||
30,510,942 | ||||||||
Electronic Equipment, Instruments and Components — 0.5% | ||||||||
Trimble, Inc.(1) | 155,367 | 6,710,301 | ||||||
Zebra Technologies Corp., Class A(1) | 22,066 | 5,647,792 | ||||||
12,358,093 | ||||||||
Energy Equipment and Services — 0.2% | ||||||||
Schlumberger Ltd. | 191,886 | 3,528,784 | ||||||
Entertainment — 2.3% | ||||||||
Activision Blizzard, Inc. | 161,872 | 12,286,085 | ||||||
Electronic Arts, Inc.(1) | 176,989 | 23,371,398 | ||||||
Netflix, Inc.(1) | 9,507 | 4,326,065 | ||||||
Zynga, Inc., Class A(1) | 1,270,369 | 12,119,320 | ||||||
52,102,868 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 0.2% | ||||||||
WP Carey, Inc. | 67,910 | 4,594,111 | ||||||
Food and Staples Retailing — 0.4% | ||||||||
Walgreens Boots Alliance, Inc. | 104,692 | 4,437,894 |
11
Shares | Value | |||||||
Walmart, Inc. | 35,706 | $ | 4,276,865 | |||||
8,714,759 | ||||||||
Food Products — 2.9% | ||||||||
Campbell Soup Co. | 54,474 | 2,703,545 | ||||||
General Mills, Inc. | 270,095 | 16,651,357 | ||||||
Hershey Co. (The) | 180,188 | 23,355,969 | ||||||
Hormel Foods Corp. | 216,039 | 10,428,202 | ||||||
Kellogg Co. | 166,169 | 10,977,124 | ||||||
Kraft Heinz Co. (The) | 76,607 | 2,442,997 | ||||||
66,559,194 | ||||||||
Health Care Equipment and Supplies — 4.0% | ||||||||
Abbott Laboratories | 279,693 | 25,572,331 | ||||||
ABIOMED, Inc.(1) | 25,163 | 6,078,374 | ||||||
Align Technology, Inc.(1) | 36,767 | 10,090,335 | ||||||
Baxter International, Inc. | 247,800 | 21,335,580 | ||||||
Danaher Corp. | 29,548 | 5,224,973 | ||||||
DexCom, Inc.(1) | 5,874 | 2,381,320 | ||||||
Edwards Lifesciences Corp.(1) | 181,638 | 12,553,002 | ||||||
Medtronic plc | 70,291 | 6,445,685 | ||||||
Zimmer Biomet Holdings, Inc. | 27,861 | 3,325,489 | ||||||
93,007,089 | ||||||||
Health Care Providers and Services — 3.2% | ||||||||
Cardinal Health, Inc. | 44,438 | 2,319,219 | ||||||
CVS Health Corp. | 306,236 | 19,896,153 | ||||||
Henry Schein, Inc.(1) | 36,387 | 2,124,637 | ||||||
Humana, Inc. | 50,003 | 19,388,663 | ||||||
McKesson Corp. | 87,109 | 13,364,263 | ||||||
UnitedHealth Group, Inc. | 55,862 | 16,476,497 | ||||||
73,569,432 | ||||||||
Health Care Technology — 1.0% | ||||||||
Cerner Corp. | 323,943 | 22,206,293 | ||||||
Hotels, Restaurants and Leisure — 0.8% | ||||||||
Las Vegas Sands Corp. | 141,498 | 6,443,819 | ||||||
Starbucks Corp. | 165,302 | 12,164,574 | ||||||
18,608,393 | ||||||||
Household Durables — 0.6% | ||||||||
Mohawk Industries, Inc.(1) | 71,229 | 7,248,263 | ||||||
PulteGroup, Inc. | 177,674 | 6,046,246 | ||||||
13,294,509 | ||||||||
Household Products — 2.4% | ||||||||
Colgate-Palmolive Co. | 161,501 | 11,831,563 | ||||||
Kimberly-Clark Corp. | 118,643 | 16,770,188 | ||||||
Procter & Gamble Co. (The) | 218,921 | 26,176,384 | ||||||
54,778,135 | ||||||||
Industrial Conglomerates — 1.4% | ||||||||
3M Co. | 85,061 | 13,268,665 | ||||||
Carlisle Cos., Inc. | 117,463 | 14,056,797 | ||||||
Honeywell International, Inc. | 38,954 | 5,632,359 | ||||||
32,957,821 | ||||||||
Insurance — 1.8% | ||||||||
American Financial Group, Inc. | 66,474 | 4,218,440 |
12
Shares | Value | |||||||
Aon plc, Class A | 16,977 | $ | 3,269,770 | |||||
Brown & Brown, Inc. | 185,181 | 7,547,978 | ||||||
Hartford Financial Services Group, Inc. (The) | 117,585 | 4,532,902 | ||||||
Marsh & McLennan Cos., Inc. | 109,108 | 11,714,926 | ||||||
MetLife, Inc. | 245,278 | 8,957,552 | ||||||
Reinsurance Group of America, Inc. | 29,198 | 2,290,291 | ||||||
42,531,859 | ||||||||
Interactive Media and Services — 5.7% | ||||||||
Alphabet, Inc., Class A(1) | 46,158 | 65,454,352 | ||||||
Facebook, Inc., Class A(1) | 291,468 | 66,183,639 | ||||||
131,637,991 | ||||||||
Internet and Direct Marketing Retail — 4.6% | ||||||||
Amazon.com, Inc.(1) | 31,142 | 85,915,173 | ||||||
eBay, Inc. | 393,694 | 20,649,250 | ||||||
106,564,423 | ||||||||
IT Services — 3.6% | ||||||||
Accenture plc, Class A | 39,749 | 8,534,905 | ||||||
Akamai Technologies, Inc.(1) | 48,561 | 5,200,398 | ||||||
Amdocs Ltd. | 178,876 | 10,889,971 | ||||||
Cognizant Technology Solutions Corp., Class A | 81,065 | 4,606,113 | ||||||
International Business Machines Corp. | 185,429 | 22,394,261 | ||||||
Mastercard, Inc., Class A | 26,359 | 7,794,356 | ||||||
Visa, Inc., Class A | 68,719 | 13,274,449 | ||||||
Western Union Co. (The) | 498,079 | 10,768,468 | ||||||
83,462,921 | ||||||||
Life Sciences Tools and Services — 0.9% | ||||||||
Agilent Technologies, Inc. | 225,051 | 19,887,757 | ||||||
Machinery — 1.7% | ||||||||
Cummins, Inc. | 155,673 | 26,971,904 | ||||||
Snap-on, Inc. | 81,160 | 11,241,472 | ||||||
38,213,376 | ||||||||
Media — 0.8% | ||||||||
Discovery, Inc., Class C(1) | 827,039 | 15,928,771 | ||||||
Interpublic Group of Cos., Inc. (The) | 149,236 | 2,560,890 | ||||||
18,489,661 | ||||||||
Metals and Mining — 0.9% | ||||||||
Reliance Steel & Aluminum Co. | 157,717 | 14,972,075 | ||||||
Steel Dynamics, Inc. | 236,052 | 6,158,596 | ||||||
21,130,671 | ||||||||
Multi-Utilities — 0.6% | ||||||||
Dominion Energy, Inc. | 133,961 | 10,874,954 | ||||||
MDU Resources Group, Inc. | 119,231 | 2,644,544 | ||||||
13,519,498 | ||||||||
Multiline Retail — 0.7% | ||||||||
Target Corp. | 141,829 | 17,009,552 | ||||||
Oil, Gas and Consumable Fuels — 1.9% | ||||||||
Cabot Oil & Gas Corp. | 117,652 | 2,021,261 | ||||||
Chevron Corp. | 287,665 | 25,668,348 | ||||||
Exxon Mobil Corp. | 225,011 | 10,062,492 | ||||||
Kinder Morgan, Inc. | 254,465 | 3,860,234 | ||||||
Williams Cos., Inc. (The) | 161,723 | 3,075,972 | ||||||
44,688,307 |
13
Shares | Value | |||||||
Personal Products — 0.7% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 80,890 | $ | 15,262,325 | |||||
Pharmaceuticals — 5.3% | ||||||||
Bristol-Myers Squibb Co. | 565,933 | 33,276,860 | ||||||
Jazz Pharmaceuticals plc(1) | 99,697 | 11,000,567 | ||||||
Johnson & Johnson | 194,130 | 27,300,502 | ||||||
Merck & Co., Inc. | 433,663 | 33,535,160 | ||||||
Mylan NV(1) | 646,586 | 10,397,103 | ||||||
Pfizer, Inc. | 221,078 | 7,229,251 | ||||||
122,739,443 | ||||||||
Professional Services — 0.7% | ||||||||
Nielsen Holdings plc | 280,473 | 4,167,829 | ||||||
Robert Half International, Inc. | 243,108 | 12,843,395 | ||||||
17,011,224 | ||||||||
Road and Rail — 0.5% | ||||||||
Kansas City Southern | 71,929 | 10,738,280 | ||||||
Semiconductors and Semiconductor Equipment — 4.7% | ||||||||
Applied Materials, Inc. | 326,421 | 19,732,149 | ||||||
Broadcom, Inc. | 104,398 | 32,949,053 | ||||||
Intel Corp. | 169,727 | 10,154,766 | ||||||
KLA Corp. | 22,431 | 4,362,381 | ||||||
Lam Research Corp. | 15,341 | 4,962,200 | ||||||
Maxim Integrated Products, Inc. | 133,244 | 8,075,919 | ||||||
NVIDIA Corp. | 9,224 | 3,504,290 | ||||||
Qorvo, Inc.(1) | 47,385 | 5,237,464 | ||||||
Texas Instruments, Inc. | 146,472 | 18,597,550 | ||||||
107,575,772 | ||||||||
Software — 12.4% | ||||||||
Adobe, Inc.(1) | 103,496 | 45,052,844 | ||||||
Autodesk, Inc.(1) | 79,468 | 19,007,951 | ||||||
Cadence Design Systems, Inc.(1) | 202,790 | 19,459,728 | ||||||
Dropbox, Inc., Class A(1) | 328,463 | 7,150,639 | ||||||
Intuit, Inc. | 59,595 | 17,651,443 | ||||||
Microsoft Corp. | 508,029 | 103,388,982 | ||||||
NortonLifeLock, Inc. | 173,507 | 3,440,644 | ||||||
Oracle Corp. (New York) | 274,317 | 15,161,501 | ||||||
salesforce.com, Inc.(1) | 124,506 | 23,323,709 | ||||||
ServiceNow, Inc.(1) | 45,148 | 18,287,649 | ||||||
VMware, Inc., Class A(1) | 78,978 | 12,230,533 | ||||||
284,155,623 | ||||||||
Specialty Retail — 1.7% | ||||||||
AutoZone, Inc.(1) | 7,033 | 7,934,068 | ||||||
Best Buy Co., Inc. | 128,846 | 11,244,390 | ||||||
Home Depot, Inc. (The) | 13,346 | 3,343,307 | ||||||
O'Reilly Automotive, Inc.(1) | 24,807 | 10,460,368 | ||||||
Ulta Beauty, Inc.(1) | 35,582 | 7,238,090 | ||||||
40,220,223 | ||||||||
Technology Hardware, Storage and Peripherals — 5.9% | ||||||||
Apple, Inc. | 315,662 | 115,153,498 | ||||||
HP, Inc. | 629,373 | 10,969,971 | ||||||
NetApp, Inc. | 229,725 | 10,192,898 | ||||||
136,316,367 |
14
Shares | Value | |||||||
Textiles, Apparel and Luxury Goods — 0.6% | ||||||||
Ralph Lauren Corp. | 203,991 | $ | 14,793,427 | |||||
Trading Companies and Distributors — 0.9% | ||||||||
W.W. Grainger, Inc. | 62,340 | 19,584,734 | ||||||
TOTAL COMMON STOCKS
(Cost $1,745,115,101) | 2,232,535,376 | |||||||
TEMPORARY CASH INVESTMENTS — 2.8% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $28,206,695), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $27,664,968) | 27,664,953 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $36,747,683), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $36,027,050) | 36,027,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 88,651 | 88,651 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $63,780,604) | 63,780,604 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8%
(Cost $1,808,895,705) | 2,296,315,980 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 3,800,789 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,300,116,769 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
S&P 500 E-Mini | 370 | September 2020 | $18,500 | $ | 57,168,700 | $ | 1,229,662 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
See Notes to Financial Statements.
15
Statement of Assets and Liabilities |
JUNE 30, 2020 | |||||
Assets | |||||
Investment securities, at value (cost of $1,808,895,705) | $ | 2,296,315,980 | |||
Deposits with broker for futures contracts | 4,440,000 | ||||
Receivable for capital shares sold | 179,219 | ||||
Receivable for variation margin on futures contracts | 786,250 | ||||
Dividends and interest receivable | 1,687,386 | ||||
2,303,408,835 | |||||
Liabilities | |||||
Payable for capital shares redeemed | 2,086,349 | ||||
Accrued management fees | 1,179,780 | ||||
Distribution and service fees payable | 25,937 | ||||
3,292,066 | |||||
Net Assets | $ | 2,300,116,769 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,617,335,029 | |||
Distributable earnings | 682,781,740 | ||||
$ | 2,300,116,769 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $1,789,425,710 | 58,839,494 | $30.41 | ||||||||
I Class, $0.01 Par Value | $419,610,212 | 13,781,916 | $30.45 | ||||||||
A Class, $0.01 Par Value | $61,504,294 | 2,025,672 | $30.36* | ||||||||
C Class, $0.01 Par Value | $5,880,299 | 196,169 | $29.98 | ||||||||
R Class, $0.01 Par Value | $21,393,902 | 704,162 | $30.38 | ||||||||
R5 Class, $0.01 Par Value | $2,302,352 | 75,605 | $30.45 |
*Maximum offering price $32.21 (net asset value divided by 0.9425).
See Notes to Financial Statements.
16
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends | $ | 43,000,439 | |||
Interest | 976,935 | ||||
Securities lending, net | 7,414 | ||||
43,984,788 | |||||
Expenses: | |||||
Management fees | 15,740,597 | ||||
Distribution and service fees: | |||||
A Class | 173,115 | ||||
C Class | 64,653 | ||||
R Class | 105,204 | ||||
Directors' fees and expenses | 192,638 | ||||
Other expenses | 15,875 | ||||
16,292,082 | |||||
Net investment income (loss) | 27,692,706 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 351,475,883 | ||||
Futures contract transactions | 8,059,288 | ||||
359,535,171 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (242,565,441) | ||||
Futures contracts | 801,458 | ||||
(241,763,983) | |||||
Net realized and unrealized gain (loss) | 117,771,188 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 145,463,894 |
See Notes to Financial Statements.
17
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 27,692,706 | $ | 36,511,467 | ||||||||||
Net realized gain (loss) | 359,535,171 | 188,944,034 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (241,763,983) | (38,705,025) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 145,463,894 | 186,750,476 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (193,302,904) | (265,255,033) | ||||||||||||
I Class | (40,657,808) | (46,413,839) | ||||||||||||
A Class | (6,862,367) | (8,778,046) | ||||||||||||
C Class | (598,033) | (838,751) | ||||||||||||
R Class | (2,047,280) | (2,368,400) | ||||||||||||
R5 Class | (218,843) | (213,507) | ||||||||||||
Decrease in net assets from distributions | (243,687,235) | (323,867,576) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (449,071,936) | (93,176,001) | ||||||||||||
Net increase (decrease) in net assets | (547,295,277) | (230,293,101) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 2,847,412,046 | 3,077,705,147 | ||||||||||||
End of period | $ | 2,300,116,769 | $ | 2,847,412,046 |
See Notes to Financial Statements.
18
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Equity Growth Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth by investing in common stocks.
The fund offers the Investor Class, I Class, A Class, C Class, R Class and R5 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
19
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 8% of the shares of the fund.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund's assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds.
The Investment Category Fee range, the Complex Fee range and the effective annual management fee for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||
Investor Class | 0.3380% to 0.5200% | 0.2500% to 0.3100% | 0.66% | ||||||||
I Class | 0.0500% to 0.1100% | 0.46% | |||||||||
A Class | 0.2500% to 0.3100% | 0.66% | |||||||||
C Class | 0.2500% to 0.3100% | 0.66% | |||||||||
R Class | 0.2500% to 0.3100% | 0.66% | |||||||||
R5 Class | 0.0500% to 0.1100% | 0.46% |
21
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended June 30, 2020 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $65,337,806 and $84,041,293, respectively. The effect of interfund transactions on the Statement of Operations was $6,336,392 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $2,721,430,596 and $3,396,973,332, respectively.
22
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 680,000,000 | 680,000,000 | ||||||||||||||||||
Sold | 3,076,813 | $ | 91,838,331 | 5,221,355 | $ | 166,954,910 | ||||||||||||||
Issued in reinvestment of distributions | 6,045,901 | 188,741,405 | 9,151,538 | 260,741,084 | ||||||||||||||||
Redeemed | (22,435,146) | (701,557,557) | (18,886,278) | (581,731,249) | ||||||||||||||||
(13,312,432) | (420,977,821) | (4,513,385) | (154,035,255) | |||||||||||||||||
I Class/Shares Authorized | 120,000,000 | 120,000,000 | ||||||||||||||||||
Sold | 2,921,120 | 85,171,554 | 4,112,238 | 136,248,140 | ||||||||||||||||
Issued in reinvestment of distributions | 1,283,020 | 40,071,785 | 1,610,269 | 46,027,392 | ||||||||||||||||
Redeemed | (4,461,127) | (137,401,925) | (3,449,137) | (111,171,558) | ||||||||||||||||
(256,987) | (12,158,586) | 2,273,370 | 71,103,974 | |||||||||||||||||
A Class/Shares Authorized | 45,000,000 | 45,000,000 | ||||||||||||||||||
Sold | 262,546 | 7,894,410 | 452,590 | 14,223,425 | ||||||||||||||||
Issued in reinvestment of distributions | 202,427 | 6,313,811 | 275,610 | 7,829,884 | ||||||||||||||||
Redeemed | (998,318) | (30,297,298) | (922,614) | (29,222,799) | ||||||||||||||||
(533,345) | (16,089,077) | (194,414) | (7,169,490) | |||||||||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 20,012 | 578,499 | 24,278 | 771,743 | ||||||||||||||||
Issued in reinvestment of distributions | 17,839 | 550,419 | 28,679 | 800,283 | ||||||||||||||||
Redeemed | (77,138) | (2,307,450) | (156,576) | (5,055,558) | ||||||||||||||||
(39,287) | (1,178,532) | (103,619) | (3,483,532) | |||||||||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 216,601 | 6,406,575 | 158,901 | 5,028,068 | ||||||||||||||||
Issued in reinvestment of distributions | 65,573 | 2,047,260 | 83,539 | 2,368,370 | ||||||||||||||||
Redeemed | (253,381) | (7,460,016) | (244,147) | (7,563,285) | ||||||||||||||||
28,793 | 993,819 | (1,707) | (166,847) | |||||||||||||||||
R5 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 14,171 | 425,154 | 41,111 | 1,351,155 | ||||||||||||||||
Issued in reinvestment of distributions | 7,007 | 218,843 | 7,472 | 213,507 | ||||||||||||||||
Redeemed | (10,714) | (305,736) | (30,051) | (989,513) | ||||||||||||||||
10,464 | 338,261 | 18,532 | 575,149 | |||||||||||||||||
Net increase (decrease) | (14,102,794) | $ | (449,071,936) | (2,521,223) | $ | (93,176,001) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
23
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 2,232,535,376 | — | — | |||||||
Temporary Cash Investments | 88,651 | $ | 63,691,953 | — | |||||||
$ | 2,232,624,027 | $ | 63,691,953 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 1,229,662 | — | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts 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's average notional exposure to equity price risk derivative instruments held during the period was $25,479 futures contracts purchased.
The value of equity price risk derivative instruments as of June 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $786,250 in receivable for variation margin on futures contracts*. For the year ended June 30, 2020, the effect of equity price risk derivative instruments on the Statement of Operations was $8,059,288 in net realized gain (loss) on futures contract transactions and $801,458 in change in net unrealized appreciation (depreciation) on futures contracts.
*Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
24
9. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 26,146,735 | $ | 102,578,649 | ||||
Long-term capital gains | $ | 217,540,500 | $ | 221,288,927 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
The reclassifications, which are primarily due to tax equalization, were made to capital $36,069,094 and distributable earnings $(36,069,094).
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,815,494,624 | |||
Gross tax appreciation of investments | $ | 568,501,637 | |||
Gross tax depreciation of investments | (87,680,281) | ||||
Net tax appreciation (depreciation) of investments | $ | 480,821,356 | |||
Undistributed ordinary income | — | ||||
Accumulated long-term gains | $ | 201,960,384 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
25
Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $31.73 | 0.34 | 1.58 | 1.92 | (0.33) | (2.91) | (3.24) | $30.41 | 5.86% | 0.67% | 1.09% | 113% | $1,789,426 | |||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $33.36 | 0.39 | 1.56 | 1.95 | (0.37) | (3.21) | (3.58) | $31.73 | 7.21% | 0.67% | 1.23% | 80% | $2,289,532 | |||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $31.79 | 0.43 | 4.40 | 4.83 | (0.40) | (2.86) | (3.26) | $33.36 | 15.62% | 0.66% | 1.30% | 84% | $2,557,773 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $27.44 | 0.40 | 4.50 | 4.90 | (0.40) | (0.15) | (0.55) | $31.79 | 17.99% | 0.67% | 1.34% | 85% | $2,542,710 | |||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $30.56 | 0.41 | (1.29) | (0.88) | (0.40) | (1.84) | (2.24) | $27.44 | (2.78)% | 0.67% | 1.45% | 91% | $2,488,951 | |||||||||||||||||||||||||||||||||||||||||||||||||
I Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $31.76 | 0.40 | 1.59 | 1.99 | (0.39) | (2.91) | (3.30) | $30.45 | 6.10% | 0.47% | 1.29% | 113% | $419,610 | |||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $33.39 | 0.45 | 1.56 | 2.01 | (0.43) | (3.21) | (3.64) | $31.76 | 7.41% | 0.47% | 1.43% | 80% | $445,933 | |||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $31.82 | 0.50 | 4.40 | 4.90 | (0.47) | (2.86) | (3.33) | $33.39 | 15.87% | 0.46% | 1.50% | 84% | $392,859 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $27.46 | 0.46 | 4.51 | 4.97 | (0.46) | (0.15) | (0.61) | $31.82 | 18.21% | 0.47% | 1.54% | 85% | $471,260 | |||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $30.58 | 0.46 | (1.29) | (0.83) | (0.45) | (1.84) | (2.29) | $27.46 | (2.58)% | 0.47% | 1.65% | 91% | $453,858 | |||||||||||||||||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $31.69 | 0.26 | 1.57 | 1.83 | (0.25) | (2.91) | (3.16) | $30.36 | 5.57% | 0.92% | 0.84% | 113% | $61,504 | |||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $33.32 | 0.31 | 1.57 | 1.88 | (0.30) | (3.21) | (3.51) | $31.69 | 6.96% | 0.92% | 0.98% | 80% | $81,086 | |||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $31.76 | 0.35 | 4.39 | 4.74 | (0.32) | (2.86) | (3.18) | $33.32 | 15.32% | 0.91% | 1.05% | 84% | $91,750 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $27.41 | 0.32 | 4.50 | 4.82 | (0.32) | (0.15) | (0.47) | $31.76 | 17.71% | 0.92% | 1.09% | 85% | $116,980 | |||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $30.53 | 0.33 | (1.29) | (0.96) | (0.32) | (1.84) | (2.16) | $27.41 | (3.03)% | 0.92% | 1.20% | 91% | $144,365 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $31.34 | 0.03 | 1.55 | 1.58 | (0.03) | (2.91) | (2.94) | $29.98 | 4.80% | 1.67% | 0.09% | 113% | $5,880 | |||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $33.00 | 0.07 | 1.55 | 1.62 | (0.07) | (3.21) | (3.28) | $31.34 | 6.17% | 1.67% | 0.23% | 80% | $7,378 | |||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $31.50 | 0.10 | 4.34 | 4.44 | (0.08) | (2.86) | (2.94) | $33.00 | 14.48% | 1.66% | 0.30% | 84% | $11,191 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $27.19 | 0.10 | 4.46 | 4.56 | (0.10) | (0.15) | (0.25) | $31.50 | 16.78% | 1.67% | 0.34% | 85% | $11,777 | |||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $30.29 | 0.12 | (1.27) | (1.15) | (0.11) | (1.84) | (1.95) | $27.19 | (3.73)% | 1.67% | 0.45% | 91% | $12,542 | |||||||||||||||||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $31.71 | 0.18 | 1.57 | 1.75 | (0.17) | (2.91) | (3.08) | $30.38 | 5.31% | 1.17% | 0.59% | 113% | $21,394 | |||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $33.34 | 0.23 | 1.57 | 1.80 | (0.22) | (3.21) | (3.43) | $31.71 | 6.69% | 1.17% | 0.73% | 80% | $21,413 | |||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $31.78 | 0.28 | 4.37 | 4.65 | (0.23) | (2.86) | (3.09) | $33.34 | 15.06% | 1.16% | 0.80% | 84% | $22,576 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $27.43 | 0.25 | 4.50 | 4.75 | (0.25) | (0.15) | (0.40) | $31.78 | 17.37% | 1.17% | 0.84% | 85% | $31,953 | |||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $30.54 | 0.27 | (1.29) | (1.02) | (0.25) | (1.84) | (2.09) | $27.43 | (3.24)% | 1.17% | 0.95% | 91% | $28,535 | |||||||||||||||||||||||||||||||||||||||||||||||||
R5 Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $31.77 | 0.40 | 1.58 | 1.98 | (0.39) | (2.91) | (3.30) | $30.45 | 6.06% | 0.47% | 1.29% | 113% | $2,302 | |||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $33.39 | 0.45 | 1.57 | 2.02 | (0.43) | (3.21) | (3.64) | $31.77 | 7.44% | 0.47% | 1.43% | 80% | $2,069 | |||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $31.82 | 0.43 | 4.47 | 4.90 | (0.47) | (2.86) | (3.33) | $33.39 | 15.83% | 0.46% | 1.50% | 84% | $1,556 | |||||||||||||||||||||||||||||||||||||||||||||||||
2017(3) | $31.12 | 0.11 | 0.69 | 0.80 | (0.10) | — | (0.10) | $31.82 | 2.58% | 0.47%(4) | 1.60%(4) | 85%(5) | $5 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)April 10, 2017 (commencement of sale) through June 30, 2017.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended June 30, 2017.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Equity Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Equity Growth Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
29
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
30
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
31
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
32
Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
33
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board found the investment
34
management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
35
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer group.The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
36
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
37
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
38
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $26,146,735, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as qualified for the corporate dividends received deduction.
The fund hereby designates $252,853,146, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended June 30, 2020.
The fund utilized earnings and profits of $36,069,094 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
39
Notes |
40
Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92990 2008 |
Annual Report | |||||
June 30, 2020 | |||||
Global Gold Fund | |||||
Investor Class (BGEIX) | |||||
I Class (AGGNX) | |||||
A Class (ACGGX) | |||||
C Class (AGYCX) | |||||
R Class (AGGWX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of June 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | ||||||||||||||||||||||||||||||||||
Investor Class | BGEIX | 41.12% | 16.24% | -1.81% | 8/17/88 | |||||||||||||||||||||||||||||||||
NYSE Arca Gold Miners Index | — | 44.54% | 16.94% | -2.23% | — | |||||||||||||||||||||||||||||||||
MSCI World Index | — | 2.84% | 6.89% | 9.94% | — | |||||||||||||||||||||||||||||||||
I Class | AGGNX | 41.34% | 16.46% | -1.62% | 9/28/07 | |||||||||||||||||||||||||||||||||
A Class | ACGGX | 5/6/98 | ||||||||||||||||||||||||||||||||||||
No sales charge | 40.72% | 15.95% | -2.06% | |||||||||||||||||||||||||||||||||||
With sales charge | 32.65% | 14.60% | -2.63% | |||||||||||||||||||||||||||||||||||
C Class | AGYCX | 39.71% | 15.11% | -2.79% | 9/28/07 | |||||||||||||||||||||||||||||||||
R Class | AGGWX | 40.44% | 15.67% | -2.29% | 9/28/07 |
Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied..
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $8,330 | ||||||||
NYSE Arca Gold Miners Index — $7,982 | ||||||||
MSCI World Index — $25,828 | ||||||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | ||||||||||||||||||||||
0.68% | 0.48% | 0.93% | 1.68% | 1.18% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Manager: Yulin Long
Elizabeth Xie left the fund's portfolio management team in March 2020.
Effective August 2020, Guan Wang will join the fund's portfolio management team.
Performance Summary
Global Gold returned 41.12%* for the 12 months ended June 30, 2020. The portfolio’s benchmark, the NYSE Arca Gold Miners Index, gained 44.54%. The fund’s return reflects operating expenses, while the benchmark’s return does not. By comparison, the MSCI World Index, a broad measure of global equity market performance, returned 2.84%.
Gold Rallies Amid Global Crises
Gold performed very well in a period that saw the global spread of a pandemic, a sharp economic recession and a bear market in stocks. The precious metal began the period at roughly $1,400 an ounce and ended June 2020 at approximately $1,770, but was volatile in between. Gold is often viewed as a safe-haven investment in times of market stress, which supported demand during the period. According to the World Gold Council, gold exchange-traded fund holdings—viewed as a proxy for investment demand—reached a record high in June. Nevertheless, gold’s price did decline briefly in March, as investors were believed to have sold some of their gold holdings to meet liquidity needs at the peak of the market decline. Ultimately, gold’s price recovered rapidly and was among the best-performing asset classes for the 12 months.
Central bank demand for gold as a reserve asset was also positive, but below levels of recent years. In addition, record-low interest rates and central bank bond buying all reduced the appeal of cash and bonds as interest-bearing assets in competition with gold. The U.S. dollar was little changed for the period, as gold’s price reached the highest level in dollar terms in eight years. The rising price and economic downturn meant jewelry demand fell to a record low in the first quarter of 2020.
Even as prices rose, gold supply fell. The pandemic disrupted mine production, which fell to a five-year low in the first quarter of 2020, according to the World Gold Council. Producer net hedging also declined. When gold prices rise, miners may sell some of their production forward as a way to lock in attractive prices. So the fact that producer hedging went down even as prices touched their highest level in years is a sign that producers expected higher prices ahead.
Looking at the stocks of gold companies, share prices and earnings rose along with the price of the underlying metal. Not only did gold prices rise, but all-in production costs for gold companies fell through the fourth quarter of 2019 according to Standard & Poor’s. Mining output also fell in 2020, as the pandemic disrupted mining activity and threatened capital spending plans. Gold company profits are highly levered to changes in the price of the underlying metal. Consider a hypothetical example—assume production costs of $1,000 an ounce and a gold price of $1,100. If the gold price rises to $1,200, the price has increased less than 10%, but the profit has doubled from $100 to $200 an ounce. Of course, this principle also works in reverse, so that small declines in gold’s price lead to large declines in miners’ profits. During the period, gold company profits benefited from falling production costs and rising prices for the underlying metal.
* All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structures; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Key Contributors to Relative Performance
The key contributors to relative results were stocks that performed poorly and to which we had less exposure than the benchmark. Peruvian miner Cia de Minas Buenaventura underperformed amid production setbacks at a number of its mines. Australia-based miner Newcrest Mining similarly missed production estimates and lowered its forecasted output for the year. It was also beneficial to have no exposure to Chinese company Zhaojin Mining Industry and Australian company Resolute Mining, which operates mines in Africa. Both companies saw production disrupted by the pandemic and efforts to combat it.
Notable Detractors From Relative Results
In a period of such strong performance, few positions detracted in an absolute sense. Relative to the benchmark, the leading detractor was Pan American Silver, a Canada-based miner with operations throughout Latin America. The stock benefited from record production and profits announced during the period. We had some exposure to the stock, but less than the benchmark. Australian miner Regis Resources was another notable detractor from performance compared with the benchmark. The stock was volatile and though the company reported record profits during the period, production at one of its mines disappointed even before pandemic-related closures. Other notable detractors from relative returns were Newmont, Yamana Gold and Wheaton Precious Metals. These were modest underweight positions relative to the benchmark that performed well.
Portfolio Positioning
We see many reasons to be positive on gold going forward. In terms of supply and demand fundamentals, mine supply is likely to be constrained going forward because of the effects of the pandemic and uncertain capital spending budgets for the remainder of the year. The backdrop for demand is also likely supportive. Interest rate cuts by the Federal Reserve and central banks all over the world mean yields on perceived safe-haven investments that compete with gold for a place in investor portfolios are at record lows. In addition, central bank decisions to lower interest rates don’t happen in a vacuum—they reflect a highly uncertain environment economically, politically and financially. Because we don’t see an end to this uncertainty anytime soon, we would expect safe-haven demand to remain supportive of gold’s price for the foreseeable future. Nevertheless, the metal may be vulnerable to profit-taking after its very strong recent performance, particularly if the pandemic and economic conditions were to improve significantly.
In terms of gold mining stocks, a high or rising gold price directly benefits profitability and translates into higher valuations for deposits in the ground. Given that production costs for gold mining companies are relatively fixed in the short run, increases in gold prices typically result in proportionally larger gains in gold miners’ operating profit. We believe that creates a positive backdrop for the shares going forward.
6
Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Newmont Corp. | 13.4% | |||||||
Barrick Gold Corp.* | 13.0% | |||||||
Franco-Nevada Corp. (New York) | 7.7% | |||||||
Wheaton Precious Metals Corp. | 5.1% | |||||||
Newcrest Mining Ltd. | 4.4% | |||||||
AngloGold Ashanti Ltd.* | 4.2% | |||||||
Agnico Eagle Mines Ltd. (New York) | 3.7% | |||||||
Kirkland Lake Gold Ltd. | 3.6% | |||||||
Royal Gold, Inc. | 3.3% | |||||||
Kinross Gold Corp. (New York) | 3.3% | |||||||
*Includes shares traded on all exchanges. | ||||||||
Geographic Composition | % of net assets | |||||||
Canada | 54.7% | |||||||
United States | 17.7% | |||||||
Australia | 14.1% | |||||||
South Africa | 7.7% | |||||||
United Kingdom | 1.2% | |||||||
Peru | 0.3% | |||||||
China | 0.2% | |||||||
Exchange-Traded Funds | 2.5% | |||||||
Cash and Equivalents* | 1.6% | |||||||
*Includes temporary cash investments and other assets and liabilities. | ||||||||
Types of Investments in Portfolio | % of net assets | |||||||
Foreign Common Stocks | 78.2% | |||||||
Domestic Common Stocks | 17.7% | |||||||
Exchange-Traded Funds | 2.5% | |||||||
Total Equity Exposure | 98.4% | |||||||
Temporary Cash Investments | 1.6% | |||||||
Other Assets and Liabilities | —* | |||||||
*Category is less than 0.05% of total net assets. |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 | Annualized Expense Ratio(1) | |||||||||||||||||||||||
Actual | ||||||||||||||||||||||||||
Investor Class | $1,000 | $1,233.60 | $3.72 | 0.67% | ||||||||||||||||||||||
I Class | $1,000 | $1,233.90 | $2.61 | 0.47% | ||||||||||||||||||||||
A Class | $1,000 | $1,230.80 | $5.10 | 0.92% | ||||||||||||||||||||||
C Class | $1,000 | $1,227.40 | $9.25 | 1.67% | ||||||||||||||||||||||
R Class | $1,000 | $1,229.70 | $6.49 | 1.17% | ||||||||||||||||||||||
Hypothetical | ||||||||||||||||||||||||||
Investor Class | $1,000 | $1,021.53 | $3.37 | 0.67% | ||||||||||||||||||||||
I Class | $1,000 | $1,022.53 | $2.36 | 0.47% | ||||||||||||||||||||||
A Class | $1,000 | $1,020.29 | $4.62 | 0.92% | ||||||||||||||||||||||
C Class | $1,000 | $1,016.56 | $8.37 | 1.67% | ||||||||||||||||||||||
R Class | $1,000 | $1,019.05 | $5.87 | 1.17% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 95.9% | ||||||||
Australia — 14.1% | ||||||||
Evolution Mining Ltd. | 6,074,400 | $ | 24,284,261 | |||||
Gold Road Resources Ltd.(1) | 639,490 | 753,316 | ||||||
Newcrest Mining Ltd. | 1,487,513 | 33,164,485 | ||||||
Northern Star Resources Ltd. | 1,895,800 | 18,045,231 | ||||||
Perseus Mining Ltd.(1) | 3,788,000 | 3,496,606 | ||||||
Ramelius Resources Ltd. | 1,247,200 | 1,741,392 | ||||||
Regis Resources Ltd. | 2,261,383 | 8,316,552 | ||||||
Saracen Mineral Holdings Ltd.(1) | 1,651,034 | 6,341,076 | ||||||
Silver Lake Resources Ltd.(1) | 4,773,500 | 7,149,279 | ||||||
St. Barbara Ltd. | 1,220,300 | 2,714,170 | ||||||
106,006,368 | ||||||||
Canada — 54.7% | ||||||||
Agnico Eagle Mines Ltd. (New York) | 436,500 | 27,962,190 | ||||||
Alacer Gold Corp.(1) | 1,131,600 | 7,776,833 | ||||||
Alamos Gold, Inc., Class A (New York) | 1,218,800 | 11,432,344 | ||||||
B2Gold Corp. (New York) | 3,818,400 | 21,726,696 | ||||||
Barrick Gold Corp. | 3,502,120 | 94,347,113 | ||||||
Barrick Gold Corp., (Toronto) | 119,300 | 3,210,098 | ||||||
Centerra Gold, Inc. | 830,300 | 9,265,649 | ||||||
Dundee Precious Metals, Inc. | 237,700 | 1,565,290 | ||||||
Eldorado Gold Corp.(1) | 300,300 | 2,912,910 | ||||||
Eldorado Gold Corp., (Toronto)(1) | 40,300 | 388,573 | ||||||
Endeavour Mining Corp.(1) | 141,000 | 3,411,793 | ||||||
Equinox Gold Corp.(1) | 174,800 | 1,961,256 | ||||||
First Majestic Silver Corp. (New York)(1) | 178,500 | 1,776,075 | ||||||
Franco-Nevada Corp. (New York) | 413,200 | 57,699,248 | ||||||
GoGold Resources, Inc.(1) | 5,526,925 | 4,071,100 | ||||||
Guyana Goldfields, Inc.(1) | 721,621 | 924,883 | ||||||
IAMGOLD Corp. (New York)(1) | 6,400 | 25,280 | ||||||
Kinross Gold Corp. (New York)(1) | 3,409,657 | 24,617,724 | ||||||
Kirkland Lake Gold Ltd. | 655,278 | 26,981,467 | ||||||
OceanaGold Corp.(1) | 2,327,400 | 5,417,342 | ||||||
Orezone Gold Corp.(1) | 5,400,000 | 3,420,742 | ||||||
Osisko Gold Royalties Ltd. | 8,000 | 80,000 | ||||||
Pan American Silver Corp. (NASDAQ) | 537,800 | 16,343,742 | ||||||
Pretium Resources, Inc.(1) | 405,300 | 3,404,520 | ||||||
Roxgold, Inc.(1) | 1,618,400 | 1,823,919 | ||||||
Sandstorm Gold Ltd.(1) | 565,900 | 5,431,406 | ||||||
Sandstorm Gold Ltd. (New York)(1) | 5,900 | 56,758 | ||||||
SEMAFO, Inc.(1) | 1,020,900 | 3,481,708 | ||||||
Silvercorp Metals, Inc. | 685,700 | 3,682,209 | ||||||
SSR Mining, Inc.(1) | 229,700 | 4,899,501 | ||||||
Torex Gold Resources, Inc.(1) | 258,100 | 4,066,558 | ||||||
Wesdome Gold Mines Ltd.(1) | 242,500 | 2,095,260 | ||||||
Wheaton Precious Metals Corp. | 870,500 | 38,345,525 |
10
Shares | Value | |||||||
Yamana Gold, Inc. (New York) | 2,966,881 | $ | 16,199,170 | |||||
410,804,882 | ||||||||
China — 0.2% | ||||||||
Shandong Gold Mining Co. Ltd., H Shares | 870,450 | 1,875,037 | ||||||
Peru — 0.3% | ||||||||
Cia de Minas Buenaventura SAA, ADR | 232,400 | 2,124,136 | ||||||
South Africa — 7.7% | ||||||||
AngloGold Ashanti Ltd. | 149,802 | 4,398,584 | ||||||
AngloGold Ashanti Ltd., ADR | 912,476 | 26,908,917 | ||||||
Gold Fields Ltd. | 498,310 | 4,711,026 | ||||||
Gold Fields Ltd., ADR | 1,953,100 | 18,359,140 | ||||||
Harmony Gold Mining Co. Ltd., ADR(1) | 740,600 | 3,088,302 | ||||||
57,465,969 | ||||||||
United Kingdom — 1.2% | ||||||||
Centamin plc | 3,160,000 | 7,191,423 | ||||||
Highland Gold Mining Ltd. | 200,300 | 576,579 | ||||||
Petropavlovsk plc(1) | 4,787,800 | 1,491,382 | ||||||
9,259,384 | ||||||||
United States — 17.7% | ||||||||
Coeur Mining, Inc.(1) | 577,400 | 2,933,192 | ||||||
Gold Resource Corp. | 173,500 | 713,085 | ||||||
Hecla Mining Co. | 1,000,000 | 3,270,000 | ||||||
Newmont Corp. | 1,632,480 | 100,789,315 | ||||||
Royal Gold, Inc. | 200,921 | 24,978,499 | ||||||
132,684,091 | ||||||||
TOTAL COMMON STOCKS
(Cost $378,661,146) | 720,219,867 | |||||||
EXCHANGE-TRADED FUNDS — 2.5% | ||||||||
SPDR Gold Shares(1) | 43,000 | 7,196,910 | ||||||
VanEck Vectors Junior Gold Miners ETF | 227,200 | 11,264,576 | ||||||
TOTAL EXCHANGE-TRADED FUNDS
(Cost $17,485,233) | 18,461,486 | |||||||
TEMPORARY CASH INVESTMENTS — 1.6% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $5,419,879), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $5,315,787) | 5,315,784 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $7,060,541), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $6,922,010) | 6,922,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 17,258 | 17,258 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $12,255,042) | 12,255,042 | |||||||
TOTAL INVESTMENT SECURITIES — 100.0%
(Cost $408,401,421) | 750,936,395 | |||||||
OTHER ASSETS AND LIABILITIES† | (370,380) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 750,566,015 |
11
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||||||||
ADR | - | American Depositary Receipt |
† Category is less than 0.05% of total net assets.
(1)Non-income producing.
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
JUNE 30, 2020 | ||||||||
Assets | ||||||||
Investment securities, at value (cost of $408,401,421) | $ | 750,936,395 | ||||||
Cash | 15,556 | |||||||
Receivable for capital shares sold | 992,477 | |||||||
Dividends and interest receivable | 281,426 | |||||||
752,225,854 | ||||||||
Liabilities | ||||||||
Payable for capital shares redeemed | 1,287,882 | |||||||
Accrued management fees | 361,668 | |||||||
Distribution and service fees payable | 10,289 | |||||||
1,659,839 | ||||||||
Net Assets | $ | 750,566,015 | ||||||
Net Assets Consist of: | ||||||||
Capital (par value and paid-in surplus) | $ | 545,645,166 | ||||||
Distributable earnings | 204,920,849 | |||||||
$ | 750,566,015 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $644,945,956 | 47,297,811 | $13.64 | ||||||||
I Class, $0.01 Par Value | $74,729,996 | 5,418,382 | $13.79 | ||||||||
A Class, $0.01 Par Value | $15,797,864 | 1,185,124 | $13.33* | ||||||||
C Class, $0.01 Par Value | $4,628,436 | 366,516 | $12.63 | ||||||||
R Class, $0.01 Par Value | $10,463,763 | 794,707 | $13.17 |
*Maximum offering price $14.14 (net asset value divided by 0.9425).
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | ||||||||
Investment Income (Loss) | ||||||||
Income: | ||||||||
Dividends (net of foreign taxes withheld of $449,373) | $ | 5,506,702 | ||||||
Interest | 65,135 | |||||||
Securities lending, net | 46,828 | |||||||
5,618,665 | ||||||||
Expenses: | ||||||||
Management fees | 3,569,397 | |||||||
Distribution and service fees: | ||||||||
A Class | 30,885 | |||||||
C Class | 35,721 | |||||||
R Class | 35,634 | |||||||
Directors' fees and expenses | 41,587 | |||||||
Other expenses | 1,736 | |||||||
3,714,960 | ||||||||
Net investment income (loss) | 1,903,705 | |||||||
Realized and Unrealized Gain (Loss) | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | 17,109,741 | |||||||
Foreign currency translation transactions | (148,938) | |||||||
16,960,803 | ||||||||
Change in net unrealized appreciation (depreciation) on: | ||||||||
Investments | 184,512,702 | |||||||
Translation of assets and liabilities in foreign currencies | (2,499) | |||||||
184,510,203 | ||||||||
Net realized and unrealized gain (loss) | 201,471,006 | |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 203,374,711 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 1,903,705 | $ | 3,046,382 | ||||||||||
Net realized gain (loss) | 16,960,803 | (5,164,354) | ||||||||||||
Change in net unrealized appreciation (depreciation) | 184,510,203 | 62,975,001 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 203,374,711 | 60,857,029 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (4,394,193) | — | ||||||||||||
I Class | (560,018) | — | ||||||||||||
A Class | (82,256) | — | ||||||||||||
R Class | (25,464) | — | ||||||||||||
Decrease in net assets from distributions | (5,061,931) | — | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 103,964,323 | 11,193,212 | ||||||||||||
Net increase (decrease) in net assets | 302,277,103 | 72,050,241 | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 448,288,912 | 376,238,671 | ||||||||||||
End of period | $ | 750,566,015 | $ | 448,288,912 | ||||||||||
See Notes to Financial Statements.
15
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Global Gold Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek to realize a total return (capital growth and dividends) consistent with investment in securities of companies that are engaged in mining, processing, fabricating or distributing gold or other precious metals throughout the world.
The fund offers the Investor Class, I Class, A Class, C Class and R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of
16
Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid semiannually. Distributions from net realized gains, if any, are generally declared and paid annually.
17
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds.
The Investment Category Fee range, the Complex Fee range and the effective annual management fee for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||
Investor Class | 0.3380% to 0.5200% | 0.2500% to 0.3100% | 0.66% | ||||||||
I Class | 0.0500% to 0.1100% | 0.46% | |||||||||
A Class | 0.2500% to 0.3100% | 0.66% | |||||||||
C Class | 0.2500% to 0.3100% | 0.66% | |||||||||
R Class | 0.2500% to 0.3100% | 0.66% |
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of
18
0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in
arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended June 30, 2020 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $365,065,310 and $273,245,016, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 360,000,000 | 360,000,000 | ||||||||||||||||||
Sold | 23,530,168 | $ | 259,679,350 | 11,498,013 | $ | 91,760,087 | ||||||||||||||
Issued in reinvestment of distributions | 404,401 | 4,136,691 | — | — | ||||||||||||||||
Redeemed | (17,491,083) | (190,197,797) | (11,133,781) | (91,058,012) | ||||||||||||||||
6,443,486 | 73,618,244 | 364,232 | 702,075 | |||||||||||||||||
I Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||||||||
Sold | 5,075,948 | 56,439,549 | 5,463,516 | 43,020,050 | ||||||||||||||||
Issued in reinvestment of distributions | 53,180 | 559,735 | — | — | ||||||||||||||||
Redeemed | (2,808,552) | (30,720,336) | (3,919,422) | (33,623,403) | ||||||||||||||||
2,320,576 | 26,278,948 | 1,544,094 | 9,396,647 | |||||||||||||||||
A Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 902,594 | 9,720,707 | 688,777 | 5,511,378 | ||||||||||||||||
Issued in reinvestment of distributions | 8,049 | 80,011 | — | — | ||||||||||||||||
Redeemed | (806,308) | (8,517,206) | (497,467) | (3,985,567) | ||||||||||||||||
104,335 | 1,283,512 | 191,310 | 1,525,811 | |||||||||||||||||
C Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||||||
Sold | 134,297 | 1,385,471 | 123,257 | 914,110 | ||||||||||||||||
Redeemed | (98,829) | (1,015,442) | (99,114) | (753,262) | ||||||||||||||||
35,468 | 370,029 | 24,143 | 160,848 | |||||||||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 800,388 | 8,567,549 | 266,925 | 2,079,551 | ||||||||||||||||
Issued in reinvestment of distributions | 2,590 | 25,464 | — | — | ||||||||||||||||
Redeemed | (599,664) | (6,179,423) | (339,420) | (2,671,720) | ||||||||||||||||
203,314 | 2,413,590 | (72,495) | (592,169) | |||||||||||||||||
Net increase (decrease) | 9,107,179 | $ | 103,964,323 | 2,051,284 | $ | 11,193,212 |
19
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | |||||||||||
Australia | — | $ | 106,006,368 | — | |||||||
Canada | $ | 327,472,261 | 83,332,621 | — | |||||||
China | — | 1,875,037 | — | ||||||||
South Africa | 48,356,359 | 9,109,610 | — | ||||||||
United Kingdom | — | 9,259,384 | — | ||||||||
Other Countries | 134,808,227 | — | — | ||||||||
Exchange-Traded Funds | 18,461,486 | — | — | ||||||||
Temporary Cash Investments | 17,258 | 12,237,784 | — | ||||||||
$ | 529,115,591 | $ | 221,820,804 | — |
7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund may be subject to greater risk and market fluctuations than a portfolio representing a broader range of industries. Gold stocks are generally considered speculative because of high share price volatility. The price of gold will likely impact the value of the companies in which the fund invests. The price of gold will fluctuate, sometimes considerably. Though many investors believe that gold investments hedge against inflation, currency devaluations and stock market declines, there is no guarantee that these historical inverse relationships will continue.
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8. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 5,061,931 | — | |||||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 420,263,049 | |||
Gross tax appreciation of investments | $ | 333,817,628 | |||
Gross tax depreciation of investments | (3,144,282) | ||||
Net tax appreciation (depreciation) of investments | 330,673,346 | ||||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | 3,639 | ||||
Net tax appreciation (depreciation) | $ | 330,676,985 | |||
Undistributed ordinary income | $ | 874,061 | |||
Accumulated short-term capital losses | $ | (41,701,713) | |||
Accumulated long-term capital losses | $ | (84,928,484) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $9.76 | 0.04 | 3.94 | 3.98 | (0.10) | $13.64 | 41.12% | 0.67% | 0.35% | 50% | $644,946 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $8.58 | 0.07 | 1.11 | 1.18 | — | $9.76 | 13.75% | 0.67% | 0.84% | 47% | $398,804 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $8.25 | 0.04 | 0.29 | 0.33 | — | $8.58 | 4.00% | 0.66% | 0.47% | 37% | $347,311 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.66 | —(3) | (2.57) | (2.57) | (0.84) | $8.25 | (21.33)% | 0.67% | 0.05% | 27% | $351,207 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $7.21 | —(3) | 4.45 | 4.45 | — | $11.66 | 61.72% | 0.68% | 0.06% | 11% | $474,952 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $9.88 | 0.06 | 3.98 | 4.04 | (0.13) | $13.79 | 41.34% | 0.47% | 0.55% | 50% | $74,730 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $8.67 | 0.08 | 1.13 | 1.21 | — | $9.88 | 13.96% | 0.47% | 1.04% | 47% | $30,608 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $8.32 | 0.06 | 0.29 | 0.35 | — | $8.67 | 4.21% | 0.46% | 0.67% | 37% | $13,464 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.75 | 0.02 | (2.60) | (2.58) | (0.85) | $8.32 | (21.17)% | 0.47% | 0.25% | 27% | $14,717 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $7.25 | 0.02 | 4.48 | 4.50 | — | $11.75 | 62.07% | 0.48% | 0.26% | 11% | $15,579 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $9.54 | 0.01 | 3.85 | 3.86 | (0.07) | $13.33 | 40.72% | 0.92% | 0.10% | 50% | $15,798 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $8.40 | 0.05 | 1.09 | 1.14 | — | $9.54 | 13.57% | 0.92% | 0.59% | 47% | $10,311 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $8.11 | 0.02 | 0.27 | 0.29 | — | $8.40 | 3.58% | 0.91% | 0.22% | 37% | $7,475 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.47 | (0.02) | (2.52) | (2.54) | (0.82) | $8.11 | (21.45)% | 0.92% | (0.20)% | 27% | $7,895 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $7.11 | (0.01) | 4.37 | 4.36 | — | $11.47 | 61.32% | 0.93% | (0.19)% | 11% | $15,196 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $9.04 | (0.07) | 3.66 | 3.59 | — | $12.63 | 39.71% | 1.67% | (0.65)% | 50% | $4,628 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $8.03 | (0.01) | 1.02 | 1.01 | — | $9.04 | 12.58% | 1.67% | (0.16)% | 47% | $2,994 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $7.80 | (0.04) | 0.27 | 0.23 | — | $8.03 | 2.95% | 1.66% | (0.53)% | 37% | $2,463 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.07 | (0.09) | (2.43) | (2.52) | (0.75) | $7.80 | (22.04)% | 1.67% | (0.95)% | 27% | $2,284 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $6.91 | (0.06) | 4.22 | 4.16 | — | $11.07 | 60.20% | 1.68% | (0.94)% | 11% | $2,589 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $9.42 | (0.01) | 3.80 | 3.79 | (0.04) | $13.17 | 40.44% | 1.17% | (0.15)% | 50% | $10,464 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $8.32 | 0.02 | 1.08 | 1.10 | — | $9.42 | 13.22% | 1.17% | 0.34% | 47% | $5,573 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $8.05 | —(3) | 0.27 | 0.27 | — | $8.32 | 3.35% | 1.16% | (0.03)% | 37% | $5,524 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.39 | (0.04) | (2.50) | (2.54) | (0.80) | $8.05 | (21.63)% | 1.17% | (0.45)% | 27% | $4,517 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $7.08 | (0.03) | 4.34 | 4.31 | — | $11.39 | 60.88% | 1.18% | (0.44)% | 11% | $5,176 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)Per-share amount was less than $0.005.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Global Gold Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Global Gold Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the five years in the period ended June 30, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the five years in the period ended June 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
24
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
25
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
26
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
27
Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
28
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the five- and ten-year periods and below its benchmark for the one- and three-year periods reviewed
29
by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
30
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was the lowest of the total expense ratios of the Fund’s peer group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
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Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for
for the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $2,665,420, or up to the maximum amount
allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as
qualified for the corporate dividends received deduction.
For the fiscal year ended June 30, 2020, the fund intends to pass through to shareholders foreign
source income of $4,671,321 and foreign taxes paid of $420,068, or up to the maximum amount
allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding
share on June 30, 2020 are $0.0848 and $0.0076, respectively.
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Notes |
35
Notes |
36
Notes |
37
Notes |
38
Notes |
39
Notes |
40
Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92988 2008 |
Annual Report | |||||
June 30, 2020 | |||||
Income & Growth Fund | |||||
Investor Class (BIGRX) | |||||
I Class (AMGIX) | |||||
A Class (AMADX) | |||||
C Class (ACGCX) | |||||
R Class (AICRX) | |||||
R5 Class (AICGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of June 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |||||||||||||||||||||||||||||||||||||||
Investor Class | BIGRX | 1.70% | 7.28% | 11.82% | — | 12/17/90 | ||||||||||||||||||||||||||||||||||||||
Russell 1000 Value Index | — | -8.84% | 4.64% | 10.40% | — | — | ||||||||||||||||||||||||||||||||||||||
S&P 500 Index | — | 7.51% | 10.72% | 13.98% | — | — | ||||||||||||||||||||||||||||||||||||||
I Class | AMGIX | 1.90% | 7.50% | 12.04% | — | 1/28/98 | ||||||||||||||||||||||||||||||||||||||
A Class | AMADX | 12/15/97 | ||||||||||||||||||||||||||||||||||||||||||
No sales charge | 1.46% | 7.02% | 11.54% | — | ||||||||||||||||||||||||||||||||||||||||
With sales charge | -4.37% | 5.76% | 10.88% | — | ||||||||||||||||||||||||||||||||||||||||
C Class | ACGCX | 0.68% | 6.22% | 10.71% | — | 6/28/01 | ||||||||||||||||||||||||||||||||||||||
R Class | AICRX | 1.18% | 6.75% | 11.26% | — | 8/29/03 | ||||||||||||||||||||||||||||||||||||||
R5 Class | AICGX | 1.90% | — | — | 6.96% | 4/10/17 |
Effective July 1, 2020, the fund's benchmark changed from the S&P 500 Index to the Russell 1000 Value Index. The fund's investment advisor believes that the Russell 1000 Value Index aligns better with the fund's strategy.
Average annual returns since inception are presented when ten years of performance history is not available.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $30,581 | ||||||||
Russell 1000 Value Index — $26,923 | ||||||||
S&P 500 Index — $37,031 | ||||||||
Total Annual Fund Operating Expenses | |||||||||||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | R5 Class | ||||||||||||||||||||||||
0.67% | 0.47% | 0.92% | 1.67% | 1.17% | 0.47% |
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. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Steven Rossi and Claudia Musat
In April 2020, Brian Garbe departed the fund's portfolio management team and Steven Rossi joined.
Effective August 2020, portfolio manager Claudia Musat will leave the fund’s portfolio management team, and Yulin Long will join the fund as a portfolio manager.
Performance Summary
Income & Growth returned 1.70%* for the fiscal year ended June 30, 2020, compared with the 7.51% return of its benchmark, the S&P 500 Index.
Income & Growth advanced during the fiscal year, but underperformed its benchmark, the S&P 500 Index. Stock selections in the information technology, real estate and financials sectors were the main detractors from fund performance, while positioning in industrials and utilities was additive.
Security Selection within Information Technology Detracted Most From Relative Returns
Stock choices in information technology weighed most heavily on the fund’s 12-month results. Selections in the semiconductors and semiconductor equipment industry were the main headwind. A lack of exposure to chipmaker NVIDIA was among the leading individual detractors from performance. Demand for NVIDIA’s gaming chips was high throughout the period but spiked starting in March, when widespread pandemic lockdown measures caused game manufacturers to purchase large amounts of the chips out of fear that production would stop. Positioning within the communications equipment industry also detracted, as did stock selection in IT services. Within the communications equipment and software industries, positions in Cisco Systems and Zscaler, respectively, were also among the leading detractors from overall results. We have since eliminated our position in Zscaler.
Within real estate, Lamar Advertising, an equity real estate investment trust, weighed heavily on returns. It was among the top individual detractors from performance. The stock began the period with upward momentum but fell in late February as the spread of COVID-19 led businesses to curtail advertising spending. Positions in other stocks such as VICI Properties, WP Carey and Realty Income also provided a headwind to results. Amid the lockdown, widespread concerns over tenant ability to pay rent as foot traffic at retail centers fell and commercial office space sat unused worked to depress prices. We have since closed our positions in Lamar Advertising, VICI Properties and WP Carey.
Security selections within the financials sector also hurt relative results. Positioning within banks was problematic. Late in the year, a low-rate environment cut into banks’ profitability on lending products. Investors also showed concern over the loan portfolios on many banks balance sheets as borrowers’ future ability to make loan payments was questioned amid widespread unemployment stemming from the pandemic. An overweight to KeyCorp was among the leading individual detractors for the period. We have since exited the stock. Security choices within capital markets also provided a headwind, as did those within the insurance industry.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
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Positioning in Industrials and Utilities Benefits Returns
Stock selection within industrials was the primary contributor to relative results. Positioning within aerospace and defense provided a tailwind to returns. Reduced exposure to The Boeing Co. was a leading individual contributor to relative results. The company was plagued throughout the first half of the period by continued issues with its 737 MAX airliner and governance concerns. In the second half of the year, the stock price came under additional pressure due to canceled orders for its aircraft. Business and consumer travel ground to a halt due to the COVID-19 pandemic, affecting airline companies’ demand for Boeing jets. We have exited the stock. Reduced exposure to several other companies within the sector also provided a tailwind, such as General Electric and Honeywell International. Within trading companies and distributors, an overweight to Fastenal was among the leading individual contributors to returns. Avoidance of several airline stocks also worked to bolster relative results. The companies struggled during the latter half of the period due to reduced travel.
In the utilities sector, reduced exposure to several multi-utilities companies that underperformed the broader market during the period helped to bolster relative returns. The same was true of independent power and renewable electricity producers and gas utilities companies. A similar theme occurred in the energy sector, where prices were hurt by reduced consumer demand brought on by lockdown measures and a price war between Saudi Arabia and Russia. Avoidance of several energy equipment and services companies, which are located in the index, worked to benefit relative results.
Portfolio Positioning
We employ a structured, disciplined investment approach for both stock selection and portfolio construction. We incorporate measures of valuation, quality, growth and sentiment into our stock-selection process, with the aim of producing consistent long-term performance. We seek to maintain balanced exposure to our fundamentally based, multidimensional drivers of stock returns, applying bottom-up research and analysis on individual stocks to determine positioning. As a result of this approach and our risk-control process, which seeks to limit active risk at the sector and industry level, we will have only modest sector overweights/underweights at any given time.
At period-end, industrials was the largest relative overweight. We increased our position during the year, as our model indicates desirable opportunities in the air freight and logistics, machinery and trading companies and distributors industries. Elsewhere, information technology was the largest absolute weight and second-largest relative overweight. We increased our allocation to the sector as attractive opportunities became available in the wake of the bear market. Based on our models, we are currently seeing opportunities in the computers and peripherals and semiconductors and semiconductor equipment industries. Conversely, we are comparatively underweight consumer discretionary and financials stocks. Within consumer discretionary, our underweight is in part due to our limited exposure to the specialty retail and textiles, apparel and luxury goods industries, which score poorly on multiple factors. Our financials sector underweight position reflects a lack of opportunity in this area across most factors in the stock selection model, particularly within the capital markets and diversified financial services industries.
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Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Apple, Inc. | 5.8% | |||||||
Microsoft Corp. | 5.7% | |||||||
Amazon.com, Inc. | 4.2% | |||||||
Alphabet, Inc., Class A | 3.4% | |||||||
Facebook, Inc., Class A | 2.3% | |||||||
Verizon Communications, Inc. | 1.7% | |||||||
Johnson & Johnson | 1.7% | |||||||
AT&T, Inc. | 1.6% | |||||||
Bristol-Myers Squibb Co. | 1.6% | |||||||
Broadcom, Inc. | 1.6% | |||||||
Top Five Industries | % of net assets | |||||||
Software | 9.2% | |||||||
Technology Hardware, Storage and Peripherals | 7.9% | |||||||
Pharmaceuticals | 6.4% | |||||||
Interactive Media and Services | 5.7% | |||||||
Semiconductors and Semiconductor Equipment | 5.1% | |||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 97.0% | |||||||
Temporary Cash Investments | 2.8% | |||||||
Other Assets and Liabilities | 0.2% |
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Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid
During Period(1)
1/1/20 - 6/30/20 |
Annualized
Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $934.40 | $3.22 | 0.67% | ||||||||||
I Class | $1,000 | $935.30 | $2.26 | 0.47% | ||||||||||
A Class | $1,000 | $933.20 | $4.42 | 0.92% | ||||||||||
C Class | $1,000 | $929.70 | $8.01 | 1.67% | ||||||||||
R Class | $1,000 | $932.00 | $5.62 | 1.17% | ||||||||||
R5 Class | $1,000 | $935.30 | $2.26 | 0.47% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,021.53 | $3.37 | 0.67% | ||||||||||
I Class | $1,000 | $1,022.53 | $2.36 | 0.47% | ||||||||||
A Class | $1,000 | $1,020.29 | $4.62 | 0.92% | ||||||||||
C Class | $1,000 | $1,016.56 | $8.37 | 1.67% | ||||||||||
R Class | $1,000 | $1,019.05 | $5.87 | 1.17% | ||||||||||
R5 Class | $1,000 | $1,022.53 | $2.36 | 0.47% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 97.0% | ||||||||
Aerospace and Defense — 0.2% | ||||||||
Lockheed Martin Corp. | 12,262 | $ | 4,474,649 | |||||
Air Freight and Logistics — 1.0% | ||||||||
United Parcel Service, Inc., Class B | 189,508 | 21,069,499 | ||||||
Airlines — 0.1% | ||||||||
Delta Air Lines, Inc. | 61,380 | 1,721,709 | ||||||
Banks — 4.6% | ||||||||
Bank of America Corp. | 728,923 | 17,311,921 | ||||||
Citigroup, Inc. | 213,338 | 10,901,572 | ||||||
Fifth Third Bancorp | 98,197 | 1,893,238 | ||||||
JPMorgan Chase & Co. | 269,862 | 25,383,220 | ||||||
PNC Financial Services Group, Inc. (The) | 100,709 | 10,595,594 | ||||||
Prosperity Bancshares, Inc. | 83,344 | 4,948,967 | ||||||
Regions Financial Corp. | 366,150 | 4,071,588 | ||||||
SVB Financial Group(1) | 17,764 | 3,828,675 | ||||||
Truist Financial Corp. | 36,394 | 1,366,595 | ||||||
U.S. Bancorp | 49,364 | 1,817,582 | ||||||
Wells Fargo & Co. | 312,367 | 7,996,595 | ||||||
Zions Bancorp N.A. | 110,077 | 3,742,618 | ||||||
93,858,165 | ||||||||
Beverages — 1.9% | ||||||||
Coca-Cola Co. (The) | 19,952 | 891,455 | ||||||
Molson Coors Beverage Co., Class B | 417,461 | 14,343,960 | ||||||
Monster Beverage Corp.(1) | 47,054 | 3,261,783 | ||||||
PepsiCo, Inc. | 158,299 | 20,936,626 | ||||||
39,433,824 | ||||||||
Biotechnology — 3.4% | ||||||||
AbbVie, Inc. | 161,937 | 15,898,974 | ||||||
Amgen, Inc. | 97,164 | 22,917,101 | ||||||
Biogen, Inc.(1) | 22,196 | 5,938,540 | ||||||
Gilead Sciences, Inc. | 260,049 | 20,008,170 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 6,558 | 4,089,897 | ||||||
68,852,682 | ||||||||
Building Products — 0.6% | ||||||||
Fortune Brands Home & Security, Inc. | 54,500 | 3,484,185 | ||||||
Johnson Controls International plc | 36,916 | 1,260,312 | ||||||
Masco Corp. | 149,387 | 7,500,722 | ||||||
12,245,219 | ||||||||
Capital Markets — 1.5% | ||||||||
Ameriprise Financial, Inc. | 22,944 | 3,442,518 | ||||||
Cboe Global Markets, Inc. | 41,910 | 3,909,365 | ||||||
FactSet Research Systems, Inc. | 9,345 | 3,069,552 | ||||||
Moody's Corp. | 12,811 | 3,519,566 | ||||||
T. Rowe Price Group, Inc. | 138,505 | 17,105,367 | ||||||
31,046,368 | ||||||||
Chemicals — 0.4% | ||||||||
Dow, Inc. | 71,778 | 2,925,672 |
10
Shares | Value | |||||||
Eastman Chemical Co. | 89,491 | $ | 6,232,153 | |||||
9,157,825 | ||||||||
Commercial Services and Supplies — 0.1% | ||||||||
Waste Management, Inc. | 12,437 | 1,317,203 | ||||||
Communications Equipment — 1.5% | ||||||||
Cisco Systems, Inc. | 420,017 | 19,589,593 | ||||||
Juniper Networks, Inc. | 326,576 | 7,465,527 | ||||||
Motorola Solutions, Inc. | 31,330 | 4,390,273 | ||||||
31,445,393 | ||||||||
Consumer Finance — 0.1% | ||||||||
Discover Financial Services | 27,359 | 1,370,412 | ||||||
Containers and Packaging — 1.8% | ||||||||
Amcor plc | 1,349,459 | 13,777,976 | ||||||
International Paper Co. | 539,508 | 18,996,077 | ||||||
Packaging Corp. of America | 27,949 | 2,789,310 | ||||||
35,563,363 | ||||||||
Diversified Consumer Services — 0.1% | ||||||||
H&R Block, Inc. | 113,604 | 1,622,265 | ||||||
Diversified Financial Services — 0.7% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 85,040 | 15,180,490 | ||||||
Diversified Telecommunication Services — 3.3% | ||||||||
AT&T, Inc. | 1,102,987 | 33,343,297 | ||||||
Verizon Communications, Inc. | 625,165 | 34,465,346 | ||||||
67,808,643 | ||||||||
Electric Utilities — 1.8% | ||||||||
Evergy, Inc. | 59,687 | 3,538,842 | ||||||
IDACORP, Inc. | 10,673 | 932,500 | ||||||
NextEra Energy, Inc. | 36,831 | 8,845,701 | ||||||
NRG Energy, Inc. | 174,832 | 5,692,530 | ||||||
OGE Energy Corp. | 272,994 | 8,288,098 | ||||||
PPL Corp. | 349,180 | 9,022,811 | ||||||
36,320,482 | ||||||||
Electrical Equipment — 0.8% | ||||||||
Eaton Corp. plc | 72,514 | 6,343,525 | ||||||
Emerson Electric Co. | 161,435 | 10,013,813 | ||||||
16,357,338 | ||||||||
Entertainment — 0.9% | ||||||||
Activision Blizzard, Inc. | 57,017 | 4,327,590 | ||||||
Electronic Arts, Inc.(1) | 78,755 | 10,399,598 | ||||||
Zynga, Inc., Class A(1) | 352,419 | 3,362,077 | ||||||
18,089,265 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 2.9% | ||||||||
Digital Realty Trust, Inc. | 57,033 | 8,104,960 | ||||||
Extra Space Storage, Inc. | 83,278 | 7,692,389 | ||||||
Healthcare Trust of America, Inc., Class A | 92,874 | 2,463,019 | ||||||
Industrial Logistics Properties Trust | 59,022 | 1,212,902 | ||||||
Life Storage, Inc. | 82,875 | 7,868,981 | ||||||
National Retail Properties, Inc. | 112,538 | 3,992,848 | ||||||
Prologis, Inc. | 85,991 | 8,025,540 | ||||||
Public Storage | 15,246 | 2,925,555 | ||||||
Realty Income Corp. | 233,548 | 13,896,106 |
11
Shares | Value | |||||||
Simon Property Group, Inc. | 24,645 | $ | 1,685,225 | |||||
57,867,525 | ||||||||
Food and Staples Retailing — 0.4% | ||||||||
Sysco Corp. | 63,774 | 3,485,887 | ||||||
Walgreens Boots Alliance, Inc. | 40,833 | 1,730,911 | ||||||
Walmart, Inc. | 28,919 | 3,463,918 | ||||||
8,680,716 | ||||||||
Food Products — 2.5% | ||||||||
Campbell Soup Co. | 72,231 | 3,584,825 | ||||||
General Mills, Inc. | 427,858 | 26,377,446 | ||||||
Hershey Co. (The) | 67,204 | 8,710,982 | ||||||
Kellogg Co. | 194,505 | 12,849,000 | ||||||
51,522,253 | ||||||||
Health Care Equipment and Supplies — 1.5% | ||||||||
Abbott Laboratories | 96,769 | 8,847,590 | ||||||
Baxter International, Inc. | 63,854 | 5,497,829 | ||||||
DexCom, Inc.(1) | 7,649 | 3,100,905 | ||||||
Edwards Lifesciences Corp.(1) | 48,798 | 3,372,430 | ||||||
Medtronic plc | 108,012 | 9,904,700 | ||||||
30,723,454 | ||||||||
Health Care Providers and Services — 1.7% | ||||||||
Cardinal Health, Inc. | 232,275 | 12,122,432 | ||||||
Cigna Corp. | 14,899 | 2,795,798 | ||||||
CVS Health Corp. | 105,601 | 6,860,897 | ||||||
Humana, Inc. | 12,435 | 4,821,671 | ||||||
McKesson Corp. | 26,422 | 4,053,663 | ||||||
UnitedHealth Group, Inc. | 12,488 | 3,683,336 | ||||||
34,337,797 | ||||||||
Health Care Technology — 0.3% | ||||||||
Cerner Corp. | 90,913 | 6,232,086 | ||||||
Hotels, Restaurants and Leisure — 1.0% | ||||||||
Darden Restaurants, Inc. | 25,441 | 1,927,665 | ||||||
McDonald's Corp. | 53,548 | 9,878,000 | ||||||
Starbucks Corp. | 75,872 | 5,583,420 | ||||||
Vail Resorts, Inc. | 14,781 | 2,692,359 | ||||||
20,081,444 | ||||||||
Household Durables — 0.2% | ||||||||
Leggett & Platt, Inc. | 90,852 | 3,193,448 | ||||||
Household Products — 2.4% | ||||||||
Clorox Co. (The) | 47,757 | 10,476,453 | ||||||
Colgate-Palmolive Co. | 29,794 | 2,182,708 | ||||||
Kimberly-Clark Corp. | 109,275 | 15,446,021 | ||||||
Procter & Gamble Co. (The) | 175,336 | 20,964,926 | ||||||
49,070,108 | ||||||||
Industrial Conglomerates — 1.9% | ||||||||
3M Co. | 134,592 | 20,995,006 | ||||||
Carlisle Cos., Inc. | 39,379 | 4,712,485 | ||||||
Honeywell International, Inc. | 89,530 | 12,945,143 | ||||||
38,652,634 | ||||||||
Insurance — 1.3% | ||||||||
Marsh & McLennan Cos., Inc. | 28,216 | 3,029,552 | ||||||
MetLife, Inc. | 124,418 | 4,543,745 |
12
Shares | Value | |||||||
Old Republic International Corp. | 564,109 | $ | 9,200,618 | |||||
Prudential Financial, Inc. | 39,502 | 2,405,672 | ||||||
Travelers Cos., Inc. (The) | 70,563 | 8,047,710 | ||||||
27,227,297 | ||||||||
Interactive Media and Services — 5.7% | ||||||||
Alphabet, Inc., Class A(1) | 47,706 | 67,649,493 | ||||||
Facebook, Inc., Class A(1) | 208,378 | 47,316,393 | ||||||
114,965,886 | ||||||||
Internet and Direct Marketing Retail — 4.6% | ||||||||
Amazon.com, Inc.(1) | 30,706 | 84,712,327 | ||||||
eBay, Inc. | 160,900 | 8,439,205 | ||||||
93,151,532 | ||||||||
IT Services — 4.1% | ||||||||
Automatic Data Processing, Inc. | 46,650 | 6,945,719 | ||||||
International Business Machines Corp. | 248,962 | 30,067,141 | ||||||
Mastercard, Inc., Class A | 10,672 | 3,155,710 | ||||||
Paychex, Inc. | 195,694 | 14,823,821 | ||||||
Visa, Inc., Class A | 50,049 | 9,667,965 | ||||||
Western Union Co. (The) | 850,815 | 18,394,620 | ||||||
83,054,976 | ||||||||
Life Sciences Tools and Services — 0.3% | ||||||||
Agilent Technologies, Inc. | 79,823 | 7,053,959 | ||||||
Machinery — 2.1% | ||||||||
Caterpillar, Inc. | 56,533 | 7,151,424 | ||||||
Cummins, Inc. | 160,833 | 27,865,926 | ||||||
Snap-on, Inc. | 50,359 | 6,975,225 | ||||||
41,992,575 | ||||||||
Media — 0.9% | ||||||||
Discovery, Inc., Class C(1) | 199,575 | 3,843,814 | ||||||
Interpublic Group of Cos., Inc. (The) | 799,130 | 13,713,071 | ||||||
17,556,885 | ||||||||
Metals and Mining — 0.4% | ||||||||
Reliance Steel & Aluminum Co. | 38,554 | 3,659,931 | ||||||
Steel Dynamics, Inc. | 163,368 | 4,262,271 | ||||||
7,922,202 | ||||||||
Multi-Utilities — 0.2% | ||||||||
Dominion Energy, Inc. | 38,710 | 3,142,478 | ||||||
Multiline Retail — 0.7% | ||||||||
Target Corp. | 115,312 | 13,829,368 | ||||||
Oil, Gas and Consumable Fuels — 3.5% | ||||||||
Chevron Corp. | 336,199 | 29,999,037 | ||||||
ConocoPhillips | 87,602 | 3,681,036 | ||||||
EOG Resources, Inc. | 80,519 | 4,079,092 | ||||||
Exxon Mobil Corp. | 371,472 | 16,612,228 | ||||||
Kinder Morgan, Inc. | 321,597 | 4,878,626 | ||||||
Phillips 66 | 37,409 | 2,689,707 | ||||||
Valero Energy Corp. | 118,773 | 6,986,228 | ||||||
Williams Cos., Inc. (The) | 152,883 | 2,907,835 | ||||||
71,833,789 | ||||||||
Personal Products — 0.1% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 15,421 | 2,909,634 |
13
Shares | Value | |||||||
Pharmaceuticals — 6.4% | ||||||||
Bristol-Myers Squibb Co. | 548,680 | $ | 32,262,384 | |||||
Eli Lilly & Co. | 16,933 | 2,780,060 | ||||||
Jazz Pharmaceuticals plc(1) | 44,955 | 4,960,335 | ||||||
Johnson & Johnson | 240,180 | 33,776,513 | ||||||
Merck & Co., Inc. | 323,847 | 25,043,088 | ||||||
Mylan NV(1) | 241,839 | 3,888,771 | ||||||
Pfizer, Inc. | 828,888 | 27,104,638 | ||||||
129,815,789 | ||||||||
Professional Services — 0.2% | ||||||||
Robert Half International, Inc. | 69,330 | 3,662,704 | ||||||
Road and Rail — 0.4% | ||||||||
Kansas City Southern | 26,511 | 3,957,827 | ||||||
Union Pacific Corp. | 21,355 | 3,610,490 | ||||||
7,568,317 | ||||||||
Semiconductors and Semiconductor Equipment — 5.1% | ||||||||
Applied Materials, Inc. | 114,796 | 6,939,418 | ||||||
Broadcom, Inc. | 102,076 | 32,216,207 | ||||||
Intel Corp. | 231,754 | 13,865,842 | ||||||
Lam Research Corp. | 11,531 | 3,729,817 | ||||||
Maxim Integrated Products, Inc. | 146,684 | 8,890,517 | ||||||
QUALCOMM, Inc. | 116,255 | 10,603,619 | ||||||
Texas Instruments, Inc. | 215,225 | 27,327,118 | ||||||
103,572,538 | ||||||||
Software — 9.2% | ||||||||
Adobe, Inc.(1) | 39,617 | 17,245,676 | ||||||
Autodesk, Inc.(1) | 15,049 | 3,599,570 | ||||||
Cadence Design Systems, Inc.(1) | 25,594 | 2,456,000 | ||||||
Intuit, Inc. | 11,621 | 3,442,024 | ||||||
Microsoft Corp. | 568,482 | 115,691,772 | ||||||
NortonLifeLock, Inc. | 450,285 | 8,929,152 | ||||||
Oracle Corp. (New York) | 59,931 | 3,312,387 | ||||||
salesforce.com, Inc.(1) | 90,007 | 16,861,011 | ||||||
ServiceNow, Inc.(1) | 27,204 | 11,019,252 | ||||||
VMware, Inc., Class A(1) | 21,573 | 3,340,795 | ||||||
185,897,639 | ||||||||
Specialty Retail — 2.3% | ||||||||
AutoZone, Inc.(1) | 2,206 | 2,488,633 | ||||||
Best Buy Co., Inc. | 143,763 | 12,546,197 | ||||||
Home Depot, Inc. (The) | 125,029 | 31,321,015 | ||||||
46,355,845 | ||||||||
Technology Hardware, Storage and Peripherals — 7.9% | ||||||||
Apple, Inc. | 324,827 | 118,496,890 | ||||||
HP, Inc. | 826,677 | 14,408,980 | ||||||
NetApp, Inc. | 315,846 | 14,014,087 | ||||||
Seagate Technology plc | 265,108 | 12,833,878 | ||||||
159,753,835 | ||||||||
Textiles, Apparel and Luxury Goods — 0.2% | ||||||||
Ralph Lauren Corp. | 57,207 | 4,148,652 | ||||||
Trading Companies and Distributors — 1.8% | ||||||||
Fastenal Co. | 416,821 | 17,856,612 |
14
Shares | Value | |||||||
W.W. Grainger, Inc. | 19,931 | $ | 6,261,523 | |||||
Watsco, Inc. | 69,675 | 12,381,247 | ||||||
36,499,382 | ||||||||
TOTAL COMMON STOCKS
(Cost $1,538,528,925) | 1,969,211,541 | |||||||
TEMPORARY CASH INVESTMENTS — 2.8% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $24,719,697), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $24,244,940) | 24,244,927 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.125%, 01/15/30, valued at $32,204,555), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $31,573,044) | 31,573,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 77,560 | 77,560 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $55,895,487) | 55,895,487 | |||||||
TOTAL INVESTMENT SECURITIES — 99.8%
(Cost $1,594,424,412) | 2,025,107,028 | |||||||
OTHER ASSETS AND LIABILITIES — 0.2% | 4,192,467 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 2,029,299,495 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
S&P 500 E-Mini | 266 | September 2020 | $ | 13,300 | $ | 41,099,660 | $ | 884,027 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
See Notes to Financial Statements.
15
Statement of Assets and Liabilities |
JUNE 30, 2020 | |||||
Assets | |||||
Investment securities, at value (cost of $1,594,424,412) | $ | 2,025,107,028 | |||
Deposits with broker for futures contracts | 3,192,000 | ||||
Receivable for capital shares sold | 974,842 | ||||
Receivable for variation margin on futures contracts | 565,250 | ||||
Dividends and interest receivable | 1,562,557 | ||||
2,031,401,677 | |||||
Liabilities | |||||
Payable for capital shares redeemed | 1,011,483 | ||||
Accrued management fees | 1,051,932 | ||||
Distribution and service fees payable | 38,767 | ||||
2,102,182 | |||||
Net Assets | $ | 2,029,299,495 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 1,564,132,354 | |||
Distributable earnings | 465,167,141 | ||||
$ | 2,029,299,495 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $1,588,536,921 | 44,137,434 | $35.99 | ||||||||
I Class, $0.01 Par Value | $272,306,984 | 7,553,742 | $36.05 | ||||||||
A Class, $0.01 Par Value | $130,397,742 | 3,629,618 | $35.93* | ||||||||
C Class, $0.01 Par Value | $7,451,620 | 207,902 | $35.84 | ||||||||
R Class, $0.01 Par Value | $14,217,872 | 395,273 | $35.97 | ||||||||
R5 Class, $0.01 Par Value | $16,388,356 | 454,486 | $36.06 |
*Maximum offering price $38.12 (net asset value divided by 0.9425).
See Notes to Financial Statements.
16
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends | $ | 57,318,552 | |||
Interest | 630,991 | ||||
Securities lending, net | 158,373 | ||||
58,107,916 | |||||
Expenses: | |||||
Management fees | 13,401,156 | ||||
Distribution and service fees: | |||||
A Class | 349,656 | ||||
C Class | 81,942 | ||||
R Class | 95,027 | ||||
Directors' fees and expenses | 161,857 | ||||
Other expenses | 11,423 | ||||
14,101,061 | |||||
Net investment income (loss) | 44,006,855 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 42,593,197 | ||||
Futures contract transactions | 3,397,912 | ||||
45,991,109 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (51,179,283) | ||||
Futures contracts | 884,027 | ||||
(50,295,256) | |||||
Net realized and unrealized gain (loss) | (4,304,147) | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 39,702,708 |
See Notes to Financial Statements.
17
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 44,006,855 | $ | 45,547,410 | ||||||||||
Net realized gain (loss) | 45,991,109 | 78,603,188 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (50,295,256) | (26,164,480) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 39,702,708 | 97,986,118 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (67,946,479) | (184,522,529) | ||||||||||||
I Class | (12,272,211) | (29,223,053) | ||||||||||||
A Class | (5,399,427) | (15,989,055) | ||||||||||||
C Class | (260,089) | (863,598) | ||||||||||||
R Class | (665,352) | (2,594,469) | ||||||||||||
R5 Class | (617,245) | (1,482,829) | ||||||||||||
Decrease in net assets from distributions | (87,160,803) | (234,675,533) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (137,072,165) | 130,765,006 | ||||||||||||
Net increase (decrease) in net assets | (184,530,260) | (5,924,409) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 2,213,829,755 | 2,219,754,164 | ||||||||||||
End of period | $ | 2,029,299,495 | $ | 2,213,829,755 | ||||||||||
See Notes to Financial Statements.
18
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Income & Growth Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth by investing in common stocks. Income is a secondary objective.
The fund offers the Investor Class, I Class, A Class, C Class, R Class and R5 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
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The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
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Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund's assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds.
The Investment Category Fee range, the Complex Fee range and the effective annual management fee for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||
Investor Class | 0.3380% to 0.5200% | 0.2500% to 0.3100% | 0.66% | ||||||||
I Class | 0.0500% to 0.1100% | 0.46% | |||||||||
A Class | 0.2500% to 0.3100% | 0.66% | |||||||||
C Class | 0.2500% to 0.3100% | 0.66% | |||||||||
R Class | 0.2500% to 0.3100% | 0.66% | |||||||||
R5 Class | 0.0500% to 0.1100% | 0.46% |
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Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended June 30, 2020 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $55,595,370 and $47,701,341, respectively. The effect of interfund transactions on the Statement of Operations was $7,448,889 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $2,039,418,038 and $2,252,798,535, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 370,000,000 | 370,000,000 | ||||||||||||||||||
Sold | 2,749,247 | $ | 97,021,684 | 3,531,134 | $ | 132,444,830 | ||||||||||||||
Issued in reinvestment of distributions | 1,711,370 | 64,723,217 | 5,087,471 | 176,541,937 | ||||||||||||||||
Redeemed | (6,693,738) | (242,453,016) | (6,474,475) | (243,095,222) | ||||||||||||||||
(2,233,121) | (80,708,115) | 2,144,130 | 65,891,545 | |||||||||||||||||
I Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||||||||||||
Sold | 1,482,368 | 52,890,938 | 2,716,347 | 98,765,501 | ||||||||||||||||
Issued in reinvestment of distributions | 317,816 | 12,031,531 | 814,500 | 28,358,276 | ||||||||||||||||
Redeemed | (2,559,456) | (94,053,880) | (2,143,883) | (81,643,945) | ||||||||||||||||
(759,272) | (29,131,411) | 1,386,964 | 45,479,832 | |||||||||||||||||
A Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 681,396 | 24,560,801 | 799,389 | 30,028,792 | ||||||||||||||||
Issued in reinvestment of distributions | 129,109 | 4,884,893 | 422,928 | 14,629,031 | ||||||||||||||||
Redeemed | (1,324,116) | (48,422,778) | (1,004,009) | (37,933,837) | ||||||||||||||||
(513,611) | (18,977,084) | 218,308 | 6,723,986 | |||||||||||||||||
C Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||||||
Sold | 45,917 | 1,621,543 | 94,306 | 3,495,190 | ||||||||||||||||
Issued in reinvestment of distributions | 6,114 | 232,367 | 22,498 | 772,317 | ||||||||||||||||
Redeemed | (92,408) | (3,276,568) | (85,258) | (3,171,487) | ||||||||||||||||
(40,377) | (1,422,658) | 31,546 | 1,096,020 | |||||||||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 134,521 | 4,748,380 | 269,308 | 9,978,276 | ||||||||||||||||
Issued in reinvestment of distributions | 11,377 | 431,716 | 31,358 | 1,083,316 | ||||||||||||||||
Redeemed | (421,061) | (15,387,717) | (269,160) | (10,039,390) | ||||||||||||||||
(275,163) | (10,207,621) | 31,506 | 1,022,202 | |||||||||||||||||
R5 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 176,026 | 6,570,965 | 336,733 | 13,331,436 | ||||||||||||||||
Issued in reinvestment of distributions | 16,359 | 616,770 | 42,842 | 1,482,829 | ||||||||||||||||
Redeemed | (106,978) | (3,813,011) | (117,421) | (4,262,844) | ||||||||||||||||
85,407 | 3,374,724 | 262,154 | 10,551,421 | |||||||||||||||||
Net increase (decrease) | (3,736,137) | $ | (137,072,165) | 4,074,608 | $ | 130,765,006 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
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The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 1,969,211,541 | — | — | |||||||
Temporary Cash Investments | 77,560 | $ | 55,817,927 | — | |||||||
$ | 1,969,289,101 | $ | 55,817,927 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 884,027 | — | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts 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's average notional exposure to equity price risk derivative instruments held during the period was $15,992 futures contracts purchased.
The value of equity price risk derivative instruments as of June 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $565,250 in receivable for variation margin on futures contracts*. For the year ended June 30, 2020, the effect of equity price risk derivative instruments on the Statement of Operations was $3,397,912 in net realized gain (loss) on futures contract transactions and $884,027 in change in net unrealized appreciation (depreciation) on futures contracts.
*Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
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9. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 44,101,500 | $ | 79,811,845 | ||||
Long-term capital gains | $ | 43,059,303 | $ | 154,863,688 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,598,073,117 | |||
Gross tax appreciation of investments | $ | 511,537,889 | |||
Gross tax depreciation of investments | (84,503,978) | ||||
Net tax appreciation (depreciation) of investments | $ | 427,033,911 | |||
Undistributed ordinary income | $ | 1,401,117 | |||
Accumulated long-term gains | $ | 36,732,113 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
10. Corporate Event
The fund will be renamed to Disciplined Core Value Fund effective September 25, 2020.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $36.82 | 0.76 | (0.07) | 0.69 | (0.77) | (0.75) | (1.52) | $35.99 | 1.70% | 0.67% | 2.08% | 100% | $1,588,537 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $39.61 | 0.78 | 0.63 | 1.41 | (0.73) | (3.47) | (4.20) | $36.82 | 4.43% | 0.67% | 2.07% | 72% | $1,707,536 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $37.90 | 0.93 | 4.40 | 5.33 | (0.88) | (2.74) | (3.62) | $39.61 | 14.32% | 0.66% | 2.33% | 77% | $1,751,738 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $33.91 | 0.79 | 4.55 | 5.34 | (0.76) | (0.59) | (1.35) | $37.90 | 15.95% | 0.67% | 2.16% | 81% | $1,691,048 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $36.78 | 0.82 | (0.61) | 0.21 | (0.84) | (2.24) | (3.08) | $33.91 | 1.00% | 0.68% | 2.40% | 79% | $1,551,664 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $36.88 | 0.83 | (0.07) | 0.76 | (0.84) | (0.75) | (1.59) | $36.05 | 1.90% | 0.47% | 2.28% | 100% | $272,307 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $39.66 | 0.85 | 0.65 | 1.50 | (0.81) | (3.47) | (4.28) | $36.88 | 4.65% | 0.47% | 2.27% | 72% | $306,583 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $37.94 | 0.99 | 4.43 | 5.42 | (0.96) | (2.74) | (3.70) | $39.66 | 14.55% | 0.46% | 2.53% | 77% | $274,687 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $33.95 | 0.86 | 4.55 | 5.41 | (0.83) | (0.59) | (1.42) | $37.94 | 16.16% | 0.47% | 2.36% | 81% | $181,620 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $36.82 | 0.88 | (0.60) | 0.28 | (0.91) | (2.24) | (3.15) | $33.95 | 1.21% | 0.48% | 2.60% | 79% | $127,626 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $36.76 | 0.67 | (0.07) | 0.60 | (0.68) | (0.75) | (1.43) | $35.93 | 1.46% | 0.92% | 1.83% | 100% | $130,398 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $39.55 | 0.69 | 0.63 | 1.32 | (0.64) | (3.47) | (4.11) | $36.76 | 4.18% | 0.92% | 1.82% | 72% | $152,312 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $37.85 | 0.83 | 4.39 | 5.22 | (0.78) | (2.74) | (3.52) | $39.55 | 14.03% | 0.91% | 2.08% | 77% | $155,233 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $33.87 | 0.69 | 4.55 | 5.24 | (0.67) | (0.59) | (1.26) | $37.85 | 15.65% | 0.92% | 1.91% | 81% | $156,863 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $36.74 | 0.73 | (0.61) | 0.12 | (0.75) | (2.24) | (2.99) | $33.87 | 0.75% | 0.93% | 2.15% | 79% | $205,390 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $36.68 | 0.39 | (0.08) | 0.31 | (0.40) | (0.75) | (1.15) | $35.84 | 0.68% | 1.67% | 1.08% | 100% | $7,452 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $39.48 | 0.41 | 0.63 | 1.04 | (0.37) | (3.47) | (3.84) | $36.68 | 3.40% | 1.67% | 1.07% | 72% | $9,107 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $37.79 | 0.53 | 4.39 | 4.92 | (0.49) | (2.74) | (3.23) | $39.48 | 13.18% | 1.66% | 1.33% | 77% | $8,557 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $33.82 | 0.42 | 4.53 | 4.95 | (0.39) | (0.59) | (0.98) | $37.79 | 14.77% | 1.67% | 1.16% | 81% | $7,368 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $36.68 | 0.47 | (0.60) | (0.13) | (0.49) | (2.24) | (2.73) | $33.82 | 0.01% | 1.68% | 1.40% | 79% | $6,734 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $36.81 | 0.58 | (0.09) | 0.49 | (0.58) | (0.75) | (1.33) | $35.97 | 1.18% | 1.17% | 1.58% | 100% | $14,218 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $39.59 | 0.60 | 0.64 | 1.24 | (0.55) | (3.47) | (4.02) | $36.81 | 3.95% | 1.17% | 1.57% | 72% | $24,676 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $37.89 | 0.73 | 4.40 | 5.13 | (0.69) | (2.74) | (3.43) | $39.59 | 13.73% | 1.16% | 1.83% | 77% | $25,298 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $33.91 | 0.60 | 4.55 | 5.15 | (0.58) | (0.59) | (1.17) | $37.89 | 15.34% | 1.17% | 1.66% | 81% | $28,052 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $36.77 | 0.65 | (0.60) | 0.05 | (0.67) | (2.24) | (2.91) | $33.91 | 0.52% | 1.18% | 1.90% | 79% | $23,290 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R5 Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $36.89 | 0.83 | (0.07) | 0.76 | (0.84) | (0.75) | (1.59) | $36.06 | 1.90% | 0.47% | 2.28% | 100% | $16,388 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $39.66 | 0.88 | 0.63 | 1.51 | (0.81) | (3.47) | (4.28) | $36.89 | 4.68% | 0.47% | 2.27% | 72% | $13,615 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $37.95 | 0.91 | 4.50 | 5.41 | (0.96) | (2.74) | (3.70) | $39.66 | 14.52% | 0.46% | 2.53% | 77% | $4,241 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017(3) | $37.51 | 0.20 | 0.43 | 0.63 | (0.19) | — | (0.19) | $37.95 | 1.68% | 0.47%(4) | 2.37%(4) | 81%(5) | $175 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)April 10, 2017 (commencement of sale) through June 30, 2017.
(4)Annualized.
(5)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended June 30, 2017.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Income & Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Income & Growth Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
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renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board found the investment
34
management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
35
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
36
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
37
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for
the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $44,101,500, or up to the maximum amount
allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as
qualified for the corporate dividends received deduction.
The fund hereby designates $43,059,303, or up to the maximum amount allowable, as long-term
capital gain distributions (20% rate gain distributions) for the fiscal year ended June 30, 2020.
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Notes |
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Contact Us | americancentury.com | ||||||||||
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American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92991 2008 |
Annual Report | |||||
June 30, 2020 | |||||
Multi-Asset Real Return Fund | |||||
Investor Class (ASIOX) | |||||
I Class (ASINX) | |||||
A Class (ASIDX) | |||||
C Class (ASIZX) | |||||
R Class (ASIUX) | |||||
R5 Class (AMRUX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||||||||||||||||||||
Investor Class | ASIOX | -0.26% | 3.02% | 1.81% | — | 4/30/10 | |||||||||||||||||||||||||||||||||||
Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index | — | 8.28% | 3.74% | 3.52% | — | — | |||||||||||||||||||||||||||||||||||
I Class | ASINX | -0.01% | 3.24% | 2.02% | — | 4/30/10 | |||||||||||||||||||||||||||||||||||
A Class | ASIDX | 4/30/10 | |||||||||||||||||||||||||||||||||||||||
No sales charge | -0.38% | 2.79% | 1.57% | — | |||||||||||||||||||||||||||||||||||||
With sales charge | -6.09% | 1.58% | 0.98% | — | |||||||||||||||||||||||||||||||||||||
C Class | ASIZX | -1.17% | 2.01% | 0.80% | — | 4/30/10 | |||||||||||||||||||||||||||||||||||
R Class | ASIUX | -0.70% | 2.52% | 1.30% | — | 4/30/10 | |||||||||||||||||||||||||||||||||||
R5 Class | AMRUX | 0.09% | — | — | 4.33% | 4/10/17 |
Average annual returns since inception are presented when ten years of performance history is not available.
Fund returns would have been lower if a portion of the fees had not been waived.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $11,968 | ||||||||
Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index — $14,132 | ||||||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||||||||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | R5 Class | ||||||||||||||||||||||||
0.93% | 0.73% | 1.18% | 1.93% | 1.43% | 0.73% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Bob Gahagan, Brian Howell, John Lovito, Steven Brown and Peruvemba Satish
The fund's Board of Directors has approved plans to liquidate Multi-Asset Real Return on October 16, 2020. Prior to the liquidation, the fund will close to all investments after the close of business on October 9, 2020.
Performance Summary
For the 12 months ended June 30, 2020, Multi-Asset Real Return returned -0.26%.* The Bloomberg Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index returned 8.28%. Fund returns reflect operating expenses, while index returns do not.
Portfolio performance reflected the generally challenging backdrop for commodity-related investments. Negative results from these assets in early 2020 overwhelmed positive performance from other portfolio components, particularly fixed-income investments.
Inflation Weakened as Pandemic Triggered Recession
U.S. economic growth remained generally upbeat during the first half of the period, supported by a dovish Federal Reserve (Fed). The U.S. economy grew at an annualized pace of 2.1% in both the third and fourth quarters of 2019. Monthly year-over-year headline inflation (Consumer Price Index) steadily increased amid rising energy prices, ending 2019 at 2.3%. However, annual core inflation (Personal Consumption Expenditures Index), which excludes volatile food and energy prices, remained below the Fed’s 2.0% target. The market’s expectations for longer-term inflation, as measured by the 10-year inflation breakeven rate (the yield difference between 10-year nominal Treasuries and TIPS) increased modestly, which supported returns for inflation-indexed securities.
This backdrop took a dramatic turn in early 2020, when the COVID-19 outbreak expanded into a pandemic. Beginning in late February, U.S. and global growth grinded to a halt as businesses shut down and governments issued stay-at-home orders to slow the virus’s spread. Uncertainty gripped the financial markets, and investors shed stocks and other riskier assets in favor of perceived safe-haven securities, including U.S. Treasuries. Unemployment soared, and the U.S. economy contracted 5% in the first quarter of 2020. Against this backdrop, measures of current inflation plunged, while the 10-year breakeven rate tumbled to a record low in March.
The Fed and the federal government quickly came to the rescue, launching massive stimulus plans to stabilize the financial markets and provide relief to ailing businesses and individuals. These actions helped calm the market unrest and ultimately sparked a sharp second-quarter-2020 rebound among stocks and credit-sensitive securities. Current inflation remained weak, but the 10-year inflation breakeven rate jumped from 0.50% on March 19 to 1.34% on June 30, fueling a rally among TIPS.
Inflation Was Weak Outside the U.S.
Outside the U.S., developed markets central banks expanded their already aggressive stimulus programs in an effort to battle the pandemic’s economic fallout. Nevertheless, economies contracted, and inflation remained weak. At the end of June 2020, year-over-year headline inflation
in the eurozone was 0.3%, down from 1.0% a year earlier. Annual headline inflation in the U.K. began the reporting period at 2.1% and ended it at 0.6%. In Japan, the annual inflation rate ended the period at 0.1% compared with 0.7% in June 2019.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structures; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Commodity Allocations Weighed on Performance
Our exposure to commodity-related investments detracted from results, largely due to energy sector challenges. Already struggling with rising inventories and excess supply, the sector declined amid falling demand due to the pandemic. Additionally, an oil price war erupted when negotiations between Saudi Arabia and Russia failed in early 2020, further pressuring the sector. Oil and other commodities prices plunged in the second half of the reporting period, triggering a steep decline for the asset class for the 12-month period overall. Holdings in the metals and mining industry also weighed on results.
The portfolio’s non-dollar currency overlay strategy modestly detracted from performance. Despite the Fed’s three rate cuts in 2019 and its drop to near-zero interest rate policy in March 2020, the U.S. dollar remained overvalued as investors sought perceived safety in the reserve currency.
Fixed-Income Holdings Contributed to Results
The portfolio’s fixed-income component was the main contributor to performance. U.S. Treasury yields declined significantly during the 12-month period, and bonds generally delivered strong results for the year. Although corporate bonds and securitized securities declined in the first-quarter 2020 sell-off, they bounced back sharply in the final months of the period. TIPS also rallied as breakeven rates recovered. This late-period rebound, combined with solid performance in the first half, led to strong results for the fixed-income portfolio for the 12 months. Our investment-grade corporate bonds, securitized bonds and inflation-linked securities, including an inflation overlay for the non-inflation-linked securities (created with inflation swaps), lifted portfolio performance.
Our equity positions modestly aided performance, largely due to strong performance early and late in the period, which more than offset the effects of the early 2020 sell-off. Within the portfolio’s equity component, we favored exposure to the information technology, health care and industrials sectors. Results from global real estate investment trusts (REITs) were slightly positive. While the rate-sensitive asset class benefited from declining interest rates, the pandemic-driven sell-off weighed on REITs. Uncertainty stemming from COVID-19’s near- and longer-term impact on retail and commercial properties weighed on the sector.
Outlook
We expect annual inflation rates to remain weak in the near term. But we expect higher inflation in the intermediate term, due to the massive increase in U.S. debt, a weaker U.S. dollar and onshoring trends among U.S. businesses. In our view, inflation breakeven rates don’t adequately reflect this likely increase, highlighting continued value in inflation-linked securities.
Within the portfolio, our corporate credit exposure remains somewhat defensive, given challenging economic and earnings backdrops and the potential for ratings downgrades. In addition to focusing on high-quality bonds the Fed is buying via quantitative easing, we’re looking for opportunities created by market dislocations. Elsewhere in the portfolio, we continue to favor select global REITs. In addition to low interest rates, certain holdings should benefit from long-term trends, including the ongoing demand for data centers from the e-commerce industry. We also have a favorable outlook for the information technology and health care sectors, where we believe favorable customer demand trends will continue to drive earnings growth.
6
Fund Characteristics |
JUNE 30, 2020 | ||||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 44.9% | |||||||
U.S. Treasury Securities | 33.4% | |||||||
Corporate Bonds | 2.8% | |||||||
Asset-Backed Securities | 2.7% | |||||||
Collateralized Mortgage Obligations | 2.3% | |||||||
Exchange-Traded Funds | 1.1% | |||||||
Temporary Cash Investments | 11.4% | |||||||
Other Assets and Liabilities | 1.4% |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid
During Period(1)
1/1/20 - 6/30/20 |
Annualized
Expense Ratio(1) | |||||||||||||||||||||||
Actual | ||||||||||||||||||||||||||
Investor Class | $1,000 | $963.00 | $4.34 | 0.89% | ||||||||||||||||||||||
I Class | $1,000 | $964.60 | $3.37 | 0.69% | ||||||||||||||||||||||
A Class | $1,000 | $962.70 | $5.56 | 1.14% | ||||||||||||||||||||||
C Class | $1,000 | $958.40 | $9.20 | 1.89% | ||||||||||||||||||||||
R Class | $1,000 | $961.30 | $6.78 | 1.39% | ||||||||||||||||||||||
R5 Class | $1,000 | $964.60 | $3.37 | 0.69% | ||||||||||||||||||||||
Hypothetical | ||||||||||||||||||||||||||
Investor Class | $1,000 | $1,020.44 | $4.47 | 0.89% | ||||||||||||||||||||||
I Class | $1,000 | $1,021.43 | $3.47 | 0.69% | ||||||||||||||||||||||
A Class | $1,000 | $1,019.20 | $5.72 | 1.14% | ||||||||||||||||||||||
C Class | $1,000 | $1,015.47 | $9.47 | 1.89% | ||||||||||||||||||||||
R Class | $1,000 | $1,017.95 | $6.97 | 1.39% | ||||||||||||||||||||||
R5 Class | $1,000 | $1,021.43 | $3.47 | 0.69% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
JUNE 30, 2020
Shares/Principal Amount | Value | |||||||
COMMON STOCKS — 44.9% | ||||||||
Aerospace and Defense — 1.3% | ||||||||
Axon Enterprise, Inc.(1) | 196 | $ | 19,234 | |||||
General Dynamics Corp. | 167 | 24,960 | ||||||
L3Harris Technologies, Inc. | 146 | 24,772 | ||||||
Lockheed Martin Corp. | 73 | 26,639 | ||||||
Teledyne Technologies, Inc.(1) | 95 | 29,540 | ||||||
125,145 | ||||||||
Banks — 1.3% | ||||||||
Bank of America Corp. | 979 | 23,251 | ||||||
JPMorgan Chase & Co. | 248 | 23,327 | ||||||
Truist Financial Corp. | 744 | 27,937 | ||||||
Wells Fargo & Co. | 1,021 | 26,138 | ||||||
Zions Bancorp N.A. | 556 | 18,904 | ||||||
119,557 | ||||||||
Beverages — 1.0% | ||||||||
Coca-Cola Co. (The) | 839 | 37,486 | ||||||
Monster Beverage Corp.(1) | 490 | 33,967 | ||||||
PepsiCo, Inc. | 211 | 27,907 | ||||||
99,360 | ||||||||
Biotechnology — 1.8% | ||||||||
AbbVie, Inc. | 365 | 35,836 | ||||||
Gilead Sciences, Inc. | 426 | 32,776 | ||||||
Neurocrine Biosciences, Inc.(1) | 256 | 31,232 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 46 | 28,688 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 131 | 38,031 | ||||||
166,563 | ||||||||
Capital Markets — 0.7% | ||||||||
Intercontinental Exchange, Inc. | 336 | 30,778 | ||||||
S&P Global, Inc. | 101 | 33,277 | ||||||
64,055 | ||||||||
Chemicals — 1.8% | ||||||||
Air Liquide SA | 99 | 14,265 | ||||||
Air Products and Chemicals, Inc. | 77 | 18,592 | ||||||
Axalta Coating Systems Ltd.(1) | 625 | 14,094 | ||||||
Corteva, Inc. | 261 | 6,992 | ||||||
Eastman Chemical Co. | 111 | 7,730 | ||||||
FMC Corp. | 171 | 17,035 | ||||||
Koninklijke DSM NV | 55 | 7,602 | ||||||
Linde plc | 91 | 19,302 | ||||||
NewMarket Corp. | 26 | 10,412 | ||||||
Novozymes A/S, B Shares | 149 | 8,611 | ||||||
RPM International, Inc. | 175 | 13,136 | ||||||
Scotts Miracle-Gro Co. (The) | 140 | 18,826 | ||||||
Valvoline, Inc. | 342 | 6,611 | ||||||
Yara International ASA | 201 | 6,983 | ||||||
170,191 |
10
Shares/Principal Amount | Value | |||||||
Commercial Services and Supplies — 0.8% | ||||||||
A-Living Services Co. Ltd., H Shares | 1,750 | $ | 8,831 | |||||
Ever Sunshine Lifestyle Services Group Ltd. | 4,000 | 6,192 | ||||||
Waste Connections, Inc. | 345 | 32,322 | ||||||
Waste Management, Inc. | 267 | 28,278 | ||||||
75,623 | ||||||||
Communications Equipment — 0.3% | ||||||||
Cisco Systems, Inc. | 650 | 30,316 | ||||||
Containers and Packaging — 0.8% | ||||||||
Amcor plc | 765 | 7,810 | ||||||
Avery Dennison Corp. | 101 | 11,523 | ||||||
Ball Corp. | 155 | 10,771 | ||||||
Berry Global Group, Inc.(1) | 175 | 7,756 | ||||||
Crown Holdings, Inc.(1) | 215 | 14,003 | ||||||
Graphic Packaging Holding Co. | 724 | 10,129 | ||||||
Sonoco Products Co. | 221 | 11,556 | ||||||
73,548 | ||||||||
Diversified Financial Services — 0.3% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 181 | 32,310 | ||||||
Diversified Telecommunication Services — 0.1% | ||||||||
Cellnex Telecom SA | 185 | 11,260 | ||||||
Electric Utilities — 0.3% | ||||||||
NextEra Energy, Inc. | 130 | 31,222 | ||||||
Electrical Equipment — 1.0% | ||||||||
AMETEK, Inc. | 351 | 31,369 | ||||||
Eaton Corp. plc | 379 | 33,155 | ||||||
Sensata Technologies Holding plc(1) | 723 | 26,917 | ||||||
91,441 | ||||||||
Electronic Equipment, Instruments and Components — 0.6% | ||||||||
Amphenol Corp., Class A | 274 | 26,252 | ||||||
Trimble, Inc.(1) | 636 | 27,469 | ||||||
53,721 | ||||||||
Energy Equipment and Services — 0.1% | ||||||||
ChampionX Corp.(1) | 1,480 | 14,445 | ||||||
Entertainment — 0.4% | ||||||||
Activision Blizzard, Inc. | 456 | 34,610 | ||||||
Equity Real Estate Investment Trusts (REITs) — 6.5% | ||||||||
Agree Realty Corp. | 193 | 12,682 | ||||||
Alexandria Real Estate Equities, Inc. | 91 | 14,765 | ||||||
American Homes 4 Rent, Class A | 472 | 12,697 | ||||||
Boston Properties, Inc. | 153 | 13,828 | ||||||
Brixmor Property Group, Inc. | 1,284 | 16,461 | ||||||
Canadian Apartment Properties REIT | 154 | 5,512 | ||||||
Charter Hall Group | 2,205 | 14,998 | ||||||
Comforia Residential REIT, Inc. | 3 | 8,956 | ||||||
Cousins Properties, Inc. | 191 | 5,698 | ||||||
DiamondRock Hospitality Co. | 1,075 | 5,945 | ||||||
Embassy Office Parks REIT | 800 | 3,611 | ||||||
Equinix, Inc. | 74 | 51,970 | ||||||
GLP J-Reit | 4 | 5,808 | ||||||
Goodman Group | 1,885 | 19,400 |
11
Shares/Principal Amount | Value | |||||||
Healthpeak Properties, Inc. | 559 | $ | 15,406 | |||||
Inmobiliaria Colonial Socimi SA | 575 | 5,057 | ||||||
Invesco Office J-Reit, Inc. | 81 | 10,563 | ||||||
Invincible Investment Corp. | 26 | 6,715 | ||||||
Invitation Homes, Inc. | 1,117 | 30,751 | ||||||
JBG SMITH Properties | 184 | 5,441 | ||||||
Link REIT | 1,000 | 8,160 | ||||||
Mapletree Industrial Trust | 5,600 | 11,638 | ||||||
MGM Growth Properties LLC, Class A | 464 | 12,625 | ||||||
Mid-America Apartment Communities, Inc. | 161 | 18,462 | ||||||
Mitsui Fudosan Logistics Park, Inc. | 3 | 13,368 | ||||||
Omega Healthcare Investors, Inc. | 384 | 11,416 | ||||||
Orix JREIT, Inc. | 11 | 14,436 | ||||||
Prologis, Inc. | 606 | 56,558 | ||||||
QTS Realty Trust, Inc., Class A | 353 | 22,624 | ||||||
Realty Income Corp. | 279 | 16,601 | ||||||
Rexford Industrial Realty, Inc. | 425 | 17,608 | ||||||
Safestore Holdings plc | 528 | 4,747 | ||||||
SBA Communications Corp. | 21 | 6,256 | ||||||
Segro plc | 1,515 | 16,782 | ||||||
SOSiLA Logistics REIT, Inc. | 6 | 7,230 | ||||||
Stockland | 3,871 | 8,891 | ||||||
STORE Capital Corp. | 297 | 7,072 | ||||||
Sun Communities, Inc. | 159 | 21,573 | ||||||
UDR, Inc. | 111 | 4,149 | ||||||
Unibail-Rodamco-Westfield | 134 | 7,537 | ||||||
Urban Edge Properties | 229 | 2,718 | ||||||
VICI Properties, Inc. | 574 | 11,589 | ||||||
Welltower, Inc. | 383 | 19,820 | ||||||
Weyerhaeuser Co. | 928 | 20,843 | ||||||
608,967 | ||||||||
Food and Staples Retailing — 0.7% | ||||||||
Costco Wholesale Corp. | 97 | 29,411 | ||||||
Walmart, Inc. | 314 | 37,611 | ||||||
67,022 | ||||||||
Food Products — 0.7% | ||||||||
Campbell Soup Co. | 561 | 27,842 | ||||||
General Mills, Inc. | 584 | 36,004 | ||||||
63,846 | ||||||||
Gas Utilities — 0.1% | ||||||||
National Fuel Gas Co. | 202 | 8,470 | ||||||
Health Care Equipment and Supplies — 2.8% | ||||||||
Abbott Laboratories | 377 | 34,469 | ||||||
Danaher Corp. | 220 | 38,903 | ||||||
Edwards Lifesciences Corp.(1) | 507 | 35,039 | ||||||
IDEXX Laboratories, Inc.(1) | 107 | 35,327 | ||||||
Quidel Corp.(1) | 85 | 19,018 | ||||||
STERIS plc | 250 | 38,360 | ||||||
Tandem Diabetes Care, Inc.(1) | 306 | 30,269 | ||||||
Teleflex, Inc. | 80 | 29,118 | ||||||
260,503 |
12
Shares/Principal Amount | Value | |||||||
Health Care Providers and Services — 1.6% | ||||||||
Anthem, Inc. | 95 | $ | 24,983 | |||||
Chartwell Retirement Residences | 1,011 | 6,978 | ||||||
Chemed Corp. | 68 | 30,673 | ||||||
Humana, Inc. | 74 | 28,694 | ||||||
Laboratory Corp. of America Holdings(1) | 184 | 30,564 | ||||||
UnitedHealth Group, Inc. | 91 | 26,840 | ||||||
148,732 | ||||||||
Hotels, Restaurants and Leisure — 0.1% | ||||||||
Wyndham Hotels & Resorts, Inc. | 217 | 9,249 | ||||||
Household Durables — 0.1% | ||||||||
Taylor Wimpey plc | 4,788 | 8,447 | ||||||
Household Products — 1.0% | ||||||||
Church & Dwight Co., Inc. | 423 | 32,698 | ||||||
Kimberly-Clark Corp. | 233 | 32,934 | ||||||
Procter & Gamble Co. (The) | 266 | 31,806 | ||||||
97,438 | ||||||||
Interactive Media and Services — 0.4% | ||||||||
Alphabet, Inc., Class A(1) | 13 | 18,435 | ||||||
Facebook, Inc., Class A(1) | 99 | 22,480 | ||||||
40,915 | ||||||||
Internet and Direct Marketing Retail — 0.4% | ||||||||
Amazon.com, Inc.(1) | 15 | 41,382 | ||||||
IT Services — 2.0% | ||||||||
Akamai Technologies, Inc.(1) | 296 | 31,699 | ||||||
Booz Allen Hamilton Holding Corp. | 439 | 34,150 | ||||||
GDS Holdings Ltd., ADR(1) | 279 | 22,225 | ||||||
Leidos Holdings, Inc. | 334 | 31,286 | ||||||
PayPal Holdings, Inc.(1) | 197 | 34,323 | ||||||
VeriSign, Inc.(1) | 171 | 35,368 | ||||||
189,051 | ||||||||
Life Sciences Tools and Services — 1.5% | ||||||||
Agilent Technologies, Inc. | 372 | 32,873 | ||||||
Bio-Techne Corp. | 70 | 18,485 | ||||||
Charles River Laboratories International, Inc.(1) | 179 | 31,209 | ||||||
Illumina, Inc.(1) | 51 | 18,888 | ||||||
Thermo Fisher Scientific, Inc. | 108 | 39,133 | ||||||
140,588 | ||||||||
Machinery — 0.7% | ||||||||
Lincoln Electric Holdings, Inc. | 384 | 32,348 | ||||||
Nordson Corp. | 182 | 34,527 | ||||||
66,875 | ||||||||
Media — 0.4% | ||||||||
Cable One, Inc. | 19 | 33,722 | ||||||
Metals and Mining — 0.4% | ||||||||
BHP Group Ltd. | 598 | 14,840 | ||||||
Newmont Corp. | 128 | 7,903 | ||||||
Rio Tinto Ltd. | 119 | 8,069 | ||||||
Rio Tinto plc, ADR | 195 | 10,955 | ||||||
41,767 |
13
Shares/Principal Amount | Value | |||||||
Mortgage Real Estate Investment Trusts (REITs) — 0.1% | ||||||||
AGNC Investment Corp. | 488 | $ | 6,295 | |||||
Multi-Utilities — 0.3% | ||||||||
Public Service Enterprise Group, Inc. | 617 | 30,332 | ||||||
Multiline Retail — 0.3% | ||||||||
Target Corp. | 266 | 31,901 | ||||||
Oil, Gas and Consumable Fuels — 0.7% | ||||||||
Chevron Corp. | 122 | 10,886 | ||||||
Enbridge, Inc. | 299 | 9,092 | ||||||
Kinder Morgan, Inc. | 433 | 6,569 | ||||||
Magellan Midstream Partners LP | 230 | 9,929 | ||||||
Phillips 66 | 87 | 6,255 | ||||||
TC Energy Corp. | 304 | 12,988 | ||||||
TOTAL SA | 158 | 6,018 | ||||||
Valero Energy Corp. | 143 | 8,411 | ||||||
70,148 | ||||||||
Pharmaceuticals — 1.4% | ||||||||
Bristol-Myers Squibb Co. | 654 | 38,455 | ||||||
Eli Lilly & Co. | 219 | 35,956 | ||||||
Johnson & Johnson | 218 | 30,657 | ||||||
Sanofi | 288 | 29,301 | ||||||
134,369 | ||||||||
Professional Services — 0.5% | ||||||||
IHS Markit Ltd. | 249 | 18,799 | ||||||
TransUnion | 350 | 30,464 | ||||||
49,263 | ||||||||
Real Estate Management and Development — 0.4% | ||||||||
Aroundtown SA(1) | 1,188 | 6,800 | ||||||
ESR Cayman Ltd.(1) | 2,200 | 5,219 | ||||||
Longfor Group Holdings Ltd. | 500 | 2,382 | ||||||
Samhallsbyggnadsbolaget i Norden AB | 1,438 | 3,664 | ||||||
Shimao Group Holdings Ltd. | 1,500 | 6,357 | ||||||
Shurgard Self Storage SA | 115 | 4,319 | ||||||
VGP NV | 57 | 7,270 | ||||||
36,011 | ||||||||
Road and Rail — 2.1% | ||||||||
Canadian Pacific Railway Ltd. | 136 | 34,593 | ||||||
Kansas City Southern | 224 | 33,441 | ||||||
Knight-Swift Transportation Holdings, Inc. | 829 | 34,578 | ||||||
Norfolk Southern Corp. | 107 | 18,786 | ||||||
Old Dominion Freight Line, Inc. | 235 | 39,854 | ||||||
Union Pacific Corp. | 208 | 35,166 | ||||||
196,418 | ||||||||
Semiconductors and Semiconductor Equipment — 1.8% | ||||||||
Applied Materials, Inc. | 546 | 33,006 | ||||||
Entegris, Inc. | 532 | 31,415 | ||||||
Lam Research Corp. | 112 | 36,227 | ||||||
Qorvo, Inc.(1) | 341 | 37,691 | ||||||
QUALCOMM, Inc. | 358 | 32,653 | ||||||
170,992 |
14
Shares/Principal Amount | Value | |||||||
Software — 2.9% | ||||||||
Adobe, Inc.(1) | 86 | $ | 37,437 | |||||
Cadence Design Systems, Inc.(1) | 337 | 32,338 | ||||||
Crowdstrike Holdings, Inc., Class A(1) | 171 | 17,150 | ||||||
Fortinet, Inc.(1) | 205 | 28,140 | ||||||
Microsoft Corp. | 202 | 41,109 | ||||||
Proofpoint, Inc.(1) | 166 | 18,446 | ||||||
ServiceNow, Inc.(1) | 69 | 27,949 | ||||||
Synopsys, Inc.(1) | 203 | 39,585 | ||||||
VMware, Inc., Class A(1) | 184 | 28,494 | ||||||
270,648 | ||||||||
Specialty Retail — 1.8% | ||||||||
AutoZone, Inc.(1) | 24 | 27,075 | ||||||
Home Depot, Inc. (The) | 133 | 33,318 | ||||||
Lowe's Cos., Inc. | 286 | 38,644 | ||||||
TJX Cos., Inc. (The) | 673 | 34,027 | ||||||
Tractor Supply Co. | 278 | 36,638 | ||||||
169,702 | ||||||||
Textiles, Apparel and Luxury Goods — 0.6% | ||||||||
Deckers Outdoor Corp.(1) | 133 | 26,120 | ||||||
NIKE, Inc., Class B | 275 | 26,964 | ||||||
53,084 | ||||||||
TOTAL COMMON STOCKS
(Cost $3,743,589) | 4,239,504 | |||||||
U.S. TREASURY SECURITIES — 33.4% | ||||||||
U.S. Treasury Inflation Indexed Bonds, 2.375%, 1/15/25(2) | $ | 81,611 | 94,079 | |||||
U.S. Treasury Inflation Indexed Bonds, 2.00%, 1/15/26 | 161,473 | 187,894 | ||||||
U.S. Treasury Inflation Indexed Bonds, 0.25%, 2/15/50 | 219,395 | 246,665 | ||||||
U.S. Treasury Inflation Indexed Notes, 0.50%, 4/15/24 | 203,316 | 213,941 | ||||||
U.S. Treasury Inflation Indexed Notes, 0.375%, 1/15/27 | 318,417 | 343,589 | ||||||
U.S. Treasury Inflation Indexed Notes, 0.50%, 1/15/28 | 259,855 | 284,877 | ||||||
U.S. Treasury Inflation Indexed Notes, 0.25%, 7/15/29 | 551,282 | 603,723 | ||||||
U.S. Treasury Inflation Indexed Notes, 0.125%, 1/15/30 | 647,738 | 700,659 | ||||||
U.S. Treasury Notes, 2.50%, 2/28/21 | 200,000 | 203,105 | ||||||
U.S. Treasury Notes, 1.625%, 8/15/29 | 100,000 | 109,117 | ||||||
U.S. Treasury Notes, 1.50%, 2/15/30 | 150,000 | 162,164 | ||||||
TOTAL U.S. TREASURY SECURITIES
(Cost $3,017,829) | 3,149,813 | |||||||
CORPORATE BONDS — 2.8% | ||||||||
Banks — 0.2% | ||||||||
Bank of America Corp., MTN, 3.25%, 10/21/27 | 15,000 | 16,553 | ||||||
Containers and Packaging — 0.3% | ||||||||
Reynolds Group Issuer, Inc. / Reynolds Group Issuer LLC / Reynolds Group Issuer Lu, 5.125%, 7/15/23(3) | 25,000 | 25,330 | ||||||
Electric Utilities — 0.2% | ||||||||
Duke Energy Progress LLC, 3.70%, 10/15/46 | 10,000 | 11,722 | ||||||
Exelon Generation Co. LLC, 5.60%, 6/15/42 | 5,000 | 5,627 | ||||||
17,349 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 0.9% | ||||||||
Crown Castle International Corp., 5.25%, 1/15/23 | 75,000 | 83,487 | ||||||
Hotels, Restaurants and Leisure — 0.2% | ||||||||
1011778 BC ULC / New Red Finance, Inc., 5.00%, 10/15/25(3) | 20,000 | 19,934 |
15
Shares/Principal Amount | Value | |||||||
Media — 0.2% | ||||||||
CCO Holdings LLC / CCO Holdings Capital Corp., 5.125%, 5/1/27(3) | $ | 10,000 | $ | 10,360 | ||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 6.48%, 10/23/45 | 10,000 | 13,333 | ||||||
23,693 | ||||||||
Metals and Mining† | ||||||||
Freeport-McMoRan, Inc., 3.55%, 3/1/22 | 4,000 | 4,009 | ||||||
Oil, Gas and Consumable Fuels — 0.5% | ||||||||
Callon Petroleum Co., 6.25%, 4/15/23 | 25,000 | 9,547 | ||||||
MPLX LP, 6.25%, 10/15/22 | 19,000 | 19,234 | ||||||
MPLX LP, 4.875%, 6/1/25 | 10,000 | 11,169 | ||||||
Oasis Petroleum, Inc., 6.875%, 3/15/22 | 25,000 | 4,203 | ||||||
44,153 | ||||||||
Specialty Retail — 0.3% | ||||||||
Suburban Propane Partners LP / Suburban Energy Finance Corp., 5.50%, 6/1/24 | 25,000 | 24,828 | ||||||
TOTAL CORPORATE BONDS
(Cost $282,563) | 259,336 | |||||||
ASSET-BACKED SECURITIES — 2.7% | ||||||||
Goodgreen, Series 2018-1A, Class A, VRN, 3.93%, 10/15/53(3) | 67,644 | 70,566 | ||||||
Hilton Grand Vacations Trust, Series 2014-AA, Class A SEQ, 1.77%, 11/25/26(3) | 7,371 | 7,349 | ||||||
Invitation Homes Trust, Series 2018-SFR2, Class C, VRN, 1.46%, (1-month LIBOR plus 1.28%), 6/17/37(3) | 100,000 | 98,322 | ||||||
MVW Owner Trust, Series 2014-1A, Class B, 2.70%, 9/22/31(3) | 30,444 | 29,943 | ||||||
MVW Owner Trust, Series 2016-1A, Class A SEQ, 2.25%, 12/20/33(3) | 6,079 | 5,993 | ||||||
MVW Owner Trust, Series 2017-1A, Class B, 2.75%, 12/20/34(3) | 18,436 | 17,939 | ||||||
Sierra Timeshare Receivables Funding LLC, Series 2016-2A, Class A SEQ, 2.33%, 7/20/33(3) | 6,644 | 6,646 | ||||||
Sierra Timeshare Receivables Funding LLC, Series 2018-3A, Class C, 4.17%, 9/20/35(3) | 20,924 | 20,022 | ||||||
TOTAL ASSET-BACKED SECURITIES
(Cost $257,528) | 256,780 | |||||||
COLLATERALIZED MORTGAGE OBLIGATIONS — 2.3% | ||||||||
ABN Amro Mortgage Corp., Series 2003-6, Class 1A4, 5.50%, 5/25/33 | 1,758 | 1,810 | ||||||
Bear Stearns Adjustable Rate Mortgage Trust, Series 2004-12, Class 2A1, VRN, 3.71%, 2/25/35 | 20,186 | 19,643 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2004-UST1, Class A4, VRN, 2.97%, 8/25/34 | 9,001 | 8,531 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2005-4, Class A, VRN, 4.58%, 8/25/35 | 12,228 | 12,099 | ||||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2004-4, Class A19, 5.25%, 5/25/34 | 17,824 | 18,479 | ||||||
Countrywide Home Loan Mortgage Pass-Through Trust, Series 2004-5, Class 2A4, 5.50%, 5/25/34 | 3,303 | 3,374 | ||||||
First Horizon Mortgage Pass-Through Trust, Series 2005-AR3, Class 4A1, VRN, 4.07%, 8/25/35 | 9,726 | 9,833 | ||||||
GSR Mortgage Loan Trust, Series 2005-AR6, Class 2A1, VRN, 4.07%, 9/25/35 | 15,128 | 15,058 | ||||||
JPMorgan Mortgage Trust, Series 2006-A3, Class 7A1, VRN, 3.99%, 4/25/35 | 2,907 | 2,871 | ||||||
JPMorgan Mortgage Trust, Series 2016-1, Class A7 SEQ, VRN, 3.50%, 5/25/46(3) | 100,000 | 103,540 | ||||||
Thornburg Mortgage Securities Trust, Series 2004-3, Class A, VRN, 0.92%, (1-month LIBOR plus 0.74%), 9/25/34 | 6,688 | 6,269 |
16
Shares/Principal Amount | Value | |||||||
WaMu Mortgage Pass-Through Certificates, Series 2003-S11, Class 3A5, 5.95%, 11/25/33 | $ | 3,254 | $ | 3,346 | ||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2005-AR7, Class 1A1, VRN, 4.11%, 5/25/35 | 5,754 | 5,729 | ||||||
Wells Fargo Mortgage-Backed Securities Trust, Series 2006-AR15, Class A1, VRN, 4.62%, 10/25/36 | 8,079 | 7,242 | ||||||
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $217,945) | 217,824 | |||||||
EXCHANGE-TRADED FUNDS — 1.1% | ||||||||
Invesco DB Base Metals Fund | 3,044 | 41,429 | ||||||
SPDR Gold Shares(1) | 362 | 60,588 | ||||||
TOTAL EXCHANGE-TRADED FUNDS
(Cost $92,951) | 102,017 | |||||||
TEMPORARY CASH INVESTMENTS — 11.4% | ||||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class (Cost $1,073,653) | 1,073,653 | 1,073,653 | ||||||
TOTAL INVESTMENT SECURITIES — 98.6%
(Cost $8,686,058) | 9,298,927 | |||||||
OTHER ASSETS AND LIABILITIES — 1.4% | 132,872 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 9,431,799 |
17
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
AUD | 601 | USD | 412 | Bank of America N.A. | 9/30/20 | $ | 3 | |||||||||||||||||||
AUD | 789 | USD | 540 | Bank of America N.A. | 9/30/20 | 4 | ||||||||||||||||||||
AUD | 375 | USD | 261 | Bank of America N.A. | 9/30/20 | (2) | ||||||||||||||||||||
USD | 22,115 | AUD | 31,969 | Bank of America N.A. | 9/30/20 | 46 | ||||||||||||||||||||
USD | 9,403 | AUD | 13,593 | Bank of America N.A. | 9/30/20 | 20 | ||||||||||||||||||||
USD | 234 | AUD | 338 | Bank of America N.A. | 9/30/20 | — | ||||||||||||||||||||
USD | 258 | AUD | 375 | Bank of America N.A. | 9/30/20 | (1) | ||||||||||||||||||||
CAD | 729 | USD | 534 | Morgan Stanley | 9/30/20 | 2 | ||||||||||||||||||||
CAD | 1,139 | USD | 835 | Morgan Stanley | 9/30/20 | 4 | ||||||||||||||||||||
CAD | 617 | USD | 451 | Morgan Stanley | 9/30/20 | 3 | ||||||||||||||||||||
CAD | 2,650 | USD | 1,944 | Morgan Stanley | 9/30/20 | 9 | ||||||||||||||||||||
USD | 138,591 | CAD | 185,670 | Morgan Stanley | 9/23/20 | 1,806 | ||||||||||||||||||||
USD | 64,665 | CAD | 87,527 | Morgan Stanley | 9/30/20 | 182 | ||||||||||||||||||||
USD | 22,424 | CAD | 30,351 | Morgan Stanley | 9/30/20 | 63 | ||||||||||||||||||||
USD | 6,791 | CAD | 9,191 | Morgan Stanley | 9/30/20 | 19 | ||||||||||||||||||||
USD | 1,369 | CAD | 1,874 | Morgan Stanley | 9/30/20 | (12) | ||||||||||||||||||||
USD | 66,033 | CNY | 469,525 | Goldman Sachs & Co. | 9/23/20 | (107) | ||||||||||||||||||||
USD | 60,931 | COP | 224,395,144 | Goldman Sachs & Co. | 9/23/20 | 1,624 | ||||||||||||||||||||
USD | 8,238 | DKK | 54,430 | Goldman Sachs & Co. | 9/30/20 | 15 | ||||||||||||||||||||
EUR | 1,982 | USD | 2,247 | Credit Suisse AG | 9/30/20 | (16) | ||||||||||||||||||||
EUR | 1,758 | USD | 1,978 | Credit Suisse AG | 9/30/20 | 1 | ||||||||||||||||||||
USD | 27,127 | EUR | 24,036 | Credit Suisse AG | 9/30/20 | 68 | ||||||||||||||||||||
USD | 29,107 | EUR | 25,791 | Credit Suisse AG | 9/30/20 | 73 | ||||||||||||||||||||
USD | 44,812 | EUR | 39,707 | Credit Suisse AG | 9/30/20 | 113 | ||||||||||||||||||||
GBP | 54,367 | USD | 66,973 | Bank of America N.A. | 9/23/20 | 425 | ||||||||||||||||||||
USD | 10,671 | GBP | 8,551 | JPMorgan Chase Bank N.A. | 9/30/20 | 70 | ||||||||||||||||||||
USD | 26,434 | GBP | 21,183 | JPMorgan Chase Bank N.A. | 9/30/20 | 173 | ||||||||||||||||||||
USD | 33,373 | HKD | 258,850 | Bank of America N.A. | 9/30/20 | (6) | ||||||||||||||||||||
HUF | 40,138,586 | USD | 126,664 | UBS AG | 9/23/20 | 630 | ||||||||||||||||||||
USD | 132,782 | HUF | 40,138,586 | UBS AG | 9/23/20 | 5,487 | ||||||||||||||||||||
INR | 10,209,707 | USD | 133,234 | UBS AG | 9/23/20 | 747 | ||||||||||||||||||||
JPY | 14,239,451 | USD | 132,934 | Bank of America N.A. | 9/23/20 | (907) | ||||||||||||||||||||
JPY | 527,194 | USD | 4,917 | Bank of America N.A. | 9/30/20 | (28) | ||||||||||||||||||||
USD | 61,030 | JPY | 6,498,004 | Bank of America N.A. | 9/30/20 | 774 | ||||||||||||||||||||
USD | 4,731 | JPY | 504,965 | Bank of America N.A. | 9/30/20 | 48 | ||||||||||||||||||||
USD | 67,951 | KRW | 80,923,355 | Goldman Sachs & Co. | 9/23/20 | 452 | ||||||||||||||||||||
KZT | 48,086,546 | USD | 116,857 | Goldman Sachs & Co. | 9/23/20 | (1,159) | ||||||||||||||||||||
MXN | 1,471,234 | USD | 65,099 | Morgan Stanley | 9/23/20 | (1,781) | ||||||||||||||||||||
USD | 63,712 | MXN | 1,471,234 | Morgan Stanley | 9/23/20 | 394 | ||||||||||||||||||||
MYR | 351,209 | USD | 82,042 | Goldman Sachs & Co. | 9/23/20 | (380) | ||||||||||||||||||||
USD | 81,724 | MYR | 351,209 | Goldman Sachs & Co. | 9/23/20 | 63 | ||||||||||||||||||||
NOK | 1,315,765 | USD | 141,849 | Goldman Sachs & Co. | 9/23/20 | (5,108) | ||||||||||||||||||||
NOK | 2,535 | USD | 262 | Goldman Sachs & Co. | 9/30/20 | 2 | ||||||||||||||||||||
NOK | 2,223 | USD | 229 | Goldman Sachs & Co. | 9/30/20 | 2 | ||||||||||||||||||||
NOK | 1,618 | USD | 170 | Goldman Sachs & Co. | 9/30/20 | (2) | ||||||||||||||||||||
USD | 75,079 | NOK | 700,490 | Goldman Sachs & Co. | 9/23/20 | 2,280 | ||||||||||||||||||||
USD | 7,423 | NOK | 71,164 | Goldman Sachs & Co. | 9/30/20 | 27 | ||||||||||||||||||||
NZD | 94,131 | USD | 61,398 | UBS AG | 9/23/20 | (661) | ||||||||||||||||||||
USD | 60,506 | NZD | 94,131 | UBS AG | 9/23/20 | (232) |
18
Currency Purchased | Currency Sold | Counterparty | Settlement Date | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
USD | 369,644 | PEN | 1,278,081 | Goldman Sachs & Co. | 9/23/20 | $ | 9,320 | |||||||||||||||||||
PHP | 3,384,344 | USD | 67,283 | Goldman Sachs & Co. | 9/23/20 | 453 | ||||||||||||||||||||
USD | 67,424 | PHP | 3,384,344 | Goldman Sachs & Co. | 9/23/20 | (312) | ||||||||||||||||||||
PLN | 518,204 | USD | 132,290 | Goldman Sachs & Co. | 9/23/20 | (1,274) | ||||||||||||||||||||
USD | 130,477 | PLN | 518,204 | Goldman Sachs & Co. | 9/23/20 | (538) | ||||||||||||||||||||
SEK | 1,428,975 | USD | 155,323 | Goldman Sachs & Co. | 9/23/20 | (1,815) | ||||||||||||||||||||
SEK | 3,380 | USD | 364 | Goldman Sachs & Co. | 9/30/20 | (1) | ||||||||||||||||||||
SEK | 3,279 | USD | 352 | Goldman Sachs & Co. | 9/30/20 | 1 | ||||||||||||||||||||
SEK | 1,311 | USD | 141 | Goldman Sachs & Co. | 9/30/20 | — | ||||||||||||||||||||
USD | 4,333 | SEK | 40,554 | Goldman Sachs & Co. | 9/30/20 | (24) | ||||||||||||||||||||
USD | 8,504 | SGD | 11,818 | Bank of America N.A. | 9/30/20 | 21 | ||||||||||||||||||||
USD | 1,454 | SGD | 2,018 | Bank of America N.A. | 9/30/20 | 5 | ||||||||||||||||||||
USD | 455 | SGD | 633 | Bank of America N.A. | 9/30/20 | 1 | ||||||||||||||||||||
THB | 4,165,475 | USD | 133,590 | Goldman Sachs & Co. | 9/23/20 | 1,162 | ||||||||||||||||||||
$ | 12,226 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
S&P 500 E-Mini | 2 | September 2020 | $ | 100 | $ | 309,020 | $ | 7,017 | ||||||||||||||||||||||||
U.S. Treasury 10-Year Notes | 1 | September 2020 | $ | 100,000 | 139,172 | 529 | ||||||||||||||||||||||||||
U.S. Treasury 10-Year Ultra Notes | 2 | September 2020 | $ | 200,000 | 314,969 | 1,870 | ||||||||||||||||||||||||||
$ | 763,161 | $ | 9,416 |
CENTRALLY CLEARED CREDIT DEFAULT SWAP AGREEMENTS | ||||||||||||||||||||||||||||||||||||||||||||
Reference Entity | Type | Fixed Rate Received (Paid) Quarterly | Termination Date | Notional Amount | Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | Value^ | |||||||||||||||||||||||||||||||||||||
Markit CDX North America High Yield Index Series 33 | Buy | (5.00)% | 12/20/24 | $ | 297,160 | $ | 16,038 | $ | (14,682) | $ | 1,356 |
^The value for credit default swap agreements serves as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability or profit at the period end. Increasing values in absolute terms when compared to the notional amount of the credit default swap agreement represent a deterioration of the referenced entity's credit soundness and an increased likelihood or risk of a credit event occurring as defined in the agreement.
TOTAL RETURN SWAP AGREEMENTS | ||||||||||||||||||||||||||||||||||||||
Counterparty | Floating Rate Index | Pay/Receive Floating Rate Index at Termination | Fixed Rate | Termination Date | Notional Amount | Value* | ||||||||||||||||||||||||||||||||
Bank of America N.A. | CPURNSA | Receive | 1.41% | 8/27/20 | $ | 700,000 | $ | 3,441 |
*Amount represents value and unrealized appreciation (depreciation).
19
NOTES TO SCHEDULE OF INVESTMENTS | ||||||||||||||
ADR | - | American Depositary Receipt | ||||||||||||
AUD | - | Australian Dollar | ||||||||||||
CAD | - | Canadian Dollar | ||||||||||||
CDX | - | Credit Derivatives Indexes | ||||||||||||
CNY | - | Chinese Yuan | ||||||||||||
COP | - | Colombian Peso | ||||||||||||
CPURNSA | - | U.S. Consumer Price Index Urban Consumers Not Seasonally Adjusted Index | ||||||||||||
DKK | - | Danish Krone | ||||||||||||
EUR | - | Euro | ||||||||||||
GBP | - | British Pound | ||||||||||||
HKD | - | Hong Kong Dollar | ||||||||||||
HUF | - | Hungarian Forint | ||||||||||||
INR | - | Indian Rupee | ||||||||||||
JPY | - | Japanese Yen | ||||||||||||
KRW | - | South Korean Won | ||||||||||||
KZT | - | Kazakhstani Tenge | ||||||||||||
LIBOR | - | London Interbank Offered Rate | ||||||||||||
MTN | - | Medium Term Note | ||||||||||||
MXN | - | Mexican Peso | ||||||||||||
MYR | - | Malaysian Ringgit | ||||||||||||
NOK | - | Norwegian Krone | ||||||||||||
NZD | - | New Zealand Dollar | ||||||||||||
PEN | - | Peruvian Sol | ||||||||||||
PHP | - | Philippine Peso | ||||||||||||
PLN | - | Polish Zloty | ||||||||||||
SEK | - | Swedish Krona | ||||||||||||
SEQ | - | Sequential Payer | ||||||||||||
SGD | - | Singapore Dollar | ||||||||||||
THB | - | Thai Baht | ||||||||||||
USD | - | United States Dollar | ||||||||||||
VRN | - | Variable Rate Note. The rate adjusts periodically based upon the terms set forth in the security’s offering documents. The rate shown is effective at the period end and the reference rate and spread, if any, is indicated. The security's effective maturity date may be shorter than the final maturity date shown. |
† Category is less than 0.05% of total net assets.
(1)Non-income producing.
(2)Security, or a portion thereof, has been pledged at the custodian bank or with a broker for collateral requirements on forward foreign currency exchange contracts, futures contracts and/or swap agreements. At the period end, the aggregate value of securities pledged was $39,524.
(3)Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may be sold in transactions exempt from registration, normally to qualified institutional investors. The aggregate value of these securities at the period end was $415,944, which represented 4.4% of total net assets.
See Notes to Financial Statements.
20
Statement of Assets and Liabilities |
JUNE 30, 2020 | ||||||||
Assets | ||||||||
Investment securities, at value (cost of $8,686,058) | $ | 9,298,927 | ||||||
Foreign currency holdings, at value (cost of $15) | 15 | |||||||
Deposits with broker for futures contracts | 24,000 | |||||||
Receivable for investments sold | 125,520 | |||||||
Receivable for capital shares sold | 96 | |||||||
Receivable for variation margin on futures contracts | 4,253 | |||||||
Unrealized appreciation on forward foreign currency exchange contracts | 26,592 | |||||||
Swap agreements, at value | 3,441 | |||||||
Dividends and interest receivable | 20,274 | |||||||
Other assets | 166 | |||||||
9,503,284 | ||||||||
Liabilities | ||||||||
Payable for investments purchased | 1,580 | |||||||
Payable for capital shares redeemed | 44,723 | |||||||
Payable for variation margin on futures contracts | 656 | |||||||
Payable for variation margin on swap agreements | 2,263 | |||||||
Unrealized depreciation on forward foreign currency exchange contracts | 14,366 | |||||||
Accrued management fees | 6,717 | |||||||
Distribution and service fees payable | 1,180 | |||||||
71,485 | ||||||||
Net Assets | $ | 9,431,799 | ||||||
Net Assets Consist of: | ||||||||
Capital (par value and paid-in surplus) | $ | 14,406,138 | ||||||
Distributable earnings | (4,974,339) | |||||||
$ | 9,431,799 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $6,053,050 | 586,832 | $10.31 | ||||||||
I Class, $0.01 Par Value | $622,593 | 60,033 | $10.37 | ||||||||
A Class, $0.01 Par Value | $1,588,025 | 155,295 | $10.23* | ||||||||
C Class, $0.01 Par Value | $985,887 | 100,467 | $9.81 | ||||||||
R Class, $0.01 Par Value | $32,050 | 3,175 | $10.09 | ||||||||
R5 Class, $0.01 Par Value | $150,194 | 14,489 | $10.37 |
*Maximum offering price $10.85 (net asset value divided by 0.9425).
See Notes to Financial Statements.
21
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | ||||||||
Investment Income (Loss) | ||||||||
Income: | ||||||||
Dividends (net of foreign taxes withheld of $2,931) | $ | 112,450 | ||||||
Interest | 91,434 | |||||||
Securities lending, net | 387 | |||||||
204,271 | ||||||||
Expenses: | ||||||||
Management fees | 94,421 | |||||||
Distribution and service fees: | ||||||||
A Class | 4,213 | |||||||
C Class | 11,174 | |||||||
R Class | 120 | |||||||
Directors' fees and expenses | 845 | |||||||
Other expenses | 469 | |||||||
111,242 | ||||||||
Net investment income (loss) | 93,029 | |||||||
Realized and Unrealized Gain (Loss) | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | 144,605 | |||||||
Forward foreign currency exchange contract transactions | (8,777) | |||||||
Futures contract transactions | 48,557 | |||||||
Swap agreement transactions | (10,079) | |||||||
Foreign currency translation transactions | (775) | |||||||
173,531 | ||||||||
Change in net unrealized appreciation (depreciation) on: | ||||||||
Investments | (326,409) | |||||||
Forward foreign currency exchange contracts | 6,775 | |||||||
Futures contracts | 1,921 | |||||||
Swap agreements | (3,155) | |||||||
Translation of assets and liabilities in foreign currencies | (6) | |||||||
(320,874) | ||||||||
Net realized and unrealized gain (loss) | (147,343) | |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (54,314) |
See Notes to Financial Statements.
22
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 93,029 | $ | 220,684 | ||||||||||
Net realized gain (loss) | 173,531 | (71,743) | ||||||||||||
Change in net unrealized appreciation (depreciation) | (320,874) | 387,462 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | (54,314) | 536,403 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (201,774) | (217,230) | ||||||||||||
I Class | (21,350) | (81,827) | ||||||||||||
A Class | (42,164) | (44,517) | ||||||||||||
C Class | (19,088) | (23,878) | ||||||||||||
R Class | (520) | (357) | ||||||||||||
R5 Class | (4,334) | (3,410) | ||||||||||||
Decrease in net assets from distributions | (289,230) | (371,219) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (2,029,814) | (3,552,653) | ||||||||||||
Net increase (decrease) in net assets | (2,373,358) | (3,387,469) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 11,805,157 | 15,192,626 | ||||||||||||
End of period | $ | 9,431,799 | $ | 11,805,157 | ||||||||||
See Notes to Financial Statements.
23
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Multi-Asset Real Return Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek total real return.
The fund offers the Investor Class, I Class, A Class, C Class, R Class and R5 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Fixed income securities are valued at the evaluated mean as provided by independent pricing services or at the mean of the most recent bid and asked prices as provided by investment dealers. Corporate bonds, U.S. Treasury and Government Agency securities, convertible bonds, municipal securities, and sovereign governments and agencies are valued using market models that consider trade data, quotations from dealers and active market makers, relevant yield curve and spread data, creditworthiness, trade data or market information on comparable securities, and other relevant security specific information. Mortgage-related and asset-backed securities are valued based on models that consider trade data, prepayment and default projections, benchmark yield and spread data and estimated cash flows of each tranche of the issuer. Collateralized loan obligations are valued based on discounted cash flow models that consider trade and economic data, prepayment assumptions and default projections.
Open-end management investment companies are valued at the reported net asset value per share. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange. Swap agreements are valued at an evaluated mean as provided by independent pricing services or independent brokers. Forward foreign currency exchange contracts are valued at the mean of the appropriate forward exchange rate at the close of the NYSE as provided by an independent pricing service.
24
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes paydown gain (loss) and accretion of discounts and amortization of premiums. Inflation adjustments related to inflation-linked debt securities are reflected as interest income. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. American Century Investment Management, Inc. (ACIM) (the investment advisor) monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
25
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds.
26
The Investment Category Fee range, the Complex Fee range and the effective annual management fee for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||
Investor Class | 0.5754% to 0.6929% | 0.2500% to 0.3100% | 0.88% | ||||||||
I Class | 0.0500% to 0.1100% | 0.68% | |||||||||
A Class | 0.2500% to 0.3100% | 0.88% | |||||||||
C Class | 0.2500% to 0.3100% | 0.88% | |||||||||
R Class | 0.2500% to 0.3100% | 0.88% | |||||||||
R5 Class | 0.0500% to 0.1100% | 0.68% |
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended June 30, 2020 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $34,211 and $110,421, respectively. The effect of interfund transactions on the Statement of Operations was $2,973 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases of investment securities, excluding short-term investments, for the period ended June 30, 2020 totaled $14,507,123, of which $2,840,301 represented U.S. Treasury and Government Agency obligations.
Sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 totaled $16,431,047, of which $352,451 represented U.S. Treasury and Government Agency obligations.
27
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 87,288 | $ | 875,177 | 35,868 | $ | 369,261 | ||||||||||||||
Issued in reinvestment of distributions | 17,988 | 188,086 | 18,871 | 196,512 | ||||||||||||||||
Redeemed | (262,503) | (2,680,331) | (186,972) | (1,931,702) | ||||||||||||||||
(157,227) | (1,617,068) | (132,233) | (1,365,929) | |||||||||||||||||
I Class/Shares Authorized | 25,000,000 | 25,000,000 | ||||||||||||||||||
Sold | 2,325 | 25,183 | 213,456 | 2,211,956 | ||||||||||||||||
Issued in reinvestment of distributions | 1,879 | 19,741 | 7,669 | 80,421 | ||||||||||||||||
Redeemed | (15,118) | (156,012) | (420,741) | (4,234,360) | ||||||||||||||||
(10,914) | (111,088) | (199,616) | (1,941,983) | |||||||||||||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||||||||||||
Sold | 12,268 | 129,926 | 5,005 | 50,760 | ||||||||||||||||
Issued in reinvestment of distributions | 4,048 | 41,972 | 4,289 | 44,337 | ||||||||||||||||
Redeemed | (30,756) | (323,596) | (23,915) | (243,421) | ||||||||||||||||
(14,440) | (151,698) | (14,621) | (148,324) | |||||||||||||||||
C Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | — | — | 297 | 3,000 | ||||||||||||||||
Issued in reinvestment of distributions | 1,820 | 18,187 | 2,288 | 22,754 | ||||||||||||||||
Redeemed | (19,997) | (198,732) | (14,147) | (137,649) | ||||||||||||||||
(18,177) | (180,545) | (11,562) | (111,895) | |||||||||||||||||
R Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||||||
Sold | 1,799 | 18,001 | 700 | 7,033 | ||||||||||||||||
Issued in reinvestment of distributions | 51 | 520 | 35 | 357 | ||||||||||||||||
Redeemed | (629) | (6,087) | (234) | (2,400) | ||||||||||||||||
1,221 | 12,434 | 501 | 4,990 | |||||||||||||||||
R5 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 1,322 | 13,997 | 704 | 7,268 | ||||||||||||||||
Issued in reinvestment of distributions | 413 | 4,334 | 326 | 3,410 | ||||||||||||||||
Redeemed | (17) | (180) | (18) | (190) | ||||||||||||||||
1,718 | 18,151 | 1,012 | 10,488 | |||||||||||||||||
Net increase (decrease) | (197,819) | $ | (2,029,814) | (356,519) | $ | (3,552,653) |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
28
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 3,803,692 | $ | 435,812 | — | ||||||
U.S. Treasury Securities | — | 3,149,813 | — | ||||||||
Corporate Bonds | — | 259,336 | — | ||||||||
Asset-Backed Securities | — | 256,780 | — | ||||||||
Collateralized Mortgage Obligations | — | 217,824 | — | ||||||||
Exchange-Traded Funds | 102,017 | — | — | ||||||||
Temporary Cash Investments | 1,073,653 | — | — | ||||||||
$ | 4,979,362 | $ | 4,319,565 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 9,416 | — | — | |||||||
Swap Agreements | — | $ | 4,797 | — | |||||||
Forward Foreign Currency Exchange Contracts | — | 26,592 | — | ||||||||
$ | 9,416 | $ | 31,389 | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Forward Foreign Currency Exchange Contracts | — | $ | 14,366 | — |
7. Derivative Instruments
Credit Risk — The fund is subject to credit risk in the normal course of pursuing its investment objectives. The value of a bond generally declines as the credit quality of its issuer declines. Credit default swap agreements enable a fund to buy/sell protection against a credit event of a specific issuer or index. A fund may attempt to enhance returns by selling protection or attempt to mitigate credit risk by buying protection. The buyer/seller of credit protection against a security or basket of securities may pay/receive an up-front or periodic payment to compensate for/against potential default events. Changes in value, including the periodic amounts of interest to be paid or received on swap agreements, are recorded as unrealized appreciation (depreciation) on swap agreements. Upon entering into a centrally cleared swap, a fund is required to deposit cash or securities (initial margin) with a financial intermediary in an amount equal to a certain percentage of the notional amount. Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the value and is a component of unrealized gains and losses. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The risks of entering into swap agreements include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments. The fund's average notional amount held during the period was $291,388.
29
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's average notional exposure to equity price risk derivative instruments held during the period was $100 futures contracts purchased and $306 futures contracts sold.
Foreign Currency Risk — The fund is subject to foreign currency exchange rate risk in the normal course of pursuing its investment objectives. The value of foreign investments held by a fund may be significantly affected by changes in foreign currency exchange rates. The dollar value of a foreign security generally decreases when the value of the dollar rises against the foreign currency in which the security is denominated and tends to increase when the value of the dollar declines against such foreign currency. A fund may enter into forward foreign currency exchange contracts to reduce a fund's exposure to foreign currency exchange rate fluctuations or to gain exposure to the fluctuations in the value of foreign currencies. The net U.S. dollar value of foreign currency underlying all contractual commitments held by a fund and the resulting unrealized appreciation or depreciation are determined daily. Realized gain or loss is recorded upon the termination of the contract. Net realized and unrealized gains or losses occurring during the holding period of forward foreign currency exchange contracts are a component of net realized gain (loss) on forward foreign currency exchange contract transactions and change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts, respectively. A fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses, up to the fair value, may arise if the counterparties do not perform under the contract terms. The fund's average U.S. dollar exposure to foreign currency risk derivative instruments held during the period was $13,224,373.
Interest Rate Risk — The fund is subject to interest rate risk in the normal course of pursuing its investment objectives. The value of bonds generally declines as interest rates rise. A fund may enter into futures contracts based on a bond index or a specific underlying security. 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 will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. 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 futures 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's average notional exposure to interest rate risk derivative instruments held during the period was $300,000 futures contracts purchased.
Other Contracts — A fund may enter into total return swap agreements in order to attempt to obtain or preserve a particular return or spread at a lower cost than obtaining a return or spread through purchases and/or sales of instruments in other markets or gain exposure to certain markets in the most economical way possible. A fund will segregate cash, cash equivalents or other appropriate liquid securities on its records in amounts sufficient to meet requirements. Changes in value, including the periodic amounts of interest to be paid or received on swap agreements, are recorded as unrealized appreciation (depreciation) on swap agreements. Upon entering into a centrally cleared swap, a fund is required to deposit cash or securities (initial margin) with a financial intermediary in an amount equal to a certain percentage of the notional amount. Subsequent payments (variation margin) are made or received daily, in cash, by a fund. The variation margin is equal to the daily change in the value and is a component of unrealized gains and losses. Realized gain or loss is recorded upon receipt or payment of a periodic settlement or termination of swap agreements. Net realized and unrealized gains or losses occurring during the holding period of swap agreements are a component of net realized gain (loss) on swap agreement transactions and change in net unrealized appreciation (depreciation) on swap agreements, respectively. The risks of entering into swap agreements include the possible lack of liquidity, failure of the counterparty to meet its obligations, and that there may be unfavorable changes in the underlying investments or instruments, including inflationary risk. The fund's average notional amount held during the period was $741,667.
30
Value of Derivative Instruments as of June 30, 2020
Asset Derivatives | Liability Derivatives | |||||||||||||
Type of Risk Exposure | Location on Statement of Assets and Liabilities | Value | Location on Statement of Assets and Liabilities | Value | ||||||||||
Credit Risk | Receivable for variation margin on swap agreements* | — | Payable for variation margin on swap agreements* | $ | 2,263 | |||||||||
Equity Price Risk | Receivable for variation margin on futures contracts* | $ | 4,253 | Payable for variation margin on futures contracts* | — | |||||||||
Foreign Currency Risk | Unrealized appreciation on forward foreign currency exchange contracts | 26,592 | Unrealized depreciation on forward foreign currency exchange contracts | 14,366 | ||||||||||
Interest Rate Risk | Receivable for variation margin on futures contracts* | — | Payable for variation margin on futures contracts* | 656 | ||||||||||
Other Contracts | Swap agreements | 3,441 | Swap agreements | — | ||||||||||
$ | 34,286 | $ | 17,285 |
*Included in the unrealized appreciation (depreciation) on futures contracts or centrally cleared swap agreements, as applicable, as reported in the Schedule of Investments.
Effect of Derivative Instruments on the Statement of Operations for the Year Ended June 30, 2020
Net Realized Gain (Loss) | Change in Net Unrealized Appreciation (Depreciation) | |||||||||||||
Type of Risk Exposure | Location on Statement of Operations | Value | Location on Statement of Operations | Value | ||||||||||
Credit Risk | Net realized gain (loss) on swap agreement transactions | $ | 11,274 | Change in net unrealized appreciation (depreciation) on swap agreements | $ | (14,682) | ||||||||
Equity Price Risk | Net realized gain (loss) on futures contract transactions | (1,992) | Change in net unrealized appreciation (depreciation) on futures contracts | 7,017 | ||||||||||
Foreign Currency Risk | Net realized gain (loss) on forward foreign currency exchange contract transactions | (8,777) | Change in net unrealized appreciation (depreciation) on forward foreign currency exchange contracts | 6,775 | ||||||||||
Interest Rate Risk | Net realized gain (loss) on futures contract transactions | 50,549 | Change in net unrealized appreciation (depreciation) on futures contracts | (5,096) | ||||||||||
Other Contracts | Net realized gain (loss) on swap agreement transactions | (21,353) | Change in net unrealized appreciation (depreciation) on swap agreements | 11,527 | ||||||||||
$ | 29,701 | $ | 5,541 |
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
31
The fund may invest in instruments that have variable or floating coupon rates based on the London Interbank Offered Rate (LIBOR). LIBOR is a benchmark interest rate intended to be representative of the rate at which certain major international banks lend to one another over short-terms. LIBOR will be phased out by the end of 2021. Uncertainty remains regarding a replacement rate or rates for LIBOR. The transition process may lead to increased volatility or illiquidity in markets for instruments that rely on LIBOR. This could result in a change to the value of such instruments.
9. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 289,230 | $ | 371,219 | ||||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 8,738,662 | |||
Gross tax appreciation of investments | $ | 690,608 | |||
Gross tax depreciation of investments | (130,343) | ||||
Net tax appreciation (depreciation) of investments | 560,265 | ||||
Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies | (1,658) | ||||
Net tax appreciation (depreciation) | $ | 558,607 | |||
Undistributed ordinary income | $ | 18,415 | |||
Accumulated short-term capital losses | $ | (1,288,204) | |||
Accumulated long-term capital losses | $ | (4,263,157) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
10. Recently Issued Accounting Standards
In March 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2017-08, “Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities” (ASU 2017-08). ASU 2017-08 amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The adoption of ASU 2017-08 did not materially impact the financial statements.
11. Corporate Event
On June 17, 2020, the Board of Directors approved a plan of liquidation for the fund. The liquidation date is expected to be October 16, 2020.
32
Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $10.63 | 0.10 | (0.13) | (0.03) | (0.29) | $10.31 | (0.26)% | 0.89% | 0.89% | 0.97% | 0.97% | 145% | $6,053 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.35 | 0.17 | 0.37 | 0.54 | (0.26) | $10.63 | 5.33% | 0.89% | 0.91% | 1.68% | 1.66% | 241% | $7,906 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $9.80 | 0.16 | 0.58 | 0.74 | (0.19) | $10.35 | 7.57% | 0.89% | 1.09% | 1.61% | 1.41% | 160% | $9,067 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.43 | 0.16 | 0.21 | 0.37 | — | $9.80 | 3.92% | 0.89% | 1.09% | 1.68% | 1.48% | 173% | $13,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.54 | 0.04 | (0.15) | (0.11) | — | $9.43 | (1.15)% | 0.90% | 1.10% | 0.47% | 0.27% | 152% | $14,230 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $10.69 | 0.12 | (0.12) | —(3) | (0.32) | $10.37 | (0.01)% | 0.69% | 0.69% | 1.17% | 1.17% | 145% | $623 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.40 | 0.18 | 0.39 | 0.57 | (0.28) | $10.69 | 5.56% | 0.69% | 0.71% | 1.88% | 1.86% | 241% | $758 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $9.85 | 0.19 | 0.57 | 0.76 | (0.21) | $10.40 | 7.74% | 0.69% | 0.89% | 1.81% | 1.61% | 160% | $2,813 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.46 | 0.18 | 0.21 | 0.39 | — | $9.85 | 4.12% | 0.69% | 0.89% | 1.88% | 1.68% | 173% | $1,608 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.55 | 0.08 | (0.17) | (0.09) | — | $9.46 | (0.94)% | 0.70% | 0.90% | 0.67% | 0.47% | 152% | $1,384 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $10.53 | 0.07 | (0.11) | (0.04) | (0.26) | $10.23 | (0.38)% | 1.14% | 1.14% | 0.72% | 0.72% | 145% | $1,588 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.26 | 0.15 | 0.36 | 0.51 | (0.24) | $10.53 | 5.07% | 1.14% | 1.16% | 1.43% | 1.41% | 241% | $1,787 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $9.73 | 0.14 | 0.56 | 0.70 | (0.17) | $10.26 | 7.15% | 1.14% | 1.34% | 1.36% | 1.16% | 160% | $1,892 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.38 | 0.13 | 0.22 | 0.35 | — | $9.73 | 3.73% | 1.14% | 1.34% | 1.43% | 1.23% | 173% | $1,964 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.51 | 0.03 | (0.16) | (0.13) | — | $9.38 | (1.37)% | 1.15% | 1.35% | 0.22% | 0.02% | 152% | $4,587 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $10.09 | —(3) | (0.12) | (0.12) | (0.16) | $9.81 | (1.17)% | 1.89% | 1.89% | (0.03)% | (0.03)% | 145% | $986 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $9.86 | 0.07 | 0.35 | 0.42 | (0.19) | $10.09 | 4.25% | 1.89% | 1.91% | 0.68% | 0.66% | 241% | $1,197 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $9.35 | 0.06 | 0.54 | 0.60 | (0.09) | $9.86 | 6.42% | 1.89% | 2.09% | 0.61% | 0.41% | 160% | $1,284 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.09 | 0.06 | 0.20 | 0.26 | — | $9.35 | 2.86% | 1.89% | 2.09% | 0.68% | 0.48% | 173% | $1,655 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.28 | (0.05) | (0.14) | (0.19) | — | $9.09 | (2.05)% | 1.90% | 2.10% | (0.53)% | (0.73)% | 152% | $2,310 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $10.39 | 0.04 | (0.11) | (0.07) | (0.23) | $10.09 | (0.70)% | 1.39% | 1.39% | 0.47% | 0.47% | 145% | $32 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.14 | 0.12 | 0.36 | 0.48 | (0.23) | $10.39 | 4.73% | 1.39% | 1.41% | 1.18% | 1.16% | 241% | $20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $9.61 | 0.11 | 0.56 | 0.67 | (0.14) | $10.14 | 6.98% | 1.39% | 1.59% | 1.11% | 0.91% | 160% | $15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.29 | 0.11 | 0.21 | 0.32 | — | $9.61 | 3.44% | 1.39% | 1.59% | 1.18% | 0.98% | 173% | $113 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.44 | 0.01 | (0.16) | (0.15) | — | $9.29 | (1.59)% | 1.40% | 1.60% | (0.03)% | (0.23)% | 152% | $105 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R5 Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $10.68 | 0.12 | (0.11) | 0.01 | (0.32) | $10.37 | 0.09% | 0.69% | 0.69% | 1.17% | 1.17% | 145% | $150 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $10.40 | 0.20 | 0.36 | 0.56 | (0.28) | $10.68 | 5.46% | 0.69% | 0.71% | 1.88% | 1.86% | 241% | $136 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $9.85 | 0.19 | 0.57 | 0.76 | (0.21) | $10.40 | 7.74% | 0.69% | 0.89% | 1.81% | 1.61% | 160% | $122 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017(4) | $9.77 | 0.05 | 0.03 | 0.08 | — | $9.85 | 0.82% | 0.69%(5) | 0.89%(5) | 2.42%(5) | 2.22%(5) | 173%(6) | $5 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)Per-share amount was less than $0.005.
(4)April 10, 2017 (commencement of sale) through June 30, 2017.
(5)Annualized.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended June 30, 2017.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Multi-Asset Real Return Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Multi-Asset Real Return Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
Subsequent Event
As discussed in Note 11 to the financial statements, the Board of Directors approved a plan of liquidation for the Fund on June 17, 2020.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
36
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
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renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the one-, three-, and five-year periods reviewed by the Board. The Board found the investment
41
management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
42
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer universe. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
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Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $38,441, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as qualified for the corporate dividends received deduction.
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Notes |
47
Notes |
48
Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92993 2008 |
Annual Report | |||||
June 30, 2020 | |||||
NT Disciplined Growth Fund | |||||
Investor Class (ANTDX) | |||||
G Class (ANDGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Performance |
Total Returns as of June 30, 2020 | |||||||||||||||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | Since Inception | Inception Date | |||||||||||||||||||||||||||||||
Investor Class | ANTDX | 22.14% | 12.85% | 11.64% | 3/19/15 | ||||||||||||||||||||||||||||||
Russell 1000 Growth Index | — | 23.28% | 15.87% | 14.74% | — | ||||||||||||||||||||||||||||||
G Class | ANDGX | 23.39% | 13.60% | 12.36% | 3/19/15 |
Fund returns would have been lower if a portion of the fees had not been waived.
Growth of $10,000 Over Life of Class | ||
$10,000 investment made March 19, 2015 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $17,896 | ||||||||
Russell 1000 Growth Index — $20,693 | ||||||||
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||||||
Investor Class | G Class | |||||||
1.02% | 0.82% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Yulin Long and Tsuyoshi Ozaki
Performance Summary
NT Disciplined Growth returned 23.39%* for the fiscal year ended June 30, 2020, compared with the 23.28% return of its benchmark, the Russell 1000 Growth Index.
NT Disciplined Growth advanced during the fiscal year, and outperformed its benchmark, the Russell 1000 Growth Index. Positioning within the consumer staples, financials and health care sectors benefited relative performance, while stock selection in consumer discretionary and information technology detracted.
Positioning within Consumer Staples, Financials and Health Care was Additive
Within the consumer staples sector, positioning in the beverages industry was the leading driver, as an underweight to The Coca-Cola Co. was among the top individual contributors for the period. It was beneficial to be underrepresented in the stock of the soft drink company as widespread lockdown measures hurt key markets, such as sporting events and restaurants. Conversely, adult beverage manufacturer The Boston Beer Co. enjoyed increased demand for its products during the lockdown, boosting its stock price. Its seltzer product, Truly, enjoyed strong demand throughout the reporting period. We have since sold out of both Coca-Cola and Boston Beer. Within the sector, it was also beneficial to have no exposure to tobacco companies and an underweight allocation in food and staples retailing companies.
Within the financials sector, overweights to capital markets companies such as MSCI and FactSet Research Systems were beneficial. Demand for these companies data products remained high throughout the period, and these companies were insulated from many of the concerns that plagued other financial companies, such as the impact of low rates and borrower defaults on profitability. A position in MarketAxess Holdings was also helpful, as was a lack of exposure to The Charles Schwab Corp.
Within the health care sector, security selections within the health care equipment and supplies industry bolstered relative returns. Masimo and DexCom were among the leading individual contributors to performance during the 12 months. Overweights to these patient-monitoring device manufacturers were beneficial during the period. The COVID-19 outbreak increased demand for remote patient-monitoring devices, which Masimo makes, and patient self-monitoring devices for chronic diseases, such as diabetes, which are provided by DexCom. Within the biotechnology industry, an overweight in Vertex Pharmaceuticals was also among the leading contributors to overall performance.
Positioning Across Some Sectors Detracted From Relative Returns
Stock selection within consumer discretionary was the largest detractor from relative returns. A lack of exposure to automobile manufacturer Tesla was a leading detractor from performance compared with the benchmark for the period. The stock began a significant upward trend in March after the company’s automobile deliveries for the quarter shattered analysts’ expectations. The manufacturer also rolled out a new model in early 2020 and reduced pricing on older models. Both developments are expected to bolster demand. Within textiles, apparel and luxury goods, a position in Deckers Outdoor provided a headwind to results, as did stakes in specialty retailers Ross Stores and AutoZone. Specialty retailers, especially those that rely heavily on foot traffic for sales, experienced sales setbacks during the COVID-19 lockdown. We have since closed our position in AutoZone.
*All fund returns referenced in this commentary are for G Class shares. Fund returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when G Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 2 for returns for all share classes.
3
Security selections in the information technology sector were also a driver of relative underperformance. Stock choices in the semiconductors and semiconductor equipment industry were the main headwind. An underweight to chipmaker NVIDIA was among the leading individual detractors from relative performance. Demand for NVIDIA’s gaming chips was high throughout the period but spiked starting in March, when widespread pandemic lockdown measures caused game manufacturers to purchase large amounts of the chips out of fear that production would stop. Elsewhere in the sector, positions in communications equipment company Motorola Solutions and software company Cornerstone OnDemand also weighed on returns. We have since exited our position in Cornerstone.
Security choices within the materials sector also detracted. Factory closures due to the pandemic constrained some companies’ abilities to produce their products. Within containers and packaging, Ball Corp. weighed on results, as did construction materials company Eagle Materials. We have since closed these positions.
A Look Ahead
Our disciplined, objective and systematic investment strategy is designed to take advantage of opportunities at the individual company level. We believe this approach is an effective way to capitalize on market inefficiencies that lead to the mispricing of individual stocks. As a result of this approach, our sector and industry allocations reflect where we are finding the greatest opportunities among individual companies at a given time.
At period-end, financials was the most overweight sector. We increased our relative overweight position during the year in order to take advantage of opportunities our models identified in the capital markets industry. Industrials is also among our largest active weights as of period-end. Based on our factor model, we believe there are significant opportunities in the commercial services and supplies and road and rail industries. Conversely, we are underweight the consumer staples and real estate sectors. Beverages and food and staples companies show a lack of opportunity and are comparatively unattractive in terms of our model metrics. In the real estate sector, our underweight is driven by a lack of exposure to equity real estate investment trusts (REITs).
4
Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Microsoft Corp. | 9.4% | |||||||
Apple, Inc. | 8.5% | |||||||
Amazon.com, Inc. | 7.6% | |||||||
Alphabet, Inc., Class A | 4.4% | |||||||
Facebook, Inc., Class A | 4.1% | |||||||
Mastercard, Inc., Class A | 1.8% | |||||||
Vertex Pharmaceuticals, Inc. | 1.7% | |||||||
S&P Global, Inc. | 1.7% | |||||||
Merck & Co., Inc. | 1.6% | |||||||
Broadcom, Inc. | 1.6% | |||||||
Top Five Industries | % of net assets | |||||||
Software | 19.3% | |||||||
Technology Hardware, Storage and Peripherals | 9.0% | |||||||
Interactive Media and Services | 8.5% | |||||||
Internet and Direct Marketing Retail | 8.1% | |||||||
IT Services | 6.5% | |||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 98.1% | |||||||
Temporary Cash Investments | 2.2% | |||||||
Other Assets and Liabilities | (0.3)% |
5
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $1,119.60 | $5.32 | 1.01% | ||||||||||
G Class | $1,000 | $1,124.50 | $0.05 | 0.01% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,019.84 | $5.07 | 1.01% | ||||||||||
G Class | $1,000 | $1,024.81 | $0.05 | 0.01% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
6
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 98.1% | ||||||||
Aerospace and Defense — 0.9% | ||||||||
Axon Enterprise, Inc.(1) | 12,169 | $ | 1,194,144 | |||||
Lockheed Martin Corp. | 4,382 | 1,599,079 | ||||||
Mercury Systems, Inc.(1) | 6,358 | 500,120 | ||||||
3,293,343 | ||||||||
Auto Components — 0.1% | ||||||||
Aptiv plc | 4,898 | 381,652 | ||||||
Beverages — 0.1% | ||||||||
Monster Beverage Corp.(1) | 6,538 | 453,214 | ||||||
Biotechnology — 3.4% | ||||||||
AbbVie, Inc. | 28,319 | 2,780,360 | ||||||
Biogen, Inc.(1) | 137 | 36,654 | ||||||
Exelixis, Inc.(1) | 73,527 | 1,745,531 | ||||||
Incyte Corp.(1) | 4,414 | 458,924 | ||||||
Neurocrine Biosciences, Inc.(1) | 9,849 | 1,201,578 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 21,765 | 6,318,597 | ||||||
12,541,644 | ||||||||
Building Products — 1.4% | ||||||||
AAON, Inc. | 7,492 | 406,741 | ||||||
AO Smith Corp. | 21,986 | 1,035,980 | ||||||
Fortune Brands Home & Security, Inc. | 15,381 | 983,307 | ||||||
Simpson Manufacturing Co., Inc. | 18,004 | 1,518,818 | ||||||
UFP Industries, Inc. | 28,123 | 1,392,370 | ||||||
5,337,216 | ||||||||
Capital Markets — 4.6% | ||||||||
FactSet Research Systems, Inc. | 11,151 | 3,662,769 | ||||||
MarketAxess Holdings, Inc. | 3,684 | 1,845,389 | ||||||
Moody's Corp. | 1,596 | 438,469 | ||||||
MSCI, Inc. | 10,394 | 3,469,725 | ||||||
S&P Global, Inc. | 18,831 | 6,204,438 | ||||||
SEI Investments Co. | 27,380 | 1,505,353 | ||||||
17,126,143 | ||||||||
Chemicals — 0.5% | ||||||||
NewMarket Corp. | 4,511 | 1,806,565 | ||||||
Commercial Services and Supplies — 0.1% | ||||||||
IAA, Inc.(1) | 5,325 | 205,385 | ||||||
Communications Equipment — 1.4% | ||||||||
Arista Networks, Inc.(1) | 1,403 | 294,672 | ||||||
Cisco Systems, Inc. | 25,179 | 1,174,348 | ||||||
Motorola Solutions, Inc. | 27,498 | 3,853,295 | ||||||
5,322,315 | ||||||||
Distributors — 0.3% | ||||||||
LKQ Corp.(1) | 44,172 | 1,157,306 | ||||||
Diversified Consumer Services — 0.1% | ||||||||
Chegg, Inc.(1) | 4,514 | 303,612 | ||||||
Diversified Telecommunication Services — 0.4% | ||||||||
Cogent Communications Holdings, Inc. | 20,903 | 1,617,056 |
7
Shares | Value | |||||||
Electronic Equipment, Instruments and Components — 1.0% | ||||||||
Trimble, Inc.(1) | 25,950 | $ | 1,120,780 | |||||
Zebra Technologies Corp., Class A(1) | 9,782 | 2,503,703 | ||||||
3,624,483 | ||||||||
Entertainment — 2.5% | ||||||||
Electronic Arts, Inc.(1) | 17,760 | 2,345,208 | ||||||
Netflix, Inc.(1) | 3,372 | 1,534,395 | ||||||
Spotify Technology SA(1) | 9,896 | 2,555,049 | ||||||
Take-Two Interactive Software, Inc.(1) | 6,667 | 930,513 | ||||||
Zynga, Inc., Class A(1) | 209,067 | 1,994,499 | ||||||
9,359,664 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 1.0% | ||||||||
American Tower Corp. | 5,571 | 1,440,326 | ||||||
Crown Castle International Corp. | 12,315 | 2,060,915 | ||||||
Public Storage | 1,615 | 309,903 | ||||||
3,811,144 | ||||||||
Food and Staples Retailing — 0.3% | ||||||||
Costco Wholesale Corp. | 1,387 | 420,552 | ||||||
Sprouts Farmers Market, Inc.(1) | 29,554 | 756,287 | ||||||
1,176,839 | ||||||||
Food Products — 0.9% | ||||||||
Hershey Co. (The) | 26,050 | 3,376,601 | ||||||
Health Care Equipment and Supplies — 4.3% | ||||||||
ABIOMED, Inc.(1) | 3,997 | 965,515 | ||||||
Align Technology, Inc.(1) | 14,987 | 4,113,032 | ||||||
DexCom, Inc.(1) | 4,438 | 1,799,165 | ||||||
IDEXX Laboratories, Inc.(1) | 14,759 | 4,872,831 | ||||||
Masimo Corp.(1) | 1,051 | 239,618 | ||||||
NuVasive, Inc.(1) | 15,488 | 862,062 | ||||||
ResMed, Inc. | 13,778 | 2,645,376 | ||||||
Tandem Diabetes Care, Inc.(1) | 5,417 | 535,850 | ||||||
16,033,449 | ||||||||
Health Care Providers and Services — 1.5% | ||||||||
Amedisys, Inc.(1) | 7,327 | 1,454,703 | ||||||
Chemed Corp. | 4,253 | 1,918,401 | ||||||
HCA Healthcare, Inc. | 6,191 | 600,898 | ||||||
UnitedHealth Group, Inc. | 5,678 | 1,674,726 | ||||||
5,648,728 | ||||||||
Health Care Technology — 2.1% | ||||||||
Cerner Corp. | 42,726 | 2,928,867 | ||||||
Omnicell, Inc.(1) | 25,522 | 1,802,364 | ||||||
Veeva Systems, Inc., Class A(1) | 13,392 | 3,139,353 | ||||||
7,870,584 | ||||||||
Hotels, Restaurants and Leisure — 0.9% | ||||||||
Chipotle Mexican Grill, Inc.(1) | 1,632 | 1,717,452 | ||||||
Domino's Pizza, Inc. | 2,970 | 1,097,237 | ||||||
Yum! Brands, Inc. | 4,107 | 356,939 | ||||||
3,171,628 | ||||||||
Household Durables — 0.2% | ||||||||
Tempur Sealy International, Inc.(1) | 9,115 | 655,824 | ||||||
Household Products — 0.7% | ||||||||
Procter & Gamble Co. (The) | 18,930 | 2,263,460 |
8
Shares | Value | |||||||
Reynolds Consumer Products, Inc. | 11,084 | $ | 385,058 | |||||
2,648,518 | ||||||||
Industrial Conglomerates — 0.7% | ||||||||
3M Co. | 15,682 | 2,446,235 | ||||||
Insurance — 0.7% | ||||||||
Aon plc, Class A | 8,746 | 1,684,479 | ||||||
Erie Indemnity Co., Class A | 2,410 | 462,479 | ||||||
Kinsale Capital Group, Inc. | 2,280 | 353,879 | ||||||
2,500,837 | ||||||||
Interactive Media and Services — 8.5% | ||||||||
Alphabet, Inc., Class A(1) | 11,431 | 16,209,730 | ||||||
Facebook, Inc., Class A(1) | 67,331 | 15,288,850 | ||||||
31,498,580 | ||||||||
Internet and Direct Marketing Retail — 8.1% | ||||||||
Amazon.com, Inc.(1) | 10,172 | 28,062,717 | ||||||
eBay, Inc. | 41,170 | 2,159,367 | ||||||
30,222,084 | ||||||||
IT Services — 6.5% | ||||||||
Accenture plc, Class A | 13,821 | 2,967,645 | ||||||
International Business Machines Corp. | 7,728 | 933,311 | ||||||
Jack Henry & Associates, Inc. | 10,436 | 1,920,537 | ||||||
Mastercard, Inc., Class A | 22,907 | 6,773,600 | ||||||
PayPal Holdings, Inc.(1) | 22,096 | 3,849,786 | ||||||
Square, Inc., Class A(1) | 18,008 | 1,889,759 | ||||||
VeriSign, Inc.(1) | 13,664 | 2,826,125 | ||||||
Visa, Inc., Class A | 16,115 | 3,112,935 | ||||||
24,273,698 | ||||||||
Leisure Products — 0.2% | ||||||||
Polaris, Inc. | 6,744 | 624,157 | ||||||
Life Sciences Tools and Services — 0.1% | ||||||||
Illumina, Inc.(1) | 602 | 222,951 | ||||||
Machinery — 0.8% | ||||||||
Graco, Inc. | 26,089 | 1,252,011 | ||||||
Lincoln Electric Holdings, Inc. | 21,440 | 1,806,106 | ||||||
3,058,117 | ||||||||
Media — 0.3% | ||||||||
Cable One, Inc. | 103 | 182,809 | ||||||
Sirius XM Holdings, Inc. | 183,086 | 1,074,715 | ||||||
1,257,524 | ||||||||
Multiline Retail — 0.1% | ||||||||
Dollar General Corp. | 1,482 | 282,336 | ||||||
Pharmaceuticals — 3.0% | ||||||||
Bristol-Myers Squibb Co. | 37,826 | 2,224,169 | ||||||
Eli Lilly & Co. | 8,576 | 1,408,007 | ||||||
Merck & Co., Inc. | 78,839 | 6,096,620 | ||||||
Zoetis, Inc. | 9,446 | 1,294,480 | ||||||
11,023,276 | ||||||||
Road and Rail — 1.6% | ||||||||
J.B. Hunt Transport Services, Inc. | 8,215 | 988,593 | ||||||
Landstar System, Inc. | 27,935 | 3,137,380 | ||||||
Union Pacific Corp. | 10,596 | 1,791,466 | ||||||
5,917,439 |
9
Shares | Value | |||||||
Semiconductors and Semiconductor Equipment — 5.9% | ||||||||
Advanced Micro Devices, Inc.(1) | 28,297 | $ | 1,488,705 | |||||
Applied Materials, Inc. | 38,445 | 2,324,000 | ||||||
Broadcom, Inc. | 18,692 | 5,899,382 | ||||||
Lattice Semiconductor Corp.(1) | 8,779 | 249,236 | ||||||
Monolithic Power Systems, Inc. | 5,977 | 1,416,549 | ||||||
NVIDIA Corp. | 7,507 | 2,851,984 | ||||||
QUALCOMM, Inc. | 27,732 | 2,529,436 | ||||||
Texas Instruments, Inc. | 36,482 | 4,632,120 | ||||||
Universal Display Corp. | 2,944 | 440,481 | ||||||
21,831,893 | ||||||||
Software — 19.3% | ||||||||
Adobe, Inc.(1) | 3,112 | 1,354,685 | ||||||
ANSYS, Inc.(1) | 407 | 118,734 | ||||||
Atlassian Corp. plc, Class A(1) | 8,581 | 1,546,897 | ||||||
Autodesk, Inc.(1) | 17,708 | 4,235,577 | ||||||
Blackline, Inc.(1) | 5,810 | 481,707 | ||||||
Box, Inc., Class A(1) | 32,681 | 678,458 | ||||||
Cadence Design Systems, Inc.(1) | 33,683 | 3,232,221 | ||||||
DocuSign, Inc.(1) | 6,349 | 1,093,361 | ||||||
Dropbox, Inc., Class A(1) | 63,026 | 1,372,076 | ||||||
Fair Isaac Corp.(1) | 3,595 | 1,502,854 | ||||||
Fortinet, Inc.(1) | 24,527 | 3,366,821 | ||||||
Intuit, Inc. | 15,610 | 4,623,526 | ||||||
Microsoft Corp. | 171,396 | 34,880,800 | ||||||
Oracle Corp. (New York) | 21,564 | 1,191,842 | ||||||
Palo Alto Networks, Inc.(1) | 11,549 | 2,652,459 | ||||||
Pegasystems, Inc. | 1,773 | 179,374 | ||||||
Proofpoint, Inc.(1) | 23,602 | 2,622,654 | ||||||
ServiceNow, Inc.(1) | 2,690 | 1,089,611 | ||||||
Synopsys, Inc.(1) | 20,866 | 4,068,870 | ||||||
Workday, Inc., Class A(1) | 6,193 | 1,160,321 | ||||||
71,452,848 | ||||||||
Specialty Retail — 2.5% | ||||||||
Advance Auto Parts, Inc. | 6,548 | 932,763 | ||||||
Best Buy Co., Inc. | 10,651 | 929,513 | ||||||
Floor & Decor Holdings, Inc., Class A(1) | 4,198 | 242,015 | ||||||
Home Depot, Inc. (The) | 13,603 | 3,407,687 | ||||||
Lowe's Cos., Inc. | 8,525 | 1,151,898 | ||||||
O'Reilly Automotive, Inc.(1) | 3,947 | 1,664,331 | ||||||
Ross Stores, Inc. | 10,834 | 923,490 | ||||||
9,251,697 | ||||||||
Technology Hardware, Storage and Peripherals — 9.0% | ||||||||
Apple, Inc. | 86,460 | 31,540,608 | ||||||
Pure Storage, Inc., Class A(1) | 114,055 | 1,976,573 | ||||||
33,517,181 | ||||||||
Textiles, Apparel and Luxury Goods — 1.9% | ||||||||
Deckers Outdoor Corp.(1) | 6,338 | 1,244,720 | ||||||
lululemon athletica, Inc.(1) | 1,226 | 382,524 | ||||||
NIKE, Inc., Class B | 55,118 | 5,404,320 | ||||||
7,031,564 |
10
Shares | Value | |||||||
Trading Companies and Distributors — 0.2% | ||||||||
SiteOne Landscape Supply, Inc.(1) | 5,518 | $ | 628,886 | |||||
TOTAL COMMON STOCKS
(Cost $240,070,161) | 363,964,216 | |||||||
TEMPORARY CASH INVESTMENTS — 2.2% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $3,585,873), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $3,517,004) | 3,517,002 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $4,669,669), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $4,578,006) | 4,578,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 11,371 | 11,371 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $8,106,373) | 8,106,373 | |||||||
TOTAL INVESTMENT SECURITIES — 100.3%
(Cost $248,176,534) | 372,070,589 | |||||||
OTHER ASSETS AND LIABILITIES — (0.3)% | (987,840) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 371,082,749 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
NASDAQ 100 E-Mini | 7 | September 2020 | $ | 140 | $ | 1,420,615 | $ | 23,928 | ||||||||||||||||||||||||
S&P 500 E-Mini | 5 | September 2020 | $ | 250 | 772,550 | (6,530) | ||||||||||||||||||||||||||
$ | 2,193,165 | $ | 17,398 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
JUNE 30, 2020 | ||||||||
Assets | ||||||||
Investment securities, at value (cost of $248,176,534) | $ | 372,070,589 | ||||||
Deposits with broker for futures contracts | 165,000 | |||||||
Receivable for variation margin on futures contracts | 34,915 | |||||||
Dividends and interest receivable | 120,780 | |||||||
372,391,284 | ||||||||
Liabilities | ||||||||
Payable for capital shares redeemed | 1,247,954 | |||||||
Accrued management fees | 60,581 | |||||||
1,308,535 | ||||||||
Net Assets | $ | 371,082,749 | ||||||
Net Assets Consist of: | ||||||||
Capital (par value and paid-in surplus) | $ | 189,736,316 | ||||||
Distributable earnings | 181,346,433 | |||||||
$ | 371,082,749 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $73,179,304 | 5,143,007 | $14.23 | ||||||||
G Class, $0.01 Par Value | $297,903,445 | 20,860,366 | $14.28 |
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends | $ | 3,704,056 | |||
Interest | 106,149 | ||||
3,810,205 | |||||
Expenses: | |||||
Management fees | 3,545,401 | ||||
Directors' fees and expenses | 32,179 | ||||
Other expenses | 3,072 | ||||
3,580,652 | |||||
Fees waived(1) | (2,685,778) | ||||
894,874 | |||||
Net investment income (loss) | 2,915,331 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 84,604,663 | ||||
Futures contract transactions | 416,826 | ||||
85,021,489 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (2,275,929) | ||||
Futures contracts | 17,398 | ||||
(2,258,531) | |||||
Net realized and unrealized gain (loss) | 82,762,958 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 85,678,289 |
(1)Amount consists of $7,593 and $2,678,185 for Investor Class and G Class, respectively.
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 2,915,331 | $ | 5,127,445 | ||||||||||
Net realized gain (loss) | 85,021,489 | 27,327,955 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (2,258,531) | 4,676,422 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 85,678,289 | 37,131,822 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (3,798,350) | (12,696,691) | ||||||||||||
G Class | (20,219,351) | (48,148,677) | ||||||||||||
Decrease in net assets from distributions | (24,017,701) | (60,845,368) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (173,717,866) | (44,155,811) | ||||||||||||
Net increase (decrease) in net assets | (112,057,278) | (67,869,357) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 483,140,027 | 551,009,384 | ||||||||||||
End of period | $ | 371,082,749 | $ | 483,140,027 | ||||||||||
See Notes to Financial Statements.
14
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Disciplined Growth Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the Investor Class and G Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid semiannually. Distributions from net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
16
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services, which may be provided indirectly through another American Century Investments mutual fund. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds. Effective August 1, 2019, the investment advisor agreed to waive 0.01% of the fund's management fee. The investment advisor expects this waiver to continue until July 31, 2021 and cannot terminate it prior to such date without the approval of the Board of Directors. The investment advisor agreed to waive the G Class’s management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors.
The Investment Category Fee range, the Complex Fee range and the effective annual management fee before and after waiver for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||||||||
Before Waiver | After Waiver | ||||||||||||||||
Investor Class | 0.6880% to 0.8700% | 0.2500% to 0.3100% | 1.01% | 1.00% | |||||||||||||
G Class | 0.0500% to 0.1100% | 0.81% | 0.00% |
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $22,769,535 and $22,478,449, respectively. The effect of interfund transactions on the Statement of Operations was $4,985,730 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $555,938,641 and $754,861,074, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||||||||||||
Sold | 1,222,209 | $ | 15,548,929 | 116,272 | $ | 1,236,821 | ||||||||||||||
Issued in reinvestment of distributions | 300,265 | 3,798,350 | 1,169,815 | 12,696,691 | ||||||||||||||||
Redeemed | (5,703,916) | (73,591,791) | (1,171,841) | (14,832,929) | ||||||||||||||||
(4,181,442) | (54,244,512) | 114,246 | (899,417) | |||||||||||||||||
G Class/Shares Authorized | 330,000,000 | 330,000,000 | ||||||||||||||||||
Sold | 6,451,142 | 82,271,277 | 2,221,257 | 27,299,692 | ||||||||||||||||
Issued in reinvestment of distributions | 1,588,461 | 20,219,351 | 4,404,423 | 48,148,677 | ||||||||||||||||
Redeemed | (17,105,855) | (221,963,982) | (9,437,095) | (118,704,763) | ||||||||||||||||
(9,066,252) | (119,473,354) | (2,811,415) | (43,256,394) | |||||||||||||||||
Net increase (decrease) | (13,247,694) | $ | (173,717,866) | (2,697,169) | $ | (44,155,811) |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 363,964,216 | — | — | |||||||
Temporary Cash Investments | 11,371 | $ | 8,095,002 | — | |||||||
$ | 363,975,587 | $ | 8,095,002 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 23,928 | — | — | |||||||
Liabilities | |||||||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 6,530 | — | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts 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's average notional exposure to equity price risk derivative instruments held during the period was $2,348 futures contracts purchased.
The value of equity price risk derivative instruments as of June 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $34,915 in receivable for variation margin on futures contracts*. For the year ended June 30, 2020, the effect of equity price risk derivative instruments on the Statement of Operations was $416,826 in net realized gain (loss) on futures contract transactions and $17,398 in change in net unrealized appreciation (depreciation) on futures contracts.
*Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
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8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
9. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 2,722,586 | $ | 21,777,059 | ||||
Long-term capital gains | $ | 21,295,115 | $ | 39,068,309 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
The reclassifications, which are primarily due to tax equalization, were made to capital $12,576,476 and distributable earnings $(12,576,476).
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 250,727,771 | |||
Gross tax appreciation of investments | $ | 124,326,389 | |||
Gross tax depreciation of investments | (2,983,571) | ||||
Net tax appreciation (depreciation) of investments | $ | 121,342,818 | |||
Undistributed ordinary income | $ | 1,802,696 | |||
Accumulated long-term gains | $ | 58,200,919 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $12.29 | (0.01) | 2.64 | 2.63 | — | (0.69) | (0.69) | $14.23 | 22.14% | 1.01% | 1.02% | (0.09)% | (0.10)% | 137% | $73,179 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $13.13 | 0.03 | 0.65 | 0.68 | (0.04) | (1.48) | (1.52) | $12.29 | 6.76% | 1.02% | 1.02% | 0.23% | 0.23% | 115% | $114,600 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $11.41 | 0.03 | 2.10 | 2.13 | (0.03) | (0.38) | (0.41) | $13.13 | 18.85% | 1.01% | 1.01% | 0.22% | 0.22% | 105% | $120,907 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.49 | 0.05 | 1.92 | 1.97 | (0.05) | — | (0.05) | $11.41 | 20.83% | 1.02% | 1.02% | 0.51% | 0.51% | 131% | $106,476 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.77 | 0.06 | (0.27) | (0.21) | (0.07) | — | (0.07) | $9.49 | (2.18)% | 1.02% | 1.02% | 0.62% | 0.62% | 118% | $92,560 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $12.31 | 0.12 | 2.66 | 2.78 | (0.12) | (0.69) | (0.81) | $14.28 | 23.39% | 0.01% | 0.82% | 0.91% | 0.10% | 137% | $297,903 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $13.14 | 0.15 | 0.65 | 0.80 | (0.15) | (1.48) | (1.63) | $12.31 | 7.80% | 0.01% | 0.82% | 1.24% | 0.43% | 115% | $368,540 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $11.41 | 0.15 | 2.10 | 2.25 | (0.14) | (0.38) | (0.52) | $13.14 | 19.98% | 0.07% | 0.81% | 1.16% | 0.42% | 105% | $430,102 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $9.49 | 0.08 | 1.92 | 2.00 | (0.08) | — | (0.08) | $11.41 | 21.08% | 0.82% | 0.82% | 0.71% | 0.71% | 131% | $449,768 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $9.78 | 0.08 | (0.28) | (0.20) | (0.09) | — | (0.09) | $9.49 | (2.03)% | 0.82% | 0.82% | 0.82% | 0.82% | 118% | $397,955 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of NT Disciplined Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT Disciplined Growth Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the five years in the period ended June 30, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the five years in the period ended June 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
22
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
23
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
24
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
26
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one- and three-year periods reviewed by the Board. The Board discussed the Fund’s performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board
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found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
28
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was at the median of the total expense ratios of the Fund’s peer group.The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.01% (e.g., the Investor Class unified fee will be reduced from 1.01% to 1.00%) for at least one year, beginning August 1, 2020. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
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Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $2,722,586, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as qualified for the corporate dividends received deduction.
The fund hereby designates $33,368,782, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended June 30, 2020.
The fund hereby designates $349,996 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended June 30, 2020.
The fund utilized earnings and profits of $12,576,476 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-93000 2008 |
Annual Report | |||||
June 30, 2020 | |||||
NT Equity Growth Fund | |||||
G Class (ACLEX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
Performance |
Total Returns as of June 30, 2020 | |||||||||||||||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | |||||||||||||||||||||||||||||||
G Class | ACLEX | 6.58% | 8.97% | 13.14% | 5/12/06 | ||||||||||||||||||||||||||||||
S&P 500 Index | — | 7.51% | 10.72% | 13.98% | — |
Fund returns would have been lower if a portion of the fees had not been waived.
Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 |
Value on June 30, 2020 | ||||||||
G Class — $34,404 | ||||||||
S&P 500 Index — $37,031 | ||||||||
Ending value of G Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||
G Class 0.47% |
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. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Claudia Musat and Steven Rossi
Effective August 2020, portfolio manager Claudia Musat will leave the fund’s portfolio management team, and Guan Wang will join the fund as a portfolio manager.
Performance Summary
NT Equity Growth returned 6.58%* for the fiscal year ended June 30, 2020, compared with the 7.51% return of its benchmark, the S&P 500 Index.
NT Equity Growth advanced during the fiscal year, but underperformed its benchmark, the S&P 500 Index. Security selection in the information technology, consumer discretionary and materials sectors detracted the most from fund performance compared with the benchmark, while positioning in energy and communication services were most additive.
Stock Choices Across Several Sectors Detracted From Relative Returns
Stock choices in the information technology sector weighed most heavily on the fund’s 12-month results. Selections in the semiconductors and semiconductor equipment industry were the main headwind. An underweight to chipmaker NVIDIA was among the leading individual detractors from relative performance. Demand for NVIDIA’s gaming chips was high throughout the period but spiked starting in March, when widespread pandemic lockdown measures caused game manufacturers to purchase large amounts of the chips out of fear that production would stop. Positioning within the communications equipment industry also detracted, as did stock selection in IT services, where an underweight to PayPal Holdings was another leading individual detractor. We have since exited our position in PayPal Holdings.
Within the consumer discretionary sector, security selections in the textiles, apparel and luxury goods industry weighed most heavily on relative results. Within the specialty retail industry, an underweight compared with the benchmark in The Home Depot was among the leading individual detractors for the year. The price increased early in the period but fell during the March 2020 volatility. However, the stock rose heartily during the second quarter of 2020 as people under lockdown turned to home improvement projects to pass the time, stoking demand for the store’s products. Within the internet and direct marketing retail industry, a position in Amazon was also among the top detractors from overall performance.
Stock selections within the metals and mining industry provided the largest headwind for the materials sector. Security picks within the chemicals industry also weighed on results, as did a position in Domtar within the paper and forest products industry. We have since sold the stock. Many areas of the materials sector performed poorly during the 12 months as the economy entered recession and sapped demand for basic materials.
Energy and Communication Services were Additive
Positioning within the energy sector was the largest tailwind to relative returns during the period reflecting reduced exposure to several areas of the sector. Amid the spring lockdown, energy demand fell sharply, which weighed on the price of oil. In addition, a price war between Saudi Arabia and Russia further exacerbated the drop. Many energy companies, such as drillers and refiners, were hurt by the price decrease. Within the oil, gas and consumable fuels industry, underweight exposure to Exxon Mobil boosted returns and was among the leading contributors to relative performance.
*Fund returns would have been lower if a portion of fees had not been waived.
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Reduced exposure to other companies such as Phillips 66, Occidental Petroleum and ConocoPhillips also helped performance compared with the benchmark. As of the end of the period, we have exited our positions in Phillips 66, Occidental Petroleum and ConocoPhillips. Limited exposure to several companies within the energy equipment and services industry also bolstered results.
Stock selection within the communication services sector was also helpful, particularly within the entertainment industry. Video game companies did well during the period, with demand for their products surging during the lockdown. An overweight to Activision Blizzard was among the leading individual contributors for the period. A position in Electronic Arts was also beneficial. Both companies boasted strong revenues and earnings beats during the period, especially in the first quarter of 2020. An underweight to The Walt Disney Co. also drove relative returns, as the company’s revenues were hurt by park closures due to the pandemic. We have since exited the stock. Positioning within the interactive media and services industry also provided a tailwind.
A Look Ahead
Our disciplined, objective and systematic investment strategy is designed to take advantage of opportunities at the individual company level. We believe this approach is an effective way to capitalize on market inefficiencies that lead to the mispricing of individual stocks. Our strategy is designed to provide investors with well-diversified and risk-managed exposure to broad U.S. equities. As such, we do not see significant deviations in sector weightings versus the S&P 500 Index. Nevertheless, we can point to select sectors and industries where we are finding more or less investment opportunity.
At period-end, the information technology sector was the largest absolute weighting and largest relative overweight. Software and communications equipment represent some of the most attractive industry groups we see. The health care sector was the second-largest relative overweight. Our model detects opportunities within the biotechnology, health care technology and life sciences tools and services industries. Conversely, a relative lack of exposure to financials reflects the fact that we see a number of stocks in the capital markets, diversified financial services and banks industries that do not score well across our models in the current environment. In addition, our real estate sector underweight position reflects a lack of opportunity within real estate investment trusts (REITs) across most factors in the stock selection model.
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Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Apple, Inc. | 5.0% | |||||||
Microsoft Corp. | 4.6% | |||||||
Amazon.com, Inc. | 3.8% | |||||||
Alphabet, Inc., Class A | 2.9% | |||||||
Facebook, Inc., Class A | 2.9% | |||||||
Adobe, Inc. | 2.0% | |||||||
Merck & Co., Inc. | 1.5% | |||||||
Broadcom, Inc. | 1.4% | |||||||
Bristol-Myers Squibb Co. | 1.4% | |||||||
Verizon Communications, Inc. | 1.2% | |||||||
Top Five Industries | % of net assets | |||||||
Software | 12.7% | |||||||
Technology Hardware, Storage and Peripherals | 6.0% | |||||||
Interactive Media and Services | 5.8% | |||||||
Pharmaceuticals | 5.4% | |||||||
Semiconductors and Semiconductor Equipment | 4.7% | |||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 98.5% | |||||||
Temporary Cash Investments | 1.6% | |||||||
Other Assets and Liabilities | (0.1)% |
5
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
G Class | $1,000 | $980.00 | $0.05 | 0.01% | ||||||||||
Hypothetical | ||||||||||||||
G Class | $1,000 | $1,024.81 | $0.05 | 0.01% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
6
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 98.5% | ||||||||
Aerospace and Defense — 0.9% | ||||||||
Huntington Ingalls Industries, Inc. | 5,822 | $ | 1,015,880 | |||||
Lockheed Martin Corp. | 11,231 | 4,098,417 | ||||||
5,114,297 | ||||||||
Banks — 2.4% | ||||||||
Bank of America Corp. | 141,418 | 3,358,678 | ||||||
Citigroup, Inc. | 15,234 | 778,457 | ||||||
East West Bancorp, Inc. | 18,325 | 664,098 | ||||||
JPMorgan Chase & Co. | 58,575 | 5,509,564 | ||||||
Regions Financial Corp. | 52,006 | 578,307 | ||||||
Truist Financial Corp. | 25,628 | 962,331 | ||||||
Wells Fargo & Co. | 29,733 | 761,165 | ||||||
Zions Bancorp N.A. | 36,458 | 1,239,572 | ||||||
13,852,172 | ||||||||
Beverages — 1.1% | ||||||||
Coca-Cola Co. (The) | 25,676 | 1,147,204 | ||||||
Molson Coors Beverage Co., Class B | 67,828 | 2,330,570 | ||||||
Monster Beverage Corp.(1) | 39,979 | 2,771,344 | ||||||
6,249,118 | ||||||||
Biotechnology — 2.7% | ||||||||
AbbVie, Inc. | 32,569 | 3,197,625 | ||||||
Amgen, Inc. | 5,862 | 1,382,611 | ||||||
Biogen, Inc.(1) | 14,133 | 3,781,284 | ||||||
Exelixis, Inc.(1) | 23,802 | 565,060 | ||||||
Incyte Corp.(1) | 16,387 | 1,703,756 | ||||||
Neurocrine Biosciences, Inc.(1) | 4,714 | 575,108 | ||||||
Regeneron Pharmaceuticals, Inc.(1) | 5,501 | 3,430,699 | ||||||
Vertex Pharmaceuticals, Inc.(1) | 3,933 | 1,141,789 | ||||||
15,777,932 | ||||||||
Building Products — 1.5% | ||||||||
Fortune Brands Home & Security, Inc. | 40,244 | 2,572,799 | ||||||
Masco Corp. | 122,963 | 6,173,972 | ||||||
8,746,771 | ||||||||
Capital Markets — 2.3% | ||||||||
Ameriprise Financial, Inc. | 10,930 | 1,639,937 | ||||||
Eaton Vance Corp. | 11,127 | 429,502 | ||||||
FactSet Research Systems, Inc. | 9,245 | 3,036,705 | ||||||
LPL Financial Holdings, Inc. | 17,027 | 1,334,917 | ||||||
Moody's Corp. | 12,402 | 3,407,202 | ||||||
Morgan Stanley | 19,941 | 963,150 | ||||||
SEI Investments Co. | 34,114 | 1,875,588 | ||||||
State Street Corp. | 9,649 | 613,194 | ||||||
13,300,195 | ||||||||
Chemicals — 0.6% | ||||||||
Eastman Chemical Co. | 21,376 | 1,488,625 |
7
Shares | Value | |||||||
LyondellBasell Industries NV, Class A | 30,512 | $ | 2,005,248 | |||||
3,493,873 | ||||||||
Communications Equipment — 0.9% | ||||||||
Cisco Systems, Inc. | 44,393 | 2,070,490 | ||||||
Motorola Solutions, Inc. | 21,118 | 2,959,265 | ||||||
5,029,755 | ||||||||
Consumer Finance — 0.1% | ||||||||
Capital One Financial Corp. | 12,436 | 778,369 | ||||||
Containers and Packaging — 1.0% | ||||||||
International Paper Co. | 56,579 | 1,992,146 | ||||||
Packaging Corp. of America | 25,766 | 2,571,447 | ||||||
WestRock Co. | 39,311 | 1,110,929 | ||||||
5,674,522 | ||||||||
Distributors — 0.2% | ||||||||
LKQ Corp.(1) | 45,115 | 1,182,013 | ||||||
Diversified Financial Services — 1.1% | ||||||||
Berkshire Hathaway, Inc., Class B(1) | 35,143 | 6,273,377 | ||||||
Diversified Telecommunication Services — 2.6% | ||||||||
AT&T, Inc. | 158,892 | 4,803,305 | ||||||
CenturyLink, Inc. | 309,028 | 3,099,551 | ||||||
Verizon Communications, Inc. | 127,321 | 7,019,207 | ||||||
14,922,063 | ||||||||
Electric Utilities — 2.0% | ||||||||
Duke Energy Corp. | 20,599 | 1,645,654 | ||||||
Evergy, Inc. | 45,413 | 2,692,537 | ||||||
Exelon Corp. | 30,768 | 1,116,571 | ||||||
NextEra Energy, Inc. | 1,702 | 408,769 | ||||||
NRG Energy, Inc. | 85,134 | 2,771,963 | ||||||
PPL Corp. | 94,016 | 2,429,373 | ||||||
Southern Co. (The) | 8,143 | 422,215 | ||||||
11,487,082 | ||||||||
Electrical Equipment — 1.4% | ||||||||
Emerson Electric Co. | 97,209 | 6,029,874 | ||||||
Hubbell, Inc. | 14,478 | 1,814,962 | ||||||
7,844,836 | ||||||||
Electronic Equipment, Instruments and Components — 0.5% | ||||||||
Trimble, Inc.(1) | 39,284 | 1,696,676 | ||||||
Zebra Technologies Corp., Class A(1) | 5,560 | 1,423,082 | ||||||
3,119,758 | ||||||||
Energy Equipment and Services — 0.1% | ||||||||
Schlumberger Ltd. | 48,353 | 889,212 | ||||||
Entertainment — 2.3% | ||||||||
Activision Blizzard, Inc. | 40,790 | 3,095,961 | ||||||
Electronic Arts, Inc.(1) | 44,599 | 5,889,298 | ||||||
Netflix, Inc.(1) | 2,395 | 1,089,821 | ||||||
Zynga, Inc., Class A(1) | 335,951 | 3,204,972 | ||||||
13,280,052 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 0.2% | ||||||||
WP Carey, Inc. | 17,113 | 1,157,694 |
8
Shares | Value | |||||||
Food and Staples Retailing — 0.4% | ||||||||
Walgreens Boots Alliance, Inc. | 27,686 | $ | 1,173,609 | |||||
Walmart, Inc. | 9,442 | 1,130,963 | ||||||
2,304,572 | ||||||||
Food Products — 2.9% | ||||||||
Campbell Soup Co. | 14,406 | 714,970 | ||||||
General Mills, Inc. | 68,061 | 4,195,961 | ||||||
Hershey Co. (The) | 45,758 | 5,931,152 | ||||||
Hormel Foods Corp. | 57,132 | 2,757,762 | ||||||
Kellogg Co. | 40,990 | 2,707,799 | ||||||
Kraft Heinz Co. (The) | 19,304 | 615,604 | ||||||
16,923,248 | ||||||||
Health Care Equipment and Supplies — 4.1% | ||||||||
Abbott Laboratories | 69,567 | 6,360,511 | ||||||
ABIOMED, Inc.(1) | 6,341 | 1,531,732 | ||||||
Align Technology, Inc.(1) | 9,723 | 2,668,380 | ||||||
Baxter International, Inc. | 62,443 | 5,376,342 | ||||||
Danaher Corp. | 7,316 | 1,293,688 | ||||||
DexCom, Inc.(1) | 1,571 | 636,883 | ||||||
Edwards Lifesciences Corp.(1) | 45,024 | 3,111,609 | ||||||
Medtronic plc | 17,477 | 1,602,641 | ||||||
Zimmer Biomet Holdings, Inc. | 6,872 | 820,242 | ||||||
23,402,028 | ||||||||
Health Care Providers and Services — 3.3% | ||||||||
Cardinal Health, Inc. | 11,002 | 574,195 | ||||||
CVS Health Corp. | 80,985 | 5,261,596 | ||||||
Henry Schein, Inc.(1) | 9,008 | 525,977 | ||||||
Humana, Inc. | 13,223 | 5,127,218 | ||||||
McKesson Corp. | 21,667 | 3,324,151 | ||||||
UnitedHealth Group, Inc. | 14,076 | 4,151,716 | ||||||
18,964,853 | ||||||||
Health Care Technology — 1.0% | ||||||||
Cerner Corp. | 85,668 | 5,872,541 | ||||||
Hotels, Restaurants and Leisure — 0.8% | ||||||||
Las Vegas Sands Corp. | 35,656 | 1,623,774 | ||||||
Starbucks Corp. | 44,790 | 3,296,096 | ||||||
4,919,870 | ||||||||
Household Durables — 0.6% | ||||||||
Mohawk Industries, Inc.(1) | 18,359 | 1,868,212 | ||||||
PulteGroup, Inc. | 44,772 | 1,523,591 | ||||||
3,391,803 | ||||||||
Household Products — 2.4% | ||||||||
Colgate-Palmolive Co. | 40,170 | 2,942,854 | ||||||
Kimberly-Clark Corp. | 30,421 | 4,300,009 | ||||||
Procter & Gamble Co. (The) | 55,165 | 6,596,079 | ||||||
13,838,942 | ||||||||
Industrial Conglomerates — 1.5% | ||||||||
3M Co. | 21,435 | 3,343,646 | ||||||
Carlisle Cos., Inc. | 31,063 | 3,717,309 | ||||||
Honeywell International, Inc. | 10,124 | 1,463,829 | ||||||
8,524,784 |
9
Shares | Value | |||||||
Insurance — 1.9% | ||||||||
American Financial Group, Inc. | 17,579 | $ | 1,115,563 | |||||
Aon plc, Class A | 4,203 | 809,498 | ||||||
Brown & Brown, Inc. | 48,971 | 1,996,058 | ||||||
Hartford Financial Services Group, Inc. (The) | 28,719 | 1,107,117 | ||||||
Marsh & McLennan Cos., Inc. | 27,012 | 2,900,278 | ||||||
MetLife, Inc. | 60,723 | 2,217,604 | ||||||
Reinsurance Group of America, Inc. | 7,358 | 577,162 | ||||||
10,723,280 | ||||||||
Interactive Media and Services — 5.8% | ||||||||
Alphabet, Inc., Class A(1) | 11,786 | 16,713,138 | ||||||
Facebook, Inc., Class A(1) | 73,446 | 16,677,383 | ||||||
33,390,521 | ||||||||
Internet and Direct Marketing Retail — 4.7% | ||||||||
Amazon.com, Inc.(1) | 7,971 | 21,990,554 | ||||||
eBay, Inc. | 94,690 | 4,966,491 | ||||||
26,957,045 | ||||||||
IT Services — 3.7% | ||||||||
Accenture plc, Class A | 10,193 | 2,188,641 | ||||||
Akamai Technologies, Inc.(1) | 12,237 | 1,310,460 | ||||||
Amdocs Ltd. | 45,214 | 2,752,628 | ||||||
Cognizant Technology Solutions Corp., Class A | 20,428 | 1,160,719 | ||||||
International Business Machines Corp. | 47,395 | 5,723,894 | ||||||
Mastercard, Inc., Class A | 6,642 | 1,964,040 | ||||||
Visa, Inc., Class A | 18,173 | 3,510,479 | ||||||
Western Union Co. (The) | 123,308 | 2,665,919 | ||||||
21,276,780 | ||||||||
Life Sciences Tools and Services — 0.9% | ||||||||
Agilent Technologies, Inc. | 56,711 | 5,011,551 | ||||||
Machinery — 1.7% | ||||||||
Cummins, Inc. | 39,228 | 6,796,643 | ||||||
Snap-on, Inc. | 20,452 | 2,832,807 | ||||||
9,629,450 | ||||||||
Media — 0.8% | ||||||||
Discovery, Inc., Class C(1) | 208,405 | 4,013,880 | ||||||
Interpublic Group of Cos., Inc. (The) | 36,947 | 634,011 | ||||||
4,647,891 | ||||||||
Metals and Mining — 0.9% | ||||||||
Reliance Steel & Aluminum Co. | 38,268 | 3,632,781 | ||||||
Steel Dynamics, Inc. | 68,842 | 1,796,088 | ||||||
5,428,869 | ||||||||
Multi-Utilities — 0.6% | ||||||||
Dominion Energy, Inc. | 33,757 | 2,740,393 | ||||||
MDU Resources Group, Inc. | 31,531 | 699,358 | ||||||
3,439,751 | ||||||||
Multiline Retail — 0.7% | ||||||||
Target Corp. | 36,231 | 4,345,184 | ||||||
Oil, Gas and Consumable Fuels — 1.9% | ||||||||
Cabot Oil & Gas Corp. | 29,647 | 509,335 | ||||||
Chevron Corp. | 72,489 | 6,468,193 | ||||||
Exxon Mobil Corp. | 56,701 | 2,535,669 |
10
Shares | Value | |||||||
Kinder Morgan, Inc. | 62,997 | $ | 955,665 | |||||
Williams Cos., Inc. (The) | 40,753 | 775,122 | ||||||
11,243,984 | ||||||||
Personal Products — 0.7% | ||||||||
Estee Lauder Cos., Inc. (The), Class A | 20,383 | 3,845,864 | ||||||
Pharmaceuticals — 5.4% | ||||||||
Bristol-Myers Squibb Co. | 140,763 | 8,276,865 | ||||||
Jazz Pharmaceuticals plc(1) | 24,797 | 2,736,101 | ||||||
Johnson & Johnson | 48,919 | 6,879,479 | ||||||
Merck & Co., Inc. | 111,482 | 8,620,903 | ||||||
Mylan NV(1) | 170,991 | 2,749,535 | ||||||
Pfizer, Inc. | 49,814 | 1,628,918 | ||||||
30,891,801 | ||||||||
Professional Services — 0.7% | ||||||||
Nielsen Holdings plc | 70,676 | 1,050,245 | ||||||
Robert Half International, Inc. | 61,261 | 3,236,419 | ||||||
4,286,664 | ||||||||
Road and Rail — 0.5% | ||||||||
Kansas City Southern | 17,743 | 2,648,852 | ||||||
Semiconductors and Semiconductor Equipment — 4.7% | ||||||||
Applied Materials, Inc. | 82,254 | 4,972,254 | ||||||
Broadcom, Inc. | 26,307 | 8,302,752 | ||||||
Intel Corp. | 44,885 | 2,685,470 | ||||||
KLA Corp. | 5,652 | 1,099,201 | ||||||
Lam Research Corp. | 3,865 | 1,250,173 | ||||||
Maxim Integrated Products, Inc. | 32,869 | 1,992,190 | ||||||
NVIDIA Corp. | 2,439 | 926,601 | ||||||
Qorvo, Inc.(1) | 11,689 | 1,291,985 | ||||||
Texas Instruments, Inc. | 37,098 | 4,710,333 | ||||||
27,230,959 | ||||||||
Software — 12.7% | ||||||||
Adobe, Inc.(1) | 26,528 | 11,547,904 | ||||||
Autodesk, Inc.(1) | 21,015 | 5,026,578 | ||||||
Cadence Design Systems, Inc.(1) | 50,713 | 4,866,419 | ||||||
Dropbox, Inc., Class A(1) | 82,769 | 1,801,881 | ||||||
Intuit, Inc. | 15,017 | 4,447,885 | ||||||
Microsoft Corp. | 129,903 | 26,436,560 | ||||||
NortonLifeLock, Inc. | 43,156 | 855,783 | ||||||
Oracle Corp. (New York) | 69,125 | 3,820,539 | ||||||
salesforce.com, Inc.(1) | 32,970 | 6,176,270 | ||||||
ServiceNow, Inc.(1) | 11,939 | 4,836,011 | ||||||
VMware, Inc., Class A(1) | 19,901 | 3,081,869 | ||||||
72,897,699 | ||||||||
Specialty Retail — 1.8% | ||||||||
AutoZone, Inc.(1) | 1,792 | 2,021,591 | ||||||
Best Buy Co., Inc. | 32,468 | 2,833,482 | ||||||
Home Depot, Inc. (The) | 3,293 | 824,930 | ||||||
O'Reilly Automotive, Inc.(1) | 6,314 | 2,662,424 | ||||||
Ulta Beauty, Inc.(1) | 8,966 | 1,823,864 | ||||||
10,166,291 |
11
Shares | Value | |||||||
Technology Hardware, Storage and Peripherals — 6.0% | ||||||||
Apple, Inc. | 79,544 | $ | 29,017,651 | |||||
HP, Inc. | 158,596 | 2,764,328 | ||||||
NetApp, Inc. | 57,888 | 2,568,491 | ||||||
34,350,470 | ||||||||
Textiles, Apparel and Luxury Goods — 0.6% | ||||||||
Ralph Lauren Corp. | 51,404 | 3,727,818 | ||||||
Trading Companies and Distributors — 0.9% | ||||||||
W.W. Grainger, Inc. | 16,048 | 5,041,640 | ||||||
TOTAL COMMON STOCKS
(Cost $438,208,853) | 567,498,096 | |||||||
TEMPORARY CASH INVESTMENTS — 1.6% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $4,066,513), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $3,988,413) | 3,988,411 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $5,296,961), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $5,193,007) | 5,193,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 12,895 | 12,895 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $9,194,306) | 9,194,306 | |||||||
TOTAL INVESTMENT SECURITIES — 100.1%
(Cost $447,403,159) | 576,692,402 | |||||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (703,167) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 575,989,235 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
S&P 500 E-Mini | 30 | September 2020 | $1,500 | $ | 4,635,300 | $ | 109,700 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
JUNE 30, 2020 | |||||
Assets | |||||
Investment securities, at value (cost of $447,403,159) | $ | 576,692,402 | |||
Deposits with broker for futures contracts | 360,000 | ||||
Receivable for capital shares sold | 38,426 | ||||
Receivable for variation margin on futures contracts | 63,750 | ||||
Dividends and interest receivable | 429,479 | ||||
577,584,057 | |||||
Liabilities | |||||
Payable for capital shares redeemed | 1,594,822 | ||||
Net Assets | $ | 575,989,235 | |||
G Class Capital Shares, $0.01 Par Value | |||||
Shares authorized | 985,000,000 | ||||
Shares outstanding | 53,916,178 | ||||
Net Asset Value Per Share | $ | 10.68 | |||
Net Assets Consist of: | |||||
Capital (par value and paid-in surplus) | $ | 347,262,560 | |||
Distributable earnings | 228,726,675 | ||||
$ | 575,989,235 |
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | |||||
Investment Income (Loss) | |||||
Income: | |||||
Dividends | $ | 14,964,922 | |||
Interest | 668,791 | ||||
Securities lending, net | 1,929 | ||||
15,635,642 | |||||
Expenses: | |||||
Management fees | 4,234,658 | ||||
Directors' fees and expenses | 73,850 | ||||
Other expenses | 6,535 | ||||
4,315,043 | |||||
Fees waived | (4,234,658) | ||||
80,385 | |||||
Net investment income (loss) | 15,555,257 | ||||
Realized and Unrealized Gain (Loss) | |||||
Net realized gain (loss) on: | |||||
Investment transactions | 284,576,587 | ||||
Futures contract transactions | 11,350,634 | ||||
295,927,221 | |||||
Change in net unrealized appreciation (depreciation) on: | |||||
Investments | (228,891,071) | ||||
Futures contracts | (55,183) | ||||
(228,946,254) | |||||
Net realized and unrealized gain (loss) | 66,980,967 | ||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 82,536,224 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 15,555,257 | $ | 28,640,627 | ||||||||||
Net realized gain (loss) | 295,927,221 | 102,727,641 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (228,946,254) | (17,300,566) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | 82,536,224 | 114,067,702 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings | (159,452,313) | (194,396,133) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Proceeds from shares sold | 30,112,019 | 133,221,176 | ||||||||||||
Proceeds from reinvestment of distributions | 159,452,313 | 194,396,133 | ||||||||||||
Payments for shares redeemed | (958,021,793) | (498,765,868) | ||||||||||||
Net increase (decrease) in net assets from capital share transactions | (768,457,461) | (171,148,559) | ||||||||||||
Net increase (decrease) in net assets | (845,373,550) | (251,476,990) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 1,421,362,785 | 1,672,839,775 | ||||||||||||
End of period | $ | 575,989,235 | $ | 1,421,362,785 | ||||||||||
Transactions in Shares of the Fund | ||||||||||||||
Sold | 2,954,313 | 10,292,977 | ||||||||||||
Issued in reinvestment of distributions | 14,469,417 | 16,453,755 | ||||||||||||
Redeemed | (72,058,057) | (37,479,042) | ||||||||||||
Net increase (decrease) in shares of the fund | (54,634,327) | (10,732,310) |
See Notes to Financial Statements.
15
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Equity Growth Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the G Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
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Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
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Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds. The rates for the Investment Category Fee range from 0.3380% to 0.5200%. The rates for the Complex Fee range from 0.0500% to 0.1100%. The investment advisor agreed to waive the fund's management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended June 30, 2020 was 0.46% before waiver and 0.00% after waiver.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $22,239,001 and $63,384,386, respectively. The effect of interfund transactions on the Statement of Operations was $5,561,047 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $941,045,705 and $1,840,223,615, respectively.
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5. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 567,498,096 | — | — | |||||||
Temporary Cash Investments | 12,895 | $ | 9,181,411 | — | |||||||
$ | 567,510,991 | $ | 9,181,411 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 109,700 | — | — |
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's average notional exposure to equity price risk derivative instruments held during the period was $18,513 futures contracts purchased.
The value of equity price risk derivative instruments as of June 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $63,750 in receivable for variation margin on futures contracts*. For the year ended June 30, 2020, the effect of equity price risk derivative instruments on the Statement of Operations was $11,350,634 in net realized gain (loss) on futures contract transactions and $(55,183) in change in net unrealized appreciation (depreciation) on futures contracts.
*Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
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7. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
8. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 15,643,887 | $ | 68,693,242 | ||||
Long-term capital gains | $ | 143,808,426 | $ | 125,702,891 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
The reclassifications, which are primarily due to tax equalization, were made to capital $95,990,588 and distributable earnings $(95,990,588).
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 450,298,911 | |||
Gross tax appreciation of investments | $ | 148,069,755 | |||
Gross tax depreciation of investments | (21,676,264) | ||||
Net tax appreciation (depreciation) of investments | $ | 126,393,491 | |||
Undistributed ordinary income | $ | 11,294,837 | |||
Accumulated long-term gains | $ | 91,038,347 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net
Investment
Income
(Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total
Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $13.09 | 0.21 | 0.71 | 0.92 | (0.25) | (3.08) | (3.33) | $10.68 | 6.58% | 0.01% | 0.47% | 1.69% | 1.23% | 108% | $575,989 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $14.02 | 0.25 | 0.64 | 0.89 | (0.24) | (1.58) | (1.82) | $13.09 | 8.05% | 0.01% | 0.47% | 1.89% | 1.43% | 84% | $1,421,363 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $13.03 | 0.27 | 1.79 | 2.06 | (0.26) | (0.81) | (1.07) | $14.02 | 16.11% | 0.04% | 0.46% | 1.93% | 1.51% | 83% | $1,672,840 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.20 | 0.19 | 1.83 | 2.02 | (0.19) | — | (0.19) | $13.03 | 18.09% | 0.47% | 0.47% | 1.54% | 1.54% | 88% | $1,771,561 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $12.30 | 0.19 | (0.53) | (0.34) | (0.19) | (0.57) | (0.76) | $11.20 | (2.65)% | 0.47% | 0.47% | 1.65% | 1.65% | 94% | $1,563,685 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of NT Equity Growth Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT Equity Growth Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the five years in the period ended June 30, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the five years in the period ended June 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
25
Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
26
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board found the investment
27
management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
28
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
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Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $13,889,857, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as qualified for the corporate dividends received deduction.
The fund hereby designates $3,140,573 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended June 30, 2020.
The fund hereby designates $236,805,822, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended June 30, 2020.
The fund utilized earnings and profits of $95,990,588 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92997 2008 |
Annual Report | |||||
June 30, 2020 | |||||
Small Company Fund | |||||
Investor Class (ASQIX) | |||||
I Class (ASCQX) | |||||
A Class (ASQAX) | |||||
C Class (ASQCX) | |||||
R Class (ASCRX) | |||||
R5 Class (ASQGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of June 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Average Annual Returns | |||||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | ||||||||||||||||||||||||||||||||||||
Investor Class | ASQIX | -8.19% | 1.22% | 9.16% | — | 7/31/98 | |||||||||||||||||||||||||||||||||||
Russell 2000 Index | — | -6.63% | 4.28% | 10.49% | — | — | |||||||||||||||||||||||||||||||||||
I Class | ASCQX | -7.97% | 1.41% | 9.36% | — | 10/1/99 | |||||||||||||||||||||||||||||||||||
A Class | ASQAX | 9/7/00 | |||||||||||||||||||||||||||||||||||||||
No sales charge | -8.38% | 0.96% | 8.87% | — | |||||||||||||||||||||||||||||||||||||
With sales charge | -13.67% | -0.23% | 8.23% | — | |||||||||||||||||||||||||||||||||||||
C Class | ASQCX | -9.08% | 0.20% | 8.07% | — | 3/1/10 | |||||||||||||||||||||||||||||||||||
R Class | ASCRX | -8.59% | 0.71% | 8.61% | — | 8/29/03 | |||||||||||||||||||||||||||||||||||
R5 Class | ASQGX | -7.97% | — | — | -0.65% | 4/10/17 |
Average annual returns since inception are presented when ten years of performance history is not available.
Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge and may be subject to a maximum CDSC of 1.00%. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 | ||
Performance for other share classes will vary due to differences in fee structure. |
Value on June 30, 2020 | ||||||||
Investor Class — $24,032 | ||||||||
Russell 2000 Index — $27,142 | ||||||||
Total Annual Fund Operating Expenses | ||||||||||||||||||||||||||||||||
Investor Class | I Class | A Class | C Class | R Class | R5 Class | |||||||||||||||||||||||||||
0.87% | 0.67% | 1.12% | 1.87% | 1.37% | 0.67% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Manager: Steven Rossi
In April 2020, Brian Garbe left the fund's portfolio management team.
Effective August 2020, Guan Wang will join the fund's portfolio management team.
Performance Summary
Small Company returned -8.19%* for the fiscal year ended June 30, 2020, compared with the -6.63% return of its benchmark, the Russell 2000 Index.
Small Company fell during the fiscal year, and trailed the return of its benchmark, the Russell 2000 Index. Stock choices in the health care, real estate and consumer discretionary sectors detracted most from fund performance, while selections in the consumer staples and industrials sectors benefited fund results.
Stock Choices Across Several Sectors Detracted From Relative Returns
Stock choices were the largest driver of the fund’s 12-month results. Security selections in the health care sector detracted most from performance, primarily within the biotechnology industry. An underweight to Immunomedics was one of the leading individual detractors from performance compared with the benchmark for the period. The stock price began to rise dramatically in April, when the Food and Drug Administration granted accelerated approval for its breast cancer drug. Security selections within the health care technology industry also weighed on results, as did positioning within health care providers and services, where an overweight to AMN Healthcare Services was not beneficial. The stock of the health care staffing company started on a downward trend in March that lasted through early May before leveling off after a favorable earnings call. A decrease in elective surgical procedures and demand for home health care assistance affected the company during the COVID-19 lockdown. We have since exited the position.
Stock selection within real estate also negatively affected the portfolio, particularly within the equity real estate investment trusts (REITs) industry. Commercial real estate company Alexander & Baldwin was one of the leading individual detractors from relative results for the period. We closed the position. CorEnergy Infrastructure Trust and The GEO Group also weighed on results. CorEnergy operates oil pipelines and was negatively affected in March, when a price war between Saudi Arabia and Russia exacerbated the decrease in oil prices. We sold the position.
Within the consumer discretionary sector, stock choices within the hotels, restaurants and leisure industry were the primary headwind to results. Many businesses within the industry were very negatively affected by the pandemic. Jack in the Box fast-food restaurant was a leading detractor from portfolio performance for the period. BJ’s Restaurants and Dave & Buster’s Entertainment also weighed on returns, as diner traffic at their locations was eliminated by widespread lockdown measures. We have since exited our position in BJ’s Restaurants.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund’s benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Consumer Staples and Industrials Were Additive
In consumer staples, an overweight to the beverages industry, as well as stock choices within the personal products and tobacco industries, were the largest contributors to relative returns. In beverages, an overweight position in The Boston Beer Co. provided a tailwind to results. The maker of Samuel Adams and other adult beverages enjoyed strong demand for its products during the period. Its hard seltzer brand, Truly, was popular during the 12 months. Sales saw an uptick during the first and second quarters of 2020, helping the stock price to rise steadily starting in late March.
Within the personal products industry, diet and wellness company Medifast was a leading contributor. Its stock price came under pressure due to activist investor activity in November of 2019, but the company enjoyed revenue increases in both the fourth and first quarters of 2019 and 2020, respectively, which helped to bolster the stock price. Within tobacco, an overweight position in Vector Group, as well as avoidance of several other tobacco companies, lifted relative results. We have since closed our position in Vector Group.
Stock selections across several industries within the industrials sector worked to boost returns. Within machinery, infrastructure equipment company SPX was a leading contributor. The stock rose on strong earnings for the third and fourth quarter of 2019 but was mildly impacted by the COVID-19 pandemic. However, the stock rebounded in late March as central banks worked to stoke economic activity and support security valuations. We have since exited the position. Within the road and rail industry, a position in Marten Transport provided a tailwind, as did avoidance of Hertz Global Holdings, which had a subsidiary file for bankruptcy in May 2020. We have since sold Marten Transport. Avoiding several airline companies, which were badly hurt by the pandemic, also worked to lift returns. As COVID-19 spread, business and consumer travel halted, causing airline revenues to nosedive. The aerospace and defense sector was also hurt by the trend. Reduced exposure to that industry benefited returns.
Portfolio Positioning
Our disciplined, objective and systematic investment strategy is designed to take advantage of opportunities at the individual company level. We believe this approach is an effective way to capitalize on market inefficiencies that lead to the mispricing of individual stocks. As a result, our sector weights reflect where we are finding opportunities at a given time.
At period-end, the portfolio’s largest relative overweights were in the consumer staples and information technology sectors. In consumer staples, we find attractive investment opportunities within the beverages and personal products industries. In information technology, our models indicate opportunity in the software and semiconductors and semiconductor equipment industries. Conversely, we reduced our exposure to financials stocks during the period. The sector is now among the largest relative underweight positions. We feel there is a comparative lack of opportunity in the sector, particularly within the banks and mortgage REITs industries. The utilities sector also shows a lack of opportunity and was also a significant relative underweight at period-end.
6
Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
Quidel Corp. | 1.4% | |||||||
MAXIMUS, Inc. | 1.3% | |||||||
Exelixis, Inc. | 1.2% | |||||||
ASGN, Inc. | 1.1% | |||||||
Box, Inc., Class A | 1.1% | |||||||
Chegg, Inc. | 1.1% | |||||||
Novocure Ltd. | 1.0% | |||||||
Cirrus Logic, Inc. | 1.0% | |||||||
Cogent Communications Holdings, Inc. | 1.0% | |||||||
j2 Global, Inc. | 1.0% | |||||||
Top Five Industries | % of net assets | |||||||
Software | 7.9% | |||||||
Health Care Equipment and Supplies | 6.8% | |||||||
Biotechnology | 5.9% | |||||||
Banks | 5.5% | |||||||
Equity Real Estate Investment Trusts (REITs) | 4.3% | |||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 94.3% | |||||||
Temporary Cash Investments | 11.9% | |||||||
Other Assets and Liabilities | (6.2)%* |
*Amount relates primarily to payable for investments purchased, but not settled, at period end.
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Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
8
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 |
Annualized
Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $869.00 | $4.04 | 0.87% | ||||||||||
I Class | $1,000 | $870.40 | $3.12 | 0.67% | ||||||||||
A Class | $1,000 | $868.00 | $5.20 | 1.12% | ||||||||||
C Class | $1,000 | $864.60 | $8.67 | 1.87% | ||||||||||
R Class | $1,000 | $867.10 | $6.36 | 1.37% | ||||||||||
R5 Class | $1,000 | $869.80 | $3.11 | 0.67% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,020.54 | $4.37 | 0.87% | ||||||||||
I Class | $1,000 | $1,021.53 | $3.37 | 0.67% | ||||||||||
A Class | $1,000 | $1,019.29 | $5.62 | 1.12% | ||||||||||
C Class | $1,000 | $1,015.56 | $9.37 | 1.87% | ||||||||||
R Class | $1,000 | $1,018.05 | $6.87 | 1.37% | ||||||||||
R5 Class | $1,000 | $1,021.53 | $3.37 | 0.67% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
9
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 94.3% | ||||||||
Aerospace and Defense — 0.6% | ||||||||
Axon Enterprise, Inc.(1) | 8,989 | $ | 882,092 | |||||
Air Freight and Logistics — 0.6% | ||||||||
Echo Global Logistics, Inc.(1) | 28,355 | 613,035 | ||||||
Forward Air Corp. | 6,595 | 328,563 | ||||||
941,598 | ||||||||
Auto Components — 1.8% | ||||||||
American Axle & Manufacturing Holdings, Inc.(1) | 49,737 | 378,001 | ||||||
Dana, Inc. | 37,256 | 454,151 | ||||||
Gentherm, Inc.(1) | 18,352 | 713,893 | ||||||
LCI Industries | 11,085 | 1,274,553 | ||||||
2,820,598 | ||||||||
Automobiles — 0.1% | ||||||||
Winnebago Industries, Inc. | 1,605 | 106,925 | ||||||
Banks — 5.5% | ||||||||
BancFirst Corp. | 10,488 | 425,498 | ||||||
Bank of NT Butterfield & Son Ltd. (The) | 38,152 | 930,527 | ||||||
Cathay General Bancorp. | 38,357 | 1,008,789 | ||||||
City Holding Co. | 4,811 | 313,533 | ||||||
Community Bank System, Inc. | 22,825 | 1,301,482 | ||||||
Eagle Bancorp, Inc. | 9,335 | 305,721 | ||||||
First BanCorp | 41,921 | 234,338 | ||||||
First Commonwealth Financial Corp. | 52,651 | 435,950 | ||||||
First Merchants Corp. | 14,286 | 393,865 | ||||||
Independent Bank Group, Inc. | 4,733 | 191,781 | ||||||
International Bancshares Corp. | 28,512 | 912,954 | ||||||
Pacific Premier Bancorp, Inc. | 32,989 | 715,202 | ||||||
Park National Corp. | 3,053 | 214,870 | ||||||
S&T Bancorp, Inc. | 26,823 | 628,999 | ||||||
TCF Financial Corp. | 10,663 | 313,706 | ||||||
United Community Banks, Inc. | 22,665 | 456,020 | ||||||
8,783,235 | ||||||||
Beverages — 1.4% | ||||||||
Boston Beer Co., Inc. (The), Class A(1) | 665 | 356,872 | ||||||
Coca-Cola Consolidated, Inc. | 1,780 | 407,958 | ||||||
National Beverage Corp.(1) | 24,241 | 1,479,186 | ||||||
2,244,016 | ||||||||
Biotechnology — 5.9% | ||||||||
ACADIA Pharmaceuticals, Inc.(1) | 3,441 | 166,785 | ||||||
Akebia Therapeutics, Inc.(1) | 19,050 | 258,699 | ||||||
Anika Therapeutics, Inc.(1) | 10,657 | 402,089 | ||||||
CareDx, Inc.(1) | 5,200 | 184,236 | ||||||
Eagle Pharmaceuticals, Inc.(1) | 14,334 | 687,745 | ||||||
Exact Sciences Corp.(1) | 5,386 | 468,259 | ||||||
Exelixis, Inc.(1) | 82,806 | 1,965,814 | ||||||
Heron Therapeutics, Inc.(1) | 36,243 | 533,135 |
10
Shares | Value | |||||||
Immunomedics, Inc.(1) | 9,142 | $ | 323,992 | |||||
Invitae Corp.(1) | 8,038 | 243,471 | ||||||
Iovance Biotherapeutics, Inc.(1) | 6,703 | 183,997 | ||||||
Ironwood Pharmaceuticals, Inc.(1) | 89,931 | 928,088 | ||||||
Mirati Therapeutics, Inc.(1) | 880 | 100,470 | ||||||
Natera, Inc.(1) | 4,981 | 248,353 | ||||||
PTC Therapeutics, Inc.(1) | 14,240 | 722,538 | ||||||
Radius Health, Inc.(1) | 18,751 | 255,576 | ||||||
Retrophin, Inc.(1) | 7,541 | 153,912 | ||||||
Sarepta Therapeutics, Inc.(1) | 2,218 | 355,634 | ||||||
Vanda Pharmaceuticals, Inc.(1) | 71,160 | 814,070 | ||||||
Veracyte, Inc.(1) | 10,866 | 281,429 | ||||||
Vericel Corp.(1) | 8,635 | 119,336 | ||||||
9,397,628 | ||||||||
Building Products — 3.0% | ||||||||
Advanced Drainage Systems, Inc. | 29,603 | 1,462,388 | ||||||
Apogee Enterprises, Inc. | 15,451 | 355,991 | ||||||
Builders FirstSource, Inc.(1) | 47,007 | 973,045 | ||||||
Masonite International Corp.(1) | 2,407 | 187,216 | ||||||
Patrick Industries, Inc. | 11,848 | 725,690 | ||||||
PGT Innovations, Inc.(1) | 36,984 | 579,909 | ||||||
UFP Industries, Inc. | 10,327 | 511,290 | ||||||
4,795,529 | ||||||||
Capital Markets — 1.9% | ||||||||
Blucora, Inc.(1) | 16,171 | 184,673 | ||||||
Evercore, Inc., Class A | 20,193 | 1,189,772 | ||||||
Moelis & Co., Class A | 10,647 | 331,760 | ||||||
Piper Sandler Cos. | 3,066 | 181,385 | ||||||
Waddell & Reed Financial, Inc., Class A | 71,377 | 1,107,057 | ||||||
2,994,647 | ||||||||
Chemicals — 1.0% | ||||||||
Minerals Technologies, Inc. | 9,456 | 443,770 | ||||||
Sensient Technologies Corp. | 16,990 | 886,198 | ||||||
Tronox Holdings plc, Class A(1) | 25,212 | 182,031 | ||||||
1,511,999 | ||||||||
Commercial Services and Supplies — 3.0% | ||||||||
ACCO Brands Corp. | 23,750 | 168,625 | ||||||
Cimpress plc(1) | 12,571 | 959,670 | ||||||
Deluxe Corp. | 47,718 | 1,123,282 | ||||||
Healthcare Services Group, Inc. | 15,412 | 376,977 | ||||||
Herman Miller, Inc. | 8,474 | 200,071 | ||||||
HNI Corp. | 40,900 | 1,250,313 | ||||||
Knoll, Inc. | 32,398 | 394,932 | ||||||
Steelcase, Inc., Class A | 24,903 | 300,330 | ||||||
4,774,200 | ||||||||
Communications Equipment — 0.8% | ||||||||
Extreme Networks, Inc.(1) | 131,966 | 572,732 | ||||||
Lumentum Holdings, Inc.(1) | 8,250 | 671,798 | ||||||
1,244,530 | ||||||||
Construction and Engineering — 0.7% | ||||||||
Comfort Systems USA, Inc. | 4,019 | 163,774 |
11
Shares | Value | |||||||
MasTec, Inc.(1) | 21,960 | $ | 985,345 | |||||
1,149,119 | ||||||||
Consumer Finance — 1.2% | ||||||||
Encore Capital Group, Inc.(1) | 4,579 | 156,510 | ||||||
Enova International, Inc.(1) | 41,808 | 621,685 | ||||||
Green Dot Corp., Class A(1) | 16,397 | 804,765 | ||||||
LendingTree, Inc.(1) | 1,353 | 391,734 | ||||||
1,974,694 | ||||||||
Diversified Consumer Services — 1.9% | ||||||||
Chegg, Inc.(1) | 25,763 | 1,732,819 | ||||||
K12, Inc.(1) | 9,034 | 246,086 | ||||||
Perdoceo Education Corp.(1) | 32,359 | 515,479 | ||||||
WW International, Inc.(1) | 20,833 | 528,742 | ||||||
3,023,126 | ||||||||
Diversified Telecommunication Services — 1.0% | ||||||||
Cogent Communications Holdings, Inc. | 20,592 | 1,592,997 | ||||||
Electrical Equipment — 0.7% | ||||||||
Atkore International Group, Inc.(1) | 11,508 | 314,744 | ||||||
AZZ, Inc. | 23,384 | 802,539 | ||||||
1,117,283 | ||||||||
Electronic Equipment, Instruments and Components — 0.9% | ||||||||
Belden, Inc. | 5,966 | 194,194 | ||||||
OSI Systems, Inc.(1) | 13,333 | 995,175 | ||||||
Sanmina Corp.(1) | 7,931 | 198,592 | ||||||
1,387,961 | ||||||||
Energy Equipment and Services — 0.4% | ||||||||
Cactus, Inc., Class A | 14,496 | 299,053 | ||||||
NexTier Oilfield Solutions, Inc.(1) | 143,634 | 351,903 | ||||||
650,956 | ||||||||
Equity Real Estate Investment Trusts (REITs) — 4.3% | ||||||||
Alexander's, Inc. | 3,470 | 835,923 | ||||||
CareTrust REIT, Inc. | 30,655 | 526,040 | ||||||
Equity Lifestyle Properties, Inc. | 3,922 | 245,047 | ||||||
Front Yard Residential Corp. | 26,482 | 230,393 | ||||||
GEO Group, Inc. (The) | 59,145 | 699,685 | ||||||
Global Medical REIT, Inc. | 33,077 | 374,762 | ||||||
Global Net Lease, Inc. | 11,914 | 199,321 | ||||||
Life Storage, Inc. | 5,910 | 561,155 | ||||||
LTC Properties, Inc. | 11,648 | 438,780 | ||||||
Monmouth Real Estate Investment Corp. | 12,905 | 186,994 | ||||||
National Health Investors, Inc. | 13,363 | 811,401 | ||||||
Omega Healthcare Investors, Inc. | 23,706 | 704,779 | ||||||
Sabra Health Care REIT, Inc. | 28,226 | 407,301 | ||||||
Uniti Group, Inc. | 21,499 | 201,016 | ||||||
Urstadt Biddle Properties, Inc., Class A | 32,825 | 389,961 | ||||||
6,812,558 | ||||||||
Food and Staples Retailing — 0.4% | ||||||||
SpartanNash Co. | 11,489 | 244,141 | ||||||
Weis Markets, Inc. | 6,811 | 341,368 | ||||||
585,509 | ||||||||
Food Products — 1.5% | ||||||||
Calavo Growers, Inc. | 7,938 | 499,380 |
12
Shares | Value | ||||||||||
Freshpet, Inc.(1) | 10,949 | $ | 915,993 | ||||||||
John B Sanfilippo & Son, Inc. | 2,943 | 251,126 | |||||||||
Lancaster Colony Corp. | 1,853 | 287,197 | |||||||||
Tootsie Roll Industries, Inc. | 12,798 | 438,587 | |||||||||
2,392,283 | |||||||||||
Health Care Equipment and Supplies — 6.8% | |||||||||||
AtriCure, Inc.(1) | 3,984 | 179,081 | |||||||||
Cardiovascular Systems, Inc.(1) | 22,640 | 714,292 | |||||||||
Inogen, Inc.(1) | 10,549 | 374,700 | |||||||||
Insulet Corp.(1) | 900 | 174,834 | |||||||||
Integra LifeSciences Holdings Corp.(1) | 5,486 | 257,787 | |||||||||
iRhythm Technologies, Inc.(1) | 3,558 | 412,337 | |||||||||
Natus Medical, Inc.(1) | 38,997 | 850,915 | |||||||||
Nevro Corp.(1) | 4,343 | 518,858 | |||||||||
Novocure Ltd.(1) | 27,891 | 1,653,936 | |||||||||
NuVasive, Inc.(1) | 25,830 | 1,437,698 | |||||||||
Orthofix Medical, Inc.(1) | 5,146 | 164,672 | |||||||||
Penumbra, Inc.(1) | 842 | 150,566 | |||||||||
Quidel Corp.(1) | 10,029 | 2,243,888 | |||||||||
STAAR Surgical Co.(1) | 6,235 | 383,702 | |||||||||
Tandem Diabetes Care, Inc.(1) | 13,041 | 1,290,016 | |||||||||
10,807,282 | |||||||||||
Health Care Providers and Services — 1.4% | |||||||||||
Amedisys, Inc.(1) | 3,515 | 697,868 | |||||||||
BioTelemetry, Inc.(1) | 8,536 | 385,742 | |||||||||
HealthEquity, Inc.(1) | 9,180 | 538,590 | |||||||||
Tivity Health, Inc.(1) | 51,236 | 580,504 | |||||||||
2,202,704 | |||||||||||
Health Care Technology — 1.1% | |||||||||||
Simulations Plus, Inc. | 2,717 | 162,531 | |||||||||
Teladoc Health, Inc.(1) | 4,935 | 941,795 | |||||||||
Vocera Communications, Inc.(1) | 26,333 | 558,260 | |||||||||
1,662,586 | |||||||||||
Hotels, Restaurants and Leisure — 1.5% | |||||||||||
Cheesecake Factory, Inc. (The) | 11,081 | 253,976 | |||||||||
Cracker Barrel Old Country Store, Inc. | 2,889 | 320,419 | |||||||||
Dave & Buster's Entertainment, Inc. | 6,180 | 82,379 | |||||||||
Jack in the Box, Inc. | 10,723 | 794,467 | |||||||||
Scientific Games Corp., Class A(1) | 7,865 | 121,593 | |||||||||
Texas Roadhouse, Inc. | 12,866 | 676,366 | |||||||||
Wingstop, Inc. | 876 | 121,738 | |||||||||
2,370,938 | |||||||||||
Household Durables — 0.6% | |||||||||||
Installed Building Products, Inc.(1) | 4,499 | 309,441 | |||||||||
iRobot Corp.(1) | 6,782 | 569,010 | |||||||||
878,451 | |||||||||||
Household Products — 0.7% | |||||||||||
Central Garden & Pet Co., Class A(1) | 31,724 | 1,071,954 | |||||||||
Independent Power and Renewable Electricity Producers — 1.5% | |||||||||||
Clearway Energy, Inc., Class C | 54,017 | 1,245,632 | |||||||||
TerraForm Power, Inc., Class A | 57,808 | 1,065,979 | |||||||||
2,311,611 |
13
Shares | Value | |||||||
Insurance — 2.4% | ||||||||
Enstar Group Ltd.(1) | 5,339 | $ | 815,639 | |||||
Goosehead Insurance, Inc., Class A(1) | 3,252 | 244,420 | ||||||
National General Holdings Corp. | 52,996 | 1,145,244 | ||||||
Stewart Information Services Corp. | 38,609 | 1,255,179 | ||||||
Trupanion, Inc.(1) | 8,160 | 348,350 | ||||||
3,808,832 | ||||||||
Interactive Media and Services — 0.1% | ||||||||
Cars.com, Inc.(1) | 29,989 | 172,737 | ||||||
Internet and Direct Marketing Retail — 1.9% | ||||||||
Etsy, Inc.(1) | 2,663 | 282,890 | ||||||
PetMed Express, Inc. | 9,170 | 326,819 | ||||||
Shutterstock, Inc. | 33,479 | 1,170,761 | ||||||
Stamps.com, Inc.(1) | 6,915 | 1,270,216 | ||||||
3,050,686 | ||||||||
IT Services — 2.0% | ||||||||
Cardtronics plc, Class A(1) | 14,984 | 359,316 | ||||||
CSG Systems International, Inc. | 2,592 | 107,283 | ||||||
MAXIMUS, Inc. | 28,293 | 1,993,242 | ||||||
NIC, Inc. | 28,685 | 658,608 | ||||||
3,118,449 | ||||||||
Leisure Products — 0.4% | ||||||||
Malibu Boats, Inc., Class A(1) | 8,000 | 415,600 | ||||||
YETI Holdings, Inc.(1) | 5,690 | 243,134 | ||||||
658,734 | ||||||||
Life Sciences Tools and Services — 0.3% | ||||||||
Medpace Holdings, Inc.(1) | 4,826 | 448,914 | ||||||
Repligen Corp.(1) | 775 | 95,798 | ||||||
544,712 | ||||||||
Machinery — 2.4% | ||||||||
Astec Industries, Inc. | 14,535 | 673,116 | ||||||
EnPro Industries, Inc. | 5,803 | 286,030 | ||||||
Hillenbrand, Inc. | 22,567 | 610,889 | ||||||
Mueller Industries, Inc. | 30,279 | 804,816 | ||||||
Navistar International Corp.(1) | 12,223 | 344,688 | ||||||
Proto Labs, Inc.(1) | 1,837 | 206,607 | ||||||
Standex International Corp. | 3,067 | 176,506 | ||||||
Tennant Co. | 5,867 | 381,414 | ||||||
Wabash National Corp. | 35,729 | 379,442 | ||||||
3,863,508 | ||||||||
Media — 0.6% | ||||||||
Cardlytics, Inc.(1) | 2,369 | 165,782 | ||||||
MSG Networks, Inc., Class A(1) | 84,443 | 840,208 | ||||||
1,005,990 | ||||||||
Metals and Mining — 1.5% | ||||||||
Commercial Metals Co. | 56,455 | 1,151,682 | ||||||
Kaiser Aluminum Corp. | 2,304 | 169,620 | ||||||
Materion Corp. | 13,540 | 832,575 | ||||||
Worthington Industries, Inc. | 6,009 | 224,136 | ||||||
2,378,013 | ||||||||
Multi-Utilities — 0.1% | ||||||||
Unitil Corp. | 2,951 | 132,264 |
14
Shares | Value | |||||||
Oil, Gas and Consumable Fuels — 1.6% | ||||||||
Brigham Minerals, Inc., Class A | 12,218 | $ | 150,892 | |||||
CNX Resources Corp.(1) | 10,341 | 89,450 | ||||||
CVR Energy, Inc. | 40,470 | 813,852 | ||||||
DHT Holdings, Inc. | 34,150 | 175,189 | ||||||
Magnolia Oil & Gas Corp., Class A(1) | 97,443 | 590,504 | ||||||
PDC Energy, Inc.(1) | 41,459 | 515,750 | ||||||
Southwestern Energy Co.(1) | 63,705 | 163,085 | ||||||
2,498,722 | ||||||||
Paper and Forest Products — 1.0% | ||||||||
Boise Cascade Co. | 18,559 | 698,004 | ||||||
Neenah, Inc. | 4,840 | 239,387 | ||||||
Schweitzer-Mauduit International, Inc. | 21,208 | 708,559 | ||||||
1,645,950 | ||||||||
Personal Products — 1.6% | ||||||||
Edgewell Personal Care Co.(1) | 6,052 | 188,580 | ||||||
elf Beauty, Inc.(1) | 17,712 | 337,768 | ||||||
Medifast, Inc. | 8,341 | 1,157,481 | ||||||
USANA Health Sciences, Inc.(1) | 11,781 | 865,079 | ||||||
2,548,908 | ||||||||
Pharmaceuticals — 3.0% | ||||||||
Amneal Pharmaceuticals, Inc.(1) | 61,324 | 291,902 | ||||||
Collegium Pharmaceutical, Inc.(1) | 27,139 | 474,933 | ||||||
Corcept Therapeutics, Inc.(1) | 73,364 | 1,233,982 | ||||||
Innoviva, Inc.(1) | 74,731 | 1,044,739 | ||||||
Omeros Corp.(1) | 15,019 | 221,080 | ||||||
Pacira BioSciences, Inc.(1) | 24,591 | 1,290,290 | ||||||
Supernus Pharmaceuticals, Inc.(1) | 10,702 | 254,173 | ||||||
4,811,099 | ||||||||
Professional Services — 1.6% | ||||||||
ASGN, Inc.(1) | 26,646 | 1,776,755 | ||||||
Insperity, Inc. | 975 | 63,112 | ||||||
TriNet Group, Inc.(1) | 6,515 | 397,024 | ||||||
TrueBlue, Inc.(1) | 20,423 | 311,859 | ||||||
2,548,750 | ||||||||
Real Estate Management and Development — 0.6% | ||||||||
Newmark Group, Inc., Class A | 64,046 | 311,264 | ||||||
RE/MAX Holdings, Inc., Class A | 12,858 | 404,127 | ||||||
Realogy Holdings Corp. | 40,911 | 303,150 | ||||||
1,018,541 | ||||||||
Semiconductors and Semiconductor Equipment — 3.5% | ||||||||
Amkor Technology, Inc.(1) | 19,354 | 238,248 | ||||||
Cirrus Logic, Inc.(1) | 26,134 | 1,614,558 | ||||||
Diodes, Inc.(1) | 8,179 | 414,675 | ||||||
Enphase Energy, Inc.(1) | 7,968 | 379,038 | ||||||
FormFactor, Inc.(1) | 31,352 | 919,554 | ||||||
Inphi Corp.(1) | 3,678 | 432,165 | ||||||
MaxLinear, Inc.(1) | 18,089 | 388,190 | ||||||
Silicon Laboratories, Inc.(1) | 1,080 | 108,292 | ||||||
Ultra Clean Holdings, Inc.(1) | 19,225 | 435,062 | ||||||
Veeco Instruments, Inc.(1) | 43,520 | 587,085 | ||||||
5,516,867 |
15
Shares | Value | |||||||
Software — 7.9% | ||||||||
Appfolio, Inc., Class A(1) | 3,842 | $ | 625,132 | |||||
Blackbaud, Inc. | 1,976 | 112,790 | ||||||
Blackline, Inc.(1) | 834 | 69,147 | ||||||
Box, Inc., Class A(1) | 84,759 | 1,759,597 | ||||||
CommVault Systems, Inc.(1) | 34,650 | 1,340,955 | ||||||
Digital Turbine, Inc.(1) | 9,975 | 125,386 | ||||||
Five9, Inc.(1) | 8,765 | 970,022 | ||||||
HubSpot, Inc.(1) | 2,316 | 519,595 | ||||||
j2 Global, Inc.(1) | 24,258 | 1,533,348 | ||||||
Model N, Inc.(1) | 26,214 | 911,199 | ||||||
New Relic, Inc.(1) | 5,105 | 351,734 | ||||||
Progress Software Corp. | 17,717 | 686,534 | ||||||
Proofpoint, Inc.(1) | 3,614 | 401,588 | ||||||
PROS Holdings, Inc.(1) | 2,495 | 110,853 | ||||||
RingCentral, Inc., Class A(1) | 851 | 242,543 | ||||||
SPS Commerce, Inc.(1) | 13,047 | 980,091 | ||||||
SVMK, Inc.(1) | 4,927 | 115,981 | ||||||
Workiva, Inc.(1) | 7,481 | 400,159 | ||||||
Xperi Holding Corp. | 47,785 | 705,306 | ||||||
Zendesk, Inc.(1) | 6,479 | 573,586 | ||||||
12,535,546 | ||||||||
Specialty Retail — 2.4% | ||||||||
Aaron's, Inc. | 2,089 | 94,841 | ||||||
Bed Bath & Beyond, Inc. | 20,170 | 213,802 | ||||||
Children's Place, Inc. (The) | 9,088 | 340,073 | ||||||
Lithia Motors, Inc., Class A | 2,113 | 319,760 | ||||||
Rent-A-Center, Inc. | 24,430 | 679,642 | ||||||
RH(1) | 4,223 | 1,051,105 | ||||||
Signet Jewelers Ltd. | 18,215 | 187,068 | ||||||
Sleep Number Corp.(1) | 11,076 | 461,205 | ||||||
Zumiez, Inc.(1) | 19,255 | 527,202 | ||||||
3,874,698 | ||||||||
Technology Hardware, Storage and Peripherals — 0.3% | ||||||||
Pure Storage, Inc., Class A(1) | 25,237 | 437,357 | ||||||
Textiles, Apparel and Luxury Goods — 1.4% | ||||||||
Crocs, Inc.(1) | 20,416 | 751,717 | ||||||
G-III Apparel Group Ltd.(1) | 18,424 | 244,855 | ||||||
Oxford Industries, Inc. | 16,423 | 722,776 | ||||||
Steven Madden Ltd. | 21,011 | 518,762 | ||||||
2,238,110 | ||||||||
Thrifts and Mortgage Finance — 2.5% | ||||||||
Essent Group Ltd. | 40,024 | 1,451,671 | ||||||
MGIC Investment Corp. | 90,560 | 741,686 | ||||||
NMI Holdings, Inc., Class A(1) | 37,398 | 601,360 | ||||||
Radian Group, Inc. | 35,406 | 549,147 | ||||||
Walker & Dunlop, Inc. | 12,103 | 614,953 | ||||||
3,958,817 | ||||||||
Trading Companies and Distributors — 2.6% | ||||||||
Applied Industrial Technologies, Inc. | 2,746 | 171,323 | ||||||
BMC Stock Holdings, Inc.(1) | 52,251 | 1,313,590 | ||||||
GMS, Inc.(1) | 28,839 | 709,151 |
16
Shares | Value | |||||||
MRC Global, Inc.(1) | 110,077 | $ | 650,555 | |||||
NOW, Inc.(1) | 95,071 | 820,463 | ||||||
Triton International Ltd. | 12,574 | 380,238 | ||||||
4,045,320 | ||||||||
Wireless Telecommunication Services — 0.4% | ||||||||
Shenandoah Telecommunications Co. | 14,230 | 701,397 | ||||||
TOTAL COMMON STOCKS
(Cost $131,815,688) | 149,603,016 | |||||||
TEMPORARY CASH INVESTMENTS — 11.9% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $8,339,450), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $8,179,286) | 8,179,281 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $10,863,078), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $10,650,015) | 10,650,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 26,444 | 26,444 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $18,855,725) | 18,855,725 | |||||||
TOTAL INVESTMENT SECURITIES — 106.2%
(Cost $150,671,413) | 168,458,741 | |||||||
OTHER ASSETS AND LIABILITIES(2) — (6.2)% | (9,823,741) | |||||||
TOTAL NET ASSETS — 100.0% | $ | 158,635,000 |
FUTURES CONTRACTS PURCHASED | ||||||||||||||||||||||||||||||||
Reference Entity | Contracts | Expiration Date | Notional Amount | Underlying Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||||||||||||||||||
Russell 2000 E-Mini Index | 70 | September 2020 | $ | 3,500 | $ | 5,031,600 | $ | 202,401 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
(2)Amount relates primarily to payable for investments purchased, but not settled, at period end.
See Notes to Financial Statements.
17
Statement of Assets and Liabilities |
JUNE 30, 2020 | ||||||||
Assets | ||||||||
Investment securities, at value (cost of $131,842,132) | $ | 149,629,460 | ||||||
Repurchase agreements, at value (cost of $18,829,281) | 18,829,281 | |||||||
Total investment securities, at value (cost of $150,671,413) | 168,458,741 | |||||||
Deposits with broker for futures contracts | 448,000 | |||||||
Receivable for capital shares sold | 31,860 | |||||||
Receivable for variation margin on futures contracts | 1,141,169 | |||||||
Dividends and interest receivable | 76,652 | |||||||
170,156,422 | ||||||||
Liabilities | ||||||||
Payable for investments purchased | 11,251,861 | |||||||
Payable for capital shares redeemed | 62,589 | |||||||
Accrued management fees | 201,575 | |||||||
Distribution and service fees payable | 5,397 | |||||||
11,521,422 | ||||||||
Net Assets | $ | 158,635,000 | ||||||
Net Assets Consist of: | ||||||||
Capital (par value and paid-in surplus) | $ | 178,950,053 | ||||||
Distributable earnings | (20,315,053) | |||||||
$ | 158,635,000 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | |||||||||
Investor Class, $0.01 Par Value | $133,204,561 | 11,009,164 | $12.10 | ||||||||
I Class, $0.01 Par Value | $8,376,257 | 688,983 | $12.16 | ||||||||
A Class, $0.01 Par Value | $8,726,675 | 741,358 | $11.77* | ||||||||
C Class, $0.01 Par Value | $762,351 | 68,616 | $11.11 | ||||||||
R Class, $0.01 Par Value | $7,401,008 | 646,339 | $11.45 | ||||||||
R5 Class, $0.01 Par Value | $164,148 | 13,489 | $12.17 |
*Maximum offering price $12.49 (net asset value divided by 0.9425).
See Notes to Financial Statements.
18
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | ||||||||
Investment Income (Loss) | ||||||||
Income: | ||||||||
Dividends (net of foreign taxes withheld of $4,711) | $ | 6,205,016 | ||||||
Interest | 222,391 | |||||||
Securities lending, net | 62,977 | |||||||
6,490,384 | ||||||||
Expenses: | ||||||||
Management fees | 4,195,694 | |||||||
Distribution and service fees: | ||||||||
A Class | 28,712 | |||||||
C Class | 9,897 | |||||||
R Class | 43,232 | |||||||
Directors' fees and expenses | 39,195 | |||||||
Other expenses | 3,920 | |||||||
4,320,650 | ||||||||
Net investment income (loss) | 2,169,734 | |||||||
Realized and Unrealized Gain (Loss) | ||||||||
Net realized gain (loss) on: | ||||||||
Investment transactions | (23,460,428) | |||||||
Futures contract transactions | 5,022,146 | |||||||
(18,438,282) | ||||||||
Change in net unrealized appreciation (depreciation) on: | ||||||||
Investments | (13,675,068) | |||||||
Futures contracts | 202,401 | |||||||
(13,472,667) | ||||||||
Net realized and unrealized gain (loss) | (31,910,949) | |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (29,741,215) |
See Notes to Financial Statements.
19
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 2,169,734 | $ | 1,822,732 | ||||||||||
Net realized gain (loss) | (18,438,282) | 8,709,828 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (13,472,667) | (55,593,892) | ||||||||||||
Net increase (decrease) in net assets resulting from operations | (29,741,215) | (45,061,332) | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings: | ||||||||||||||
Investor Class | (3,031,824) | (60,872,390) | ||||||||||||
I Class | (156,076) | (2,151,580) | ||||||||||||
A Class | (31,135) | (1,924,288) | ||||||||||||
C Class | — | (194,670) | ||||||||||||
R Class | (14,146) | (1,385,413) | ||||||||||||
R5 Class | (2,505) | (23,818) | ||||||||||||
Decrease in net assets from distributions | (3,235,686) | (66,552,159) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (419,982,085) | 62,169,196 | ||||||||||||
Net increase (decrease) in net assets | (452,958,986) | (49,444,295) | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 611,593,986 | 661,038,281 | ||||||||||||
End of period | $ | 158,635,000 | $ | 611,593,986 | ||||||||||
See Notes to Financial Statements.
20
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Small Company Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth by investing primarily in common stocks of small companies.
The fund offers the Investor Class, I Class, A Class, C Class, R Class and R5 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value. Exchange-traded futures contracts are valued at the settlement price as provided by the appropriate exchange.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
21
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and
losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
22
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), extraordinary expenses, and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act.The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds.
The Investment Category Fee range, the Complex Fee range and the effective annual management fee for each class for the period ended June 30, 2020 are as follows:
Investment Category Fee Range | Complex Fee Range | Effective Annual Management Fee | |||||||||
Investor Class | 0.5380% to 0.7200% | 0.2500% to 0.3100% | 0.86% | ||||||||
I Class | 0.0500% to 0.1100% | 0.66% | |||||||||
A Class | 0.2500% to 0.3100% | 0.86% | |||||||||
C Class | 0.2500% to 0.3100% | 0.86% | |||||||||
R Class | 0.2500% to 0.3100% | 0.86% | |||||||||
R5 Class | 0.0500% to 0.1100% | 0.66% |
23
Distribution and Service Fees — The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, C Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The fees are used to pay financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the period ended June 30, 2020 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $11,165,435 and $15,762,589, respectively. The effect of interfund transactions on the Statement of Operations was $1,189,696 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $635,069,907 and $1,050,142,124, respectively.
24
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended June 30, 2020 | Year ended June 30, 2019 | |||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||
Investor Class/Shares Authorized | 340,000,000 | 340,000,000 | ||||||||||||||||||
Sold | 5,240,049 | $ | 58,414,522 | 8,566,116 | $ | 120,535,946 | ||||||||||||||
Issued in reinvestment of distributions | 229,972 | 2,972,437 | 4,843,836 | 59,918,460 | ||||||||||||||||
Redeemed | (37,095,980) | (464,184,870) | (7,430,997) | (105,877,692) | ||||||||||||||||
(31,625,959) | (402,797,911) | 5,978,955 | 74,576,714 | |||||||||||||||||
I Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||||||||||||
Sold | 397,413 | 5,124,981 | 681,560 | 9,730,626 | ||||||||||||||||
Issued in reinvestment of distributions | 11,912 | 155,978 | 171,734 | 2,150,512 | ||||||||||||||||
Redeemed | (1,089,775) | (14,417,556) | (1,157,692) | (16,981,008) | ||||||||||||||||
(680,450) | (9,136,597) | (304,398) | (5,099,870) | |||||||||||||||||
A Class/Shares Authorized | 35,000,000 | 35,000,000 | ||||||||||||||||||
Sold | 118,109 | 1,422,983 | 219,970 | 3,035,504 | ||||||||||||||||
Issued in reinvestment of distributions | 2,415 | 29,014 | 134,925 | 1,621,800 | ||||||||||||||||
Redeemed | (539,724) | (6,484,672) | (713,257) | (10,045,216) | ||||||||||||||||
(419,200) | (5,032,675) | (358,362) | (5,387,912) | |||||||||||||||||
C Class/Shares Authorized | 15,000,000 | 15,000,000 | ||||||||||||||||||
Sold | 1,479 | 16,998 | 17,797 | 249,506 | ||||||||||||||||
Issued in reinvestment of distributions | — | — | 15,968 | 182,677 | ||||||||||||||||
Redeemed | (56,297) | (647,404) | (41,538) | (530,641) | ||||||||||||||||
(54,818) | (630,406) | (7,773) | (98,458) | |||||||||||||||||
R Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||||||||||||
Sold | 157,494 | 1,830,770 | 207,467 | 2,748,218 | ||||||||||||||||
Issued in reinvestment of distributions | 1,211 | 13,928 | 104,398 | 1,223,547 | ||||||||||||||||
Redeemed | (350,822) | (4,143,065) | (446,703) | (5,902,157) | ||||||||||||||||
(192,117) | (2,298,367) | (134,838) | (1,930,392) | |||||||||||||||||
R5 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||||||||||||
Sold | 2,993 | 38,434 | 6,511 | 91,514 | ||||||||||||||||
Issued in reinvestment of distributions | 192 | 2,505 | 1,904 | 23,818 | ||||||||||||||||
Redeemed | (10,755) | (127,068) | (455) | (6,218) | ||||||||||||||||
(7,570) | (86,129) | 7,960 | 109,114 | |||||||||||||||||
Net increase (decrease) | (32,980,114) | $ | (419,982,085) | 5,181,544 | $ | 62,169,196 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
25
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 149,603,016 | — | — | |||||||
Temporary Cash Investments | 26,444 | $ | 18,829,281 | — | |||||||
$ | 149,629,460 | $ | 18,829,281 | — | |||||||
Other Financial Instruments | |||||||||||
Futures Contracts | $ | 202,401 | — | — |
7. Derivative Instruments
Equity Price Risk — The fund is subject to equity price risk in the normal course of pursuing its investment objectives. A fund may enter into futures contracts 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's average notional exposure to equity price risk derivative instruments held during the period was $17,613 futures contracts purchased.
The value of equity price risk derivative instruments as of June 30, 2020, is disclosed on the Statement of Assets and Liabilities as an asset of $1,141,169 in receivable for variation margin on futures contracts*. For the year ended June 30, 2020, the effect of equity price risk derivative instruments on the Statement of Operations was $5,022,146 in net realized gain (loss) on futures contract transactions and $202,401 in change in net unrealized appreciation (depreciation) on futures contracts.
*Included in the unrealized appreciation (depreciation) on futures contracts as reported in the Schedule of Investments.
8. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
26
9. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 3,235,686 | $ | 7,819,252 | ||||
Long-term capital gains | — | $ | 58,732,907 |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 152,091,939 | |||
Gross tax appreciation of investments | $ | 24,036,089 | |||
Gross tax depreciation of investments | (7,669,287) | ||||
Net tax appreciation (depreciation) of investments | $ | 16,366,802 | |||
Undistributed ordinary income | — | ||||
Accumulated short-term capital losses | $ | (18,998,788) | |||
Post-October capital loss deferral | $ | (17,683,067) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Loss deferrals represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized
capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an
unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue
Code limitations.
27
Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $13.28 | 0.06 | (1.14) | (1.08) | (0.10) | — | (0.10) | $12.10 | (8.19)% | 0.87% | 0.45% | 140% | $133,205 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $16.17 | 0.04 | (1.39) | (1.35) | (0.01) | (1.53) | (1.54) | $13.28 | (7.66)% | 0.87% | 0.30% | 99% | $566,025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $15.04 | 0.02 | 1.91 | 1.93 | (0.02) | (0.78) | (0.80) | $16.17 | 13.18% | 0.86% | 0.11% | 92% | $592,615 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $12.46 | 0.05 | 2.58 | 2.63 | (0.05) | — | (0.05) | $15.04 | 21.19% | 0.87% | 0.37% | 90% | $594,198 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $13.68 | 0.04 | (1.22) | (1.18) | (0.04) | — | (0.04) | $12.46 | (8.63)% | 0.88% | 0.36% | 93% | $654,517 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
I Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $13.36 | 0.08 | (1.14) | (1.06) | (0.14) | — | (0.14) | $12.16 | (7.97)% | 0.67% | 0.65% | 140% | $8,376 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $16.26 | 0.07 | (1.40) | (1.33) | (0.04) | (1.53) | (1.57) | $13.36 | (7.50)% | 0.67% | 0.50% | 99% | $18,293 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $15.11 | 0.05 | 1.92 | 1.97 | (0.04) | (0.78) | (0.82) | $16.26 | 13.42% | 0.66% | 0.31% | 92% | $27,213 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $12.52 | 0.08 | 2.59 | 2.67 | (0.08) | — | (0.08) | $15.11 | 21.41% | 0.67% | 0.57% | 90% | $25,863 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $13.76 | 0.07 | (1.24) | (1.17) | (0.07) | — | (0.07) | $12.52 | (8.50)% | 0.68% | 0.56% | 93% | $34,094 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $12.89 | 0.02 | (1.10) | (1.08) | (0.04) | — | (0.04) | $11.77 | (8.38)% | 1.12% | 0.20% | 140% | $8,727 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $15.78 | —(3) | (1.36) | (1.36) | — | (1.53) | (1.53) | $12.89 | (7.90)% | 1.12% | 0.05% | 99% | $14,960 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $14.72 | (0.02) | 1.86 | 1.84 | — | (0.78) | (0.78) | $15.78 | 12.90% | 1.11% | (0.14)% | 92% | $23,970 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $12.19 | 0.02 | 2.53 | 2.55 | (0.02) | — | (0.02) | $14.72 | 20.85% | 1.12% | 0.12% | 90% | $31,600 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $13.39 | 0.01 | (1.20) | (1.19) | (0.01) | — | (0.01) | $12.19 | (8.89)% | 1.13% | 0.11% | 93% | $35,153 |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $12.22 | (0.07) | (1.04) | (1.11) | — | — | — | $11.11 | (9.08)% | 1.87% | (0.55)% | 140% | $762 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $15.16 | (0.10) | (1.31) | (1.41) | — | (1.53) | (1.53) | $12.22 | (8.60)% | 1.87% | (0.70)% | 99% | $1,508 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $14.27 | (0.13) | 1.80 | 1.67 | — | (0.78) | (0.78) | $15.16 | 12.01% | 1.86% | (0.89)% | 92% | $1,989 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.89 | (0.08) | 2.46 | 2.38 | — | — | — | $14.27 | 20.02% | 1.87% | (0.63)% | 90% | $1,703 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $13.15 | (0.07) | (1.19) | (1.26) | — | — | — | $11.89 | (9.58)% | 1.88% | (0.64)% | 93% | $1,631 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $12.55 | (0.01) | (1.07) | (1.08) | (0.02) | — | (0.02) | $11.45 | (8.59)% | 1.37% | (0.05)% | 140% | $7,401 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $15.45 | (0.03) | (1.34) | (1.37) | — | (1.53) | (1.53) | $12.55 | (8.15)% | 1.37% | (0.20)% | 99% | $10,525 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $14.46 | (0.06) | 1.83 | 1.77 | — | (0.78) | (0.78) | $15.45 | 12.56% | 1.36% | (0.39)% | 92% | $15,038 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $11.99 | (0.02) | 2.49 | 2.47 | — | — | — | $14.46 | 20.60% | 1.37% | (0.13)% | 90% | $17,067 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $13.19 | (0.01) | (1.19) | (1.20) | — | — | — | $11.99 | (9.10)% | 1.38% | (0.14)% | 93% | $14,847 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R5 Class | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $13.37 | 0.08 | (1.14) | (1.06) | (0.14) | — | (0.14) | $12.17 | (7.97)% | 0.67% | 0.65% | 140% | $164 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $16.27 | 0.07 | (1.40) | (1.33) | (0.04) | (1.53) | (1.57) | $13.37 | (7.49)% | 0.67% | 0.50% | 99% | $282 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $15.12 | 0.06 | 1.90 | 1.96 | (0.03) | (0.78) | (0.81) | $16.27 | 13.34% | 0.66% | 0.31% | 92% | $213 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017(4) | $14.90 | 0.02 | 0.20 | 0.22 | — | — | — | $15.12 | 1.48% | 0.67%(5) | 0.51%(5) | 90%(6) | $5 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized.
(3)Per-share amount was less than $0.005.
(4)April 10, 2017 (commencement of sale) through June 30, 2017.
(5)Annualized.
(6)Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended June 30, 2017.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Small Company Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Small Company Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the periods indicated therein (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the periods indicated therein in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
31
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
32
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
33
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
34
Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
35
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board. The Board discussed the Fund’s performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor.
36
The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
37
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
38
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
39
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for
the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $1,993,986, or up to the maximum amount
allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as
qualified for the corporate dividends received deduction.
41
Notes |
42
Notes |
43
Notes |
44
Notes |
45
Notes |
46
Notes |
47
Notes |
48
Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92992 2008 |
Annual Report | |||||
June 30, 2020 | |||||
Utilities Fund | |||||
Investor Class (BULIX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
President's Letter | |||||
Performance | |||||
Portfolio Commentary | |||||
Fund Characteristics | |||||
Shareholder Fee Example | |||||
Schedule of Investments | |||||
Statement of Assets and Liabilities | |||||
Statement of Operations | |||||
Statement of Changes in Net Assets | |||||
Notes to Financial Statements | |||||
Financial Highlights | |||||
Report of Independent Registered Public Accounting Firm | |||||
Management | |||||
Approval of Management Agreement | |||||
Liquidity Risk Management Program | |||||
Additional Information |
Any opinions expressed in this report reflect those of the author as of the date of the report, and do not necessarily represent the opinions of American Century Investments® or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century Investments by third party vendors. To the best of American Century Investments’ knowledge, such information is accurate at the time of printing.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the period ended June 30, 2020. Annual reports help convey important information about fund returns, including factors that affected performance during the reporting period. For additional investment insights, please visit americancentury.com.
Pandemic Pressured Risk Asset Returns
Market sentiment was generally upbeat through early 2020. Dovish central banks, modest inflation, improving economic and corporate earnings data, and U.S.-China trade-policy progress helped boost growth outlooks. Key stock indices rose to new highs, and risk assets remained in favor.
However, beginning in late February, unprecedented turmoil quickly quashed the optimistic tone. The COVID-19 outbreak rapidly spread worldwide, halting most U.S. and global economic activity and triggering a worldwide recession. Stocks and other riskier assets sold off sharply as investors fled to perceived safe-haven investments. Central banks and federal governments stepped in quickly and aggressively to stabilize global markets and provide financial relief. These extraordinary efforts proved helpful. Risk assets broadly rebounded late in the period despite discouraging economic and corporate earnings data. Slowing coronavirus infection and death rates in many regions and the reopening of economies also helped fuel the late-period recovery.
Overall, stocks delivered mixed results for the 12-month period. The broad U.S. stock market (S&P 500 Index) overcame the effects of the early 2020 sell-off to deliver a solid 12-month return. Large-cap stocks generally fared better than their smaller counterparts, and the growth style significantly outperformed value stocks. Perceived safe-haven investments, including Treasuries and gold, delivered strong returns, outperforming most broad stock indices.
A Slow Return to Normal
The return to pre-pandemic life will take time and patience, but we are confident we will get there. We remain hopeful medical researchers will uncover effective COVID-19 treatments and potentially develop a vaccine. In the meantime, investors likely will face periods of outbreak-related disruptions, economic and political uncertainty, and heightened market volatility. While these influences can be unsettling, they tend to be temporary. We appreciate your confidence in us during these extraordinary times. We have a long history of helping clients weather volatile markets, and we're confident we will meet today's challenges.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of June 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Average Annual Returns | ||||||||||||||||||||||||||||||||||||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | ||||||||||||||||||||||||||||||||||
Investor Class | BULIX | -8.39% | 5.39% | 8.91% | 3/1/93 | |||||||||||||||||||||||||||||||||
S&P 500 Utilities Index | — | -2.11% | 10.16% | 11.30% | — | |||||||||||||||||||||||||||||||||
Russell 3000 Utilities Index | — | -2.84% | 8.06% | 10.58% | — | |||||||||||||||||||||||||||||||||
S&P 500 Index | — | 7.51% | 10.72% | 13.98% | — |
Effective April 1, 2020, the fund's primary benchmark changed from the Russell 3000 Utilities Index to the S&P 500 Utilities Index. The fund's investment advisor believes that the S&P 500 Utilities Index aligns better with the fund's strategy.
Growth of $10,000 Over 10 Years | ||
$10,000 investment made June 30, 2010 |
Value on June 30, 2020 | ||||||||
Investor Class — $23,489 | ||||||||
S&P 500 Utilities Index — $29,207 | ||||||||
Russell 3000 Utilities Index — $27,349 | ||||||||
S&P 500 Index — $37,031 | ||||||||
Total Annual Fund Operating Expenses | ||||||||
Investor Class | 0.67% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Portfolio Commentary |
Portfolio Managers: Yulin Long and Tsuyoshi Ozaki
Performance Summary
Utilities returned -8.39% for the 12 months ended June 30, 2020, trailing the -2.11% return of its benchmark, the S&P 500 Utilities Index. By comparison, the S&P 500 Index, a broad market measure, returned 7.51%.
The S&P 500 Utilities Index is made up of utilities stocks and does not include allocations to other sectors. Compared with the index, the portfolio’s underperformance was largely a result of stock selection decisions in the utilities sector. Out-of-index positions in the information technology sector also detracted, while positioning within the communication services sector was additive.
Equity Volatility and Falling Rates Influence Utility Stock Performance
The period was characterized by extreme volatility, as the pandemic and efforts to combat it sent the U.S. economy into recession and stocks into a bear market for the first time since the financial crisis more than a decade ago. In that environment, U.S. utility stock performance was influenced by two conflicting factors: investor preference for more dependable growth stocks and falling interest rates. Utilities are generally thought of as defensive, lower-volatility stocks, but amid the downturn many investors gravitated toward growth-oriented investments and shied away from low-volatility, high-yielding stocks. Utilities stocks came under further pressure as the recession meant a significant reduction in electricity demand, hurting revenues and earnings throughout the sector.
At the same time, the Federal Reserve slashed short-term interest rates to zero and instituted unprecedented bond buying to lower longer-term borrowing costs as well. That’s important for utilities stocks, whose sizable dividends and consistent revenue streams make them attractive to income-oriented investors as an alternative or complement to bonds. When bond yields fall, as they did during the reporting period, utility stocks become comparatively more attractive. That demand was supportive for utilities shares in an otherwise challenging market environment.
Electric Utilities Stocks Detracted the Most
The main source of weakness relative to the benchmark was stock selection among electric utilities companies. Reduced exposure to NextEra Energy was the leading individual detractor from results compared with the benchmark. The company was the largest stock in the index by far on average during the period. We had significant exposure to the stock, but less than the index. The stock produced a solid gain even during the COVID-19 lockdown, two of NextEra’s major business units, Florida Power & Light and Gulf Power, enjoyed earnings increases. PG&E was another leading individual detractor from performance. The stock price experienced volatility throughout the period due to ongoing concerns associated with wildfire liabilities in California. We have since exited the position.
Security choices within the multi-utilities industry also detracted from relative results. Positions in NorthWestern and MDU Resources Group were among the leading industry detractors. Both reported earnings below expectations amid less demand for electricity. Within the independent power producers and energy traders industry, a position in The AES Corp. was a leading headwind to relative performance. The stock rose the first half of the period but fell in the spring of 2020, when the company missed first-quarter earnings estimates and reported decreased revenues. Stock selection within the gas utilities industry also weighed on results. Elsewhere in the markets, an out-of-benchmark position in the information technology sector detracted from relative returns. Software and communications firm J2 Global performed well early in the period, reaching an all-time high before declining sharply amid the sell-off.
4
Communication Services was a Key Contributor
Positioning within the communication services sector contributed to relative returns. Within the diversified telecommunication services industry, a position in Verizon Communications was a leading individual contributor to results. During the COVID-19 lockdown, consumer and business demand for Verizon’s services increased, driving revenues for the company. A position in Cogent Communications Holdings also benefited results. Within wireless telecommunication services, a position in T-Mobile US was also helpful. We have sold these three stocks. Elsewhere, allocation decisions within industrials and real estate also provided a modest tailwind.
Portfolio Positioning
We employ a structured, disciplined investment approach. We incorporate both growth and valuation measures into our stock selection process and attempt to balance the portfolio’s risk and expected return. We continue to overweight information technology, and we are also overweight real estate stocks relative to the benchmark. During the year, we reduced our communication services sector exposure significantly. At the end of the period, we held no exposure, which is even with the benchmark weighting. The portfolio is modestly underweight utilities versus the benchmark.
We continue to believe that utilities stocks can play an important role in an investor’s portfolio despite the recent volatility. These companies continue to pay attractive dividends, which we believe can contribute to attractive risk-adjusted total returns over time. As of June 30, 2020, the portfolio continued to offer attractive dividends relative to bonds and the broader S&P 500 Index.
5
Fund Characteristics |
JUNE 30, 2020 | ||||||||
Top Ten Holdings | % of net assets | |||||||
NextEra Energy, Inc. | 12.6% | |||||||
Dominion Energy, Inc. | 6.8% | |||||||
Duke Energy Corp. | 5.4% | |||||||
Xcel Energy, Inc. | 4.9% | |||||||
Southern Co. (The) | 4.7% | |||||||
American Water Works Co., Inc. | 4.5% | |||||||
PPL Corp. | 4.4% | |||||||
Entergy Corp. | 4.2% | |||||||
Public Service Enterprise Group, Inc. | 3.9% | |||||||
Consolidated Edison, Inc. | 3.8% | |||||||
Sub-Industry Allocation | % of net assets | |||||||
Electric Utilities | 59.0% | |||||||
Multi-Utilities | 26.0% | |||||||
Water Utilities | 5.8% | |||||||
Independent Power Producers and Energy Traders | 3.0% | |||||||
Gas Utilities | 0.9% | |||||||
Electronic Equipment and Instruments | 0.5% | |||||||
Communications Equipment | 0.5% | |||||||
Semiconductor Equipment | 0.5% | |||||||
Specialty | 0.3% | |||||||
Semiconductors | 0.3% | |||||||
Exchange-Traded Funds | 1.6% | |||||||
Cash and Equivalents* | 1.6% | |||||||
*Includes temporary cash investments and other assets and liabilities. | ||||||||
Types of Investments in Portfolio | % of net assets | |||||||
Common Stocks | 96.8% | |||||||
Exchange-Traded Funds | 1.6% | |||||||
Total Equity Exposure | 98.4% | |||||||
Temporary Cash Investments | 1.5% | |||||||
Other Assets and Liabilities | 0.1% |
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Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from January 1, 2020 to June 30, 2020.
Actual Expenses
The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century Investments fund, or I Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not through a financial intermediary or employer-sponsored retirement plan account), American Century Investments may charge you a $25.00 annual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $25.00 fee. In determining your total eligible investment amount, we will include your investments in all personal accounts (including American Century Investments brokerage accounts) registered under your Social Security number. Personal accounts include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Investments brokerage accounts, you are currently not subject to this fee. If you are subject to the account maintenance fee, your account value could be reduced by the fee amount.
Hypothetical Example for Comparison Purposes
The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund’s share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
7
Beginning Account Value 1/1/20 | Ending Account Value 6/30/20 | Expenses Paid During Period(1) 1/1/20 - 6/30/20 | Annualized Expense Ratio(1) | |||||||||||
Actual | ||||||||||||||
Investor Class | $1,000 | $846.20 | $3.08 | 0.67% | ||||||||||
Hypothetical | ||||||||||||||
Investor Class | $1,000 | $1,021.53 | $3.37 | 0.67% |
(1)Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses.
8
Schedule of Investments |
JUNE 30, 2020
Shares | Value | |||||||
COMMON STOCKS — 96.8% | ||||||||
Communications Equipment — 0.5% | ||||||||
Cisco Systems, Inc. | 36,310 | $ | 1,693,498 | |||||
Electric Utilities — 59.0% | ||||||||
Alliant Energy Corp. | 225,101 | 10,768,832 | ||||||
American Electric Power Co., Inc. | 130,748 | 10,412,771 | ||||||
Duke Energy Corp. | 218,804 | 17,480,252 | ||||||
Edison International | 122,120 | 6,632,337 | ||||||
Entergy Corp. | 144,196 | 13,527,027 | ||||||
Evergy, Inc. | 19,216 | 1,139,317 | ||||||
Eversource Energy | 96,900 | 8,068,863 | ||||||
Exelon Corp. | 286,714 | 10,404,851 | ||||||
FirstEnergy Corp. | 188,505 | 7,310,224 | ||||||
IDACORP, Inc. | 3,724 | 325,366 | ||||||
NextEra Energy, Inc. | 169,207 | 40,638,445 | ||||||
NRG Energy, Inc. | 244,647 | 7,965,706 | ||||||
OGE Energy Corp. | 73,234 | 2,223,384 | ||||||
Pinnacle West Capital Corp. | 91,361 | 6,695,848 | ||||||
Portland General Electric Co. | 38,866 | 1,624,987 | ||||||
PPL Corp. | 542,287 | 14,012,696 | ||||||
Southern Co. (The) | 288,963 | 14,982,732 | ||||||
Xcel Energy, Inc. | 253,664 | 15,854,000 | ||||||
190,067,638 | ||||||||
Electronic Equipment and Instruments — 0.5% | ||||||||
Itron, Inc.(1) | 25,847 | 1,712,364 | ||||||
Gas Utilities — 0.9% | ||||||||
Atmos Energy Corp. | 20,358 | 2,027,250 | ||||||
National Fuel Gas Co. | 17,765 | 744,886 | ||||||
2,772,136 | ||||||||
Independent Power Producers and Energy Traders — 3.0% | ||||||||
AES Corp. (The) | 482,032 | 6,984,643 | ||||||
Clearway Energy, Inc., Class C | 108,996 | 2,513,448 | ||||||
9,498,091 | ||||||||
Multi-Utilities — 26.0% | ||||||||
Ameren Corp. | 68,862 | 4,845,130 | ||||||
Avista Corp. | 28,180 | 1,025,470 | ||||||
CMS Energy Corp. | 31,010 | 1,811,604 | ||||||
Consolidated Edison, Inc. | 171,116 | 12,308,374 | ||||||
Dominion Energy, Inc. | 268,963 | 21,834,416 | ||||||
DTE Energy Co. | 81,595 | 8,771,463 | ||||||
MDU Resources Group, Inc. | 162,986 | 3,615,030 | ||||||
NiSource, Inc. | 88,513 | 2,012,786 | ||||||
NorthWestern Corp. | 42,764 | 2,331,493 | ||||||
Public Service Enterprise Group, Inc. | 253,968 | 12,485,067 | ||||||
Sempra Energy | 67,097 | 7,865,781 | ||||||
WEC Energy Group, Inc. | 53,355 | 4,676,566 | ||||||
83,583,180 |
9
Shares | Value | |||||||
Semiconductor Equipment — 0.5% | ||||||||
Enphase Energy, Inc.(1) | 17,576 | $ | 836,090 | |||||
SolarEdge Technologies, Inc.(1) | 5,916 | 821,023 | ||||||
1,657,113 | ||||||||
Semiconductors — 0.3% | ||||||||
QUALCOMM, Inc. | 9,585 | 874,248 | ||||||
Specialty — 0.3% | ||||||||
American Tower Corp. | 3,813 | 985,813 | ||||||
Water Utilities — 5.8% | ||||||||
American Water Works Co., Inc. | 112,908 | 14,526,743 | ||||||
Essential Utilities, Inc. | 97,991 | 4,139,140 | ||||||
18,665,883 | ||||||||
TOTAL COMMON STOCKS
(Cost $285,488,220) | 311,509,964 | |||||||
EXCHANGE-TRADED FUNDS — 1.6% | ||||||||
Utilities Select Sector SPDR Fund (Cost $5,105,437) | 90,046 | 5,081,296 | ||||||
TEMPORARY CASH INVESTMENTS — 1.5% | ||||||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 2.125% - 3.125%, 12/31/22 - 2/15/43, valued at $2,178,068), in a joint trading account at 0.02%, dated 6/30/20, due 7/1/20 (Delivery value $2,136,237) | 2,136,235 | |||||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 11/15/48, valued at $2,835,616), at 0.05%, dated 6/30/20, due 7/1/20 (Delivery value $2,780,004) | 2,780,000 | |||||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 60,358 | 60,358 | ||||||
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $4,976,593) | 4,976,593 | |||||||
TOTAL INVESTMENT SECURITIES — 99.9%
(Cost $295,570,250) | 321,567,853 | |||||||
OTHER ASSETS AND LIABILITIES — 0.1% | 349,003 | |||||||
TOTAL NET ASSETS — 100.0% | $ | 321,916,856 |
NOTES TO SCHEDULE OF INVESTMENTS |
(1)Non-income producing.
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
JUNE 30, 2020 | ||||||||
Assets | ||||||||
Investment securities, at value (cost of $295,570,250) | $ | 321,567,853 | ||||||
Receivable for capital shares sold | 287,279 | |||||||
Dividends and interest receivable | 552,759 | |||||||
322,407,891 | ||||||||
Liabilities | ||||||||
Payable for capital shares redeemed | 309,819 | |||||||
Accrued management fees | 181,216 | |||||||
491,035 | ||||||||
Net Assets | $ | 321,916,856 | ||||||
Investor Class Capital Shares, $0.01 Par Value | ||||||||
Shares authorized | 260,000,000 | |||||||
Shares outstanding | 20,231,477 | |||||||
Net Asset Value Per Share | $ | 15.91 | ||||||
Net Assets Consist of: | ||||||||
Capital (par value and paid-in surplus) | $ | 285,386,825 | ||||||
Distributable earnings | 36,530,031 | |||||||
$ | 321,916,856 |
See Notes to Financial Statements.
11
Statement of Operations |
YEAR ENDED JUNE 30, 2020 | ||||||||
Investment Income (Loss) | ||||||||
Income: | ||||||||
Dividends | $ | 14,029,071 | ||||||
Interest | 33,201 | |||||||
Securities lending, net | 244 | |||||||
14,062,516 | ||||||||
Expenses: | ||||||||
Management fees | 2,567,812 | |||||||
Directors' fees and expenses | 29,978 | |||||||
Other expenses | 299 | |||||||
2,598,089 | ||||||||
Net investment income (loss) | 11,464,427 | |||||||
Realized and Unrealized Gain (Loss) | ||||||||
Net realized gain (loss) on investment transactions | 16,330,266 | |||||||
Change in net unrealized appreciation (depreciation) on: | ||||||||
Investments | (57,768,177) | |||||||
Translation of assets and liabilities in foreign currencies | (61) | |||||||
(57,768,238) | ||||||||
Net realized and unrealized gain (loss) | (41,437,972) | |||||||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | (29,973,545) |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
YEARS ENDED JUNE 30, 2020 AND JUNE 30, 2019 | ||||||||||||||
Increase (Decrease) in Net Assets | June 30, 2020 | June 30, 2019 | ||||||||||||
Operations | ||||||||||||||
Net investment income (loss) | $ | 11,464,427 | $ | 13,031,196 | ||||||||||
Net realized gain (loss) | 16,330,266 | 5,319,519 | ||||||||||||
Change in net unrealized appreciation (depreciation) | (57,768,238) | 28,451,216 | ||||||||||||
Net increase (decrease) in net assets resulting from operations | (29,973,545) | 46,801,931 | ||||||||||||
Distributions to Shareholders | ||||||||||||||
From earnings | (11,389,979) | (22,923,015) | ||||||||||||
Capital Share Transactions | ||||||||||||||
Proceeds from shares sold | 33,412,352 | 54,018,722 | ||||||||||||
Proceeds from reinvestment of distributions | 10,727,644 | 21,790,113 | ||||||||||||
Payments for shares redeemed | (87,807,808) | (98,583,216) | ||||||||||||
Net increase (decrease) in net assets from capital share transactions | (43,667,812) | (22,774,381) | ||||||||||||
Net increase (decrease) in net assets | (85,031,336) | 1,104,535 | ||||||||||||
Net Assets | ||||||||||||||
Beginning of period | 406,948,192 | 405,843,657 | ||||||||||||
End of period | $ | 321,916,856 | $ | 406,948,192 | ||||||||||
Transactions in Shares of the Fund | ||||||||||||||
Sold | 1,868,720 | 3,095,555 | ||||||||||||
Issued in reinvestment of distributions | 589,723 | 1,249,905 | ||||||||||||
Redeemed | (4,988,647) | (5,669,320) | ||||||||||||
Net increase (decrease) in shares of the fund | (2,530,204) | (1,323,860) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
JUNE 30, 2020
1. Organization
American Century Quantitative Equity Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Utilities Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objectives are to seek current income and long-term growth of capital and income. The fund invests at least 80% of its assets in equity securities of companies engaged in the utilities industry. The fund offers the Investor Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
14
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Distributions to Shareholders — Distributions from net investment income, if any, are generally declared and paid quarterly. Distributions from net realized gains, if any, are generally declared and paid annually.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of
15
the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee). The agreement provides that ACIM will pay all expenses of managing and operating the fund, except brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses. The fee is computed and accrued daily based on the daily net assets of the fund and paid monthly in arrears. The fee consists of (1) an Investment Category Fee based on the daily net assets of the fund and certain other accounts managed by the investment advisor that are in the same broad investment category as the fund and (2) a Complex Fee based on the assets of all the funds in the American Century Investments family of funds. The rates for the Investment Category Fee range from 0.3380% to 0.5200% and the rates for the Complex Fee range from 0.2500% to 0.3100%. The effective annual management fee for the period ended June 30, 2020 was 0.66%.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases were $10,975 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended June 30, 2020 were $390,069,446 and $434,852,480, respectively.
5. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels.
•Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
16
•Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
•Level 3 valuation inputs consist of unobservable data (including a fund’s own assumptions).
The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not necessarily an indication of the risks associated with investing in these securities or other financial instruments.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | |||||||||
Assets | |||||||||||
Investment Securities | |||||||||||
Common Stocks | $ | 311,509,964 | — | — | |||||||
Exchange-Traded Funds | 5,081,296 | — | — | ||||||||
Temporary Cash Investments | 60,358 | $ | 4,916,235 | — | |||||||
$ | 316,651,618 | $ | 4,916,235 | — |
6. Risk Factors
The value of the fund’s shares will go up and down, sometimes rapidly or unpredictably, based on the performance of the securities owned by the fund and other factors generally affecting the securities market. Market risks, including political, regulatory, economic and social developments, can affect the value of the fund’s investments. Natural disasters, public health emergencies, terrorism and other unforeseeable events may lead to increased market volatility and may have adverse long-term effects on world economies and markets generally.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund may be subject to greater risk and market fluctuations than a portfolio representing a broader range of industries.
7. Federal Tax Information
The tax character of distributions paid during the years ended June 30, 2020 and June 30, 2019 were as follows:
2020 | 2019 | |||||||
Distributions Paid From | ||||||||
Ordinary income | $ | 11,389,979 | $ | 14,317,731 | ||||
Long-term capital gains | — | $ | 8,605,284 |
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.
17
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 299,774,356 | |||
Gross tax appreciation of investments | $ | 28,305,901 | |||
Gross tax depreciation of investments | (6,512,404) | ||||
Net tax appreciation (depreciation) of investments | 21,793,497 | ||||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (1,072) | ||||
Net tax appreciation (depreciation) of investments | $ | 21,792,425 | |||
Undistributed ordinary income | $ | 263,858 | |||
Accumulated long-term gains | $ | 14,473,748 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
18
Financial Highlights |
For a Share Outstanding Throughout the Years Ended June 30 (except as noted) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investor Class | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 | $17.88 | 0.53 | (1.97) | (1.44) | (0.53) | — | (0.53) | $15.91 | (8.39)% | 0.67% | 2.95% | 102% | $321,917 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2019 | $16.85 | 0.56 | 1.46 | 2.02 | (0.56) | (0.43) | (0.99) | $17.88 | 12.26% | 0.67% | 3.20% | 64% | $406,948 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2018 | $18.14 | 0.58 | (0.58) | —(3) | (0.56) | (0.73) | (1.29) | $16.85 | (0.06)% | 0.67% | 3.31% | 48% | $405,844 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2017 | $19.35 | 0.59 | (0.48) | 0.11 | (0.58) | (0.74) | (1.32) | $18.14 | 0.61% | 0.67% | 3.17% | 39% | $540,880 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | $16.28 | 0.57 | 3.44 | 4.01 | (0.54) | (0.40) | (0.94) | $19.35 | 25.76% | 0.68% | 3.35% | 36% | $640,342 |
Notes to Financial Highlights |
(1)Computed using average shares outstanding throughout the period.
(2)Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized.
(3)Per-share amount was less than $0.005.
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors of American Century Quantitative Equity Funds, Inc. and Shareholders of Utilities Fund
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Utilities Fund (one of the funds constituting American Century Quantitative Equity Funds, Inc., referred to hereafter as the "Fund") as of June 30, 2020, the related statement of operations for the year ended June 30, 2020, the statement of changes in net assets for each of the two years in the period ended June 30, 2020, including the related notes, and the financial highlights for each of the five years in the period ended June 30, 2020 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund as of June 30, 2020, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended June 30, 2020 and the financial highlights for each of the five years in the period ended June 30, 2020 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of June 30, 2020 by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Kansas City, Missouri
August 17, 2020
We have served as the auditor of one or more investment companies in American Century Investments since 1997.
20
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday; provided, however, that on or after January 1, 2022, independent directors shall retire on December 31 of the year in which they reach their 76th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for eight (in the case of Jonathan S. Thomas, 16; and Ronald J. Gilson, 9) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director other than Mr. Thomas is 1665 Charleston Road, Mountain View, California 94043. The mailing address for Mr. Thomas is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Tanya S. Beder (1955) | Director | Since 2011 | Chairman and CEO, SBCC Group Inc. (independent advisory services) (2006 to present) | 40 | CYS Investments, Inc.; Kirby Corporation: Nabors Industries Ltd. | |||||||||||||||||||||
Jeremy I. Bulow (1954) | Director | Since 2011 | Professor of Economics, Stanford University, Graduate School of Business (1979 to present) | 40 | None | |||||||||||||||||||||
Anne Casscells (1958) | Director | Since 2016 | Co-Chief Executive Officer and Chief Investment Officer, Aetos Alternatives Management (investment advisory firm) (2001 to present); Lecturer in Accounting, Stanford University, Graduate School of Business (2009 to 2017) | 40 | None |
21
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years | |||||||||||||||||||||
Independent Directors | ||||||||||||||||||||||||||
Ronald J. Gilson (1946) | Director and Chairman of the Board | Since 1995 (Chairman since 2005) | Charles J. Meyers Professor of Law and Business, Emeritus, Stanford Law School (1979 to 2016); Marc and Eva Stern Professor of Law and Business, Columbia University School of Law (1992 to present) | 59 | None | |||||||||||||||||||||
Frederick L. A. Grauer (1946) | Director | Since 2008 | Senior Advisor, Credit Sesame, Inc. (credit monitoring firm) (2018 to present); Senior Advisor, Course Hero (an educational technology company) (2015 to present) | 40 | None | |||||||||||||||||||||
Jonathan D. Levin (1972) | Director | Since 2016 | Philip H. Knight Professor and Dean, Graduate School of Business, Stanford University (2016 to present); Professor, Stanford University, (2000 to present) | 40 | None | |||||||||||||||||||||
Peter F. Pervere (1947) | Director | Since 2007 | Retired | 40 | None | |||||||||||||||||||||
John B. Shoven (1947) | Director | Since 2002 | Charles R. Schwab Professor of Economics, Stanford University (1973 to present, emeritus since 2019) | 40 | Cadence Design Systems; Exponent; Financial Engines | |||||||||||||||||||||
Interested Director | ||||||||||||||||||||||||||
Jonathan S. Thomas (1963) | Director | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 122 | None |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years | ||||||
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries | ||||||
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Vice President, ACS (2020 to present); Investment Operations and Investment Accounting, ACS (2000 to present) | ||||||
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present). Also serves as Vice President, ACIS | ||||||
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS | ||||||
C. Jean Wade (1964) | Vice President since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) | ||||||
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) | ||||||
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS | ||||||
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
23
Approval of Management Agreement |
At a meeting held on June 17, 2020, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s Directors, including a majority of the independent Directors, each year. The Board regards this annual evaluation and renewal as one of its most important responsibilities.
The independent Directors have memorialized a statement regarding the relationship between their ongoing obligations to oversee and evaluate the performance of the Advisor and their annual consideration of renewal of the management agreement. In that statement, the independent Directors noted that their assessment of the Advisor’s performance is an ongoing process that takes place over the entire year and is informed by all of the extensive information that the Board and its committees receive and consider over time. This information, together with the additional materials provided specifically in connection with the review, are central to the Board’s assessment of the Advisor’s performance and its determination whether to renew the Fund’s management agreement.
Prior to its consideration of the renewal of the management agreement, the Board requested and reviewed extensive data and analysis relating to the proposed renewal. This information and analysis was compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
•the nature, extent, and quality of investment management, shareholder services, and other services provided to the Fund;
•the wide range of other programs and services the Advisor and its affiliates provide to the Fund and its shareholders on a routine and non-routine basis;
•the Fund’s investment performance, including data comparing the Fund’s performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies;
•the cost of owning the Fund compared to the cost of owning similar funds;
•the compliance policies, procedures, and regulatory experience of the Advisor and its affiliates and certain other Fund service providers;
•financial data showing the cost of services provided by the Advisor and its affiliates to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor;
•the Advisor’s strategic plans;
•the Advisor’s response to the COVID-19 pandemic;
•any economies of scale associated with the Advisor’s management of the Fund;
•services provided and charges to the Advisor’s other investment management clients;
•fees and expenses associated with any investment by the Fund in other funds;
•payments and practices in connection with financial intermediaries holding shares of the Fund on behalf of their clients and the services provided by intermediaries in connection therewith; and
•any collateral benefits derived by the Advisor from the management of the Fund.
In keeping with its practice, the Board held two meetings and the independent Directors met in private session to discuss the renewal and to review and discuss the information provided in response to their request. The Board held active discussions with the Advisor regarding the
24
renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and the independent Directors’ independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In connection with their review, the Directors did not identify any single factor as being all-important or controlling and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including the following:
Nature, Extent and Quality of Services — Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including:
•constructing and designing the Fund
•portfolio research and security selection
•initial capitalization/funding
•securities trading
•Fund administration
•custody of Fund assets
•daily valuation of the Fund’s portfolio
•shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications
•legal services (except the independent Directors’ counsel)
•regulatory and portfolio compliance
•financial reporting
•marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans)
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to seek the best execution of fund trades. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Portfolio Committee, regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-, three-, five-, and ten-year periods reviewed by the Board.The Board discussed the Fund’s performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor.
25
The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor, either directly or through affiliates or third parties, provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through its various committees, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
COVID-19 Response. During 2020, much of the world experienced unprecedented change and challenges from the impacts of the rapidly evolving, worldwide spread of the COVID-19 virus. The Board evaluated the Advisor’s response to the COVID-19 pandemic and its impact on service to the Fund. The Board found that Fund shareholders have continued to receive the Advisor’s investment management and other services without disruption, and Advisor personnel have demonstrated great resiliency in providing those services. The Board, directly and through its committees, continues to monitor the impact of the pandemic and the response of each of the Fund’s service providers.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund, its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale, to the extent they exist, through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business, infrastructure, investment capabilities and initiatives to provide shareholders enhanced and expanded services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, fees and expenses of the Fund’s independent Directors (including their independent legal counsel), and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the Investment Company Act. Under this unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing, and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be
26
increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider and comparing the Fund’s unified fee to the total expense ratio of peer funds. The unified fee charged to shareholders of the Fund was the lowest of the total expense ratios of the Fund’s peer universe. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Board also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided by intermediaries. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided with respect to the Fund. The Directors reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund’s Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor’s resources and reasonable profits. The Board found such payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. The Board noted that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that the Advisor may receive proprietary research from broker-dealers that execute fund portfolio transactions. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board noted that the assets of those other accounts are, where applicable, included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors and assisted by the advice of independent legal counsel, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, concluded that the management agreement between the Fund and the Advisor is fair and reasonable in light of the services provided and should be renewed.
27
Liquidity Risk Management Program |
The Fund has adopted a liquidity risk management program (the “program”). The Fund’s Board of Directors (the "Board") has designated American Century Investment Management, Inc. (“ACIM”) as the administrator of the program. Personnel of ACIM or its affiliates conduct the day-to-day operation of the program pursuant to policies and procedures administered by those members of the ACIM’s Investment Oversight Committee who are members of the ACIM’s Investment Management and Global Analytics departments.
Under the program, ACIM manages the Fund’s liquidity risk, which is the risk that the Fund could not meet shareholder redemption requests without significant dilution of remaining shareholders’ interests in the Fund. This risk is managed by monitoring the degree of liquidity of the Fund’s investments, limiting the amount of the Fund’s illiquid investments, and utilizing various risk management tools and facilities available to the Fund for meeting shareholder redemptions, among other means. ACIM’s process of determining the degree of liquidity of the Fund’s investments is supported by one or more third-party liquidity assessment vendors.
The Board reviewed a report prepared by ACIM regarding the operation and effectiveness of the program for the period December 1, 2018 through December 31, 2019. No significant liquidity events impacting the Fund were noted in the report. In addition, ACIM provided its assessment that the program had been effective in managing the Fund’s liquidity risk.
28
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts are subject to federal income tax withholding, unless you elect not to have withholding apply*. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld.
If you don’t want us to withhold on this amount, you must notify us to not withhold the federal income tax. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don’t have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
Descriptions of the principles and policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund are available without charge, upon request, by calling 1-800-345-2021 or visiting American Century Investments’ website at americancentury.com/proxy. A description of the policies is also available on the Securities and Exchange Commission’s website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on americancentury.com/proxy. It is also available at sec.gov.
Quarterly Portfolio Disclosure
The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. The fund’s Form N-PORT reports are available on the SEC’s website at sec.gov. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
29
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for
the fiscal year ended June 30, 2020.
For corporate taxpayers, the fund hereby designates $11,389,979, or up to the maximum amount
allowable, of ordinary income distributions paid during the fiscal year ended June 30, 2020 as
qualified for the corporate dividends received deduction.
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | ||||||||||
Automated Information Line | 1-800-345-8765 | ||||||||||
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | ||||||||||
Investors Using Advisors | 1-800-378-9878 | ||||||||||
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | ||||||||||
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | ||||||||||
Telecommunications Relay Service for the Deaf | 711 | ||||||||||
American Century Quantitative Equity Funds, 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. | |||||||||||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-92986 2008 |
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions.
(b) No response required.
(c) None.
(d) None.
(e) Not applicable.
(f) The registrant’s Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.’s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board has determined that the registrant has at least one audit committee financial expert serving on its audit committee.
(a)(2) Tanya S. Beder, Anne Casscells, Peter F. Pervere and Ronald J. Gilson are the registrant's designated audit committee financial experts. They are "independent" as defined in Item 3 of Form N-CSR.
(a)(3) Not applicable.
(b) No response required.
(c) No response required.
(d) No response required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees.
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows:
FY 2019: $409,775
FY 2020: $249,331
(b) Audit-Related Fees.
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were as follows:
For services rendered to the registrant:
FY 2019: $ FY 2020: $ |
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2019: $ FY 2020: $ |
(c) Tax Fees.
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows:
For services rendered to the registrant:
FY 2019: $0
FY 2020: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2019: $0
FY 2020: $0
(d) All Other Fees.
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows:
For services rendered to the registrant:
FY 2019: $ FY 2020: $ |
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2019: $ FY 2020: $ |
(e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant’s audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant’s audit committee also pre-approves its accountant’s engagements for non-audit services with the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant.
(e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant’s audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C).
(f) The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than 50%.
(g) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows:
FY 2019: $181,197
FY 2020: $147,500
(h) The registrant’s investment adviser and accountant have notified the registrant’s audit committee of all non-audit services that were rendered by the registrant’s accountant to the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant’s audit committee included sufficient details regarding such services to allow the registrant’s audit committee to consider the continuing independence of its principal accountant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. EXHIBITS.
(a)(1) Registrant’s Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.’s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005.
(a)(2) Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT.
(a)(3) Not applicable.
(a)(4) Not applicable.
(b) A certification by the registrant’s chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | American Century Quantitative Equity Funds, Inc. | ||||||||||||||||||||||
By: | /s/ Patrick Bannigan | ||||||||||||||||||||||
Name: | Patrick Bannigan | ||||||||||||||||||||||
Title: | President | ||||||||||||||||||||||
Date: | August 21, 2020 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Patrick Bannigan | |||||||||||||
Name: | Patrick Bannigan | |||||||||||||
Title: | President | |||||||||||||
(principal executive officer) | ||||||||||||||
Date: | August 21, 2020 |
By: | /s/ R. Wes Campbell | |||||||||||||
Name: | R. Wes Campbell | |||||||||||||
Title: | Treasurer and | |||||||||||||
Chief Financial Officer | ||||||||||||||
(principal financial officer) | ||||||||||||||
Date: | August 21, 2020 |