Document two

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KY5TgaWS4FI6a4YBc0GIXV0+sNmR2fV7iuCNSP9hvP/DnpovdPZzMaIXeP3Z+Wik 9uMAfTPDBl/mJahtS5Iviw== 0000100334-02-000024.txt : 20021001 0000100334-02-000024.hdr.sgml : 20021001 20021001143056 ACCESSION NUMBER: 0000100334-02-000024 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20021001 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CENTURY MUTUAL FUNDS INC CENTRAL INDEX KEY: 0000100334 IRS NUMBER: 446006315 STATE OF INCORPORATION: MO FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-14213 FILM NUMBER: 02778209 BUSINESS ADDRESS: STREET 1: 4500 MAIN ST STREET 2: P O BOX 419200 CITY: KANSAS CITY STATE: MO ZIP: 64141 BUSINESS PHONE: 8165315575 MAIL ADDRESS: STREET 1: TWENTIETH CENTURY INVESTORS INC STREET 2: 4500 MAIN STREET CITY: KANSAS CITY STATE: MO ZIP: 64141-6200 FORMER COMPANY: FORMER CONFORMED NAME: TWENTIETH CENTURY INVESTORS INC DATE OF NAME CHANGE: 19920703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CENTURY MUTUAL FUNDS INC CENTRAL INDEX KEY: 0000100334 IRS NUMBER: 446006315 STATE OF INCORPORATION: MO FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-00816 FILM NUMBER: 02778210 BUSINESS ADDRESS: STREET 1: 4500 MAIN ST STREET 2: P O BOX 419200 CITY: KANSAS CITY STATE: MO ZIP: 64141 BUSINESS PHONE: 8165315575 MAIL ADDRESS: STREET 1: TWENTIETH CENTURY INVESTORS INC STREET 2: 4500 MAIN STREET CITY: KANSAS CITY STATE: MO ZIP: 64141-6200 FORMER COMPANY: FORMER CONFORMED NAME: TWENTIETH CENTURY INVESTORS INC DATE OF NAME CHANGE: 19920703 485APOS 1 doc2-pea97a.htm PEA 97A Document two

485APOS
Post-Effective Amendment

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. 97 [X]

and/or

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

File No. 811-0816

Amendment No. 97 [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 64141-6200
_________________________________________________________________
(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: December 20, 2002

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

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on December 20, 2002 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.

- ------------------------------------------------------------------------

Your
American Century
prospectus

INVESTOR CLASS
INSTITUTIONAL CLASS
New Opportunities II Fund
Select Fund

DECEMBER 20, 2002

EFFECTIVE JANUARY 30, 2003, NEW OPPORTUNITIES II FUND AND SELECT FUND WILL
BE CLOSED TO NEW RETAIL INVESTORS, BUT WILL BE 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.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE
WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.

American Century
Investment Services, Inc.

American Century
Investments

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

Dear Investor,

American Century is committed to providing you with an easy-to-read prospectus
that gives you the information you need to make confident investment decisions.

This year, you'll notice that we've combined information about Investor Class
and Institutional Class shares into one prospectus. It's important for you to be
aware of which class of shares you own or are considering for purchase while
you're reading through your prospectus. Certain restrictions may apply to one
class or another, and different classes may have different fees, expenses or
minimum investment requirements. Neither class of shares has any up-front or
deferred charges, commissions or 12b-1 fees.

Read carefully through the Fund Performance History, Investing with American
Century, and Financial Highlights sections, as they reflect the most significant
differences between the classes. Some sections have separate pages for the
different classes.

After you've reviewed your prospectus, should you have any questions, please
visit www.americancentury.com. You'll find information there 24 hours a day,
seven days a week that should answer many of your questions. You also may call
1-800-345-2021 weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m.
Central time.

Sincerely,

/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.

Table of Contents

AN OVERVIEW OF THE FUNDS .................................................. 2
FUND PERFORMANCE HISTORY .................................................. 3
FEES AND EXPENSES ......................................................... 5
OBJECTIVES, STRATEGIES AND RISKS .......................................... 6
MANAGEMENT ................................................................ 9
INVESTING WITH AMERICAN CENTURY ........................................... 11
SHARE PRICE AND DISTRIBUTIONS ............................................. 18
TAXES ..................................................................... 19
MULTIPLE CLASS INFORMATION ................................................ 21
FINANCIAL HIGHLIGHTS ...................................................... 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 FUNDS

WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

These funds seek long-term capital growth.

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

The funds look for common stocks of growing companies. Each fund's investment
strategy is based on the belief that, over the long term, stocks of companies
with earnings and revenue growth have a greater-than-average chance to increase
in value over time. A more detailed description of American Century's growth
investment style begins on page 6.

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.

WHO MAY WANT TO INVEST IN THE FUNDS?

The funds may be a good investment if you are

* seeking long-term capital growth from your investment
* comfortable with short-term price volatility
* comfortable with the risks associated with the funds' investment strategies
* investing through an IRA or other tax-advantaged retirement plan

WHO MAY NOT WANT TO INVEST IN THE FUNDS?

The funds may not be a good investment if you are

* seeking current income from your investment
* investing for a short period of time
* uncomfortable with short-term volatility in the value of your investment

[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.

FUND PERFORMANCE HISTORY

NEW OPPORTUNITIES II FUND
SELECT FUND

As a new fund, New Opportunities II's performance history is not available as of
the date of this prospectus. When these classes of the fund have 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 chart shows the performance of the fund's Investor Class
shares for each of the last 10 calendar years. It indicates the volatility of
the fund's historical returns from year to year. Account fees are not reflected
in the chart below. If they had been included, returns would be lower than those
shown. The return of the Institutional Class of shares will differ from those
shown in the chart, depending on the expenses of that class.

SELECT - INVESTOR CLASS(1)

Select Fund
2001 -18.16%
2000 -8.71%
1999 22.23%
1998 35.65%
1997 32.19%
1996 19.22%
1995 22.67%
1994 -8.04%
1993 14.67%
1992 -4.45%

(1) As of September 30, 2002, the end of the most recent calendar quarter,
Select's year-to-date return was ____.

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

Highest Lowest
- --------------------------------------------------------------------------------
Select 22.30% (4Q 1998) -14.64% (1Q 2001)
- --------------------------------------------------------------------------------

Average Annual Total Returns

The following table shows the average annual total returns of the fund's
Investor Class shares calculated three different ways.

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

INVESTOR CLASS

For the calendar year ended December 31, 2001 1 year 5 years 10 years Life of Fund(1)
- -----------------------------------------------------------------------------------------------------------
Select
Return Before Taxes -18.16% 10.36% 9.21% 15.53%(2)
Return After Taxes on Distributions -18.22% 7.48% 6.32% N/A
Return After Taxes on Distributions and Sale of Fund Shares -11.06% 7.91% 6.62% N/A
S&P 500 Index -11.87% 10.70% 12.94% 12.18%(2)
(reflects no deduction for fees, expenses or taxes)
- -----------------------------------------------------------------------------------------------------------

(1) The inception date is October 31, 1958 for the Investor Class of Select.
Only funds with performance history for less than 10 years show
after-tax returns for life of fund.

(2) Although the fund's actual inception date was October 31, 1958, life of
fund returns are calculated from June 30, 1971, when the management company
implemented its current investment philosophy and practices.

INSTITUTIONAL CLASS

For the calendar year ended December 31, 2001 1 year Life of Fund(1)
- -----------------------------------------------------------------------------
Select
Return Before Taxes -17.94% 9.86%
S&P 500 Index -11.87% 9.61%
(reflects no deduction for fees, expenses or taxes)
- -----------------------------------------------------------------------------

(1) The inception date is March 13, 1997 for the Institutional Class.

The performance information on this page 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 the funds will perform in the future.

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

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 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)
- --------------------------------------------------------------------------------
Investor Class
Maximum Account Maintenance Fee $25(1)
- --------------------------------------------------------------------------------

(1) Applies only to investors whose total investments with American Century are
less than $10,000. See Account Maintenance Fee under Investing with
American Century for more details.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses(1) Operating Expenses
- --------------------------------------------------------------------------------------------------
Select
Investor Class 1.00% None 0.00% 1.00%
- --------------------------------------------------------------------------------------------------
Institutional Class 0.80% None 0.00% 0.80%
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New Opportunities II
Investor Class 1.50% None 0.00% 1.50%
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Institutional Class 1.30% None 0.00% 1.30%
- --------------------------------------------------------------------------------------------------

(1) 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.

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 assets 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
- -------------------------------------------------------------------------------
Select
Investor Class $102 $318 $551 $1,219
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Institutional Class $82 $255 $443 $987
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New Opportunities II
Investor Class $152 $472 $814 $1,778
- -------------------------------------------------------------------------------
Institutional Class $132 $410 $710 $1,558
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OBJECTIVES, STRATEGIES AND RISKS

NEW OPPORTUNITIES II
SELECT

WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

These funds seek long-term capital growth.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?

The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy developed by American
Century. This strategy looks for companies with earnings and revenues that are
growing at a successively faster, or accelerating, pace. For New Opportunities
II, it also includes companies whose growth rates, although still negative, are
less negative than in prior periods. This strategy is based on the premise that,
over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.

The managers use a bottom-up approach to select stocks to buy for the funds.
This means that the managers make their investment decisions based on the
business fundamentals of the individual companies, rather than on economic
forecasts or the outlook for industries or sectors. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the companies' earnings and
revenues. This information is used to help the fund managers select or hold the
stocks of companies they believe will be able to sustain accelerating growth and
sell the stocks of companies whose growth begins to slow down.

[graphic of triangle]

Accelerating growth is shown, for example, by growth that is
faster this quarter than last or faster this year than the year
before.

Although most of the funds' assets will be invested in U.S. companies, there is
no limit on the amount of assets the funds can invest in 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 fund 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 stock index futures contracts and other
similar securities. Stock index 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 stock index futures contracts and
similar derivative securities to help manage the risk of these types of
investments. For example, the fund managers cannot invest in a derivative
security if it would be possible for a fund to lose more money than it invested.
A complete description of the derivatives policy is included in the Statement of
Additional Information.

In order to better control the size of the companies in which New Opportunities
II invests, the investment advisor has determined that it will close the fund
when it reaches $500 million in assets. After that time, no new investments will
be accepted.

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

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?

The New Opportunities II fund 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 small-sized, the fund 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 Select fund 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 DIFFERENCES BETWEEN THE FUNDS?

Select generally invests in larger companies, although it may purchase companies
of any size.

New Opportunities II generally invests in smaller-sized companies.

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 fund 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.

Because New Opportunities II generally invests in smaller companies than
American Century's similarly managed growth equity funds (such as Growth, Ultra
and Select), it may be more volatile, and subject to greater short-term risk,
than those funds. 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.

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 fund managers intend to invest the funds' assets 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.

New Opportunities II'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.

MANAGEMENT

WHO MANAGES THE FUNDS?

The Board of Directors, investment advisor and fund management team 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 two-thirds of the directors are independent of the funds' advisor;
that is, they are not employed by and have no financial interest in the advisor.

THE INVESTMENT ADVISOR

The funds' investment advisor is American Century Investment Management, Inc.
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.

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 Year Ended October 31, 2002 Investor Class Institutional Class
- --------------------------------------------------------------------------------
New Opportunities II 1.50% N/A
- --------------------------------------------------------------------------------
Select 1.00% 0.80%
- --------------------------------------------------------------------------------

THE FUND MANAGEMENT TEAMS

The advisor uses teams of portfolio managers, assistant 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.

New Opportunities II

CHRISTOPHER K. BOYD

Mr. Boyd, Senior Vice President and Senior Portfolio Manager, has been a member
of the team that manages New Opportunities II since its inception. With the
exception of 1997, he has been with American Century since March 1988 and has
served as a Portfolio Manager since December 1992. During 1997 he was in private
practice as an investment advisor. He has a bachelor of science from the
University of Kansas and an MBA from Dartmouth College. He is a CFA
charterholder.

JOHN D. SEITZER

Mr. Seitzer, Vice President and Portfolio Manager, has been a member of the team
that manages New Opportunities II since its inception. He joined American
Century in June 1993 as an Investment Analyst and was promoted to Portfolio
Manager in July 1996. He has a bachelor's degree in accounting and finance from
Kansas State University and an MBA in finance from Indiana University. He is a
CFA charterholder and a Certified Public Accountant.

TOM TELFORD

Mr. Telford, Portfolio Manager, has been a member of the team that manages New
Opportunities II since its inception. He joined American Century in July 1996 as
an Investment Analyst and was promoted to Portfolio Manager in February 2000.
Before joining American Century, he attended the Wharton School of Business,
University of Pennsylvania, from August 1994 to May 1996, where he obtained his
MBA. He also has a bachelor of business administration from Southern Methodist
University. He is a CFA charterholder and a Certified Public Accountant.

Select

TIM REYNOLDS

Mr. Reynolds, Vice President and Portfolio Manager, has been a member of the
team that manages Select since November 1999. He was promoted to Portfolio
Manager in August 2001. He joined American Century in November 1999 as an
Investment Analyst. Prior to joining American Century, he was a Senior Analyst
at USAA from May 1997 to November 1999 and a Portfolio Manager at U.S. Global
from June 1995 to May 1997. He has a bachelor of business administration-finance
from Texas A&M University and a master's degree in finance from Texas Tech
University. He is a CFA charterholder.

WADE SLOME

Mr. Slome, Portfolio Manager, has been a member of the team since being promoted
to Portfolio Manager in July 2002. He joined American Century in June 1998 as an
investment analyst. Prior to joining American Century, he attended Cornell
University from 1996 to 1998, where he obtained his MBA in finance. He also
holds a bachelor's degree in economics from the University of California, Los
Angeles. 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. 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 permitted personal trades.

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 may change any other policies and
investment strategies.

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.

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
- --------------------------------------------------------------------------------

www.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.

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

INVESTOR CLASS INSTITUTIONAL CLASS
Investor Relations 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 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.

- --------------------------------------------------------------------------------
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 privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.

SELL SHARES

If you have at least $10,000 in your account, 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 5:30 p.m., Monday - Friday 8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday

1665 Charleston Road 10350 Park Meadows Drive
Mountain View, California Littleton, Colorado
8 a.m. to 5 p.m., Monday - Friday 8:30 a.m. to 5:30 p.m., Monday - Friday

MINIMUM INITIAL INVESTMENT AMOUNTS (INVESTOR CLASS)

To open an account, the minimum investments are: Select New Opportunities II
- --------------------------------------------------------------------------------
Individual or Joint $2,500 $10,000
- --------------------------------------------------------------------------------
Traditional IRA $2,500 $10,000(1)
- --------------------------------------------------------------------------------
Roth IRA $2,500 $10,000(1)
- --------------------------------------------------------------------------------
Coverdell Education Savings Account (CESA)(2) $2,000 $10,000
- --------------------------------------------------------------------------------
UGMA/UTMA $2,500 $10,000
- --------------------------------------------------------------------------------
403(b)(3) $1,000 $10,000
- --------------------------------------------------------------------------------
Qualified Retirement Plans(4) $2,500 $10,000
- --------------------------------------------------------------------------------

(1) To establish a traditional or Roth IRA in the fund, you will need to
exchange from another American Century IRA, transfer from another custodian
or roll over a minimum of $10,000 in order to meet the fund's minimum.

(2) Formerly Education IRA

(3) For each fund you select for your 403(b) plan, American Century will waive
the fund minimum if you make a contribution of at least $50 a month.
If your contribution is less than $50 a month, you may make only
one fund choice.

(4) The minimum initial investment requirements may be different for some
types of retirement accounts.

ACCOUNT MAINTENANCE FEE (INVESTOR CLASS)

We charge a $12.50 semiannual account maintenance fee to investors whose total
investments with American Century are less than $10,000. We will determine the
amount of your total investments twice per year, generally the last Friday in
October and April. If your total investments are 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 a tax liability as a result of the
redemption. In determining your total investment amount, we will include your
investments in American Century funds held in all PERSONAL ACCOUNTS and IRAs
including SEP-, SARSEP- and SIMPLE-IRAs (but no other retirement plan 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 www.americancentury.com/info/demo.
The Institutional Class does not have an account maintenance fee.

[graphic of triangle]

PERSONAL ACCOUNTS include individual accounts, joint accounts,
UGMA/UTMA accounts, personal trusts, Education Savings Accounts
(formerly Education IRAs) and traditional, Roth and Rollover
IRAs. 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 investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermediary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has 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.

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. Each time
you make an investment with American Century, there is a seven-day holding
period before you can redeem those shares, unless you provide us with
satisfactory proof that your purchase funds have cleared. This seven-day holding
period begins the day after your investment is processed. However, investments
by wire require only a one-day holding period.

[graphic of triangle]

A fund's NET ASSET VALUE, or NAV, is the price of the fund's
shares.

In addition, we reserve the right to delay delivery of redemption proceeds--up
to seven days--or to honor certain REDEMPTIONS with securities, rather than
cash, as described in the next section.

[graphic of triangle]

A REDEMPTION is the sale of all or a portion of the shares in an
account, including those sold as a part of an exchange to another
American Century account.

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 fund
managers would select these securities from the fund's portfolio. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.

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 shares in the
account and send the proceeds to your address of record. For Instituational
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.

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

We do not permit market timing or other abusive trading practices in our funds.

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the funds and their shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor 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.

INVESTING THROUGH FINANCIAL INTERMEDIARIES

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

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

Please contact your FINANCIAL INTERMEDIARY or plan sponsor for a complete
description of its policies. Copies of the funds' 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.

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, American Century will pay the
service provider a fee for performing those services.

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.

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

American Century determines the NAV of each fund as of the close of regular
trading on the New York Stock Exchange (usually 4 p.m. Eastern time) on each day
the Exchange is open. On days when the Exchange is closed (including certain
U.S. holidays), we do not calculate the NAV. A fund share's NAV is the current
value of the fund's assets, minus any liabilities, divided by the number of fund
shares outstanding.

If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. For example, if an event occurs after
the close of the exchange on which a fund's portfolio securities are principally
traded that is likely to have changed the value of the securities, the advisor
may determine the securities' fair value. Trading of securities in foreign
markets may not take place every day the Exchange is open. Also, trading in some
foreign markets and on some electronic trading networks may take place on
weekends or holidays when a fund's NAV is not calculated. So, the value of a
fund's portfolio may be affected on days when you can't purchase or redeem
shares of the fund.

We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in GOOD ORDER.

[graphic of triangle]

GOOD ORDER means that your instructions have been received in the
form required by American Century. This may include, for example,
providing the fund name and account number, the amount of the
transaction and all required signatures.

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 will 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 employer-sponsored retirement or savings plans must reinvest all
distributions. For investors investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash.

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. Distributions of capital gains are classified either as short term or
long term and are taxed as follows:

Tax Rate for 10% Tax Rate for
Type of Distribution and 15% Brackets All Other Brackets
- --------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
- --------------------------------------------------------------------------------
Long-term capital gains (1-5 years) 10% 20%
- --------------------------------------------------------------------------------
Long-term capital gains (>5 years) 8% 20%(1)
- --------------------------------------------------------------------------------

(1) The reduced rate for these gains will not begin until 2006 because the
security holding period must start after December 31, 2000. Once the
security has been held for more than 5 years, the rate will be 18%.

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 a
financial intermediary will inform you of the tax status of fund distributions
for each calendar year in an annual tax mailing (Form 1099-DIV).

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 the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The funds distribute 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.

MULTIPLE CLASS INFORMATION

American Century offers six classes of Select and five classes of New
Opportunities II through financial intermediaries: Investor Class, Institutional
Class, A Class, B Class, C Class and ( for Select only) Advisor Class. The
shares offered by this Prospectus are Investor Class and Institutional Class
shares. Investor 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 and not the result of any difference
in amounts charged by the advisor for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class.
Different fees and expenses will affect performance. For additional information
concerning A, B, C or Advisor Class shares, 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 the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between 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.

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 have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report and the financial statements are
included in the funds' Annual Report, which is available upon request.

NEW OPPORTUNITIES II
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31

Per-Share Data

2001(1)
----------------
Net Asset Value, Beginning of Period $5.00
----------------
Income From Investment Operations
Net Investment Loss (0.01)
Net Realized and Unrealized Loss (0.47)
----------------
Total From Investment Operations (0.48)
----------------
Net Asset Value, End of Period $4.52
================
Total Return(2) (9.60)%

Ratios/Supplemental Data

2001(1)
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.50%(3)
Ratio of Net Investment Loss to Average Net Assets (0.81)%(3)
Portfolio Turnover Rate 89%
Net Assets, End of Period (in thousands) $18,217

(1) June 1, 2001 (inception) through October 31, 2001.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year
are not annualized.

(3) Annualized.

SELECT FUND
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31

Per-Share Data

2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $52.20 $53.32 $49.54 $48.18 $41.52
------------------------------------------------------
Income From Investment Operations
Net Investment Income (Loss)(1) 0.06 (0.06) 0.01 0.12 0.15
Net Realized and Unrealized Gain (Loss) (14.53) 4.04 13.73 9.37 10.51
------------------------------------------------------
Total From Investment Operations (14.47) 3.98 13.74 9.49 10.66
------------------------------------------------------
Distributions
From Net Investment Income -- -- (0.17) (0.20) (0.32)
From Net Realized Gains (2.62) (5.10) (9.79) (7.93) (3.68)
In Excess of Net Realized Gains (0.17) -- -- -- --
------------------------------------------------------
Total Distributions (2.79) (5.10) (9.96) (8.13) (4.00)
------------------------------------------------------
Net Asset Value, End of Period $34.94 $52.20 $53.32 $49.54 $48.18
======================================================
Total Return(2) (28.93)% 7.64% 31.22% 22.96% 27.89%

Ratios/Supplemental Data

2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.15% (0.11)% 0.03% 0.25% 0.33%
Portfolio Turnover Rate 98% 67% 130% 165% 94%
Net Assets, End of Period
(in millions) $4,745 $7,086 $7,216 $5,591 $4,769

(1) Computed using average shares outstanding throughout the period.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

SELECT FUND
Institutional Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Per-Share Data

2001 2000 1999 1998 1997(1)
- --------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $52.36 $53.41 $49.63 $48.24 $40.56
-----------------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.14 0.04 0.02 0.22 0.13
Net Realized and Unrealized Gain (Loss) (14.55) 4.01 13.83 9.37 7.55
-----------------------------------------------------
Total From Investment Operations (14.41) 4.05 13.85 9.59 7.68
-----------------------------------------------------
Distributions
From Net Investment Income -- -- (0.28) (0.27) --
From Net Realized Gains (2.62) (5.10) (9.79) (7.93) --
In Excess of Net Realized Gains (0.17) -- -- -- --
-----------------------------------------------------
Total Distributions (2.79) (5.10) (10.07) (8.20) --
-----------------------------------------------------
Net Asset Value, End of Period $35.16 $52.36 $53.41 $49.63 $48.24
=====================================================
Total Return(3) (28.71)% 7.77% 31.47% 23.22% 18.93%

Ratios/Supplemental Data

2001 2000 1999 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 0.80% 0.80% 0.80% 0.80% 0.80%(4)
Ratio of Net Investment Income to Average Net Assets 0.35% 0.09% 0.23% 0.45% 0.45%(4)

Portfolio Turnover Rate 98% 67% 130% 165% 94%(5)

Net Assets, End of Period(in thousands) $181,708 $259,092 $112,293 $173 $11,486

(1) March 13, 1997 (commencement of sale) through October 31, 1997.

(2) Computed using average shares outstanding throughout the period.

(3) Total return assumes reinvestment of dividends 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.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 1997.

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, 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 www.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
- --------------------------------------------------------------------------------
New Opportunities II
Investor Class 136 ANOIX N/A
- --------------------------------------------------------------------------------
Institutional Class N/A N/A N/A
- --------------------------------------------------------------------------------
Select
Investor Class 021 TWCIX Select
- --------------------------------------------------------------------------------
Institutional Class 321 TWSIX Select
- --------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
www.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

0212
SH-PRS-xxxxx

Your
American Century
prospectus

A CLASS
B CLASS
C CLASS
New Opportunities II Fund
Select Fund

ADVISOR CLASS
Select Fund

DECEMBER 20, 2002

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.

American Century
Investment Services, Inc.

[american century logo and text logo (reg. sm)]

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[american century logo and text logo (reg. sm)]
American Century
Investments

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

Dear Investor,

American Century is committed to providing you with an easy-to-read prospectus
that gives you the information you need to make confident investment decisions.

This year, you'll notice that we've combined information about four classes of
shares into one prospectus. These classes are all offered primarily through
employer-sponsored retirement plans, or through institutions such as banks,
broker-dealers and insurance companies.

It's important for you to be aware of which class of shares you own or are
considering for purchase while you're reading through your prospectus. Certain
restrictions may apply to one class or another, and different classes may have
different fees, expenses or minimum investment requirements.

After you've reviewed your prospectus, should you have any questions, please
call your investment professional, who will be happy to assist you.

Sincerely,

/s/W. Gordon Snyder

W. Gordon Snyder
President, Chief Marketing Officer
American Century Investment Services, Inc.

Table of Contents

AN OVERVIEW OF THE FUNDS .................................................. 2
FUND PERFORMANCE HISTORY .................................................. 3
FEES AND EXPENSES ......................................................... 5
OBJECTIVES, STRATEGIES AND RISKS .......................................... 7
MANAGEMENT ................................................................ 10
INVESTING WITH AMERICAN CENTURY ........................................... 13
SHARE PRICE AND DISTRIBUTIONS ............................................. 20
TAXES ..................................................................... 21
MULTIPLE CLASS INFORMATION ................................................ 23
FINANCIAL HIGHLIGHTS ...................................................... 24
PERFORMANCE INFORMATION OF OTHER CLASS .................................... 26

[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 ARE THE FUNDS' INVESTMENT OBJECTIVES?

These funds seek long-term capital growth.

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

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.

WHO MAY WANT TO INVEST IN THE FUNDS?

The funds may be a good investment if you are

* seeking long-term capital growth from your investment
* comfortable with short-term price volatility
* comfortable with the risks associated with the funds' investment strategy
* investing through an IRA or other tax-advantaged retirement plan

WHO MAY NOT WANT TO INVEST IN THE FUNDS?

The funds may not be a good investment if you are

* seeking current income from your investment
* investing for a short period of time
* uncomfortable with short-term volatility in the value of your investment

[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.

FUND PERFORMANCE HISTORY

NEW OPPORTUNITIES II FUND
SELECT FUND

As a new fund, New Opportunities II's performance history is not available as of
the date of this prospectus. When the A, B or C Classes of the fund have
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 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. Sales charges are
not reflected in the chart below. If they had been included, returns would be
lower than those shown. 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 - ADVISOR CLASS(1)

[data from bar chart]

2001 -18.45%
2000 -8.83%
1999 21.985
1998 35.29%

(1) As of September 30, 2002, the end of the most recent calendar quarter,
Select's year-to-date return was ____.

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

Highest Lowest
- --------------------------------------------------------------------------------
Select 22.21% (4Q 1998) -14.70% (1Q 2001)
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS

The following table shows the average annual total returns of Select's Advisor
Class shares. Because the funds' A, B and C Class shares did not have a full
calendar year's worth of performance they are 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.

ADVISOR CLASS

For the calendar year ended December 31, 2001 1 year Life of Class(1)
- -------------------------------------------------------------------------------
Select
Return Before Taxes -18.45% 5.46%
Return After Taxes on Distributions -18.45% 1.89%
Return After Taxes on Distributions
and Sale of Fund Shares -11.24% 3.36%
S&P 500 Index -11.87% 5.79%
(reflects no deduction for fees, expenses or taxes)
- -------------------------------------------------------------------------------

(1) The inception date is August 8, 1997 for the Advisor Class of Select.

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

FEES AND EXPENSES

The following table describes 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 Class B Class C Class Advisor Class
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Maximum Sales Charge (Load)
Imposed on Purchases
(as a percentage of offering price) 5.75% None None None
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Maximum Deferred Sales Charge (Load)
(as a percentage of the original offering None(1) 5.00%(2) 1.00%(3) None
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) This charge is 5.00% in the first year after purchase, declines over the
next five years and is eliminated after six years.

(3) This charge is eliminated after one year.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees(1) Expenses(2) Operating Expenses
- ---------------------------------------------------------------------------------------------
Select
A Class 1.00% 0.25% 0.00% 1.25%
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B Class 1.00% 1.00% 0.00% 2.00%
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C Class 1.00% 1.00% 0.00% 2.00%
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Advisor Class(3) 0.75% 0.50% 0.00% 1.25%
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New Opportunities II
A Class 1.50% 0.25% 0.00% 1.75%
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B Class 1.50% 1.00% 0.00% 2.50%
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C Class 1.50% 1.00% 0.00% 2.50%
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(1) The 12b-1 fee is designed to permit investors to purchase shares through
broker-dealers, banks, insurance companies and other financial
intermediaries. A portion of the fee is used to compensate such financial
intermediaries for ongoing recordkeeping and administrative services that
would otherwise be performed by an affiliate of the advisor, and a portion
is used to compensate them for distribution and other shareholder services.
For more information, see Service and Distribution Fees, page 23.

(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) Half of the Advisor Class 12b-1 fee is for shareholder 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.

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
- --------------------------------------------------------------------

Select
A Class $695 $947 $1,219 $1,991
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B Class $702 $923 $1,269 $2,115
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C Class $202 $623 $1,069 $2,305
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Advisor Class $127 $395 $683 $1,503
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New Opportunities II
A Class $742 $1,091 $1,463 $2,503
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B Class $751 $1,071 $1,517 $2,623
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C Class $251 $771 $1,317 $2,803
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You would pay the following expenses if you did not redeem your shares.

1 year 3 years 5 years 10 years
- --------------------------------------------------------------------
Select
A Class $695 $947 $1,219 $1,991
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B Class $202 $623 $1,069 $2,115
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C Class $202 $623 $1,069 $2,305
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Advisor Class $127 $395 $683 $1,503
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New Opportunities II
A Class $742 $1,091 $1,463 $2,503
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B Class $251 $771 $1,317 $2,623
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C Class $251 $771 $1,317 $2,803
- --------------------------------------------------------------------

OBJECTIVES, STRATEGIES AND RISKS

NEW OPPORTUNITIES II
SELECT

WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

These funds seek long-term capital growth.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?

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Accelerating growth is shown, for example, by growth that is
faster this quarter than last or faster this year than the year
before.

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

WHAT KINDS OF SECURITIES DO THE FUNDS BUY?

WHAT ARE THE DIFFERENCES BETWEEN THE FUNDS?

Select generally invests in larger companies, although it may purchase companies
of any size.

New Opportunities II generally invests in smaller-sized companies.

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.

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 two-thirds of the directors are independent of the funds' advisor;
that is, they are not employed by and have no financial interest in the advisor

THE INVESTMENT ADVISOR

For the services it provided to the funds during the most recent fiscal year,
the advisor received a unified management fee based on a percentage of the
average net assets of each class of shares. The amount of the management fee for
a fund is calculated daily and paid monthly in arrears. The A, B and C Classes
of the funds had no assets as of the date of this prospectus, but each such
class of New Opportunities II will pay the advisor a unified management fee of
1.50%, and each such class of Select will pay the advisor a unified management
fee of 1.00%. New Opportunities II does not offer the Advisor Class; the fee
paid by the Advisor Class of Select is shown below.

Management Fees Paid by the Funds to the Advisor
as a Percentage of Average Net Assets for the Most
Recent Fiscal Year Ended October 31, 2002 Advisor Class
- --------------------------------------------------------------------------------
Select 0.75%
- --------------------------------------------------------------------------------

THE FUND MANAGEMENT TEAMS

The portfolio managers on the investment teams are identified below.

New Opportunities II

CHRISTOPHER K. BOYD

JOHN D. SEITZER

TOM TELFORD

Mr. Telford, Portfolio Manager, has been a member of the team that manages New
Opportunities II since the fund's inception. He joined American Century in July
1996 as an Investment Analyst and was promoted to Portfolio Manager in February
2000. Before joining American Century, he attended the Wharton School of
Business, University of Pennsylvania, from August 1994 to May 1996, where he
obtained his MBA. He also has a bachelor of business administration from
Southern Methodist University. He is a CFA charterholder and a Certified Public
Accountant.

Select

TIM REYNOLDS

WADE SLOME

CODE OF ETHICS

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 may change any other
policies and investment strategies.

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.

American Century Advisor Funds may offer the following four classes of shares: A
Class, B Class, C Class and Advisor Class. Select offers all four classes
through this prospectus; New Opportunities II offers A, B and C 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 CDSC(2) Contingent deferred sales 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 Purchase orders limited to
for long-term investors amounts less than $250,000
- --------------------------------------------------------------------------------

C Class Advisor Class
- --------------------------------------------------------------------------------
No initial sales charge No initial sales charge
- --------------------------------------------------------------------------------
Contingent deferred sales charge No contingent deferred sales charge
on redemptions within one year
- --------------------------------------------------------------------------------
12b-1 fee of 1.00% 12b-1 fee of 0.50%
- --------------------------------------------------------------------------------
No conversion feature No conversion feature
- --------------------------------------------------------------------------------
Purchase orders limited to amounts Generally offered through qualified
less than $1,000,000; generally more retirement plans and other
appropriate for short-term investors fee-based 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 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 investments for Select are $2,000 for a
Coverdell Education Savings Account (CESA, formerly an Education IRA), and
$2,500 for all other accounts. For New Opportunities II, the minimum investment
is $10,000 for all accounts. To establish a traditional or Roth IRA in the fund,
you will need to exchange from another American Century IRA, transfer from
another custodian or roll over a minimum of $10,000 in order to meet the fund's
minimum.

CALCULATION OF SALES CHARGES

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:

Sales Charge Sales Charge Amount paid to
as a % of as a % of Financial Advisor
Purchase Amount Offering Price Net Amount Invested as a % of Offering 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 on page 15.

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 such information 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 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

Concurrent Purchases. You may combine simultaneous purchases in A, B or C Class
shares of any two or more American Century Advisor Funds 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.

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. 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:

* certain financial intermediaries who have selling agreements for the American
Century Advisor Funds, and those intermediaries' employees and sales
representatives

* 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. However, if you redeem your shares within six years of purchase you
will pay a contingent deferred sales charge (CDSC). There is no CDSC on shares
acquired through reinvestment of dividends or capital gains.

Years after Purchase 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 will automatically convert to A Class shares 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. However, 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 value at
redemption, whichever is less.

CALCULATION OF 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

The contingent deferred sales charge on A Class shares for purchases of over
$1,000,000, B Class and C Class shares may be waived in the following cases:

* redemptions through systematic withdrawal plans not exceeding 12% each year
of the original purchase cost, for B Class shares, or the lesser of the
original purchase cost or the current market value of the fund account, for A
and C Class shares

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

* 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 (12 months for A and C Class shares, and 6 years for B
Class shares)

* 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

BUYING AND SELLING SHARES

Your ability to purchase, exchange and redeem shares will depend on 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

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 the fund's annual
report, semiannual report and Statement of Additional Information are available
from your intermediary or plan sponsor.

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.

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 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

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.

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

We do not permit market timing or other abusive trading practices in our funds.

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

REDEMPTIONS

If you sell your B or 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 below.

[graphic of triangle]

A fund's NET ASSET VALUE, or NAV, is the price of the fund's
shares.

In addition, we reserve the right to delay delivery of redemption proceeds--up
to seven days--or to honor certain REDEMPTIONS with securities, rather than
cash, as described in the next section.

[graphic of triangle]

A REDEMPTION is the sale of all or a portion of the shares in an
account including those sold as a part of an exchange to another
American Century account.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

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.

RIGHT TO CHANGE POLICIES

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in GOOD ORDER.

[graphic of triangle]

DISTRIBUTIONS

[graphic of triangle]

CAPITAL GAINS are increases in the values of capital assets, such
as stock, from the time the assets are purchased.

We will reinvest distributions unless you elect to receive them in cash.

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

Tax Rate for 10% Tax Rate for
Type of Distribution and 15% Brackets All Other Brackets
- --------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
- --------------------------------------------------------------------------------
Long-term capital gains (1-5 years) 10% 20%
- --------------------------------------------------------------------------------
Long-term capital gains (> 5 years) 8% 20%(1)
- --------------------------------------------------------------------------------

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.

MULTIPLE CLASS INFORMATION

American Century may offer six classes of the funds through financial
intermediaries: A Class, B Class, C Class, Advisor Class, Investor Class and
Institutional Class. The shares offered by this Prospectus are A, B, C and (for
Select only) Advisor Class shares, which are offered primarily through
employer-sponsored retirement plans or through institutions like investment
advisors, 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 and not the result of any difference
in amounts charged by the advisor for core investment advisory services.
Accordingly, the core investment advisory expenses 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
that class of shares.

Except as described herein, all classes of shares of the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between 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.

SERVICE AND DISTRIBUTION 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 annual fees of 0.25% for A Class, 1.00% for B and C Class, and 0.50%
for Advisor Class. The advisor, as paying agent for the funds, 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 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.

In addition, the advisor or the funds' distributor may make payments for various
services or other expenses out of their past profits or other available sources.
Such expenses may include distribution services, shareholder services or
marketing, promotional or related expenses. The amount of these payments is
determined by the advisor or the distributor and is not paid by you.

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The table on the next page itemizes what contributed to the changes in Select's
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. Because A,
B and C Class shares are new, financial information is not available for these
classes 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 have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Reports and the financial statements are
included in the funds' annual reports, which are available upon request.

SELECT FUND
Advisor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)

Per-Share Data
2001 2000 1999 1998 1997(1)
- ----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $52.01 $53.19 $49.44 48.16 $49.43
----------------------------------------------------
Income From Investment Operations
Net Investment Loss(2) (0.04) (0.21) (0.13) -- (0.02)
Net Realized and Unrealized Gain (Loss) (14.50) 4.13 13.71 9.37 (1.25)
----------------------------------------------------
Total From Investment Operations (14.54) 3.92 13.58 9.37 (1.27)
----------------------------------------------------
Distributions
From Net Investment Income -- -- (0.04) 0.16) --
From Net Realized Gains (2.62) (5.10) (9.79) 7.93) --
In Excess of Net Realized Gains (0.17) -- -- -- --
----------------------------------------------------
Total Distributions (2.79) (5.10) (9.83) 8.09) --
----------------------------------------------------
Net Asset Value, End of Period $34.68 $52.01 $53.19 49.44 $48.16
====================================================
Total Return(3) (29.18)% 7.54% 30.87% 2.67% (2.57)%

Ratios/Supplemental Data
2001 2000 1999 1998 1997(1)
- ----------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.25% 1.25% 1.25% 1.25% 1.25%(4)
Ratio of Net Investment Loss
to Average Net Assets (0.10)% (0.36)% (0.22)% -- (0.17)%(4)
Portfolio Turnover Rate 98% 67% 130% 165% 94%(5)
Net Assets, End of Period
(in thousands) $23,389 $22,239 $8,369 $1,617 $1,289

(1) August 8, 1997 (commencement of sale) through October 31, 1997.

(2) Computed using average shares outstanding throughout the period.

(3) Total return assumes reinvestment of dividends 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.

(5) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 1997.

PERFORMANCE INFORMATION OF OTHER CLASS

The following financial information is provided to show the performance of New
Opportunities II's original class of shares. This class, the Investor Class, has
a total expense ratio that is lower than the A, B and C Classes. If the A, B and
C Classes had existed during the periods presented, their performance would have
been lower because of the additional expense.

The table on the next page itemizes what contributed to the changes in the
Investor Class 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, the 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

The 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 have been audited by Deloitte & Touche LLP, independent
accountants. Their Independent Accountants' Report and the financial statements
are included in the fund's Annual Report, which is available upon request.

NEW OPPORTUNITIES II
Investor Class

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED OCTOBER 31

Per-Share Data
2001(1)
- ---------------------------------------------------------------------------
Net Asset Value, Beginning of Period $5.00
--------
Income From Investment Operations
Net Investment Loss (0.01)
Net Realized and Unrealized Loss (0.47)
--------
Total From Investment Operations (0.48)
--------
Net Asset Value, End of Period $4.52
========
Total Return(2) (9.60)%

Ratios/Supplemental Data
2001(1)
- ---------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.50%(3
Ratio of Net Investment Loss to Average Net Assets (0.81)%(3
Portfolio Turnover Rate 89
Net Assets, End of Period (in thousands) $18,21

(1) June 1, 2001 (inception) through October 31, 2001.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.

(3) Annualized.

NOTES

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 www.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
- ----------------------------------------------------------------------------
Select
A Class 121 N/A Select
- ----------------------------------------------------------------------------
B Class 302 N/A Select
- ----------------------------------------------------------------------------
C Class 412 N/A Select
- ----------------------------------------------------------------------------
Advisor Class 721 TWCAX Select
- ----------------------------------------------------------------------------
New Opportunities II
A Class 106 N/A N/A
- ----------------------------------------------------------------------------
B Class 306 N/A N/A
- ----------------------------------------------------------------------------
C Class 436 N/A N/A
- ----------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-378-9878
www.americancentury.com

0212
SH-PRS-30905

American Century
statement of
additional information

Growth Fund
Ultra(sm) Fund
Select Fund
Vista Fund
Heritage Fund
Balanced Fund
Tax-Managed Value Fund
Giftrust(sm) Fund
New Opportunities Fund
New Opportunities II Fund
Veedot(sm) Fund

December 20, 2002
American Century Mutual Funds, Inc.

This Statement of Additional Information adds to the discussion in the funds'
Prospectuses dated March 1, 2002 and December 20, 2002, 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 www.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.

TABLE OF CONTENTS

The Funds' History.............................................................2
Fund Investment Guidelines.....................................................2
Growth, Ultra, Select, Vista, Heritage, Giftrust, New Opportunities
New Opportunities II and Veedot ........................................... 3
Balanced....................................................................3
Tax-Managed Value...........................................................4
Fund Investments and Risks.....................................................6
Investment Strategies and Risks.............................................6
Investment Policies........................................................18
Portfolio Turnover.........................................................20
Management....................................................................21
The Board of Directors.....................................................25
Code of Ethics.............................................................28
The Funds' Principal Shareholders.............................................28
Service Providers.............................................................32
Investment Advisor.........................................................34
Transfer Agent and Administrator...........................................38
Distributor................................................................38
Other Service Providers.......................................................38
Custodian Banks............................................................38
Independent Auditors.......................................................38
Brokerage Allocation..........................................................38
Growth, Ultra, Select, Vista, Heritage, Tax-Managed Value, Giftrust,
New Opportunities, New Opportunities II, Veedot and the Equity Portion
of Balanced................................................................38
The Fixed-Income Portion of Balanced.......................................39
Information about Fund Shares.................................................40
Multiple Class Structure...................................................40
Buying and Selling Fund Shares.............................................45
Valuation of a Fund's Securities...........................................46
Taxes 47
How Fund Performance Information Is Calculated................................49
Performance Comparisons....................................................54
Permissible Advertising Information........................................55
Multiple Class Performance Advertising.....................................55
Financial Statements..........................................................55
Explanation of Fixed-Income Securities Ratings................................55

The Fund's 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 June 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.

Investor Class Institutional Class

Fund Ticker Symbol Inception Date Ticker Symbol Inception Date
- ---- ------------- -------------- ------------- --------------
Growth TWCGX 10/31/1958 TWGOX 06/16/1997
Ultra TWCUX 11/02/1981 TWUIX 11/14/1996
Select TWCIX 10/31/1958 TWSIX 03/13/1997
Vista TWCVX 11/25/1983 TWVIX 11/14/1996
Heritage TWHIX 11/10/1987 ATHIX 06/16/1997
Balanced TWBIX 10/20/1988 ABINX 05/01/1997
Tax-Managed Value ACTIX 03/31/1999 N/A N/A
Giftrust TWGTX 11/25/1983 N/A N/A
New Opportunities TWNOX 12/26/1996 N/A N/A
New Opportunities II ANOIX 06/01/2001 N/A N/A
Veedot AMVIX 11/30/1999 N/A 08/01/2000

A Class B Class

Fund Ticker Symbol Inception Date Ticker Symbol Inception Date
- ---- ------------- -------------- ------------- --------------
Growth N/A N/A N/A N/A
Ultra N/A N/A N/A N/A
Select N/A N/A N/A N/A
Vista N/A N/A N/A N/A
Heritage N/A N/A N/A N/A
Balanced N/A N/A N/A N/A
Tax-Managed Value N/A N/A N/A N/A
Giftrust N/A N/A N/A N/A
New Opportunities N/A N/A N/A N/A
New Opportunities II N/A N/A N/A N/A
Veedot N/A N/A N/A N/A

C Class Advisor Class

Fund Ticker Symbol Inception Date Ticker Symbol Inception Date
- ---- ------------- -------------- ------------- --------------
Growth N/A 11/28/2001 TWRAX06/04/1997
Ultra N/A 10/29/2001 TWUAX10/01/1996
Select N/A N/A TWCAX 08/07/1997
Vista N/A 07/18/2001 TWVAX 10/01/1996
Heritage N/A 06/26/2001 ATHAX 07/11/1997
Balanced N/A N/A TWBAX 01/06/1997
Tax-Managed Value N/A N/A N/A N/A
Giftrust N/A N/A N/A N/A
New Opportunities N/A N/A N/A N/A
New Opportunities II N/A N/A N/A N/A
Veedot N/A N/A N/A N/A

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 a 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 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.

Veedot is nondiversified. Although Veedot's 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.

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.

GROWTH, ULTRA, SELECT, VISTA, HERITAGE, GIFTRUST, NEW OPPORTUNITIES, NEW
OPPORTUNITIES II AND VEEDOT

In general, within the restrictions outlined here and in the funds'
Prospectuses, the fund 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 fund managers, are high-grade issues also
may be purchased for defensive purposes.

So long as a sufficient number of acceptable securities are available, the fund
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. In most
circumstances, each fund's actual level of cash and cash equivalents will be
less than 10%. The managers may use stock index 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 11 and Futures
and Options, page 12.

BALANCED

In general, within the restrictions outlined here and in the fund's Prospectus,
the fund 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 fund managers also may purchase foreign
securities, convertible debt securities, equity-equivalent securities,
non-leveraged stock index futures contracts and similar securities, and
short-term securities. See Table 1, page 5.

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, 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 and bond
prices rising, 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 54.

TAX-MANAGED VALUE

The fund managers will invest primarily in stocks of medium to large companies
that the managers believe are undervalued at the time of purchase. The fund
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 debt 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.

New
Growth Opportunities II Tax-
Ultra Vista New Managed
Select Heritage Opportunities Giftrust Balanced Value Veedot
------ -------- ------------- -------- -------- ----- ------
Foreign
Securities X X X X X X X
Convertible
Debt
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 Companies
with Limited
Operating Histories 5% 10% 10% 10% 5% X 10%
Other
Investment
Companies 10% 10% 10% 10% 10% 10% 10%
Repurchase
Agreement 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%
Restricted
Securities X X X X X X X
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
Fixed-Income Securities
Municipal
Notes X X
Municipal
Bonds X X
Variable- and
Floating-Rate
Obligations X X
Obligations with Term
Puts Attached X X
Tender Option Bonds X
Zero-Coupon Securities X
Inverse Floaters X X
Loan Interests

FUND INVESTMENTS AND RISKS

INVESTMENT STRATEGIES AND RISKS

This section describes investment vehicles and techniques the fund 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, pages 5 and 6.

Foreign Securities

Each fund may invest 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.

An unlimited portion of each fund's total assets may be invested in the
securities of foreign issuers, except for High-Yield, which may invest up to 40%
of its assets in foreign securities.

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.

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 Debt Securities

A convertible debt security is a fixed-income security that offers the potential
for capital appreciation through a conversion feature that enables the holder to
convert the fixed-income security into a stated number of shares of common
stock. As fixed-income securities, convertible debt securities provide a stable
stream of income, with generally higher yields than common stocks. Convertible
debt securities offer the potential to benefit from increases in the market
price of the underlying common stock, however, they generally offer lower yields
than non-convertible securities of similar quality. Of course, as with all
fixed-income securities, there can be no assurance of current income because the
issuers of the convertible debt 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.

Convertible debt securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. Because of the subordination feature, however, convertible debt
securities typically have lower ratings from ratings organizations than similar
non-convertible securities.

Unlike a convertible security that is a single security, a synthetic convertible
security is comprised of two distinct securities that together resemble
convertible securities in certain respects. Synthetic convertible securities are
created by combining non-convertible bonds or preferred stocks with warrants or
stock call options. The options that will form elements of synthetic convertible
securities will be listed on a securities exchange or NASDAQ. The two components
of a synthetic convertible security, which will be issued with respect to the
same entity, generally are not offered as a unit, and may be purchased and sold
by the fund at different times. Synthetic convertible securities differ from
convertible securities in certain respects. Each component of a synthetic
convertible security has a separate market value and responds differently to
market fluctuations. Investing in a synthetic convertible security involves the
risk normally found in holding the securities comprising the synthetic
convertible security.

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.

A fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes. 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 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 fund 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 it had invested. 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.

Investment in Companies with Limited Operating Histories

The funds may invest a portion of their assets in the 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.

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.

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 (typically 15 to 45 days, but not more than 120 days, later).

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, 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 of Rule 144A securities to the fund managers. The
board retains the responsibility to monitor the implementation of the guidelines
and procedures it has adopted.

Because the secondary market for such securities is 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 fund 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

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.

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.

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 fund 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 bond, 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.
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 debt securities 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 fund 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 fund 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 fund 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 fund 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.

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 fund 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 fund managers would be able to enter into a forward currency contract to
do so;

(2)When the fund 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 fund 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 segregate on its records cash or
securities in an amount sufficient to cover its obligations under the forward
currency contract.

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 it matures. Predicting short-term currency market
movements is extremely difficult, and the successful execution of short-term
hedging strategy is highly uncertain. The fund 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
fund 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.

Each fund (except High-Yield) will limit its holdings of convertible debt
securities to those that, at the time of purchase, are rated at least B- by S&P
or B3 by Moody's, or, if not rated by S&P or Moody's, are of equivalent
investment quality as determined by the advisor. Each fund's investments (except
High-Yield) in convertible debt securities and other high-yield, non-convertible
debt securities rated below investment-grade will comprise less than 35% of the
fund's net assets. Debt securities rated below the four highest categories are
not considered 'investment-grade' obligations. These securities have speculative
characteristics and present more credit risk than investment-grade obligations.
Equity equivalents also may include securities whose value or return is derived
from the value or return of a different security.

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 sea port 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 sea port 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.

Obligations with Term Puts Attached

High-Yield, Balanced and Tax-Managed 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 fund 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 fund 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, High-Yield and Tax-Managed 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
fund 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, Step-Coupon and Pay-In-Kind 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, pay-in-kind 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.

Inverse Floaters

High-Yield, Balanced and Tax-Managed 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.

Loan Interests

Loan interests are interests in amounts owed by a corporate, governmental or
other borrower to lenders or lending syndicates. Loan interests purchased by
High-Yield may have a maturity of any number of days or years, and may be
acquired from U.S. and foreign banks, insurance companies, finance companies or
other financial institutions that have made loans or are members of a lending
syndicate or from the holders of loan interests.

Loan interests involve the risk of loss in case of default or bankruptcy of the
borrower and, in the case of participation interests, involve a risk of
insolvency of the agent lending bank or other financial intermediary. Loan
interests are not rated by any nationally recognized securities rating
organization and are, at present, not readily marketable and may be subject to
contractual restrictions on resale.

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 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 under the Investment
Securities 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 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 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 and Options A fund may enter into futures contracts and 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 money than
it invested.

Issuers with A fund may invest a portion of its assets in the securities of issuers with limited
Limited Operating operating histories. An issuer is considered to have a limited operating history if
Histories 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.

PORTFOLIO TURNOVER

The portfolio turnover rate of each fund is listed in the Financial Highlights
table in that fund's Prospectus.

Tax-Managed Value Fund

The fund managers of Tax-Managed 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 fund 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 will 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 fund 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 Veedot, events that occurred in 2001 created significant challenges. For
example, the extreme volatility in the markets in recent months has been
dramatic, causing fund managers to trade more frequently than is typical. In
addition, the collapse of corporate earnings has made it increasingly difficult
to find stocks that consistently demonstrate the characteristics the fund seeks,
which also resulted in more frequent trading. Due to these factors, portfolio
turnover has been uncharacteristically high.

For Vista, Giftrust and New Opportunities, the higher portfolio turnover rate
for 2001 resulted from efforts to improve the fund's performance, which included
replacing underperforming stocks and increasing the fund's diversification
across a broader range of industries. As a result, a greater number of stocks
were sold and purchased during 2001 than has been the fund's historical
practice.

MANAGEMENT

The individuals listed below serve as directors or officers of the funds. 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 subsidiaries, including the funds' investment adviser, American
Century Investment Management, Inc. (ACIM); the funds' principal underwriter,
American Century Investment Services, Inc. (ACIS); and the funds' transfer
agent, American Century Services Corporation (ACSC).

The other directors, (more than two-thirds of the total number) are independent;
that is, they are not employees or officers of, and have no financial interest
in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS and ACSC.

All persons named as officers of the funds also serve in similar capacities for
other funds advised by ACIM. 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.

Number of
Portfolios
in Fund
Position(s) Length Complex Other
Held of Time Overseen Directorships
with Served Principal Occupation(s) by Held by
Name, Address (Age) Fund (years) During Past 5 Years Director Director

Interested Directors
James E. Stowers, Jr. Director, 43 Chairman, Director and 38 None
4500 Main Street Chairman controlling shareholder, ACC
Kansas City, MO 64111 of the Chairman , ACIM, ACSC and
(77) Board other ACC subsidiaries
Director, ACIM, ACSC and
other ACC subsidiaries(1)
James E. Stowers III Director, 11 Co-Chairman, ACC 76 None
4500 Main Street Chairman (September 2000 to present)
Kansas City, MO 64111 of the Chief Executive Officer, ACC
(42) Board (June 1996 to September 2000)
Chief Executive Officer,
ACIM, ACSC and
other ACC subsidiaries
Director, ACC, ACIM, ACSC
and other ACC subsidiaries
President, ACC
(January 1995 to June 1997)
President, ACIM and ACSC
(April 1993 to August 1997)

Independent Directors
Thomas A. Brown Director 21 Strategic Account 38 None
4500 Main Street Implementation Manager,
Kansas City, MO 64111 Applied Industrial
(61) Technologies, Inc.,
a corporation engaged in
the sale of bearings and
power transmission products

Robert W. Doering, M.D. Director less Retired, formerly a 38 None
4500 Main Street Emeritus (2) than general surgeon
Kansas City, MO 64111 1 year
(68)

Andrea C. Hall, Ph.D. Director 4 Senior Vice President, 38 Director, Midwest
4500 Main Street Midwest Research Institute Research Institute
Kansas City, MO 64111
(56)

D.D. (Del) Hock Director 5 Retired, formerly Chairman, 38 Director, RMI.NET
4500 Main Street Public Service Company Inc., Hathaway
Kansas City, MO 64111 of Colorado Corporation and J.D.
(66) Edwards & Company.

Donald H. Pratt Director, 6 Chairman, 38 Director, Butler
4500 Main Street Vice Western Investments, Inc. Manufacturing
Kansas City, MO 64111 Chairman Retired Chairman of the Board, Company
(63) of the Butler Manufacturing Company Director, Atlas-Copco,
Board North America Inc.

Gale E. Sayers Director 1 President, Chief Executive 38 None
4500 Main Street Officer and Founder,
Kansas City, MO 64111 Sayers Computer Source
(58)

M. Jeannine Strandjord Director 7 Senior Vice President, 38 Director, DST
4500 Main Street Long Distance Finance, Systems, Inc.
Kansas City, MO 64111 Sprint Corporation
(55)

Timothy S. Webster Director less President and Chief 38 None
4500 Main Street than Executive Officer,
Kansas City, MO 64111 1 year American Italian Pasta
(40) Company

Officers
William M. Lyons President 1 Chief Executive Officer, ACC Not Not
4500 Main St. and other ACC subsidiaries applicable applicable
Kansas City, MO 64111 (September 2000 to present)
(46) President, ACC
(June 1997 to present)
Chief Operating Officer, ACC
(June 1996 to September 2000)
General Counsel, ACC,
ACIM, ACIS, ACSC and
other ACC subsidiaries
(June 1989 to June 1998)
Executive Vice President, ACC,
(January 1995 to June 1997)
Also serves as: Executive Vice
President and Chief Operating
Officer, ACIM, ACIS, ACSC
and other ACC subsidiaries, and
Executive Vice President of
other ACC subsidiaries

Robert T. Jackson Executive 6 Chief Administrative Officer, Not applicable Not applicable
4500 Main St. Vice ACC (August 1997 to present)
Kansas City, MO 64111 President Chief Financial Officer, ACC
(55) and (May 1995 to present)
Chief President, ACSC
Financial (January 1999 to present)
Officer Executive Vice President,
ACC (May 1995 to present)
Also serves as: Executive
Vice President and Chief
Financial Officer, ACIM, ACIS
and other ACC subsidiaries,
and Treasurer of ACC and
other ACC subsidiaries

Maryanne Roepke, CPA Senior 1 Senior Vice President and Not applicable Not applicable
4500 Main St. Vice Assistant Treasurer, ACSC
Kansas City, MO 64111 President,
(45) Treasurer
and Chief
Accounting
Officer

David C. Tucker Senior 1 Senior Vice President, ACIM, Not applicable Not applicable
4500 Main St. Vice ACIS, ACSC and other ACC
Kansas City, MO 64111 President subsidiaries
(43) and (June 1998 to present)
General General Counsel, ACC, ACIM,
Counsel ACIS, ACSC and other
ACC subsidiaries
(June 1998 to present)
Consultant to mutual
fund industry
(May 1997 to April 1998)
Vice President and General
Counsel, Janus Companies
(1990 to 1997)

Robert Leach Controller 4 Vice President, ACSC Not applicable Not applicable
4500 Main St. February 2000 to present)
Kansas City, MO 64111 Controller-Fund Accounting,
(35) ACSC

C. Jean Wade Controller 8 Vice President, ACSC Not applicable Not applicable
4500 Main St. (February 2000 to present)
Kansas City, MO 64111 Controller-Fund Accounting,
(37) ACSC

Jon Zindel Tax Officer 4 Vice President, Corporate Tax, Not applicable Not applicable
4500 Main St. ACSC (April 1998 to present)
Kansas City, MO 64111 Vice President, ACIM, ACIS and
(34) other ACC subsidiaries
(April 1999 to present)
President, American Century
Employee Benefit Services, Inc.
(January 2000 to December 2000)
Treasurer, American Century
Employee Benefit Services, Inc.
(December 2000 to present)
Treasurer, American Century
Ventures, Inc.
(December 1999 to present)
Controller, ACSC
(July 1996 to April 1998)

1 James E. Stowers, Jr. is the father of James E. Stowers III.

2 Dr. Robert Doering resigned as a full-time director, effective November 5,
2001, after serving in such capacity for 33 years. Dr. Doering continues to
serve the board in an advisory capacity. His position as Director Emeritus is
an advisory position and involves attendance at one board meeting per year to
review prior year-end results for the funds. He receives all regular board
communications, including monthly mailings, industry newsletters, email
communications, and company information, but not quarterly board and committee
materials relating to meetings that he does not attend. Dr. Doering is not a
director or a member of the board, and has no voting power relating to fund
operations. He is not an interested person of the funds or ACIM. He receives
an annual stipend of $2,500 for his services.

On December 23, 1999, American Century Services Corporation (ACSC) entered into
an agreement with DST Systems, Inc. (DST) under which DST would provide back
office software for transfer agency services provided by ACSC (the Agreement).
For its software, ACSC pays DST fees based in part on the number of accounts and
the number and type of transactions processed for those accounts. Through
October 31, 2001, DST received $20,745,257 in fees from ACSC. DST's revenue for
the calendar year ended December 31, 2000 was approximately $1.36 billion.

Ms. Strandjord is a director of DST and a holder of 53,000 shares of DST common
stock, 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 ACSC. DST
was chosen by ACSC for its industry-leading role in providing cost-effective
back office support for mutual fund service providers such as ACSC. 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 ACSC; she was not involved in any way with
the negotiations between ACSC 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 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.

Committees

The board has four 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
Committee Members Function Fiscal Year
- --------- ------- -------- -----------
Executive James E. Stowers, Jr. The Executive Committee performs the functions 0
James E. Stowers III of the Board of Directors between Board meetings,
Donald H. Pratt 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 Communications 4
and Shareholder Thomas A. Brown Committee reviews the results of the funds'
Communications Gale E. Sayers compliance testing program, reviews quarterly
Timothy S. Webster 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 recommends the engagement 4
Donald H. Pratt of the funds' independent auditors and oversees its
Jeannine Strandjord activities. 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 Board Governance Committee primarily considers and 0
Jeannine Strandjord recommends individuals for nomination as directors.
Thomas A. Brown The names of potential director candidates are
drawn from a number of sources, including
recommendations from members of the Board,
management and shareholders. 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.

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.

Aggregate Director Compensation for Fiscal Year Ended October 31, 2002
- ----------------------------------------------------------------------------------------------------------------
Total Total Compensation
Compensation from the
from the American Century
Name of Director Funds (1) Family of Funds(2)
Thomas A. Brown $XX $XX
Robert W. Doering, M.D. XX XX
Andrea C. Hall, Ph.D. XX XX
D.D. (Del) Hock XX XX
Donald H. Pratt XX XX
Gale E. Sayers XX XX
M. Jeannine Strandjord XX XX
Timothy S. Webster (3) XX XX
- ----------------------------------------------------------------------------------------------------------------

1Includes compensation paid to the directors during the fiscal year ended
October 31, 2002, and also includes amounts deferred at the election of the
directors under the American Century Mutual Funds' Independent Directors'
Deferred Compensation Plan. The total amount of deferred compensation included
in the preceding table is as follows: Mr. Brown, $XX; Dr. Hall, $XX; Mr. Hock,
$XX; Mr. Pratt, $XX; Mr. Sayers, $XX and Ms. Strandjord, $XX.

2Includes compensation paid by the five investment company members of the
American Century family of funds served by this Board at the end of the fiscal
year.

3Mr. Webster joined the board on November 16, 2001.

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.

Ownership of Fund Shares

The directors owned shares in the funds as of December 31, 2001, as shown in the
table below:

Name of Directors

James E. James E. Thomas A. Robert W. Andrea C
Stowers, Jr. Stowers III Brown Doering Hall, Ph.D.
- -----------------------------------------------------------------------------------------------------------------------------
Dollar Range of Equity Securities in the Funds:
Growth E C B E A
Ultra B E A E A
Select C E C E A
Vista E E C A C
Heritage A C B A A
Giftrust B C A A A
Balanced A A C A A
New Opportunities A E C E C
New Opportunities II A A A A A
Tax-Managed Value A A A A A
Veedot A E B A A
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Director in
Family of Investment Companies E E E E D

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:
Growth D A A A A
Ultra D C A D A
Select D A A A A
Vista D A A A A
Heritage A A A A A
Giftrust A A A A A
Balanced A A C A A
New Opportunities A C A A A
New Opportunities II A A A A A
Tax-Managed Value A A A A A
Veedot A A A A A
Aggregate Dollar Range of Equity
Securities in all Registered Investment
Companies Overseen by Director in
Family of Investment Companies E E C E A

Ranges: A-none, B-$1-$10,000, C-$10,001-$50,000, D-$50,001-$100,000, E-More than
$100,000

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.

THE FUNDS' PRINCIPAL SHAREHOLDERS

As of November 22, 2002, the following companies were the record owners of more
than 5% of the outstanding shares of any class of the fund:

Percentage of
Outstanding Shares
Fund Shareholder Owned
- ---- ----------- -----
Growth
Investor State Street Bank and Trust Co. Trustee
Martin Marietta Profit Sharing Plan and Trust
Boston, Massachusetts XX%

Advisor Charles Schwab & Co. Inc.
San Francisco, California XX%
Nationwide Trust Company
Columbus, Ohio XX%
FNB Nominee Co.
c/o First Commonwealth Trust Co.
Indiana, Pennsylvania XX%
UMBSC & Co.
FBO Diamant Boart
Kansas City, Missouri XX%

Institutional The Chase Manhattan Bank NA TR
Norwest Financial Thrift & PSP Trust
New York, New York XX%
The Chase Manhattan Bank NA TTEE
The Reynolds and Reynolds Co. 401(k)
New York, New York XX%
American Century Profit Sharing and 401K
Savings Plan and Trust
Kansas City, Missouri XX%

C Raymond James & Assoc. Inc.
FBO Maples
St. Petersburg, Florida XX%
Donaldson, Lufkin Jenrette
Securities Corporation Inc.
Jersey City, New Jersey XX%
Raymond James & Assoc. Inc.
FBO Carleton IRA
St. Petersburg, Florida XX%

Select
Investor None

Advisor Principal Life Insurance
Des Moines, Iowa XX%
Orchard Trust Company Custodian
RHD Investors Choice 403B
Englewood, Colorado XX%
HLPF&S for the Sole
Benefit of Its Customers
Jacksonville, Florida XX%
Saxon & Co.
Philadelphia, Pennsylvania XX%
Charles Schwab & Co. Inc.
San Francisco, California XX%

Institutional The Chase Manhattan Bank NA Trustee
Robert Bosch Corporation New Star
Plan and Trust
New York, New York XX%
The Chase Manhattan Bank NA TR
Winnebago Industries Inc. Profit Sharing
& Deferred Savings Investment Plan
New York, New York XX%
The Chase Manhattan Bank NA TR
Huntsman Corp. Salary Deferral Plan
New York, New York XX%
Morgan Guaranty Trust Company of New York TR
Champion International Corporation Plan for
Salaried Employees
New York, New York XX%
UMB NA Trustee
Buckeye Pipe Line Services Company
Retirement and Savings Plan
Kansas City, Missouri XX%
The Chase Manhattan Bank NA TR
Hunstman Corp MPP Plan & Trust
New York, New York XX%
Heritage
Investor Bankers Trust Company Trustee
Kraft General Foods Inc. Master Savings
Plan and Trust
Jersey City, New Jersey XX%
Bankers Trust Company Trustee
Philip Morris Deferred Profit Sharing
Plan and Trust
Jersey City, New Jersey XX%

Advisor Charles Schwab & Co. Inc.
San Francisco, California XX%
BNY Clearing Services LLC
Milwaukee, Wisconsin XX%

UMBSC & Co. FBO
O'Sullivan Industries Inc. Retirement Plan
Kansas City, Missouri XX%

Institutional Chase Manhattan Bank Trustee
The BOC Group Inc. Savings Investment Plan Trust
New York, New York XX%

The Chase Manhattan Bank NA TTEE
The Reynolds and Reynolds Co. 401(k)
Savings Plan Trust
New York, New York XX%

American Century Profit-Sharing & 401(k)
Savings Plan & Trust
Kansas City, Missouri XX%

C Mobank & Co. EB
Monroe, Michigan XX%

American Enterprise Investment Services
Minneapolis, Minnesota XX%
Ultra
Investor Charles Schwab & Co. Inc.
San Francisco, California XX%

Advisor Principal Life Insurance
Des Moines, Iowa XX%

Institutional JP Morgan Chase Bank Trustee
401(k) Savings Plan of JP Morgan Chase & Co. Trust
Brooklyn, New York XX%

The Chase Manhattan Bank NA Trustee
Robert Bosch Corporation New Star Plan and Trust
New York, New York XX%

Nationwide Insurance Company
QPVA
Columbus, Ohio XX%

The Chase Manhattan Bank NA Trustee
The Proctor & Gamble Subsidiaries Savings
Plan Core Fund
New York, New York XX%

The Chase Manhattan Bank NA Trustee
Marconi USA Wealth Accumulation Matching Plan Trust
New York, New York XX%

The Chase Manhattan Bank NA TR
Norwest Financial Thrift PSP & Trust
New York, New York XX%

UMB Bank TR
BAE Employees Savings Investment Plan Trust
Kansas City, Missouri XX%

The Chase Manhattan Bank NA TR
Huntsman Corp Salary Deferral Plan
New York, New York XX%

The Chase Manhattan Bank NA TR
Winnebago Industries Inc. P/S &
Deferred Savings Investment Plan
New York, New York XX%

The Chase Manhattan Bank TR
Hayes Lemmerz International Inc.
Retirement Savings Plan Trust
New York, New York XX%

C American Enterprise Investment Services
Minneapolis, Minnesota XX%

Raymond James & Associates Inc. CSDN
York, Pennsylvania XX%

Mobank & Company
Monroe, Michigan XX%

Mobank &Company EB
Monroe, Michigan XX%

Giftrust None
Vista
Investor None

Advisor American Chamber of Commerce Executives
Amended & Restated 401k Plan & Trust
Springfield, Missouri XX%

Charles Schwab & Co. Inc.
San Francisco, California XX%

American Chamber of Commerce Executives
Amended & Restated MPP Plan and Trust
Springfield, Missouri XX%

Orchard Trust Company Custodian
RHD Investors Choice 403B
Englewood, Colorado XX%

Institutional American Century Profit Sharing and 401K
Savings Plan and Trust
Kansas City, Missouri XX%

UMB Bank TR
BAE Employees Savings Investment Plan Trust
Kansas City, Missouri XX%

The Chase Manhattan Bank NA TR
Huntsman Corp Salary Deferral Plan & Trust
New York, New York XX%

The Chase Manhattan Bank NA TR
Huntsman Corp MPP Plan & Trust
New York, New York XX%

C American Enterprise Investment Services
Minneapolis, Minnesota XX%
Balanced
Advisor Fulvest & Co
Lancaster, Pennsylvania XX%

MLPF&S
For the Sole Benefit of Its Customers
Jacksonville, Florida XX%

UMBSC & Co
FBO The Medical Center
Kansas City, Missouri XX%

UMBSC & Co
FBO Parmelee Industries Inc. 401k
Kansas City, Missouri XX%

UMBSC & Co
FBO Toledo Clinic Inc.
Kansas City, Missouri XX%

Institutional The Chase Manhattan Bank NA TR
Huntsman Corp Salary Deferral Plan
New York, New York XX%

The Chase Manhattan Bank NA TR
Huntsman Corp MPP Plan & Trust
New York, New York XX%

New Opportunities
Investor American Century Profit Sharing and 401k
Savings & Trust
Kansas City, Missouri XX%

American Century Investment Management, Inc.
Kansas City, Missouri XX%

High-Yield
Investor Charles Schwab & Co. Inc.
Kansas City, Missouri XX%

Morgan Guaranty Trust of NY
Newark, Delaware XX%

Advisor None

C Raymond James & Assoc. Inc.
FBO Picerno IRA
St. Petersburg, Florida XX%

Raymond James & Assoc. Inc.
FBO Van Dusen James
St. Petersburg, Florida XX%

Veedot
Investor None

Advisor None

Institutional American Century Profit Sharing & 401k
Savings Plan & Trust
Kansas City, Missouri XX%

American Century Investment Management Inc.
Kansas City, Missouri XX%

UMB TR
American Century Executive
Deferred Comp Plan Trust
Kansas City, Missouri XX%

UMB TR
American Century Services Corp.
Stock Option Surrender Plan
Kansas City, Missouri XX%

Tax-Managed Value
Investor American Century Investment Management, Inc.
Kansas City, Missouri XX%

Advisor None

Institutional None

New Opportunities II
Investor El Monte Sign & Neon Company Inc.
El Monte, California XX%

Institutional 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. As of November 22,
2002, the officers and directors of the funds, as a group, owned less than 1% of
any class of a fund's outstanding shares.

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, ACSC and ACIS are wholly owned by ACC. James E. Stowers Jr., Chairman of
ACC, 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 Prospectuses under the heading Management.

For services provided to each fund, the advisor receives a monthly fee based on
a percentage of the average net assets of each fund. Ultra, Balanced,
Tax-Managed Value and Veedot have a stepped fee structure. The management fees
for the funds are as follows:

Fund Class Percentage of Net Assets
- ---- ----- ------------------------
Growth Investor and C 1.00%
Institutional 0.80%
Advisor 0.75%

Ultra Investor and C 1.00% of first $20 billion
0.95% over $20 billion
Institutional 0.80% of first $20 billion
0.75% over $20 billion
Advisor 0.75% of first $20 billion
0.70% over $20 billion

Select Investor, A, B and C 1.00%
Institutional 0.80%
Advisor 0.75%

Vista Investor and C 1.00%
Institutional 0.80%
Advisor 0.75%

Heritage Investor and C 1.00%
Institutional 0.80%
Advisor 0.75%

Balanced Investor 0.90% of first $1 billion
0.80% over $1 billion
Institutional 0.70% of first $1 billion
0.60% over $1 billion
Advisor 0.65% of first $1 billion
0.55% over $1 billion

Tax-Managed Value Investor 1.10% of first $500 million
1.00% of next $500 million
0.90% of 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

Giftrust Investor 1.00%

New Opportunities Investor 1.50%

New Opportunities II Investor, A, B and C 1.50%
Institutional 1.30%

Veedot Investor 1.50% of first $500 million
1.45% of next $500 million
1.40% of over $1 billion
Institutional 1.30% of first $500 million
1.25% of next $500 million
1.20% over $1 billion
Advisor 1.25% of first $500 million
1.20% of next $500 million
1.15% over $1 billion

On the first business day of each month, the funds pay a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of a fund's net assets during the previous
month. This number is then multiplied by a fraction, the numerator of which is
the number of days in the previous month and the denominator of which is 365
(366 in leap years).

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.

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, 2001,
2000 and 1999, are indicated in the following tables.

Unified Management Fees (Investor Class)

Fund 2001 2000 1999
- ---- ---- ---- ----
Growth $71,751,032 $100,365,047 $75,334,938
Ultra 296,533,074 411,243,949 323,012,542
Select 57,594,371 74,410,279 68,649,039
Vista 16,438,598 21,675,209 9,522,370
Heritage 15,634,691 16,346,863 9,817,953
Balanced 6,728,534 8,703,277 9,452,864
Tax-Managed Value 476,718 445,431 276,382
Giftrust 12,140,513 19,959,904 9,559,715
New Opportunities 7,596,803 12,892,612 4,174,987
New Opportunities II 100,936(1) N/A N/A
Veedot 4,287,497 4,117,607 N/A
Limited-Term Bond 78,358(2) 78,284 130,779
Intermediate-Term Bond 292,021(3) 218,626 215,378
Bond 925,340(3) 884,934 1,084,745
High-Yield 305,280(4) 302,034 360,784

1 Fees accrued from June 1, 2001 (inception) through October 31, 2001.

2 The fund's assets were transferred to the American Century Short-Term
Government fund on December 3, 2001.

3 The fund's assets were transferred to the American Century Diversified Bond
fund on December 3, 2001.

4 The fund's assets were transferred to the American Century High-Yield fund, a
series issued by the American Century Investment Trust, on July 1, 2002.

Unified Management Fees (Advisor Class and Institutional Class)

Fund 2001 2000 1999
- ---- ---- ---- ----
Growth
Advisor $201,692 $149,577 $70,294
Institutional 627,513 212,927 8,214
Ultra
Advisor 3,481,936 3,157,451 1,351,217
Institutional 5,269,404 3,661,448 423,827
Select
Advisor 168,511 111,586 37,600
Institutional 1,726,156 1,578,151 137,485
Vista
Advisor 123,077 128,782 41,307
Institutional 438,762 246,228 1,048
Heritage
Advisor 18,536 12,566 8,268
Institutional 219,138 46,536 660
Balanced
Advisor 124,391 93,449 67,602
Institutional 154,486 76,113 N/A
Veedot
Institutional 145,476 36,251 N/A
Limited-Term Bond
Advisor 8,864(1) 13,788 5,538
Intermediate-Term Bond
Advisor 18,467(2) 16,915 21,941
Bond
Advisor 28,191(2) 20,068 10,937
High-Yield
Advisor N/A N/A N/A

1 The assets for this fund were transferred to the Short-Term Government fund on
December 3, 2001.

2 The assets for this fund were transferred to the Diversified Bond fund on
December 3, 2001.

Unified Management Fees (C Class)

Fund 2001(1) 2000 1999
- ---- ------- ---- ----
Growth N/A N/A N/A
Ultra 5 N/A N/A
Vista 14 N/A N/A
Heritage 8 N/A N/A

1 Fees accrued from class inception through October 31, 2001.

TRANSFER AGENT AND ADMINISTRATOR

American Century Services Corporation, 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
ACSC for these services.

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.

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, and 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.

OTHER SERVICE PROVIDERS

CUSTODIAN BANKS

J.P. Morgan Chase and Co., 770 Broadway, 10th Floor, New York, New York
10003-9598, 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 AUDITORS

Deloitte & Touche LLP is the independent auditor of the funds. The address of
Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas City, Missouri 64106. As
the independent auditor of the funds, Deloitte & Touche LLP provides 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.

BROKERAGE ALLOCATION

GROWTH, ULTRA, SELECT, VISTA, HERITAGE, TAX-MANAGED VALUE, GIFTRUST, NEW
OPPORTUNITIES, NEW OPPORTUNITIES II, VEEDOT 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, 2001, 2000 and 1999, the brokerage commissions of
each fund were:

Fund 2002 2001 2000
- ---- ---- ---- ----
Growth $XX $12,572,889 $9,949,477
Ultra $XX $39,761,395 $22,096,395
Select $XX $10,237,183 $6,782,094
Vista $XX $9,833,296 $4,205,307
Heritage $XX $4,214,257 $2,949,237
Balanced $XX $655,072 $493,080
Tax-Managed Value $XX $42,231 $39,005
Giftrust $XX $2,935,931 $1,087,217
New Opportunities $XX $1,181,493 $464,626
New Opportunities II $XX $35,650 N/A
Veedot $XX $2,774,001 $1,095,419

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.

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). During the fiscal years ended
October 31, 2001, 2000, and 1999, the funds did not pay any brokerage
commissions.

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.

In the event of complete liquidation or dissolution of the funds, shareholders
of each series or class of shares will be entitled to receive, pro rata, all of
the assets less the liabilities of that series or class.

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 six classes of shares: Investor
Class, Institutional Class, A Class, B Class, C Class and Advisor Class. Not all
funds offer all six 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 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 total
management fee is the same as for Investor Class, but the A, B and C Class
shares each are subject to a separate Master Distribution and Individual
Shareholder Services Plan (the A Class Plan, B Class Plan and C 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 and Advisor Classes have
approved and entered into the A Class Plan, B Class Plan, C 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 Plan would benefit the funds and
the shareholders of the affected class. 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
Rules of Fair Practice 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.

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 Advisor, as paying agent for the fund, a fee equal to 0.25%
annually of the average daily net asset value of the A Class shares. The A Class
had not been offered as of October 31, 2002, and therefore no fees have been
paid.

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;

(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 Rules of Fair Practice 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 Advisor, as paying agent for the fund, a fee equal to 1.00%
annually of the average daily net asset value of the B Class shares. The B Class
had not been offered as of October 31, 2002, and therefore no fees have been
paid.

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;