AMERICAN CENTURY MUTUAL FUNDS INC (Form: 485BPOS, Received: 07/28/2005 09:20:00)

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

File No. 2-14213

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 111 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

File No. 811-0816

Amendment No. 111 [X]

(Check appropriate box or boxes.)

AMERICAN CENTURY MUTUAL FUNDS, INC.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

4500 Main Street, Kansas City, MO 64111
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (816) 531-5575

David C. Tucker, Esq., 4500 Main Street, 9th Floor, Kansas City, MO 64111
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: July 29, 2005

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)
[X] on July 29, 2005 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

July 29, 2005

American Century Investments
prospectus

Investor Class
Institutional Class
Capital Growth Fund
New Opportunities II Fund
Select Fund

NEW OPPORTUNITIES II AND SELECT ARE CLOSED TO NEW SELF-DIRECTED RETAIL
INVESTORS, BUT ARE AVAILABLE THROUGH FINANCIAL INTERMEDIARIES. ANY SHAREHOLDER
WITH AN OPEN ACCOUNT AS OF JANUARY 30, 2003, MAY MAKE ADDITIONAL INVESTMENTS AND
REINVEST DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS AS LONG AS SUCH ACCOUNT
REMAINS OPEN.

CAPITAL GROWTH IS NOT AVAILABLE TO SELF-DIRECTED RETAIL INVESTORS, BUT IS
AVAILABLE THROUGH FINANCIAL INTERMEDIARIES.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century Investment
Services, Inc., Distributor

[american century investments logo and text logo]

Dear Investor,

American Century Investments is committed to helping you achieve your financial
goals. That's why we focus on achieving superior results and building long-term
relationships with our investors. We believe an important first step is to
provide you with an easy-to-read prospectus.

In the prospectus, you will find the information you need to make confident
decisions about your investments. For example, you can find a fund's objectives,
performance history, fees and much more.* Additionally, this information is
useful when comparing funds.

We realize you may have questions after reading this prospectus. If so, please
contact our Investor Services Representatives at 1-800-345-2021. They are
available weekdays from 7 a.m. to 7 p.m. and Saturdays from 9 a.m. to 2 p.m.
Central time. If you prefer, you can visit our Web site, americancentury.com,
for information that may help answer many of your questions.

Thank you for considering American Century for your investment needs.

Sincerely,

/s/Donna Byers

Donna Byers
Senior Vice President
Direct Sales and Services
American Century Services, LLC

* You'll notice that this prospectus includes information about Investor
Class and Institutional Class shares. Investor Class shares are available
directly from American Century and Institutional Class shares are offered
primarily through employer-sponsored retirement plans, banks, broker-dealers
and insurance companies. Please be aware of which class you are considering
or already own.

American Century Investments
P.O. Box 419200, Kansas City, MO 64141-6200

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

Table of Contents

AN OVERVIEW OF THE FUNDS . . . . . . . . . . . . . . . . . . .2

FUND PERFORMANCE HISTORY . . . . . . . . . . . . . . . . . . .3

FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . 6

OBJECTIVES, STRATEGIES AND RISKS . . . . . . . . . . . . . . .8
Capital Growth Fund . . . . . . . . . . . . . . . . . . . 8
Select Fund . . . . . . . . . . . . . . . . . . . . . . . 8
New Opportunities II Fund . . . . . . . . . . . . . . . .10

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 12

INVESTING WITH AMERICAN CENTURY . . . . . . . . . . . . . . .15

SHARE PRICE AND DISTRIBUTIONS . . . . . . . . . . . . . . . .23

TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

MULTIPLE CLASS INFORMATION . . . . . . . . . . . . . . . . . 27

FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . 28

PERFORMANCE INFORMATION OF OTHER CLASS . . . . . . . . . . . 32

[graphic of triangle]

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT DEFINITIONS OF KEY
INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL INFORMATION.

AN OVERVIEW OF THE FUNDS

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The portfolio managers look for stocks of companies they believe will increase
in value over time, using investment strategies developed by American Century.
In implementing this strategy, the portfolio managers make their investment
decisions based primarily on their analysis of individual companies, rather than
on broad economic forecasts. Management of the funds is based on the belief
that, over the long term, stock price movements follow growth in earnings,
revenues and/or cash flow.

The portfolio managers for Capital Growth and Select use a variety of analytical
research tools and techniques to identify the stocks of larger-sized companies
that meet their investment criteria. Under normal market conditions, the funds'
portfolio will primarily consist of securities of companies whose earnings or
revenues are not only growing, but growing at an accelerating pace.

The portfolio managers for New Opportunities II look for stocks of smaller-sized
companies. Their principal analytical technique involves the identification of
companies with earnings and revenues that are not only growing, but growing at
an accelerating pace.

The funds' principal risks include

* MARKET RISK - The value of a fund's shares will go up and down based on
the performance of the companies whose securities it owns and other factors
generally affecting the securities market.

* PRICE VOLATILITY - The value of a fund's shares may fluctuate
significantly in the short term.

* PRINCIPAL LOSS - At any given time your shares may be worth more or less
than the price you paid for them. In other words, it is possible to lose
money by investing in the funds.

* FOREIGN SECURITIES - The funds may invest in foreign securities, which can
be riskier than investing in U.S. securities.

A more detailed description of the funds' investment strategies and risks may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
8.

[graphic of triangle]

AN INVESTMENT IN THE FUNDS IS NOT A BANK DEPOSIT, AND IT IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY
OTHER GOVERNMENT AGENCY.

------
2

FUND PERFORMANCE HISTORY

CAPITAL GROWTH FUND
NEW OPPORTUNITIES II FUND
SELECT FUND

CAPITAL GROWTH FUND

As a new fund, Capital Growth's performance history is not available as of the
date of this prospectus. When a class of the fund has investment results for a
full calendar year, this section will feature charts that show annual total
returns, highest and lowest quarterly returns and average annual total returns.

Annual Total Returns

The following bar charts show the performance of the funds' Investor Class
shares for each of the last 10 calendar years or for each full calendar year in
the life of a fund if less than 10 years. They indicate the volatility of a
fund's historical returns from year to year. Account fees are not reflected in
the charts below. If they had been included, returns would be lower than those
shown. The returns of the Institutional Class of shares will differ from those
shown in the charts, depending on the expenses of that class.

NEW OPPORTUNITIES II FUND - INVESTOR CLASS

[data from bar chart]

2002 -15.87%
2003 47.88%
2004 11.14%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
New Opportunities II 21.51% (4Q 2003) -17.80% (3Q 2002)
--------------------------------------------------------------------------------

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3

SELECT FUND - INVESTOR CLASS

[data from bar chart]

1995 22.67%
1996 19.22%
1997 32.19%
1998 35.65%
1999 22.23%
2000 -8.71%
2001 -18.16%
2002 -22.77%
2003 24.74%
2004 7.35%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
Select 22.30% (4Q 1998) -15.44% (3Q 2002)
--------------------------------------------------------------------------------

Average Annual Total Returns

The following tables show the average annual total returns of the funds'
Investor Class shares calculated three different ways. An additional table shows
the average annual total returns of Select's Institutional Class shares
calculated before the impact of taxes. Because the Institutional Class of New
Opportunities II was not in operation as of the calendar year end, it is not
included.

Return Before Taxes shows the actual change in the value of fund shares over the
periods shown, but does not reflect the impact of taxes on fund distributions or
the sale of fund shares. The two after-tax returns take into account taxes that
may be associated with owning fund shares. Return After Taxes on Distributions
is a fund's actual performance, adjusted by the effect of taxes on distributions
made by the fund during the periods shown. Return After Taxes on Distributions
and Sale of Fund Shares is further adjusted to reflect the tax impact on any
change in the value of fund shares as if they had been sold on the last day of
the period.

After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs. After-tax
returns are shown only for Investor Class shares. After-tax returns for the
Institutional Class shares will vary.

The benchmarks are unmanaged indices that have no operating costs and are
included in the tables for performance comparison.

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4

INVESTOR CLASS
10 LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR 5 YEARS YEARS CLASS(1)
------------------------------------------------------------------------------------
New Opportunities II
Return Before Taxes 11.14% N/A N/A 9.71%
Return After Taxes on Distributions 10.43% N/A N/A 9.51%
Return After Taxes on Distributions
and Sale of Fund Shares 7.51% N/A N/A 8.30%
Russell 2000® Growth Index 14.31% N/A N/A 2.79%(2)
(reflects no deduction for fees,
expenses or taxes)
S&P 500 Index 10.88% N/A N/A 0.67%(2)
(reflects no deduction for fees,
expenses or taxes)
------------------------------------------------------------------------------------

Select
Return Before Taxes 7.35% -5.03% 9.49% N/A
Return After Taxes on Distributions 7.31% -5.29% 7.34% N/A
Return After Taxes on Distributions
and Sale of Fund Shares 4.82% -4.26% 7.32% N/A
S&P 500 Index 10.88% -2.30% 12.07% N/A
(reflects no deduction for fees,
expenses or taxes)
------------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR NEW OPPORTUNITIES II IS JUNE 1, 2001. ONLY
CLASSES WITH PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR
LIFE OF CLASS.

(2) SINCE MAY 31, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

INSTITUTIONAL CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR 5 YEARS CLASS(1)
--------------------------------------------------------------------------------
Select
Return Before Taxes 7.56% -4.84% 6.50%
S&P 500 Index 10.88% -2.30% 7.25%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE INSTITUTIONAL CLASS IS MARCH 13, 1997.

Performance information is designed to help you see how fund returns can vary.
Keep in mind that past performance (before and after taxes) does not predict how
a fund will perform in the future.

For current performance information, please call us at 1-800-345-2021 or visit
us at americancentury.com.

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5

FEES AND EXPENSES

There are no sales loads, fees or other charges

* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the same class of shares of other American Century funds
* to redeem your shares, other than a $10 fee to redeem by wire

The following tables describe the fees and expenses you may pay if you buy and
hold shares of the funds.

(SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
--------------------------------------------------------------------------------

Investor Class
Maximum Account Maintenance Fee $25(1)
--------------------------------------------------------------------------------
(1) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH
AMERICAN CENTURY ARE LESS THAN $10,000. SEE Account Maintenance Fee UNDER
Investing with American Century FOR MORE DETAILS.

(1) BASED ON ASSETS DURING THE FUNDS' MOST RECENT FISCAL YEAR. THE FUNDS
HAVE STEPPED FEE SCHEDULES. AS A RESULT, THE FUNDS' MANAGEMENT FEE RATES
GENERALLY DECREASE AS STRATEGY ASSETS INCREASE AND INCREASE AS STRATEGY
ASSETS DECREASE. SEE The Investment Advisor UNDER Management FOR AN
EXPLANATION OF STRATEGY ASSETS.

(2) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUNDS'
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, ARE
EXPECTED TO BE LESS THAN 0.005% FOR THE CURRENT FISCAL YEAR.

(3) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUNDS'
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, WERE
LESS THAN 0.005% FOR THE MOST RECENT FISCAL YEAR.

------
6

EXAMPLE

The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .

* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above

. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Capital Growth
Investor Class $102 $318 $551 $1,219
--------------------------------------------------------------------------------
Institutional Class $82 $255 $443 $987
--------------------------------------------------------------------------------
New Opportunities II
Investor Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------
Institutional Class $132 $410 $710 $1,558
--------------------------------------------------------------------------------
Select
Investor Class $102 $318 $551 $1,219
--------------------------------------------------------------------------------
Institutional Class $82 $255 $443 $987
--------------------------------------------------------------------------------

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7

OBJECTIVES, STRATEGIES AND RISKS

CAPITAL GROWTH FUND
SELECT FUND

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVE?

The portfolio managers look for stocks of larger-sized companies they believe
will increase in value over time, using an investment strategy developed by
American Century. In implementing this strategy, the portfolio managers use a
bottom-up approach to stock selection. This means that the managers make their
investment decisions based primarily on their analysis of individual companies,
rather than on broad economic forecasts. Management of the funds is based on the
belief that, over the long term, stock price movements follow growth in
earnings, revenues and/or cash flow.

Using American Century's extensive computer database, as well as other primary
analytical research tools, the portfolio managers track financial information
for individual companies to identify trends in earnings, revenues and other
business fundamentals. Under normal market conditions, the funds' portfolios
will primarily consist of securities of companies whose earnings or revenues are
not only growing, but growing at an accelerating pace. This includes companies
whose growth rates, although still negative, are less negative than prior
periods. Other analytical techniques help identify additional signs of business
improvement, such as increasing cash flows, or other indications of the relative
strength of a company's business. These techniques help the portfolio managers
buy or hold the stocks of companies they believe have favorable growth prospects
and sell the stocks of companies whose characteristics no longer meet their
criteria.

Although the portfolio managers intend to invest the funds' assets primarily in
U.S. stocks, the funds may invest in securities of foreign companies. Most of
the funds' foreign investments are in companies located and doing business in
developed countries. Investments in foreign securities present some unique risks
that are more fully described in the funds' statement of additional information.

The portfolio managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the funds essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, the funds may invest a portion of their assets in
convertible debt securities, equity-equivalent securities, foreign securities,
short-term securities, nonleveraged futures contracts and other similar
securities. Futures contracts, a type of derivative security, can help the
funds' cash assets remain liquid while performing more like stocks. The funds
have a policy governing futures contracts and similar derivative securities to
help manage the risk of these types of investments. A complete description of
the derivatives policy is included in the statement of additional information.

A description of the policies and procedures with respect to the disclosure of
the funds' portfolio securities is available in the statement of additional
information.

------
8

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?

The portfolio managers usually purchase common stocks, but they can purchase
other securities as well. Each fund also may invest in domestic and foreign
preferred stocks, convertible securities, equity-equivalent securities, notes,
bonds and other debt securities. Each fund generally limits its purchase of debt
securities to investment-grade obligations.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?

The value of a fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.

The portfolio managers may buy a large amount of a company's stock quickly, and
often will dispose of it quickly if the company's earnings or revenues decline.
While the managers believe this strategy provides substantial appreciation
potential over the long term, in the short term it can create a significant
amount of share price volatility. This volatility can be greater than that of
the average stock fund.

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

Market performance tends to be cyclical, and, in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring a
fund's style, the fund's gains may not be as big as, or its losses may be bigger
than, other equity funds using different investment styles.

Although the portfolio managers intend to invest the funds' assets primarily in
U.S. stocks, the funds may invest in securities of foreign companies. Foreign
investment involves additional risks, including fluctuations in currency
exchange rates, less stable political and economic structures, reduced
availability of public information, and lack of uniform financial reporting and
regulatory practices similar to those that apply in the United States. These
factors make investing in foreign securities generally riskier than investing in
U.S. stocks. To the extent a fund invests in foreign securities, the overall
risk of that fund could be affected.

------
9

NEW OPPORTUNITIES II FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks long-term capital growth.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?

The portfolio managers look for stocks of smaller-sized companies they believe
will increase in value over time, using an investment strategy developed by
American Century. In implementing this strategy, the portfolio managers use a
bottom-up approach to stock selection. This means that the managers make their
investment decisions based primarily on their analysis of individual companies,
rather than on broad economic forecasts. Management of the fund is based on the
belief that, over the long term, stock price movements follow growth in earnings
and revenues.

Using American Century's extensive computer database, as well as other primary
analytical research tools, the portfolio managers track financial information
for thousands of individual companies to identify trends in earnings, revenues
and other business fundamentals. The portfolio managers' principal analytical
technique involves the identification of companies with earnings and revenues
that are not only growing, but growing at an accelerating pace. This includes
companies whose growth rates, although still negative, are less negative than
prior periods, and companies whose growth rates are expected to accelerate.
These techniques help the portfolio managers buy or hold the stocks of companies
they believe have favorable growth prospects and sell the stocks of companies
whose characteristics no longer meet their criteria.

Although the portfolio managers intend to invest the fund's assets primarily in
U. S. stocks, the fund may invest in securities of foreign companies. Most of
the fund's foreign investments are in companies located and doing business in
developed countries. Investments in foreign securities present some unique risks
that are more fully described in the fund's statement of additional information.

The portfolio managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, the fund may invest a portion of its assets in
convertible debt securities, equity-equivalent securities, foreign securities,
short-term securities, nonleveraged futures contracts and other similar
securities. Futures contracts, a type of derivative security, can help the
fund's cash assets remain liquid while performing more like stocks. The fund has
a policy governing futures contracts and similar derivative securities to help
manage the risk of these types of investments. A complete description of the
derivatives policy is included in the statement of additional information.

If the companies in which the fund invests are successful, these companies may
grow into medium- and large-sized companies. In addition, if the portfolio
managers determine that the availability of smaller-sized companies in which to
invest is not adequate to meet the fund's investment needs, the portfolio
managers may invest in medium- and large-sized companies.

A description of the policies and procedures with respect to the disclosure of
the fund's portfolio securities is available in the statement of additional
information.

------
10

WHAT KINDS OF SECURITIES DOES THE FUND BUY?

The portfolio managers will usually purchase common stocks of U.S. and foreign
companies that are small at the time of purchase, but they can purchase other
types of securities as well. When determining whether a company is
smaller-sized, the portfolio managers will consider, among other factors, the
capitalization of the company and the amount of revenues, as well as other
information they obtain about the company. The fund also may invest in domestic
and foreign preferred stocks, convertible securities, equity-equivalent
securities, notes, bonds and other debt securities. The fund generally limits
its purchase of debt securities to investment-grade obligations.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

Because the fund generally invests in smaller companies, it may be more
volatile, and subject to greater short-term risk, than funds that invest
primarily in larger companies. Smaller companies may have limited financial
resources, product lines and markets, and their securities may trade less
frequently and in more limited volumes than the securities of larger companies.
In addition, smaller companies may have less publicly available information and,
when available, it may be inaccurate or incomplete.

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

Although the portfolio managers intend to invest the fund's assets primarily in
U.S. stocks, the fund may invest in securities of foreign companies. Foreign
investment involves additional risks, including fluctuations in currency
exchange rates, less stable political and economic structures, reduced
availability of public information, and lack of uniform financial reporting and
regulatory practices similar to those that apply in the United States. These
factors make investing in foreign securities generally riskier than investing in
U.S. stocks. To the extent a fund invests in foreign securities, the overall
risk of that fund could be affected.

The fund's performance also may be affected by investments in initial public
offerings (IPOs). The impact of IPOs on a fund's performance depends on the
strength of the IPO market and the size of the fund. IPOs may have less impact
on a fund's performance as its assets grow.

------
11

MANAGEMENT

WHO MANAGES THE FUNDS?

The Board of Directors, investment advisor and fund management teams play key
roles in the management of the funds.

THE BOARD OF DIRECTORS

The Board of Directors oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired an investment advisor to do
so. More than three-fourths of the directors are independent of the funds'
advisor; that is, they have never been employed by and have no financial
interest in the advisor or any of its affiliated companies (other than as
shareholders of American Century funds).

THE INVESTMENT ADVISOR

The funds' investment advisor is American Century Investment Management, Inc.
(the advisor). The advisor has been managing mutual funds since 1958 and is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.

The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.

For the services it provides to each fund, the advisor receives a unified
management fee based on a percentage of the daily net assets of each specific
class of shares of each fund. This formula takes into account all of the
advisor's assets under management in the fund's investment strategy ("strategy
assets") to calculate the appropriate fee rate for the fund. The strategy assets
include the fund's assets and the assets of other clients of the advisor that
are not in the American Century family of mutual funds (such as subadvised funds
and separate accounts) but that have the same investment team and investment
strategy. The use of strategy assets, rather than fund assets, in calculating
the fee rate for a particular fund could allow a fund to realize scheduled cost
savings more quickly if the advisor acquires additional assets under management
within a strategy in addition to the fund's assets. However, it is possible that
the strategy assets for a fund will not include assets of other client accounts.
In addition, if there are such assets, they may not be sufficient to result in a
lower fee rate. The amount of the fee is calculated daily and paid monthly in
arrears. For funds with a stepped fee schedule, the rate of the fee is
determined by applying a fee rate calculation formula.

The Investor Class of Capital Growth Fund had no assets as of the date of this
prospectus, but will pay the advisor a unified management fee of 1.000% of its
pro rata share of the first $5 billion of the strategy assets, 0.990% of its pro
rata share of the next $5 billion, 0.980% of its pro rata share of the next $5
billion, 0.970% of its pro rata share of the next $5 billion, 0.950% of its pro
rata share of the next $5 billion of the strategy assets, 0.900% of its pro rata
share of the next $5 billion of the strategy assets and 0.800% of its pro rata
share over $30 billion of the strategy assets. The Institutional Class of
Capital Growth Fund had no assets as of the date of this prospectus, but will
pay the advisor a unified management fee of 0.800% of its pro rata share of the
first $5 billion of the strategy assets, 0.790% of its pro rata share of the
next $5 billion, 0.780% of the pro rata share of the next $5 billion, 0.770% of
its pro rata share of the next $5 billion, 0.750% of its pro rata share of the
next $5 billion of the strategy assets, 0.700% of its pro rata share of the next
$5 billion of the strategy assets and 0.600% of its pro rata share over $30
billion of the strategy assets.

The Institutional Class of New Opportunities II had no assets as of the date of
this prospectus, but will pay the advisor a unified management fee of 1.30% of
its pro rata share of the first $500 million of the strategy assets, 1.10% of
its pro rata share of the next $500 million of the strategy assets and 0.90% of
its pro rata share over $1 billion of the strategy assets.

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12

Out of each fund's fee, the advisor paid all expenses of managing and operating
that fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses. A portion of each fund's management fee may be paid by the fund's
advisor to unaffiliated third parties who provide recordkeeping and
administrative services that would otherwise be performed by an affiliate of the
advisor.

MANAGEMENT FEES PAID BY THE FUNDS
TO THE ADVISOR AS A PERCENTAGE OF AVERAGE
NET ASSETS FOR THE MOST RECENT FISCAL INVESTOR INSTITUTIONAL
YEAR ENDED OCTOBER 31, 2004 CLASS CLASS
--------------------------------------------------------------------------------
Capital Growth(1) N/A N/A
--------------------------------------------------------------------------------
New Opportunities II 1.50% N/A(2)
--------------------------------------------------------------------------------
Select 1.00% 0.80%
--------------------------------------------------------------------------------

(1) THE INVESTOR AND INSTITUTIONAL CLASS OF THIS FUND HAD NOT COMMENCED
OPERATIONS AS OF OCTOBER 31, 2004.

(2) THE INSTITUTIONAL CLASS OF THIS FUND HAD NOT COMMENCED OPERATIONS AS
OF OCTOBER 31, 2004.

THE FUND MANAGEMENT TEAMS

The advisor uses teams of portfolio managers and analysts to manage the funds.
The teams meet regularly to review portfolio holdings and discuss purchase and
sale activity. Team members buy and sell securities for a fund as they see fit,
guided by the fund's investment objective and strategy.

The portfolio managers on the investment teams are identified below.

Capital Growth

GREGORY J. WOODHAMS

Mr. Woodhams, Vice President and Senior Portfolio Manager, has been a member of
the team since the fund's inception. He joined American Century in September
1997 as an Investment Analyst. He was promoted to Portfolio Manager for the
Growth team in May 1998. He has a bachelor's degree in economics from Rice
University and an M.A. in economics from the University of Wisconsin. He is a
CFA charterholder.

E. A. PRESCOTT LEGARD

Mr. LeGard, Vice President and Portfolio Manager, has been a member of the team
since the fund's inception. Before joining American Century in March 1999, he
was an Analyst for USAA Investment Management from March 1998 to March 1999. He
has a bachelor's degree in economics from DePauw University. He is a CFA
charterholder.

New Opportunities II

HAROLD S. BRADLEY

Mr. Bradley, Chief Investment Officer - U.S. Growth Equity for small cap, mid
cap and sector portfolios, has been a member of the team that manages New
Opportunities II since June 2003. He joined American Century in 1988 and has
managed the global equity, futures, and foreign exchange trading activities.
Since joining American Century, he has been a portfolio manager for other growth
funds and has supervised research and development efforts. In 1999, he was named
Senior Vice President Investment Management and served in that capacity until
being named to his current position in 2002. He has a bachelor of arts from
Marquette University.

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13

TOM TELFORD

Mr. Telford, Vice President and Portfolio Manager, rejoined the team that
manages New Opportunities II in 2004. He joined American Century in July 1996 as
an Investment Analyst. In 2000, he was named Portfolio Manager and served in
that capacity until being named to his current position in 2003. He has a
bachelor of business administration from Southern Methodist University and an
MBA from Wharton School of Business, University of Pennsylvania. He is a CFA
charterholder.

Select

JOHN R. SYKORA

Mr. Sykora, Vice President and Senior Portfolio Manager, has been a member of
the team that manages Select since September 2002. He joined American Century in
May 1994 as an Investment Analyst and was promoted to Portfolio Manager in
November 1997. He has a bachelor's degree in accounting and finance from
Creighton University and an MBA in finance from Michigan State University. He is
a CFA charterholder.

KEITH LEE

Mr. Lee, Portfolio Manager, has been a member of the team since October 2001 and
was promoted to Portfolio Manager in June 2003. He was an International
Investment Analyst for American Century from July 1998 to July 2000 and was a
telecommunications analyst for Galleon Management from July 2000 to September
2001. He has a bachelor's of science in industrial engineering from Columbia
University. He is a CFA charterholder.

Code of Ethics

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. It also contains limits on short-term transactions in American
Century-managed funds. In addition, the Code of Ethics requires portfolio
managers and other employees with access to information about the purchase or
sale of securities by the funds to obtain approval before executing personal
trades.

FUND PERFORMANCE

New Opportunities and New Opportunities II have the same management team and
investment policies as one another. The fees and expenses of the funds are
expected to be similar, and they will be managed with substantially the same
investment objective and strategies. Notwithstanding these general similarities,
New Opportunities and New Opportunities II are separate mutual funds that will
have different investment performance. Differences in cash flows into the two
funds, the assets under management in each portfolio and specific investments
held by the two funds will cause performance to differ.

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the statement of additional
information and the investment objective of the funds may not be changed without
shareholder approval. The Board of Directors and/or the advisor may change any
other policies and investment strategies.

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14

INVESTING WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

Most accounts automatically will have access to the services listed below when
the account is opened. If you do not want these services, see CONDUCTING
BUSINESS IN WRITING. If you have questions about the services that apply to your
account type, please call us.

CONDUCTING BUSINESS IN WRITING

If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form. By choosing this option, you are not eligible to enroll
for exclusive online account management to waive the account maintenance fee.
See ACCOUNT MAINTENANCE FEE in this section.

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

To reduce the amount of mail you receive from us, we may deliver a single copy
of certain investor documents (such as shareholder reports and prospectuses) to
investors who share an address, even if accounts are registered under different
names. If you prefer to receive multiple copies of these documents individually
addressed, please call 1-800-345-2021. If you invest in American Century mutual
funds through a financial intermediary, please contact them directly. For
American Century Brokerage accounts, please call 1-888-345-2071.

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

American Century and its affiliated companies use procedures reasonably designed
to confirm that telephone, electronic and other instructions are genuine. These
procedures include recording telephone calls, requesting personalized security
codes or other information, and sending confirmation of transactions. If we
follow these procedures, we are not responsible for any losses that may occur
due to unauthorized instructions. For transactions conducted over the Internet,
we recommend the use of a secure Internet browser. In addition, you should
verify the accuracy of your confirmation statements immediately after you
receive them.

WAYS TO MANAGE YOUR ACCOUNT

--------------------------------------------------------------------------------
ONLINE
--------------------------------------------------------------------------------

americancentury.com

INVESTOR CLASS ONLY

OPEN AN ACCOUNT

If you are a current or new investor, you can open an account by completing and
submitting our online application. Current investors also can open an account by
exchanging shares from another American Century account.

EXCHANGE SHARES

Exchange shares from another American Century account.

MAKE ADDITIONAL INVESTMENTS

Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.

SELL SHARES*

Redeem shares and proceeds will be electronically transferred to your authorized
bank account.

* ONLINE REDEMPTIONS UP TO $25,000 PER DAY.

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15

--------------------------------------------------------------------------------
BY TELEPHONE
--------------------------------------------------------------------------------

INVESTOR CLASS INSTITUTIONAL CLASS

Investor Services Representative Service Representative
1-800-345-2021 1-800-345-3533

Business, Not-For-Profit and
Employer-Sponsored Retirement Plans
1-800-345-3533

Automated Information Line
1-800-345-8765

OPEN AN ACCOUNT

If you are a current investor, you can open an account by exchanging shares from
another American Century account.

EXCHANGE SHARES

Call or use our Automated Information Line if you have authorized us to accept
telephone instructions. The Automated Information Line is available only to
Investor Class shareholders.

MAKE ADDITIONAL INVESTMENTS

Call or use our Automated Information Line if you have authorized us to invest
from your bank account. The Automated Information Line is available only to
Investor Class shareholders.

SELL SHARES

Call a Service Representative.

--------------------------------------------------------------------------------
BY WIRE
--------------------------------------------------------------------------------

INVESTOR AND INSTITUTIONAL CLASS

Please remember, if you request redemptions by wire, $10 will be deducted from
the amount redeemed. Your bank also may charge a fee.

OPEN AN ACCOUNT

Call to set up your account or mail a completed application to the address
provided in the BY MAIL OR FAX section. Give your bank the following information
to wire money.

* Our bank information
Commerce Bank N.A.
Routing No. 101000019
Account No. Please call for the appropriate account number.

* The fund name

* Your American Century account number, if known*

* Your name

* The contribution year (for IRAs only)

*FOR ADDITIONAL INVESTMENTS ONLY

MAKE ADDITIONAL INVESTMENTS

Follow the BY WIRE-OPEN AN ACCOUNT instructions.

SELL SHARES

You can receive redemption proceeds by wire or electronic transfer.

EXCHANGE SHARES

Not available.

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16

--------------------------------------------------------------------------------
BY MAIL OR FAX
--------------------------------------------------------------------------------

INVESTOR CLASS INSTITUTIONAL CLASS

P.O. Box 419200 P.O. Box 419385
Kansas City, MO 64141-6200 Kansas City, MO 64141-6385

Fax Fax
816-340-7962 816-340-4655

OPEN AN ACCOUNT

Send a signed, completed application and check or money order payable to
American Century Investments.

EXCHANGE SHARES

Send written instructions to exchange your shares from one American Century
account to another.

MAKE ADDITIONAL INVESTMENTS

Send your check or money order for at least $50 with an investment slip or $250
without an investment slip. If you don't have an investment slip, include your
name, address and account number on your check or money order.

SELL SHARES

Send written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.

--------------------------------------------------------------------------------
AUTOMATICALLY
--------------------------------------------------------------------------------

INVESTOR AND INSTITUTIONAL CLASS

OPEN AN ACCOUNT

Not available.

EXCHANGE SHARES

Send written instructions to set up an automatic exchange of your shares from
one American Century account to another.

MAKE ADDITIONAL INVESTMENTS

With the automatic investment service, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.

SELL SHARES

You may sell shares automatically by establishing Check-A-Month or Automatic
Redemption plans.

--------------------------------------------------------------------------------
IN PERSON
--------------------------------------------------------------------------------

INVESTOR CLASS ONLY

If you prefer to handle your transactions in person, visit one of our Investor
Centers and a representative can help you open an account, make additional
investments, and sell or exchange shares.

4500 Main Street 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5 p.m., Monday - Friday 8 a.m. to 5 p.m., Monday - Friday
8 a.m. to noon, Saturday

1665 Charleston Road
Mountain View, California
8 a.m. to 5 p.m., Monday - Friday

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17

MINIMUM INITIAL INVESTMENT AMOUNTS (INVESTOR CLASS)

To open an account, the minimum initial investment amounts are $2,000 for a
Coverdell Education Savings Account (CESA), and $2,500 for all other accounts.

ACCOUNT MAINTENANCE FEE

If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
we may charge you a $12.50 semiannual account maintenance fee if the value of
those shares is less than $10,000. We will determine the amount of your total
eligible investments twice per year, generally the last Friday in October and
April. If the value of those investments is less than $10,000 at that time, we
will redeem shares automatically in one of your accounts to pay the $12.50 fee.
Please note that you may incur tax liability as a result of the redemption. In
determining your total eligible investment amount, we will include your
investments in all PERSONAL ACCOUNTS (including American Century Brokerage
accounts) registered under your Social Security number. We will not charge the
fee as long as you choose to manage your accounts exclusively online. You may
enroll for exclusive online account management on our Web site. To find out more
about exclusive online account management, visit americancentury.com/info/demo.

[graphic of triangle]

PERSONAL ACCOUNTS INCLUDE INDIVIDUAL ACCOUNTS, JOINT ACCOUNTS, UGMA/UTMA
ACCOUNTS, PERSONAL TRUSTS, COVERDELL EDUCATION SAVINGS ACCOUNTS, 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 BROKERAGE
ACCOUNTS, YOU ARE CURRENTLY NOT SUBJECT TO THIS FEE, BUT YOU MAY BE
SUBJECT TO OTHER FEES.

ELIGIBILITY FOR INSTITUTIONAL CLASS SHARES

The Institutional Class shares are made available for purchase by large
institutional shareholders such as bank trust departments, corporations,
retirement plans, endowments, foundations and financial advisors that meet the
funds' minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.

MINIMUM INITIAL INVESTMENT AMOUNTS (INSTITUTIONAL CLASS)

The minimum initial investment amount is $5 million ($3 million for endowments
and foundations) per fund. If you invest with us through a financial
intermediary, this requirement may be met if your financial intermediary
aggregates your investments with those of other clients into a single group, or
omnibus, account that meets the minimum. The minimum investment requirement may
be waived if you, or your financial intermediary if you invest through an
omnibus account, have an aggregate investment in our family of funds of $10
million or more ($5 million for endowments and foundations). In addition,
financial intermediaries or plan recordkeepers may require retirement plans to
meet certain other conditions, such as plan size or a minimum level of assets
per participant, in order to be eligible to purchase Institutional Class shares.

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18

The following policies apply to Investor Class and Institutional Class
shareholders.

REDEMPTIONS

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order.

[graphic of triangle]

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S SHARES.

However, we reserve the right to delay delivery of redemption proceeds up to
seven days. For example, each time you make an investment with American Century,
there is a seven-day holding period before we will release redemption proceeds
from those shares, unless you provide us with satisfactory proof that your
purchase funds have cleared. For funds with CheckWriting privileges, we will not
honor checks written against shares subject to this seven-day holding period.
Investments by wire generally require only a one-day holding period. If you
change your address, we may require that any redemption request made within 15
days be submitted in writing and be signed by all authorized signers with their
signatures guaranteed. If you change your bank information, we may impose a
15-day holding period before we will transfer or wire redemption proceeds to
your bank. In addition, we reserve the right to honor certain redemptions with
securities, rather than cash, as described in the next section.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of a fund's assets if that amount is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The portfolio
managers would select these securities from the fund's portfolio.

We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice. Also, if payment is made in securities, you may have to pay
brokerage or other transaction costs to convert the securities to cash.

If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on a fund and its remaining investors.

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum initial investment amount for
any reason other than as a result of market fluctuation, we will notify you and
give you 90 days to meet the minimum. For Investor Class shares, if you do not
meet the deadline, American Century reserves the right to redeem the shares in
the account and send the proceeds to your address of record. Please note that
you may incur tax liability as a result of the redemption. For Institutional
Class shares, we reserve the right to convert your shares to Investor Class
shares of the same fund. The Investor Class shares have a unified management fee
that is 0.20% higher than the Institutional Class.

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19

SIGNATURE GUARANTEES

A signature guarantee - which is different from a notarized signature - is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

* Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

* Your redemption proceeds or distribution amount is sent by wire or EFT to
a destination other than your personal bank account

* You are transferring ownership of an account over $100,000

We reserve the right to require a signature guarantee for other transactions, at
our discretion.

MODIFYING OR CANCELING AN INVESTMENT

Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. Each fund reserves the right to suspend the offering of shares for a period
of time and to reject any specific investment (including a purchase by
exchange). Additionally, we may refuse a purchase if, in our judgment, it is of
a size that would disrupt the management of a fund.

ABUSIVE TRADING PRACTICES

Short-term trading and other so-called market timing practices are not defined
or explicitly prohibited by any federal or state law. However, short-term
trading and other abusive trading practices may disrupt portfolio management
strategies and harm fund performance. If the cumulative amount of short-term
trading activity is significant relative to a fund's net assets, the fund may
incur trading costs that are higher than necessary as securities are first
purchased then quickly sold to meet the redemption request. In such case, the
fund's performance could be negatively impacted by the increased trading costs
created by short-term trading if the additional trading costs are significant.

Because of the potentially harmful effects of abusive trading practices, the
funds' Board of Directors has approved American Century's abusive trading
policies and procedures, which are designed to reduce the frequency and effect
of these activities in our funds. These policies and procedures include
monitoring trading activity, imposing trading restrictions on certain accounts,
imposing redemption fees on certain funds, and using fair value pricing when
current market prices are not readily available. Although these efforts are
designed to discourage abusive trading practices, they cannot eliminate the
possibility that such activity will occur. American Century seeks to exercise
its judgment in implementing these tools to the best of its ability in a manner
that it believes is consistent with shareholder interests.

American Century uses a variety of techniques to monitor for and detect abusive
trading practices. These techniques may vary depending on the type of fund, the
class of shares or whether the shares are held directly or indirectly with
American Century. They may change from time to time as determined by American
Century in its sole discretion. To minimize harm to the funds and their
shareholders, we reserve the right to reject any purchase order (including
exchanges) from any shareholder we believe has a history of abusive trading or
whose trading, in our judgment, has been or may be disruptive to the funds. In
making this judgment, we may consider trading done in multiple accounts under
common ownership or control.

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20

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

* within seven days of the purchase, or
* within 30 days of the purchase, if it happens more than once per year.

To the extent practicable, we try to use the same approach for defining abusive
trading for shares held through financial intermediaries. American Century
reserves the right, in its sole discretion, to identify other trading practices
as abusive and to modify its monitoring and other practices as necessary to deal
with novel or unique abusive trading practices.

In addition, American Century reserves the right to accept purchases and
exchanges in excess of the trading restrictions discussed above if it believes
that such transactions would not be inconsistent with the best interests of fund
shareholders or this policy.

American Century's policies do not permit us to enter into arrangements with
fund shareholders that permit such shareholders to engage in frequent purchases
and redemptions of fund shares. Due to the complexity and subjectivity involved
in identifying abusive trading activity and the volume of shareholder
transactions American Century handles, there can be no assurance that American
Century's efforts will identify all trades or trading practices that may be
considered abusive. In addition, American Century's ability to monitor trades
that are placed by the individual shareholders within group, or omnibus,
accounts maintained by financial intermediaries is severely limited because
American Century generally does not have access to the underlying shareholder
account information. However, American Century monitors aggregate trades placed
in omnibus accounts and seeks to work with financial intermediaries to
discourage shareholders from engaging in abusive trading practices and to impose
restrictions on excessive trades. There may be limitations on the ability of
financial intermediaries to impose restrictions on the trading practices of
their clients. As a result, American Century's ability to monitor and discourage
abusive trading practices in omnibus accounts may be limited.

INVESTING THROUGH FINANCIAL INTERMEDIARIES

If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange, redeem and transfer shares will be
affected by the policies of that entity. Some policy differences may include

* minimum investment requirements
* exchange policies
* fund choices
* cutoff time for investments
* trading restrictions

Please contact your FINANCIAL INTERMEDIARY or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and statement of additional information are available from your
intermediary or plan sponsor.

[graphic of triangle]

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS, INSURANCE

COMPANIES AND INVESTMENT ADVISORS.

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21

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, the advisor will pay such
service providers a fee for performing those services. Also, the advisor and the
funds' distributor may make payments for various additional services or other
expenses out of their profits or other available sources. Such payments may be
made for one or more of the following: (1) distribution services, which include
expenses incurred by intermediaries for their sales activities with respect to
the funds, such as preparing, printing and distributing sales literature and
advertising materials and compensating registered representatives or other
employees of such intermediary for their sales activities; (2) shareholder
services, such as providing individual and custom investment advisory services
to clients of the intermediary; and (3) marketing and promotional services,
including business planning assistance, educating personnel about the funds, and
sponsorship of sales meetings, which may include covering costs of providing
speakers, meals and other entertainment. The distributor may sponsor seminars
and conferences designed to educate intermediaries about the funds and may cover
the expenses associated with attendance at such meetings, including travel
costs. These payments and activities are intended to provide an incentive to
intermediaries to sell the funds by ensuring that they are educated about the
funds, and to help such intermediaries defray costs associated with offering the
funds. The amount of any payments described by this paragraph is determined by
the advisor or the distributor, and all such amounts are paid out of the
available assets of the advisor and distributor, and not by you or the funds. As
a result, the total expense ratio of the funds will not be affected by any such
payments.

Although fund share transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the funds.

The funds have authorized certain financial intermediaries to accept orders on
each fund's behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on a fund's behalf before the time the net asset value is
determined in order to receive that day's share price. If those orders are
transmitted to American Century and paid for in accordance with the contract,
they will be priced at the net asset value next determined after your request is
received in the form required by the intermediary.

RIGHT TO CHANGE POLICIES

We reserve the right to change any stated investment requirement, including
those that relate to purchases, exchanges and redemptions. We also may alter,
add or discontinue any service or privilege. Changes may affect all investors or
only those in certain classes or groups. In addition, from time to time we may
waive a policy on a case-by-case basis, as the advisor deems appropriate.

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22

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

American Century will price the fund shares you purchase, exchange or redeem at
the net asset value (NAV) next determined after your order is received and
accepted by the fund's transfer agent, or other financial intermediary with the
authority to accept orders on the fund's behalf. We determine the NAV of each
fund as of 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. On days when the NYSE
is closed (including certain U.S. national holidays), we do not calculate the
NAV. A fund's NAV is the current value of the fund's assets, minus any
liabilities, divided by the number of shares outstanding.

The fund values portfolio securities for which market quotations are readily
available at their market price. As a general rule, equity securities listed on
a U.S. exchange are valued at the last current reported sale price as of the
time of valuation. Securities listed on the NASDAQ National Market System
(Nasdaq) are valued at the Nasdaq Official Closing Price (NOCP), as determined
by Nasdaq, or lacking an NOCP, at the last current reported sale price as of the
time of valuation. The fund may use pricing services to assist in the
determination of market value. Unlisted securities for which market quotations
are readily available are valued at the last quoted sale price or the last
quoted ask price, as applicable, except that debt obligations with 60 days or
less remaining until maturity may be valued at amortized cost. Exchange-traded
options, futures and options on futures are valued at the settlement price as
determined by the appropriate clearing corporation.

If the fund determines that the market price for a portfolio security is not
readily available or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined in good faith by, or in accordance with procedures adopted by, the
fund's board or its designee (a process referred to as "fair valuing" the
security). Circumstances that may cause the fund to fair value a security
include, but are not limited to:

* for funds investing in foreign securities, if, after the close of the
foreign exchange on which a portfolio security is principally traded, but
before the close of the NYSE, an event occurs that may materially affect the
value of the security;

* for funds that invest in debt securities, a debt security has been
declared in default; or

* trading in a security has been halted during the trading day.

If such circumstances occur, the fund will fair value the security if the fair
valuation would materially impact the fund's NAV. While fair value
determinations involve judgments that are inherently subjective, these
determinations are made in good faith in accordance with procedures adopted by
the fund's board.

The effect of using fair value determinations is that the fund's NAV will be
based, to some degree, on security valuations that the board or its designee
believes are fair rather than being solely determined by the market.

With respect to any portion of the fund's assets that are invested in one or
more open-end management investment companies that are registered with the SEC
(known as registered investment companies, or RICs), the fund's NAV will be
calculated based upon the NAVs of such RICs. These RICs are required by law to
explain the circumstances under which they will use fair value pricing and the
effects of using fair value pricing in their prospectuses.

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23

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

Trading of securities in foreign markets may not take place every day the NYSE
is open. Also, trading in some foreign markets and on some electronic trading
networks may take place on weekends or holidays when the fund's NAV is not
calculated. So, the value of the fund's portfolio may be affected on days when
you will not be able to purchase, exchange or redeem fund shares.

DISTRIBUTIONS

Federal tax laws require each fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the funds should not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received by a fund, as well as CAPITAL GAINS realized
by a fund on the sale of its investment securities. Each fund generally pays
distributions from net income and capital gains, if any, once a year in
December. The funds may make more frequent distributions, if necessary, to
comply with Internal Revenue Code provisions.

[graphic of triangle]

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH AS
STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

You will participate in fund distributions when they are declared, starting the
next business day after your purchase is effective. For example, if you purchase
shares on a day that a distribution is declared, you will not receive that
distribution. If you redeem shares, you will receive any distribution declared
on the day you redeem. If you redeem all shares, we will include any
distributions received with your redemption proceeds.

Participants in tax-deferred retirement plans must reinvest all distributions.
For investors investing through taxable accounts, we will reinvest distributions
unless you elect to have dividends and/or capital gains sent to another American
Century account, to your bank electronically, or to your home address or to
another person or address by check.

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24

TAXES

The tax consequences of owning shares of the funds will vary depending on
whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they have
received or capital gains they have generated through their investment
activities. Tax consequences also may result when investors sell fund shares
after the net asset value has increased or decreased.

Tax-Deferred Accounts

If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a tax
advisor.

Taxable Accounts

If you own fund shares through a taxable account, you may be taxed on your
investments if the fund makes distributions or if you sell your fund shares.

Taxability of Distributions

Fund distributions may consist of income, such as dividends and interest earned
by a fund from its investments, or capital gains generated by a fund from the
sale of its investment securities. Distributions of income are taxed as ordinary
income, unless they are designated as QUALIFIED DIVIDEND INCOME and you meet a
minimum required holding period with respect to your shares of the fund, in
which case distributions of income are taxed as long-term capital gains.

[graphic of triangle]

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY A FUND FROM THE
STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED THAT THE
FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

TAX RATE FOR 10% AND TAX RATE FOR
TYPE OF DISTRIBUTION 15% BRACKETS ALL OTHER BRACKETS
--------------------------------------------------------------------------------
Short-term capital gains Ordinary Income Ordinary Income
--------------------------------------------------------------------------------
Long-term capital gains (> 1 year)
and Qualified Dividend Income 5% 15%
--------------------------------------------------------------------------------

If the fund's distributions exceed its taxable income and capital gains realized
during the tax year, all or a portion of the distributions made by the fund in
that tax year will be considered a return of capital. A return of capital
distribution is generally not subject to tax, but will reduce your cost basis in
the fund and result in higher realized capital gains (or lower realized capital
losses) upon the sale of fund shares.

------
25

The tax status of any distributions of capital gains is determined by how long a
fund held the underlying security that was sold, not by how long you have been
invested in the fund, or whether you reinvest your distributions in additional
shares or take them in cash. For taxable accounts, American Century or your
financial intermediary will inform you of the tax status of fund distributions
for each calendar year in an annual tax mailing.

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

Taxes on Transactions

Your redemptions-including exchanges to other American Century funds-are subject
to capital gains tax. The table above can provide a general guide for your
potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or exchange of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.

If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to withholding, we
are required to withhold and pay to the IRS the applicable federal withholding
tax rate on taxable dividends, capital gains distributions and redemption
proceeds.

Buying a Dividend

Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.

The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

------
26

MULTIPLE CLASS INFORMATION

American Century offers the following classes of shares of the funds through
financial intermediaries:

* Capital Growth - Investor Class, Institutional Class, A Class, B Class, C
Class and R Class

* New Opportunities II - Investor Class, Institutional Class, A Class, B
Class and C Class

* Select - Investor Class, Institutional Class, Advisor Class, A Class, B
Class, C Class and R Class

The shares offered by this prospectus are Investor Class and Institutional Class
shares. Investor Class and Institutional Class shares have no up-front or
deferred charges, commissions or 12b-1 fees. Institutional Class shares are
offered primarily through employer-sponsored retirement plans, or through
institutions like banks, broker-dealers and insurance companies.

The other classes have different fees, expenses and/or minimum investment
requirements from the classes offered by this prospectus. The difference in the
fee structures between the classes is the result of their separate arrangements
for shareholder and distribution services. It is not the result of any
difference in advisory or custodial fees or other expenses related to the
management of the funds' assets, which do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this prospectus, call us at
1-800-378-9878.

You also can contact a sales representative or financial intermediary who offers
those classes of shares.

Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; (e) the Institutional Class may provide for
automatic conversion from that class into shares of the Investor Class of the
same fund; and (f) the B Class provides for automatic conversion from that class
into shares of the A Class of the same fund after eight years.

------
27

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years or less, if the share class is not five years old. Because the
Institutional Class of New Opportunities II is new, financial information is not
available for this class as of the date of this prospectus.

On a per-share basis, each table includes as appropriate

* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to investors
* share price at the end of the period

Each table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage
of average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio
that is replaced during the period

The Financial Highlights that follow have been audited by Deloitte & Touche LLP,
except for the six-month period ended April 30, 2005, which have not been
audited. The funds' Report of Independent Registered Public Accounting Firm and
the financial statements are included in the funds' annual reports, which are
available upon request.

------
28

NEW OPPORTUNITIES II FUND
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001(2)
----------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.29 $5.75 $4.15 $4.52 $5.00
----------------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------
Net Investment Loss(3) (0.03) (0.07) (0.05) (0.05) (0.01)
------------------------------------
Net Realized and (0.12) 0.61 1.65 (0.32) (0.47)
Unrealized Gain (Loss)
----------------------------------------------------------------------------------------
Total From Investment Operations (0.15) 0.54 1.60 (0.37) (0.48)
----------------------------------------------------------------------------------------
Distributions
------------------------------------
From Net Realized Gains (0.17) - - - -
----------------------------------------------------------------------------------------
Net Asset Value, End of Period $5.97 $6.29 $5.75 $4.15 $4.52
========================================================================================
TOTAL RETURN(4) (2.59)% 9.39% 38.55% (8.19)% (9.60)%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.50%(5) 1.50% 1.50% 1.50% 1.50%(5)
------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.85)%(5) (1.09)% (1.11)% (1.02)% (0.81)%(5)
------------------------------------
Portfolio Turnover Rate 130% 255% 236% 182% 89%
------------------------------------
Net Assets, End of Period
(in thousands) $38,857 $38,917 $32,512 $25,479 $18,217
----------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JUNE 1, 2001 (INCEPTION) THROUGH OCTOBER 31, 2001.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR
ARE NOT ANNUALIZED. THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY
REFLECT THE CLASS EXPENSE DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING
THE NET ASSET VALUES TO TWO DECIMAL PLACES. IF NET ASSET VALUES WERE
CALCULATED TO THREE DECIMAL PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE
CLOSELY REFLECT THE CLASS EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET
VALUES TO TWO DECIMAL PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND
DOES NOT RESULT IN ANY GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) ANNUALIZED.

------
29

SELECT FUND
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
---------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
---------------------------------------------------------------------------------------
PER-SHARE DATA
---------------------------------------------------------------------------------------
Net Asset Value, $34.80 $33.77 $28.91 $34.94 $52.20 $53.32
Beginning of Period
---------------------------------------------------------------------------------------
Income From Investment
Operations
------------------------------
Net Investment 0.15 -(3) 0.01 0.07 0.06 (0.06)
Income (Loss)(2)
------------------------------
Net Realized and 0.33 1.03 4.92 (6.04) (14.53) 4.04
Unrealized Gain (Loss)
---------------------------------------------------------------------------------------
Total From Investment 0.48 1.03 4.93 (5.97) (14.47) 3.98
Operations
---------------------------------------------------------------------------------------
Distributions
------------------------------
From Net Investment Income (0.08) - (0.07) (0.06) - -
------------------------------
From Net Realized Gains - - - - (2.79) (5.10)
---------------------------------------------------------------------------------------
Total Distributions (0.08) - (0.07) (0.06) (2.79) (5.10)
---------------------------------------------------------------------------------------
Net Asset Value, End of Period $35.20 $34.80 $33.77 $28.91 $34.94 $52.20
=======================================================================================
TOTAL RETURN(4) 1.37% 3.05% 17.11% (17.11)% (28.93)% 7.64%

RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.00%(5) 1.00% 1.00% 1.00% 1.00% 1.00%
------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.84%(5) (0.01)% 0.03% 0.21% 0.15% (0.11)%
------------------------------
Portfolio Turnover Rate 33% 48% 84% 168% 98% 67%
------------------------------
Net Assets, End of Period
(in millions) $3,376 $3,565 $3,828 $3,522 $4,745 $7,086
---------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) PER-SHARE AMOUNT IS LESS THAN $0.005.

(5) ANNUALIZED.

------
30

SELECT FUND

Institutional Class
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
--------------------------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $35.09 $33.99 $29.10 $35.16 $52.36 $53.41
--------------------------------------------------------------------------------------------------
Income From Investment Operations
-------------------------------------
Net Investment Income(2) 0.20 0.07 0.07 0.13 0.14 0.04
-------------------------------------
Net Realized and 0.34 1.03 4.95 (6.06) (14.55) 4.01
Unrealized Gain (Loss)
--------------------------------------------------------------------------------------------------
Total From Investment Operations 0.54 1.10 5.02 (5.93) (14.41) 4.05
--------------------------------------------------------------------------------------------------
Distributions
-------------------------------------
From Net Investment Income (0.16) - (0.13) (0.13) - -
-------------------------------------
From Net Realized Gains - - - - (2.79) (5.10)
--------------------------------------------------------------------------------------------------
Total Distributions (0.16) - (0.13) (0.13) (2.79) (5.10)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $35.47 $35.09 $33.99 $29.10 $35.16 $52.36
==================================================================================================
TOTAL RETURN(3) 1.49% 3.24% 17.34% (16.93)% (28.71)% 7.77%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 0.80%(4) 0.80% 0.80% 0.80% 0.80% 0.80%
-------------------------------------
Ratio of Net Investment Income
to Average Net Assets 1.04%(4) 0.19% 0.23% 0.41% 0.35% 0.09%
-------------------------------------
Portfolio Turnover Rate 33% 48% 84% 168% 98% 67%
-------------------------------------
Net Assets, End of Period
in thousands) $203,305 $234,815 $229,596 $185,897 $181,708 $259,092
--------------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR
ARE NOT ANNUALIZED. THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY
REFLECT THE CLASS EXPENSE DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING
THE NET ASSET VALUES TO TWO DECIMAL PLACES. IF NET ASSET VALUES WERE
CALCULATED TO THREE DECIMAL PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE
CLOSELY REFLECT THE CLASS EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET
VALUES TO TWO DECIMAL PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND
DOES NOT RESULT IN ANY GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(4) ANNUALIZED.

------
31

PERFORMANCE INFORMATION OF OTHER CLASS

The following financial information is provided to show the performance of the
Capital Growth Fund's A Class shares. This class, the A Class, has a total
expense ratio that is higher than the Investor and Institutional Classes. If the
Investor and Institutional Classes had existed during the periods presented,
their performance would have been higher because of the lower expense.

The table on the next page itemizes what contributed to the changes in the Class
A share price during the most recently ended fiscal year. It also shows the
changes in share price for this period in comparison to changes over the last
five fiscal years or less, if the share class is not five years old.

On a per-share basis, each table includes as appropriate

* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to investors
* share price at the end of the period
Each table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage
of average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio
that is replaced during the period

------
32

CAPITAL GROWTH FUND
A Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
--------------------------------------------------------------------------------
2005(1) 2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.89 $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
----------------------------------------
Net Investment Income (Loss)(3) 0.02 (0.03)
----------------------------------------
Net Realized and 0.10 (0.08)
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment Operations 0.12 (0.11)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $10.01 $9.89
================================================================================
TOTAL RETURN(4) 1.21% (1.10)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.27%(5) 1.25%(5)
----------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.41%(5) (0.43)%(5)
----------------------------------------
Portfolio Turnover Rate 44% 87%
----------------------------------------
Net Assets, End of Period
(in thousands) $985 $692
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) FEBRUARY 27, 2004 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2004.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY, AND DOES NOT REFLECT APPLICABLE SALES CHARGES.
TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL
RETURN OF THE CLASSES MAY NOT PRECISELY REFLECT THE CLASS EXPENSE
DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING THE NET ASSET VALUES TO
TWO DECIMAL PLACES. IF NET ASSET VALUES WERE CALCULATED TO THREE DECIMAL
PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE CLOSELY REFLECT THE CLASS
EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET VALUES TO TWO DECIMAL
PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND DOES NOT RESULT IN ANY
GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) ANNUALIZED.

------
33

MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

Annual and semiannual reports contain more information about the funds'
investments and the market conditions and investment strategies that
significantly affected the funds' performance during the most recent fiscal
period.

Statement of Additional Information (SAI)

The SAI contains a more detailed, legal description of the funds' operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this prospectus. This means that it is legally part of this
prospectus, even if you don't request a copy.

You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the funds or your accounts, online at americancentury.com or by
contacting American Century at the address or telephone numbers listed below.

You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET * EDGAR database at sec.gov
* By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section
Washington, D.C. 20549-0102

This prospectus shall not constitute an offer to sell securities of a fund in
any state, territory, or other jurisdiction where the fund's shares have not
been registered or qualified for sale, unless such registration or qualification
is not required, or under any circumstances in which such offer or solicitation
would be unlawful.

FUND REFERENCE FUND CODE TICKER NEWSPAPER LISTING
-------------------------------------------------------------------------------
Capital Growth
Investor Class 132 N/A N/A
-------------------------------------------------------------------------------
Institutional
Class 332 N/A N/A
-------------------------------------------------------------------------------
New Opportunities II
Investor Class 136 ANOIX NewOppII
-------------------------------------------------------------------------------
Institutional
Class 336 N/A NewOppII
-------------------------------------------------------------------------------
Select
Investor Class 021 TWCIX Select
-------------------------------------------------------------------------------
Institutional
Class 321 TWSIX Select
-------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
americancentury.com

Investor Class Institutional Class
P.O. Box 419200 P.O. Box 419385
Kansas City, Missouri 64141-6200 Kansas City, Missouri 64141-6385
1-800-345-2021 or 816-531-5575 1-800-345-3533 or 816-531-5575

0507
SH-PRS-43931

July 29, 2005

American Century Investments
prospectus

A Class
B Class
C Class
Capital Growth Fund
New Opportunities II Fund
Select Fund

R Class
Capital Growth Fund
Select Fund

Advisor Class
Select Fund

THE SECURITIES AND EXCHANGE COMMISSIONHAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century Investment
Services, Inc., Distributor

[american century investments logo and text logo]

Dear Investor,

American Century Investments is committed to helping people make the most of
their financial opportunities. That's why we are focused on achieving superior
results and building long-term relationships with investors.

We believe our relationship with you begins with an easy-to-read prospectus that
provides you with the information you need to feel confident about your
investment decisions.

Naturally, you may have questions about investing after you read through the
prospectus. Please contact your investment professional with questions or for
more information about our funds.

Sincerely,

/s/Brian Jeter

Brian Jeter
Senior Vice President
Third Party Sales and Services
American Century Investment Services, Inc.

American Century Investments
P.O. Box 419786, Kansas City, MO 64141-6786

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

Table of Contents

AN OVERVIEW OF THE FUNDS . . . . . . . . . . . . . . . . . . . . 2

FUND PERFORMANCE HISTORY . . . . . . . . . . . . . . . . . . . . 3
Capital Growth Fund . . . . . . . . . . . . . . . . . . .3
New Opportunities II Fund . . . . . . . . . . . . . . . .3
Select Fund . . . . . . . . . . . . . . . . . . . . . . .5

FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . .7

OBJECTIVES, STRATEGIES AND RISKS . . . . . . . . . . . . . . . . 9
Capital Growth Fund and Select Fund . . . . . . . . . . .9
New Opportunities II Fund . . . . . . . . . . . . . . . 11

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .13

INVESTING WITH AMERICAN CENTURY . . . . . . . . . . . . . . . . 16

SHARE PRICE AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . 24

TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

MULTIPLE CLASS INFORMATION . . . . . . . . . . . . . . . . . . .28

FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . .30

[graphic of triangle]

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT DEFINITIONS OF KEY
INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL INFORMATION.

AN OVERVIEW OF THE FUNDS

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The portfolio managers for Capital Growth and Select use a variety of analytical
research tools and techniques to identify the stocks of larger-sized companies
that meet their investment criteria. Under normal market conditions, the funds'
portfolios will primarily consist of securities of companies whose earnings or
revenues are not only growing, but growing at an accelerating pace.

The funds' principal risks include

* MARKET RISK - The value of a fund's shares will go up and down based on
the performance of the companies whose securities it owns and other factors
generally affecting the securities market.

* PRICE VOLATILITY - The value of a fund's shares may fluctuate
significantly in the short term.

* PRINCIPAL LOSS - At any given time your shares may be worth more or less
than the price you paid for them. In other words, it is possible to lose money
by investing in the funds.

* FOREIGN SECURITIES - The funds may invest in foreign securities, which can
be riskier than investing in U.S. securities.

A more detailed description of the funds' investment strategies and risks may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
9.

[graphic of triangle]

AN INVESTMENT IN THE FUNDS IS NOT A BANK DEPOSIT, AND IT IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY
OTHER GOVERNMENT AGENCY.

------
2

FUND PERFORMANCE HISTORY

CAPITAL GROWTH FUND

NEW OPPORTUNITIES II FUND

Annual Total Returns

The following bar chart shows the performance of New Opportunities II's A Class
shares for each full calendar year in the life of the class. It indicates the
volatility of the fund's historical returns from year to year. Account fees and
sales charges are not reflected in the chart below. If they had been included,
returns would have been lower than those shown. The returns of the fund's B and
C Class shares will differ from the returns shown in the chart, depending on the
expenses of those classes.

NEW OPPORTUNITIES II FUND- A CLASS

[data from bar chart]

2004 10.71%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
New Opportunities II 11.78% (4Q 2004) -3.28% (3Q 2004)
--------------------------------------------------------------------------------

Average Annual Total Returns

The following table shows the average annual total returns of New Opportunities
II's A Class shares calculated three different ways.

Return Before Taxes shows the actual change in the value of fund shares over the
time periods shown, but does not reflect the impact of taxes on fund
distributions or the sale of fund shares. The two after-tax returns take into
account taxes that may be associated with owning fund shares. Return After Taxes
on Distributions is a fund's actual performance, adjusted by the effect of taxes
on distributions made by the fund during the periods shown. Return After Taxes
on Distributions and Sale of Fund Shares is further adjusted to reflect the tax
impact on any change in the value of fund shares as if they had been sold on the
last day of the period.

------
3

After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs. After-tax
returns are shown only for A Class shares. After-tax returns for other share
classes will vary.

The benchmark is an unmanaged index that has no operating costs and is included
in the table for performance comparison.

A CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
New Opportunities II(2)
Return Before Taxes 4.38% 26.77%
Return After Taxes on Distributions 3.79% 26.40%
Return After Taxes on Distributions
and Sale of Fund Shares 3.09% 22.95%
Russell 2000® Growth Index 14.31% 33.72%
(reflects no deduction for fees,
expenses or taxes)
S&P 500 Index 10.88% 22.06%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE A CLASS IS JANUARY 31, 2003.

(2) RETURNS ASSUME THE DEDUCTION OF ALL SALES LOADS, CHARGES AND OTHER
FEES ASSOCIATED WITH THE FUND. YOUR ACTUAL RETURNS MAY VARY DEPENDING ON
THE CIRCUMSTANCES OF YOUR INVESTMENT.

B CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
New Opportunities II(2)
Return Before Taxes 5.95% 28.15%
Russell 2000® Growth Index 14.31% 33.72%
(reflects no deduction for fees,
expenses or taxes)
S&P 500 Index 10.88% 22.06%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE B CLASS IS JANUARY 31, 2003.

(2) RETURNS ASSUME THE DEDUCTION OF ALL SALES LOADS, CHARGES AND OTHER
FEES ASSOCIATED WITH THE FUND. YOUR ACTUAL RETURNS MAY VARY DEPENDING ON
THE CIRCUMSTANCES OF YOUR INVESTMENT.

C CLASS
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR LIFE OF CLASS(1)
--------------------------------------------------------------------------------
New Opportunities II
Return Before Taxes 9.92% 30.00%
Russell 2000® Growth Index 14.31% 33.72%
(reflects no deduction for fees,
expenses or taxes)
S&P 500 Index 10.88% 22.06%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE C CLASS IS JANUARY 31, 2003.

------
4

SELECT FUND

Annual Total Returns

The following bar chart shows the performance of Select's Advisor Class shares
for each full calendar year in the life of the class. It indicates the
volatility of the fund's historical returns from year to year. The returns of
the fund's other classes of shares will differ from those shown in the chart,
depending on the expenses of those classes.

SELECT FUND - ADVISOR CLASS

[data from bar chart]

1998 35.29%
1999 21.98%
2000 -8.83%
2001 -18.45%
2002 -23.02%
2003 24.48%
2004 7.09%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
Select 22.21% (4Q 1998) -15.49% (3Q 2002)
--------------------------------------------------------------------------------

Average Annual Total Returns

The following table shows the average annual total returns of Select's Advisor
Class shares calculated three different ways. Additional tables show the average
annual total returns of the fund's A, B and C Class shares calculated before the
impact of taxes. Because the R Class of Select was not in operation as of the
calendar year end, it is not included.

After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs. After-tax
returns are shown only for Advisor Class shares. After-tax returns for other
share classes will vary.

The benchmark is an unmanaged index that has no operating costs and is included
in the table for performance comparison.

------
5

ADVISOR CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR 5 YEARS CLASS(1)
--------------------------------------------------------------------------------
Select
Return Before Taxes 7.09% -5.27% 3.57%
Return After Taxes on Distributions 7.09% -5.49% 1.76%
Return After Taxes on Distributions
and Sale of Fund Shares 4.61% -4.43% 2.31%
S&P 500 Index 10.88% -2.30% 4.89%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE ADVISOR CLASS IS AUGUST 8, 1997.

(2) SINCE AUGUST 7, 1997, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

A CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Select(2)
Return Before Taxes 0.93% 14.24%
S&P 500 Index 10.88% 22.06%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE A CLASS IS JANUARY 31, 2003.

(2) RETURNS ASSUME THE DEDUCTION OF ALL SALES LOADS, CHARGES AND OTHER
FEES ASSOCIATED WITH THE FUND. YOUR ACTUAL RETURNS MAY VARY DEPENDING ON
THE CIRCUMSTANCES OF YOUR INVESTMENT.

B CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Select(2)
Return Before Taxes 2.27% 15.12%
S&P 500 Index 10.88% 22.06%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE B CLASS IS JANUARY 31, 2003.

(2) RETURNS ASSUME THE DEDUCTION OF ALL SALES LOADS, CHARGES AND OTHER
FEES ASSOCIATED WITH THE FUND. YOUR ACTUAL RETURNS MAY VARY DEPENDING ON
THE CIRCUMSTANCES OF YOUR INVESTMENT.

C CLASS
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR LIFE OF CLASS(1)
--------------------------------------------------------------------------------
Select
Return Before Taxes 6.24% 16.98%
S&P 500 Index 10.88% 22.06%
(reflects no deduction for fees, expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE C CLASS IS JANUARY 31, 2003.

Performance information is designed to help you see how fund returns can vary.
Keep in mind that past performance (before and after taxes) does not predict how
a fund will perform in the future.

For current performance information, please call us at 1-800-378-9878.

------
6

FEES AND EXPENSES

The following tables describe the fees and expenses you may pay if you buy and
hold shares of a fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
A B C R ADVISOR
CLASS CLASS CLASS CLASS CLASS
--------------------------------------------------------------------------------
Maximum Sales 5.75% None None None None
Charge (Load)
Imposed on Purchases
(as a percentage of
offering price)
--------------------------------------------------------------------------------
Maximum Deferred Sales None(1) 5.00%(2) 1.00%(3) None None
Charge (Load)
(as a percentage of the
original offering price for
B Class shares or the lower
of the original offering
price or redemption
proceeds for A and
C Class shares)
--------------------------------------------------------------------------------

(1) INVESTMENTS OF $1 MILLION OR MORE IN A CLASS SHARES MAY BE SUBJECT TO
A CONTINGENT DEFERRED SALES CHARGE OF 1.00% IF THE SHARES ARE REDEEMED
WITHIN ONE YEAR OF THE DATE OF PURCHASE.

(2) THE CHARGE IS 5.00% DURING THE FIRST YEAR AFTER PURCHASE, DECLINES
OVER THE NEXT FIVE YEARS AS SHOWN ON PAGE 18, AND IS ELIMINATED AFTER SIX
YEARS.

(3) THE CHARGE IS 1.00% DURING THE FIRST YEAR AFTER PURCHASE, AND IS
ELIMINATED THEREAFTER.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEE(1) (12B-1) FEES EXPENSES EXPENSES
--------------------------------------------------------------------------------
Capital
Growth
A Class 1.00% 0.25%(2) 0.00%(3) 1.25%
--------------------------------------------------------------------------------
B Class 1.00% 1.00%(2) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
C Class 1.00% 1.00%(2) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
R Class 1.00% 0.50%(2) 0.00%(4) 1.50%
--------------------------------------------------------------------------------
New
Opportunities
II
A Class 1.50% 0.25%(2) 0.00%(3) 1.75%
--------------------------------------------------------------------------------
B Class 1.50% 1.00%(2) 0.00%(3) 2.50%
--------------------------------------------------------------------------------
C Class 1.50% 1.00%(2) 0.00%(3) 2.50%
--------------------------------------------------------------------------------
Select
A Class 1.00% 0.25%(2) 0.00%(3) 1.25%
--------------------------------------------------------------------------------
B Class 1.00% 1.00%(2) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
C Class 1.00% 1.00%(2) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
R Class 1.00% 0.50%(2) 0.00%(4) 1.50%
--------------------------------------------------------------------------------
Advisor
Class 0.75% 0.50%(5) 0.00%(3) 1.25%
--------------------------------------------------------------------------------

(2) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES
THROUGH BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. THE FEE MAY BE USED TO COMPENSATE SUCH FINANCIAL
INTERMEDIARIES FOR DISTRIBUTION AND OTHER SHAREHOLDER SERVICES. FOR MORE
INFORMATION, SEE Service, Distribution and Administrative Fees, PAGE 29.

(3) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUNDS'
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, WERE
LESS THAN 0.005% FOR THE MOST RECENT FISCAL YEAR.

(4) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUND'S
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, ARE
EXPECTED TO BE LESS THAN 0.005% FOR THE CURRENT FISCAL YEAR.

(5) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES
THROUGH BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. HALF OF THE ADVISOR CLASS 12B-1 FEE (0.25%) IS FOR ONGOING
RECORDKEEPING AND ADMINISTRATIVE SERVICES PROVIDED BY FINANCIAL
INTERMEDIARIES, WHICH WOULD OTHERWISE BE PAID BY THE ADVISOR OUT OF THE
UNIFIED MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY SERVICES
IS THE SAME FOR ALL CLASSES. FOR MORE INFORMATION, SEE Service,
Distribution and Administrative Fees, PAGE 29.

------
7

EXAMPLE

The examples in the tables below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .

* invest $10,000 in the fund

* redeem all of your shares at the end of the periods shown below

* earn a 5% return each year

* incur the same operating expenses as shown above

. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Capital Growth
A Class $695 $947 $1,219 $1,991
--------------------------------------------------------------------------------
B Class $602 $923 $1,169 $2,115
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------
New Opportunities II
A Class $742 $1,091 $1,463 $2,503
--------------------------------------------------------------------------------
B Class $651 $1,071 $1,417 $2,623
--------------------------------------------------------------------------------
C Class $251 $771 $1,317 $2,803
--------------------------------------------------------------------------------
Select
A Class $695 $947 $1,219 $1,991
--------------------------------------------------------------------------------
B Class $602 $923 $1,169 $2,115
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------
Advisor Class $127 $395 $683 $1,503
--------------------------------------------------------------------------------

The table above reflects a deduction for charges payable upon redemption. You
would pay the following expenses if you did not redeem your shares, and thus,
did not incur such charges.

10
1 YEAR 3 YEARS 5 YEARS YEARS
--------------------------------------------------------------------------------
Capital Growth
A Class $695 $947 $1,219 $1,991
--------------------------------------------------------------------------------
B Class $202 $623 $1,069 $2,115
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------
New Opportunities II
A Class $742 $1,091 $1,463 $2,503
--------------------------------------------------------------------------------
B Class $251 $771 $1,317 $2,623
--------------------------------------------------------------------------------
C Class $251 $771 $1,317 $2,803
--------------------------------------------------------------------------------
Select
A Class $695 $947 $1,219 $1,991
--------------------------------------------------------------------------------
B Class $202 $623 $1,069 $2,115
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------
Advisor Class $127 $395 $683 $1,503
--------------------------------------------------------------------------------

------
8

OBJECTIVES, STRATEGIES AND RISKS

CAPITAL GROWTH FUND
SELECT FUND

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVE?

Using American Century's extensive computer database, as well as other primary
analytical research tools, the portfolio managers track financial information
for individual companies to identify and evaluate trends in earnings, revenues
and other business fundamentals. Under normal market conditions, the funds'
portfolios will primarily consist of securities of companies whose earnings or
revenues are not only growing, but growing at an accelerating pace. This
includes companies whose growth rates, although still negative, are less
negative than prior periods, and companies whose growth rates are expected to
accelerate. Other analytical techniques help identify additional signs of
business improvement, such as increasing cash flows, or other indications of the
relative strength of a company's business. These techniques help the portfolio
managers buy or hold the stocks of companies they believe have favorable growth
prospects and sell the stocks of companies whose characteristics no longer meet
their criteria.

A description of the policies and procedures with respect to the disclosure of
the funds' portfolio securities is available in the statement of additional
information.

------
9

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?

The portfolio managers usually purchase common stocks, but they can purchase
other securities as well. Each fund also may invest in domestic and foreign
preferred stocks, convertible debt securities, equity-equivalent securities,
notes, bonds and other debt securities. Each fund generally limits its purchase
of debt securities to investment-grade obligations.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

------
10

NEW OPPORTUNITIES II FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks long-term capital growth.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?

Using American Century's extensive computer database, as well as other primary
analytical research tools, the portfolio managers track financial information
for thousands of individual companies to identify and evaluate trends in
earnings, revenues and other business fundamentals. The portfolio managers'
principal analytical technique involves the identification of companies with
earnings and revenues that are not only growing, but growing at an accelerating
pace. This includes companies whose growth rates, although still negative, are
less negative than prior periods, and companies whose growth rates are expected
to accelerate. These techniques help the portfolio managers buy or hold the
stocks of companies they believe have favorable growth prospects and sell the
stocks of companies whose characteristics no longer meet their criteria.

Although the portfolio managers intend to invest the fund's assets primarily in
U.S. stocks, the fund may invest in securities of foreign companies. Most of the
fund's foreign investments are in companies located and doing business in
developed countries. Investments in foreign securities present some unique risks
that are more fully described in the fund's statement of additional information.

A description of the policies and procedures with respect to the disclosure of
the fund's portfolio securities is available in the statement of additional
information.

------
11

WHAT KINDS OF SECURITIES DOES THE FUND BUY?

The portfolio managers will usually purchase common stocks of U.S. and foreign
companies that are small at the time of purchase, but they can purchase other
types of securities as well. When determining whether a company is
smaller-sized, the portfolio managers will consider, among other factors, the
capitalization of the company and the amount of revenues, as well as other
information they obtain about the company. The fund also may invest in domestic
and foreign preferred stocks, convertible debt securities, equity-equivalent
securities, notes, bonds and other debt securities. The fund generally limits
its purchase of debt securities to investment-grade obligations.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

------
12

MANAGEMENT

WHO MANAGES THE FUNDS?

The Board of Directors, investment advisor and fund management teams play key
roles in the management of the funds.

THE BOARD OF DIRECTORS

THE INVESTMENT ADVISOR

The R Class of Capital Growth Fund had no assets as of the date of this
prospectus, but will pay the advisor a unified management fee of 1.000% of its
pro rata share of the first $5 billion of the strategy assets, 0.990% of its pro
rata share of the next $5 billion, 0.980% of the pro rata share of the next $5
billion, 0.970% of its pro rata share of the next $5 billion, 0.950% of its pro
rata share of the next $5 billion, 0.900% of its pro rata share of the next $5
billion and 0.800% of its pro rata share over $30 billion of the strategy
assets.

The R Class of Select Fund had no assets as of the date of this prospectus, but
will pay the advisor a unified management fee of 1.000% of its pro rata share of
the first $5 billion of the strategy assets, 0.990% of its pro rata share of the
next $5 billion, 0.980% of the pro rata share of the next $5 billion, 0.970% of
its pro rata share of the next $5 billion, 0.950% of its pro rata share of the
next $5 billion, 0.900% of its pro rata share of the next $5 billion and 0.800%
of its pro rata share over $30 billion of the strategy assets.

Out of that fee, the advisor pays all expenses of managing and operating each
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses. A portion of each fund's management fee may be paid by the fund's
advisor to unaffiliated third parties who provide recordkeeping and
administrative services that would otherwise be performed by an affiliate of the
advisor.

------
13

MANAGEMENT FEES PAID BY THE FUNDS
TO THE ADVISOR AS A PERCENTAGE
OF AVERAGE NET ASSETS FOR THE MOST
RECENT FISCAL YEAR ENDED A B C R ADVISOR
OCTOBER 31, 2004 CLASS CLASS CLASS CLASS CLASS
--------------------------------------------------------------------------------
Capital Growth 1.00% 1.00% 1.00% N/A(1) N/A(2)
--------------------------------------------------------------------------------
New Opportunities II 1.50% 1.50% 1.50% N/A(3) N/A(3)
--------------------------------------------------------------------------------
Select 1.00% 1.00% 1.00% N/A(1) 0.75%
--------------------------------------------------------------------------------

(1) THE R CLASS OF THIS FUND HAD NOT COMMENCED OPERATIONS AS OF OCTOBER
31, 2004.

(2) CAPITAL GROWTH DOES NOT OFFER THE ADVISOR CLASS.

(3) NEW OPPORTUNITIES II DOES NOT OFFER THE R CLASS OR ADVISOR CLASS.

THE FUND MANAGEMENT TEAMS

The portfolio managers on the investment teams are identified below.

Capital Growth

GREGORY J. WOODHAMS

E. A. PRESCOTT LEGARD

New Opportunities II

HAROLD S. BRADLEY

TOM TELFORD

------
14

Select

JOHN R. SYKORA

KEITH LEE

Code of Ethics

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. It also contains limits on short-term trading in American Century-managed
funds. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing personal trades.

FUND PERFORMANCE

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the statement of additional
information and the investment objectives of the funds may not be changed
without shareholder approval. The Board of Directors and/or the advisor may
change any other policies and investment strategies.

------
15

INVESTING WITH AMERICAN CENTURY

CHOOSING A SHARE CLASS

The shares offered by this prospectus are intended for purchase by participants
in employer-sponsored retirement or savings plans and for persons purchasing
shares through investment advisors, broker-dealers, banks, insurance companies
and other financial intermediaries that provide various administrative and
distribution services.

Select offers the A, B, C, R and Advisor Classes through this prospectus; New
Opportunities II offers the A, B and C Classes and Capital Growth offers the A,
B, C and R Classes. Although each class of shares represents an interest in the
same fund, each has a different cost structure, as described below. Which class
is right for you depends on many factors, including how long you plan to hold
the shares, how much you plan to invest, the fee structure of each class, and
how you wish to compensate your financial advisor for the services provided to
you. Your financial advisor can help you choose the option that is most
appropriate.

The following chart provides a summary description of each class offered by this
prospectus:

A CLASS B CLASS
---------------------------------------------------------------------
Initial sales charge(1) No initial sales charge
---------------------------------------------------------------------
Generally no contingent Contingent deferred sales
deferred sales charge(2) charge on redemptions
within six years
---------------------------------------------------------------------
12b-1 fee of 0.25% 12b-1 fee of 1.00%
---------------------------------------------------------------------
No conversion feature Convert to A Class shares
eight years after purchase
---------------------------------------------------------------------
Generally more appropriate Aggregate purchases
for long-term investors limited to amounts
less than $100,000
---------------------------------------------------------------------

C CLASS ADVISOR CLASS AND R CLASS
---------------------------------------------------------------------
No initial sales charge No initial sales charge
---------------------------------------------------------------------
Contingent deferred sales charge No contingent deferred
on redemptions within 12 months sales charge
---------------------------------------------------------------------
12b-1 fee of 1.00% 12b-1 fee of 0.50%(3)
---------------------------------------------------------------------
No conversion feature No conversion feature
---------------------------------------------------------------------
Aggregate purchases limited to Generally offered through
amounts less than $1,000,000; qualified retirement plans
generally more appropriate for and other fee-based
short-term investors arrangements
---------------------------------------------------------------------

(1) THE SALES CHARGE FOR A CLASS SHARES DECREASES DEPENDING ON THE SIZE OF
YOUR INVESTMENT, AND MAY BE WAIVED FOR SOME PURCHASES. THERE IS NO SALES
CHARGE FOR PURCHASES OF $1,000,000 OR MORE.

(2) A CONTINGENT DEFERRED SALES CHARGE (CDSC) OF 1.00% WILL BE CHARGED ON
CERTAIN PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN ONE YEAR
OF PURCHASE.

(3) WHILE THE ADVISOR CLASS AND R CLASS HAVE THE SAME 12B-1 FEE, THEIR
TOTAL ANNUAL FUND OPERATING EXPENSES WILL BE DIFFERENT BECAUSE OF THE
ADVISOR CLASS'S LOWER UNIFIED MANAGEMENT FEE. SEE PAGES 7-8 FOR MORE
DETAILS.

Minimum Initial Investment Amounts

To open an account, the minimum initial investment amounts are $2,000 for a
Coverdell Education Savings Account (CESA), and $2,500 for all other accounts.

CALCULATION OF SALES CHARGES

The information regarding sales charges provided herein is included free of
charge and in a clear and prominent format at americancentury.com in the
INVESTORS USING ADVISORS and INVESTMENT PROFESSIONALS portions of the Web site.
From the description of A, B or C Class shares, a hyperlink will take you
directly to this disclosure.

------
16

A Class

A Class shares are sold at their offering price, which is net asset value plus
an initial sales charge. This sales charge varies depending on the amount of
your investment, and is deducted from your purchase before it is invested. The
sales charges and the amounts paid to your financial advisor are:

AMOUNT PAID
TO FINANCIAL
SALES CHARGE SALES CHARGE ADVISOR AS A
AS A % OF AS A % OF NET % OF OFFERING
PURCHASE AMOUNT OFFERING PRICE AMOUNT INVESTED PRICE
--------------------------------------------------------------------------------
Less than $50,000 5.75% 6.10% 5.00%
--------------------------------------------------------------------------------
$50,000 - $99,999 4.75% 4.99% 4.00%
--------------------------------------------------------------------------------
$100,000 - $249,999 3.75% 3.90% 3.25%
--------------------------------------------------------------------------------
$250,000 - $499,999 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------
$500,000 - $999,999 2.00% 2.04% 1.75%
--------------------------------------------------------------------------------
$1,000,000 - $3,999,999 0.00% 0.00% 1.00%(1)
--------------------------------------------------------------------------------
$4,000,000 - $9,999,999 0.00% 0.00% 0.50%(1)
--------------------------------------------------------------------------------
$10,000,000 or more 0.00% 0.00% 0.25%(1)
--------------------------------------------------------------------------------

(1) FOR PURCHASES OVER $1,000,000 BY QUALIFIED RETIREMENT PLANS, NO
UPFRONT AMOUNT WILL BE PAID TO FINANCIAL ADVISORS.

There is no front-end sales charge for purchases of $1,000,000 or more, but if
you redeem your shares within one year of purchase you will pay a 1.00% deferred
sales charge, subject to the exceptions listed below. No sales charge applies to
reinvested dividends.

Reductions and Waivers of Sales Charges for A Class

You may qualify for a reduction or waiver of certain sales charges, but you or
your financial advisor must provide certain information, including the account
numbers of any accounts to be aggregated, to American Century at the time of
purchase in order to take advantage of such reduction or waiver.

You and your immediate family (your spouse and your children under the age of
21) may combine investments to reduce your A Class sales charge in the following
ways:

ACCOUNT AGGREGATION. Investments made by you and your immediate family may be
aggregated at each account's current market value if made for your own
account(s) and/or certain other accounts, such as:

* Certain trust accounts

* Solely controlled business accounts

* Single-participant retirement plans

* Endowments or foundations established and controlled by you or an
immediate family member

For purposes of aggregation, only investments made through individual-level
accounts, rather than accounts aggregated at the intermediary level, may be
included.

CONCURRENT PURCHASES. You may combine simultaneous purchases in A, B or C Class
shares of any two or more American Century Advisor Funds (funds that offer A, B
and C Class shares) to qualify for a reduced A Class sales charge.

RIGHTS OF ACCUMULATION. You may take into account the current value of your
existing holdings in A, B or C Class shares of any American Century Advisor Fund
to determine your A Class sales charge.

------
17

LETTER OF INTENT. A Letter of Intent allows you to combine all non-money market
fund purchases of all A, B and C Class shares you intend to make over a 13-month
period to determine the applicable sales charge. Such purchases will be valued
at their historical cost for this purpose. At your request, purchases made
during the previous 90 days may be included; however, capital appreciation,
capital gains and reinvested dividends do not apply toward these combined
purchases. A portion of your account will be held in escrow to cover additional
A Class sales charges that will be due if your total investments over the
13-month period do not qualify for the applicable sales charge reduction.

WAIVERS FOR CERTAIN INVESTORS. The sales charge on A Class shares may be waived
for:

* purchases by registered representatives and other employees of certain
financial intermediaries (and their immediate family members) having sales
agreements with the advisor or distributor

* wrap accounts maintained for clients of certain financial intermediaries
who have entered into agreements with American Century

* present or former officers, directors and employees (and their families)
of American Century

* qualified retirement plan purchases

* IRA Rollovers from any American Century Advisor Fund held in a qualified
retirement plan

* certain other investors as deemed appropriate by American Century

B Class

B Class shares are sold at their net asset value without an initial sales
charge. For sales of B Class shares, the amount paid to your financial advisor
is 4.00% of the amount invested. If you redeem your shares within six years of
purchase date you will pay a contingent deferred sales charge (CDSC), as set
forth below. The purpose of the CDSC is to permit the fund's distributor to
recoup all or a portion of the up-front payment made to your financial advisor.
There is no CDSC on shares acquired through reinvestment of dividends or capital
gains.

REDEMPTION DURING CDSC AS A % OF ORIGINAL PURCHASE PRICE
--------------------------------------------------------------------------------
1st year 5.00%
--------------------------------------------------------------------------------
2nd year 4.00%
--------------------------------------------------------------------------------
3rd year 3.00%
--------------------------------------------------------------------------------
4th year 3.00%
--------------------------------------------------------------------------------
5th year 2.00%
--------------------------------------------------------------------------------
6th year 1.00%
--------------------------------------------------------------------------------
After 6th year None
--------------------------------------------------------------------------------

B Class shares (which carry a 1.00% 12b-1 fee) will automatically convert to A
Class shares (which carry a 0.25% 12b-1 fee) in the month of the eight-year
anniversary of the purchase date.

C Class

C Class shares are sold at their net asset value without an initial sales
charge. For sales of C Class shares, the amount paid to your financial advisor
is 1.00% of the amount invested. If you redeem your shares within 12 months of
purchase you will pay a CDSC of 1.00% of the original purchase price or the
current market value at redemption, whichever is less. The purpose of the CDSC
is to permit the fund's distributor to recoup all or a portion of the up-front
payment made to your financial advisor.

------
18

The CDSC will not be charged on shares acquired through reinvestment of
dividends or distributions or increases in the net asset value of shares.

CALCULATION OF CONTINGENT DEFERRED SALES CHARGE (CDSC)

To minimize the amount of the CDSC you may pay when you redeem shares, the fund
will first redeem shares acquired through reinvested dividends and capital gain
distributions, which are not subject to a CDSC. Shares that have been in your
account long enough that they are not subject to a CDSC are redeemed next. For
any remaining redemption amount, shares will be sold in the order they were
purchased (earliest to latest).

CDSC WAIVERS

Any applicable CDSC may be waived in the following cases:

* redemptions through systematic withdrawal plans not exceeding annually:

* 12% of the lesser of the original purchase cost or current market
value for A Class shares

* 12% of the original purchase cost for B Class shares

* 12% of the lesser of the original purchase cost or current market
value for C Class shares

* distributions from IRAs due to attainment of age 59-1/2 for A Class and C
Class shares

* required minimum distributions from retirement accounts upon reaching age
70-1/2

* tax-free returns of excess contributions to IRAs

* redemptions due to death or post-purchase disability

* exchanges, unless the shares acquired by exchange are redeemed within the
original CDSC period

* IRA Rollovers from any American Century Advisor Fund held in a qualified
retirement plan, for A Class shares only

* if no broker was compensated for the sale

REINSTATEMENT PRIVILEGE

Within 90 days of a redemption of any A or B Class shares, you may reinvest all
of the redemption proceeds in A Class shares of any American Century Advisor
Fund at the then-current net asset value without paying an initial sales charge.
Any CDSC you paid on an A Class redemption that you are reinvesting will be
credited to your account. You or your financial advisor must notify the fund's
transfer agent in writing at the time of the reinvestment to take advantage of
this privilege, and you may use it only once.

EXCHANGING SHARES

You may exchange shares of a fund for shares of the same class of another
American Century Advisor Fund without a sales charge if you meet the following
criteria:

* The exchange is for a minimum of $100

* For an exchange that opens a new account, the amount of the exchange must
meet or exceed the minimum account size requirement for the fund receiving
the exchange

For purposes of computing any applicable CDSC on shares that have been
exchanged, the holding period will begin as of the date of purchase of the
original fund owned. Exchanges from a money market fund are subject to a sales
charge on the fund being purchased, unless the money market fund shares were
acquired by exchange from a fund with a sales charge or by reinvestment of
dividends or capital gains distributions.

------
19

BUYING AND SELLING SHARES

Your ability to purchase, exchange, redeem and transfer shares will be affected
by the policies of the financial intermediary through which you do business.
Some policy differences may include

* minimum investment requirements

* exchange policies

* fund choices

* cutoff time for investments

* trading restrictions

In addition, your financial intermediary may charge a transaction fee for the
purchase or sale of fund shares. Please contact your intermediary or plan
sponsor for a complete description of its policies. Copies of a fund's annual
report, semiannual report and statement of additional information are available
from your intermediary or plan sponsor.

The funds have authorized certain FINANCIAL INTERMEDIARIES to accept orders on
the funds' behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on a fund's behalf before the time the net asset value is
determined in order to receive that day's share price. If those orders are
transmitted to American Century and paid for in accordance with the contract,
they will be priced at the net asset value next determined after your request is
received in the form required by the intermediary.

[graphic of triangle]

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS, INSURANCE

COMPANIES AND INVESTMENT ADVISORS.

MODIFYING OR CANCELING AN INVESTMENT

ABUSIVE TRADING PRACTICES

------
20

Because of the potentially harmful effects of abusive trading practices, the
funds' Board of Directors has approved American Century's abusive trading
policies and procedures, which are designed to reduce the frequency and effect
of these activities in our funds. These policies and procedures include
monitoring trading activity, imposing trading restrictions on certain accounts,
imposing redemption fees on certain funds, and using fair value pricing when
current market prices are not readily available. Although these efforts are
designed to discourage abusive trading practices, they cannot eliminate the
possibility that such activity will occur. American Century seeks to exercise
its judgment in implementing these tools to the best of its abilities in a
manner that it believes is consistent with shareholder interests.

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

* within seven days of the purchase, or

* within 30 days of the purchase, if it happens more than once per year.

American Century's policies do not permit us to enter into arrangements with
fund shareholders that permit such shareholders to engage in frequent purchases
and redemptions of fund shares. Due to the complexity and subjectivity involved
in identifying abusive trading activity and the volume of shareholder
transactions American Century handles, there can be no assurance that American
Century's efforts will identify all trades or trading practices that may be
considered abusive. In addition, American Century's ability to monitor trades
that are placed by individual shareholders within group, or omnibus, accounts
maintained by financial intermediaries is severely limited because American
Century generally does not have access to the underlying shareholder account
information. However, American Century monitors aggregate trades placed in
omnibus accounts and seeks to work with financial intermediaries to discourage
shareholders from engaging in abusive trading practices and to impose
restrictions on excessive trades. There may be limitations on the ability of
financial intermediaries to impose restrictions on the trading practices of
their clients. As a result, American Century's ability to monitor and discourage
abusive trading practices in omnibus accounts may be limited.

------
21

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

REDEMPTIONS

If you sell your B and C Class or, in certain cases, A Class shares within a
certain time after their purchase, you will pay a sales charge the amount of
which is contingent upon the amount of time you have held your shares, as
described above. Your redemption proceeds will be calculated using the NET ASSET
VALUE (NAV) next determined after we receive your transaction request in good
order.

[graphic of triangle]

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S SHARES.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

------
22

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum initial investment amount for
any reason other than as a result of market fluctuation, we will notify you and
give you 90 days to meet the minimum. If you do not meet the deadline, American
Century reserves the right to redeem the shares in the account and send the
proceeds to your address of record. Please note that shares redeemed in this
manner may be subject to a sales charge if held less than the applicable time
period. You also may incur tax liability as a result of the redemption.

SIGNATURE GUARANTEES

A signature guarantee - which is different from a notarized signature - is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

* Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

* Your redemption proceeds or distribution amount is sent by wire or EFT to
a destination other than your personal bank account

* You are transferring ownership of an account over $100,000

We reserve the right to require a signature guarantee for other transactions, at
our discretion.

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

RIGHT TO CHANGE POLICIES

------
23

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

* for funds that invest in debt securities, a debt security has been
declared in default; or

* trading in a security has been halted during the trading day.

------
24

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

DISTRIBUTIONS

[graphic of triangle]

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH AS
STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

------
25

TAXES

Tax-Deferred Accounts

Taxable Accounts

If you own fund shares through a taxable account, you may be taxed on your
investments if the fund makes distributions or if you sell your fund shares.

Taxability of Distributions

[graphic of triangle]

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY A FUND FROM THE
STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED THAT THE
FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

TAX RATE FOR 10% TAX RATE FOR
TYPE OF DISTRIBUTION AND 15% BRACKETS ALL OTHER BRACKETS
--------------------------------------------------------------------------------
Short-term capital gains Ordinary Income Ordinary Income
--------------------------------------------------------------------------------
Long-term capital gains (> 1 year)
and Qualified Dividend Income 5% 15%
--------------------------------------------------------------------------------

------
26

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

Taxes on Transactions

Buying a Dividend

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

------
27

MULTIPLE CLASS INFORMATION

American Century offers the following classes of shares of the funds through
financial intermediaries:

* Capital Growth - Investor Class, Institutional Class, A Class, B Class, C
Class and R Class

* New Opportunities II - Investor Class, Institutional Class, A Class, B
Class and C Class

* Select - Investor Class, Institutional Class, Advisor Class, A Class, B
Class, C Class and R Class

The shares offered by this prospectus are A, B, C and R (for Capital Growth and
Select only) and Advisor (for Select only) Class shares, which are offered
primarily through employer-sponsored retirement plans or through institutions
like investment advisors, banks, broker-dealers and insurance companies.

You also can contact a sales representative or financial intermediary who offers
those classes of shares.

------
28

Service, Distribution and Administrative Fees

Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. Each class offered by this prospectus has a 12b-1 plan. The plans
provide for the funds to pay annual fees of 0.25% for A Class, 1.00% for B and C
Class, and 0.50% for Advisor Class and R Class to the distributor for certain
ongoing shareholder and administrative services and for distribution services,
including past distribution services. Under the Advisor Class Plan, the funds'
Advisor Class pays the distributor an annual fee of 0.50% of Advisor Class
average net assets, half for certain ongoing shareholder and administrative
services and half for distribution services, including past distribution
services. The distributor pays all or a portion of such fees to the investment
advisors, banks, broker-dealers and insurance companies that make the classes
available. Because these fees are used to pay for services that are not related
to prospective sales of the funds, each class will continue to make payments
under its plan even if it is closed to new investors. Because these fees are
paid out of the funds' assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than other types of
sales charges. The higher fees for B and C Class shares may cost you more over
time than paying the initial sales charge for A Class shares. For additional
information about the plans and their terms, see MULTIPLE CLASS STRUCTURE in the
statement of additional information.

------
29

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years, or less if the share class is not five years old. Because the
R Class shares of Capital Growth and Select are new, financial information is
not available for these classes.

On a per-share basis, each table includes as appropriate

* share price at the beginning of the period

* investment income and capital gains or losses

* distributions of income and capital gains paid to investors

* share price at the end of the period

Each table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage
of average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio
that is replaced during the period

------
30

SELECT FUND
Advisor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
-------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
-------------------------------------------------------------------------------------------------
PER-SHARE DATA
-------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.43 $33.49 $28.66 $34.68 $52.01 $53.19
-------------------------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Income (Loss)(2) 0.10 (0.09) (0.07) (0.02) (0.04) (0.21)
--------------------------------------
Net Realized and 0.33 1.03 4.90 (6.00) (14.50) 4.13
Unrealized Gain (Loss)
-------------------------------------------------------------------------------------------------
Total From Investment 0.43 0.94 4.83 (6.02) (14.54) 3.92
Operations
-------------------------------------------------------------------------------------------------
Distributions
--------------------------------------
From Net Investment Income - - -(3) - - -
---------------------------------------
From Net Realized Gains - - - - (2.79) (5.10)
-------------------------------------------------------------------------------------------------
Total Distributions - - -(3) - (2.79) (5.10)
-------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $34.86 $34.43 $33.49 $28.66 $34.68 $52.01
=================================================================================================
TOTAL RETURN(4) 1.25% 2.81% 16.86% (17.36)% (29.18)% 7.54%

RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.25%(5) 1.25% 1.25% 1.25% 1.25% 1.25%
--------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.59%(5) (0.26)% (0.22)% (0.04)% (0.10)% (0.36)%
--------------------------------------
Portfolio Turnover Rate 33% 48% 84% 168% 98% 67%
--------------------------------------
Net Assets, End of Period
(in thousands) $25,262 $22,626 $29,152 $20,432 $23,389 $22,239
-------------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) PER-SHARE AMOUNT IS LESS THAN $0.005.

(5) ANNUALIZED.

------
31

CAPITAL GROWTH FUND
A Class

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) FEBRUARY 27, 2004 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2004.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

------
32

NEW OPPORTUNITIES II FUND
A Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.26 $5.74 $4.15
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Loss(3) (0.04) (0.08) (0.05)
--------------------------------------
Net Realized and (0.11) 0.60 1.64
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment Operations (0.15) 0.52 1.59
--------------------------------------------------------------------------------
Distributions
--------------------------------------
From Net Realized Gains (0.16) - -
--------------------------------------------------------------------------------
Net Asset Value, End of Period $5.95 $6.26 $5.74
================================================================================
TOTAL RETURN(4) (2.70)% 9.06% 38.31%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.75%(5) 1.75% 1.75%(5)
--------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.10)%(5) (1.34)% (1.47)%(5)
--------------------------------------
Portfolio Turnover Rate 130% 255% 236%(6)
--------------------------------------
Net Assets, End of Period
(in thousands) $37,548 $20,337 $891
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JANUARY 31, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
33

SELECT FUND
A Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.66 $33.72 $27.75
--------------------------------------------------------------------------------
Income From Investment Operations
----------------------------------------
Net Investment Income (Loss)(3) 0.10 (0.10) (0.14)
----------------------------------------
Net Realized and 0.33 1.04 6.11
Unrealized Gain
--------------------------------------------------------------------------------
Total From Investment 0.43 0.94 5.97
Operations
--------------------------------------------------------------------------------
Net Asset Value, End of Period $35.09 $34.66 $33.72
================================================================================
TOTAL RETURN(4) 1.24% 2.79% 21.51%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.25%(5) 1.25% 1.25%(5)
----------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.59%(5) (0.26)% (0.56)%(5)
----------------------------------------
Portfolio Turnover Rate 33% 48% 84%(6)
----------------------------------------
Net Assets, End of Period
(in thousands) $38,377 $32,624 $10,305
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JANUARY 31, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
34

CAPITAL GROWTH FUND
B Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
--------------------------------------------------------------------------------
2005(1) 2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.84 $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
----------------------------------------
Net Investment Loss(3) (0.02) (0.08)
----------------------------------------
Net Realized and 0.10 (0.08)
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment 0.08 (0.16)
Operations
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.92 $9.84
================================================================================
TOTAL RETURN(4) 0.81% (1.60)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.02%(5) 2.00%(5)
----------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.34)%(5) (1.17)%(5)
----------------------------------------
Portfolio Turnover Rate 44% 87%
----------------------------------------
Net Assets, End of Period
(in thousands) $569 $450
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) FEBRUARY 27, 2004 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2004.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

------
35

NEW OPPORTUNITIES II FUND
B Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.18 $5.71 $4.15
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Loss(3) (0.06) (0.13) (0.08)
--------------------------------------
Net Realized and (0.11) 0.60 1.64
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment (0.17) 0.47 1.56
Operations
--------------------------------------------------------------------------------
Distributions
--------------------------------------
From Net Realized Gains (0.11) - -
--------------------------------------------------------------------------------
Net Asset Value, End of Period $5.90 $6.18 $5.71
================================================================================
TOTAL RETURN(4) (2.99)% 8.23% 37.59%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50%(5) 2.50% 2.50%(5)
--------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.85)%(5) (2.09)% (2.20)%(5)
--------------------------------------
Portfolio Turnover Rate 130% 255% 236%(6)
--------------------------------------
Net Assets, End of Period
(in thousands) $1,911 $1,163 $215
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JANUARY 31, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
36

SELECT FUND
B Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.21 $33.53 $27.75
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Loss(3) (0.03) (0.35) (0.31)
--------------------------------------
Net Realized and 0.33 1.03 6.09
Unrealized Gain
--------------------------------------------------------------------------------
Total From Investment Operations 0.30 0.68 5.78
--------------------------------------------------------------------------------
Net Asset Value, End of Period $34.51 $34.21 $33.53
================================================================================
TOTAL RETURN(4) 0.88% 2.03% 20.83%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00%(5)
--------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.16)%(5) (1.01)% (1.28)%(5)
--------------------------------------
Portfolio Turnover Rate 33% 48% 84%(6)
--------------------------------------
Net Assets, End of Period
(in thousands) $2,380 $2,273 $1,032
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JANUARY 31, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
37

CAPITAL GROWTH FUND
C Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
--------------------------------------------------------------------------------
2005(1) 2004(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $9.84 $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
----------------------------------------
Net Investment Loss(3) (0.02) (0.08)
----------------------------------------
Net Realized and 0.10 (0.08)
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment Operations 0.08 (0.16)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.92 $9.84
================================================================================
TOTAL RETURN(4) 0.81% (1.60)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.02%(5) 2.00%(5)
----------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.34)%(5) (1.18)%(5)
----------------------------------------
Portfolio Turnover Rate 44% 87%
----------------------------------------
Net Assets, End of Period
(in thousands) $507 $343
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) FEBRUARY 27, 2004 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2004.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

------
38

NEW OPPORTUNITIES II FUND
C Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.20 $5.73 $4.15
--------------------------------------------------------------------------------
Income From Investment Operations
-------------------------------------
Net Investment Loss(3) (0.06) (0.13) (0.07)
-------------------------------------
Net Realized and (0.11) 0.60 1.65
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment Operations (0.17) 0.47 1.58
--------------------------------------------------------------------------------
Distributions
-------------------------------------
From Net Realized Gains (0.11) - -
--------------------------------------------------------------------------------
Net Asset Value, End of Period $5.92 $6.20 $5.73
================================================================================
TOTAL RETURN(4) (2.98)% 8.20% 38.07%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50%(5) 2.50% 2.22%(5)(6)
-------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.85)%(5) (2.09)% (1.97)%(5)(6)
-------------------------------------
Portfolio Turnover Rate 130% 255% 236%(7)
-------------------------------------
Net Assets, End of Period
(in thousands) $2,180 $1,294 $34
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JANUARY 31, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

(6) DURING A PORTION OF THE PERIOD ENDED OCTOBER 31, 2003, THE DISTRIBUTOR
AGREED TO VOLUNTARILY WAIVE THE DISTRIBUTION AND SERVICE FEES. HAD FEES NOT
BEEN WAIVED THE ANNUALIZED RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE ANNUALIZED RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.50% AND (2.25)%, RESPECTIVELY.

(7) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
39

SELECT FUND
C Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $34.23 $33.56 $27.75
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Loss(3) (0.04) (0.36) (0.31)
--------------------------------------
Net Realized and Unrealized Gain 0.34 1.03 6.12
--------------------------------------------------------------------------------
Total From Investment Operations 0.30 0.67 5.81
--------------------------------------------------------------------------------
Net Asset Value, End of Period $34.53 $34.23 $33.56
================================================================================
TOTAL RETURN(4) 0.85% 2.03% 20.94%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00%(5)
--------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.16)%(5) (1.01)% (1.28)%(5)
--------------------------------------
Portfolio Turnover Rate 33% 48% 84%(6)
--------------------------------------
Net Assets, End of Period
(in thousands) $3,647 $3,733 $1,136
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JANUARY 31, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
40

NOTES

------
41

MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

Statement of Additional Information (SAI)

You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room, Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET * EDGAR database at sec.gov

* By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section, Washington, D.C. 20549-0102

FUND REFERENCE FUND CODE TICKER NEWSPAPER LISTING
--------------------------------------------------------------------------------
Capital Growth
A Class 129 ACCGX N/A
--------------------------------------------------------------------------------
B Class 329 ACGBX N/A
--------------------------------------------------------------------------------
C Class 429 ACPGX N/A
--------------------------------------------------------------------------------
R Class 232 N/A N/A
--------------------------------------------------------------------------------

New Opportunities II
A Class 106 ANOAX NewOppII
--------------------------------------------------------------------------------
B Class 306 ANOBX NewOppII
--------------------------------------------------------------------------------
C Class 436 ANOCX NewOppII
--------------------------------------------------------------------------------
Select
A Class 121 AASLX Select
--------------------------------------------------------------------------------
B Class 302 ABSLX Select
--------------------------------------------------------------------------------
C Class 412 ACSLX Select
--------------------------------------------------------------------------------
R Class 123 N/A Select
--------------------------------------------------------------------------------

Advisor Class 721 TWCAX Select
--------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419786
Kansas City, Missouri 64141-6786
1-800-378-9878

0507
SH-PRS-43932

July 29, 2005

American Century Investments
prospectus

Advisor Class
Growth Fund
Heritage Fund
Ultra® Fund
Vista(sm) Fund

C Class
Growth Fund
Heritage Fund
Ultra® Fund
Vista(sm) Fund

R Class
Growth Fund
Ultra® Fund
Vista(sm) Fund

THE SECURITIES AND EXCHANGE COMMISSIONHAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century Investment
Services, Inc., Distributor

[american century investments logo and text logo]

Dear Investor:

We believe our relationship with you begins with an easy-to-read prospectus that
provides you with the information you need to feel confident about your
investment decisions.

Naturally, you may have questions about investing after you read through the
prospectus. Please contact your investment professional with questions or for
more information about our funds.

Sincerely,

/s/Brian Jeter

Brian Jeter
Senior Vice President
Third Party Sales and Services
American Century Investment Services, Inc.

American Century Investments
P.O. Box 419786, Kansas City, MO 64141-6786

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

Table of Contents

AN OVERVIEW OF THE FUNDS . . . . . . . . . . . . . . . .2

FUND PERFORMANCE HISTORY . . . . . . . . . . . . . . . .3

FEES AND EXPENSES . . . . . . . . . . .. . . . . . . . .7

OBJECTIVES, STRATEGIES AND RISKS . . . . . . . . . . . .9
Growth Fund and Ultra Fund . . . . . . . . . . . . . 9
Heritage Fund and Vista Fund . . . . . . . . . . . .11

MANAGEMENT . . . . . . . . . . .. . . . . . . . . . . .13

INVESTING WITH AMERICAN CENTURY . . . . . . . . . . . .16

SHARE PRICE AND DISTRIBUTIONS . . . . . . . . . . .. . 21

TAXES . . . . . . . . . . .. . . . . . . . . . . . . . 23

MULTIPLE CLASS INFORMATION . . . . . . . . . . . . . . 25

FINANCIAL HIGHLIGHTS . . . . . . . . . . . . . . . . . 27

[graphic of triangle]

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT DEFINITIONS OF KEY
INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL INFORMATION.

AN OVERVIEW OF THE FUNDS

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The portfolio managers for Growth and Ultra use a variety of analytical research
tools and techniques to identify the stocks of larger-sized companies that meet
their investment criteria. Under normal market conditions, the funds' portfolios
will primarily consist of securities of companies whose earnings or revenues are
not only growing, but growing at an accelerating pace.

The portfolio managers for Heritage and Vista look for stocks of medium-sized
and smaller companies. Their principal analytical technique involves the
identification of companies with earnings and revenues that are not only
growing, but growing at an accelerating pace.

The funds' principal risks include

* MARKET RISK - The value of a fund's shares will go up and down based on
the performance of the companies whose securities it owns and other factors
generally affecting the securities market.

* PRICE VOLATILITY - The value of a fund's shares may fluctuate
significantly in the short term.

* PRINCIPAL LOSS - At any given time your shares may be worth more or less
than the price you paid for them. In other words, it is possible to lose
money by investing in the funds.

* FOREIGN SECURITIES - A fund may invest in foreign securities, which can be
riskier than investing in U.S. securities.

A more detailed description of the funds' investment strategies and risks may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
9.

[graphic of triangle]

AN INVESTMENT IN THE FUNDS IS NOT A BANK DEPOSIT, AND IT IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY
OTHER GOVERNMENT AGENCY.

------
2

FUND PERFORMANCE HISTORY

GROWTH FUND
HERITAGE FUND
ULTRA FUND
VISTA FUND

Annual Total Returns

The following bar charts show the performance of the funds' Advisor Class shares
for each full calendar year in the life of the class. They indicate the
volatility of the funds' historical returns from year to year. The returns of
the funds' other classes of shares will differ from those shown in the charts
depending on the expenses of those classes.

GROWTH FUND - ADVISOR CLASS

[data from bar chart]

1998 36.49%
1999 34.24%
2000 -14.92%
2001 -18.97%
2002 -26.34%
2003 24.16%
2004 9.62%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
Growth 23.51% (4Q 1999) -19.38% (1Q 2001)
--------------------------------------------------------------------------------

HERITAGE FUND - ADVISOR CLASS

[data from bar chart]

1998 -0.31%
1999 50.79%
2000 17.14%
2001 -25.86%
2002 -16.14%
2003 21.24%
2004 6.84%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
Heritage 40.26% (4Q 1999) -21.20% (3Q 1998)
--------------------------------------------------------------------------------

------
3

ULTRA FUND - ADVISOR CLASS

[data from bar chart]

1997 22.83%
1998 34.21%
1999 41.31%
2000 -20.07%
2001 -14.88%
2002 -23.39%
2003 25.59%
2004 10.38%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
Ultra 32.18% (4Q 1999) -17.52% (1Q 2001)
--------------------------------------------------------------------------------

VISTA FUND - ADVISOR CLASS

[data from bar chart]

1997 -8.82%
1998 -14.45%
1999 119.06%
2000 -1.22%
2001 -27.90%
2002 -21.07%
2003 42.35%
2004 15.52%

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST
--------------------------------------------------------------------------------
Vista 72.64% (4Q 1999) -27.55% (3Q 1998)
--------------------------------------------------------------------------------

Average Annual Total Returns

The following table shows the average annual total returns of the funds' Advisor
Class shares calculated three different ways. An additional table shows the
average annual total returns of the funds' C Class and R Class shares calculated
before the impact of taxes. Because the R Class of Vista was not in operation as
of the calendar year end, it is not included.

------
4

After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs. After-tax
returns are shown only for the Advisor Class shares. After-tax returns for the C
Class and R Class will vary.

The benchmarks are unmanaged indices that have no operating costs and are
included in the table for performance comparison.

ADVISOR CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR 5 YEAR CLASS(1)
--------------------------------------------------------------------------------
Growth
Return Before Taxes 9.62% -7.12% 5.21%
Return After Taxes on Distributions 9.62% -7.63% 3.39%
Return After Taxes on Distributions
and Sale of Fund Shares 6.25% -5.98% 3.96%
Russell 1000® Growth Index 6.30% -9.29% 3.39%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Heritage
Return Before Taxes 6.84% -1.16% 4.95%
Return After Taxes on Distributions 6.84% -2.32% 2.89%
Return After Taxes on Distributions
and Sale of Fund Shares 4.45% -1.43% 3.25%
Russell Midcap® Index 20.22% 7.59% 10.30%(3)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Ultra
Return Before Taxes 10.38% -6.29% 6.58%
Return After Taxes on Distributions 10.38% -6.76% 5.02%
Return After Taxes on Distributions
and Sale of Fund Shares 6.75% -5.33% 5.07%
S&P 500 Index 10.88% -2.30% 8.68%(4)
(reflects no deduction for fees,
expenses or taxes)
Russell 1000® Growth Index 6.30% -9.29% 5.57%(4)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Vista
Return Before Taxes 15.52% -1.56% 4.78%
Return After Taxes on Distributions 15.52% -3.05% 3.18%
Return After Taxes on Distributions
and Sale of Fund Shares 10.09% -1.87% 3.41%
Russell Midcap® Growth Index 15.48% -3.36% 8.04%(4)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATES FOR THE ADVISOR CLASS OF THE FUNDS ARE GROWTH,
JUNE 4, 1997; ULTRA AND VISTA, OCTOBER 2, 1996; AND HERITAGE, JULY 11,
1997.

(2) SINCE MAY 31, 1997, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

(3) SINCE JULY 10, 1997, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

(4) SINCE OCTOBER 3, 1996, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

------
5

C CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Growth
Return Before Taxes 8.81% -0.40%
Russell 1000® Growth Index 6.30% -0.23%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Heritage
Return Before Taxes 5.93% -2.33%
Russell Midcap® Index 20.22% 9.51%(3)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Ultra
Return Before Taxes 9.60% 3.71%
S&P 500 Index 10.88% 4.87%(4)
(reflects no deduction for fees,
expenses or taxes)
Russell 1000® Growth Index 6.30% 1.24%(4)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Vista
Return Before Taxes 14.62% 4.45%
Russell Midcap® Growth Index 15.48% 4.88%(5)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATES FOR THE C CLASS OF THE FUNDS ARE GROWTH, NOVEMBER
28, 2001; ULTRA, OCTOBER 29, 2001; VISTA, JULY 18, 2001; AND HERITAGE,
JUNE 26, 2001.

(2) SINCE NOVEMBER 30, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

(3) SINCE JUNE 28, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

(4) SINCE OCTOBER 25, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

(5) SINCE JULY 31, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

R CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2004 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Growth
Return Before Taxes 9.32% 13.32%
Russell 1000® Growth Index 6.30% 11.86%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
Ultra
Return Before Taxes 10.18% 13.07%
S&P 500 Index 10.88% 16.84%(2)
(reflects no deduction for fees,
expenses or taxes)
Russell 1000® Growth Index 6.30% 11.86%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------

(1) THE INCEPTION DATES FOR THE R CLASS OF THE FUNDS ARE GROWTH, AUGUST
29, 2003; ULTRA, AUGUST 29, 2003.

(2) SINCE AUGUST 31, 2003, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR
WHICH DATA IS AVAILABLE.

Performance information is designed to help you see how fund returns can vary.
Keep in mind that past performance (before and after taxes) does not predict how
a fund will perform in the future.

For current performance information, please call us at 1-800-378-9878.

------
6

FEES AND EXPENSES

There are no sales loads, fees or other charges

* to buy fund shares directly from American Century

* to reinvest dividends in additional shares

* to exchange into the same class of shares of other American Century funds

* to redeem your shares (other than a $10 fee to redeem by wire and the
deferred sales charges associated with C Class shares redeemed during the
first year after purchase)

The following table describes the fees and expenses you may pay if you buy and
hold shares of the funds.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
--------------------------------------------------------------------------------
C Class (All funds)
Maximum Deferred Sales Charge (load) 1.00%(1)
(as a percentage of net asset value)
--------------------------------------------------------------------------------

(1) THE DEFERRED SALES CHARGE IS CONTINGENT ON THE LENGTH OF TIME YOU HAVE
OWNED YOUR SHARES. THE CHARGE IS 1.00% DURING THE FIRST YEAR AFTER PURCHASE
AND IS ELIMINATED THEREAFTER.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEE (12B-1) FEES EXPENSES EXPENSES
--------------------------------------------------------------------------------
Growth
Advisor
Class 0.75%(1) 0.50%(2) 0.00%(3) 1.25%
--------------------------------------------------------------------------------
C Class 1.00%(1) 1.00%(4) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
R Class 1.00%(1) 0.50%(4) 0.00%(3) 1.50%
--------------------------------------------------------------------------------
Heritage
Advisor
Class 0.75% 0.50%(2) 0.00%(3) 1.25%
--------------------------------------------------------------------------------
C Class 1.00% 1.00%(4) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
Ultra
Advisor
Class 0.74%(1) 0.50%(2) 0.00%(3) 1.24%
--------------------------------------------------------------------------------
C Class 0.99%(1) 1.00%(4) 0.00%(3) 1.99%
--------------------------------------------------------------------------------
R Class 0.99%(1) 0.50%(4) 0.00%(3) 1.49%
--------------------------------------------------------------------------------
Vista
Advisor
Class 0.75% 0.50%(2) 0.00%(3) 1.25%
--------------------------------------------------------------------------------
C Class 1.00% 1.00%(4) 0.00%(3) 2.00%
--------------------------------------------------------------------------------
R Class 1.00% 0.50%(4) 0.00%(5) 1.50%
--------------------------------------------------------------------------------

(1) BASED ON ASSETS DURING A FUND'S MOST RECENT FISCAL YEAR. THE FUNDS
HAVE STEPPED FEE SCHEDULES. AS A RESULT, THE FUNDS' MANAGEMENT FEE RATES
GENERALLY DECREASE AS STRATEGY ASSETS INCREASE AND INCREASE AS STRATEGY
ASSETS DECREASE. SEE The Investment Advisor UNDER Management FOR AN
EXPLANATION OF STRATEGY ASSETS.

(2) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES
THROUGH BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. HALF OF THE ADVISOR CLASS 12B-1 FEE (0.25%) IS FOR ONGOING
RECORDKEEPING AND ADMINISTRATIVE SERVICES PROVIDED BY FINANCIAL
INTERMEDIARIES, WHICH WOULD OTHERWISE BE PAID BY THE ADVISOR OUT OF THE
UNIFIED MANAGEMENT FEE. THE ADVISOR HAS REDUCED ITS UNIFIED MANAGEMENT FEE
FOR ADVISOR CLASS SHARES, BUT THE FEE FOR CORE INVESTMENT ADVISORY SERVICES
IS THE SAME FOR ALL CLASSES. FOR MORE INFORMATION, SEE Service,
Distribution and Administrative Fees, PAGE 26.

(3) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUNDS'
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, WERE
LESS THAN 0.005% FOR THE MOST RECENT FISCAL YEAR.

(4) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES
THROUGH BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. THE FEE MAY BE USED TO COMPENSATE SUCH FINANCIAL
INTERMEDIARIES FOR DISTRIBUTION AND OTHER SHAREHOLDER SERVICES. FOR MORE
INFORMATION, SEE Service, Distribution and Administrative Fees, PAGE 26.

(5) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUNDS'
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, ARE
EXPECTED TO BE LESS THAN 0.005% FOR THE CURRENT FISCAL YEAR.

------
7

EXAMPLE

* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above

. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Growth
Advisor
Class $127 $395 $683 $1,503
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------
Heritage
Advisor
Class $127 $395 $683 $1,503
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
Ultra
Advisor
Class $126 $392 $678 $1,492
--------------------------------------------------------------------------------
C Class $201 $620 $1,064 $2,295
--------------------------------------------------------------------------------
R Class $151 $469 $809 $1,767
--------------------------------------------------------------------------------
Vista
Advisor
Class $127 $395 $683 $1,503
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------

------
8

OBJECTIVES, STRATEGIES AND RISKS

GROWTH FUND
ULTRA FUND

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVE?

Using American Century's extensive computer database, as well as other primary
analytical research tools, the portfolio managers track financial information
for individual companies to identify and evaluate trends in earnings, revenues
and other business fundamentals. Under normal market conditions, the funds'
portfolios will primarily consist of securities of companies whose earnings or
revenues are not only growing, but growing at an accelerating pace. This
includes companies whose growth rates, although still negative, are less
negative than prior periods, and companies whose growth rates are expected to
accelerate. Other analytical techniques help identify additional signs of
business improvement, such as increasing cash flows, or other indications of the
relative strength of a company's business. These techniques help the portfolio
managers buy or hold the stocks of companies they believe have favorable growth
prospects and sell the stocks of companies whose characteristics no longer meet
their criteria.

A description of the policies and procedures with respect to the disclosure of
the funds' portfolio securities is available in the statement of additional
information.

------
9

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?

The funds will usually purchase common stocks, but they can purchase other types
of securities as well, such as domestic and foreign preferred stocks,
convertible debt securities, equity-equivalent securities, nonleveraged futures
contracts and options, notes, bonds and other debt securities, as discussed
above. The funds generally limit their purchase of debt securities to
investment-grade obligations.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

------
10

HERITAGE FUND
VISTA FUND

WHAT IS THE FUNDS' INVESTMENT OBJECTIVE?

These funds seek long-term capital growth.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVE?

The portfolio managers look for stocks of medium-sized and smaller companies
they believe will increase in value over time, using an investment strategy
developed by American Century. In implementing this strategy, the portfolio
managers use a bottom-up approach to stock selection. This means that the
managers make their investment decisions based primarily on their analysis of
individual companies, rather than on broad economic forecasts. Management of the
funds is based on the belief that, over the long term, stock price movements
follow growth in earnings and revenues.

Using American Century's extensive computer database, as well as other primary
analytical research tools, the portfolio managers track financial information
for thousands of individual companies to identify and evaluate trends in
earnings, revenues and other business fundamentals. The portfolio managers'
principal analytical technique involves the identification of companies with
earnings and revenues that are not only growing, but growing at an accelerating
pace. This includes companies whose growth rates, although still negative, are
less negative than prior periods, and companies whose growth rates are expected
to accelerate. These techniques help the portfolio managers buy or hold the
stocks of companies they believe have favorable growth prospects and sell the
stocks of companies whose characteristics no longer meet their criteria.

A description of the policies and procedures with respect to the disclosure of
the funds' portfolio securities is available in the statement of additional
information.

------
11

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?

The funds will usually purchase common stocks of U. S. and foreign companies
that are medium-sized and smaller at the time of purchase, but they can purchase
other types of securities as well. When determining the size of a company, the
portfolio managers will consider, among other factors, the capitalization of the
company and the amount of revenues, as well as other information they obtain
about the company. The funds also may invest in domestic and foreign preferred
stocks, convertible securities, equity-equivalent securities, nonleveraged
futures contracts and options, notes, bonds and other debt securities, as
discussed above. The funds generally limit their purchase of debt securities to
investment-grade obligations.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

------
12

MANAGEMENT

WHO MANAGES THE FUNDS?

The Board of Directors, investment advisor and fund management teams play key
roles in the management of the funds.

THE BOARD OF DIRECTORS

THE INVESTMENT ADVISOR

For the services it provides to each fund, the advisor receives a fee based on a
percentage of the daily net assets of each specific class of shares of each
fund. For a mutual fund with a stepped fee schedule, the rate of the fee is
determined by applying a fee rate calculation formula. This formula takes into
account all of the advisor's assets under management in the fund's investment
strategy ("strategy assets") to calculate the appropriate fee rate for the fund.
The strategy assets include the fund's assets and the assets of other clients of
the advisor that are not in the American Century family of mutual funds (such as
subadvised funds and separate accounts) but that have the same investment team
and investment strategy. The use of strategy assets, rather than fund assets, in
calculating the fee rate for a particular fund could allow a fund to realize
scheduled cost savings more quickly if the advisor acquires additional assets
under management within a strategy in addition to the fund's assets. However, it
is possible that the strategy assets for a fund will not include assets of other
client accounts. In addition, if there are such assets, they may not be
sufficient to result in a lower fee rate. The amount of the fee is calculated
daily and paid monthly in arrears. Vista's R Class will pay the advisor a
unified management fee of 1.00%.

MANAGEMENT FEES PAID BY THE FUNDS TO
THE ADVISOR AS A PERCENTAGE OF AVERAGE
NET ASSETS FOR THE MOST RECENT FISCAL ADVISOR C R
YEAR ENDED OCTOBER 31, 2004 CLASS CLASS CLASS
--------------------------------------------------------------------------------
Growth 0.75% 1.00% 1.00%
--------------------------------------------------------------------------------
Heritage 0.75% 1.00% N/A(1)
--------------------------------------------------------------------------------
Ultra 0.74% 0.99% 0.99%
--------------------------------------------------------------------------------
Vista 0.75% 1.00% N/A(2)
--------------------------------------------------------------------------------

(1) THIS FUND DOES NOT OFFER R CLASS SHARES.

(2) THE R CLASS OF THIS FUND HAD NOT COMMENCED OPERATIONS AS OF OCTOBER
31, 2004.

------
13

THE FUND MANAGEMENT TEAMS

The portfolio managers on the investment teams are identified below.

Growth

GREGORY J. WOODHAMS

Mr. Woodhams, Vice President and Senior Portfolio Manager, has been a member of
the team that manages Growth since he joined American Century in September 1997
as an Investment Analyst. He was promoted to Portfolio Manager for the Growth
team in May 1998. He has a bachelor's degree in economics from Rice University
and an M.A. in economics from the University of Wisconsin. He is a CFA
charterholder.

E. A. PRESCOTT LEGARD

Mr. LeGard, Vice President and Portfolio Manager, has been a member of the team
that manages Growth since March 2000. Before joining American Century in March
1999, he was an Analyst for USAA Investment Management from March 1998 to March
1999. He has a bachelor's degree in economics from DePauw University. He is a
CFA charterholder.

Heritage

KURT R. STALZER

Mr. Stalzer, Vice President and Portfolio Manager, has been a member of the team
that manages Heritage since joining American Century in January 2000. Before
joining American Century, he was a Portfolio Manager for Scudder Kemper
Investments from January 1997 to October 1999. He has a BBA with a concentration
in finance and accounting from the University of Michigan - Dearborn.

DAVID M. ROSE

Mr. Rose, Vice President and Portfolio Manager, has been a member of the team
that manages Heritage since March 2004. He joined American Century in July 1998
as an Investment Analyst. He has a bachelor's degree in business administration
from Washington University and an MS in finance, investments and banking from
the University of Wisconsin - Madison. He is a CFA charterholder.

Ultra

BRUCE A. WIMBERLY

Mr. Wimberly, Vice President and Senior Portfolio Manager, has been a member of
the team that manages Ultra since July 1996. He joined American Century in
September 1994 as an Investment Analyst. In 2000, he was named to his current
position. He has a bachelor of arts from Middlebury College and an MBA from the
Kellogg Graduate School of Management, Northwestern University.

WADE W. SLOME

Mr. Slome, Vice President and Portfolio Manager, has been a member of the team
that manages Ultra since June 1998. He was promoted to Portfolio Manager in July
2002. He joined American Century in June 1998 as an investment analyst. He holds
a bachelor's degree in economics from the University of California - Los
Angeles, and an MBA in finance from Cornell University. He is a CFA
charterholder.

------
14

JERRY SULLIVAN

Mr. Sullivan, Vice President and Portfolio Manager, has been a member of the
team that manages Ultra since July 2001. Before joining American Century in
February 2000, he was a Portfolio Manager with the Franklin Templeton Group from
March 1998 to October 1999. He has a bachelor's degree in political science from
Columbia College and an MBA with a concentration in finance and accounting from
the Columbia Graduate School of Business.

Vista

GLENN A. FOGLE

Mr. Fogle, Senior Vice President and Senior Portfolio Manager, has been a member
of the team that manages Vista since September 1990 and was promoted to
Portfolio Manager in March 1993. He joined American Century in September 1990 as
an Investment Analyst. In 2000, he was named Vice President and Senior Portfolio
Manager and in 2001, he was named to his current position. He has a bachelor of
business administration (management) and an MBA in finance from Texas Christian
University. He is a CFA charterholder.

DAVID M. HOLLOND

Mr. Hollond, Vice President and Portfolio Manager, has been a member of the team
that manages Vista since August 1998. He joined American Century in 1998 as an
Investment Analyst and was promoted to Portfolio Manager in March 2004. He has a
bachelor's degree in Russian and economics from Grinnell College, a master's
degree in economics from the University of Wisconsin, a master's degree in
international studies from the University of Pennsylvania and an MBA in finance
from The Wharton School at the University of Pennsylvania.

Code of Ethics

FUNDAMENTAL INVESTMENT POLICIES

------
15

INVESTING WITH AMERICAN CENTURY

ELIGIBILITY FOR ADVISOR CLASS, C CLASS AND R CLASS SHARES

The Advisor Class, C Class and R Class shares are intended for purchase by
participants in employer-sponsored retirement or savings plans and for persons
purchasing shares through broker-dealers, banks, insurance companies and other
financial intermediaries that provide various administrative and distribution
services.

MINIMUM INITIAL INVESTMENT AMOUNTS

To open an account, the minimum initial investment amounts for the funds are
$2,000 for a Coverdell Education Savings Account (CESA) and $2,500 for all other
accounts. Aggregate purchases are limited to amounts less than $1,000,000 for C
Class shares.

INVESTING THROUGH FINANCIAL INTERMEDIARIES

* minimum investment requirements

* exchange policies

* fund choices

* cutoff time for investments

* trading restrictions

[graphic of triangle]

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS, INSURANCE

COMPANIES AND INVESTMENT ADVISORS.

MODIFYING OR CANCELING AN INVESTMENT

------
16

ABUSIVE TRADING PRACTICES

Because of the potentially harmful effects of abusive trading practices, the
funds' Board of Directors has approved American Century's abusive trading
policies and procedures, which are designed to reduce the frequency and effect
of these activities in our funds. These policies and procedures include
monitoring trading activity, imposing trading restrictions on certain accounts,
imposing redemption fees on certain funds, and using fair value pricing when
current market prices are not readily available. Although these efforts are
designed to discourage abusive trading practices, they cannot eliminate the
possibility that such activity will occur. American Century seeks to exercise
its judgment in implementing these tools to the best of its abilities in a
manner that it believes is consistent with shareholder interests.

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

* within seven days of the purchase, or

* within 30 days of the purchase, if it happens more than once per year.

------
17

monitors aggregate trades placed in omnibus accounts and seeks to work with
financial intermediaries to discourage shareholders from engaging in abusive
trading practices and to impose restrictions on excessive trades. There may be
limitations on the ability of financial intermediaries to impose restrictions on
the trading practices of their clients. As a result, American Century's ability
to monitor and discourage abusive trading practices in omnibus accounts may be
limited.

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

REDEMPTIONS

If you sell your C Class shares within 12 months of their purchase, you will pay
a sales charge.

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order.

[graphic of triangle]

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S SHARES.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

------
18

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum initial investment amount for
any reason other than as a result of market fluctuation, we will notify you and
give you 90 days to meet the minimum. If you do not meet the deadline, American
Century reserves the right to redeem the shares in the account and send the
proceeds to your address of record. Please note that C Class shares redeemed in
this manner may be subject to a sales charge if held less than 12 months. You
also may incur tax liability as a result of the redemption.

SIGNATURE GUARANTEES

A signature guarantee - which is different from a notarized signature - is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

* Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

* Your redemption proceeds or distribution amount is sent by wire or EFT to
a destination other than your personal bank account

* You are transferring ownership of an account over $100,000

We reserve the right to require a signature guarantee for other transactions, at
our discretion.

CALCULATION OF CONTINGENT DEFERRED SALES CHARGE (CDSC)

C Class shares are sold at their net asset value without an initial sales
charge. For sales of C Class shares, the amount paid to your financial advisor
is 1.00% of the amount invested. If you redeem your shares within 12 months of
purchase, you will pay a CDSC of 1.00% of the original purchase price or the
current market value at redemption, whichever is less. The purpose of the CDSC
is to permit the funds' distributor to recoup all or a portion of the up-front
payment made to your financial advisor.

The CDSC will not be charged on shares acquired through reinvestment of
dividends or distributions or increases in the net asset value of shares.

The information regarding C Class sales charges provided herein is included free
of charge and in a clear and prominent format at americancentury.com in the
INVESTORS USING ADVISORS and INVESTMENT PROFESSIONALS portions of the Web site.
From the description of C Class shares, a hyperlink will take you directly to
this disclosure.

------
19

CDSC WAIVERS

Any applicable CDSC may be waived in the following cases:

* redemptions through systematic withdrawal plans not exceeding 12% annually
of the lesser of the original purchase cost or current market value

* distributions from IRAs due to attainment of age 59-1/2

* required minimum distributions from retirement accounts upon reaching age
70-1/2

* tax-free returns of excess contributions to IRAs

* redemptions due to death or post-purchase disability

* exchanges, unless the shares acquired by exchange are redeemed within the
original CDSC period

* if no broker was compensated for the sale

EXCHANGES BETWEEN FUNDS (C CLASS)

You may exchange C Class shares of a fund for C Class shares of any other
American Century fund. You may not exchange from the C Class to any other class.
We will not charge a CDSC on the shares you exchange, regardless of the length
of time you have owned them. When you do redeem shares that have been exchanged,
the CDSC will be based on the date you purchased the original shares.

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

RIGHT TO CHANGE POLICIES

------
20

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

* for funds that invest in debt securities, a debt security has been
declared in default; or

* trading in a security has been halted during the trading day.

------
21

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

DISTRIBUTIONS

[graphic of triangle]

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH AS
STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

------
22

TAXES

Tax-Deferred Accounts

Taxable Accounts

If you own fund shares through a taxable account, you may be taxed on your
investments if the fund makes distributions or if you sell your fund shares.

Taxability of Distributions

Fund distributions may consist of income, such as dividends and interest earned
by the fund from its investments, or capital gains generated by a fund from the
sale of investment securities. Distributions of income are taxed as ordinary
income, unless they are designated as QUALIFIED DIVIDEND INCOME and you meet a
minimum required holding period with respect to your shares of the fund, in
which case distributions of income are taxed as long-term capital gains.

[graphic of triangle]

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY THE FUND FROM THE
STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED THAT THE
FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

------
23

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

Taxes on Transactions

Buying a Dividend

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

------
24

MULTIPLE CLASS INFORMATION

American Century offers the following classes of shares of the funds:

* Growth - Investor Class, Institutional Class, Advisor Class, C Class and R
Class

* Heritage - Investor Class, Institutional Class, Advisor Class and C Class

* Ultra - Investor Class, Institutional Class, Advisor Class, C Class and R
Class

* Vista - Investor Class, Institutional Class, Advisor Class, C Class and R
Class

The shares offered by this prospectus are Advisor Class, C Class and R Class
shares and are offered primarily through employer-sponsored retirement plans, or
through institutions like banks, broker-dealers and insurance companies.

* 1-800-345-2021 for Investor Class shares

* 1-800-345-3533 for Institutional Class shares

You also can contact a sales representative or financial intermediary who offers
those classes of shares.

Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting that class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.

------
25

Service, Distribution and Administrative Fees

Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. The funds' Advisor Class, C Class and R Class shares have a 12b-1
Plan. The plans provide for the funds to pay annual fees of 1.00% for C Class
and 0.50% for Advisor and R Class to the distributor for certain ongoing
shareholder and administrative services and for distribution services, including
past distribution services. Under the Advisor Class Plan, each fund's Advisor
Class pays the distributor an annual fee of 0.50% of Advisor Class average net
assets, half for certain shareholder and administrative services and half for
distribution services, including past distribution services. The distributor
pays all or a portion of such fees to the investment advisors, banks,
broker-dealers and insurance companies that make the classes available. Because
these fees are used to pay for services that are not related to prospective
sales of the funds, each class will continue to make payments under its plan
even if it is closed to new investors. Because these fees are paid out of the
funds' assets on an ongoing basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges. For additional information about the plans and their terms, see
MULTIPLE CLASS STRUCTURE - MASTER DISTRIBUTION AND SHAREHOLDER SERVICES PLAN in
the statement of additional information.

------
26

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years or less, if the share class is not five years old. Because the
R Class shares for Vista are new, financial information is not available for
this class.

On a per-share basis, each table includes as appropriate

* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to investors
* share price at the end of the period

Each table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage
of average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio
that is replaced during the period

------
27

GROWTH FUND
Advisor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
-----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
-----------------------------------------------------------------------------------------------
PER-SHARE DATA
-----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $18.22 $17.11 $14.70 $17.78 $31.01 $31.52
-----------------------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Income (Loss)(2) 0.05 (0.06) (0.03) (0.05) (0.06) (0.19)
--------------------------------------
Net Realized and 0.17 1.17 2.44 (3.03) (9.66) 3.73
Unrealized Gain (Loss)
-----------------------------------------------------------------------------------------------
Total From Investment Operations 0.22 1.11 2.41 (3.08) (9.72) 3.54
-----------------------------------------------------------------------------------------------
Distributions
--------------------------------------
From Net Realized Gains - - - - (3.51) (4.05)
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $18.44 $18.22 $17.11 $14.70 $17.78 $31.01
===============================================================================================
TOTAL RETURN(3) 1.21% 6.49% 16.39% (17.32)% (34.40)% 11.23%

RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25%
--------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.58%(4) (0.32)% (0.20)% (0.29)% (0.26)% (0.55)%
--------------------------------------
Portfolio Turnover Rate 29% 131% 159% 135% 114% 102%
--------------------------------------
Net Assets, End of Period
(in thousands) $81,024 $76,962 $55,010 $32,530 $25,272 $24,750
-----------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) ANNUALIZED.

------
28

HERITAGE FUND
Advisor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
-------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
-------------------------------------------------------------------------------------------------
PER-SHARE DATA
-------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.64 $10.68 $9.05 $10.09 $19.05 $12.98
-------------------------------------------------------------------------------------------------
Income From Investment Operations
-------------------------------------
Net Investment Loss(2) (0.04) (0.07) (0.06) (0.06) (0.04) (0.07)
-------------------------------------
Net Realized and 0.59 0.03 1.69 (0.98) (5.32) 7.62
Unrealized Gain (Loss)
-------------------------------------------------------------------------------------------------
Total From Investment Operations 0.55 (0.04) 1.63 (1.04) (5.36) 7.55
-------------------------------------------------------------------------------------------------
Distributions
-------------------------------------
From Net Investment Income - - - - - -(3)
-------------------------------------
From Net Realized Gains - - - - (3.60) (1.48)
-------------------------------------------------------------------------------------------------
Total Distributions - - - - (3.60) (1.48)
-------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.19 $10.64 $10.68 $9.05 $10.09 $19.05
=================================================================================================
TOTAL RETURN(4) 5.17% (0.37)% 18.01% (10.31)% (33.30)% 62.26%

RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets 1.25%(5) 1.25% 1.25% 1.25% 1.25% 1.25%
-------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.69)%(5) (0.69)% (0.64)% (0.62)% (0.27)% (0.42)%
-------------------------------------
Portfolio Turnover Rate 122% 264% 129% 128% 152% 119%
-------------------------------------
Net Assets, End of Period
(in thousands) $15,405 $15,623 $13,668 $3,737 $2,146 $2,127
-------------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) PER-SHARE AMOUNT WAS LESS THAN $0.005.

(5) ANNUALIZED.

------
29

ULTRA
Advisor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
--------------------------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $26.85 $25.77 $21.62 $24.92 $41.23 $38.80
--------------------------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Income (Loss)(2) -(3) (0.12) (0.08) -(3) (0.13) (0.40)
--------------------------------------
Net Realized and
Unrealized Gain (Loss) (0.01) 1.20 4.24 (3.30) (11.87) 4.21
--------------------------------------------------------------------------------------------------
Total From Investment Operations (0.01) 1.08 4.16 (3.30) (12.00) 3.81
--------------------------------------------------------------------------------------------------
Distributions
--------------------------------------
From Net Investment Income - - (0.01) - - -
--------------------------------------
From Net Realized Gains - - - - (4.31) (1.38)
--------------------------------------------------------------------------------------------------
Total Distributions - - (0.01) - (4.31) (1.38)
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $26.84 $26.85 $25.77 $21.62 $24.92 $41.23
==================================================================================================
TOTAL RETURN(4) (0.04)% 4.19% 19.24% (13.24)% (31.69)% 9.72%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.24%(5) 1.24% 1.25% 1.24% 1.23% 1.24%
--------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.02%(5) (0.45)% (0.34)% (0.01)% (0.43)% (0.89)%
--------------------------------------
Portfolio Turnover Rate 22% 34% 82% 92% 86% 62%
--------------------------------------
Net Assets, End of Period
(in thousands) $623,888 $738,032 $643,144 $391,968 $437,024 $521,187
--------------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) PER-SHARE AMOUNT WAS LESS THAN $0.005.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR
ARE NOT ANNUALIZED. THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY
REFLECT THE CLASS EXPENSE DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING
THE NET ASSET VALUE TO TWO DECIMAL PLACES. IF NET ASSET VALUES WERE
CALCULATED TO THREE DECIMAL PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE
CLOSELY REFLECT THE CLASS EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET
VALUES TO TWO DECIMAL PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND
DOES NOT RESULT IN ANY GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) ANNUALIZED.

------
30

VISTA FUND
Advisor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
-------------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
-------------------------------------------------------------------------------------------------
PER-SHARE DATA
-------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $12.95 $11.82 $9.15 $10.53 $24.24 $15.31
-------------------------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------
Net Investment Loss(2) (0.03) (0.11) (0.08) (0.06) (0.08) (0.22)
------------------------------------
Net Realized and 0.45 1.24 2.75 (1.32) (7.35) 10.05
Unrealized Gain (Loss)
-------------------------------------------------------------------------------------------------
Total From Investment Operations 0.42 1.13 2.67 (1.38) (7.43) 9.83
-------------------------------------------------------------------------------------------------
Distributions
------------------------------------
From Net Realized Gains - - - - (6.28) (0.90)
-------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.37 $12.95 $11.82 $9.15 $10.53 $24.24
=================================================================================================
TOTAL RETURN(3) 3.24% 9.56% 29.18% (13.11)% (37.76)% 65.98%

RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets 1.25%(4) 1.25% 1.25% 1.25% 1.25% 1.25%
------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.39)%(4) (0.73)% (0.82)% (0.59)% (0.56)% (0.90)%
------------------------------------
Portfolio Turnover Rate 116% 255% 280% 293% 290% 135%
------------------------------------
Net Assets, End of Period
(in thousands) $166,842 $106,750 $17,060 $11,333 $13,315 $22,077
-------------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) ANNUALIZED.

------
31

GROWTH FUND
C Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------
2005(1) 2004 2003 2002(2)
----------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $17.91 $16.95 $14.66 $19.38
----------------------------------------------------------------------------------
Income From Investment Operations
-------------------------------------
Net Investment Loss(3) (0.02) (0.19) (0.15) (0.16)
-------------------------------------
Net Realized and 0.18 1.15 2.44 (4.56)
Unrealized Gain (Loss)
----------------------------------------------------------------------------------
Total From Investment Operations 0.16 0.96 2.29 (4.72)
----------------------------------------------------------------------------------
Net Asset Value, End of Period $18.07 $17.91 $16.95 $14.66
===================================================================================
TOTAL RETURN(4) 0.89% 5.66% 15.62% (24.36)%

RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00%(5)
-------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.17)%(5) (1.07)% (0.95)% (0.99)%(5)
-------------------------------------
Portfolio Turnover Rate 29% 131% 159% 135%(6)
-------------------------------------
Net Assets, End of Period
(in thousands) $711 $632 $623 $482
----------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) NOVEMBER 28, 2001 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2002.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY, AND DOES NOT REFLECT APPLICABLE SALES
CHARGES. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY REFLECT THE CLASS EXPENSE
DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING THE NET ASSET VALUES TO
TWO DECIMAL PLACES. IF NET ASSET VALUES WERE CALCULATED TO THREE DECIMAL
PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE CLOSELY REFLECT THE CLASS
EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET VALUES TO TWO DECIMAL
PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND DOES NOT RESULT IN ANY
GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2002.

------
32

HERITAGE FUND
C Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001(2)
--------------------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.41 $10.54 $8.99 $10.10 $12.43
--------------------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------
Net Investment Loss(3) (0.08) (0.15) (0.13) (0.13) (0.06)
------------------------------------
Net Realized and 0.58 0.02 1.68 (0.98) (2.27)
Unrealized Gain (Loss)
--------------------------------------------------------------------------------------------
Total From Investment Operations 0.50 (0.13) 1.55 (1.11) (2.33)
--------------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.91 $10.41 $10.54 $8.99 $10.10
============================================================================================
TOTAL RETURN(4) 4.80% (1.23)% 17.24% (10.99)% (18.74)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.99%(5)(6) 2.00% 2.00% 2.00% 2.00%(6)
------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (1.43)%(5)(6) (1.44)% (1.39)% (1.37)% (1.50)%(6)
------------------------------------
Portfolio Turnover Rate 122% 264% 129% 128% 152%(7)
------------------------------------
Net Assets, End of Period
(in thousands) $866 $889 $872 $146 $3
--------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JUNE 26, 2001 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2001.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY, AND DOES NOT REFLECT APPLICABLE SALES
CHARGES. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY REFLECT THE CLASS EXPENSE
DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING THE NET ASSET VALUES TO
TWO DECIMAL PLACES. IF NET ASSET VALUES WERE CALCULATED TO THREE DECIMAL
PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE CLOSELY REFLECT THE CLASS
EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET VALUES TO TWO DECIMAL
PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND DOES NOT RESULT IN ANY
GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) DURING THE SIX MONTHS ENDED APRIL 30, 2005, THE CLASS RECEIVED A
PARTIAL REIMBURSEMENT OF ITS SERVICE AND DISTRIBUTION FEES. HAD FEES NOT
BEEN REIMBURSED THE ANNUALIZED RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS AND ANNUALIZED RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS
WOULD HAVE BEEN 2.00% AND (1.44)%, RESPECTIVELY.

(6) ANNUALIZED.

(7) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2001.

------
33

ULTRA FUND
C Class

RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.99%(6) 1.99% 2.00% 1.99% 1.99%(6)
------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.73)%(6) (1.20)% (1.09)% (0.76)% (3.10)%(6)
------------------------------------
Portfolio Turnover Rate 22% 34% 82% 92% 86%(7)
------------------------------------
Net Assets, End of Period
(in thousands) $5,928 $4,836 $2,232 $502 $95
------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) OCTOBER 29, 2001 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2001.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) PER-SHARE AMOUNT WAS LESS THAN $0.005.

(5) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY, AND DOES NOT REFLECT APPLICABLE SALES CHARGES.
TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL
RETURN OF THE CLASSES MAY NOT PRECISELY REFLECT THE CLASS EXPENSE
DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING THE NET ASSET VALUE TO TWO
DECIMAL PLACES. IF NET ASSET VALUES WERE CALCULATED TO THREE DECIMAL
PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE CLOSELY REFLECT THE CLASS
EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET VALUES TO TWO DECIMAL
PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND DOES NOT RESULT IN ANY
GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(6) ANNUALIZED.

(7) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2001.

------
34

VISTA FUND
C Class

RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.00% 2.00% 2.00%(5)
------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.14)%(5) (1.48)% (1.57)% (1.34)% (1.77)%(5)
------------------------------------
Portfolio Turnover Rate 116% 255% 280% 293% 290%(6)
------------------------------------
Net Assets, End of Period
(in thousands) $1,944 $1,439 $333 $110 $4
------------------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) JULY 18, 2001 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2001.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY, AND DOES NOT REFLECT APPLICABLE SALES
CHARGES. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED.
THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY REFLECT THE CLASS EXPENSE
DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING THE NET ASSET VALUES TO
TWO DECIMAL PLACES. IF NET ASSET VALUES WERE CALCULATED TO THREE DECIMAL
PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE CLOSELY REFLECT THE CLASS
EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET VALUES TO TWO DECIMAL
PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND DOES NOT RESULT IN ANY
GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) ANNUALIZED.

(6) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2001.

------
35

GROWTH FUND
R Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $18.32 $17.25 $16.56
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Income (Loss)(3) -(4) (0.13) (0.02)
--------------------------------------
Net Realized and 0.20 1.20 0.71
Unrealized Gain
--------------------------------------------------------------------------------
Total From Investment Operations 0.20 1.07 0.69
--------------------------------------------------------------------------------
Net Asset Value, End of Period $18.52 $18.32 $17.25
================================================================================
TOTAL RETURN(5) 1.09% 6.20% 4.17%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.50%(6) 1.50% 1.50%(6)
--------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.33%(6) (0.57)% (0.58)%(6)
--------------------------------------
Portfolio Turnover Rate 29% 131% 159%(7)
--------------------------------------
Net Assets, End of Period
(in thousands) $32 $12 $3
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) AUGUST 29, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) PER-SHARE AMOUNT WAS LESS THAN $0.005.

(5) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR
ARE NOT ANNUALIZED. THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY
REFLECT THE CLASS EXPENSE DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING
THE NET ASSET VALUE TO TWO DECIMAL PLACES. IF NET ASSET VALUES WERE
CALCULATED TO THREE DECIMAL PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE
CLOSELY REFLECT THE CLASS EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET
VALUES TO TWO DECIMAL PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND
DOES NOT RESULT IN ANY GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(6) ANNUALIZED.

(7) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
36

ULTRA FUND
R Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
2005(1) 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $27.01 $25.99 $24.87
--------------------------------------------------------------------------------
Income From Investment Operations
--------------------------------------
Net Investment Loss(3) (0.02) (0.22) (0.04)
--------------------------------------
Net Realized and (0.01) 1.24 1.16
Unrealized Gain (Loss)
--------------------------------------------------------------------------------
Total From Investment Operations (0.03) 1.02 1.12
--------------------------------------------------------------------------------
Net Asset Value, End of Period $26.98 $27.01 $25.99
================================================================================
TOTAL RETURN(4) (0.11)% 3.92% 4.50%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.38%(5)(6) 1.49% 1.50%(5)
--------------------------------------
Ratio of Net Investment
Loss to Average Net Assets (0.12)%(5)(6) (0.70)% (0.81)%(5)
--------------------------------------
Portfolio Turnover Rate 22% 34% 82%(7)
--------------------------------------
Net Assets, End of Period
(in thousands) $5,914 $4,545 $3
--------------------------------------------------------------------------------

(1) SIX MONTHS ENDED APRIL 30, 2005 (UNAUDITED).

(2) AUGUST 29, 2003 (COMMENCEMENT OF SALE) THROUGH OCTOBER 31, 2003.

(3) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY. TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR
ARE NOT ANNUALIZED. THE TOTAL RETURN OF THE CLASSES MAY NOT PRECISELY
REFLECT THE CLASS EXPENSE DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING
THE NET ASSET VALUE TO TWO DECIMAL PLACES. IF NET ASSET VALUES WERE
CALCULATED TO THREE DECIMAL PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE
CLOSELY REFLECT THE CLASS EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET
VALUES TO TWO DECIMAL PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND
DOES NOT RESULT IN ANY GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(5) ANNUALIZED.

(6) DURING THE SIX MONTHS ENDED APRIL 30, 2005, THE CLASS RECEIVED A
PARTIAL REIMBURSEMENT OF ITS SERVICE AND DISTRIBUTION FEE. HAD FEES NOT
BEEN REIMBURSED THE ANNUALIZED RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS AND ANNUALIZED RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS
WOULD HAVE BEEN 1.49% AND -0.23%, RESPECTIVELY.

(7) PORTFOLIO TURNOVER IS CALCULATED AT THE FUND LEVEL. PERCENTAGE
INDICATED WAS CALCULATED FOR THE YEAR ENDED OCTOBER 31, 2003.

------
37

MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

Statement of Additional Information (SAI)

You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room, Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET * EDGAR database at sec.gov

* By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section, Washington, D.C. 20549-0102

FUND REFERENCE FUND CODE TICKER NEWSPAPER LISTING
--------------------------------------------------------------------------------
Growth
Advisor
Class 720 TCRAX Grwth
--------------------------------------------------------------------------------
C Class 420 TWGCX Grwth
--------------------------------------------------------------------------------
R Class 120 AGWRX Grwth
--------------------------------------------------------------------------------
Heritage
Advisor
Class 730 ATHAX Heritage
--------------------------------------------------------------------------------
C Class 430 AHGCX Heritage
--------------------------------------------------------------------------------
Ultra
Advisor
Class 722 TWUAX Ultra
--------------------------------------------------------------------------------
C Class 422 TWCCX Ultra
--------------------------------------------------------------------------------
R Class 122 AULRX Ultra
--------------------------------------------------------------------------------
Vista
Advisor
Class 724 TWVAX Vista
--------------------------------------------------------------------------------
C Class 424 TWVCX Vista
--------------------------------------------------------------------------------
R Class 124 N/A Vista
--------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419786
Kansas City, Missouri 64141-6786
1-800-378-9878

0507
SH-PRS-43930

July 29, 2005

American Century
Investments
prospectus

Investor Class
Institutional Class
Fundamental Equity Fund

THE FUND IS NOT AVAILABLE TO SELF-DIRECTED RETAIL INVESTORS, BUT IS AVAILABLE
THROUGH FINANCIAL INTERMEDIARIES.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century Investment
Services, Inc., Distributor

[american century investments logo and text logo]

Dear Investor:

We believe our relationship with you begins with an easy-to-read prospectus that
provides you with the information you need to feel confident about your
investment decisions.

Naturally, you may have questions about investing after you read through the
prospectus. Please contact your investment professional with questions or for
more information about our funds.

Sincerely,

/s/Brian Jeter

Brian Jeter
Senior Vice President
Third Party Sales and Services
American Century Investment Services, Inc.

American Century Investments
P.O. Box 419786, Kansas City, MO 64141-6786

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

Table of Contents

AN OVERVIEW OF THE FUND . . . . . . . . . . . . . 2

FUND PERFORMANCE HISTORY . . . . . . . . . . . . .3

FEES AND EXPENSES . . . . . . . . . . . . . . . . 4

OBJECTIVES, STRATEGIES AND RISKS . . . . . . . . .5

MANAGEMENT . . . . . . . . . . . . . . . . . . . .7

INVESTING WITH AMERICAN CENTURY . . . . . . . . . 9

SHARE PRICE AND DISTRIBUTIONS . . . . . . . . . .17

TAXES . . . . . . . . . . . . . . . . . . . . . .19

MULTIPLE CLASS INFORMATION . . . . . . . . . . . 21

PERFORMANCE INFORMATION OF OTHER CLASS . . . . . 22

[graphic of triangle]

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT DEFINITIONS OF KEY
INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL INFORMATION.

AN OVERVIEW OF THE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks long-term capital growth. Income is a secondary objective.

WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The fund looks for common stocks of companies that the fund's portfolio managers
believe are priced attractively in relation to their earnings growth potential
and estimated dividend production. The fund will generally invest in larger
companies, although it may purchase shares in companies of other sizes.

The fund's principal risks include

* MARKET RISK - The value of the fund's shares will go up and down based on
the performance of the companies whose securities it owns and other factors
generally affecting the securities market.

* PRINCIPAL LOSS - At any given time your shares may be worth more or less
than the price you paid for them. In other words, it is possible to lose
money by investing in the fund.

* FOREIGN SECURITIES - The fund may invest in foreign securities, which can
be riskier than investing in U.S. securities.

* STYLE RISK - If at any time the market is not favoring the fund's style,
the fund's gains may not be as big as, or its losses may be bigger than,
other equity funds using different investment styles.

A more detailed description of the fund's investment strategies and risks may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
5.

[graphic of triangle]

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT, AND IT IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY
OTHER GOVERNMENT AGENCY.

------
2

FUND PERFORMANCE HISTORY

The fund's performance history is not available as of the date of this
prospectus. When a class of the fund has investment results for a full calendar
year, this section will feature charts that show annual total returns, highest
and lowest quarterly returns and average annual total returns for the fund. This
information indicates the volatility of the fund's historical returns from year
to year.

For current performance information, please call us at 1-800-378-9878.

------
3

FEES AND EXPENSES

There are no sales loads, fees or other charges

* to buy fund shares directly from American Century

* to reinvest dividends in additional shares

* to exchange into the same class of shares of other American Century funds

* to redeem your shares, other than a $10 fee to redeem by wire

The following tables describe the fees and expenses you may pay if you buy and
hold shares of the funds.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
--------------------------------------------------------------------------------
Investor Class
Maximum Account Maintenance Fee $25(1)
--------------------------------------------------------------------------------

(1) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH
AMERICAN CENTURY ARE LESS THAN $10,000. SEE Account Maintenance Fee UNDER
Investing with American Century FOR MORE DETAILS.

(1) BASED ON ASSETS DURING THE FUND'S MOST RECENT FISCAL YEAR. THE FUND
HAS A STEPPED FEE SCHEDULE. AS A RESULT, THE FUND'S MANAGEMENT FEE RATE
GENERALLY DECREASES AS STRATEGY ASSETS INCREASE AND INCREASES AS STRATEGY
ASSETS DECREASE. SEE The Investment Advisor UNDER Management FOR AN
EXPLANATION OF STRATEGY ASSETS.

(2) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUND'S
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, ARE
EXPECTED TO BE LESS THAN 0.005% FOR THE CURRENT FISCAL YEAR.

EXAMPLE

* invest $10,000 in the fund

* redeem all of your shares at the end of the periods shown below

* earn a 5% return each year

* incur the same operating expenses as shown above

. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Fundamental
Equity
Investor Class $102 $318 $551 $1,219
--------------------------------------------------------------------------------
Institutional
Class $82 $255 $443 $987
--------------------------------------------------------------------------------

------
4

OBJECTIVES, STRATEGIES AND RISKS

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks long-term capital growth. Income is a secondary objective.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?

The fund generally looks for common stocks that the fund's portfolio managers
believe are attractively priced relative to the companies' earnings growth
potential and dividend yields. In implementing this approach, the managers use
an investment methodology that focuses on stock-specific internal factors, such
as achievable earnings estimates, sustainable growth rates and dividend payouts.
Risk control measures implemented by the portfolio managers help to provide
diversification of securities and sectors within the fund.

The fund's investment approach is expected to generate returns with a lower
level of price volatility than is associated with more aggressive investments.
As a result, the fund is designed to meet the needs of long-term investors who
seek capital growth but do not want the price volatility typically associated
with more aggressive growth strategies.

Although the portfolio managers intend to invest the fund's assets primarily in
U.S. stocks, the fund may invest in securities of foreign companies. To the
extent the fund invests in foreign companies, most of those investments will be
in companies located and doing business in developed countries. Investments in
foreign securities present some unique risks that are more fully described in
the fund's statement of additional information.

The portfolio managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 80% of the fund's assets
invested in EQUITY SECURITIES at all times. When the managers believe it is
prudent, the fund may invest a portion of its assets in convertible securities,
equity-equivalent securities, foreign securities, short-term securities,
non-leveraged futures contracts and other similar securities. Futures contracts,
a type of derivative security, can help the fund's cash assets remain liquid
while performing more like stocks. The fund has a policy governing futures
contracts and similar derivative securities to help manage the risk of these
types of investments. A complete description of the derivatives policy is
included in the statement of additional information.

[graphic of triangle]

EQUITY SECURITIES INCLUDE COMMON STOCK, PREFERRED STOCK, AND
EQUITY-EQUIVALENT SECURITIES, SUCH AS SECURITIES CONVERTIBLE INTO
COMMON STOCK, STOCK FUTURES CONTRACTS OR STOCK INDEX FUTURES CONTRACTS.

When determining whether to sell a security, the portfolio managers consider
among other things, a security's price, whether a security's risk parameters
outweigh its return opportunities, general market conditions and any other
factor deemed relevant by the portfolio managers.

A description of the policies and procedures with respect to the disclosure of
the portfolio securities is available in the fund's statement of additional
information.

WHAT KINDS OF SECURITIES DOES THE FUND BUY?

The fund will usually purchase common stocks, but it can purchase other types of
securities as well, such as domestic and foreign preferred stocks, convertible
securities, equity-equivalent securities, nonleveraged futures contracts and
options, notes, bonds and other debt securities, as discussed above. The fund
generally limits its purchase of debt securities to investment-grade
obligations.

------
5

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the fund.

Although the portfolio managers intend to invest the fund's assets primarily in
U.S. stocks, the fund may invest in securities of foreign companies. Foreign
investment involves additional risks, including fluctuations in currency
exchange rates, less stable political and economic structures, reduced
availability of public information, and lack of uniform financial reporting and
regulatory practices similar to those that apply in the United States. These
factors make investing in foreign securities generally riskier than investing in
U.S. stocks. To the extent the fund invests in foreign securities, the overall
risk of the fund could be affected.

------
6

MANAGEMENT

WHO MANAGES THE FUND?

The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.

THE BOARD OF DIRECTORS

The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than three-fourths of the directors are independent of the fund's advisor;
that is, they have never been employed by and have no financial interest in the
advisor or any of its affiliated companies (other than as shareholders of
American Century funds).

THE INVESTMENT ADVISOR

The fund's investment advisor is American Century Investment Management, Inc.
(the advisor). The advisor has been managing mutual funds since 1958 and is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.

The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.

For the services it provides to the fund, the advisor receives a unified
management fee based on a percentage of the daily net assets of each specific
class of shares of the fund. For funds with a stepped fee schedule, the rate of
the fee is determined by applying a fee rate calculation formula. This formula
takes into account all of the advisor's assets under management in the fund's
investment strategy ("strategy assets") to calculate the appropriate fee rate
for the fund. The strategy assets include the fund's assets and the assets of
other clients of the advisor that are not in the American Century family of
mutual funds (such as subadvised funds and separate accounts) but that have the
same investment team and investment strategy. The use of strategy assets, rather
than fund assets, in calculating the fee rate for a particular fund could allow
a fund to realize scheduled cost savings more quickly if the advisor acquires
additional assets under management within a strategy in addition to the fund's
assets. However, it is possible that the strategy assets for a fund will not
include assets of other client accounts. In addition, if there are such assets,
they may not be sufficient to result in a lower fee rate. The amount of the fee
is calculated daily and paid monthly in arrears. The Investor Class of
Fundamental Equity had no assets as of the date of this prospectus, but will pay
the advisor a unified management fee of 1.000% of its pro rata share of the
first $5 billion of the strategy assets, 0.990% of its pro rata share of the
next $5 billion of the strategy assets, 0.980% of its pro rata share of the next
$5 billion of the strategy assets, 0.970% of its pro rata share of the next $5
billion of the strategy assets, 0.950% of its pro rata share of the next $5
billion of the strategy assets, 0.900% of its pro rata share of the next $5
billion of the strategy assets and 0.800% of its pro rata share over $30 billion
of the strategy assets. The Institutional Class of Fundamental Equity had no
assets as of the date of this prospectus, but will pay the advisor a unified
management fee of 0.800% of its pro rata share of the first $5 billion of the
strategy assets, 0.790% of its pro rata share of the next $5 billion of the
strategy assets, 0.780% of its pro rata share of the next $5 billion of the
strategy assets, 0.770% of its pro rata share of the next $5 billion of the
strategy assets, 0.750% of its pro rata share of the next $5 billion of the
strategy assets, 0.700% of its pro rata share of the next $5 billion of the
strategy assets and 0.600% of its pro rata share over $30 billion of the
strategy assets.

Out of that fee, the advisor paid 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. A portion of the fund's management fee may be paid by the fund's
advisor to unaffiliated third parties who provide recordkeeping and
administrative services that would otherwise be performed by an affiliate of the
advisor.

------
7

THE FUND MANAGEMENT TEAM

The advisor uses a team of portfolio managers and analysts to manage the fund.
The team meets regularly to review portfolio holdings and discuss purchase and
sale activity. Team members buy and sell securities for the fund as they see
fit, guided by the fund's investment objectives and strategy.

The portfolio managers on the investment team are identified below.

JERRY SULLIVAN

Mr. Sullivan, Vice President and Portfolio Manager, has been a member of the
team that manages Fundamental Equity since its inception. Since joining American
Century in February 2000, he served as a portfolio manager for Select and
continues to serve as a portfolio manager for Ultra. He was a portfolio manager
with the Franklin Templeton Group from March 1998 to October 1999. He has a
bachelor's degree in political science from Columbia College and an MBA with a
concentration in finance and accounting from the Columbia Graduate School of
Business.

ROBERT M. BROOKBY

Mr. Brookby, Portfolio Manager, has been a member of the team that manages
Fundamental Equity since February 2005. He joined American Century in June 2000
as an investment analyst and became a portfolio manager in February 2005. Before
joining American Century, he was an equity analyst with Raymond James from
August 1999 to June 2000. He has a bachelor's degree in economics from
Northwestern University and an MBA from Harvard University.

Code of Ethics

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. It also contains limits on short-term transactions in American Century-
managed funds. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the funds to obtain approval before executing personal trades.

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the statement of additional
information and the investment objectives of the fund may not be changed without
shareholder approval. The Board of Directors and/or the advisor may change any
other policies and investment strategies.

------
8

INVESTING WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

CONDUCTING BUSINESS IN WRITING

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

WAYS TO MANAGE YOUR ACCOUNT

--------------------------------------------------------------------------------
ONLINE
--------------------------------------------------------------------------------

americancentury.com

INVESTOR CLASS ONLY

OPEN AN ACCOUNT

EXCHANGE SHARES

Exchange shares from another American Century account.

MAKE ADDITIONAL INVESTMENTS

Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.

SELL SHARES*

Redeem shares and proceeds will be electronically transferred to your authorized
bank account.

* ONLINE REDEMPTIONS UP TO $25,000 PER DAY.

------
9

--------------------------------------------------------------------------------
BY TELEPHONE
--------------------------------------------------------------------------------

INVESTOR CLASS INSTITUTIONAL CLASS

Investor Services Representative Service Representative
1-800-345-2021 1-800-345-3533

Business, Not-For-Profit and
Employer-Sponsored Retirement Plans
1-800-345-3533

Automated Information Line
1-800-345-8765

OPEN AN ACCOUNT

If you are a current investor, you can open an account by exchanging shares from
another American Century account.

EXCHANGE SHARES

Call or use our Automated Information Line if you have authorized us to accept
telephone instructions. The Automated Information Line is available only to
Investor Class shareholders.

MAKE ADDITIONAL INVESTMENTS

Call or use our Automated Information Line if you have authorized us to invest
from your bank account. The Automated Information Line is available only to
Investor Class shareholders.

SELL SHARES

Call a Service Representative.

--------------------------------------------------------------------------------
BY WIRE
--------------------------------------------------------------------------------

INVESTOR AND INSTITUTIONAL CLASS

Please remember, if you request redemptions by wire, $10 will be deducted from
the amount redeemed. Your bank also may charge a fee.

OPEN AN ACCOUNT

Call to set up your account or mail a completed application to the address
provided in the BY MAIL OR FAX section. Give your bank the following information
to wire money.

* Our bank information
Commerce Bank N.A.
Routing No. 101000019
Account No. Please call for the appropriate account number.

* The fund name

* Your American Century account number, if known*

* Your name

* The contribution year (for IRAs only)

*FOR ADDITIONAL INVESTMENTS ONLY

MAKE ADDITIONAL INVESTMENTS

Follow the BY WIRE-OPEN AN ACCOUNT instructions.

SELL SHARES

You can receive redemption proceeds by wire or electronic transfer.

EXCHANGE SHARES

Not available.

------
10

--------------------------------------------------------------------------------
BY MAIL OR FAX
--------------------------------------------------------------------------------

INVESTOR CLASS INSTITUTIONAL CLASS

P.O. Box 419200 P.O. Box 419385
Kansas City, MO 64141-6200 Kansas City, MO 64141-6385

Fax Fax
816-340-7962 816-340-4655

OPEN AN ACCOUNT

Send a signed, completed application and check or money order payable to
American Century Investments.

EXCHANGE SHARES

Send written instructions to exchange your shares from one American Century
account to another.

MAKE ADDITIONAL INVESTMENTS

SELL SHARES

Send written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.

--------------------------------------------------------------------------------
AUTOMATICALLY
--------------------------------------------------------------------------------

INVESTOR AND INSTITUTIONAL CLASS

OPEN AN ACCOUNT

Not available.

EXCHANGE SHARES

Send written instructions to set up an automatic exchange of your shares from
one American Century account to another.

MAKE ADDITIONAL INVESTMENTS

With the automatic investment service, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.

SELL SHARES

You may sell shares automatically by establishing Check-A-Month or Automatic
Redemption plans.

--------------------------------------------------------------------------------
IN PERSON
--------------------------------------------------------------------------------

INVESTOR CLASS ONLY

If you prefer to handle your transactions in person, visit one of our Investor
Centers and a representative can help you open an account, make additional
investments, and sell or exchange shares.

4500 Main Street 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5 p.m., Monday - Friday 8 a.m. to 5 p.m., Monday - Friday
8 a.m. to noon, Saturday

1665 Charleston Road
Mountain View, California
8 a.m. to 5 p.m., Monday - Friday

------
11

MINIMUM INITIAL INVESTMENT AMOUNTS (INVESTOR CLASS)

To open an account, the minimum initial investment amounts are $2,000 for a
Coverdell Education Savings Account (CESA), and $2,500 for all other accounts.

ACCOUNT MAINTENANCE FEE

[graphic of triangle]

ELIGIBILITY FOR INSTITUTIONAL CLASS SHARES

The Institutional Class shares are made available for purchase by large
institutional shareholders such as bank trust departments, corporations,
retirement plans, endowments, foundations and financial advisors that meet the
fund's minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.

MINIMUM INITIAL INVESTMENT AMOUNTS (INSTITUTIONAL CLASS)

------
12

The following policies apply to Investor Class and Institutional Class
shareholders.

REDEMPTIONS

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order.

[graphic of triangle]

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S SHARES.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

------
13

SIGNATURE GUARANTEES

A signature guarantee - which is different from a notarized signature - is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

* Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

* Your redemption proceeds or distribution amount is sent by wire or EFT to
a destination other than your personal bank account

* You are transferring ownership of an account over $100,000

We reserve the right to require a signature guarantee for other transactions, at
our discretion.

MODIFYING OR CANCELING AN INVESTMENT

ABUSIVE TRADING PRACTICES

Because of the potentially harmful effects of abusive trading practices, the
fund's Board of Directors has approved American Century's abusive trading
policies and procedures, which are designed to reduce the frequency and effect
of these activities in our funds. These policies and procedures include
monitoring trading activity, imposing trading restrictions on certain accounts,
imposing redemption fees on certain funds, and using fair value pricing when
current market prices are not readily available. Although these efforts are
designed to discourage abusive trading practices, they cannot eliminate the
possibility that such activity will occur. American Century seeks to exercise
its judgment in implementing these tools to the best of its ability in a manner
that it believes is consistent with shareholder interests.

------
14

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

* within seven days of the purchase, or

* within 30 days of the purchase, if it happens more than once per year.

INVESTING THROUGH FINANCIAL INTERMEDIARIES

* minimum investment requirements

* exchange policies

* fund choices

* cutoff time for investments

* trading restrictions

Please contact your FINANCIAL INTERMEDIARY or plan sponsor for a complete
description of its policies. Copies of the fund's annual report, semiannual
report and statement of additional information are available from your
intermediary or plan sponsor.

[graphic of triangle]

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS, INSURANCE

COMPANIES AND INVESTMENT ADVISORS.

------
15

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, the advisor will pay such
service providers a fee for performing those services. Also, the advisor and the
fund's distributor may make payments for various additional services or other
expenses out of their profits or other available sources. Such payments may be
made for one or more of the following: (1) distribution services, which include
expenses incurred by intermediaries for their sales activities with respect to
the fund, such as preparing, printing and distributing sales literature and
advertising materials and compensating registered representatives or other
employees of such intermediary for their sales activities; (2) shareholder
services, such as providing individual and custom investment advisory services
to clients of the intermediary; and (3) marketing and promotional services,
including business planning assistance, educating personnel about the fund, and
sponsorship of sales meetings, which may include covering costs of providing
speakers, meals and other entertainment. The distributor may sponsor seminars
and conferences designed to educate intermediaries about the fund and may cover
the expenses associated with attendance at such meetings, including travel
costs. These payments and activities are intended to provide an incentive to
intermediaries to sell the fund by ensuring that they are educated about the
fund, and to help such intermediaries defray costs associated with offering the
fund. The amount of any payments described by this paragraph is determined by
the advisor or the distributor, and all such amounts are paid out of the
available assets of the advisor and distributor, and not by you or the fund. As
a result, the total expense ratio of the fund will not be affected by any such
payments.

The fund has authorized certain financial intermediaries to accept orders on the
fund's behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on a fund's behalf before the time the net asset value is
determined in order to receive that day's share price. If those orders are
transmitted to American Century and paid for in accordance with the contract,
they will be priced at the net asset value next determined after your request is
received in the form required by the intermediary.

RIGHT TO CHANGE POLICIES

------
16

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

* for funds that invest in debt securities, a debt security has been
declared in default; or

* trading in a security has been halted during the trading day.

------
17

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

DISTRIBUTIONS

Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund should not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received by the fund, as well as CAPITAL GAINS
realized by the fund on the sale of its investment securities. The fund
generally pays distributions from net income and capital gains, if any, once a
year in December. The fund may make more frequent distributions, if necessary,
to comply with Internal Revenue Code provisions.

[graphic of triangle]

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH AS
STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

------
18

TAXES

The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through their investment activities. Tax
consequences also may result when investors sell fund shares after the net asset
value has increased or decreased.

Tax-Deferred Accounts

Taxable Accounts

If you own fund shares through a taxable account, you may be taxed on your
investments if the fund makes distributions or if you sell your fund shares.

Taxability of Distributions

[graphic of triangle]

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY THE FUND FROM THE
STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED THAT THE
FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

------
19

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

Taxes on Transactions

Buying a Dividend

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

------
20

MULTIPLE CLASS INFORMATION

American Century offers six classes of shares of the fund: Investor Class,
Institutional Class, A Class, B Class, C Class and R Class.

The other classes have different fees, expenses and/or minimum investment
requirements from the classes offered by this prospectus. The difference in the
fee structures between the classes is the result of their separate arrangements
for shareholder and distribution 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. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this prospectus, call us at
1-800-378-9878.

You also can contact a sales representative or financial intermediary who offers
those classes of shares.

------
21

PERFORMANCE INFORMATION OF OTHER CLASS

The following financial information is provided to show the performance of the
Fundamental Equity Fund's A Class shares. This class, the A Class, has a total
expense ratio that is higher than the Investor and Institutional Classes. If the
Investor and Institutional Classes had existed during the period presented,
their performance would have been higher because of the lower expense.

The table on the next page itemizes what contributed to the changes in the A
Class share price during the most recently ended fiscal period. It also shows
the changes in share price for this period in comparison to changes over the
last five fiscal years or less, if the share class is not five years old.
Financial information for the Investor and Institutional Class shares of
Fundamental Equity will not be available until they have a year's worth of
performance.

On a per-share basis, each table includes as appropriate

* share price at the beginning of the period

* investment income and capital gains or losses

* distributions of income and capital gains paid to investors

* share price at the end of the period

Each table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage
of average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio
that is replaced during the period

The Financial Highlights that follow are for the six-month period ended April
30, 2005, and have not been audited.

------
22

FUNDAMENTAL EQUITY FUND

A Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

--------------------------------------------------------------------------------
2005(1)
--------------------------------------------------------------------------------

PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------------------------
Net Investment Income(2) -(3)
------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
--------------------------------------------------------------------------------
Total From Investment Operations (0.02)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.98
================================================================================
TOTAL RETURN(4) (0.20)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.28%(5)
------------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 0.07%(5)
------------------------------------------------------------
Portfolio Turnover Rate 44%
------------------------------------------------------------
Net Assets, End of Period (in thousands) $674
--------------------------------------------------------------------------------

(1) NOVEMBER 30, 2004 (INCEPTION) THROUGH APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) PER-SHARE AMOUNT IS LESS THAN $0.005.

(5) ANNUALIZED.

------
23

NOTES

------
24

NOTES

------
25

MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

Annual and semiannual reports contain more information about the fund's
investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent fiscal
period.

Statement of Additional Information (SAI)

The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this prospectus. This means that it is legally part of this
prospectus, even if you don't request a copy.

You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, online at americancentury.com or by
contacting American Century at the address or telephone numbers listed below.

You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET * EDGAR database at sec.gov
* By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section
Washington, D.C. 20549-0102

FUND REFERENCE FUND CODE TICKER SYMBOL
--------------------------------------------------------------------------------
Fundamental Equity Fund
Investor Class 118 N/A
--------------------------------------------------------------------------------
Institutional
Class 413 N/A
--------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419786
Kansas City, Missouri 64141-6786
1-800-378-9878

0507
SH-PRS-43928

July 29, 2005

American Century
Investments
prospectus

A Class
B Class
C Class
R Class
Fundamental Equity Fund

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century Investment
Services, Inc., Distributor

[american century investments logo and text logo]

Dear Investor:

We believe our relationship with you begins with an easy-to-read prospectus that
provides you with the information you need to feel confident about your
investment decisions.

Naturally, you may have questions about investing after you read through the
prospectus. Please contact your investment professional with questions or for
more information about our funds.

Sincerely,

/s/Brian Jeter

Brian Jeter
Senior Vice President
Third Party Sales and Services
American Century Investment Services, Inc.

American Century Investments
P.O. Box 419786, Kansas City, MO 64141-6786

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

Table of Contents

AN OVERVIEW OF THE FUND . . . . . . . . . . . .2

FUND PERFORMANCE HISTORY . . . . . . . . . . . 3

FEES AND EXPENSES . . . . . . . . . . . . . . .4

OBJECTIVES, STRATEGIES AND RISKS . . . . . . . 6

MANAGEMENT . . . . . . . . . . . . . . . . . . 8

INVESTING WITH AMERICAN CENTURY . . . . . . . 10

SHARE PRICE AND DISTRIBUTIONS . . . . . . . . 18

TAXES . . . . . . . . . . . . . . . . . . . . 20

MULTIPLE CLASS INFORMATION . . . . . . . . . .22

FINANCIAL HIGHLIGHTS . . . . . . . . . . . . .24

[graphic of triangle]

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT DEFINITIONS OF KEY
INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL INFORMATION.

AN OVERVIEW OF THE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks long-term capital growth. Income is a secondary objective.

WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The fund's principal risks include

* MARKET RISK - The value of the fund's shares will go up and down based on
the performance of the companies whose securities it owns and other factors
generally affecting the securities market.

* PRINCIPAL LOSS - At any given time your shares may be worth more or less
than the price you paid for them. In other words, it is possible to lose
money by investing in the fund.

* FOREIGN SECURITIES - The fund may invest in foreign securities, which can
be riskier than investing in U.S. securities.

A more detailed description of the fund's investment strategies and risks may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
6.

[graphic of triangle]

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT, AND IT IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) OR ANY
OTHER GOVERNMENT AGENCY.

------
2

FUND PERFORMANCE HISTORY

For current performance information, please call us at 1-800-378-9878.

------
3

FEES AND EXPENSES

The following tables describe the fees and expenses you may pay if you buy and
hold shares of the fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
A B C R
CLASS CLASS CLASS CLASS
--------------------------------------------------------------------------------------
Maximum Sales Charge (Load) 5.75% None None None
Imposed on Purchases
(as a percentage of offering price)
--------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) None (1) 5.00% (2) 1.00% (3) None
(as a percentage of the original offering
price for B Class shares and the lower
of the original offering price or redemption
proceeds for A and C Class shares)
--------------------------------------------------------------------------------------

(1) INVESTMENTS OF $1 MILLION OR MORE IN A CLASS SHARES MAY BE SUBJECT TO
A CONTINGENT DEFERRED SALES CHARGE OF 1.00% IF THE SHARES ARE REDEEMED
WITHIN ONE YEAR OF THE DATE OF PURCHASE.

(2) THE CHARGE IS 5.00% DURING THE FIRST YEAR AFTER PURCHASE, DECLINES
OVER THE NEXT FIVE YEARS AS SHOWN ON PAGE 12, AND IS ELIMINATED AFTER SIX
YEARS.

(3) THE CHARGE IS 1.00% DURING THE FIRST YEAR AFTER PURCHASE, AND IS
ELIMINATED THEREAFTER.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEE (1) (12B-1) FEES(2) EXPENSES (3) EXPENSES
--------------------------------------------------------------------------------
Fundamental Equity
A Class 1.00% 0.25% 0.00% 1.25%
--------------------------------------------------------------------------------
B Class 1.00% 1.00% 0.00% 2.00%
--------------------------------------------------------------------------------
C Class 1.00% 1.00% 0.00% 2.00%
--------------------------------------------------------------------------------
R Class 1.00% 0.50% 0.00% 1.50%
--------------------------------------------------------------------------------

(1) THE FUND HAS A STEPPED FEE SCHEDULE. AS A RESULT, THE FUND'S
MANAGEMENT FEE RATE GENERALLY DECREASES AS STRATEGY ASSETS INCREASE AND
INCREASES AS STRATEGY ASSETS DECREASE. SEE The Investment Advisor UNDER
Management FOR AN EXPLANATION OF STRATEGY ASSETS.

(3) OTHER EXPENSES, WHICH INCLUDE THE FEES AND EXPENSES OF THE FUND'S
INDEPENDENT DIRECTORS AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST, ARE
EXPECTED TO BE LESS THAN 0.005% FOR THE CURRENT FISCAL YEAR.

------
4

EXAMPLE

The examples in the tables below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .

* invest $10,000 in the fund

* redeem all of your shares at the end of the periods shown below

* earn a 5% return each year

* incur the same operating expenses as shown above

. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Fundamental Equity
A Class $695 $947 $1,219 $1,991
--------------------------------------------------------------------------------
B Class $602 $923 $1,169 $2,115
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------

The table above reflects a deduction for charges payable upon redemption.

You would pay the following expenses if you did not redeem your shares and thus
did not incur such charges.

1 YEAR 3 YEARS 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Fundamental Equity
A Class $695 $947 $1,219 $1,991
--------------------------------------------------------------------------------
B Class $202 $623 $1,069 $2,115
--------------------------------------------------------------------------------
C Class $202 $623 $1,069 $2,305
--------------------------------------------------------------------------------
R Class $152 $472 $814 $1,778
--------------------------------------------------------------------------------

------
5

OBJECTIVES, STRATEGIES AND RISKS

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks long-term capital growth. Income is a secondary objective.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?

[graphic of triangle]

EQUITY SECURITIES INCLUDE COMMON STOCK, PREFERRED STOCK, AND
EQUITY-EQUIVALENT SECURITIES, SUCH AS SECURITIES CONVERTIBLE INTO
COMMON STOCK, STOCK FUTURES CONTRACTS OR STOCK INDEX FUTURES CONTRACTS.

A description of the policies and procedures with respect to the disclosure of
the portfolio securities is available in the fund's statement of additional
information.

------
6

WHAT KINDS OF SECURITIES DOES THE FUND BUY?

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the fund.

Although the portfolio managers intend to invest the fund's assets primarily in
U.S. stocks, the fund may invest in securities of foreign companies. Foreign
investment involves additional risks, including fluctuations in currency
exchange rates, less stable political and economic structures, reduced
availability of public information, and lack of uniform financial reporting and
regulatory practices similar to those that apply in the United States. These
factors make investing in foreign securities generally riskier than investing in
U.S. stocks. To the extent the fund invests in foreign securities, the overall
risk of the fund could be affected.

------
7

MANAGEMENT

WHO MANAGES THE FUND?

The Board of Directors, investment advisor and fund management teams play key
roles in the management of the fund.

THE BOARD OF DIRECTORS

THE INVESTMENT ADVISOR

For the services it provides to the fund, the advisor receives a unified
management fee based on a percentage of the daily net assets of each specific
class of shares of the fund. For funds with a stepped fee schedule, the rate of
the fee is determined by applying a fee rate calculation formula. This formula
takes into account all of the advisor's assets under management in the fund's
investment strategy ("strategy assets") to calculate the appropriate fee rate
for the fund. The strategy assets include the fund's assets and the assets of
other clients of the advisor that are not in the American Century family of
mutual funds (such as subadvised funds and separate accounts) but that have the
same investment team and investment strategy. The use of strategy assets, rather
than fund assets, in calculating the fee rate for a particular fund could allow
a fund to realize scheduled cost savings more quickly if the advisor acquires
additional assets under management within a strategy in addition to the fund's
assets. However, it is possible that the strategy assets for a fund will not
include assets of other client accounts. In addition, if there are such assets,
they may not be sufficient to result in a lower fee rate. The amount of the fee
is calculated daily and paid monthly in arrears. Fundamental Equity's A, B, C
and R Class will pay the advisor a unified management fee of 1.000% of its pro
rata share of the first $5 billion of the strategy assets, 0.990% of its pro
rata share of the next $5 billion of the strategy assets, 0.980% of its pro rata
share of the next $5 billion of the strategy assets, 0.970% of its pro rata
share of the next $5 billion of the strategy assets, 0.950% of its pro rata
share of the next $5 billion of the strategy assets, 0.900% of its pro rata
share of the next $5 billion of the strategy assets and 0.875% of its pro rata
share over $30 billion of the strategy assets.

------
8

THE FUND MANAGEMENT TEAM

The portfolio managers on the investment team are identified below.

JERRY SULLIVAN

ROBERT M. BROOKBY

Code of Ethics

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. It also contains limits on short-term transactions in American Century-
managed funds. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the funds to obtain approval before executing personal trades.

FUNDAMENTAL INVESTMENT POLICIES

------
9

INVESTING WITH AMERICAN CENTURY

CHOOSING A SHARE CLASS

Fundamental Equity offers the A, B, C and R Classes through this prospectus.
Although each class of shares represents an interest in the same fund, each has
a different cost structure, as described below. Which class is right for you
depends on many factors, including how long you plan to hold the shares, how
much you plan to invest, the fee structure of each class, and how you wish to
compensate your financial advisor for the services provided to you. Your
financial advisor can help you choose the option that is most appropriate.

The following chart provides a summary description of each class offered by this
prospectus:

A CLASS B CLASS
--------------------------------------------------------------------------------
Initial sales charge (1) No initial sales charge
--------------------------------------------------------------------------------
Generally no contingent Contingent deferred sales charge
deferred sales charge (2) on redemptions within six years
--------------------------------------------------------------------------------
12b-1 fee of 0.25% 12b-1 fee of 1.00%
--------------------------------------------------------------------------------
No conversion feature Convert to A Class shares
eight years after purchase
--------------------------------------------------------------------------------
Generally more appropriate Aggregate purchases limited
for long-term investors to amounts less than $100,000
--------------------------------------------------------------------------------

C CLASS R CLASS
--------------------------------------------------------------------------------
No initial sales charge No initial sales charge
--------------------------------------------------------------------------------
Contingent deferred sales charge No contingent deferred
on redemptions within 12 months sales charge
--------------------------------------------------------------------------------
12b-1 fee of 1.00% 12b-1 fee of 0.50%
--------------------------------------------------------------------------------
No conversion feature No conversion feature
--------------------------------------------------------------------------------
Aggregate purchases limited to Generally offered through
amounts less than $1,000,000; qualified retirement plans and
generally more appropriate for other fee-based arrangements
short-term investors
--------------------------------------------------------------------------------

(1) THE SALES CHARGE FOR A CLASS SHARES DECREASES DEPENDING ON THE SIZE OF
YOUR INVESTMENT, AND MAY BE WAIVED FOR SOME PURCHASES. THERE IS NO SALES
CHARGE FOR PURCHASES OF $1,000,000 OR MORE.

(2) A CONTINGENT DEFERRED SALES CHARGE (CDSC) OF 1.00% WILL BE CHARGED ON
CERTAIN PURCHASES OF $1,000,000 OR MORE THAT ARE REDEEMED WITHIN ONE YEAR
OF PURCHASE.

MINIMUM INITIAL INVESTMENT AMOUNTS

To open an account, the minimum initial investment amount for Fundamental Equity
is $2,000 for a Coverdell Education Savings Account (CESA), and $2,500 for all
other accounts.

CALCULATION OF SALES CHARGES

------
10

A Class

(1) FOR PURCHASES OVER $1,000,000 BY QUALIFIED RETIREMENT PLANS, NO
UPFRONT AMOUNT WILL BE PAID TO FINANCIAL ADVISORS.

Reductions and Waivers of Sales Charges for A Class

You and your immediate family (your spouse and your children under the age of
21) may combine investments to reduce your A Class sales charge in the following
ways:

ACCOUNT AGGREGATION. Investments made by you and your immediate family may be
aggregated at each account's current market value if made for your own
account(s) and/or certain other accounts, such as:

* Certain trust accounts

* Solely controlled business accounts

* Single-participant retirement plans

* Endowments or foundations established and controlled by you or an
immediate family member

For purposes of aggregation, only investments made through individual level
accounts, rather than accounts aggregated at the intermediary level, may be
included.

RIGHTS OF ACCUMULATION. You may take into account the current value of your
existing holdings in A, B or C Class shares of any American Century Advisor Fund
to determine your A Class sales charge.

------
11

WAIVERS FOR CERTAIN INVESTORS. The sales charge on A Class shares may be waived
for:

* purchases by registered representatives and other employees of certain
financial intermediaries (and their immediate family members) having sales
agreements with the advisor or distributor

* wrap accounts maintained for clients of certain financial intermediaries
who have entered into agreements with American Century

* present or former officers, directors and employees (and their families)
of American Century

* qualified retirement plan purchases

* IRA Rollovers from any American Century Advisor Fund held in a qualified
retirement plan

* certain other investors as deemed appropriate by American Century

B Class

B Class shares are sold at their net asset value without an initial sales
charge. For sales of B Class shares, the amount paid to your financial advisor
is 4.00% of the amount invested. If you redeem your shares within six years of
purchase date, you will pay a contingent deferred sales charge (CDSC) as set
forth below. The purpose of the CDSC is to permit the fund's distributor to
recoup all or a portion of the up-front payment made to your financial advisor.
There is no CDSC on shares acquired through reinvestment of dividends or capital
gains.

B Class shares (which carry a 1.00% 12b-1 fee) will automatically convert to A
Class shares (which carry a 0.25% 12b-1 fee) in the month of the eight-year
anniversary of the purchase date.

------
12

C Class

C Class shares are sold at their net asset value without an initial sales
charge. For sales of C Class shares, the amount paid to your financial advisor
is 1.00% of the amount invested. If you redeem your shares within 12 months of
purchase, you will pay a CDSC of 1.00% of the original purchase price or the
current market value at redemption, whichever is less. The purpose of the CDSC
is to permit the fund's distributor to recoup all or a portion of the up-front
payment made to your financial advisor.

The CDSC will not be charged on shares acquired through reinvestment of
dividends or distributions or increases in the net asset value of shares.

CALCULATION OF CONTINGENT DEFERRED SALES CHARGE (CDSC)

CDSC WAIVERS

Any applicable CDSC may be waived in the following cases:

* redemptions through systematic withdrawal plans not exceeding annually:

* 12% of the lesser of the original purchase cost or current market
value for A Class shares

* 12% of the original purchase cost for B Class shares

* 12% of the lesser of the original purchase cost or current market
value for C Class shares

* distributions from IRAs due to attainment of age 59-1/2 for A Class and C
Class shares

* required minimum distributions from retirement accounts upon reaching age
70-1/2

* tax-free returns of excess contributions to IRAs

* redemptions due to death or post-purchase disability

* exchanges, unless the shares acquired by exchange are redeemed within the
original CDSC period

* IRA Rollovers from any American Century Advisor Fund held in a qualified
retirement plan, for A Class shares only

* if no broker was compensated for the sale

REINSTATEMENT PRIVILEGE

------
13

EXCHANGING SHARES

You may exchange shares of the fund for shares of the same class of another
American Century Advisor Fund without a sales charge if you meet the following
criteria:

* The exchange is for a minimum of $100

* For an exchange that opens a new account, the amount of the exchange must
meet or exceed the minimum account size requirement for the fund receiving
the exchange

BUYING AND SELLING SHARES

Your ability to purchase, exchange, redeem and transfer shares will be affected
by the policies of the financial intermediary through which you do business.
Some policy differences may include

* minimum investment requirements

* exchange policies

* fund choices

* cutoff time for investments

* trading restrictions

The fund has authorized certain FINANCIAL INTERMEDIARIES to accept orders on the
fund's behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on a fund's behalf before the time the net asset value is
determined in order to receive that day's share price. If those orders are
transmitted to American Century and paid for in accordance with the contract,
they will be priced at the net asset value next determined after your request is
received in the form required by the intermediary.

[graphic of triangle]

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS, INSURANCE

COMPANIES AND INVESTMENT ADVISORS.

MODIFYING OR CANCELING AN INVESTMENT

Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time and to reject any specific investment (including a purchase by
exchange). Additionally, we may refuse a purchase if, in our judgment, it is of
a size that would disrupt the management of the fund.

------
14

ABUSIVE TRADING PRACTICES

Because of the potentially harmful effects of abusive trading practices, the
funds' Board of Directors has approved American Century's abusive trading
policies and procedures, which are designed to reduce the frequency and effect
of these activities in our funds. These policies and procedures include
monitoring trading activity, imposing trading restrictions on certain accounts,
imposing redemption fees on certain funds, and using fair value pricing when
current market prices are not readily available. Although these efforts are
designed to discourage abusive trading practices, they cannot eliminate the
possibility that such activity will occur. American Century seeks to exercise
its judgment in implementing these tools to the best of its abilities in a
manner that it believes is consistent with shareholder interests.

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

* within seven days of the purchase, or

* within 30 days of the purchase, if it happens more than once per year.

As a heightened measure for the New Opportunities Fund, the board has approved
the imposition of a redemption fee for redemption of shares within a specified
number of days of purchase. See REDEMPTIONS, page 16, for a complete description
of the redemption fee applicable to the fund.

------
15

American Century's policies do not permit us to enter into arrangements with
fund shareholders that permit such shareholders to engage in frequent purchases
and redemptions of fund shares. Due to the complexity and subjectivity involved
in identifying abusive trading activity and the volume of shareholder
transactions American Century handles, there can be no assurance that American
Century's efforts will identify all trades or trading practices that may be
considered abusive. In addition, American Century's ability to monitor trades
that are placed by individual shareholders within group, or omnibus, accounts
maintained by financial intermediaries is severely limited because American
Century generally does not have access to the underlying shareholder account
information. However, American Century monitors aggregate trades placed in
omnibus accounts and seeks to work with financial intermediaries to discourage
shareholders from engaging in abusive trading practices and to impose
restrictions on excessive trades. There may be limitations on the ability of
financial intermediaries to impose restrictions on the trading practices of
their clients. As a result, American Century's ability to monitor and discourage
abusive trading practices in omnibus accounts may be limited.

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

REDEMPTIONS

[graphic of triangle]

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S SHARES.

------
16

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

If your redemption would exceed this limit, and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on a fund and its remaining investors.

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum initial investment amount for
any reason other than as a result of market fluctuation, we will notify you and
give you 90 days to meet the minimum. If you do not meet the deadline, American
Century reserves the right to redeem the shares in the account and send the
proceeds to your address of record. Please note that shares redeemed in this
manner may be subject to a sales charge if held less than the applicable time
period. You also may incur tax liability as a result of the redemption.

SIGNATURE GUARANTEES

A signature guarantee - which is different from a notarized signature - is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

* Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

* Your redemption proceeds or distribution amount is sent by wire or EFT to
a destination other than your personal bank account

* You are transferring ownership of an account over $100,000

We reserve the right to require a signature guarantee for other transactions, at
our discretion.

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

RIGHT TO CHANGE POLICIES

------
17

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

* for funds that invest in debt securities, a debt security has been
declared in default; or

* trading in a security has been halted during the trading day.

------
18

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

DISTRIBUTIONS

[graphic of triangle]

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH AS
STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

------
19

TAXES

The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also may result when investors sell fund shares after the net asset
value has increased or decreased.

Tax-Deferred Accounts

Taxable Accounts

If you own fund shares through a taxable account, you may be taxed on your
investments if the fund makes distributions or if you sell your fund shares.

Taxability of Distributions

Fund distributions may consist of income, such as dividends and interest earned
by a fund from its investments, or capital gains generated by a fund from the
sale of investment securities. Distributions of income are taxed as ordinary
income, unless they are designated as QUALIFIED DIVIDEND INCOME and you meet a
minimum required holding period with respect to your shares of the fund, in
which case distributions of income are taxed as long-term capital gains.

[graphic of triangle]

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY THE FUND FROM THE
STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED THAT THE
FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

------
20

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

Taxes on Transactions

Buying a Dividend

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

------
21

MULTIPLE CLASS INFORMATION

The shares offered by this prospectus are A, B, C and R Class shares, which are
offered primarily through employer-sponsored retirement plans or through
institutions like investment advisors, banks, broker-dealers and insurance
companies.

The difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution 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. Different
fees and expenses will affect performance.

Service, Distribution and Administrative Fees

Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. Each class offered by this prospectus has a 12b-1 plan. The plans
provide for the fund to pay annual fees of 0.25% for A Class, 1.00% for B and C
Class, and 0.50% for R Class to the distributor. The distributor may use these
fees to pay for certain ongoing shareholder and administrative services and for
distribution services, including past distribution services. The distributor
pays all or a portion of such fees to the investment advisors, banks,
broker-dealers and insurance companies that make the classes available. Because
these fees are used to pay for services that are not related to prospective
sales of the fund, each class will continue to make payments under its plan even
if it is closed to new investors. Because these fees are paid out of the fund's
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than other types of sales charges. The higher
fees for B and C Class shares may cost you more over time than paying the
initial sales charge for A Class shares. For additional information about the
plans and their terms, see MULTIPLE CLASS STRUCTURE in the statement of
additional information.

------
22

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, the advisor will pay such
service providers a fee for performing those services. Also, the advisor and the
fund's distributor may make payments for various additional services or other
expenses out of their profits or other available sources. Such payments may be
made for one or more of the following: (1) distribution services, which include
expenses incurred by intermediaries for their sales activities with respect to
the fund, such as preparing, printing and distributing sales literature and
advertising materials and compensating registered representatives or other
employees of such intermediary for their sales activities; (2) shareholder
services, such as providing individual and custom investment advisory services
to clients of the intermediary; and (3) marketing and promotional services,
including business planning assistance, educating personnel about the fund, and
sponsorship of sales meetings, which may include covering costs of providing
speakers, meals and other entertainment. The distributor may sponsor seminars
and conferences designed to educate intermediaries about the fund and may cover
the expenses associated with attendance at such meetings, including travel
costs. These payments and activities are intended to provide an incentive to
intermediaries to sell the fund by ensuring that they are educated about the
fund, and to help such intermediaries defray costs associated with offering the
fund. The amount of any payments described by this paragraph is determined by
the advisor or the distributor, and all such amounts are paid out of the
available assets of the advisor and distributor, and not by you or the fund. As
a result, the total expense ratio of the fund will not be affected by any such
payments.

------
23

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years or less, if the share class is not five years old. Because the
R Class shares for Fundamental Equity are new, financial information is not yet
available for this class.

On a per-share basis, each table includes as appropriate

* share price at the beginning of the period

* investment income and capital gains or losses

* distributions of income and capital gains paid to investors

* share price at the end of the period

Each table also includes some key statistics for the period as appropriate

* TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

* EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

* NET INCOME RATIO - the net investment income of the fund as a percentage
of average net assets

* PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio
that is replaced during the period

The Financial Highlights that follow are for the six-month period ended April
30, 2005, and have not been audited.

------
24

FUNDAMENTAL EQUITY FUND
A Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
--------------------------------------------------------------------------------
2005(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------------------------
Net Investment Income(2) -(3)
------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
--------------------------------------------------------------------------------
Total From Investment Operations (0.02)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.98
================================================================================
TOTAL RETURN(4) (0.20)%

(1) NOVEMBER 30, 2004 (INCEPTION) THROUGH APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) PER-SHARE AMOUNT IS LESS THAN $0.005.

(5) ANNUALIZED.

------
25

FUNDAMENTAL EQUITY FUND
B Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
--------------------------------------------------------------------------------
2005(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------------------------
Net Investment Loss(2) (0.03)
------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
--------------------------------------------------------------------------------
Total From Investment Operations (0.05)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.95
================================================================================
TOTAL RETURN(3) (0.50)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 2.03%(4)
------------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets (0.68)%(4)
------------------------------------------------------------
Portfolio Turnover Rate 44%
------------------------------------------------------------
Net Assets, End of Period (in thousands) $339
--------------------------------------------------------------------------------

(1) NOVEMBER 30, 2004 (INCEPTION) THROUGH APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(3) TOTAL RETURN ASSUMES REINVESTMENT OF NET INVESTMENT INCOME AND CAPITAL
GAINS DISTRIBUTIONS, IF ANY, AND DOES NOT REFLECT APPLICABLE SALES CHARGES.
TOTAL RETURNS FOR PERIODS LESS THAN ONE YEAR ARE NOT ANNUALIZED. THE TOTAL
RETURN OF THE CLASSES MAY NOT PRECISELY REFLECT THE CLASS EXPENSE
DIFFERENCES BECAUSE OF THE IMPACT OF CALCULATING THE NET ASSET VALUES TO
TWO DECIMAL PLACES. IF NET ASSET VALUES WERE CALCULATED TO THREE DECIMAL
PLACES, THE TOTAL RETURN DIFFERENCES WOULD MORE CLOSELY REFLECT THE CLASS
EXPENSE DIFFERENCES. THE CALCULATION OF NET ASSET VALUES TO TWO DECIMAL
PLACES IS MADE IN ACCORDANCE WITH SEC GUIDELINES AND DOES NOT RESULT IN ANY
GAIN OR LOSS OF VALUE BETWEEN ONE CLASS AND ANOTHER.

(4) ANNUALIZED.

------
26

FUNDAMENTAL EQUITY FUND
C Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
--------------------------------------------------------------------------------
2005(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00
--------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------------------------
Net Investment Loss(2) (0.03)
------------------------------------------------------------
Net Realized and Unrealized Loss (0.02)
--------------------------------------------------------------------------------
Total From Investment Operations (0.05)
--------------------------------------------------------------------------------
Net Asset Value, End of Period $9.95
================================================================================
TOTAL RETURN(3) (0.50)%

RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 2.03%(4)
------------------------------------------------------------
Ratio of Net Investment Loss to Average Net Assets (0.68)%(4)
------------------------------------------------------------
Portfolio Turnover Rate 44%
------------------------------------------------------------
Net Assets, End of Period (in thousands) $515
--------------------------------------------------------------------------------

(1) NOVEMBER 30, 2004 (INCEPTION) THROUGH APRIL 30, 2005 (UNAUDITED).

(2) COMPUTED USING AVERAGE SHARES OUTSTANDING THROUGHOUT THE PERIOD.

(4) ANNUALIZED.

------
27

NOTES

------
28

NOTES

------
29

MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS

Annual and Semiannual Reports

Statement of Additional Information (SAI)

You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET * EDGAR database at sec.gov
* By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section
Washington, D.C. 20549-0102

FUND REFERENCE FUND CODE TICKER SYMBOL
--------------------------------------------------------------------------------
Fundamental Equity Fund
A Class 113 AFDAX
--------------------------------------------------------------------------------
B Class 313 AFDBX
--------------------------------------------------------------------------------
C Class 613 AFDCX
--------------------------------------------------------------------------------
R Class 213 N/A
--------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419786
Kansas City, Missouri 64141-6786
1-800-378-9878

0507
SH-PRS-43929

July 29, 2005
American Century Investments
statement of additional information

American Century Mutual Funds, Inc.

Balanced Fund
Capital Growth Fund
Capital Value Fund
Focused Growth Fund
Fundamental Equity Fund
Giftrust® Fund
Growth Fund
Heritage Fund
New Opportunities Fund
New Opportunities II Fund
Select Fund
Ultra® Fund
Veedot® Fund
Vista(SM) Fund

THIS STATEMENT OF ADDITIONAL INFORMATION ADDS TO THE DISCUSSION IN THE FUNDS'
PROSPECTUSES DATED FEBRUARY 27, 2005, AND JULY 29, 2005, BUT IS NOT A
PROSPECTUS. THE STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH THE FUNDS' CURRENT PROSPECTUSES. IF YOU WOULD LIKE A COPY OF A
PROSPECTUS, PLEASE CONTACT US AT ONE OF THE ADDRESSES OR TELEPHONE NUMBERS
LISTED ON THE BACK COVER OR VISIT AMERICAN CENTURY'S WEB SITE AT
AMERICANCENTURY.COM.

THIS STATEMENT OF ADDITIONAL INFORMATION INCORPORATES BY REFERENCE CERTAIN
INFORMATION THAT APPEARS IN THE FUNDS' ANNUAL AND SEMIANNUAL REPORTS, WHICH ARE
DELIVERED TO ALL INVESTORS. YOU MAY OBTAIN A FREE COPY OF THE FUNDS' ANNUAL OR
SEMIANNUAL REPORTS BY CALLING 1-800-345-2021.

American Century Investment
Services, Inc., Distributor

[american century investments logo and text logo]

American Century Investment Services, Inc., Distributor

The American Century Investments logo, American Century and American Century
Investments are service marks of American Century Proprietary Holdings, Inc.

Table of Contents

THE FUNDS' HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

FUND INVESTMENT GUIDELINES . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Growth, Focused Growth,
Fundamental Equity, Giftrust, Growth, Heritage,
New Opportunities, New Opportunities II,
Select, Ultra, Veedot, Vista . . . . . . . . . . . . . . . . . . . . . 4
Balanced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

FUND INVESTMENTS AND RISKS . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment Strategies and Risks . . . . . . . . . . . . . . . . . . . .6
Investment Policies . . . . . . . . . . . . . . . . . . . . . . . . . 26
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . .28

MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
The Board of Directors . . . . . . . . . . . . . . . . . . . . . . . .31
Ownership of Fund Shares . . . . . . . . . . . . . . . . . . . . . . .36
Code of Ethics . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Proxy Voting Guidelines . . . . . . . . . . . . . . . . . . . . . . . 37
Disclosure of Portfolio Holdings . . . . . . . . . . . . . . . . . . .38

THE FUNDS' PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . 42

SERVICE PROVIDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . . .50
Transfer Agent and Administrator . . . . . . . . . . . . . . . . . . .55
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Custodian Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Independent Registered Public Accounting Firm . . . . . . . . . . . . 55

BROKERAGE ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
Capital Growth, Capital Value, Focused Growth, Fundamental
Equity, Giftrust, Growth, Heritage, New Opportunities, New
Opportunities II, Select, Ultra, Veedot, Vista
and the Equity Portion of Balanced . . . . . . . . . . . . . . . . . .56
The Fixed-Income Portion of Balanced . . . . . . . . . . . . . . . . .57
Regular Broker-Dealers . . . . . . . . . . . . . . . . . . . . . . . .57

INFORMATION ABOUT FUND SHARES . . . . . . . . . . . . . . . . . . . . . . . . 58
Multiple Class Structure . . . . . . . . . . . . . . . . . . . . . . .58
Buying and Selling Fund Shares . . . . . . . . . . . . . . . . . . . .69
Valuation of a Fund's Securities . . . . . . . . . . . . . . . . . . .69

TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Federal Income Tax . . . . . . . . . . . . . . . . . . . . . . . . . .71
State and Local Taxes . . . . . . . . . . . . . . . . . . . . . . . . 72

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

EXPLANATION OF FIXED-INCOME SECURITIES RATINGS . . . . . . . . . . . . . . . .73

------
1

THE FUNDS' HISTORY

American Century Mutual Funds, Inc. is a registered open-end management
investment company that was organized in 1957 as a Delaware corporation under
the name Twentieth Century Investors, Inc. On July 2, 1990, the company
reorganized as a Maryland corporation, and in January 1997 it changed its name
to American Century Mutual Funds, Inc. Throughout this statement of additional
information we refer to American Century Mutual Funds, Inc. as the corporation.

Each fund described in this statement of additional information is a separate
series of the corporation and operates for many purposes as if it were an
independent company. Each fund has its own investment objective, strategy,
management team, assets, and tax identification and stock registration numbers.

FUND TICKER SYMBOL INCEPTION DATE
--------------------------------------------------------------------------------
Balanced
Investor Class TWBIX 10/20/1988
--------------------------------------------------------------------------------
Institutional ABINX 05/01/2000
Class
--------------------------------------------------------------------------------
Advisor Class TWBAX 01/06/1997
--------------------------------------------------------------------------------
Capital Growth
Investor Class ACLIX 07/29/2005
--------------------------------------------------------------------------------
Institutional APLIX 07/29/2005
Class
--------------------------------------------------------------------------------
A Class ACCGX 02/27/2004
--------------------------------------------------------------------------------
B Class ACGBX 02/27/2004
--------------------------------------------------------------------------------
C Class ACPGX 02/27/2004
--------------------------------------------------------------------------------
R Class APWRX 07/29/2005
--------------------------------------------------------------------------------
Capital Value
Investor Class ACTIX 03/31/1999
--------------------------------------------------------------------------------
Institutional Class ACPIX 03/01/2002
--------------------------------------------------------------------------------
Advisor Class ACCVX 05/14/2003
--------------------------------------------------------------------------------
Focused Growth
Investor Class AFSIX 02/28/2005
--------------------------------------------------------------------------------
Fundamental Equity
Investor Class AFDIX 07/29/2005
--------------------------------------------------------------------------------
Institutional AFEIX 07/29/2005
Class
--------------------------------------------------------------------------------
A Class AFDAX 11/30/2004
--------------------------------------------------------------------------------
B Class AFDBX 11/30/2004
--------------------------------------------------------------------------------
C Class AFDCX 11/30/2004
--------------------------------------------------------------------------------
R Class AFDRX 07/29/2005
--------------------------------------------------------------------------------
Giftrust
Investor Class TWGTX 11/25/1983
--------------------------------------------------------------------------------
Growth
Investor Class TWCGX 10/31/1958
--------------------------------------------------------------------------------
Institutional Class TWGIX 06/16/1997
--------------------------------------------------------------------------------
C Class TWGCX 11/28/2001
--------------------------------------------------------------------------------
R Class AGWRX 08/29/2003
--------------------------------------------------------------------------------
Advisor Class TCRAX 06/04/1997
--------------------------------------------------------------------------------
Heritage
Investor Class TWHIX 11/10/1987
--------------------------------------------------------------------------------
Institutional ATHIX 06/16/1997
Class
--------------------------------------------------------------------------------
C Class AHGCX 06/26/2001
--------------------------------------------------------------------------------
Advisor Class ATHAX 07/11/1997
--------------------------------------------------------------------------------

------
2

FUND TICKER SYMBOL INCEPTION DATE
--------------------------------------------------------------------------------
New
Opportunities
Investor Class TWNOX 12/26/1996
--------------------------------------------------------------------------------
New
Opportunities II
Investor Class ANOIX 06/01/2001
--------------------------------------------------------------------------------
Institutional N/A N/A
Class
--------------------------------------------------------------------------------
A Class ANOAX 01/31/2003
--------------------------------------------------------------------------------
B Class ANOBX 01/31/2003
--------------------------------------------------------------------------------
C Class ANOCX 01/31/2003
--------------------------------------------------------------------------------
Select
Investor Class TWCIX 10/31/1958
--------------------------------------------------------------------------------
Institutional TWSIX 03/13/1997
Class
--------------------------------------------------------------------------------
A Class AASLX 01/31/2003
--------------------------------------------------------------------------------
B Class ABSLX 01/31/2003
--------------------------------------------------------------------------------
C Class ACSLX 01/31/2003
--------------------------------------------------------------------------------
R Class ASERX 07/29/2005
--------------------------------------------------------------------------------
Advisor Class TWCAX 08/08/1997
--------------------------------------------------------------------------------
Ultra
Investor Class TWCUX 11/02/1981
--------------------------------------------------------------------------------
Institutional TWUIX 11/14/1996
Class
--------------------------------------------------------------------------------
C Class TWCCX 10/29/2001
--------------------------------------------------------------------------------
R Class AULRX 08/29/2003
--------------------------------------------------------------------------------
Advisor Class TWUAX 10/02/1996
--------------------------------------------------------------------------------
Veedot
Investor Class AMVIX 11/30/1999
--------------------------------------------------------------------------------
Institutional AVDIX 08/01/2000
Class
--------------------------------------------------------------------------------
Vista
Investor Class TWCVX 11/25/1983
--------------------------------------------------------------------------------
Institutional TWVIX 11/14/1996
Class
--------------------------------------------------------------------------------
C Class TWVCX 07/18/2001
--------------------------------------------------------------------------------
R Class AVTRX 07/29/2005
--------------------------------------------------------------------------------
Advisor Class TWVAX 10/02/1996
--------------------------------------------------------------------------------

FUND INVESTMENT GUIDELINES

This section explains the extent to which the funds' advisor, American Century
Investment Management, Inc., can use various investment vehicles and strategies
in managing each fund's assets. Descriptions of the investment techniques and
risks associated with each appear in the section, INVESTMENT STRATEGIES AND
RISKS, which begins on page 6. In the case of the funds' principal investment
strategies, these descriptions elaborate upon discussions contained in the
prospectuses.

Each fund, other than Focused Growth and Veedot, is diversified as defined in
the Investment Company Act of 1940 (the Investment Company Act). Diversified
means that, with respect to 75% of its total assets, each fund will not invest
more than 5% of its total assets in the securities of a single issuer or own
more than 10% of the outstanding voting securities of a single issuer.

Focused Growth and Veedot are nondiversified. Nondiversified means that a fund
may invest a greater portion of its assets in a smaller number of securities
than a diversified fund. Although Veedot's portfolio managers expect that it
will ordinarily satisfy the requirements of a diversified fund, its
nondiversified status gives it more flexibility to invest heavily in the most
attractive companies identified by the fund's methodology.

------
3

To meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year

(1) no more than 25% of its total assets are invested in the securities of
a single issuer (other than the U.S. government or a regulated investment
company), and

(2) with respect to at least 50% of its total assets, no more than 5% of
its total assets are invested in the securities of a single issuer.

CAPITAL GROWTH, FOCUSED GROWTH, FUNDAMENTAL EQUITY, GIFTRUST, GROWTH, HERITAGE,
NEW OPPORTUNITIES, NEW OPPORTUNITIES II, SELECT, ULTRA, VEEDOT AND VISTA

In general, within the restrictions outlined here and in the funds'
prospectuses, the portfolio managers have broad powers to decide how to invest
fund assets, including the power to hold them uninvested.

Investments are varied according to what is judged advantageous under changing
economic conditions. It is the advisor's policy to retain maximum flexibility in
management without restrictive provisions as to the proportion of one or another
class of securities that may be held, subject to the investment restrictions
described on the following pages. It is the advisor's intention that each fund
will generally consist of domestic and foreign common stocks, convertible debt
securities and equity-equivalent securities. However, subject to the specific
limitations applicable to a fund, the funds' management teams may invest the
assets of each fund in varying amounts in other instruments and may use other
techniques, such as those reflected in Table 1 on page 5, when such a course is
deemed appropriate in order to pursue a fund's investment objective. Senior
securities that, in the opinion of the portfolio managers, are high-grade issues
also may be purchased for defensive purposes.

So long as a sufficient number of acceptable securities are available, the
portfolio managers intend to keep the funds fully invested, regardless of the
movement of stock or bond prices, generally. However, should a fund's investment
methodology fail to identify sufficient acceptable securities, or for any other
reason including the desire to take a temporary defensive position, the funds
may invest up to 100% of their assets in U.S. government securities. With regard
to Veedot, the portfolio managers intend to keep the fund fully invested so long
as the methodology identifies sufficient accelerating securities whose share
price patterns suggest their stock prices are likely to increase in value. In
most circumstances, each fund's actual level of cash and cash equivalents will
be less than 10%. The managers may use futures contracts as a way to expose each
fund's cash assets to the market while maintaining liquidity. As mentioned in
the prospectuses, the managers may not leverage a fund's portfolio; so there is
no greater market risk to the funds than if they purchase stocks. See DERIVATIVE
SECURITIES, page 8, SHORT-TERM SECURITIES, page 12 and FUTURES AND OPTIONS, page
13.

BALANCED

In general, within the restrictions outlined here and in the fund's prospectus,
the portfolio managers have broad powers to decide how to invest fund assets,
including the power to hold them uninvested. As a matter of fundamental policy,
the managers will invest approximately 60% of the fund's portfolio in equity
securities and the remainder in bonds and other fixed-income securities. The
equity portion of the fund generally will be invested in equity securities of
companies comprising the 1,500 largest publicly traded companies in the United
States. The fund's investment approach may cause its equity portion to be more
heavily invested in some industries than in others. However, it may not invest
more than 25% of its total assets in companies whose principal business
activities are in the same industry. In addition, as a diversified investment
company, its investments in a single issue are limited, as described above in
FUND INVESTMENT GUIDELINES. The portfolio managers also may purchase foreign
securities, convertible securities, equity-equivalent securities, non-leveraged
futures contracts and similar securities, and short-term securities. See Table
1, page 5.

------
4

The fixed-income portion of the fund generally will be invested in a diversified
portfolio of high-grade government, corporate, asset-backed and similar
securities. There are no maturity restrictions on the fixed-income securities in
which the fund invests, but under normal conditions the weighted average
maturity for the fixed-income portion of the fund will be in the 3-to-10-year
range. The managers will actively manage the portfolio, adjusting the
portfolio's weighted average maturity in response to expected changes in
interest rates. During periods of rising interest rates, or when rates are
expected to rise, a shorter weighted average maturity may be adopted in order to
reduce the effect of bond price declines on the fund's net asset value. When
interest rates are falling, or expected to fall, and bond prices rising, or
expected to rise, a longer weighted average portfolio maturity may be adopted.
The restrictions on the quality of the fixed-income securities the fund may
purchase are described in the prospectus. For a description of the fixed-income
securities rating system, see EXPLANATION OF FIXED-INCOME SECURITIES RATINGS, on
page 73.

CAPITAL VALUE

The portfolio managers will invest primarily in stocks of medium to large
companies that the managers believe are undervalued at the time of purchase. The
portfolio managers will usually purchase common stocks of U.S. and foreign
companies, but they can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, notes, bonds and other debt securities. See Table 1, below.

TABLE 1
AN "X" IN THE TABLE BELOW INDICATES THAT THE FUND MAY INVEST IN THE SECURITY
OR EMPLOY THE INVESTMENT TECHNIQUE THAT APPEARS IN THE CORRESPONDING ROW.

CAPITAL
GROWTH,
FOCUSED
GROWTH,
FUNDAMENTAL
EQUITY, NEW
GROWTH, OPPORTUNITIES,
ULTRA, HERITAGE, NEW CAPITAL
SELECT VISTA OPPORTUNITIES II GIFTRUST BALANCED VALUE VEEDOT
---------------------------------------------------------------------------------------------------
Foreign
Securities X X X X X X X
---------------------------------------------------------------------------------------------------
Convertible
Securities X X X X X X X
---------------------------------------------------------------------------------------------------
Short Sales X X X X X X X
---------------------------------------------------------------------------------------------------
Portfolio
Lending 33-1/3% 33-1/3% 33-1/3% 33-1/3% 33-1/3% 33-1/3% 33-1/3%
---------------------------------------------------------------------------------------------------
Derivative
Securities X X X X X X X
---------------------------------------------------------------------------------------------------
Investments in
Issuers with
Limited
Operating
Histories 5% 10% 10% 10% 5% X 10%
---------------------------------------------------------------------------------------------------
Other Investment
Companies 10% 10% 10% 10% 10% 10% 10%
---------------------------------------------------------------------------------------------------
Repurchase
Agreements X X X X X X X
---------------------------------------------------------------------------------------------------
When-Issued and
Forward
Commitment
Agreements X X X X X X X
---------------------------------------------------------------------------------------------------
Illiquid
Securities 15% 15% 15% 15% 15% 15% 15%
---------------------------------------------------------------------------------------------------
Short-Term
Securities X X X X X X X
---------------------------------------------------------------------------------------------------
Futures &
Options X X X X X X X
---------------------------------------------------------------------------------------------------
Forward
Currency
Exchange
Contracts X X X X X X X
---------------------------------------------------------------------------------------------------
Equity
Equivalents X X X X X X X
---------------------------------------------------------------------------------------------------

------
5

AN "X" IN THE TABLE BELOW INDICATES THAT THE FUND MAY INVEST IN THE SECURITY
OR EMPLOY THE INVESTMENT TECHNIQUE THAT APPEARS IN THE CORRESPONDING ROW.

CAPITAL
GROWTH,
FOCUSED
GROWTH,
FUNDAMENTAL NEW
EQUITY, OPPORTUNITIES,
GROWTH, HERITAGE, NEW CAPITAL
ULTRA, SELECT VISTA OPPORTUNITIES II GIFTRUST BALANCED VALUE VEEDOT
----------------------------------------------------------------------------------------------------------
Fixed-Income
Securities
----------------------------------------------------------------------------------------------------------
Debt Securities X X X X X X X
----------------------------------------------------------------------------------------------------------
Municipal Notes X X
----------------------------------------------------------------------------------------------------------
Municipal Bonds X X
----------------------------------------------------------------------------------------------------------
Variable- and X X
Floating-Rate
Obligations
----------------------------------------------------------------------------------------------------------
Obligations with X X
Term Puts Attached
----------------------------------------------------------------------------------------------------------
Tender Option Bonds X
----------------------------------------------------------------------------------------------------------
Zero-Coupon and X
Step-Coupon
Securities
----------------------------------------------------------------------------------------------------------
Inverse Floaters X X
----------------------------------------------------------------------------------------------------------
U.S. Government X X X X X X X
Securities
----------------------------------------------------------------------------------------------------------
Mortgage-Backed X
Securities
----------------------------------------------------------------------------------------------------------
Asset-Backed X
Securities
----------------------------------------------------------------------------------------------------------
TRACERS /TRAINS X
----------------------------------------------------------------------------------------------------------

FUND INVESTMENTS AND RISKS

INVESTMENT STRATEGIES AND RISKS

This section describes investment vehicles and techniques the portfolio managers
can use in managing a fund's assets. It also details the risks associated with
each, because each investment vehicle and technique contributes to a fund's
overall risk profile. To determine whether a fund may invest in a particular
investment vehicle, consult Table 1, page 5.

Foreign Securities

Each fund may invest an unlimited portion of its total assets in the securities
of foreign issuers, including foreign governments, when these securities meet
its standards of selection. Securities of foreign issuers may trade in the U.S.
or foreign securities markets.

The funds may invest in common stocks, convertible securities, preferred stocks,
bonds, notes and other debt securities of foreign issuers, foreign governments
and their agencies. The funds may purchase foreign securities of issuers whose
principal business activities are located in developed and emerging market
countries. The funds consider developed countries to include Australia, Austria,
Belgium, Bermuda, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong,
Ireland, Italy, Japan, Luxembourg, The Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom and the
United States.

Investments in foreign securities may present certain risks, including:

CURRENCY RISK - The value of the foreign investments held by the funds may be
significantly affected by changes in 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 falls against such currency. In addition,
the value of fund assets may be affected by losses and other expenses incurred
in converting between various currencies in order to purchase and sell foreign
securities, and by currency restrictions, exchange control regulation, currency
devaluations and political developments.

POLITICAL AND ECONOMIC RISK - The economies of many of the countries in which
the funds invest are not as developed as the economy of the United States and
may be subject to significantly different forces. Political or social
instability, expropriation, nationalization, confiscatory taxation and
limitations on the removal of funds or other assets also could adversely affect
the value of investments. Further, the funds may find it difficult or be unable
to enforce ownership rights, pursue legal remedies or obtain judgments in
foreign courts.

------
6

REGULATORY RISK - Foreign companies generally are not subject to the regulatory
controls imposed on U.S. issuers and, in general, there is less publicly
available information about foreign securities than is available about domestic
securities. Many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the funds may be reduced by a withholding tax at the source,
which would reduce dividend income payable to shareholders.

MARKET AND TRADING RISK - Brokerage commission rates in foreign countries, which
generally are fixed rather than subject to negotiation as in the United States,
are likely to be higher. The securities markets in many of the countries in
which the funds invest will have substantially less trading volume than the
principal U.S. markets. As a result, the securities of some companies in these
countries may be less liquid and more volatile than comparable U.S. securities.
Furthermore, one securities broker may represent all or a significant part of
the trading volume in a particular country, resulting in higher trading costs
and decreased liquidity due to a lack of alternative trading partners. There
generally is less government regulation and supervision of foreign stock
exchanges, brokers and issuers, which may make it difficult to enforce
contractual obligations.

CLEARANCE AND SETTLEMENT RISK - Foreign securities markets also have different
clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in clearance and settlement could result in temporary periods when assets
of the funds are uninvested and no return is earned. The inability of the funds
to make intended security purchases due to clearance and settlement problems
could cause the funds to miss attractive investment opportunities. Inability to
dispose of portfolio securities due to clearance and settlement problems could
result either in losses to the funds due to subsequent declines in the value of
the portfolio security or, if the fund has entered into a contract to sell the
security, liability to the purchaser.

OWNERSHIP RISK - Evidence of securities ownership may be uncertain in many
foreign countries. As a result, there is a risk that a fund's trade details
could be incorrectly or fraudulently entered at the time of the transaction,
resulting in a loss to the fund.

Convertible Securities

A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular time period
at a specified price or formula. A convertible security entitles the holder to
receive the interest paid or accrued on debt or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion or exchange, such securities ordinarily provide a
stream of income with generally higher yields than common stocks of the same or
similar issuers, but lower than the yield on non-convertible debt. Of course,
there can be no assurance of current income because issuers of convertible
securities may default on their obligations. In addition, there can be no
assurance of capital appreciation because the value of the underlying common
stock will fluctuate. Because of the conversion feature, the managers consider
some convertible securities to be equity equivalents.

The price of a convertible security will normally fluctuate in some proportion
to changes in the price of the underlying asset. A convertible security is
subject to risks relating to the activities of the issuer and/or general market
and economic conditions. The stream of income typically paid on a convertible
security may tend to cushion the security against declines in the price of the
underlying asset. However, the stream of income causes fluctuations based upon
changes in interest rates and the credit quality of the issuer. In general, the
value of a convertible security is a function of (1) its yield in comparison
with yields of other securities of comparable maturity and quality that do not
have a conversion privilege and (2) its worth, at market value, if converted or
exchanged into the underlying common stock. The price of a convertible security
often reflects such variations in the price of the underlying common stock in a
way that a non-convertible security does not. At any given

------
7

time, investment value generally depends upon such factors as the general level
of interest rates, the yield of similar nonconvertible securities, the financial
strength of the issuer and the seniority of the security in the issuer's capital
structure.

A convertible security may be subject to redemption at the option of the issuer
at a predetermined price. If a convertible security held by a fund is called for
redemption, the fund would be required to permit the issuer to redeem the
security and convert it to underlying common stock or to cash, or would sell the
convertible security to a third party, which may have an adverse effect on the
fund. A convertible security may feature a put option that permits the holder of
the convertible security to sell that security back to the issuer at a
predetermined price. A fund generally invests in convertible securities for
their favorable price characteristics and total return potential and normally
would not exercise an option to convert unless the security is called or
conversion is forced.

Short Sales

A fund may engage in short sales for cash management purposes only if, at the
time of the short sale, the fund owns or has the right to acquire securities
equivalent in kind and amount to the securities being sold short.

In a short sale, the seller does not immediately deliver the securities sold and
is said to have a short position in those securities until delivery occurs. To
make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If a fund engages in a short sale, the fund's custodian will segregate
cash, cash equivalents or other appropriate liquid securities on its records in
an amount sufficient to meet the purchase price. There will be certain
additional transaction costs associated with short sales, but the fund will
endeavor to offset these costs with income from the investment of the cash
proceeds of short sales.

Portfolio Lending

In order to realize additional income, a fund may lend its portfolio securities.
Such loans may not exceed one-third of the fund's total assets valued at market
except

* through the purchase of debt securities in accordance with its investment
objectives, policies and limitations, or

* by engaging in repurchase agreements with respect to portfolio securities.

Derivative Securities

To the extent permitted by its investment objectives and policies, each of the
funds may invest in securities that are commonly referred to as derivative
securities. Generally, a derivative security is a financial arrangement the
value of which is based on, or derived from, a traditional security, asset, or
market index. Certain derivative securities are described more accurately as
index/structured securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators (reference indices).

Some derivative securities, such as mortgage-related and other asset-backed
securities, are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivative securities and many different ways
to use them. Futures and options are commonly used for traditional hedging
purposes to attempt to protect a fund from exposure to changing interest rates,
securities prices, or

------
8

currency exchange rates and for cash management purposes as a low-cost method of
gaining exposure to a particular securities market without investing directly in
those securities.

No fund may invest in a derivative security unless the reference index or the
instrument to which it relates is an eligible investment for the fund. For
example, a security whose underlying value is linked to the price of oil would
not be a permissible investment because the funds may not invest in oil and gas
leases or futures.

The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.

There are risks associated with investing in derivative securities, including:

* the risk that the underlying security, interest rate, market index or
other financial asset will not move in the direction the portfolio managers
anticipate;

* the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;

* the risk that adverse price movements in an instrument can result in a
loss substantially greater than a fund's initial investment; and

* the risk that the counterparty will fail to perform its obligations.

The Board of Directors has approved the advisor's policy regarding investments
in derivative securities. That policy specifies factors that must be considered
in connection with a purchase of derivative securities and provides that a fund
may not invest in a derivative security if it would be possible for a fund to
lose more money than the notional value of the investment. The policy also
establishes a committee that must review certain proposed purchases before the
purchases can be made. The advisor will report on fund activity in derivative
securities to the Board of Directors as necessary.

Swap Agreements

Each fund may invest in swap agreements, consistent with its investment
objective and strategies. A fund may enter into a swap agreement in order to,
for example, 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; protect against currency fluctuations; attempt to
manage duration to protect against any increase in the price of securities the
fund anticipates purchasing at a later date; or gain exposure to certain markets
in the most economical way possible.

Swap agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments, which may be adjusted for an interest factor. The
gross returns to be exchanged or "swapped" between the parties are generally
calculated with respect to a "notional amount," i.e., the return on or increase
in value of a particular dollar amount invested at a particular interest rate,
in a particular foreign currency, or in a "basket" of securities representing a
particular index. Forms of swap agreements include, for example, interest rate
swaps, under which fixed- or floating-rate interest payments on a specific
principal amount are exchanged and total return swaps, under which one party
agrees to pay the other the total return of a defined underlying asset (usually
an index, stock, bond or defined portfolio of loans and mortgages) in exchange
for fee payments, often a variable stream of cashflows based on LIBOR. The funds
may enter into credit default swap agreements to hedge an existing position by
purchasing or selling credit protection. Credit default swaps enable an investor
to buy/sell protection against a credit event of a specific issuer. The seller
of credit protection against a security or basket of securities receives an
up-front or periodic payment to compensate against potential default event(s).
The fund may enhance returns by selling protection or attempt to mitigate credit
risk by buying protection. Market supply and demand factors may cause
distortions between the cash securities market and the credit default swap
market.

------
9

Whether a fund's use of swap agreements will be successful depends on the
advisor's ability to predict correctly whether certain types of investments are
likely to produce greater returns than other investments. Interest rate swaps
could result in losses if interest rate changes are not correctly anticipated by
the fund. Total return swaps could result in losses if the reference index,
security, or investments do not perform as anticipated by the fund. Credit
default swaps could result in losses if the fund does not correctly evaluate the
creditworthiness of the issuer on which the credit default swap is based.
Because they are two-party contracts and because they may have terms of greater
than seven days, swap agreements may be considered to be illiquid. Moreover, a
fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The funds will enter into swap agreements only with counterparties
that meet certain standards of creditworthiness. Certain restrictions imposed on
the funds by the Internal Revenue Code may limit the funds' ability to use swap
agreements. The swaps market is a relatively new market and is largely
unregulated. It is possible that developments in the swaps market, including
potential government regulation, could adversely affect a fund's ability to
terminate existing swap agreements or to realize amounts to be received under
such agreements.

Investment in Issuers with Limited Operating Histories

The funds may invest a portion of their assets in the equity securities of
issuers with limited operating histories. The managers consider an issuer to
have a limited operating history if that issuer has a record of less than three
years of continuous operation. The managers will consider periods of capital
formation, incubation, consolidations, and research and development in
determining whether a particular issuer has a record of three years of
continuous operation.

Investments in securities of issuers with limited operating histories may
involve greater risks than investments in securities of more mature issuers. By
their nature, such issuers present limited operating histories and financial
information upon which the managers may base their investment decision on behalf
of the funds. In addition, financial and other information regarding such
issuers, when available, may be incomplete or inaccurate.

For purposes of this limitation, "issuers" refers to operating companies that
issue securities for the purposes of issuing debt or raising capital as a means
of financing their ongoing operations. It does not, however, refer to entities,
corporate or otherwise, that are created for the express purpose of securitizing
obligations or income streams. For example, a fund's investments in a trust
created for the purpose of pooling mortgage obligations would not be subject to
the limitation.

Repurchase Agreements

Each fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of that fund.

A repurchase agreement occurs when, at the time a fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.

Because the security purchased constitutes collateral for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the seller's ability to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

------
10

The funds will limit repurchase agreement transactions to securities issued by
the U.S. government and its agencies and instrumentalities, and will enter into
such transactions with those banks and securities dealers who are deemed
creditworthy by the funds' advisor.

Repurchase agreements maturing in more than seven days would count toward a
fund's 15% limit on illiquid securities.

When-Issued and Forward Commitment Agreements

The funds may sometimes purchase new issues of securities on a when-issued or
forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future
date.

For example, a fund may sell a security and at the same time make a commitment
to purchase the same or a comparable security at a future date and specified
price. Conversely, a fund may purchase a security and at the same time make a
commitment to sell the same or a comparable security at a future date and
specified price. These types of transactions are executed simultaneously in what
are known as dollar-rolls, buy/sell back transactions, cash and carry, or
financing transactions. For example, a broker-dealer may seek to purchase a
particular security that a fund owns. The fund will sell that security to the
broker-dealer and simultaneously enter into a forward commitment agreement to
buy it back at a future date. This type of transaction generates income for the
fund if the dealer is willing to execute the transaction at a favorable price in
order to acquire a specific security.

When purchasing securities on a when-issued or forward commitment basis, a fund
assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of that security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.

In purchasing securities on a when-issued or forward commitment basis, a fund
will segregate cash, cash equivalents or other appropriate liquid securities on
its record in an amount sufficient to meet the purchase price. When the time
comes to pay for the when-issued securities, the fund will meet its obligations
with available cash, through the sale of securities, or, although it would not
normally expect to do so, by selling the when-issued securities themselves
(which may have a market value greater or less than the fund's payment
obligation). Selling securities to meet when-issued or forward commitment
obligations may generate taxable capital gains or losses.

Restricted and Illiquid Securities

The funds may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the funds' criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among
qualified institutional investors rather than the general public. Although Rule
144A securities are considered restricted securities, they are not necessarily
illiquid.

With respect to securities eligible for resale under Rule 144A, the staff of the
Securities and Exchange Commission (SEC) has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors has delegated the day-to-day function of
determining the liquidity

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11

of Rule 144A securities to the portfolio managers. The board retains the
responsibility to monitor the implementation of the guidelines and procedures it
has adopted.

Because the secondary market for restricted securities is generally limited to
certain qualified institutional investors, the liquidity of such securities may
be limited accordingly and a fund may, from time to time, hold a Rule 144A or
other security that is illiquid. In such an event, the portfolio managers will
consider appropriate remedies to minimize the effect on such fund's liquidity.

Short-Term Securities

In order to meet anticipated redemptions, anticipated purchases of additional
securities for a fund's portfolio, or, in some cases, for temporary defensive
purposes, these funds may invest a portion of their assets in money market and
other short-term securities.

Examples of those securities include:

* Securities issued or guaranteed by the U.S. government and its agencies
and instrumentalities

* Commercial Paper

* Certificates of Deposit and Euro Dollar Certificates of Deposit

* Bankers' Acceptances

* Short-term notes, bonds, debentures or other debt instruments

* Repurchase agreements

* Money market funds

Under the Investment Company Act, a fund's investment in other investment
companies (including money market funds) currently is limited to (a) 3% of the
total voting stock of any one investment company; (b) 5% of the fund's total
assets with respect to any one investment company; and (c) 10% of a fund's total
assets in the aggregate. These investments may include investments in money
market funds managed by the advisor. Any investment in money market funds must
be consistent with the investment policies and restrictions of the fund making
the investment.

Other Investment Companies

Each of the funds may invest up to 10% of its total assets in other investment
companies, such as mutual funds, provided that the investment is consistent with
the fund's investment policies and restrictions. These investments may include
investments in money market funds managed by the advisor. Under the Investment
Company Act, a fund's investment in such securities, subject to certain
exceptions, currently is limited to

* 3% of the total voting stock of any one investment company;

* 5% of the fund's total assets with respect to any one investment company;
and

* 10% of a fund's total assets in the aggregate.

Such purchases will be made in the open market where no commission or profit to
a sponsor or dealer results from the purchase other than the customary brokers'
commissions. As a shareholder of another investment company, a fund would bear,
along with other shareholders, its pro rata portion of the other investment
company's expenses, including advisory fees. These expenses would be in addition
to the management fee that each fund bears directly in connection with its own
operations.

Each fund may invest in exchange traded funds (ETFs), such as Standard & Poor's
Depositary Receipts (SPDRs) and the NASDAQ-100 index-tracking ETF (CUBES or
QQQQ), with the same percentage limitations as investments in registered
investment companies. ETFs are a type of index fund bought and sold on a
securities exchange. An ETF trades like common stock and represents a fixed
portfolio of securities designed to track the performance and dividend yield of
a particular domestic or foreign market index. A fund may purchase an ETF to
temporarily gain exposure to a portion of the U.S. or a foreign market

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12

while awaiting purchase of underlying securities. The risks of owning an ETF
generally reflect the risks of owning the underlying securities they are
designed to track, although the lack of liquidity on an ETF could result in it
being more volatile. Additionally, ETFs have management fees, which increase
their cost.

Futures and Options

Each fund may enter into futures contracts, options or options on futures
contracts. Futures contracts provide for the sale by one party and purchase by
another party of a specific security at a specified future time and price.
Generally, futures transactions will be used to:

* protect against a decline in market value of the fund's securities
(taking a short futures position),

* protect against the risk of an increase in market value for securities in
which the fund generally invests at a time when the fund is not fully
invested (taking a long futures position), or

* provide a temporary substitute for the purchase of an individual security
that may not be purchased in an orderly fashion.

Some futures and options strategies, such as selling futures, buying puts and
writing calls, hedge a fund's investments against price fluctuations. Other
strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure.

Although other techniques may be used to control a fund's exposure to market
fluctuations, the use of futures contracts may be a more effective means of
hedging this exposure. While a fund pays brokerage commissions in connection
with opening and closing out futures positions, these costs are lower than the
transaction costs incurred in the purchase and sale of the underlying
securities.

For example, the sale of a future by a fund means the fund becomes obligated to
deliver the security (or securities, in the case of an index future) at a
specified price on a specified date. The purchase of a future means the fund
becomes obligated to buy the security (or securities) at a specified price on a
specified date. The portfolio managers may engage in futures and options
transactions based on securities indices, provided that the transactions are
consistent with the fund's investment objectives. Examples of indices that may
be used include the Bond Buyer Index of Municipal Bonds for fixed-income funds,
or the S&P 500 Index for equity funds. The managers also may engage in futures
and options transactions based on specific securities, such as U.S. Treasury
bonds or notes. Futures contracts are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission (CFTC), a U.S. government agency.

Index futures contracts differ from traditional futures contracts in that when
delivery takes place, no stocks or bonds change hands. Instead, these contracts
settle in cash at the spot market value of the index. Although other types of
futures contracts by their terms call for actual delivery or acceptance of the
underlying securities, in most cases the contracts are closed out before the
settlement date. A futures position may be closed by taking an opposite position
in an identical contract (i.e., buying a contract that has previously been sold
or selling a contract that has previously been bought).

Unlike when the fund purchases or sells a security, no price is paid or received
by the fund upon the purchase or sale of the future. Initially, the fund will be
required to deposit an amount of cash or securities equal to a varying specified
percentage of the contract amount. This amount is known as initial margin. The
margin deposit is intended to ensure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. A margin deposit does not constitute a margin
transaction for purposes of the fund's investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.

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13

In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin accounts generally is not
income-producing. However, coupon bearing securities, such as Treasury bills and
bonds, held in margin accounts generally will earn income. Subsequent payments
to and from the broker, called variation margin, will be made on a daily basis
as the price of the underlying security or index fluctuates, making the future
more or less valuable, a process known as marking the contract to market.
Changes in variation margin are recorded by the fund as unrealized gains or
losses. At any time prior to expiration of the future, the fund may elect to
close the position by taking an opposite position. A final determination of
variation margin is then made; additional cash is required to be paid by or
released to the fund and the fund realizes a loss or gain.

RISKS RELATED TO FUTURES AND OPTIONS TRANSACTIONS

Futures and options prices can be volatile, and trading in these markets
involves certain risks. If the portfolio managers apply a hedge at an
inappropriate time or judge interest rate or equity market trends incorrectly,
futures and options strategies may lower a fund's return.

A fund could suffer losses if it is unable to close out its position because of
an illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the portfolio managers consider it appropriate or
desirable to do so. In the event of adverse price movements, a fund would be
required to continue making daily cash payments to maintain its required margin.
If the fund had insufficient cash, it might have to sell portfolio securities to
meet daily margin requirements at a time when the portfolio managers would not
otherwise elect to do so. In addition, a fund may be required to deliver or take
delivery of instruments underlying futures contracts it holds. The portfolio
managers will seek to minimize these risks by limiting the futures contracts
entered into on behalf of the funds to those traded on national futures
exchanges and for which there appears to be a liquid secondary market.

A fund could suffer losses if the prices of its futures and options positions
were poorly correlated with its other investments, or if securities underlying
futures contracts purchased by a fund had different maturities than those of the
portfolio securities being hedged. Such imperfect correlation may give rise to
circumstances in which a fund loses money on a futures contract at the same time
that it experiences a decline in the value of its hedged portfolio securities. A
fund also could lose margin payments it has deposited with a margin broker, if,
for example, the broker became bankrupt.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of the trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.

OPTIONS ON FUTURES

By purchasing an option on a futures contract, a fund obtains the right, but not
the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is exercised.

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14

Although they do not currently intend to do so, the funds may write (or sell)
call options that obligate them to sell (or deliver) the option's underlying
instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the funds would give up some
ability to participate in a price increase on the underlying security. If a fund
were to engage in options transactions, it would own the futures contract at the
time a call were written and would keep the contract open until the obligation
to deliver it pursuant to the call expired.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTIONS

Each fund may enter into futures contracts, options or options on futures
contracts.

Under the Commodity Exchange Act, a fund may enter into futures and options
transactions (a) for hedging purposes without regard to the percentage of assets
committed to initial margin and option premiums or (b) for purposes other than
hedging, provided that assets committed to initial margin and option premiums do
not exceed 5% of the fund's total assets. To the extent required by law, each
fund will segregate cash, cash equivalents or other appropriate liquid
securities on its records in an amount sufficient to cover its obligations under
the futures contracts and options.

Forward Currency Exchange Contracts

Each fund may purchase and sell foreign currency on a spot (i.e., cash) basis
and may engage in forward currency contracts, currency options and futures
transactions for hedging or any other lawful purpose. See DERIVATIVE SECURITIES,
page 8.

The funds expect to use forward currency contracts under two circumstances:

(1) When the portfolio managers are purchasing or selling a security
denominated in a foreign currency and wish to lock in the U.S. dollar price
of that security, the portfolio managers would be able to enter into a
forward currency contract to do so;

(2) When the portfolio managers believe that the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, a
fund would be able to enter into a forward currency contract to sell
foreign currency for a fixed U.S. dollar amount approximating the value of
some or all of its portfolio securities either denominated in, or whose
value is tied to, such foreign currency.

In the first circumstance, when a fund enters into a trade for the purchase or
sale of a security denominated in a foreign currency, it may be desirable to
establish (lock in) the U.S. dollar cost or proceeds. By entering into forward
currency contracts in U.S. dollars for the purchase or sale of a foreign
currency involved in an underlying security transaction, the fund will be able
to protect itself against a possible loss between trade and settlement dates
resulting from the adverse change in the relationship between the U.S. dollar
and the subject foreign currency.

In the second circumstance, when the portfolio managers believe that the
currency of a particular country may suffer a substantial decline relative to
the U.S. dollar, a fund could enter into a forward currency contract to sell for
a fixed dollar amount the amount in foreign currencies approximating the value
of some or all of its portfolio securities either denominated in, or whose value
is tied to, such foreign currency. The fund will cover outstanding forward
contracts by maintaining liquid portfolio securities denominated in, or whose
value is tied to, the currency underlying the forward contract or the currency
being hedged. To the extent that the fund is not able to cover its forward
currency positions with underlying portfolio securities, the fund will segregate
on its records cash or other liquid assets having a value equal to the aggregate
amount of the fund's commitments under the forward currency contact.

The precise matching of forward currency contracts in the amounts and values of
securities involved generally would not be possible because the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward currency contract is
entered into and the date

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15

it matures. Predicting short-term currency market movements is extremely
difficult, and the successful execution of short-term hedging strategy is highly
uncertain. The portfolio managers do not intend to enter into such contracts on
a regular basis. Normally, consideration of the prospect for currency parities
will be incorporated into the long-term investment decisions made with respect
to overall diversification strategies. However, the portfolio managers believe
that it is important to have flexibility to enter into such forward currency
contracts when they determine that a fund's best interests may be served.

When the forward currency contract matures, the fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate the obligation to deliver the foreign currency by
purchasing an offsetting forward currency contract with the same currency trader
that obligates the fund to purchase, on the same maturity date, the same amount
of the foreign currency.

It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward currency contract.
Accordingly, it may be necessary for a fund to purchase additional foreign
currency on the spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of foreign currency the
fund is obligated to deliver and if a decision is made to sell the security to
make delivery of the foreign currency the fund is obligated to deliver.

Equity Equivalents

In addition to investing in common stocks, the funds may invest in other equity
securities and equity equivalents, including securities that permit a fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include preferred
stock, convertible preferred stock and convertible debt securities.

Equity equivalents also may include securities whose value or return is derived
from the value or return of a different security.

Debt Securities

Each of the funds may invest in debt securities when the portfolio managers
believe such securities represent an attractive investment for the fund. The
funds may invest in debt securities for income, or as a defensive strategy when
the managers believe adverse economic or market conditions exist.

The value of debt securities in which the funds may invest will fluctuate based
upon changes in interest rates and the credit quality of the issuer. Debt
securities generally will be limited to investment-grade obligations. Investment
grade means that at the time of purchase, such obligations are rated within the
four highest categories by a nationally recognized statistical rating
organization (for example, at least Baa by Moody's Investors Service, Inc. or
BBB by Standard & Poor's Corporation), or, if not rated, are of equivalent
investment quality as determined by the fund's advisor. According to Moody's,
bonds rated Baa are medium-grade and possess some speculative characteristics. A
BBB rating by S&P indicates S&P's belief that a security exhibits a satisfactory
degree of safety and capacity for repayment, but is more vulnerable to adverse
economic conditions and changing circumstances.

In addition, the value of a fund's investments in fixed-income securities will
change as prevailing interest rates change. In general, the prices of such
securities vary inversely with interest rates. As prevailing interest rates
fall, the prices of bonds and other securities that trade on a yield basis
generally rise. When prevailing interest rates rise, bond prices generally fall.
Depending upon the particular amount and type of fixed-income securities
holdings of a fund, these changes may impact the net asset value of that fund's
shares.

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Municipal Notes

Municipal notes are issued by state and local governments or government entities
to provide short-term capital or to meet cash flow needs.

Tax Anticipation Notes (TANs) are issued in anticipation of seasonal tax
revenues, such as ad valorem property, income, sales, use and business taxes,
and are payable from these future taxes. TANs usually are general obligations of
the issuer. General obligations are backed by the issuer's full faith and credit
based on its ability to levy taxes for the timely payment of interest and
repayment of principal, although such levies may be constitutionally or
statutorily limited as to rate or amount.

Revenue Anticipation Notes (RANs) are issued with the expectation that receipt
of future revenues, such as federal revenue sharing or state aid payments, will
be used to repay the notes. Typically, these notes also constitute general
obligations of the issuer.

Bond Anticipation Notes (BANs) are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds provide
the money for repayment of the notes.

Municipal Bonds

Municipal bonds, which generally have maturities of more than one year when
issued, are designed to meet longer-term capital needs. These securities have
two principal classifications: general obligation bonds and revenue bonds.

General Obligation (GO) bonds are issued by states, counties, cities, towns and
regional districts to fund a variety of public projects, including construction
of and improvements to schools, highways, and water and sewer systems. GO bonds
are backed by the issuer's full faith and credit based on its ability to levy
taxes for the timely payment of interest and repayment of principal, although
such levies may be constitutionally or statutorily limited as to rate or amount.

Revenue Bonds are not backed by an issuer's taxing authority; rather, interest
and principal are secured by the net revenues from a project or facility.
Revenue bonds are issued to finance a variety of capital projects, including
construction or refurbishment of utility and waste disposal systems, highways,
bridges, tunnels, air and seaport facilities, schools and hospitals. Many
revenue bond issuers provide additional security in the form of a debt-service
reserve fund that may be used to make payments of interest and repayments of
principal on the issuer's obligations. Some revenue bond financings are further
protected by a state's assurance (without obligation) that it will make up
deficiencies in the debt-service reserve fund.

Industrial Development Bonds (IDBs), a type of revenue bond, are issued by or on
behalf of public authorities to finance privately operated facilities. These
bonds are used to finance business, manufacturing, housing, athletic and
pollution control projects, as well as public facilities such as mass transit
systems, air and seaport facilities and parking garages. Payment of interest and
repayment of principal on an IDB depend solely on the ability of the facility's
operator to meet financial obligations, and on the pledge, if any, of the real
or personal property financed. The interest earned on IDBs may be subject to the
federal alternative minimum tax.

Variable- and Floating-Rate Obligations

Variable- and floating-rate demand obligations (VRDOs and FRDOs) carry rights
that permit holders to demand payment of the unpaid principal plus accrued
interest, from the issuers or from financial intermediaries. Floating-rate
securities, or floaters, have interest rates that change whenever there is a
change in a designated base rate; variable-rate instruments provide for a
specified, periodic adjustment in the interest rate, which typically is based on
an index. These rate formulas are designed to result in a market value for the
VRDO or FRDO that approximates par value.

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17

Obligations with Term Puts Attached

Balanced and Capital Value may invest in fixed-rate bonds subject to third-party
puts and participation interests in such bonds that are held by a bank in trust
or otherwise, which have tender options or demand features attached. These
tender options or demand features permit the funds to tender (or put) their
bonds to an institution at periodic intervals and to receive the principal
amount thereof. The portfolio managers expect that the funds will pay more for
securities with puts attached than for securities without these liquidity
features.

Because it is difficult to evaluate the likelihood of exercise or the potential
benefit of a put, puts normally will be determined to have a value of zero,
regardless of whether any direct or indirect consideration is paid. Accordingly,
puts as separate securities are not expected to affect the funds' weighted
average maturities. When a fund has paid for a put, the cost will be reflected
as unrealized depreciation on the underlying security for the period the put is
held. Any gain on the sale of the underlying security will be reduced by the
cost of the put.

There is a risk that the seller of an obligation with a put attached will not be
able to repurchase the underlying obligation when (or if) a fund attempts to
exercise the put. To minimize such risks, the funds will purchase obligations
with puts attached only from sellers deemed creditworthy by the portfolio
managers under the direction of the Board of Directors.

Tender Option Bonds

Tender Option Bonds (TOBs) were created to increase the supply of high-quality,
short-term tax-exempt obligations, and thus they are of particular interest to
money market funds. However, Capital Value may purchase these instruments.

TOBs are created by municipal bond dealers who purchase long-term tax-exempt
bonds in the secondary market, place the certificates in trusts, and sell
interests in the trusts with puts or other liquidity guarantees attached. The
credit quality of the resulting synthetic short-term instrument is based on the
put provider's short-term rating and the underlying bond's long-term rating.

There is some risk that a remarketing agent will renege on a tender option
agreement if the underlying bond is downgraded or defaults. Because of this, the
portfolio managers monitor the credit quality of bonds underlying the funds' TOB
holdings and intend to sell or put back any TOB if the rating on the underlying
bond falls below the second-highest rating category designated by a rating
agency.

Zero-Coupon and Step-Coupon Securities

Balanced may purchase zero-coupon debt securities. Zero-coupon securities do not
make regular cash interest payments, and are sold at a deep discount to their
face value.

The fund may also purchase step-coupon or step-rate debt securities. Instead of
having a fixed coupon for the life of the security, coupon or interest payments
may increase to predetermined rates at future dates. The issuer generally
retains the right to call the security. Some step-coupon securities are issued
with no coupon payments at all during an initial period, and only become
interest-bearing at a future date; these securities are sold at a deep discount
to their face value.

Although zero-coupon and certain step-coupon securities may not pay current cash
income, federal income tax law requires the holder to include in income each
year the portion of any original issue discount and other noncash income on such
securities accrued during that year. In order to continue to qualify for
treatment as a regulated investment company under the Internal Revenue Code and
avoid certain excise tax, the funds are required to make distributions of any
original issue discount and other noncash income accrued for each year.
Accordingly, the funds may be required to dispose of other portfolio securities,
which may occur in periods of adverse market prices, in order to generate a case
to meet these distribution requirements.

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Inverse Floaters

Balanced and Capital Value may hold inverse floaters. An inverse floater is a
type of derivative security that bears an interest rate that moves inversely to
market interest rates. As market interest rates rise, the interest rate on
inverse floaters goes down, and vice versa. Generally, this is accomplished by
expressing the interest rate on the inverse floater as an above-market fixed
rate of interest, reduced by an amount determined by reference to a market-based
or bond-specific floating interest rate (as well as by any fees associated with
administering the inverse floater program).

Inverse floaters may be issued in conjunction with an equal amount of Dutch
Auction floating-rate bonds (floaters), or a market-based index may be used to
set the interest rate on these securities. A Dutch Auction is an auction system
in which the price of the security is gradually lowered until it meets a
responsive bid and is sold. Floaters and inverse floaters may be brought to
market by (1) a broker-dealer who purchases fixed-rate bonds and places them in
a trust, or (2) an issuer seeking to reduce interest expenses by using a
floater/inverse floater structure in lieu of fixed-rate bonds.

In the case of a broker-dealer structured offering (where underlying fixed-rate
bonds have been placed in a trust), distributions from the underlying bonds are
allocated to floater and inverse floater holders in the following manner:

(i) Floater holders receive interest based on rates set at a six-month
interval or at a Dutch Auction, which is typically held every 28 to 35
days. Current and prospective floater holders bid the minimum interest rate
that they are willing to accept on the floaters, and the interest rate is
set just high enough to ensure that all of the floaters are sold.

(ii) Inverse floater holders receive all of the interest that remains, if
any, on the underlying bonds after floater interest and auction fees are
paid. The interest rates on inverse floaters may be significantly reduced,
even to zero, if interest rates rise.

Procedures for determining the interest payment on floaters and inverse floaters
brought to market directly by the issuer are comparable, although the interest
paid on the inverse floaters is based on a presumed coupon rate that would have
been required to bring fixed-rate bonds to market at the time the floaters and
inverse floaters were issued.

Where inverse floaters are issued in conjunction with floaters, inverse floater
holders may be given the right to acquire the underlying security (or to create
a fixed-rate bond) by calling an equal amount of corresponding floaters. The
underlying security may then be held or sold. However, typically, there are time
constraints and other limitations associated with any right to combine interests
and claim the underlying security.

Floater holders subject to a Dutch Auction procedure generally do not have the
right to put back their interests to the issuer or to a third party. If a Dutch
Auction fails, the floater holder may be required to hold its position until the
underlying bond matures, during which time interest on the floater is capped at
a predetermined rate.

The secondary market for floaters and inverse floaters may be limited. The
market value of inverse floaters tends to be significantly more volatile than
fixed-rate bonds.

U.S. Government Securities

U.S. Treasury bills, notes, zero-coupon bonds and other bonds are direct
obligations of the U.S. Treasury, which has never failed to pay interest and
repay principal when due. Treasury bills have initial maturities of one year or
less, Treasury notes from two to 10 years, and Treasury bonds more than 10
years. Although U.S. Treasury securities carry little principal risk if held to
maturity, the prices of these securities (like all debt securities) change
between issuance and maturity in response to fluctuating market interest rates.

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A number of U.S. government agencies and instrumentalities issue debt
securities. These agencies generally are created by Congress to fulfill a
specific need, such as providing credit to home buyers or farmers. Among these
agencies are the Federal Home Loan Banks, the Federal Farm Credit Banks, the
Student Loan Marketing Association and the Resolution Funding Corporation.

Some agency securities are backed by the full faith and credit of the U.S.
government, and some are guaranteed only by the issuing agency. Agency
securities typically offer somewhat higher yields than U.S. Treasury securities
with similar maturities. However, these securities may involve greater risk of
default than securities backed by the U.S. Treasury.

Interest rates on agency securities may be fixed for the term of the investment
(fixed-rate agency securities) or tied to prevailing interest rates
(floating-rate agency securities). Interest rate resets on floating-rate agency
securities generally occur at intervals of one year or less, based on changes in
a predetermined interest rate index.

Floating-rate agency securities frequently have caps limiting the extent to
which coupon rates can be raised. The price of a floating-rate agency security
may decline if its capped coupon rate is lower than prevailing market interest
rates. Fixed- and floating-rate agency securities may be issued with a call date
(which permits redemption before the maturity date). The exercise of a call may
reduce an obligation's yield to maturity.

INTEREST RATE RESETS ON FLOATING-RATE U.S. GOVERNMENT AGENCY SECURITIES

Interest rate resets on floating-rate U.S. government agency securities
generally occur at intervals of one year or less in response to changes in a
predetermined interest rate index. There are two main categories of indices:
those based on U.S. Treasury securities and those derived from a calculated
measure, such as a cost-of-funds index. Commonly used indices include the
three-month, six-month and one-year Treasury bill rates; the two-year Treasury
note yield; the Eleventh District Federal Home Loan Bank Cost of Funds Index
(EDCOFI); and the London Interbank Offered Rate (LIBOR). Fluctuations in the
prices of floating-rate U.S. government agency securities are typically
attributed to differences between the coupon rates on these securities and
prevailing market interest rates between interest rate reset dates.

Mortgage-Backed Securities

BACKGROUND

A mortgage-backed security represents an ownership interest in a pool of
mortgage loans. The loans are made by financial institutions to finance home and
other real estate purchases. As the loans are repaid, investors receive payments
of both interest and principal.

Like fixed-income securities such as U.S. Treasury bonds, mortgage-backed
securities pay a stated rate of interest during the life of the security.
However, unlike a bond, which returns principal to the investor in one lump sum
at maturity, mortgage-backed securities return principal to the investor in
increments during the life of the security.

Because the timing and speed of principal repayments vary, the cash flow on
mortgage-backed securities is irregular. If mortgage holders sell their homes,
refinance their loans, prepay their mortgages or default on their loans, the
principal is distributed pro rata to investors.

As with other fixed-income securities, the prices of mortgage-backed securities
fluctuate in response to changing interest rates; when interest rates fall, the
prices of mortgage-backed securities rise, and vice versa. Changing interest
rates have additional significance for mortgage-backed securities investors,
however, because they influence prepayment rates (the rates at which mortgage
holders prepay their mortgages), which in turn affect the yields on
mortgage-backed securities. When interest rates decline, prepayment rates
generally increase. Mortgage holders take advantage of the opportunity to
refinance their mortgages at lower rates with lower monthly payments. When
interest rates rise, mortgage holders are less

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20

inclined to refinance their mortgages. The effect of prepayment activity on
yield depends on whether the mortgage-backed security was purchased at a premium
or at a discount.

A fund may receive principal sooner than it expected because of accelerated
prepayments. Under these circumstances, the fund might have to reinvest returned
principal at rates lower than it would have earned if principal payments were
made on schedule. Conversely, a mortgage-backed security may exceed its
anticipated life if prepayment rates decelerate unexpectedly. Under these
circumstances, a fund might miss an opportunity to earn interest at higher
prevailing rates.

GNMA CERTIFICATES

The Government National Mortgage Association (GNMA) is a wholly owned corporate
instrumentality of the United States within the Department of Housing and Urban
Development. The National Housing Act of 1934 (Housing Act), as amended,
authorizes GNMA to guarantee the timely payment of interest and repayment of
principal on certificates that are backed by a pool of mortgage loans insured by
the Federal Housing Administration under the Housing Act, or by Title V of the
Housing Act of 1949 (FHA Loans), or guaranteed by the Veterans' Affairs under
the Servicemen's Readjustment Act of 1944 (VA Loans), as amended, or by pools of
other eligible mortgage loans. The Housing Act provides that the full faith and
credit of the U.S. government is pledged to the payment of all amounts that may
be required to be paid under any guarantee. GNMA has unlimited authority to
borrow from the U.S. Treasury in order to meet its obligations under this
guarantee.

GNMA certificates represent a pro rata interest in one or more pools of the
following types of mortgage loans: (a) fixed-rate level payment mortgage loans;
(b) fixed-rate graduated payment mortgage loans (GPMs); (c) fixed-rate growing
equity mortgage loans (GEMs); (d) fixed-rate mortgage loans secured by
manufactured (mobile) homes (MHs); (e) mortgage loans on multifamily residential
properties under construction (CLCs); (f) mortgage loans on completed
multifamily projects (PLCs); (g) fixed-rate mortgage loans that use escrowed
funds to reduce the borrower's monthly payments during the early years of the
mortgage loans (buydown mortgage loans); and (h) mortgage loans that provide for
payment adjustments based on periodic changes in interest rates or in other
payment terms of the mortgage loans.

FANNIE MAE CERTIFICATES

The Federal National Mortgage Association (FNMA or Fannie Mae) is a federally
chartered and privately owned corporation established under the Federal National
Mortgage Association Charter Act. Fannie Mae was originally established in 1938
as a U.S. government agency designed to provide supplemental liquidity to the
mortgage market and was reorganized as a stockholder-owned and privately managed
corporation by legislation enacted in 1968. Fannie Mae acquires capital from
investors who would not ordinarily invest in mortgage loans directly and thereby
expands the total amount of funds available for housing. This money is used to
buy home mortgage loans from local lenders, replenishing the supply of capital
available for mortgage lending.

Fannie Mae certificates represent a pro rata interest in one or more pools of
FHA Loans, VA Loans, or, most commonly, conventional mortgage loans (i.e.,
mortgage loans that are not insured or guaranteed by a government agency) of the
following types: (a) fixed-rate level payment mortgage loans; (b) fixed-rate
growing equity mortgage loans; (c) fixed-rate graduated payment mortgage loans;
(d) adjustable-rate mortgage loans; and (e) fixed-rate mortgage loans secured by
multifamily projects.

Fannie Mae certificates entitle the registered holder to receive amounts
representing a pro rata interest in scheduled principal and interest payments
(at the certificate's pass-through rate, which is net of any servicing and
guarantee fees on the underlying mortgage loans), any principal prepayments, and
a proportionate interest in the full principal amount of any foreclosed or
otherwise liquidated mortgage loan. The full and timely payment of interest and
repayment of principal on each Fannie Mae certificate is guaranteed by Fannie
Mae; this guarantee is not backed by the full faith and credit of the U.S.
government.

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21

FREDDIE MAC CERTIFICATES

The Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac) is a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970 (FHLMC Act), as amended. Freddie Mac was established
primarily for the purpose of increasing the availability of mortgage credit. Its
principal activity consists of purchasing first-lien conventional residential
mortgage loans (and participation interests in such mortgage loans) and
reselling these loans in the form of mortgage-backed securities, primarily
Freddie Mac certificates.

Freddie Mac certificates represent a pro rata interest in a group of mortgage
loans (a Freddie Mac certificate group) purchased by Freddie Mac. The mortgage
loans underlying Freddie Mac certificates consist of fixed- or adjustable-rate
mortgage loans with original terms to maturity of between 10 and 30 years,
substantially all of which are secured by first-liens on one- to four-family
residential properties or multifamily projects. Each mortgage loan must meet
standards set forth in the FHLMC Act. A Freddie Mac certificate group may
include whole loans, participation interests in whole loans, undivided interests
in whole loans, and participations composing another Freddie Mac certificate
group.

Freddie Mac guarantees to each registered holder of a Freddie Mac certificate
the timely payment of interest at the rate provided for by the certificate.
Freddie Mac also guarantees ultimate collection of all principal on the related
mortgage loans, without any offset or deduction, but generally does not
guarantee the timely repayment of principal. Freddie Mac may remit principal at
any time after default on an underlying mortgage loan, but no later than 30 days
following (a) foreclosure sale, (b) payment of a claim by any mortgage insurer,
or (c) the expiration of any right of redemption, whichever occurs later, and in
any event no later than one year after demand has been made upon the mortgager
for accelerated payment of principal. Obligations guaranteed by Freddie Mac are
not backed by the full faith and credit pledge of the U.S. government.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)

A CMO is a multiclass bond backed by a pool of mortgage pass-through
certificates or mortgage loans. CMOs may be collateralized by (a) GNMA, Fannie
Mae or Freddie Mac pass-through certificates; (b) unsecured mortgage loans
insured by the Federal Housing Administration or guaranteed by the Department of
Veterans' Affairs; (c) unsecuritized conventional mortgages; or (d) any
combination thereof.

In structuring a CMO, an issuer distributes cash flow from the underlying
collateral over a series of classes called tranches. Each CMO is a set of two or
more tranches, with average lives and cash flow patterns designed to meet
specific investment objectives. The average life expectancies of the different
tranches in a four-part deal, for example, might be two, five, seven and 20
years.

As payments on the underlying mortgage loans are collected, the CMO issuer pays
the coupon rate of interest to the bondholders in each tranche. At the outset,
scheduled and unscheduled principal payments go to investors in the first
tranches. Investors in later tranches do not begin receiving principal payments
until the prior tranches are paid off. This basic type of CMO is known as a
sequential pay or plain vanilla CMO.

Some CMOs are structured so that the prepayment or market risks are transferred
from one tranche to another. Prepayment stability is improved in some tranches
if other tranches absorb more prepayment variability.

The final tranche of a CMO often takes the form of a Z-bond, also known as an
accrual bond or accretion bond. Holders of these securities receive no cash
until the earlier tranches are paid in full. During the period that the other
tranches are outstanding, periodic interest payments are added to the initial
face amount of the Z-bond but are not paid to investors. When the prior tranches
are retired, the Z-bond receives coupon payments on its higher principal balance
plus any principal prepayments from the underlying mortgage loans. The existence
of a Z-bond tranche helps stabilize cash flow patterns
------
22

in the other tranches. In a changing interest rate environment, however, the
value of the Z-bond tends to be more volatile.

As CMOs have evolved, some classes of CMO bonds have become more prevalent. The
planned amortization class (PAC) and targeted amortization class (TAC), for
example, were designed to reduce prepayment risk by establishing a sinking-fund
structure. PAC and TAC bonds assure to varying degrees that investors will
receive payments over a predetermined period under various prepayment scenarios.
Although PAC and TAC bonds are similar, PAC bonds are better able to provide
stable cash flows under various prepayment scenarios than TAC bonds because of
the order in which these tranches are paid.

The existence of a PAC or TAC tranche can create higher levels of risk for other
tranches in the CMO because the stability of the PAC or TAC tranche is achieved
by creating at least one other tranche - known as a companion bond, support or
non-PAC bond - that absorbs the variability of principal cash flows. Because
companion bonds have a high degree of average life variability, they generally
pay a higher yield. A TAC bond can have some of the prepayment variability of a
companion bond if there is also a PAC bond in the CMO issue.

Floating-rate CMO tranches (floaters) pay a variable rate of interest that is
usually tied to the LIBOR. Institutional investors with short-term liabilities,
such as commercial banks, often find floating-rate CMOs attractive investments.
Super floaters (which float a certain percentage above LIBOR) and inverse
floaters (which float inversely to LIBOR) are variations on the floater
structure that have highly variable cash flows.

STRIPPED MORTGAGE-BACKED SECURITIES

Stripped mortgage-backed securities are created by segregating the cash flows
from underlying mortgage loans or mortgage securities to create two or more new
securities, each with a specified percentage of the underlying security's
principal or interest payments. Mortgage-backed securities may be partially
stripped so that each investor class receives some interest and some principal.
When securities are completely stripped, however, all of the interest is
distributed to holders of one type of security, known as an interest-only
security, or IO, and all of the principal is distributed to holders of another
type of security known as a principal-only security, or PO. Strips can be
created in a pass-through structure or as tranches of a CMO.

The market values of IOs and POs are very sensitive to interest rate and
prepayment rate fluctuations. POs, for example, increase (or decrease) in value
as interest rates decline (or rise). The price behavior of these securities also
depends on whether the mortgage collateral was purchased at a premium or
discount to its par value. Prepayments on discount coupon POs generally are much
lower than prepayments on premium coupon POs. IOs may be used to hedge a fund's
other investments because prepayments cause the value of an IO strip to move in
the opposite direction from other mortgage-backed securities.

COMMERCIAL MORTGAGE-BACKED SECURITIES (CMBS)

CMBS are securities created from a pool of commercial mortgage loans, such as
loans for hotels, shopping centers, office buildings, apartment buildings, and
the like. Interest and principal payments from these loans are passed on to the
investor according to a particular schedule of payments. They may be issued by
U.S. government agencies or by private issuers. The credit quality of CMBS
depends primarily on the quality of the underlying loans and on the structure of
the particular deal. Generally, deals are structured with senior and subordinate
classes. Multiple classes may permit the issuance of securities with payment
terms, interest rates, or other characteristics differing both from those of
each other and those of the underlying assets. Examples include classes having
characteristics such as floating interest rates or scheduled amortization of
principal. Rating agencies rate the individual classes of the deal based on the
degree of seniority or subordination of a particular class and other factors.
The value of these securities may change because of actual or perceived changes
in the creditworthiness of individual borrowers, their tenants, the servicing
agents, or the general state of commercial real estate and other factors.

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23

Mortgage Dollar Rolls

The Balanced Fund may enter into mortgage dollar rolls in which a fund sells
mortgage-backed securities to financial institutions for delivery in the current
month and simultaneously contracts to repurchase similar securities on a
specified future date. During the period between the sale and repurchase (the
"roll period"), the fund forgoes principal and interest paid on the
mortgage-backed securities. The fund is compensated by the difference between
the current sales price and the lower forward price for the future purchase
(often referred to as the "drop"), as well as by the interest earned on the cash
proceeds of the initial sale. The fund will use the proceeds generated from the
transaction to invest in short term investments and/or other mortgage-backed
securities, which may enhance the fund's current yield and total return.

For each mortgage dollar roll transaction, a fund will cover the roll by
segregating on its books an offsetting cash position or a position of liquid
securities of equivalent value. The portfolio managers will monitor the value of
such securities to determine that the value equals or exceeds the mortgage
dollar roll contract price.

A fund could suffer a loss if the contracting party fails to perform the future
transaction and the fund is therefore unable to buy back the mortgage-backed
securities it initially sold. The fund also takes the risk that the
mortgage-backed securities that it repurchases at a later date will have less
favorable market characteristics than the securities originally sold.

Adjustable-Rate Mortgage Loans (ARMs)

ARMs eligible for inclusion in a mortgage pool generally will provide for a
fixed initial mortgage interest rate for a specified period of time, generally
for either the first three, six, 12, 24, 36, 60 or 84 scheduled monthly
payments. Thereafter, the interest rates are subject to periodic adjustment
based on changes in an index.

ARMs have minimum and maximum rates beyond which the mortgage interest rate may
not vary over the lifetime of the loan. Certain ARMs provide for additional
limitations on the maximum amount by which the mortgage interest rate may adjust
for any single adjustment period. Negatively amortizing ARMs may provide
limitations on changes in the required monthly payment. Limitations on monthly
payments can result in monthly payments that are greater or less than the amount
necessary to amortize a negatively amortizing ARM by its maturity at the
interest rate in effect during any particular month.

There are two types of indices that provide the basis for ARM rate adjustments:
those based on market rates and those based on a calculated measure, such as a
cost-of-funds index or a moving average of mortgage rates. Commonly utilized
indices include the one-year, three-year and five-year constant maturity U.S.
Treasury rates (as reported by the Federal Reserve Board); the three-month
Treasury bill rate; the 180-day Treasury bill rate; rates on longer-term
Treasury securities; the Eleventh District Federal Home Loan Bank Cost of Funds
Index (EDCOFI); the National Median Cost of Funds Index; the one-month,
three-month, six-month or one-year London Interbank Offered Rate (LIBOR); or
six-month CD rates. Some indices, such as the one-year constant maturity
Treasury rate or three-month LIBOR, are highly correlated with changes in market
interest rates. Other indices, such as the EDCOFI, tend to lag behind changes in
market rates and be somewhat less volatile over short periods of time.

The EDCOFI reflects the monthly weighted average cost of funds of savings and
loan associations and savings banks whose home offices are located in Arizona,
California and Nevada (the Federal Home Loan Bank Eleventh District) and who are
member institutions of the Federal Home Loan Bank of San Francisco (the FHLB of
San Francisco), as computed from statistics tabulated and published by the FHLB
of San Francisco. The FHLB of San Francisco normally announces the Cost of Funds
Index on the last working day of the month following the month in which the cost
of funds was incurred.

One-year and three-year Constant Maturity Treasury (CMT) rates are calculated by
the Federal Reserve Bank of New York, based on daily closing bid yields on
actively traded

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24

Treasury securities submitted by five leading broker-dealers. The median bid
yields are used to construct a daily yield curve.

The National Median Cost of Funds Index, similar to the EDCOFI, is calculated
monthly by the Federal Home Loan Bank Board (FHLBB) and represents the average
monthly interest expenses on liabilities of member institutions. A median,
rather than an arithmetic mean, is used to reduce the effect of extreme numbers.

LIBOR is the rate at which banks in London offer Eurodollars in trades between
banks. LIBOR has become a key rate in the U.S. domestic money market because it
is perceived to reflect the true global cost of money.

The portfolio managers may invest in ARMs whose periodic interest rate
adjustments are based on new indices as these indices become available.

Asset-Backed Securities (ABS)

ABS are structured like mortgage-backed securities, but instead of mortgage
loans or interest in mortgage loans, the underlying assets may include, for
example, such items as motor vehicle installment sales or installment loan
contracts, leases of various types of real and personal property, home equity
loans, student loans, small business loans, and receivables from credit card
agreements. The ability of an issuer of asset-backed securities to enforce its
security interest in the underlying assets may be limited. The value of an ABS
is affected by changes in the market's perception of the assets backing the
security, the creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing any credit
enhancement.

Payments of principal and interest passed through to holders of ABS are
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or a priority to
certain of the borrower's other securities. The degree of credit enhancement
varies, and generally applies to only a fraction of the asset-backed security's
par value until exhausted. If the credit enhancement of an ABS held by the fund
has been exhausted, and if any required payments of principal and interest are
not made with respect to the underlying loans, the fund may experience losses or
delays in receiving payment.

Some types of ABS may be less effective than other types of securities as a
means of "locking in" attractive long-term interest rates. One reason is the
need to reinvest prepayments of principal; another is the possibility of
significant unscheduled prepayments resulting from declines in interest rates.
These prepayments would have to be reinvested at lower rates. As a result, these
securities may have less potential for capital appreciation during periods of
declining interest rates than other securities of comparable maturities,
although they may have a similar risk of decline in market value during periods
of rising interest rates. Prepayments may also significantly shorten the
effective maturities of these securities, especially during periods of declining
interest rates. Conversely, during periods of rising interest rates, a reduction
in prepayments may increase the effective maturities of these securities,
subjecting them to a greater risk of decline in market value in response to
rising interest rates than traditional debt securities, and, therefore,
potentially increasing the volatility of the fund.

The risks of investing in ABS are ultimately dependent upon the repayment of
loans by the individual or corporate borrowers. Although the fund would
generally have no recourse against the entity that originated the loans in the
event of default by a borrower, ABS typically are structured to mitigate this
risk of default.

Asset-backed securities are generally issued in more than one class, each with
different payment terms. Multiple class asset-backed securities may be used as a
method of providing credit support through creation of one or more classes whose
right to payments is made subordinate to the right to such payments of the
remaining class or classes. Multiple classes also may permit the issuance of
securities with payment terms, interest rates or other characteristics differing
both from those of each other and from those of the

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25

underlying assets. Examples include so-called strips (asset-backed securities
entitling the holder to disproportionate interests with respect to the
allocation of interest and principal of the assets backing the security), and
securities with classes having characteristics such as floating interest rates
or scheduled amortization of principal.

TRACERS /TRAINS

Balanced may invest in TRACERS and TRAINS which represent ownership of a
specified percentage of each security in an underlying pool of securities.
Owners are entitled to receive a pro rata share of distributions from the
underlying securities. In the event an underlying security is downgraded by a
rating agency, that portion of the investment product will be redeemed and the
underlying security will be distributed to the owner pro rata or the owner may
receive cash proceeds. The risk of owning these products are the same as owning
the individual securities, but enable the fund to be more diversified by owning
a single security.

INVESTMENT POLICIES

Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the policies described below apply at the time a fund enters into a
transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment policies.

Fundamental Investment Policies

The funds' fundamental investment policies are set forth below. These investment
policies and the funds' investment objectives set forth in their prospectuses
may not be changed without approval of a majority of the outstanding votes of
shareholders of a fund, as determined in accordance with the Investment Company
Act.

SUBJECT POLICY
--------------------------------------------------------------------------------
Senior A fund may not issue senior securities, except as permitted
Securities under the Investment Company Act.
--------------------------------------------------------------------------------
Borrowing A fund may not borrow money, except for temporary or
emergency purposes (not for leveraging or investment) in
an amount not exceeding 33-1/3% of the fund's total
assets.
--------------------------------------------------------------------------------
Lending A fund may not lend any security or make any other loan if,
as a result, more than 33-1/3% of the fund's total assets
would be lent to other parties, except (i) through the
purchase of debt securities in accordance with its
investment objective, policies and limitations or (ii) by
engaging in repurchase agreements with respect to
portfolio securities.
--------------------------------------------------------------------------------
Real Estate A fund may not purchase or sell real estate unless
acquired as a result of ownership of securities or other
instruments. This policy shall not prevent a fund from
investing in securities or other instruments backed by real
estate or securities of companies that deal in real estate
or are engaged in the real estate business.
--------------------------------------------------------------------------------
Concentration A fund (except Focused Growth and Veedot) may not
concentrate its investments in securities of issuers in a
particular industry (other than securities issued or
guaranteed by the U.S. government or any of its agencies
or instrumentalities).
--------------------------------------------------------------------------------
Underwriting A fund may not act as an underwriter of securities issued
by others, except to the extent that the fund may be
considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted
securities.
--------------------------------------------------------------------------------
Commodities A fund may not purchase or sell physical commodities
unless acquired as a result of ownership of securities or
other instruments, provided that this limitation shall not
prohibit the fund from purchasing or selling options and
futures contracts or from investing in securities or other
instruments backed by physical commodities.
--------------------------------------------------------------------------------
Control A fund may not invest for purposes of exercising control
over management.
--------------------------------------------------------------------------------

For purposes of the investment restrictions relating to lending and borrowing,
the funds have received an exemptive order from the SEC regarding an interfund
lending program. Under the terms of the exemptive order, the funds may borrow
money from or lend money

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26

to other ACIM-advised funds that permit such transactions. All such transactions
will be subject to the limits for borrowing and lending set forth above. The
funds will borrow money through the program only when the costs are equal to or
lower than the costs of short-term bank loans. Interfund loans and borrowings
normally extend only overnight, but can have a maximum duration of seven days.
The funds will lend through the program only when the returns are higher than
those available from other short-term instruments (such as repurchase
agreements). The funds may have to borrow from a bank at a higher interest rate
if an interfund loan is called or not renewed. Any delay in repayment to a
lending fund could result in a lost investment opportunity or additional
borrowing costs.

For purposes of the investment restriction relating to concentration, a fund
shall not purchase any securities that would cause 25% or more of the value of
the fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry, provided that

(a) there is no limitation with respect to obligations issued or
guaranteed by the U.S. government, any state, territory or possession of
the United States, the District of Columbia or any of their authorities,
agencies, instrumentalities or political subdivisions and repurchase
agreements secured by such obligations,

(b) wholly owned finance companies will be considered to be in the
industries of their parents if their activities are primarily related to
financing the activities of their parents,

(c) utilities will be divided according to their services, for example,
gas, gas transmission, electric and gas, electric and telephone will each
be considered a separate industry, and

(d) personal credit and business credit businesses will be considered
separate industries.

Nonfundamental Investment Policies

In addition, the funds are subject to the following investment policies that are
not fundamental and may be changed by the Board of Directors.

SUBJECT POLICY
--------------------------------------------------------------------------------
Leveraging A fund may not purchase additional investment
securities at any time during which outstanding
borrowings exceed 5% of the total assets of
the fund.
--------------------------------------------------------------------------------
Liquidity A fund may not purchase any security or enter
into a repurchase agreement if, as a result, more
than 15% of its net assets would be invested in
illiquid securities. Illiquid securities include
repurchase agreements not entitling the holder
to payment of principal and interest within seven
days, and securities that are illiquid by virtue of
legal or contractual restrictions on resale or the
absence of a readily available market.
--------------------------------------------------------------------------------
Short Sales A fund may not sell securities short, unless it
owns or has the right to obtain securities
equivalent in kind and amount to the securities
sold short, and provided that transactions in
futures contracts and options are not deemed
to constitute selling securities short.
--------------------------------------------------------------------------------
Margin A fund may not purchase securities on margin,
except to obtain such short-term credits as are
necessary for the clearance of transactions, and
provided that margin payments in connection
with futures contracts and options on futures
contracts shall not constitute purchasing
securities on margin.
--------------------------------------------------------------------------------
Futures A fund may enter into futures contracts and
and Options write and buy put and call options relating to
futures contracts. A fund may not, however,
enter into leveraged futures transactions if it
would be possible for the fund to lose more
than the notional value of the investment.
--------------------------------------------------------------------------------
Issuers with A fund may invest a portion of its assets in the
Limited equity securities of issuers with limited operating
Operating histories. An issuer is considered to have a limited
Histories operating history if that issuer has a record of
less than three years of continuous operation.
Periods of capital formation, incubation,
consolidations, and research and development
may be considered in determining whether a
particular issuer has a record of three years of
continuous operation.
--------------------------------------------------------------------------------

The Investment Company Act imposes certain additional restrictions upon the
funds' ability to acquire securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as defined by the Act. It also defines and forbids the
creation of cross and circular ownership. Neither the SEC nor any other agency
of the federal or state government participates in or supervises the management
of the funds or their investment practices or policies.

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27

PORTFOLIO TURNOVER

The portfolio turnover rate of each fund is listed in the Financial Highlights
table in that fund's prospectus.

Capital Value Fund

The portfolio managers of Capital Value seek to minimize realized capital gains
by keeping portfolio turnover low and generally holding portfolio investments
for long periods. Because a higher turnover rate may increase taxable capital
gains, the managers carefully weigh the potential benefits of short-term
investing against the tax impact such investing would have on the fund's
shareholders. However, the portfolio managers may sell securities to realize
losses that can be used to offset realized capital gains. They will take such
actions when they believe the tax benefits from realizing losses offset the
near-term investment potential of that security.

Other Funds

With respect to each other fund, the managers may sell securities without regard
to the length of time the security has been held. Accordingly, each fund's
portfolio turnover rate may be substantial.

The portfolio managers intend to purchase a given security whenever they believe
it will contribute to the stated objective of a particular fund. In order to
achieve each fund's investment objective, the managers may sell a given security
regardless of the length of time it has been held in the portfolio, and
regardless of the gain or loss realized on the sale. The managers may sell a
portfolio security if they believe that the security is not fulfilling its
purpose because, among other things, it did not live up to the managers'
expectations, because it may be replaced with another security holding greater
promise, because it has reached its optimum potential, because of a change in
the circumstances of a particular company or industry or in general economic
conditions, or because of some combination of such reasons.

When a general decline in security prices is anticipated, the equity funds may
decrease or eliminate entirely their equity positions and increase their cash
positions, and when a general rise in price levels is anticipated, the equity
funds may increase their equity positions and decrease their cash positions.
However, it should be expected that the funds will, under most circumstances, be
essentially fully invested in equity securities.

Because investment decisions are based on a particular security's anticipated
contribution to a fund's investment objective, the managers believe that the
rate of portfolio turnover is irrelevant when they determine that a change is
required to pursue the fund's investment objective. As a result, a fund's annual
portfolio turnover rate cannot be anticipated and may be higher than that of
other mutual funds with similar investment objectives. Higher turnover would
generate correspondingly greater brokerage commissions, which is a cost the
funds pay directly. Portfolio turnover also may affect the character of capital
gains realized and distributed by the fund, if any, because short-term capital
gains are taxable as ordinary income.

Because the managers do not take portfolio turnover rate into account in making
investment decisions, (1) the managers have no intention of maintaining any
particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as representative
of the rates that will be attained in the future.

For Balanced, the higher portfolio turnover rate in 2004 can be attributed to
the increased use of mortgage dollar rolls in the fixed-income portion of the
fund.

For Giftrust and Heritage, the higher portfolio turnover rate for 2004 can be
attributed to a new portfolio management team.

For New Opportunities, the higher portfolio turnover rate for 2004 can be
attributed to conditions in the equity markets and shifting opportunities across
market sectors.

Veedot generally has a higher portfolio turnover rate compared to other funds
due to its investment strategies.

------
28

MANAGEMENT

The individuals listed below serve as directors or officers of the funds. Each
director serves until his or her successor is duly elected and qualified or
until he or she retires. Mandatory retirement age for independent directors is
72. Those listed as interested directors are "interested" primarily by virtue of
their engagement as officers of American Century Companies, Inc. (ACC) or its
wholly owned, direct or indirect, subsidiaries, including the funds' investment
advisor, American Century Investment Management, Inc. (ACIM or the advisor); the
funds' principal underwriter, American Century Investment Services, Inc. (ACIS);
and the funds' transfer agent, American Century Services, LLC (ACS LLC).

The other directors, (more than three-fourths of the total number) are
independent; that is, they have never been employees or officers of, and have no
financial interest in, ACC or any of its wholly owned, direct or indirect,
subsidiaries, including ACIM, ACIS and ACS LLC. The directors serve in this
capacity for six registered investment companies in the American Century family
of funds.

All persons named as officers of the funds also serve in similar capacities for
the other 13 investment companies advised by ACIM, or American Century Global
Investment Management, Inc. (ACGIM), a wholly owned subsidiary of ACIM, unless
otherwise noted. Only officers with policy-making functions are listed. 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 appointed or
re-appointed on an annual basis. The officers serve in similar capacities for
the other 13 registered investment companies advised by ACIM.

NUMBER OF
PORTFOLIOS
POSITION(S) LENGTH IN FUND OTHER
HELD OF TIME PRINCIPAL COMPLEX DIRECTORSHIPS
NAME, ADDRESS WITH SERVED OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR OF BIRTH) FUND (YEARS) DURING PAST 5 YEARS DIRECTOR DIRECTOR
---------------------------------------------------------------------------------------------------
Interested Directors
---------------------------------------------------------------------------------------------------
James E. Stowers, Jr. (1) Director, 46 Founder, Director 54 None
4500 Main Street Co-Vice and Controlling
Kansas City, MO 64111 Chairman Shareholder, ACC
(1924) Chairman, ACC
(January 1995 to
December 2004)
Director, ACGIM,
ACIM, ACS LLC
and other ACC
subsidiaries
---------------------------------------------------------------------------------------------------
James E. Stowers III (1) Director, 14 Chairman, ACC 54 None
4500 Main Street Co-Vice (January 2005
Kansas City, MO 64111 Chairman to present)
(1959) Co-Chairman, ACC
(September 2000
to December 2004)
Chief Executive
Officer, ACC
(June 1996 to
September 2000)
Chairman, ACS LLC
and other ACC
subsidiaries
Director, ACC,
ACGIM, ACIM,
ACS LLC and
other ACC
subsidiaries
---------------------------------------------------------------------------------------------------
Independent Directors
---------------------------------------------------------------------------------------------------
Thomas A. Brown Director 24 Retired, Formerly 54 None
4500 Main Street Chief Executive
Kansas City, MO 64111 Officer/Treasurer,
(1940) ASSOCIATED
BEARINGS
COMPANY
---------------------------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. Director 7 Senior Vice 54 None
4500 Main Street President,
Kansas City, MO 64111 MIDWEST
(1945) RESEARCH
INSTITUTE
---------------------------------------------------------------------------------------------------
D.D. (Del) Hock Director 8 Retired, formerly 54 Director,
4500 Main Street Chairman, ALLIED MOTION
Kansas City, MO 64111 PUBLIC SERVICE TECHNOLOGIES,
(1935) COMPANY OF INC.
COLORADO
---------------------------------------------------------------------------------------------------
Donald H. Pratt Director, 9 Chairman, 54 None
4500 Main Street Chairman WESTERN
Kansas City, MO 64111 of the INVESTMENTS, INC.
(1937) Board Retired Chairman
of the Board,
BUTLER
MANUFACTURING
COMPANY
---------------------------------------------------------------------------------------------------

(1) JAMES E. STOWERS, JR. IS THE FATHER OF JAMES E. STOWERS III.

------
29

NUMBER OF
POSITION(S) LENGTH PORTFOLIOS IN OTHER
HELD OF TIME PRINCIPAL FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS WITH SERVED OCCUPATION(S) OVERSEEN BY HELD BY
(YEAR OF BIRTH) FUND (YEARS) DURING PAST 5 YEARS DIRECTOR DIRECTOR
-------------------------------------------------------------------------------------------------------
Independent Directors
-------------------------------------------------------------------------------------------------------
Gale E. Sayers Director 4 President, Chief 54 Director,
4500 Main Street Executive TRIAD
Kansas City, MO 64111 Officer and HOSPITALS,
(1943) Founder, INC.
SAYERS40, INC.,
a technology
products and
services provider
-------------------------------------------------------------------------------------------------------
M. Jeannine Strandjord Director 10 Senior Vice 54 Director, DST
4500 Main Street President, Process SYSTEMS, INC.,
Kansas City, MO 64111 Excellence, SPRINT Director,
(1945) CORPORATION EURONET
(January 2005 WORLDWIDE,
to present) INC.
Senior Vice
President,
Transformation
SPRINT CORPORATION
(September 2003
to December 2004)
Senior Vice
President-Financial
Services, SPRINT
CORPORATION
(January 2003 to
September 2003)
Senior Vice
President-Finance,
Global Markets
Group, SPRINT
CORPORATION
(December 1998
to January 2003)
-------------------------------------------------------------------------------------------------------
Timothy S. Webster Director 3 President and 54 Director,
4500 Main Street Chief Executive AMERICAN
Kansas City, MO 64111 Officer, ITALIAN PASTA
(1961) AMERICAN ITALIAN COMPANY
PASTA COMPANY
-------------------------------------------------------------------------------------------------------
Officers
-------------------------------------------------------------------------------------------------------
William M. Lyons President 4 Chief Executive Not Not
4500 Main St. Officer, ACC applicable applicable
Kansas City, MO 64111 (September 2000
(1955) to present)
President, ACC
(June 1997
to present)
Chief Operating
Officer, ACC
(June 1996 to
September 2000)
Also serves as:
Chief Executive
Officer and
President, ACIS,
ACGIM, ACIM
and other ACC
subsidiaries,
Executive
Vice President,
ACS LLC
Director, ACC,
ACGIM, ACIM,
ACIS, ACS LLC
and other ACC
subsidiaries
-------------------------------------------------------------------------------------------------------
Robert T. Jackson Executive 9 Chief Not Not
4500 Main St. Vice Administrative applicable applicable
Kansas City, MO 64111 President Officer, ACC
(1946) (August 1997
to present)
Chief Financial
Officer, ACC
(May 1995 to
October 2002)
Executive Vice
President, ACC
(May 1995
to present)
Also serves as:
Chief Executive
Officer, Chief
Financial Officer
and President,
ACS LLC
Chief Financial
Officer and
Executive Vice
President, ACGIM,
ACIM, ACIS and
other ACC
subsidiaries
Treasurer, ACGIM,
ACIM, and other
ACC subsidiaries
Director, ACC and
other ACC
subsidiaries
-------------------------------------------------------------------------------------------------------
Maryanne Roepke Senior Vice 4 Assistant Not Not
4500 Main St. President, Treasurer, ACC applicable applicable
Kansas City, MO 64111 Treasurer (January 1995
(1956) and Chief to present)
Accounting Also serves as:
Officer Senior Vice
President, ACS LLC
Assistant Treasurer,
ACGIM, ACIM, ACIS,
ACS LLC and other
ACC subsidiaries
-------------------------------------------------------------------------------------------------------

------
30

NUMBER OF
PORTFOLIOS
IN FUND
POSITION(S) LENGTH COMPLEX OTHER
HELD OF TIME PRINCIPAL OVERSEEN DIRECTORSHIPS
NAME, ADDRESS WITH SERVED OCCUPATION(S) BY HELD BY
(YEAR OF BIRTH) FUND (YEARS) DURING PAST 5 YEARS DIRECTOR DIRECTOR
---------------------------------------------------------------------------------------------------
Officers
---------------------------------------------------------------------------------------------------
David C. Tucker Senior Vice 4 Vice President, ACC Not Not
4500 Main St. President (February 2001 applicable applicable
Kansas City, MO 64111 and to present)
(1958) General General Counsel,
Counsel ACC
(June 1998
to present)
Also serves as:
Senior Vice
President and
General Counsel,
ACGIM, ACIM,
ACIS, ACS LLC
and other ACC
subsidiaries
---------------------------------------------------------------------------------------------------
Charles C.S. Park Vice 4 Chief Compliance Not Not
4500 Main Street President, Officer, ACS LLC, applicable applicable
Kansas City, MO 64111 and ACIM and ACGIM
(1967) Chief less (March 2005
Compliance than to present)
Officer 1 year Vice President,
ACS LLC
(February 2000
to present)
Assistant General
Counsel, ACS LLC
(January 1998
to March 2005)
---------------------------------------------------------------------------------------------------
Robert Leach Controller 7 Vice President, Not Not
4500 Main St. ACS LLC applicable applicable
Kansas City, MO 64111 (February 2000
(1966) to present)
Controller-Fund
Accounting,
ACS LLC
(June 1997
to present)
---------------------------------------------------------------------------------------------------
Jon Zindel Tax Officer 7 Vice President, Not Not
4500 Main St. ACC applicable applicable
Kansas City, MO 64111 (October 2001
(1967) to present)
Vice President,
Corporate Tax,
ACS LLC
(April 1998
to present)
Also serves as:
Vice President,
ACGIM, ACIM,
ACIS and other
ACC subsidiaries
---------------------------------------------------------------------------------------------------

On December 23, 1999, American Century Services, LLC (ACS LLC) entered into
an agreement with DST Systems, Inc. (DST) under which DST would provide back
office software for transfer agency services provided by ACS LLC (the
Agreement). For its software, ACS LLC pays DST fees based in part on the number
of accounts and the number and type of transactions processed for those
accounts. Through December 31, 2004, DST received $24,917,209 in fees from ACS
LLC. DST's revenue for the calendar year ended December 31, 2004 was
approximately $2.43 billion.

Ms. Strandjord is a director of DST and a holder of 30,916 shares and possesses
options to acquire an additional 55,890 shares of DST common stock, the sum of
which is less than one percent (1%) of the shares outstanding. Because of her
official duties as a director of DST, she may be deemed to have an "indirect
interest" in the Agreement. However, the Board of Directors of the funds was not
required to nor did it approve or disapprove the Agreement, since the provision
of the services covered by the Agreement is within the discretion of ACS LLC.
DST was chosen by ACS LLC for its industry-leading role in providing
cost-effective back office support for mutual fund service providers such as ACS
LLC. DST is the largest mutual fund transfer agent, servicing more than 75
million mutual fund accounts on its shareholder recordkeeping system. Ms.
Strandjord's role as a director of DST was not considered by ACS LLC; she was
not involved in any way with the negotiations between ACS LLC and DST; and her
status as a director of either DST or the funds was not a factor in the
negotiations. The Board of Directors of the funds and Bryan Cave LLP, counsel to
the independent directors of the funds, have concluded that the existence of
this Agreement does not impair Ms. Strandjord's ability to serve as an
independent director under the Investment Company Act.

THE BOARD OF DIRECTORS

The Board of Directors oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired the advisor to do so. The
directors, in carrying out their fiduciary duty under the Investment Company Act
of 1940, are responsible for approving new and existing management contracts
with the funds' advisor. In carrying out these responsibilities, the board
reviews material factors to evaluate

------
31

such contracts, including (but not limited to) assessment of information related
to the advisor's performance and expense ratios, estimates of income and
indirect benefits (if any) accruing to the advisor, the advisor's overall
management and projected profitability, and services provided to the funds and
their investors.

The board has the authority to manage the business of the funds on behalf of
their investors, and it has all powers necessary or convenient to carry out that
responsibility. Consequently, the directors may adopt Bylaws providing for the
regulation and management of the affairs of the funds and may amend and repeal
them to the extent that such Bylaws do not reserve that right to the funds'
investors. They may fill vacancies in or reduce the number of board members, and
may elect and remove such officers and appoint and terminate such agents as they
consider appropriate. They may appoint from their own number and establish and
terminate one or more committees consisting of two or more directors who may
exercise the powers and authority of the board to the extent that the directors
determine. They may, in general, delegate such authority as they consider
desirable to any officer of the funds, to any committee of the board, to any
agent or employee of the funds, or to any custodian, transfer or investor
servicing agent, or principal underwriter. Any determination as to what is in
the interests of the funds made by the directors in good faith shall be
conclusive.

Board Review of Investment Management Contracts

The Board of Directors oversees each fund's management and performance on a
continuous basis, and the board determines annually whether to renew the fund's
investment management agreement. The advisor provides the board with monthly,
quarterly, or annual analyses of its performance in the following areas:

* Investment performance of the funds (short-, medium- and long-term);

* Management of brokerage commission and trading costs (equity funds only);

* Shareholder services provided;

* Compliance with investment restrictions; and

* Fund accounting services provided (including the valuation of portfolio
securities).

Leaders of each fund's portfolio management team meet with the board
periodically to discuss the management and performance of the fund.

When considering whether to renew an investment advisory or subadvisory
contract, the board examines several factors, but does not identify any
particular factor as controlling its decision. Some of the factors considered by
the board include: the nature, extent, and quality of the advisory services
provided, as well as other material facts, such as the investment performance of
the fund's assets managed by the advisor or subadvisor and the fair market value
of the services provided. To assess these factors, the board compares both the
fund's performance and total expense ratio to those of its peers, as reported by
independent data gathering services such as Lipper Analytical Services (for fund
performance and expenses) and National Quality Review (for shareholder
services).

Additional information is provided to the board detailing other sources of
revenue to the advisor or its affiliates from its relationship with the fund and
intangible or "fall-out" benefits that accrue to the advisor and its affiliates,
if relevant, and the advisor's control of the investment expenses of the fund,
such as transaction costs, including ways in which portfolio transactions for
the fund are conducted and brokers are selected.

The board also reviews the investment performance of each fund compared with a
peer group of funds or an appropriate index or combination of indexes, in
addition to a comparative analysis of the total expense ratios of similar funds.

In its review of the investment advisory contract, the board considered the
level of the advisor's profits in respect to the management of the American
Century family of funds, including the profitability of managing each fund. The
board has reviewed the advisor's methodology used to prepare this financial
information. It considered the profits realized by the advisor in connection
with the operation of each fund and whether the amount of profit is a reasonable
profit for the management of each fund.

------
32

When considering whether to approve the investment advisory contract for the new
Focused Growth Fund and Fundamental Equity Fund, the board examined many of the
same factors. While profitability of a non-existent fund cannot be measured, the
board did consider the entrepreneurial risk that the advisor assumes in
launching a new fund. In particular, the board considered the effect of the
unified management fee structure and the fact that the total expense ratio of
the fund would require the advisor to assume a substantial part of the start-up
costs of the fund. The board compared the resulting total expense ratio of the
fund against its peers. The board considered the experience of the portfolio
management staff designated to manage the fund. Finally, the board considered
the position that the new fund would take in the line up of the American Century
family of funds and the benefits to shareholders of existing funds and the new
fund of the broadened product offering.

Based on its evaluation of all material factors, and assisted by the advice of
independent legal counsel, the board, including the independent directors,
concluded that the investment management agreements between the funds and the
advisor are (taking into account certain adjustments to the investment advisory
fees for the Growth, New Opportunities, New Opportunities II, Select, Veedot and
Ultra Funds) fair and reasonable in light of the services provided and should be
renewed and, in the case of the Focused Growth and Fundamental Equity Funds,
approved.

The board originally approved the investment management agreement for the new
Capital Growth Fund in November of 2003. The board has not yet considered the
renewal of that agreement. Although not subject to renewal at this time, the
investment advisory fees for Capital Growth and Fundamental Equity were adjusted
to maintain consistency with similar American Century funds.

Committees

The board has five standing committees to oversee specific functions of the
funds' operations. Information about these committees appears in the table
below. The director first named serves as chairman of the committee.

NUMBER OF
MEETINGS
HELD DURING
LAST FISCAL
COMMITTEE MEMBERS FUNCTION YEAR
------------------------------------------------------------------------------------------------
Executive Donald H. Pratt The Executive Committee performs 0
James E. Stowers III the functions of the Board of
M. Jeannine Strandjord Directors between board meetings,
subject to the limitations on its
power set out in the Maryland
General Corporation Law, and
except for matters required by the
Investment Company Act to be
acted upon by the whole board.
------------------------------------------------------------------------------------------------
Compliance Andrea C. Hall, PhD The Compliance and Shareholder 4
and Shareholder Thomas A. Brown Communications Committee
Communications Gale E. Sayers reviews the results of the funds'
M. Jeannine Strandjord compliance testing program,
reviews quarterly reports from the
communications advisor to the
board regarding various compliance
matters and monitors the
implementation of the funds' Code
of Ethics, including any violations.
------------------------------------------------------------------------------------------------
Audit D.D. (Del) Hock The Audit Committee approves the 4
Donald H. Pratt engagement of the funds'
Timothy S. Webster independent registered public
accounting firm, recommends
approval of such engagement
to the independent directors, and
oversees the activities of the funds'
independent registered public
accounting firm. The Committee
receives reports from the advisor's
Internal Audit Department, which
is accountable to the Committee.
The Committee also receives
reporting about compliance
matters affecting the funds.
------------------------------------------------------------------------------------------------
Governance Donald H. Pratt The Governance Committee 1
Thomas A. Brown primarily considers and
M. Jeannine Strandjord recommends individuals for
nomination as directors. The
names of potential director
candidates are drawn from a
number of sources, including
recommendations from members
of the board, management (in
the case of interested directors
only) and shareholders. See
NOMINATIONS OF DIRECTORS below.
This committee also reviews and
makes recommendations to the
board with respect to the
composition of board committees
and other board-related matters,
including its organization, size,
composition, responsibilities,
functions and compensation.
------------------------------------------------------------------------------------------------
Fund Timothy S. Webster The Fund Performance Review 4
Performance Donald H. Pratt Committee reviews quarterly the
Review Thomas A. Brown investment activities and strategies
Andrea C. Hall, Ph.D. used to manage fund assets. The
D.D. (Del) Hock committee regularly receives
Gale E. Sayers reports from portfolio managers
M. Jeannine Strandjord and other investment personnel
concerning the funds' investments.
------------------------------------------------------------------------------------------------

------
33

Nominations of Directors

As indicated in the table above, the Governance Committee is responsible for
identifying, evaluating and recommending qualified candidates for election to
the funds' Board of Directors. While the Governance Committee largely considers
nominees from searches that it conducts, the Committee will consider director
candidates submitted by shareholders. Any shareholder wishing to submit a
candidate for consideration should send the following information to the
Corporate Secretary, American Century Funds, P.O. Box 410141, Kansas City, MO
64141 or by email to corporatesecretary@americancentury.com:

* Shareholder's name, the fund name and number of fund shares owned and
length of period held;

* Name, age and address of the candidate;

* A detailed resume describing among, other things, the candidate's
educational background, occupation, employment history, financial knowledge
and expertise and material outside commitments (e.g., memberships on other
boards and committees, charitable foundations, etc.);

* Any other information relating to the candidate that is required to be
disclosed in solicitations of proxies for election of directors in an
election contest pursuant to Regulation 14A under the Securities Exchange Act
of 1934;

* Number of fund shares owned by the candidate and length of time held;

* A supporting statement which (i) describes the candidate's reasons for
seeking election to the Board of Directors and (ii) documents his/her ability
to satisfy the director qualifications described in the board's policy;

* A signed statement from the candidate confirming his/her willingness to
serve on the Board of Directors.

The Corporate Secretary will promptly forward such materials to the Governance
Committee chairman. The Corporate Secretary also will maintain copies of such
materials for future reference by the Governance Committee when filling board
positions.

Shareholders may submit potential director candidates at any time pursuant to
these procedures. The Governance Committee will consider such candidates if a
vacancy arises or if the board decides to expand its membership, and at such
other times as the Governance Committee deems necessary or appropriate.

Compensation of Directors

The directors serve as directors for five American Century investment companies.
Each director who is not an interested person as defined in the Investment
Company Act receives compensation for service as a member of the board of all
five such companies based on a schedule that takes into account the number of
meetings attended and the assets of the funds for which the meetings are held.
These fees and expenses are divided among the five investment companies based,
in part, upon their relative net assets. Under the terms of the management
agreement with the advisor, the funds are responsible for paying such fees and
expenses.

The following table shows the aggregate compensation paid by the funds for the
periods indicated and by the five investment companies served by the board to
each director who is not an interested person as defined in the Investment
Company Act.

------
34

AGGREGATE DIRECTOR COMPENSATION DURING FISCAL YEAR ENDED OCTOBER 31, 2004
--------------------------------------------------------------------------------
TOTAL TOTAL COMPENSATION
COMPENSATION FROM THE AMERICAN
FROM THE CENTURY FAMILY
NAME OF DIRECTOR FUNDS (1) OF FUNDS (2)
--------------------------------------------------------------------------------
Thomas A. Brown $51,630 $86,726
--------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. $52,803 $88,728
--------------------------------------------------------------------------------
D.D. (Del) Hock $52,803 $88,728
--------------------------------------------------------------------------------
Donald H. Pratt $54,889 $92,228
--------------------------------------------------------------------------------
Gale E. Sayers $51,017 $85,728
--------------------------------------------------------------------------------
M. Jeannine Strandjord $51,332 $86,228
--------------------------------------------------------------------------------
Timothy S. Webster $50,416 $84,728
--------------------------------------------------------------------------------

(1) INCLUDES COMPENSATION PAID TO THE DIRECTORS DURING THE FISCAL YEAR ENDED
OCTOBER 31, 2004, AND ALSO INCLUDES AMOUNTS DEFERRED AT THE ELECTION OF THE
DIRECTORS UNDER THE AMERICAN CENTURY MUTUAL FUNDS' INDEPENDENT DIRECTORS'
DEFERRED COMPENSATION PLAN.

(2) INCLUDES COMPENSATION PAID BY THE FIVE INVESTMENT COMPANIES OF THE
AMERICAN CENTURY FAMILY OF FUNDS SERVED BY THIS BOARD AT THE END OF THE
FISCAL YEAR. THE TOTAL AMOUNT OF DEFERRED COMPENSATION INCLUDED IN THE
PRECEDING TABLE IS AS FOLLOWS: MR. BROWN, $14,746; DR. HALL, $73,128; MR.
HOCK, $76,728; MR. PRATT, $12,000; MR. SAYER, $77,978; AND MR. WEBSTER,
$36,864.

The funds have adopted the American Century Mutual Funds' Independent Directors'
Deferred Compensation Plan. Under the plan, the independent directors may defer
receipt of all or any part of the fees to be paid to them for serving as
directors of the funds.

All deferred fees are credited to an account established in the name of the
directors. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the director. The account balance continues
to fluctuate in accordance with the performance of the selected fund or funds
until final payment of all amounts credited to the account. Directors are
allowed to change their designation of mutual funds from time to time.

No deferred fees are payable until such time as a director resigns, retires or
otherwise ceases to be a member of the Board of Directors. Directors may receive
deferred fee account balances either in a lump sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a director, all remaining deferred fee account balances are paid to
the director's beneficiary or, if none, to the director's estate.

The plan is an unfunded plan and, accordingly, the funds have no obligation to
segregate assets to secure or fund the deferred fees. To date, the funds have
voluntarily funded their obligations. The rights of directors to receive their
deferred fee account balances are the same as the rights of a general unsecured
creditor of the funds. The plan may be terminated at any time by the
administrative committee of the plan. If terminated, all deferred fee account
balances will be paid in a lump sum.

No deferred fees were paid to any director under the plan during the fiscal year
ended October 31, 2004.

------
35

OWNERSHIP OF FUND SHARES

The directors owned shares in the funds as of December 31, 2004, as shown in the
table below. Because Focused Growth was not in operation as of the calendar year
end, it is not included in the tables below.

NAME OF DIRECTORS
---------------------------------------------------------------------------------------
JAMES E. JAMES E. THOMAS A. ANDREA C.
STOWERS, JR. STOWERS III BROWN HALL, PH.D.
---------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
Balanced A A B A
---------------------------------------------------------------------------------------
Capital Growth A A A A
---------------------------------------------------------------------------------------
Capital Value A A A A
---------------------------------------------------------------------------------------
Fundamental Equity A A A A
---------------------------------------------------------------------------------------
Giftrust B C A A
---------------------------------------------------------------------------------------
Growth E A B A
---------------------------------------------------------------------------------------
Heritage A A B A
---------------------------------------------------------------------------------------
New Opportunities A E C C
---------------------------------------------------------------------------------------
New Opportunities II A A A A
---------------------------------------------------------------------------------------
Select E A C A
---------------------------------------------------------------------------------------
Ultra C D C A
---------------------------------------------------------------------------------------
Veedot A E C A
---------------------------------------------------------------------------------------
Vista E D C C
---------------------------------------------------------------------------------------
Aggregate Dollar Range
of Equity Securities in all
Registered Investment
Companies Overseen
by Director in Family of
Investment Companies E E E E
---------------------------------------------------------------------------------------

RANGES: A-NONE, B-$1-$10,000, C-$10,001-$50,000, D-$50,001-$100,000, E-MORE THAN
$100,000

NAME OF DIRECTORS
-----------------------------------------------------------------------------------------
D.D. (DEL) DONALD GALE E. M. JEANNINE TIMOTHY S.
HOCK H. PRATT SAYERS STRANDJORD WEBSTER
-----------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
Balanced A A C A B
-----------------------------------------------------------------------------------------
Capital Growth A A A A A
-----------------------------------------------------------------------------------------
Capital Value A A A A A
-----------------------------------------------------------------------------------------
Fundamental Equity A A A A A
-----------------------------------------------------------------------------------------
Giftrust A A A A A
-----------------------------------------------------------------------------------------
Growth D A A A A
-----------------------------------------------------------------------------------------
Heritage A A A A A
-----------------------------------------------------------------------------------------
New Opportunities A B A A A
-----------------------------------------------------------------------------------------
New Opportunities II A A A A A
-----------------------------------------------------------------------------------------
Select D A C A A
-----------------------------------------------------------------------------------------
Ultra D A A A D
-----------------------------------------------------------------------------------------
Veedot C B A A D
-----------------------------------------------------------------------------------------
Vista E C A A D
-----------------------------------------------------------------------------------------
Aggregate Dollar Range
of Equity Securities in all
Registered Investment
Companies Overseen
by Director in Family of
Investment Companies E E D E E
-----------------------------------------------------------------------------------------

RANGES: A-NONE, B-$1-$10,000, C-$10,001-$50,000, D-$50,001-$100,000, E-MORE THAN
$100,000

------
36

CODE OF ETHICS

The funds, their investment advisor and principal underwriter have adopted a
code of ethics under Rule 17j-1 of the Investment Company Act and the code of
ethics permits personnel subject to the code to invest in securities, including
securities that may be purchased or held by the funds, provided that they first
obtain approval from the compliance department before making such investments.

PROXY VOTING GUIDELINES

The advisor is responsible for exercising the voting rights associated with the
securities purchased and/or held by the funds. In exercising its voting
obligations, the advisor is guided by general fiduciary principles. It must act
prudently, solely in the interest of the funds, and for the exclusive purpose of
providing benefits to them. The advisor attempts to consider all factors of its
vote that could affect the value of the investment. The funds' Board of
Directors has approved the advisor's Proxy Voting Guidelines to govern the
advisor's proxy voting activities.

The advisor and the board have agreed on certain significant contributors to
shareholder value with respect to a number of matters that are often the subject
of proxy solicitations for shareholder meetings. The Proxy Voting Guidelines
specifically address these considerations and establish a framework for the
advisor's consideration of the vote that would be appropriate for the funds. In
particular, the Proxy Voting Guidelines outline principles and factors to be
considered in the exercise of voting authority for proposals addressing:

* Election of Directors
* Ratification of Selection of Auditors
* Equity-Based Compensation Plans
* Anti-Takeover Proposals
* Cumulative Voting
* Staggered Boards
* "Blank Check" Preferred Stock
* Elimination of Preemptive Rights
* Non-targeted Share Repurchase
* Increase in Authorized Common Stock
* "Supermajority" Voting Provisions or Super Voting Share Classes
* "Fair Price" Amendments
* Limiting the Right to Call Special Shareholder Meetings
* Poison Pills or Shareholder Rights Plans
* Golden Parachutes
* Reincorporation
* Confidential Voting
* Opting In or Out of State Takeover Laws
* Shareholder Proposals Involving Social, Moral or Ethical Matters
* Anti-Greenmail Proposals
* Changes to Indemnification Provisions
* Non-Stock Incentive Plans
* Director Tenure
* Directors' Stock Options Plans
* Director Share Ownership

------
37

Finally, the Proxy Voting Guidelines establish procedures for voting of proxies
in cases in which the advisor may have a potential conflict of interest.
Companies with which the advisor has direct business relationships could
theoretically use these relationships to attempt to unduly influence the manner
in which American Century votes on matters for the funds. To ensure that such a
conflict of interest does not affect proxy votes cast for the funds, all
discretionary (including case-by-case) voting for these companies will be voted
in direct consultation with a committee of the independent directors of the
funds.

A copy of the advisor's Proxy Voting Guidelines and information regarding how
the advisor voted proxies relating to portfolio securities during the most
recent 12-month period ended June 30 are available on the ABOUT US page at
americancentury.com. The advisor's proxy voting record also is available on the
SEC's website at sec.gov.

DISCLOSURE OF PORTFOLIO HOLDINGS

The advisor (ACIM) has adopted policies and procedures with respect to the
disclosure of fund portfolio holdings and characteristics, which are described
below.

Distribution to the Public

Full portfolio holdings are made available to the public quarterly with a lag of
30 days. These are posted on americancentury.com on the 31st day after the end
of each fiscal quarter. In addition, full portfolio holdings are transmitted to
fund shareholders twice each year in annual and semi-annual reports.

Top 10 holdings are made available to the public monthly with a lag of 30 days.
These holdings are posted monthly on americancentury.com. From time to time the
advisor may select additional portfolio characteristics for distribution to the
public with such frequencies and lag times as the advisor determines to be in
the best interests of shareholders.

So long as portfolio holdings are disclosed in accordance with the above
parameters, the advisor makes no distinction among different categories of
recipients, such as individual investors, institutional investors,
intermediaries that distribute the funds' shares, third-party service providers,
rating and ranking organizations, and fund affiliates. Because this information
is publicly available and widely disseminated, the advisor places no conditions
or restrictions on, and does not monitor, its use. Nor does the advisor require
special authorization for its disclosure.

ACCELERATED DISCLOSURE

The advisor recognizes that certain parties, in addition to the advisor and its
affiliates, may have legitimate needs for information about portfolio holdings
and characteristics prior to the times prescribed above. Such accelerated
disclosure is permitted under the circumstances described below.

ONGOING ARRANGEMENTS

Certain parties, such as investment consultants who provide regular analysis of
fund portfolios for their clients and intermediaries who pass through
information to fund shareholders, may have legitimate needs for accelerated
disclosure. These needs may include, for example, the preparation of reports for
customers who invest in the funds, the creation of analyses of fund
characteristics for intermediary or consultant clients, the reformatting of data
for distribution to the intermediary's or consultant's clients, and the review
of fund performance for ERISA fiduciary purposes.

------
38

In such cases, accelerated disclosure is permitted if the service provider
enters an appropriate non-disclosure agreement with the advisor in which it
agrees to treat the information confidentially until the public distribution
date and represents that the information will be used only for the legitimate
services provided to its clients (i.e., not for trading). Non-disclosure
agreements require the approval of an attorney in the advisor's Legal
Department. The advisor's Compliance Department receives quarterly reports
detailing which clients received accelerated disclosure, when they received it
and the purposes of such disclosure. Compliance personnel are required to
confirm that an appropriate non-disclosure agreement has been obtained from each
recipient identified in the reports.

Those parties who have entered into non-disclosure agreements as of May 4, 2005
are as follows:

* American Fidelity Assurance Co.
* American United Life Insurance Company
* Ameritas Life Insurance Corporation
* Annuity Investors Life Insurance Company
* Asset Services Company L.L.C.
* Bell Globemedia Publishing
* Bellwether Consulting, LLC
* Bidart & Ross
* Business Men's Assurance Co. of America
* Callan Associates, Inc.
* Cleary Gull Inc.
* Commerce Bank, N.A.
* Connecticut General Life Insurance Company
* Defined Contribution Advisors, Inc.
* EquiTrust Life Insurance Company
* Farm Bureau Life Insurance Company
* First MetLife Investors Insurance Company
* Fund Evaluation Group, LLC
* The Guardian Life Insurance & Annuity Company, Inc.
* Hewitt Associates LLC
* ICMA Retirement Corporation
* ING Insurance Company of America
* Investors Securities Services, Inc.
* Iron Capital Advisors
* J.P. Morgan Retirement Plan Services LLC
* Jefferson National Life Insurance Company
* Jefferson Pilot Financial
* Kansas City Life Insurance Company
* Kmotion, Inc.
* The Lincoln National Life Insurance Company
* Lipper Inc.
* Manulife Financial
* Massachusetts Mutual Life Insurance Company

------
39

* Merrill Lynch
* MetLife Investors Insurance Company
* MetLife Investors Insurance Company of California
* Midland National Life Insurance Company
* Minnesota Life Insurance Company
* Morgan Stanley DW, Inc.
* Morningstar Associates LLC
* Morningstar Investment Services, Inc.
* Mutual of America Life Insurance Company
* National Life Insurance Company
* Nationwide Financial
* NT Global Advisors, Inc.
* NYLIFE Distributors, LLC
* Principal Life Insurance Company
* Prudential Financial
* S&P Financial Communications
* Scotia McLeod
* Scudder Distributors, Inc.
* Security Benefit Life Insurance Co.
* Smith Barney
* SunTrust Bank
* Symetra Life Insurance Company
* Trusco Capital Management
* Union Bank of California, N.A.
* The Union Central Life Insurance Company
* VALIC Financial Advisors
* VALIC Retirement Services Company
* Vestek Systems, Inc.
* Wachovia Bank, N.A.
* Wells Fargo Bank, N.A.

The types, frequency and timing of disclosure to such parties vary. Full
portfolio holdings are provided infrequently. When they are provided, it is
generally with a 30-day lag. (Vestek receives full holdings for certain funds on
a monthly basis as soon as the information is available, usually within one
business day.) Top ten holdings and other portfolio characteristics are
generally provided on a quarterly basis within 5-20 business days after the
quarter end. In some cases, such characteristics may be provided monthly within
5-10 business days after month end.

------
40

SINGLE EVENT REQUESTS

In certain circumstances, the advisor may provide fund holding information on an
accelerated basis outside of an ongoing arrangement with manager-level or higher
authorization. For example, from time to time the advisor may receive requests
for proposals (RFPs) from consultants or potential clients that request
information about a fund's holdings on an accelerated basis. As long as such
requests are on a one-time basis, and do not result in continued receipt of
data, such information may be provided in the RFP as of the most recent month
end regardless of lag time. Such information will be provided with a
confidentiality legend and only in cases where the advisor has reason to believe
that the data will be used only for legitimate purposes and not for trading.

In addition, the advisor occasionally may work with a transition manager to move
a large account into or out of a fund. To reduce the impact to the fund, such
transactions may be conducted on an in-kind basis using shares of portfolio
securities rather than cash. The advisor may provide accelerated holdings
disclosure to the transition manager with little or no lag time to facilitate
such transactions, but only if the transition manager enters into an appropriate
non-disclosure agreement.

SERVICE PROVIDERS

Various service providers to the funds and the funds' advisor must have access
to some or all of the funds' portfolio holdings information on an accelerated
basis from time to time in the ordinary course of providing services to the
funds. These service providers include the funds' custodian (daily, with no
lag), auditors (as needed) and brokers involved in the execution of fund trades
(as needed). Additional information about these service providers and their
relationships with the funds and the advisor are provided elsewhere in this
statement of additional information.

Additional Safeguards

The advisor's policies and procedures include a number of safeguards designed to
control disclosure of portfolio holdings and characteristics so that such
disclosure is consistent with the best interests of fund shareholders. First,
the frequency with which this information is disclosed to the public, and the
length of time between the date of the information and the date on which the
information is disclosed, are selected to minimize the possibility of a third
party improperly benefiting from fund investment decisions to the detriment of
fund shareholders. Second, distribution of portfolio holdings information,
including compliance with the advisor's policies and the resolution of any
potential conflicts that may arise, is monitored quarterly. Finally, the funds'
Board of Directors exercises oversight of disclosure of the funds' portfolio
securities. The board has received and reviewed a summary of the advisor's
policy and is informed on a quarterly basis of any changes to or violations of
such policy detected during the prior quarter.

Neither the advisor nor the funds receive any compensation from any party for
the distribution of portfolio holdings information.

The advisor reserves the right to change its policies and procedures with
respect to the distribution of portfolio holdings information at any time. There
is no guarantee that these policies and procedures will protect the funds from
the potential misuse of holdings information by individuals or firms in
possession of such information.

------
41

THE FUNDS' PRINCIPAL SHAREHOLDERS

As of June 30, 2005, the following shareholders, beneficial or of record, owned
more than 5% of the outstanding shares of any class of the funds. Because the
Investor, Institutional and R Class of Capital Growth, the Investor,
Institutional and R Class of Fundamental Equity, the R Class of Select and the R
Class of Vista were not in operation as of June 30, 2005, they are not included
in the chart below.

PERCENTAGE OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
FUND/ SHARES OWNED SHARES OWNED
CLASS SHAREHOLDER OF RECORD BENEFICIALLY(1)
---------------------------------------------------------------------------------
Balanced
---------------------------------------------------------------------------------
Investor 7% 0%
Charles Schwab & Co., Inc.
San Francisco, California
---------------------------------------------------------------------------------
Institutional
National Financial Services LLC 77% 0%
New York, New York

Trustees of American Century 23% 23%
Mutual Funds Indep Directors
Def Comp Plan
Kansas City, Missouri
---------------------------------------------------------------------------------
Advisor
Reliance Trust Co. Cust FBO 11% 0%
Gold Bank Corp 401k
Atlanta, Georgia

MLPF&S 10% 0%
Jacksonville, Florida

Charles Schwab & Co., Inc. 9% 0%
San Francisco, California

Fulton Financial Adv TTEE 9% 0%
FBO Masland Associates Inc.
Lancaster, Pennsylvania

Nationwide Trust Company 6% 0%
Columbus, Ohio
---------------------------------------------------------------------------------
Capital Growth
A
American Century Investment 34% 34%
Management, Inc.
Kansas City, Missouri

Charles Schwab & Co., Inc. 24% 0%
San Francisco, California
---------------------------------------------------------------------------------
B
American Century Investment 58% 58%
Management, Inc.
Kansas City, Missouri
---------------------------------------------------------------------------------

(1) IF SHARES ARE REGISTERED IN AN INDIVIDUAL'S NAME OR IN THE NAME OF AN
INTERMEDIARY FOR THE BENEFIT OF A NAMED PARTY, WE REPORT THOSE SHARES AS
BEING BENEFICIALLY OWNED. OTHERWISE, AMERICAN CENTURY HAS NO INFORMATION
CONCERNING BENEFICIAL OWNERSHIP OF FUND SHARES.

------
42

PERCENTAGE OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
SHARES OWNED SHARES OWNED
FUND/CLASS SHAREHOLDER OF RECORD BENEFICIALLY(1)
--------------------------------------------------------------------------------
Capital Growth
--------------------------------------------------------------------------------
C
American Century Investment 58% 58%
Management, Inc.
Kansas City, Missouri

AG Edwards & Sons Inc. 25% 0%
FBO RRF Investments LLC
St. Louis, Missouri
--------------------------------------------------------------------------------
Capital Value
--------------------------------------------------------------------------------
Investor
Charles Schwab & Co., Inc. 37% 0%
San Francisco, California

Saxon & Co 11% 0%
Philadelphia, Pennsylvania

US Bank Trustee 6% 0%
Private Asset 0/A Platform
Milwaukee, Wisconsin
--------------------------------------------------------------------------------
Institutional
Saxon & Co. 50% 0%
Philadelphia, Pennsylvania

Charles Schwab & Co., Inc. 46% 0%
San Francisco, California
--------------------------------------------------------------------------------
Advisor
Nationwide Trust Company 64% 0%
Columbus, Ohio

Charles Schwab & Co., Inc. 28% 0%
San Francisco, California
--------------------------------------------------------------------------------
Focused Growth
--------------------------------------------------------------------------------
Investor
None
--------------------------------------------------------------------------------
Fundamental Equity
--------------------------------------------------------------------------------
A Class
American Century Investment 45% 45%
Management, Inc.
Kansas City, Missouri

AG Edwards & Sons Inc. FBO 13% 0%
Linda S Klais TR
Linda S Klais Living
St. Louis, Missouri

Gerald P Sullivan & 5% 5%
Gail M Sullivan JTWROS
Overland Park, Kansas
--------------------------------------------------------------------------------

------
43

PERCENTAGE OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
FUND/ SHARES OWNED SHARES OWNED
CLASS SHAREHOLDER OF RECORD BENEFICIALLY(1)
--------------------------------------------------------------------------------
Fundamental Equity
--------------------------------------------------------------------------------
B Class
American Century Investment 95% 95%
Management, Inc.
Kansas City, Missouri
--------------------------------------------------------------------------------
C Class
American Century Investment 65% 65%
Management, Inc.
Kansas City, Missouri

MLPF&S Inc. 12% 0%
Jacksonville, Florida

AG Edwards & Sons Inc. Cust 7% 7%
FBO John J Rutkowski
St. Louis, Missouri
--------------------------------------------------------------------------------
Giftrust
None
--------------------------------------------------------------------------------
Growth
--------------------------------------------------------------------------------
Investor
None
--------------------------------------------------------------------------------
Institutional
State Street Bank TR 80% 0%
Lockheed Martin Co
Defined Contributions
Plans Master Trust
Westwood, Massachusetts
--------------------------------------------------------------------------------
C
Pershing LLC 44% 0%
Jersey City, New Jersey

James J. McGeachin and 6% 0%
Janice K. McGeachin
Trustees J.R. McGeachin Inc. PSP
Idaho Falls, Idaho
--------------------------------------------------------------------------------
R
MCB Trust Services Cust FBO 76% 0%
Resource Control Associates Inc.
Denver, Colorado

American Century 12% 12%
Investment Management, Inc.
Kansas City, Missouri

Reliastar Life 8% 0%
Insurance Company
Minneapolis, Minnesota
--------------------------------------------------------------------------------
Advisor
Nationwide Trust Co. 14% 0%
Columbus, Ohio

Charles Schwab & Co., Inc. 11% 0%
San Francisco, California
--------------------------------------------------------------------------------
Heritage
--------------------------------------------------------------------------------
Investor
None
--------------------------------------------------------------------------------

------
44

PERCENTAGE OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
FUND/ SHARES OWNED SHARES OWNED
CLASS SHAREHOLDER OF RECORD BENEFICIALLY(1)
--------------------------------------------------------------------------------
Heritage
--------------------------------------------------------------------------------
Institutional
Chase Manhattan Bank Trustee 52% 0%
The BOC Group Inc. Savings
Investment Plan Trust
New York, New York

The Chase Manhattan 37% 0%
Bank NA TTEE
The Reynolds and
Reynolds Co. 401(k)
Savings Plan Trust
New York, New York

Trustees of American Century 10% 10%
P/S & 401(k) Savings
Plan & Trust
Kansas City, Missouri
--------------------------------------------------------------------------------
C
Mobank & Co. EB 14% 0%
Monroe, Michigan

American Enterprise 7% 0%
Investment Svcs
Minneapolis, Minnesota
--------------------------------------------------------------------------------
Advisor
Charles Schwab & Co., Inc. 24% 0%
San Francisco, California

MCB Trust Services 14% 0%
as Agent For
Citizens Bank as
Trustee FBO
Centimark Corporation
401k Plan
Providence, Rhode Island

National Financial Services LLC 9% 0%
New York, New York

AIG Federal Savings 9% 0%
Bank Trustee
FBO Macome-Oakland Regional
Center Money Purchase Plan
Houston, Texas

Mitra & Co. 8% 0%
Milwaukee, Wisconsin
--------------------------------------------------------------------------------
New Opportunities
--------------------------------------------------------------------------------
Investor
Trustees of American 8% 8%
Century Profit
Sharing and 401K Savings
Plan & Trust
Kansas City, Missouri
--------------------------------------------------------------------------------
New Opportunities II
--------------------------------------------------------------------------------
Investor
US Bank Trustee 17% 0%
Private Asset O/A Platform
Milwaukee, Wisconsin
--------------------------------------------------------------------------------
Institutional
None
--------------------------------------------------------------------------------

------
45

New Opportunities II
--------------------------------------------------------------------------------
A
Charles Schwab & Co., Inc. 80% 0%
San Francisco, California
--------------------------------------------------------------------------------
B
None
--------------------------------------------------------------------------------
C
MLPF&S Inc. 30% 0%
Jacksonville, Florida
--------------------------------------------------------------------------------
Select
--------------------------------------------------------------------------------
Investor
None
--------------------------------------------------------------------------------
Institutional
Northern Trust Co. TR 36% 0%
CSX Corp Master
Savings Plan
Chicago, Illinois

JP Morgan Chase Bank Trustee 34% 0%
Bosch Savings Incentive Plan
Kansas City, Missouri

The Chase Manhattan 10% 0%
Bank NA TR
Huntsman Corp Salary
Deferral Plan & Trust
New York, New York

UMB Bank NA TR 5% 0%
Buckeye Pipe Line
Services Company
Retirement & Savings Plan
Kansas City, Missouri
--------------------------------------------------------------------------------
A
Charles Schwab & Co., Inc. 83% 0%
San Francisco, California
--------------------------------------------------------------------------------
B
None
--------------------------------------------------------------------------------
C
MLPF&S Inc. 31% 0%
Jacksonville, Florida
--------------------------------------------------------------------------------
Advisor
UMB Bank NA 32% 0%
Fiduciary for Various
Deferred Accounts
Topeka, Kansas

Orchard Trust Company Custodian 10% 0%
RHD Investors Choice 403B7
Englewood, Colorado

MLPF&S Inc. 9% 0%
Jacksonville, Florida
--------------------------------------------------------------------------------

------
46

Saxon & Co 8% 0%
Philadelphia, Pennsylvania

Whitney National Bank TTEE for 7% 0%
Superior Energy 401(k) Plan
New Orleans, Louisiana
--------------------------------------------------------------------------------
Ultra
--------------------------------------------------------------------------------
Investor
Charles Schwab & Co., Inc. 7% 0%
San Francisco, California

The Variable Annuity Life 5% 0%
Insurance Company
Houston, Texas
--------------------------------------------------------------------------------
Institutional
JP Morgan Chase Bank Trustee 12% 0%
401(k) Savings Plan of
JP Morgan Chase & Co. Trust
Brooklyn, New York

Fidelity FIIOC TR 11% 0%
FBO Intel SERP 401k
Covington, Kentucky

JP Morgan Chase Bank Trustee 10% 0%
Bosch Savings Incentive Plan
Kansas City, Missouri

JP Morgan Chase TR 8% 0%
The Interpublic Group of
Companies Inc.
Savings Plan Trust
New York, New York

Nationwide Trust Company 6% 0%
FBO Participating
Retirement Plans
TPA-NTC
Columbus, Ohio

Nationwide Insurance Company 5% 0%
QPVA
Columbus, Ohio
--------------------------------------------------------------------------------
Advisor
Nationwide Trust Company FSB 15% 0%
Columbus, Ohio

National Financial Services Corp. 13% 0%
New York, New York

Charles Schwab & Co., Inc. 9% 0%
San Francisco, California

Prudential Retirement 5% 0%
Insurance & Annuity Company
Hartford, Connecticut

ING Life Insurance and 5% 0%
Annuity Co
Hartford, Connecticut
--------------------------------------------------------------------------------

------
47

PERCENTAGE OF PERCENTAGE OF
OUTSTANDING OUTSTANDING
SHARES OWNED SHARES OWNED
FUND/CLASS SHAREHOLDER OF RECORD BENEFICIALLY(1)
--------------------------------------------------------------------------------
Ultra
--------------------------------------------------------------------------------
C
Mobank & Co EB 9% 0%
Monroe, Michigan
--------------------------------------------------------------------------------
R
ING National Trust 49% 0%
Hartford, Connecticut

ING Life Insurance and 18% 0%
Annuity Co.
Hartford, Connecticut

Symetra Investment Services 14% 0%
Seattle, Washington

Massachusetts Mutual 13% 0%
Life Insurance
Springfield, Massachusetts
--------------------------------------------------------------------------------
Veedot
--------------------------------------------------------------------------------
Investor
None
--------------------------------------------------------------------------------
Institutional
American Century Investment 19% 19%
Management Inc.
Kansas City, Missouri

UMB TR 9% 9%
American Century Executive
Deferred Comp Plan Trust
Kansas City, Missouri

UMB TR 9% 9%
American Century
Services Corp.
Stock Option Surrender
Plan #95
Kansas City, Missouri
--------------------------------------------------------------------------------
Vista
--------------------------------------------------------------------------------
Investor
John Hancock Life Ins Co. USA 12% 0%
Toronto, Ontario
--------------------------------------------------------------------------------
Institutional
Trustees of American Century P/S 27% 27%
and 401K Savings Plan and Trust
Kansas City, Missouri

The Chase Manhattan 17% 0%
Bank NA TR
Huntsman Corp Salary
Deferral Plan & Trust
New York, New York

JPMorgan Chase Bank Trustee 13% 0%
Astellas US Retirement
and Savings Plan
Kansas City, Missouri

Mitra & Co 7% 0%
c/o Marshall & Ilsley TR CO
Milwaukee, Wisconsin
--------------------------------------------------------------------------------

------
48

JPMorgan Chase Bank 6% 0%
Custodian
FBO Housing Renewal
Local Agency Retirement
Plan & Trust
Brooklyn, New York
--------------------------------------------------------------------------------
Advisor
Trustar/Delaware Charter 13% 0%
FBO Principal Financial Group
Wilmington, Delaware

Charles Schwab & Co., Inc. 13% 0%
San Francisco, California

Oklahoma Public Employees 10% 0%
Retirement System
Board of Trustees
FBO OK State Employees
Def Comp Plan
Greenwood Village, Colorado

Carey & Co. 10% 0%
Columbus, Ohio

Delaware Charter 5% 0%
Guarantee & Trust
FBO Various Qualified Plans
Des Moines, Iowa
--------------------------------------------------------------------------------
C
None
--------------------------------------------------------------------------------

The funds are unaware of any other shareholders, beneficial or of record, who
own more than 5% of any class of a fund's outstanding shares. The funds are
unaware of any other shareholders, beneficial or of record, who own more than
25% of the voting securities of American Century Mutual Funds, Inc. A
shareholder owning of record or beneficially more than 25% of the corporation's
outstanding shares may be considered a controlling person. The vote of any such
person could have a more significant effect on matters presented at a
shareholders' meeting than votes of other shareholders. As of June 30, 2005, the
officers and directors of the funds, as a group, owned less than 1% of any class
of a fund's outstanding shares.

------
49

SERVICE PROVIDERS

The funds have no employees. To conduct the funds' day-to-day activities, the
funds have hired a number of service providers. Each service provider has a
specific function to fill on behalf of the funds that is described below.

ACIM, ACS LLC and ACIS are wholly owned, directly or indirectly, by ACC. James
E. Stowers, Jr., controls ACC by virtue of his ownership of a majority of its
voting stock.

INVESTMENT ADVISOR

American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for each of the funds. A description of the responsibilities of the
advisor appears in each prospectus under the heading MANAGEMENT.

For services provided to each fund, the advisor receives a fee based on a
percentage of the net assets of each fund. The amount of the fee is calculated
daily and paid monthly in arrears. For funds with a stepped fee schedule, the
rate of the fee is determined by applying the fee rate calculation formula
indicated in the table below. This formula takes into account all of the
advisor's assets under management in the fund's investment strategy ("strategy
assets") to calculate the appropriate fee rate for the fund. The strategy assets
include the fund's assets and the assets of other clients of the advisor that
are not in the American Century family of mutual funds but that have the same
investment team and investment strategy. The use of strategy assets, rather than
fund assets, in calculating the fee rate for a particular fund could allow a
fund to realize scheduled cost savings more quickly if the advisor acquires
additional assets under management within a strategy in addition to the fund's
assets. The management fee schedules for the funds appear below.

FUND CLASS PERCENTAGE OF STRATEGY ASSETS
--------------------------------------------------------------------------------
Balanced Investor 0.900% of first $1 billion
0.800% over $1 billion
--------------------------------------------------------------
Institutional 0.700% of first $1 billion
0.600% over $1 billion
--------------------------------------------------------------
Advisor 0.650% of first $1 billion
0.550% over $1 billion
--------------------------------------------------------------------------------
Capital Investor, A, B, C and R 1.000% of first $5 billion
Growth 0.990% of the next $5 billion
0.980% of the next $5 billion
0.970% of the next $5 billion
0.950% of the next $5 billion
0.900% of the next $5 billion
0.800% over $30 billion
--------------------------------------------------------------
Institutional 0.800% of first $5 billion
0.790% of the next $5 billion
0.780% of the next $5 billion
0.770% of the next $5 billion
0.750% of the next $5 billion
0.700% of the next $5 billion
0.600% over $30 billion
--------------------------------------------------------------------------------
Capital Investor 1.10% of first $500 million
Value 1.00% of next $500 million
0.90% over $1 billion
--------------------------------------------------------------
Institutional 0.90% of first $500 million
0.80% of next $500 million
0.70% over $1 billion
--------------------------------------------------------------
Advisor 0.85% of first $500 million
0.75% of next $500 million
0.65% over $1 billion
--------------------------------------------------------------------------------

------
50

FUND CLASS PERCENTAGE OF STRATEGY ASSETS
--------------------------------------------------------------------------------
Focused Investor 1.00%
Growth
--------------------------------------------------------------------------------
Fundamental Investor, A, B, C and R 1.000% of first $5 billion
Equity 0.990% of next $5 billion
0.980% of next $5 billion
0.970% of next $5 billion
0.950% of next $5 billion
0.900% of next $5 billion
0.800% over $30 billion
------------------------------------------------------------
Institutional 0.800% of first $5 billion
0.790% of next $5 billion
0.780% of next $5 billion
0.770% of next $5 billion
0.750% of next $5 billion
0.700% of next $5 billion
0.600% over $30 billion
--------------------------------------------------------------------------------
Giftrust Investor 1.00%
--------------------------------------------------------------------------------
Growth Investor, C and R 1.000% of first $5 billion
0.990% of next $5 billion
0.980% of next $5 billion
0.970% of next $5 billion
0.950% of next $5 billion
0.900% of next $5 billion
0.800% over $30 billion
------------------------------------------------------------
Institutional 0.800% of first $5 billion
0.790% of next $5 billion
0.780% of next $5 billion
0.770% of next $5 billion
0.750% of next $5 billion
0.700% of next $5 billion
0.600% over $30 billion
------------------------------------------------------------
Advisor 0.750% of first $5 billion
0.740% of next $5 billion
0.730% of next $5 billion
0.720% of next $5 billion
0.700% of next $5 billion
0.650% of next $5 billion
0.550% over $30 billion
--------------------------------------------------------------------------------
Heritage Investor and C 1.000%
------------------------------------------------------------
Institutional 0.800%
------------------------------------------------------------
Advisor 0.750%
--------------------------------------------------------------------------------
New Investor 1.50% of the first $250 million
Opportunities 1.30% of next $250 million
1.10% over $500 million
--------------------------------------------------------------------------------
New Investor, A, B and C 1.50% of the first $250 million
Opportunities 1.30% of next $250 million
II 1.10% over $500 million
------------------------------------------------------------
Institutional 1.30% of the first $250 million
1.10% of next $250 million
0.90% over $500 million
--------------------------------------------------------------------------------
Select Investor, A, B, C and R 1.000% of first $5 billion
0.990% of next $5 billion
0.980% of next $5 billion
0.970% of next $5 billion
0.950% of next $5 billion
0.900% of next $5 billion
0.800% over $30 billion
--------------------------------------------------------------------------------

------
51

FUND CLASS PERCENTAGE OF STRATEGY ASSETS
--------------------------------------------------------------------------------
Select Institutional 0.800% of first $5 billion
0.790% of next $5 billion
0.780% of next $5 billion
0.770% of next $5 billion
0.750% of next $5 billion
0.700% of next $5 billion
0.600% over $30 billion
------------------------------------------------------------
Advisor 0.750% of first $5 billion
0.740% of next $5 billion
0.730% of next $5 billion
0.720% of next $5 billion
0.700% of next $5 billion
0.650% of next $5 billion
0.550% over $30 billion
--------------------------------------------------------------------------------
Ultra Investor, C and R 1.000% of first $5 billion
0.990% of next $5 billion
0.980% of next $5 billion
0.970% of next $5 billion
0.950% of next $5 billion
0.900% of next $5 billion
0.800% over $30 billion
------------------------------------------------------------
Institutional 0.800% of first $5 billion
0.790% of next $5 billion
0.780% of next $5 billion
0.770% of next $5 billion
0.750% of next $5 billion
0.700% of next $5 billion
0.600% over $30 billion
------------------------------------------------------------
Advisor 0.750% of first $5 billion
0.740% of next $5 billion
0.730% of next $5 billion
0.720% of next $5 billion
0.700% of next $5 billion
0.650% of next $5 billion
0.550% over $30 billion
--------------------------------------------------------------------------------
Vista Investor, C and R 1.000%
------------------------------------------------------------
Institutional 0.800%
------------------------------------------------------------
Advisor 0.750%
--------------------------------------------------------------------------------
Veedot Investor 1.50% of first $250 million
1.30% of next $250 million
1.10% over $500 million
--------------------------------------------------------------
Institutional 1.30% of first $250 million
1.10% of next $250 million
0.90% over $500 million
--------------------------------------------------------------------------------

On each calendar day, each class of each fund accrues a management fee that is
equal to the class's management fee rate (as calculated pursuant to the above
schedules) times the net assets of the class divided by 365 (366 in leap years).
On the first business day of each month, the funds pay a management fee to the
advisor for the previous month. The management fee is the sum of the daily fee
calculations for each day of the previous month.

The management agreement between the corporation and the advisor shall continue
in effect until the earlier of the expiration of two years from the date of its
execution or until the first meeting of fund shareholders following such
execution and for as long thereafter as its continuance is specifically approved
at least annually by

(1) the funds' Board of Directors, or a majority of outstanding
shareholder votes (as defined in the Investment Company Act) and

(2) the vote of a majority of the directors of the funds who are not
parties to the agreement or interested persons of the advisor, cast in
person at a meeting called for the purpose of voting on such approval.

------
52

The management agreement states that the funds' Board of Directors or a majority
of outstanding shareholder votes may terminate the management agreement at any
time without payment of any penalty on 60 days' written notice to the advisor.
The management agreement shall be automatically terminated if it is assigned.

The management agreement states the advisor shall not be liable to the funds or
their shareholders for anything other than willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.

The management agreement also provides that the advisor and its officers,
directors and employees may engage in other business, render services to others,
and devote time and attention to any other business whether of a similar or
dissimilar nature.

Certain investments may be appropriate for the funds and also for other clients
advised by the advisor. Investment decisions for the funds and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment generally. A particular security
may be bought or sold for only one client or fund, or in different amounts and
at different times for more than one but less than all clients or funds. In
addition, purchases or sales of the same security may be made for two or more
clients or funds on the same date. Such transactions will be allocated among
clients in a manner believed by the advisor to be equitable to each. In some
cases this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.

The advisor may aggregate purchase and sale orders of the funds with purchase
and sale orders of its other clients when the advisor believes that such
aggregation provides the best execution for the funds. The Board of Directors
has approved the policy of the advisor with respect to the aggregation of
portfolio transactions. Where portfolio transactions have been aggregated, the
funds participate at the average share price for all transactions in that
security on a given day and allocate transaction costs on a pro rata basis. The
advisor will not aggregate portfolio transactions of the funds unless it
believes such aggregation is consistent with its duty to seek best execution on
behalf of the funds and the terms of the management agreement. The advisor
receives no additional compensation or remuneration as a result of such
aggregation.

Unified management fees incurred by each fund by class for the fiscal periods
ended October 31, 2004, 2003 and 2002, are indicated in the following tables.
Because Fundamental Equity and Focused Growth were not in operation as of the
fiscal year end, they are not included in the table below. As new classes,
information regarding the Investor Class, Institutional Class and R Class of
Capital Growth and the R Class of Select and Vista was available as of the
fiscal year end.

UNIFIED MANAGEMENT FEES
FUND/CLASS 2004 2003 2002
--------------------------------------------------------------------------------
Balanced
Investor Class $5,299,050 $4,932,718 $5,583,056
--------------------------------------------------------------------------------
Advisor Class $108,622 $96,544 $103,396
--------------------------------------------------------------------------------
Institutional $1,312 $77,428 $128,656
Class
--------------------------------------------------------------------------------
Capital Growth
A Class $2,690 N/A N/A
--------------------------------------------------------------------------------
B Class $2,508 N/A N/A
--------------------------------------------------------------------------------
C Class $2,256 N/A N/A
--------------------------------------------------------------------------------
Capital Value
Investor Class $1,747,309 $771,404 $568,432
--------------------------------------------------------------------------------
Institutional $148,715 $49,740 $18,575(1)
Class
--------------------------------------------------------------------------------
Advisor Class $31,535 $305 N/A
--------------------------------------------------------------------------------

(1) FEES ACCURED FROM MARCH 1, 2002 (INSTITUTIONAL CLASS INCEPTION)
THROUGH OCTOBER 31, 2002.

------
53

UNIFIED MANAGEMENT FEES
FUND/CLASS 2004 2003 2002
--------------------------------------------------------------------------------
Giftrust
Investor Class $8,873,785 $7,857,938 $8,744,135
--------------------------------------------------------------------------------
Growth
Investor Class $42,629,274 $40,233,896 $53,431,278
--------------------------------------------------------------------------------
Advisor Class $510,260 $322,092 $245,976
--------------------------------------------------------------------------------
Institutional
Class $5,284,047 $4,188,607 $1,444,918
--------------------------------------------------------------------------------
C Class $6,830 $5,324 $2,123(1)
--------------------------------------------------------------------------------
R Class $35 $4(2) N/A
--------------------------------------------------------------------------------
Heritage
Investor Class $12,168,009 $10,654,047 $12,137,959
--------------------------------------------------------------------------------
Advisor Class $114,578 $60,335 $23,346
--------------------------------------------------------------------------------
Institutional
Class $528,668 $996,702 $928,931
--------------------------------------------------------------------------------
C Class $9,264 $3,641 $557
--------------------------------------------------------------------------------
New
Opportunities
Investor Class $4,491,558 $4,300,248 $5,552,493
--------------------------------------------------------------------------------
New
Opportunities
II
Investor Class $543,334 $404,596 $385,262
--------------------------------------------------------------------------------
A Class $104,664 $4,348(3) N/A
--------------------------------------------------------------------------------
B Class $8,253 $1,211(3) N/A
--------------------------------------------------------------------------------
C Class $8,587 $55(3) N/A
--------------------------------------------------------------------------------
Select
Investor Class $38,147,413 $35,720,710 $43,411,463
--------------------------------------------------------------------------------
Advisor Class $202,537 $180,024 $174,038
--------------------------------------------------------------------------------
Institutional $1,937,778 $1,623,535 $1,657,448
Class
--------------------------------------------------------------------------------
A Class $236,164 $20,822 N/A
--------------------------------------------------------------------------------
B Class $18,681 $3,061 N/A
--------------------------------------------------------------------------------
C Class $29,945 $2,947 N/A
--------------------------------------------------------------------------------
Ultra
Investor Class $211,788,565 $191,091,336 $231,562,879
--------------------------------------------------------------------------------
Advisor Class $5,283,974 $3,630,671 $3,304,275
--------------------------------------------------------------------------------
Institutional
Class $7,721,096 $5,376,298 $5,253,092
--------------------------------------------------------------------------------
C Class $43,173 $10,567 $2,726
--------------------------------------------------------------------------------
R Class $19,637 $4(4) N/A
--------------------------------------------------------------------------------
Veedot
Investor Class $3,453,855 $2,881,700 $3,397,163
--------------------------------------------------------------------------------
Institutional $166,778 $127,721 $128,328
Class
--------------------------------------------------------------------------------
Vista
Investor Class $13,739,409 $10,046,513 $11,472,288
--------------------------------------------------------------------------------
Advisor Class $340,458 $96,780 $101,047
--------------------------------------------------------------------------------
Institutional
Class $324,585 $293,432 $357,642
--------------------------------------------------------------------------------
C Class $10,295 $1,515 $399
--------------------------------------------------------------------------------

(1) FEES ACCRUED FROM NOVEMBER 28, 2001 (C CLASS INCEPTION) THROUGH
OCTOBER 31, 2002.

(2) FEES ACCRUED FROM AUGUST 29, 2003 (R CLASS INCEPTION) THROUGH OCTOBER
31, 2003.

(3) FEES ACCRUED FROM JANUARY 31, 2003 (A CLASS, B CLASS AND C CLASS
INCEPTION) THROUGH OCTOBER 31, 2003.

(4) FEES ACCRUED FROM AUGUST 29, 2003 (R CLASS INCEPTION) THROUGH OCTOBER
31, 2003.

------
54

TRANSFER AGENT AND ADMINISTRATOR

American Century Services, LLC, 4500 Main Street, Kansas City, Missouri 64111,
serves as transfer agent and dividend-paying agent for the funds. It provides
physical facilities, computer hardware and software and personnel for the
day-to-day administration of the funds and the advisor. The advisor pays ACS,
LLC's costs for serving as transfer agent and dividend-paying agent for the
funds out of the advisor's unified management fee. For a description of this fee
and the terms of its payment, see the above discussion under the caption
INVESTMENT ADVISOR on page 50.

From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.

DISTRIBUTOR

The funds' shares are distributed by American Century Investment Services, Inc.,
a registered broker-dealer. The distributor is a wholly owned subsidiary of ACC
and its principal business address is 4500 Main Street, Kansas City, Missouri
64111.

The distributor is the principal underwriter of the funds' shares. The
distributor makes a continuous, best-efforts underwriting of the funds' shares.
This means the distributor has no liability for unsold shares. The advisor pays
ACIS's costs for serving as principal underwriter of the funds' shares out of
the advisor's unified management fee. For a description of this fee and the
terms of its payment, see the above discussion under the caption INVESTMENT
ADVISOR on page 50. ACIS does not earn commissions for distributing the funds'
shares.

Certain financial intermediaries unaffiliated with the distributor or the funds
may perform various administrative and shareholder services for their clients
who are invested in the funds. These services may include assisting with fund
purchases, redemptions and exchanges, distributing information about the funds
and their performance, preparing and distributing client account statements, and
other administrative and shareholder services that would otherwise be provided
by the distributor or its affiliates. The distributor may pay fees out of its
own resources to such financial intermediaries for providing these services.

CUSTODIAN BANKS

JP Morgan Chase Bank, 4 Metro Tech Center, Brooklyn, New York 11245, and
Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves as
custodian of the funds' assets. The custodians take no part in determining the
investment policies of the funds or in deciding which securities are purchased
or sold by the funds. The funds, however, may invest in certain obligations of
the custodians and may purchase or sell certain securities from or to the
custodians.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP is the independent registered public accounting firm of
the funds. The address of Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas
City, Missouri 64106. As the independent registered public accounting firm of
the funds, Deloitte & Touche LLP and an affiliate provide services including

(1) auditing the annual financial statements for each fund,

(2) assisting and consulting in connection with SEC filings and

(3) reviewing the annual federal income tax return filed for each fund.

------
55

BROKERAGE ALLOCATION

CAPITAL GROWTH, CAPITAL VALUE, FOCUSED GROWTH, FUNDAMENTAL EQUITY, GIFTRUST,
GROWTH, HERITAGE, NEW OPPORTUNITIES, NEW OPPORTUNITIES II, SELECT, ULTRA,
VEEDOT, VISTA, AND THE EQUITY PORTION OF BALANCED

Under the management agreement between the funds and the advisor, the advisor
has the responsibility of selecting brokers and dealers to execute portfolio
transactions. The funds' policy is to secure the most favorable prices and
execution of orders on its portfolio transactions. So long as that policy is
met, the advisor may take into consideration the factors discussed below when
selecting brokers.

The advisor receives statistical and other information and services, including
research, without cost from brokers and dealers. The advisor evaluates such
information and services, together with all other information that it may have,
in supervising and managing the investments of the funds. Because such
information and services may vary in amount, quality and reliability, their
influence in selecting brokers varies from none to very substantial. The advisor
intends to continue to place some of the funds' brokerage business with one or
more brokers who provide information and services. Such information and services
will be in addition to and not in lieu of services required to be performed by
the advisor. The advisor does not utilize brokers that provide such information
and services for the purpose of reducing the expense of providing required
services to the funds. In the years ended October 31, 2004, 2003 and 2002, the
brokerage commissions of each fund are listed in the following table. Because
Fundamental Equity and Focused Growth were not in operation as of the fiscal
year end, they are not included.

FUND 2004 2003 2002
--------------------------------------------------------------------------------
Balanced $1,223,255 $1,606,559 $522,702
--------------------------------------------------------------------------------
Capital Growth $1,342(1) N/A N/A
--------------------------------------------------------------------------------
Capital Value $76,585(2) $41,498 $39,193
--------------------------------------------------------------------------------
Giftrust $3,433,171(3) $1,826,653 $1,674,254
--------------------------------------------------------------------------------
Growth $8,405,085 $11,633,672 $10,370,502
--------------------------------------------------------------------------------
Heritage $5,217,528(3) $2,689,688 $2,503,500
--------------------------------------------------------------------------------
New
Opportunities $1,521,059 $1,463,909 $1,192,917
--------------------------------------------------------------------------------
New
Opportunities II $231,389 $167,785 $116,276
--------------------------------------------------------------------------------
Select $3,551,910(4) $6,445,767 $11,315,541
--------------------------------------------------------------------------------
Ultra $9,440,731(4) $25,150,177 $41,568,399
--------------------------------------------------------------------------------
Veedot $1,597,322 $1,873,205 $1,741,747
--------------------------------------------------------------------------------
Vista $6,049,997 $5,927,293 $5,892,458
--------------------------------------------------------------------------------

(1) FEBRUARY 27, 2004 (INCEPTION) THROUGH OCTOBER 31, 2004.

(2) THE INCREASE IN BROKERAGE COMMISSIONS PAID BY THE FUND IN 2004 WAS A
RESULT OF AN INCREASE IN THE FUND'S ASSETS UNDER MANAGEMENT.

(3) THE INCREASE IN BROKERAGE COMMISSIONS PAID BY THE FUND IN 2004 WAS A
RESULT OF HIGHER PORTFOLIO TURNOVER DURING THAT SAME PERIOD.

(4) THE DECREASE IN BROKERAGE COMMISSIONS PAID BY THE FUND IN 2004 WAS A
RESULT OF LOWER PORTFOLIO TURNOVER DURING THE SAME PERIOD.

The brokerage commissions paid by the funds may exceed those that another broker
might have charged for effecting the same transactions, because of the value of
the brokerage and research services provided by the broker. Research services
furnished by brokers through whom the funds effect securities transactions may
be used by the advisor in servicing all of its accounts, and not all such
services may be used by the advisor in managing the portfolios of the funds.

------
56

The staff of the SEC has expressed the view that the best price and execution of
over-the-counter transactions in portfolio securities may be secured by dealing
directly with principal market makers, thereby avoiding the payment of
compensation to another broker. In certain situations, the officers of the funds
and the advisor believe that the facilities, expert personnel and technological
systems of a broker often enable the funds to secure as good a net price by
dealing with a broker instead of a principal market maker, even after payment of
the compensation to the broker. The funds regularly place their over-the-counter
transactions with principal market makers, but also may deal on a brokerage
basis when utilizing electronic trading networks or as circumstances warrant.

THE FIXED-INCOME PORTION OF BALANCED

Under the management agreement between the funds and the advisor, the advisor
has the responsibility of selecting brokers and dealers to execute portfolio
transactions. In many transactions, the selection of the broker or dealer is
determined by the availability of the desired security and its offering price.
In other transactions, the selection of the broker or dealer is a function of
market selection and price negotiation, as well as the broker's general
execution and operational and financial capabilities in the type of transaction
involved. The advisor will seek to obtain prompt execution of orders at the most
favorable prices or yields. The advisor may choose to purchase and sell
portfolio securities from and to dealers who provide services or research,
statistical and other information to the funds and to the advisor. Such
information or services will be in addition to, and not in lieu of, the services
required to be performed by the advisor, and the expenses of the advisor will
not necessarily be reduced as a result of the receipt of such supplemental
information.

The funds generally purchase and sell debt securities through principal
transactions, meaning the funds normally purchase securities on a net basis
directly from the issuer or a primary market-maker acting as principal for the
securities. The funds do not pay brokerage commissions on these transactions,
although the purchase price for debt securities usually includes an undisclosed
compensation. Purchases of securities from underwriters typically include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market-makers typically include a dealer's mark-up
(i.e., a spread between the bid and asked prices).

REGULAR BROKER-DEALERS

As of its most recently completed fiscal year, each of the funds listed below
owned securities of its regular brokers or dealers (as defined by Rule 10b-1
under the Investment Company Act of 1940) or of their parent companies. As new
funds, Fundamental Equity and Focused Growth are not included in the table
below.

VALUE OF SECURITIES
OWNED AS OF
FUND BROKER, DEALER OR PARENT OCTOBER 31, 2004
-------------------------------------------------------------------------------
Balanced Citigroup Inc. $8,027,046
-----------------------------------------------------------------
Wachovia Corp. $8,030,004
-----------------------------------------------------------------
American Express Co. $4,234,814
-----------------------------------------------------------------
Morgan Stanley $4,111,984
-----------------------------------------------------------------
B-UBS Commercial Mortgage $2,688,306
-----------------------------------------------------------------
Goldman Sachs Group, Inc. $1,569,290
-----------------------------------------------------------------
Bear Stearns Companies, Inc. $846,093
-----------------------------------------------------------------
Merrill Lynch Mortgage Investors, Inc. $93,940
-------------------------------------------------------------------------------
Capital
Growth American Express Co. $25,739
-----------------------------------------------------------------
Goldman Sachs Group, Inc. $18,200
-------------------------------------------------------------------------------
Capital
Value Citigroup Inc $12,973,788
-----------------------------------------------------------------
Wachovia Corp $4,074,588
-----------------------------------------------------------------
Merrill Lynch & Co., Inc. $4,050,894
-----------------------------------------------------------------
Morgan Stanley $3,877,731
-----------------------------------------------------------------
Fiserv, Inc. $1,823,202
-------------------------------------------------------------------------------

------
57

VALUE OF SECURITIES
OWNED AS OF
FUND BROKER, DEALER OR PARENT OCTOBER 31, 2004
-------------------------------------------------------------------------------
Giftrust None
-------------------------------------------------------------------------------
Growth American Express Co. $85,771,734
--------------------------------------------------------
Goldman Sachs Group, Inc. $60,749,650
-------------------------------------------------------------------------------
Heritage None
-------------------------------------------------------------------------------
New
Opportunities None
-------------------------------------------------------------------------------
New
Opportunities II None
-------------------------------------------------------------------------------
Select Citigroup Inc. $82,038,621
--------------------------------------------------------
American Express Co. $17,162,838
-------------------------------------------------------------------------------
Ultra Citigroup Inc. $315,293,220
--------------------------------------------------------
American Express Co. $177,041,520
--------------------------------------------------------
The Goldman Sachs Group, Inc. $158,588,560
--------------------------------------------------------
Merrill Lynch & Co., Inc. $131,775,420
-------------------------------------------------------------------------------
Veedot A.G. Edwards, Inc. $471,480
-------------------------------------------------------------------------------
Vista None
-------------------------------------------------------------------------------

INFORMATION ABOUT FUND SHARES

Each of the funds named on the front of this statement of additional information
is a series of shares issued by the corporation, and shares of each fund have
equal voting rights. In addition, each series (or fund) may be divided into
separate classes. See MULTIPLE CLASS STRUCTURE, which follows. Additional funds
and classes may be added without a shareholder vote.

Each fund votes separately on matters affecting that fund exclusively. Voting
rights are not cumulative, so investors holding more than 50% of the
corporation's (all funds') outstanding shares may be able to elect a Board of
Directors. The corporation undertakes dollar-based voting, meaning that the
number of votes a shareholder is entitled to is based upon the dollar amount of
the shareholder's investment. The election of directors is determined by the
votes received from all the corporation's shareholders without regard to whether
a majority of shares of any one fund voted in favor of a particular nominee or
all nominees as a group.

The assets belonging to each series are held separately by the custodian and the
shares of each series represent a beneficial interest in the principal, earnings
and profit (or losses) of investments and other assets held for each series.
Your rights as a shareholder are the same for all series of securities unless
otherwise stated. Within their respective series, all shares have equal
redemption rights. Each share, when issued, is fully paid and non-assessable.

Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.

MULTIPLE CLASS STRUCTURE

The corporation's Board of Directors has adopted a multiple class plan (the
Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC. The plan is
described in the prospectus of any fund that offers more than one class.
Pursuant to such plan, the funds may issue up to seven classes of shares:
Investor Class, Institutional Class, A Class, B Class, C Class, R Class and
Advisor Class. Not all funds offer all seven classes.

The Investor Class of most funds is made available to investors directly without
any load or commission, for a single unified management fee. It is also
available through some financial intermediaries. The Investor Class of those
funds which have A and B Classes is not available directly at no load. The
Institutional and Advisor Classes are made

------
58

available to institutional shareholders or through financial intermediaries that
do not require the same level of shareholder and administrative services from
the advisor as Investor Class shareholders. As a result, the advisor is able to
charge these classes a lower total management fee. In addition to the management
fee, however, the Advisor Class shares are subject to a Master Distribution and
Shareholder Services Plan (the Advisor Class Plan). The A, B and C Classes also
are made available through financial intermediaries, for purchase by individual
investors who receive advisory and personal services from the intermediary. The
R Class is made available through financial intermediaries and is generally used
in 401(k) and other retirement plans. The unified management fee for the A, B, C
and R classes is the same as for Investor Class, but the A, B, C and R Class
shares each are subject to a separate Master Distribution and Individual
Shareholder Services Plan (the A Class Plan, B Class Plan, C Class Plan and R
Class Plan, respectively and collectively with the Advisor Class Plan, the
Plans) described below. The Plans have been adopted by the funds' Board of
Directors in accordance with Rule 12b-1 adopted by the SEC under the Investment
Company Act.

Rule 12b-1

Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by its Board of
Directors and approved by its shareholders. Pursuant to such rule, the Board of
Directors and initial shareholder of the funds' A, B, C, R and Advisor Classes
have approved and entered into the A Class Plan, B Class Plan, C Class Plan, R
Class Plan and Advisor Class Plan, respectively. The plans are described below.

In adopting the plans, the Board of Directors (including a majority of directors
who are not interested persons of the funds [as defined in the Investment
Company Act], hereafter referred to as the independent directors) determined
that there was a reasonable likelihood that the plans would benefit the funds
and the shareholders of the affected class. Some of the anticipated benefits
include improved name recognition for the funds generally; and growing assets in
existing funds, which helps retain and attract investment management talent,
provides a better environment for improving fund performance, and can lower the
total expense ratio for funds with stepped-fee schedules. Pursuant to Rule
12b-1, information with respect to revenues and expenses under the plans is
presented to the Board of Directors quarterly for its consideration in
connection with its deliberations as to the continuance of the plans.
Continuance of the plans must be approved by the Board of Directors (including a
majority of the independent directors) annually. The plans may be amended by a
vote of the Board of Directors (including a majority of the independent
directors), except that the plans may not be amended to materially increase the
amount to be spent for distribution without majority approval of the
shareholders of the affected class. The plans terminate automatically in the
event of an assignment and may be terminated upon a vote of a majority of the
independent directors or by vote of a majority of outstanding shareholder votes
of the affected class.

All fees paid under the plans will be made in accordance with Section 26 of the
Conduct Rules of the National Association of Securities Dealers (NASD).

A Class Plan

As described in the prospectuses, the A Class shares of the funds are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through broker-dealers, banks, insurance companies and
other financial intermediaries that provide various administrative, shareholder
and distribution services. The funds' distributor enters into contracts with
various banks, broker-dealers, insurance companies and other financial
intermediaries, with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.

------
59

Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for A Class
investors. In addition to such services, the financial intermediaries provide
various individual shareholder and distribution services.

To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
Board of Directors has adopted the A Class Plan. Pursuant to the A Class Plan,
the A Class pays the funds' distributor a fee equal to 0.25% annually of the
average daily net asset value of the A Class shares. The distributor may use
these fees to pay for certain ongoing shareholder and administrative services
(as described below) and for distribution services, including past distribution
services (as described below). This payment is fixed at 0.25% and is not based
on expenses incurred by the distributor. During the fiscal year ended October
31, 2004, the aggregate amount of fees paid under the A Class plan was:

Capital Growth $673
New Opportunities II $17,444
Select $59,041

Because the A Class of Fundamental Equity was not in operation as of the fiscal
year end, no fees were paid under the A Class Plan.

The distributor then makes these payments to the financial intermediaries who
offer the A Class shares for the services described below. No portion of these
payments is used by the distributor to pay for advertising, printing costs or
interest expenses.

Payments may be made for a variety of individual shareholder services,
including, but not limited to:

(a) providing individualized and customized investment advisory services,
including the consideration of shareholder profiles and specific goals;

(b) creating investment models and asset allocation models for use by
shareholders in selecting appropriate funds;

(d) periodic rebalancing of shareholder accounts to ensure compliance with
the selected asset allocation;

(e) consolidating shareholder accounts in one place; and

(f) other individual services.

Individual shareholder services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares of the
funds.

Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of A Class shares, which services
may include but are not limited to:

(a) the payment of sales commissions, on-going commissions and other
payments to brokers, dealers, financial institutions or others who sell A
Class shares pursuant to selling agreements;

(b) compensation to registered representatives or other employees of the
distributor who engage in or support distribution of the funds' A Class
shares;

(d) printing prospectuses, statements of additional information and
reports for other-than-existing shareholders;

(e) preparing, printing and distributing sales literature and advertising
materials provided to the funds' shareholders and prospective shareholders;

------
60

(f) receiving and answering correspondence from prospective shareholders,
including distributing prospectuses, statements of additional information,
and shareholder reports;

(g) providing facilities to answer questions from prospective shareholders
about fund shares;

(h) complying with federal and state securities laws pertaining to the
sale of fund shares;

(i) assisting shareholders in completing application forms and selecting
dividend and other account options;

(j) providing other reasonable assistance in connection with the
distribution of fund shares;

(k) organizing and conducting sales seminars and payments in the form of
transactional and compensation or promotional incentives;

(l) profit on the foregoing;

(m) paying service fees for providing personal, continuing services to
investors, as contemplated by the Conduct Rules of the NASD; and

(n) such other distribution and services activities as the advisor
determines may be paid for by the funds pursuant to the terms of the
agreement between the corporation and the funds' distributor and in
accordance with Rule 12b-1 of the Investment Company Act.

B Class Plan

As described in the prospectuses, the B Class shares of the funds are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through broker-dealers, banks, insurance companies and
other financial intermediaries that provide various administrative, shareholder
and distribution services. The funds' distributor enters into contracts with
various banks, broker-dealers, insurance companies and other financial
intermediaries, with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.

Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for B Class
investors. In addition to such services, the financial intermediaries provide
various individual shareholder and distribution services.

To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
Board of Directors has adopted the B Class Plan. Pursuant to the B Class Plan,
the B Class pays the funds' distributor 1.00% annually of the average daily net
asset value of the B Class shares, 0.25% of which is paid for certain ongoing
individual shareholder and administrative services (as described below) and
0.75% of which is paid for distribution services, including past distribution
services (as described below). The payment is fixed at 1.00% and is not based on
expenses incurred by the distributor. During the fiscal year ended October 31,
2004, the aggregate amount of fees paid under the B Class plan was:

Capital Growth $2,508
New Opportunities II $5,501
Select $18,680

Because the B Class of Fundamental Equity was not in operation as of the fiscal
year end, no fees were paid under the B Class Plan.

The distributor then makes these payments to the financial intermediaries who
offer the B Class shares for the services described below. No portion of these
payments is used by the distributor to pay for advertising, printing costs or
interest expenses.

------
61

Payments may be made for a variety of individual shareholder services,
including, but not limited to:

(a) providing individualized and customized investment advisory services,
including the consideration of shareholder profiles and specific goals;

(b) creating investment models and asset allocation models for use by
shareholders in selecting appropriate funds;

(d) periodic rebalancing of shareholder accounts to ensure compliance with
the selected asset allocation;

(e) consolidating shareholder accounts in one place; and

(f) other individual services.

Individual shareholder services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares of the
funds.

Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of B Class shares, which services
may include but are not limited to:

(a) the payment of sales commissions, on-going commissions and other
payments to brokers, dealers, financial institutions or others who sell B
Class shares pursuant to selling agreements;

(b) compensation to registered representatives or other employees of the
distributor who engage in or support distribution of the funds' B Class
shares;