PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No.
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(Check appropriate box or boxes)
Exact Name of Registrant as Specified in Charter: Area Code and
Telephone Number:
AMERICAN CENTURY MUTUAL FUNDS, INC. (816) 531-5575
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Address of Principal Executive Offices: (Number, Street, City, State, Zip Code)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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Name and Address of Agent for Service: (Number, Street, City, State, Zip Code)
DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111
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Approximate Date of Proposed Public Offering: November 13, 2006
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Title of Securities Being Registered:
NEW OPPORTUNITIES II FUND
Calculation of Registration Fee under the Securities Act of 1933: No filing fee
is due because of reliance on Section 24(f).
KOPP FUNDS, INC.
Kopp Emerging Growth Fund
Kopp Total Quality Management Fund
Dear Fellow Shareholder:
Kopp Emerging Growth Fund and Kopp Total Quality Management Fund (collectively,
"Kopp Funds") will hold a Special Meeting of Shareholders (the "Meeting") on
January 12, 2007, at 10:00 a.m., Central Time, at 7701 France Avenue South,
Suite 500, Edina, Minnesota. If you are a shareholder of record in Kopp Funds as
of the close of business on November 13, 2006, you are entitled to vote at the
Meeting. The shareholders of each Kopp Fund will vote separately on a proposal
to approve an Agreement and Plan of Reorganization that provides for the
reorganization of each Kopp Fund into a mutual fund advised by American Century
Investment Management, Inc. (the "Reorganizations"). If shareholders approve the
Reorganizations, you will receive shares of the corresponding American Century
fund in exchange for shares of your Kopp Fund.
American Century is a highly regarded investment manager that I believe shares
many of the same investing, cultural and business values as Kopp Investment
Advisors. The reorganization of the Kopp Funds into the American Century funds
should provide a number of benefits for Kopp shareholders including:
o A parent company focused primarily on the mutual fund business.
o Proven performance from a seasoned growth investor.
o Broader product choices and award winning services.
In recent years, it has been increasingly difficult for small fund groups to
thrive. Many funds have determined that consolidation is in their shareholders'
best interest. I believe that heightened regulatory and compliance burdens along
with aggressive industry competition require the scale of a larger firm like
American Century.
Shareholders of Kopp Emerging Growth Fund will also be asked to approve a new
subadvisory agreement (the "Subadvisory Agreement") between American Century and
Kopp Investment Advisors in order to assist in transitioning that fund's
portfolio prior to the Reorganization.
The accompanying combined Proxy Statement and Prospectus includes a detailed
description of the Reorganizations and compares, among other things, the
investment objectives and policies, operating expenses and performance history
of the Kopp Funds and the corresponding American Century funds into which the
Kopp Funds are proposed to be reorganized. The combined Proxy Statement and
Prospectus also contains additional information on the proposed subadvisory
agreement between American Century and Kopp Investment Advisors. Please read the
enclosed materials carefully and cast your vote. Shareholder approval of both
Reorganizations is a condition for the consummation of either Reorganization.
THE BOARD OF DIRECTORS OF KOPP FUNDS, INCLUDING ALL OF THE INDEPENDENT
DIRECTORS, UNANIMOUSLY APPROVED AND RECOMMENDS THAT YOU VOTE FOR THE
REORGANIZATIONS AND FOR THE SUBADVISORY AGREEMENT.
YOUR VOTE IS EXTREMELY IMPORTANT, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS.
Please take a moment after reviewing the enclosed materials to sign and return
your proxy card in the enclosed postage-paid return envelope. If you attend the
Meeting, you may vote in person. You may also vote by telephone or through a
website established for that purpose. If we do not hear from you after a
reasonable time, you may receive a call from our proxy solicitor, Automatic Data
Processing, Inc. (ADP), reminding you to vote.
On behalf of Kopp Investment Advisors, we are proud to have had the opportunity
to serve Kopp Funds since 1997.
Best regards,
LeRoy C. Kopp
Chairman, CEO and President
KOPP FUNDS, INC.
Kopp Emerging Growth Fund
Kopp Total Quality Management Fund
7701 FRANCE AVENUE SOUTH, SUITE 500
EDINA, MINNESOTA 55435
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 12, 2007
To Our Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Meeting") of
Kopp Emerging Growth Fund and Kopp Total Quality Management Fund will be held at
7701 France Avenue South, Suite 500, Edina, Minnesota on January 12, 2007, at
10:00 a.m., Central Time, for the following purposes:
For shareholders of Kopp Total Quality Management Fund ("Kopp TQM Fund"):
1. To approve or disapprove a proposed Agreement and Plan of Reorganization (the
"Plan of Reorganization") providing for (i) the transfer of Kopp TQM Fund's
assets to the American Century Equity Growth Fund ("AC Equity Growth Fund"), a
series of American Century Quantitative Equity Funds, Inc., solely in exchange
for newly issued shares of capital stock of AC Equity Growth Fund, and (ii) the
subsequent distribution by Kopp TQM Fund of such shares to its shareholders in
liquidation of Kopp TQM Fund. A vote in favor of this proposal will constitute a
vote in favor of the termination of Kopp TQM Fund as a series of Kopp Funds,
Inc.
For shareholders of Kopp Emerging Growth Fund ("Kopp Emerging Growth Fund"):
1. To approve or disapprove a proposed Agreement and Plan of Reorganization (the
"Plan of Reorganization") providing for (i) the transfer of Kopp Emerging Growth
Fund's assets to the American Century New Opportunities II Fund ("AC New
Opportunities II Fund"), a series of American Century Mutual Funds, Inc., solely
in exchange for newly issued shares of capital stock of AC New Opportunities II
Fund, and (ii) the subsequent distribution by Kopp Emerging Growth Fund of such
shares to its shareholders in liquidation of Kopp Emerging Growth Fund. A vote
in favor of this proposal will constitute a vote in favor of the termination of
Kopp Emerging Growth Fund as a series of Kopp Funds, Inc.; and
2. To approve or disapprove a new subadvisory agreement between American Century
Investment Management, Inc. and Kopp Investment Advisors, LLC to take effect
upon shareholder approval of the subadvisory agreement and the Emerging Growth
Reorganization.
For shareholders of both Kopp Funds:
1. To transact such other business as properly may come before the Meeting or
any adjournment or postponement thereof.
The Board of Directors of Kopp Funds, Inc. (the "Kopp Board") has fixed the
close of business on November 13, 2006, as the record date for the determination
of shareholders entitled to notice of, and to vote at, the Meeting or any
adjournment thereof.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. SHAREHOLDERS ARE REQUESTED AND
ENCOURAGED TO COMPLETE, DATE AND SIGN EACH ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED FOR THAT PURPOSE. ALTERNATIVELY,
TO VOTE VIA TELEPHONE OR THE INTERNET, PLEASE REFER TO THE ENCLOSED PROXY CARD.
IF YOU INTEND TO ATTEND THE MEETING IN PERSON, YOU MAY REGISTER YOUR PRESENCE
WITH THE REGISTRAR AND VOTE YOUR SHARES IN PERSON, EVEN IF YOU HAVE PREVIOUSLY
VOTED YOUR SHARES BY PROXY.
If you properly execute and return the enclosed proxy card in time to be voted
at the Meeting, your shares represented by the proxy will be voted at the
Meeting in accordance with your instructions. Unless revoked, proxies that have
been returned by shareholders without instructions will be voted in favor of the
Reorganizations and the Subadvisory Agreement.
Each of the enclosed proxies is being solicited on behalf of the Kopp Board.
THE KOPP BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF KOPP EMERGING
GROWTH FUND AND KOPP TQM FUND VOTE FOR THE REORGANIZATIONS, AND THAT THE
SHAREHOLDERS OF KOPP EMERGING GROWTH FUND VOTE FOR THE SUBADVISORY AGREEMENT.
By Order of the Board of Directors of Kopp Funds, Inc.,
John P. Flakne
SECRETARY, KOPP FUNDS, INC.
KOPP FUNDS, INC.
KOPP EMERGING GROWTH FUND
KOPP TOTAL QUALITY MANAGEMENT FUND
IMPORTANT NEWS FOR SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement/Prospectus, here is a brief overview of the proposals you will be
asked to vote on. This Q&A is qualified in its entirety by reference to the more
complete information contained elsewhere in the Proxy Statement/Prospectus.
QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. The enclosed Proxy Statement/Prospectus describes proposals to approve
Agreements and Plans of Reorganization that would result in the tax-free
reorganization of each of Kopp Emerging Growth Fund and Kopp Total Quality
Management Fund (the "Kopp Funds") into an American Century fund.
Q. WHAT ARE THE REORGANIZATIONS?
A. Under the Agreements and Plans of Reorganization, each Kopp Fund would be
combined with a comparable American Century fund (each, a "Reorganization" and
collectively, the "Reorganizations"). The following table outlines the proposed
Reorganizations and shows the class of shares of AC New Opportunities II Fund
and AC Equity Growth Fund (collectively, the "American Century Funds") that
shareholders of Kopp Emerging Growth Fund and Kopp TQM Fund, respectively, will
receive if the Reorganizations are approved:
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IF YOU OWN SHARES IN: YOU WILL RECEIVE SHARES OF:
-------------------------------------- ------------------------------------------
Kopp Emerging Growth Fund American Century New Opportunities II Fund
Class A shares-------------------->> Class A shares
Class C shares-------------------->> Class C shares
Class I shares-------------------->> Investor Class shares
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Kopp Total Quality Management Fund American Century Equity Growth Fund
Class A shares-------------------->> Advisor Class shares
Class C shares-------------------->> Class C Shares
Class I shares ------------------->> Investor Class shares
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Q. WHO WILL MANAGE MY FUND AFTER THE REORGANIZATIONS?
A. American Century Investment Management, Inc. is the investment adviser to
each of the American Century Funds into which the Kopp Funds are proposed to be
combined.
Q. HOW WILL THE REORGANIZATIONS WORK?
A. The reorganization of each Kopp Fund into the corresponding American Century
Fund, as described in the Agreements and Plans of Reorganization, will involve
the following:
o the transfer of all of the assets of the Kopp Fund to the
corresponding American Century Fund in exchange for shares of the
corresponding American Century Fund having equivalent value to the net
assets transferred;
o the pro rata distribution of shares of the corresponding class of the
American Century Fund to the shareholders of record of the Kopp Funds;
and
o the termination of each Kopp Fund and of Kopp Funds, Inc. following
the Reorganizations.
Q. WILL I HAVE TO PAY ANY FRONT-END SALES CHARGES ON SHARES RECEIVED IN THE
REORGANIZATIONS?
A. No. You will not have to pay any front-end sales charge on any shares of an
American Century Fund received as part of the Reorganizations. Shareholders will
be subject to any applicable front-end sales charge on any subsequent purchases
into an American Century Fund. If you own Class C shares of the Kopp Funds, and
therefore receive Class C shares of the corresponding American Century Fund,
American Century will honor the holding period of your Kopp Fund Class C shares
for purposes of calculating the date for assessing any contingent deferred sales
charges.
Neither the Investor Class nor the Advisor Class of the American Century Funds
charge a front-end sales charge (load) or contingent deferred sales charge. (For
more information about those classes of shares, including fees and expenses, see
"SUMMARY- Purchase, Redemption and Exchange of Shares; Dividends and
Distributions" in the Proxy Statement/Prospectus.)
Q. WILL THE INVESTMENT OBJECTIVE OR INVESTMENT POLICIES OF MY FUND CHANGE IN
CONNECTION WITH THE REORGANIZATIONS?
A. Yes. However, the investment objectives and policies of the American Century
Funds are similar to the investment objectives and policies of the corresponding
Kopp Funds. (For more information about the differences in investment objectives
and policies, see "SUMMARY- Comparison of Investment Objectives and Policies" in
the Proxy Statement/Prospectus.)
Q. HOW WILL THE REORGANIZATIONS AFFECT MY ACCOUNT?
A. If the shareholders of each Kopp Fund approve the Reorganizations, each Kopp
Fund will exchange its assets for shares of the corresponding American Century
Fund of equivalent value. Each Kopp Fund's assets will be valued using the
procedures used to calculate the corresponding American Century Fund's net asset
value on the exchange date. You will receive the same percentage of the newly
issued American Century Fund shares as the shares owned in your Kopp Fund.
American Century's valuation procedures are comparable in many respects to those
used by the Kopp Funds. To the extent any differences result, American Century
and Kopp Investment Advisors, LLC, the investment adviser to the Kopp Funds,
believe any impact to shareholders will be minimal.
Q. WILL THE REORGANIZATIONS BE TAX-FREE?
A. Yes. A tax opinion from Reed Smith LLP to the effect that the exchange of
Kopp Fund shares for American Century Fund shares qualifies as a tax-free
exchange under section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), must be received as a condition to the closing of the
Reorganizations. This means that you should not recognize any gain or loss for
federal income tax purposes when your Kopp Fund shares are exchanged for shares
of the corresponding American Century Fund. In addition, the holding period of
your Kopp Fund shares should carry over to the American Century Fund shares
received in the exchange. You may wish to consult with your own tax advisor.
(For more information, see "INFORMATION ABOUT THE TRANSACTION- Federal Income
Tax Consequences of the Reorganizations" in the Proxy Statement/Prospectus.)
Q. WHY ARE SHAREHOLDERS OF KOPP EMERGING GROWTH FUND BEING ASKED TO APPROVE A
NEW SUBADVISORY AGREEMENT WITH AMERICAN CENTURY?
A. It is proposed that American Century serve as a subadvisor to Kopp Emerging
Growth Fund during the period from the shareholder meeting until the closing of
the Reorganizations. During this time, Kopp Investment Advisors, LLC and
American Century will cooperate to manage the portfolio in preparation for the
Reorganization. American Century currently serves as the advisor for AC New
Opportunities II Fund. The approval of the subadvisory agreement is a condition
to the closing of the Reorganizations. (For more information regarding the
management of Kopp Emerging Growth Fund during the transition period, see
"SUMMARY- Proposal Regarding Approval of Subadvisory Agreement for Kopp Emerging
Growth Fund" in the Proxy Statement/Prospectus.)
Q. HOW DOES THE BOARD OF DIRECTORS OF THE KOPP FUNDS RECOMMEND THAT I VOTE?
A. The Board of Directors of Kopp Funds, Inc., including all of the Independent
Directors, unanimously recommends that you vote FOR the Reorganizations and FOR
the Subadvisory Agreement. (For a discussion of the factors the Kopp Board
considered in approving the Agreements and Plans of Reorganization and
Subadvisory Agreement, see "INFORMATION ABOUT THE TRANSACTION- Reasons for the
Reorganizations" and "SUMMARY- Proposal Regarding Approval of Subadvisory
Agreement for Kopp Emerging Growth Fund" in the Proxy Statement/Prospectus.)
Q. MY HOLDINGS IN THE KOPP FUNDS ARE SMALL. WHY SHOULD I VOTE?
A. Your vote makes a difference. If many small shareholders like you fail to
vote their proxies, your Kopp Fund may not receive enough votes to go forward
with the Special Meeting of Shareholders and additional costs will be incurred
to solicit additional proxies.
Q. WHAT HAPPENS IF ANY OF THE REORGANIZATIONS ARE NOT APPROVED BY SHAREHOLDERS?
A. Each Reorganization is a separate transaction, but is dependent upon the
other Reorganization being approved by shareholders. If either Reorganization
fails to receive the required shareholder approval, the American Century Funds
and the Kopp Funds have the option not to consummate any of the Reorganizations.
Q. WHO GETS TO VOTE?
A. If you owned shares of a Kopp Fund at the close of business on November 13,
2006, you are entitled to vote with respect to your Fund, even if you later sold
the shares. Each share of a Kopp Fund is entitled to one vote, with fractional
shares voting proportionally.
Q. WHY ARE MULTIPLE PROXY CARDS ENCLOSED?
A. If you are a shareholder of both Kopp Funds, you will receive a proxy card
for each of the Kopp Funds. In addition, if you have shares of the same Fund
registered differently, you will receive a proxy card for each registration.
Q. HOW DO I CAST MY VOTE?
A. You may cast your vote by mail by returning the enclosed proxy card, by
calling or by voting online. If you need more information or have any questions
on how to cast your vote, call 1-877-256-6083. If you have any questions on the
proposals, please call your financial representative or the Kopp Funds at
1-888-533-KOPP.
YOUR VOTE IS IMPORTANT. PLEASE VOTE PROMPTLY TO AVOID THE ADDITIONAL EXPENSE OF
ANOTHER SOLICITATION.
COMBINED PROXY STATEMENT AND PROSPECTUS
November __, 2006
REORGANIZATION OF
KOPP EMERGING GROWTH FUND AND
KOPP TOTAL QUALITY MANAGEMENT FUND
EACH, A SERIES OF KOPP FUNDS, INC.
(COLLECTIVELY, THE "KOPP FUNDS")
7701 France Avenue South, Suite 500
Edina, Minnesota, 55435
Telephone No.: 1-888-533-KOPP
IN EXCHANGE FOR SHARES OF
AMERICAN CENTURY NEW OPPORTUNITIES II FUND
A SERIES OF AMERICAN CENTURY MUTUAL FUNDS, INC.
AND
AMERICAN CENTURY EQUITY GROWTH FUND
A SERIES OF AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, INC.
(COLLECTIVELY, THE "AMERICAN CENTURY FUNDS")
4500 Main Street
Kansas City, Missouri 64111
Telephone No.: 1-877-345-8836
This document is a combined Proxy Statement and Prospectus and we refer to it as
the Proxy Statement/Prospectus. We are sending you this Proxy
Statement/Prospectus in connection with the Special Meeting of Shareholders (the
"Meeting") for Kopp Emerging Growth Fund ("Kopp Emerging Growth Fund") and Kopp
Total Quality Management Fund ("Kopp TQM Fund"). The Meeting will be held on
January 12, 2007, at 10:00 a.m., Central Time. We intend to mail this Proxy
Statement/Prospectus, the enclosed Notice of a Special Meeting of Shareholders
and the enclosed proxy cards on or about November 17, 2006, to all shareholders
entitled to vote at the Meeting. At the Meeting, we are asking shareholders of
the Kopp Funds to consider the following proposals:
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Proposal 1: Shareholders of Kopp TQM Fund will be asked to approve a
reorganization of Kopp TQM Fund into American Century Equity Growth Fund ("AC
Equity Growth Fund"), a series of American Century Quantitative Equity Funds,
Inc.
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Proposal 2: Shareholders of Kopp Emerging Growth Fund will be asked to approve a
reorganization of Kopp Emerging Growth Fund into American Century New
Opportunities II Fund ("AC New Opportunities II Fund"), a series of American
Century Mutual Funds, Inc. (each, a "Reorganization" and collectively, the
"Reorganizations").
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Proposal 3: Shareholders of Kopp Emerging Growth Fund also will be asked to
approve a subadvisory agreement between American Century Investment Management,
Inc. and Kopp Investment Advisors, LLC.
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Under the Agreements and Plans of Reorganization (the "Plans of
Reorganization"), all of the assets of the Kopp Funds will be transferred to the
corresponding American Century Funds and the corresponding American Century
Funds will issue shares that will be distributed pro rata to Kopp Fund
shareholders. If the Reorganizations are approved by shareholders, it is
anticipated that shareholders of the Kopp Funds will receive shares in the
corresponding American Century Funds on or about February 26, 2007.
Your Board of Directors is seeking your proxy to vote FOR this proposal.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The investment objectives of AC New Opportunities II Fund and AC Equity Growth
Fund are both to seek long-term capital growth. The investment objectives of
Kopp Emerging Growth Fund and Kopp TQM Fund are both to seek long-term capital
appreciation. For a comparison of the investment policies of the American
Century Funds and the Kopp Funds, see "SUMMARY- Comparison of Investment
Objectives and Policies." Information concerning the Class A, C and I Shares of
Kopp Emerging Growth Fund, as compared to the Class A, C and Investor Class
Shares of the AC New Opportunities II Fund, and of the Class A, C and I Shares
of Kopp TQM Fund, as compared to the Advisor, C and Investor Class Shares of the
AC Equity Growth Fund, are included in this Proxy Statement/Prospectus in the
sections entitled " SUMMARY- Comparative Fee Tables" and " INFORMATION ABOUT THE
TRANSACTION- Description of Fund Shares and Capitalization."
This Proxy Statement/Prospectus is a proxy statement of the Kopp Funds in
connection with the solicitation of your proxy to vote your shares at the
Meeting, and serves as a prospectus for each American Century Fund under the
Securities Act of 1933, as amended (the "Securities Act"), in connection with
the issuance of shares to you pursuant to the terms of the Reorganizations.
This Proxy Statement/Prospectus sets forth concisely the information about the
American Century Funds that you should know before considering the
Reorganizations, and should be retained for future reference. If you are a
shareholder of Kopp TQM Fund this Proxy Statement/Prospectus is accompanied by
the Prospectus for the AC Equity Growth Fund, dated May 1, 2006, as supplemented
August 1, 2006. If you are a shareholder of Kopp Emerging Growth Fund this Proxy
Statement/Prospectus is accompanied by the Prospectus for the AC New
Opportunities II Fund, dated March 1, 2006, as supplemented May 1, 2006, June
30, 2006 and August 1, 2006. The Statement of Additional Information, dated
November __, 2006, relating to this Proxy Statement/Prospectus, contains
additional information and has been filed by American Century Quantitative
Equity Funds, Inc. and American Century Mutual Funds, Inc. with the Securities
and Exchange Commission ("SEC") and is incorporated herein by reference. In
addition, each of the following documents is incorporated by reference (and
legally considered to be part of the Proxy Statement/Prospectus):
1. A Statement of Additional Information for AC New Opportunities II Fund
dated May 1, 2006, as supplemented on June 1, 2006 and August 1, 2006;
2. A Statement of Additional Information for AC Equity Growth Fund dated
May 1, 2006, as supplemented on August 1, 2006;
3. A Prospectus for Kopp Emerging Growth Fund dated January 30, 2006, as
supplemented on September 13, 2006;
4. A Prospectus for Kopp TQM Fund dated January 30, 2006, as supplemented
on September 13, 2006;
5. A Combined Statement of Additional Information for Kopp Emerging
Growth Fund and Kopp TQM Fund dated January 30, 2006, as supplemented
on September 13, 2006;
6. An Annual Report dated October 31, 2005 and a Semi-Annual Report dated
April 30, 2006 for AC New Opportunities II Fund;
7. An Annual Report dated December 31, 2005 and a Semi-Annual Report
dated June 30, 2006 for AC Equity Growth Fund;
8. An Annual Report for the year ended September 30, 2005 and a
Semi-Annual Report for the period ended March 31, 2006 for Kopp
Emerging Growth Fund;
9. An Annual Report for the year ended September 30, 2005 and a
Semi-Annual Report for the period ended March 31, 2006 for Kopp TQM
Fund.
Copies of these materials and other information about the American Century Funds
and Kopp Funds may be obtained without charge by writing to the addresses below
or by calling the telephone numbers listed as follows:
If they relate to the American Century Funds: If they relate to the Kopp Funds:
4500 Main Street 7701 France Avenue South, Suite 500
Kansas City, MO 64111-7709 Edina, Minnesota, 55435
1-877-345-8836 Telephone No: 1-888-533-KOPP
HTTP://WWW.AMERICANCENTURY.COM HTTP://WWW.KOPPFUNDS.COM
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS
AND IN THE MATERIALS EXPRESSLY INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE KOPP FUNDS OR THE AMERICAN CENTURY FUNDS.
THE SHARES OFFERED BY THIS PROXY STATEMENT/PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THESE SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENT IN THESE SHARES
INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
TABLE OF CONTENTS
PAGE
SUMMARY
Introduction
Proposals with Respect to Approval of the Agreements and
Plans of Reorganization
Reasons for the Reorganizations
Closing Date
Other Considerations
Purchase, Redemption and Exchange of Shares; Dividends and Distributions
Calculation of Sales Charges - AC New Opportunities II Fund
Primary Tax Consequences
Valuation Policies and Share Price - American Century Funds
Abusive Trading Practices and Policies and
Procedures - American Century Funds
Portfolio Holdings Information
Comparison of Investment Objectives and Policies
Comparison of AC Equity Growth Fund and Kopp TQM Fund
Comparison of AC New Opportunities II Fund
and Kopp Emerging Growth Fund
American Century's Unified Fee Structure
Comparative Fee Tables
Fund Performance History
Investment Advisors
Advisory and Other Fees
Other Service Providers
Service, Distribution and Administrative Fees
Financial Highlights
Portfolio Managers
Principal Risk Factors
Proposal Regarding Approval of Subadvisory Agreement for
Kopp Emerging Growth Fund
Purpose of the Subadvisory Relationship
Effects of Portfolio Transition
Material Provisions of the Subadvisory Agreement
Kopp Board Considerations in Approving Subadvisory Agreement
Background
Additional Information Regarding KIA and American Century
INFORMATION ABOUT THE TRANSACTION
Terms of the Plans of Reorganization
Reasons for the Reorganizations
Transaction Agreement by and Among American Century
Investment Management, Inc., Kopp Investment Advisors, LLC
and Kopp Holding Company
Benefits to American Century
Federal Income Tax Consequences of the Reorganizations
Material Differences between Rights of Shareholders
Description of Fund Shares and Capitalization
INFORMATION ABOUT THE AMERICAN CENTURY FUNDS
INFORMATION ABOUT THE KOPP FUNDS
VOTING INFORMATION
General Information
Date, Time and Place of Meeting
Use and Revocation of Proxies
Voting Rights and Required Vote
Record Date and Outstanding Shares
Security Ownership of Certain Beneficial Owners and Management of the Funds
OTHER MATTERS
FORM OF AGREEMENT AND PLAN OF REORGANIZATION EXHIBIT A
FORM OF INVESTMENT SUBADVISORY AGREEMENT EXHIBIT B
SUMMARY OF INVESTMENT LIMITATIONS EXHIBIT C
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE EXHIBIT D
FINANCIAL INFORMATION EXHIBIT E
SUMMARY
This summary is qualified in its entirety by reference to the additional
information contained elsewhere in this Proxy Statement/Prospectus, or
incorporated by reference in this Proxy Statement/Prospectus. A form of the
Plans of Reorganization pursuant to which the Reorganizations will be conducted
is attached to this Proxy Statement/Prospectus as Exhibit A. The Prospectus of
the applicable American Century Fund also accompanies this Proxy
Statement/Prospectus. A form of the proposed subadvisory agreement between
American Century Investment Management, Inc. ("American Century") and Kopp
Investment Advisors, LLC ("KIA") is attached to this Proxy Statement/Prospectus
as Exhibit B.
INTRODUCTION
This Proxy Statement/Prospectus is furnished to you because you are
entitled to vote at the Special Meeting of Shareholders of Kopp TQM Fund and
Kopp Emerging Growth Fund. The Meeting will be held on January 12, 2007, to
consider the proposals described in this Proxy Statement/Prospectus.
It is being proposed that the AC Equity Growth Fund acquire all of the
assets of Kopp TQM Fund, in exchange for Advisor, C and Investor Class Shares of
the AC Equity Growth Fund (the "Equity Growth Exchange"). Immediately following
the Equity Growth Exchange, Kopp TQM Fund will distribute the Advisor Class,
Class C and Investor Class Shares of the AC Equity Growth Fund to holders of the
Class A, Class C and Class I shares of Kopp TQM Fund, respectively (the "TQM
Distribution"). The Equity Growth Exchange and the TQM Distribution are
collectively referred to in this Proxy Statement/Prospectus as the "TQM
Reorganization." As a result of the TQM Reorganization, each holder of Class A,
Class C and Class I Shares of Kopp TQM Fund will receive the same percentage of
the aggregate number of Advisor Class, Class C and Investor Class Shares,
respectively, of AC Equity Growth Fund issued in the TQM Reorganization as he or
she owned in Kopp TQM Fund on the Closing Date (as hereinafter defined).
It is also being proposed that the AC New Opportunities II Fund acquire all
of the assets of Kopp Emerging Growth Fund, in exchange for Class A, Class C and
Investor Class Shares of the AC New Opportunities II Fund (the "New
Opportunities II Exchange"). Immediately following the New Opportunities II
Exchange, Kopp Emerging Growth Fund will distribute the Class A, Class C and
Investor Class Shares of the AC New Opportunities II Fund to holders of the
Class A, Class C and Class I shares of Kopp Emerging Growth Fund, respectively
(the "Kopp Emerging Growth Distribution"). The New Opportunities II Exchange and
the Kopp Emerging Growth Distribution are collectively referred to in this Proxy
Statement/Prospectus as the "Emerging Growth Reorganization" and the TQM
Reorganization and the Emerging Growth Reorganization are hereafter collectively
referred to as the "Reorganizations." As a result of the Emerging Growth
Reorganization, each holder of Class A, Class C and Class I Shares of Kopp
Emerging Growth Fund will receive the same percentage of the aggregate number of
Class A, Class C and Investor Class Shares, respectively, of AC New
Opportunities II Fund issued in the Emerging Growth Reorganization as he or she
owned in Kopp Emerging Growth Fund on the Closing Date (as hereinafter defined).
Shareholders of Kopp Emerging Growth Fund will also be asked to approve a
new subadvisory agreement between American Century and KIA (the "Subadvisory
Agreement"). The Subadvisory Agreement will take effect upon approval of the
Subadvisory Agreement and the Emerging Growth Reorganization by shareholders of
Kopp Emerging Growth Fund. American Century will not receive any compensation
for the services provided under the Subadvisory Agreement.
PROPOSALS WITH RESPECT TO APPROVAL OF THE AGREEMENTS AND PLANS OF REORGANIZATION
REASONS FOR THE REORGANIZATIONS
In August 2006, KIA informed the Board of Directors of Kopp Funds, Inc.
("Kopp Board") of its desire to exit the retail mutual fund business and that it
had engaged in discussions with American Century regarding the potential
reorganization of the Kopp Funds. The discussions with American Century were
part of a strategic initiative to allow KIA to exit the mutual fund business
while simultaneously providing benefits to shareholders of the Kopp Funds.
Shareholders of the Kopp Funds may benefit from the proposed transaction because
American Century's existing mutual fund business, when combined with the Kopp
Funds, would potentially result in lower management fees to Kopp Fund
shareholders, increase the likelihood of asset growth through increased
distribution capabilities, offer more investment choices, provide the
opportunity for solid investment performance and greater diversification of
investment portfolios.
On August 30, 2006, the Kopp Board unanimously approved the
Reorganizations, subject to shareholder approval. The Kopp Board, including all
of the Kopp Independent Directors (as defined below), determined that the
Reorganizations are in the best interests of each of the Kopp Funds and their
shareholders. In addition, the Kopp Board, including all of the Kopp Independent
Directors, determined that the interests of existing shareholders of each Kopp
Fund will not be diluted as a result of effecting the Reorganizations. The "Kopp
Independent Directors" are the directors who are not "interested persons" of KIA
(within the meaning of the Investment Company Act of 1940 (the "1940 Act")).
In determining whether to approve the Reorganizations and to recommend
approval of the Reorganizations to shareholders of the Kopp Funds, the Kopp
Board made inquiries into all matters deemed relevant and considered the
following, among other things:
o The reputation, financial strength and resources of American Century;
o The capabilities, practices and resources of American Century's
management and the other service providers to the American Century
family of funds;
o The viability of the Kopp Funds absent approval of the proposed
Reorganizations;
o The broader product array of the American Century family of funds, and
the expanded range of investment options and exchange opportunities
available to shareholders;
o The shareholder services offered by American Century;
o The relative compatibility of investment objectives and principal
investment policies of the American Century Funds with those of the
Kopp Funds;
o The federal income tax treatment of the Reorganizations;
o The anticipated effect of the Reorganizations on expense ratios;
o The investment management experience of American Century; and
o The undertaking by KIA and American Century to share equally all the
costs and expenses of preparing, printing, and mailing this Proxy
Statement/Prospectus and related expenses of the Reorganizations.
CLOSING DATE
If all of the requisite approvals are obtained and certain conditions are
either met or waived, it is anticipated that the Reorganizations will be
consummated at the close of business on February 23, 2007 (the "Closing Date")
and that shareholders of the Kopp Funds will receive shares in the corresponding
American Century Funds on or about February 26, 2007.
OTHER CONSIDERATIONS
The parties have agreed to cooperate to facilitate the orderly
reorganization of the Kopp Funds into the American Century Funds and to reduce
potential adverse consequences to the American Century Funds. It is anticipated
that this transition will include the sale of certain portfolio securities of
the Kopp Funds prior to the Reorganizations. With respect to Kopp Emerging
Growth Fund, it is anticipated that all or substantially all of the fund's
portfolio will be transitioned. In this regard, it is proposed that American
Century be approved as a subadvisor for Kopp Emerging Growth Fund in order to
reinvest the fund's assets in a manner consistent with the investment objectives
and policies of the AC New Opportunities II Fund prior to the Closing Date (See
"SUMMARY- Proposal Regarding Approval of Subadvisory Agreement for Kopp Emerging
Growth Fund" for further information). The anticipated purchase and sale of
portfolio securities in any such portfolio restructuring will result in
increased transaction costs to Kopp Emerging Growth Fund. The sale of securities
may result in the realization of capital gains by Kopp Emerging Growth Fund.
Given the significant unutilized capital losses retained by the fund, it is not
anticipated that the realization of any such gains will result in a distribution
to shareholders. For a more complete discussion of the tax consequences, see
"Federal Income Tax Consequences of the Reorganizations."
PURCHASE, REDEMPTION AND EXCHANGE OF SHARES; DIVIDENDS AND DISTRIBUTIONS
The following chart highlights certain purchase, redemption and exchange
features of the Kopp Funds as compared to such features of the American Century
Funds.
---------------------------------------- -------------------------------------- --------------------------------------
PURCHASE, REDEMPTION AND EXCHANGE KOPP TQM FUND AC EQUITY GROWTH FUND
FEATURES
---------------------------------------- -------------------------------------- --------------------------------------
Minimum Initial Investment Class A and Class C shares: For Advisor Class shares, Investor
* Non-retirement account: $5,000 Class shares and Class C shares:
* Retirement account: $2,000 * Coverdell Education Savings
* Coverdell Education Savings Account: $2,000
Accounts and "deemed" IRAs: * Financial Intermediaries: $250
$2,000 * Broker/Dealer sponsored
wrap program accounts and/or
Class I shares: $5 million fee based accounts: No minimum
* Employer-sponsored retirement
plans: No minimum
* All other accounts: $2,500
---------------------------------------- -------------------------------------- --------------------------------------
Minimum Subsequent Investments Class A and Class C shares: $100 or $50 minimum for subsequent
more purchases. There is no minimum for
subsequent purchases for financial
Class I shares: No minimum intermediaries.
---------------------------------------- -------------------------------------- --------------------------------------
Initial Sales Charge (as a percentage Class A shares: 3.50% is the maximum None
of offering price) sales charge applicable to Class A
shares (subject to the availability
of waivers and reduced sales charges)
Class C shares: None
Class I shares: None
---------------------------------------- -------------------------------------- --------------------------------------
Reductions and Waivers of Sales Charges Waivers for Certain Investors None
Rights of Accumulation
Letter of Intent
---------------------------------------- -------------------------------------- --------------------------------------
Contingent Deferred Sales Charge (CDSC) Class A shares: 1.00% may be imposed Advisor Class shares: None
on redemptions of certain Class A
shares which were purchased without Class C shares: 1.00% during the
a sales charge and redeemed within first year after purchase
24 months of purchase
Investor Class shares: None
Class C shares: 1.00% may be imposed
on redemptions of certain Class C
shares that are redeemed within 12
months of purchase
Class I shares: None
---------------------------------------- -------------------------------------- --------------------------------------
CDSC Waivers The CDSC on Class A and Class C Any applicable CDSC may be waived in
shares may be waived if, among other the following cases:
things:
- redemptions through systematic
- the redemption results from the withdrawal plans not exceeding
death or total and permanent annually 12% of the lesser of the
disability of the shareholder which original purchase cost or current
occurs after the purchase of the market value for Class C shares;
shares being redeemed;
- distributions from IRAs due to
- the selling broker-dealer elects attainment of age 59 1/2 for Class C
to waive receipt of a commission, if shares;
any, paid at the time of sale;
- required minimum distributions
- the redemption is a result of a from retirement accounts upon
forced redemption, a required reaching age 70 1/2;
minimum distribution or shareholder
activity fees (fed wire fees, - tax-free returns of excess
overnight fees, etc.); or contributions to IRAs;
- under special circumstances, the - redemptions due to death or
Fund reserves the right to waive any post-purchase disability;
CDSC fee.
- exchanges, unless the shares
acquired by exchange are redeemed
within the original CDSC period;
- if no broker was compensated for
the sale.
---------------------------------------- -------------------------------------- --------------------------------------
Redemption Fees Class A and Class C shares: 2.00% of None
the then current value of the shares
redeemed may be imposed on certain
redemptions of Class A and Class C
shares made within 30 days of
purchase. If you redeem shares by
wire, you will be charged a $15
service fee.
Class I shares: 2.00% of the then
current value of the shares redeemed
may be imposed on certain
redemptions of Class I shares made
within 24 months of purchase. If
you redeem shares by wire, you will
be charged a $15 service fee.
---------------------------------------- -------------------------------------- --------------------------------------
Purchases By mail, fax or automatically By telephone, mail or fax, online,
in person, or automatically
---------------------------------------- -------------------------------------- --------------------------------------
Redemptions By written request, telephone, or By telephone, mail or fax, online,
systematic withdrawal program in person, or automatically
---------------------------------------- -------------------------------------- --------------------------------------
Redemptions Policies The Fund will normally mail Reserves right to delay delivery of
redemption proceeds within one or redemption proceeds up to seven
two business days and, in any event, days. Any redemption request made
no later than seven days after within 15 days of an address change
receipt by its transfer agent of a may be required to be submitted in
redemption request provided in good writing with guaranteed signatures
order. of all authorized signers. If bank
information is changed a 15-day
The Fund may hold payment until holding period may be imposed before
investments that were made by check, the proceeds are wired to the bank.
telephone or pursuant to the
automatic investment program have There is a $10 charge for redemption
been collected (which may take up to requests made by a wire transfer.
12 calendar days from the initial
investment date). If, during any 90-day period, a
shareholder redeems fund shares
The Fund reserves the right to worth more than $250,000 (or 1% of
redeem in kind (i.e., in securities the value of the fund's assets, if
or assets other than cash) any that percentage is less than
redemption request or requests $250,000) then the Fund reserves the
during any 90-day period in excess right to pay part or all of the
of the lesser of (i) $250,000 or redemption proceeds in excess of
(ii) 1% of the net asset value of this amount in readily marketable
the class of shares being redeemed. securities instead of cash. Shareholders
can avoid being paid in securities
if they provide an unconditional
instruction to redeem at least 15 days
prior to the date on which the
redemption transaction is to occur.
---------------------------------------- -------------------------------------- --------------------------------------
Exchanges You may exchange Class A or Class C Shareholders of Class C shares of AC
shares of the Fund for Class I Equity Growth Fund may exchange
shares of the Fund so long as the their shares for Class C shares of
Class I minimum initial investment any other American Century fund.
requirement is met. You may not exchange from the Class
C shares to any other class.
Shareholders of the Kopp Funds may
also exchange shares of one series Shareholders of Advisor Class and
of the Kopp Funds for another. Any Investor Class shares of AC Equity
such exchange may be effected via Growth Fund may exchange their
telephone. You may also exchange shares for Advisor Class shares and
shares of the Funds for shares of Investor Class Shares, respectively,
First American Prime Obligations of any other American Century Fund.
Fund, a no-load money market fund
managed by an affiliate of the
Fund's transfer agent.
---------------------------------------- -------------------------------------- --------------------------------------
Dividends and Distributions Distributions of investment company Distributions by the fund generally
taxable income and net capital consist of dividends and interest
gains, if any, are usually made in received by the fund, as well as
November or December. capital gains realized by the fund
on the sale of investment securities.
Shareholders will be informed
annually as to the amount and nature Substantially all of the fund's
of all distributions paid during the income is distributed quarterly to
prior year. Because of the fund's shareholders. Distributions from
investment objective, the fund realized capital gains are paid
expects that its distributions will twice a year, usually in March and
consist primarily of long-term December. The fund may make more
capital gains. frequent distributions, if
necessary, to comply with provisions
All distributions of investment of the Internal Revenue Code.
company taxable income and net
capital gains will automatically be Distributions are reinvested
reinvested in additional fund shares automatically in additional shares
unless a shareholder specifically unless a different option is chosen,
request that distributions be paid except that shareholders in a
in cash. tax-deferred retirement account must
reinvest all distributions.
A shareholder will participate in
fund distributions, when they are
declared, starting the next business
day after a shareholder's purchase
is effective.
---------------------------------------- -------------------------------------- --------------------------------------
------------------------------------- ----------------------------------------- -------------------------------------------
PURCHASE, REDEMPTION AND EXCHANGE KOPP EMERGING GROWTH FUND AC NEW OPPORTUNITIES II FUND
FEATURES
------------------------------------- ----------------------------------------- -------------------------------------------
Minimum Initial Investment Class A and Class C shares: For Class A, C and Investor Class
* Non-retirement account: $5,000 Shares:
* Retirement account: $2,000 * Coverdell Education Savings
* Coverdell Education Account: $2,000
Savings Accounts and * Financial Intermediaries: $250
"deemed" IRAs: $2,000 * Broker/Dealer sponsored wrap
program accounts and/or fee based
Class I shares: $5 million accounts: No minimum
* Employer-sponsored retirement
plans: No minimum
* All other accounts: $2,500
------------------------------------- ----------------------------------------- -------------------------------------------
Minimum Subsequent Investments Class A and Class C shares: $100 $50 minimum for subsequent purchases
or more
There is no minimum for subsequent purchases
Class I shares: No minimum for financial intermediaries.
------------------------------------- ----------------------------------------- -------------------------------------------
Initial Sales Charge (as a Class A shares: 3.50% is the Class A shares: 5.75%
percentage of offering price) maximum sales charge applicable
to Class A shares (subject to the Class C shares: None
availability of waivers and
reduced sales charges) Investor Class shares: None
Class C shares: None
Class I shares: None
------------------------------------- ----------------------------------------- -------------------------------------------
Reductions and Waivers of Sales Waivers for Certain Investors Shareholders and their spouses and
Charges children under 21 may combine investments
Rights of Accumulation to reduce their Class A sales charges in
the following ways:
Letter of Intent
Account Aggregation
Concurrent Purchases
Rights of Accumulation
Letter of Intent
Waivers for Certain Investors
------------------------------------- ----------------------------------------- -------------------------------------------
Contingent Deferred Sales Charge Class A shares: 1.00% may be Class A shares: Investments of $1 million
(CDSC) imposed on redemptions of certain or more in Class A shares may be
Class A shares which were purchased without a sales charge and are
purchased without a sales charge subject to a CDSC of 1.00% if the shares
and redeemed within 24 months of are redeemed within one year of the date
purchase of purchase
Class C shares: 1.00% may be Class C shares: 1.00% during the first
imposed on redemptions of certain year after purchase
Class C shares that are redeemed
within 12 months of purchase Investor Class shares: None
Class I shares: None
------------------------------------- ----------------------------------------- --------------------------------------------
CDSC Waivers The CDSC on Class A and Class C Any applicable CDSC may be waived in the
shares may be waived if, among following cases:
other things:
- redemptions through systematic
- the redemption results from the withdrawal plans not exceeding annually -
death or total and permanent 12% of the lesser of the original
disability of the shareholder purchase cost or current market value for
which occurs after the purchase Class A shares; 12% of the original
of the shares being redeemed; purchase cost for B Class shares; 12% of
the lesser of the original purchase cost
- the selling broker-dealer or current market value for Class C shares;
elects to waive receipt of a
commission, if any, paid at the - distributions from IRAs due to
time of sale; attainment of age 59 1/2 for Class A
shares and for Class C shares;
- the redemption is a result of a
forced redemption, a required - required minimum distributions from
minimum distribution or retirement accounts upon reaching age 70 1/2;
shareholder activity fees (fed
wire fees, overnight fees, etc.); - tax-free returns of excess
or contributions to IRAs;
- under special circumstances, - redemptions due to death or
the Fund reserves the right to post-purchase disability;
waive any CDSC fee.
- exchanges, unless the shares acquired
by exchange are redeemed within the
original CDSC period;
- IRA Rollovers from any American Century
Advisor Fund held in a qualified
retirement plan, for Class A shares only;
- if no broker was compensated for the
sale.
------------------------------------- ----------------------------------------- -------------------------------------------
Redemption Fees Class A and Class C shares: 2.00% Class A and Class C Shares: None
of the then current value of the
shares redeemed may be imposed on Investor Class Shares: While there is
certain redemptions of Class A currently no redemption fee charged by
and Class C shares made within 30 the fund, the Board of Directors has
days of purchase. If you redeem approved a redemption fee of 2.00% on
shares by wire, you will be shares redeemed within 180 days of
charged a $15 service fee. purchase. The redemption fee is
scheduled to take affect on or about
Class I shares: 2.00% of the then March 1, 2007, and will apply to shares
current value of the shares purchased on or after that date. The
redeemed may be imposed on redemption fee will not apply to shares
certain redemptions of Class I received as a result of the
shares made within 24 months of Reorganization.
purchase. If you redeem shares
by wire, you will be charged a
$15 service fee.
------------------------------------- ----------------------------------------- -------------------------------------------
Purchases By mail or fax or automatically By telephone, mail or fax, online, in
person, or automatically
------------------------------------- ----------------------------------------- -------------------------------------------
Redemptions By written request, telephone, or By telephone, mail or fax, online, in
systematic withdrawal program person, or automatically
------------------------------------- ----------------------------------------- -------------------------------------------
Redemption Policies The Fund will normally mail Reserves right to delay delivery of
redemption proceeds within one or redemption proceeds up to seven days.
two business days and, in any Any redemption request made within 15
event, no later than seven days days of an address change may be required
after receipt by its transfer to be submitted in writing with
agent of a redemption request guaranteed signatures of all authorized
provided in good order. signers. If bank information is changed
a 15-day holding period may be imposed
The Fund may hold payment until before the proceeds are wired to the bank.
investments that were made by
check, telephone or pursuant to There is a $10 charge for redemption
the automatic investment program requests made by a wire transfer.
have been collected (which may
take up to 12 calendar days from If, during any 90-day period, a
the initial investment date). shareholder redeems fund shares worth
more than $250,000 (or 1% of the value of
The Fund reserves the right to the fund's assets, if that percentage is
redeem in kind (i.e., in less than $250,000) then the fund
securities or assets other than reserves the right to pay part or all of
cash) any redemption request or the redemption proceeds in excess of this
requests during any 90-day period amount in readily marketable securities
in excess of the lesser of (i) instead of cash. Shareholders can avoid
$250,000 or (ii) 1% of the net being paid in securities if they provide
asset value of the class of an unconditional instruction to redeem at
shares being redeemed. least 15 days prior to the date on which
the redemption transaction is to occur.
------------------------------------- ----------------------------------------- -------------------------------------------
Exchanges You may exchange Class A or Class You may exchange shares of AC New
C shares of the Fund for Class I Opportunities II Fund for shares of the
shares of the Fund so long as the same class of another American Century
Class I minimum initial fund that offers A, B and Class C shares
investment requirement is met. without a sales charge if you meet the
following criteria:
Shareholders of the Kopp Funds o The exchange is for a minimum of $100
may also exchange shares of one o For an exchange that opens a new
series of the Kopp Funds for account, the amount of the exchange must
another. Any such exchange may meet or exceed the minimum account size
be effected via telephone. You requirement for the fund receiving the
may also exchange shares of the exchange.
Funds for shares of the First
American Prime Obligations Fund,
a no-load money market fund
managed by an affiliate of the
Fund's transfer agent.
------------------------------------- ----------------------------------------- -------------------------------------------
Dividends and Distributions Distributions of investment Distributions by the fund generally
company taxable income and net consist of dividends and interest
capital gains, if any, are received by the fund, as well as capital
usually made in November or gains realized by the fund on the sale of
December. investment securities.
Shareholders will be informed The fund generally pays distributions
annually as to the amount and from net income and capital gains, if
nature of all distributions paid any, once in a year in December. The
during the prior year. Because fund may make more frequent
of the fund's investment distributions, if necessary, to comply
objective, the fund expects that with Internal Revenue Code provisions.
its distributions will consist
primarily of long-term capital Distributions are reinvested
gains. automatically in additional shares unless
a different option is chosen, except that
All distributions of investment shareholders in a tax-deferred retirement
company taxable income and net account must reinvest all distributions.
capital gains will automatically
be reinvested in additional fund A shareholder will participate in fund
shares unless a shareholder distributions, when they are declared,
specifically request that starting the next business day after a
distributions be paid in cash. shareholder's purchase is effective.
------------------------------------- ----------------------------------------- -------------------------------------------
CALCULATION OF SALES CHARGES - AC NEW OPPORTUNITIES II FUND
CLASS A
Class A 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 investment professional are:
----------------------- ------------------- ---------------------- --------------------
PURCHASE AMOUNT SALES CHARGE AS A % SALES CHARGE AS A % OF AMOUNT PAID TO
OF OFFERING PRICE NET AMOUNT INVESTED FINANCIAL ADVISOR
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%*
----------------------- ------------------- ---------------------- --------------------
$4,000,000-$9,999,999 0.00% 0.00% 0.50%*
----------------------- ------------------- ---------------------- --------------------
$10,000,000 or more 0.00% 0.00% 0.25%*
----------------------- ------------------- ---------------------- --------------------
* For purchases over $1,000,000 by qualified retirement plans, no upfront
amount will be paid to financial professionals.
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 above. No sales charge
applies to reinvested dividends.
PRIMARY TAX CONSEQUENCES
The Reorganizations have been structured with the intention that they will
qualify for federal income tax purposes as tax-free reorganizations under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Consummation of the Reorganizations is subject to the condition that the parties
have received an opinion from Reed Smith LLP that for federal income tax
purposes (i) no gain or loss will be recognized by you or either of the Kopp
Funds, (ii) your basis in the American Century Fund shares you receive will be
the same as your basis in the Kopp Fund shares held by you immediately prior to
the Reorganizations, and (iii) your holding period for the American Century Fund
shares will include your holding period for your Kopp Fund shares. The sale of
portfolio securities by the Kopp Funds prior to the Reorganizations may result
in the realization of capital gains that, to the extent not offset by capital
losses, will be distributed to shareholders prior to the Closing Date. For a
more complete discussion of the tax consequences, see "Federal Income Tax
Consequences of the Reorganizations."
VALUATION POLICIES AND SHARE PRICE - AMERICAN CENTURY FUNDS
American Century will price the fund shares you purchase, exchange or
redeem at the net asset value (NAV) next determined after your order is received
and accepted by the fund's transfer agent, or other financial intermediary with
the authority to accept orders on the fund's behalf. American Century determines
the NAV of the fund as of the close of regular trading (usually 4:00 p.m.,
Eastern Time) on the New York Stock Exchange (NYSE) on each day the NYSE is
open. On days when the NYSE is closed (including certain U.S. national
holidays), American Century does not calculate the NAV. A fund's NAV is the
current value of the fund's assets, minus any liabilities, divided by the number
of shares outstanding.
The fund values portfolio securities for which market quotations are
readily available at their market price. As a general rule, equity securities
listed on a U.S. exchange are valued at the last current reported sale price as
of the time of valuation. Securities listed on the NASDAQ National Market System
(Nasdaq) are valued at the Nasdaq Official Closing Price (NOCP), as determined
by Nasdaq, or lacking an NOCP, at the last current reported sale price as of the
time of valuation. The fund may use pricing services to assist in the
determination of market value. Unlisted securities for which market quotations
are readily available are valued at the last quoted sale price or the last
quoted ask price, as applicable, except that debt obligations with 60 days or
less remaining until maturity may be valued at amortized cost. Exchange-traded
options, futures and options on futures are valued at the settlement price as
determined by the appropriate clearing corporation.
If the fund determines that the market price for a portfolio security is
not readily available or that the valuation methods mentioned above do not
reflect the security's fair value, such security is valued at its fair value as
determined in good faith by, or in accordance with procedures adopted by, the
fund's board or its designee (a process referred to as "fair valuing" the
security). Circumstances that may cause the fund to fair value a security
include, but are not limited to:
o for funds investing in foreign securities, if, after the close of the
foreign exchange on which a portfolio security is principally traded,
but before the close of the NYSE, an event occurs that may materially
affect the value of the security;
o for funds that invest in debt securities, a debt security has been
declared in default; or
o trading in a security has been halted during the trading day.
If such circumstances occur, the fund will fair value the security if the
fair valuation would materially impact the fund's NAV. While fair value
determinations involve judgments that are inherently subjective, these
determinations are made in good faith in accordance with procedures adopted by
the fund's board.
The effect of using fair value determinations is that the fund's NAV will
be based, to some degree, on security valuations that the board or its designee
believes are fair rather than being solely determined by the market.
With respect to any portion of the fund's assets that are invested in one
or more open-end management investment companies that are registered with the
SEC (known as registered investment companies, or RICs), the fund's NAV will be
calculated based upon the NAVs of such RICs. These RICs are required by law to
explain the circumstances under which they will use fair value pricing and the
effects of using fair value pricing in their prospectuses.
Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.
Trading of securities in foreign markets may not take place every day the
NYSE is open. Also, trading in some foreign markets and on some electronic
trading networks may take place on weekends or holidays when the fund's NAV is
not calculated. So, the value of the fund's portfolio may be affected on days
when you will not be able to purchase, exchange or redeem fund shares.
ABUSIVE TRADING PRACTICES AND POLICIES AND PROCEDURES - AMERICAN CENTURY FUNDS
Short-term trading and other so-called market timing practices are not
defined or explicitly prohibited by any federal or state law. However,
short-term trading and other abusive trading practices may disrupt portfolio
management strategies and harm fund performance. If the cumulative amount of
short-term trading activity is significant relative to a fund's net assets, the
fund may incur trading costs that are higher than necessary as securities are
first purchased then quickly sold to meet the redemption request. In such case,
the fund's performance could be negatively impacted by the increased trading
costs created by short-term trading if the additional trading costs are
significant.
Because of the potentially harmful effects of abusive trading practices,
American Century Funds' Board of Directors has approved American Century's
abusive trading policies and procedures, which are designed to reduce the
frequency and effect of these activities in our funds. These policies and
procedures include monitoring trading activity, imposing trading restrictions on
certain accounts, imposing redemption fees on certain funds, and using fair
value pricing when current market prices are not readily available. Although
these efforts are designed to discourage abusive trading practices, they cannot
eliminate the possibility that such activity will occur. American Century seeks
to exercise its judgment in implementing these tools to the best of its ability
in a manner that it believes is consistent with shareholder interests.
American Century uses a variety of techniques to monitor for and detect
abusive trading practices. These techniques may vary depending on the type of
fund, the class of shares or whether the shares are held directly or indirectly
with American Century. They may change from time to time as determined by
American Century in its sole discretion. To minimize harm to the funds and their
shareholders, we reserve the right to reject any purchase order (including
exchanges) from any shareholder we believe has a history of abusive trading or
whose trading, in our judgment, has been or may be disruptive to the funds. In
making this judgment, we may consider trading done in multiple accounts under
common ownership or control.
Currently, for shares held directly with American Century, we may deem the
sale of all or a substantial portion of a shareholder's purchase of fund shares
to be abusive if the sale is made
o within seven days of the purchase, or
o within 30 days of the purchase, if it happens more than once per year.
To the extent practicable, we try to use the same approach for defining
abusive trading for shares held through financial intermediaries. American
Century reserves the right, in its sole discretion, to identify other trading
practices as abusive and to modify its monitoring and other practices as
necessary to deal with novel or unique abusive trading practices.
In addition, American Century reserves the right to accept purchases and
exchanges in excess of the trading restrictions discussed above if it believes
that such transactions would not be inconsistent with the best interests of fund
shareholders or this policy.
American Century's policies do not permit us to enter into arrangements
with fund shareholders that permit such shareholders to engage in frequent
purchases and redemptions of fund shares. Due to the complexity and subjectivity
involved in identifying abusive trading activity and the volume of shareholder
transactions American Century handles, there can be no assurance that American
Century's efforts will identify all trades or trading practices that may be
considered abusive. In addition, American Century's ability to monitor trades
that are placed by individual shareholders within group, or omnibus, accounts
maintained by financial intermediaries is severely limited because American
Century generally does not have access to the underlying shareholder account
information. However, American Century monitors aggregate trades placed in
omnibus accounts and seeks to work with financial intermediaries to discourage
shareholders from engaging in abusive trading practices and to impose
restrictions on excessive trades. There may be limitations on the ability of
financial intermediaries to impose restrictions on the trading practices of
their clients. As a result, American Century's ability to monitor and discourage
abusive trading practices in omnibus accounts may be limited.
PORTFOLIO HOLDINGS INFORMATION
A description of the American Century Funds' policies and procedures with
respect to the disclosure of the Funds' portfolio securities is available in a
Statement of Additional Information dated May 1, 2006, as supplemented on August
1, 2006 for AC Equity Growth Fund and a Statement of Additional Information
dated May 1, 2006, as supplemented on June 1, 2006 and August 1, 2006 for AC New
Opportunities II Fund.
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
COMPARISON OF AC EQUITY GROWTH FUND AND KOPP TQM FUND
A comparison of the investment limitations of AC Equity Growth Fund and
Kopp TQM Fund is provided in Exhibit C to this Proxy Statement/Prospectus.
INVESTMENT OBJECTIVE.
The investment objectives of AC Equity Growth Fund and Kopp TQM Fund are
substantially similar. The investment objective of AC Equity Growth Fund is to
seek long-term capital growth. The investment objective of Kopp TQM Fund is to
seek long-term capital appreciation.
INVESTMENT EXPOSURE PROVIDED BY EACH FUND.
Both AC Equity Growth Fund and Kopp TQM Fund invest primarily in the common
stock of corporations.
Using security analysis and portfolio optimization, AC Equity Growth Fund
invests primarily in the common stocks of companies selected from the 1,500
largest publicly traded companies in the United States. The fund's goal is to
create a portfolio that provides better returns than its benchmark, the S&P 500
Index, without taking on significant additional risk. When American Century
believes it is prudent, AC Equity Growth Fund may invest a portion of its assets
in foreign securities, debt securities, preferred stock and equity-equivalent
securities, such as convertible securities, stock futures contracts or stock
index futures contracts. AC Equity Growth Fund limits its purchase of debt
securities to investment-grade obligations. Under normal market conditions,
American Century intends to invest at least 80% of AC Equity Growth Fund's
assets in equity securities regardless of the movement of stock prices
generally.
KIA pursues Kopp TQM Fund's investment objective by investing primarily in
common stocks of companies included in the S&P 500 Index that have implemented a
quality management system ("QMS"). KIA views a QMS as a management philosophy
where a company undertakes a systematic process of evaluating its business
practices and engages in a continuous effort to improve its operations
throughout the organization. Under normal market conditions, Kopp TQM Fund will
invest at least 80% of its net assets (plus any borrowing for investment
purposes) in common stocks of companies that are in the Q-100(R) Index. The
Q-100 Index generally consists of 100 companies included in the S&P 500 Index,
selected based on QMS criteria. Because the Q-100(R) Index consists of common
stocks generally included in the S&P 500 Index, Kopp TQM Fund invests primarily
in large-capitalization companies without an emphasis on either value or growth
stocks. However, up to 20% of Kopp TQM Fund's net assets may be invested outside
of the S&P 500 Index or the Q-100(R) Index.
Kopp TQM Fund may invest in exchange-traded-funds ("ETFs") which are
investment companies that are bought and sold on a securities exchange and are
designed to track a particular market segment or index. An investment in cash or
cash equivalents by KIA will be made or maintained to facilitate the buying and
selling of positions within the portfolio and to minimize the impact of
redemptions from Kopp TQM Fund. For temporary defensive purposes, Kopp TQM Fund
may invest in money market instruments or other fixed-income securities, or
retain cash or cash equivalents.
STOCK SELECTION PROCESS.
AC Equity Growth Fund's investment strategy utilizes quantitative
management techniques in a two-step process that draws heavily on computer
technology. In the first step, American Century ranks stocks for the Fund,
primarily the 1,500 largest publicly traded companies in the United States
(measured by the value of their stock), from most attractive to least
attractive. This is determined by using a computer model that combines measures
of a stock's value, as well as measures of its growth potential. To measure
value, American Century uses ratios of stock price-to-book value and stock
price-to-cash flow, among others. To measure growth, American Century uses the
rate of growth of a company's earnings and changes in its earnings estimates, as
well as other factors. In the second step, American Century uses a technique
called portfolio optimization. In portfolio optimization, American Century uses
a computer to build a portfolio of stocks from the ranking described above that
they believe will provide the optimal balance between risk and expected return.
American Century generally sells stocks from AC Equity Growth Fund when it
believes:
o a stock becomes too expensive relative to other stock
opportunities
o a stock's risk parameters outweighs its return opportunity
o more attractive alternatives are identified
o specific events alter a stock's prospects.
As noted above, KIA pursues Kopp TQM Fund's investment objective by
investing primarily in common stocks of companies included in the S&P 500 Index
that have implemented a QMS. Under normal market conditions, Kopp TQM Fund will
invest at least 80% of its net assets in common stocks of companies that are in
the Q-100(R) Index. The Q-100(R) Index generally consists of 100 companies that
are part of the S&P 500 Index. To determine whether a company is suitable for
inclusion in the Q-100(R) Index or for an investment by Kopp TQM Fund, KIA uses
qualitative and quantitative techniques to determine a company's composite
quality score ("CQS"). When determining a company's CQS, KIA currently considers
up to seven categories of criteria, each with a unique set of indicators, which
are combined to yield a CQS. The seven categories are: (1) leadership, (2)
strategic planning, (3) customer and market focus, (4) measurement, analysis and
knowledge management, (5) human resources, (6) process management and (7)
business results. The last category, business results, is given the most weight
in the determination of CQS. Each of the seven categories is loosely based upon
the categories outlined in the "Criteria for Performance Excellence," which is
published every year by the Baldrige National Quality Program and the National
Institute of Standards and Technology. These categories and their criteria may
change from time to time as concepts of quality measurement evolve. KIA seeks to
use indicators which, in its judgment, are consistent with principles and
practices of quality oriented organizations and fairly represent one or more of
the seven categories. The indicators for each category come from several
sources, including reports published by companies and reports from various
organizations that KIA believes are knowledgeable about QMS practices. Reports
may include announcements made by companies that have won quality-oriented
awards or other information that identifies a company as actively using one or
more of the components of QMS. As a result of this evaluation, KIA develops a
score, which is principally subjective, as to the level of commitment a company
has to QMS principles and practices, the extent of the company's deployment of
those principles and practices and the degree to which the company has succeeded
in the market.
The Q-100(R) Index consists of companies with high CQSs relative to other
companies in the same or similar economic sectors and industry groups within the
S&P 500 Index. The companies in the Q-100(R) Index are then weighted by economic
sector and industry group to represent the approximate weightings in the S&P 500
Index, subject to some variation.
Once an investment in a company is made by Kopp TQM Fund, KIA continues to
monitor, review and evaluate the company's performance. If a company is dropped
from the S&P 500 Index or if it is determined that its CQS has fallen or
otherwise has ceased to meet performance expectations, KIA's policy is to sell
its shares in that company and replace them with shares of common stock of a
company that has an acceptable CQS and that, upon purchase, would help Kopp TQM
Fund maintain its diversification criteria relative to the S&P 500 Index.
COMPARISON OF RISKS.
The risks associated with AC Equity Growth Fund and Kopp TQM Fund are
generally similar. It is possible to lose money by investing in either fund.
Both Funds are subject to market risk, stock market volatility and other risks
associated in investing in common stock of companies.
Since Kopp TQM Fund invests primarily in companies that have either
implemented or are implementing the QMS approach it is subject to the risk that
such companies may not be best-positioned for growth and may be unable to
weather economic downturns. In addition, the QMS practice may not necessarily
translate into the stock performance that KIA expects or that satisfies Kopp TQM
Fund's investment objective. Lastly, KIA may invest in companies that are not
firmly or successfully following QMS practices.
Since Kopp TQM Fund may invest in ETFs it may be subject to the risks of
investing in ETFs. The risks of investing ETFs generally reflect the risks of
owning the underlying securities the ETF is designed to track, although lack of
liquidity in an ETF could result in it being more volatile than the underlying
portfolio of securities. In addition, Kopp TQM Fund will bear a pro rata portion
of the ETFs expenses which could make owning the ETF more costly than owning the
underlying securities in the ETF directly.
AC Equity Growth Fund's performance will be closely tied to the performance
of its benchmark index, the S&P 500 Index, and therefore if the S&P 500 Index
goes down, it is likely that AC Equity Growth Fund's performance will also go
down.
COMPARISON OF AC NEW OPPORTUNITIES II FUND AND KOPP EMERGING GROWTH FUND
A comparison of the investment limitations of AC New Opportunities II Fund
and Kopp Emerging Growth Fund is provided in Exhibit C to this Proxy
Statement/Prospectus.
INVESTMENT OBJECTIVE.
The investment objectives of AC New Opportunities II Fund and Kopp Emerging
Growth Fund are substantially similar. The investment objective of AC New
Opportunities II Fund is to seek long-term capital growth. The investment
objective of Kopp Emerging Growth Fund is to seek long-term capital
appreciation.
INVESTMENT EXPOSURE PROVIDED BY EACH FUND.
Both AC New Opportunities II Fund and Kopp Emerging Growth Fund invest
primarily in the common stock of corporations.
AC New Opportunities II Fund invests in smaller-sized companies that
American Century believes will increase in value over time. In determining
whether a company is smaller-sized American Century will consider, among other
factors, the capitalization of the company and the amount of revenue of the
company. If American Century determines that the investment opportunities in
smaller-sized companies are not adequate, then AC New Opportunities II Fund may
invest in medium- and large- sized companies. While American Century intends to
invest primarily in U.S. stocks, AC New Opportunities II Fund may also invest in
securities of foreign companies located primarily in developed countries.
Lastly, when American Century deems it prudent, AC New Opportunities II Fund may
invest a portion of its assets in debt securities, preferred stock, and equity
equivalent securities, such as convertible securities, stock futures contracts
or stock index futures contracts. The debt securities that AC New Opportunities
II Fund invests in will generally be of investment grade.
Kopp Emerging Growth Fund, under normal market conditions, attempts to
achieve its investment objective by investing at least 65% of its assets in
common stocks of emerging and re-emerging growth companies, and at least 80% of
its net assets (plus any borrowings for investment purposes) in common stocks of
emerging growth companies. KIA views an emerging growth company as a relatively
new business organized to address an industry niche, which may have unstable
cash reserves, but the potential to experience accelerating returns. KIA views a
re-emerging growth company as a more established company experiencing a
potential resurgence in sales and earnings due to new industry leadership,
restructuring or both. KIA primarily seeks investments in emerging and
re-emerging growth companies that have a small-to-medium market capitalizations.
KIA views a small-cap company as typically having a market capitalization of up
to $1 billion and views a medium-cap company as typically having a market
capitalization of up to $3 billion. In addition to common stock, Kopp Emerging
Growth Fund may invest in preferred stock, depository receipts or shares,
warrants, and other securities convertible or exchangeable into common stock.
Lastly, KIA may engage in temporary defensive strategies in order to promptly
respond to adverse market conditions and in such event Kopp Emerging Growth Fund
may hold cash and/or invest all or a portion of its assets in money market
instruments.
STOCK SELECTION PROCESS.
American Century uses a bottom-up approach to growth stock selection. A
bottom-up approach generally provides that investment decisions are based
primarily on the adviser's analysis of individual companies, rather then on
broad economic forecasts. American Century believes that over the long term,
stock price movement follows growth in a company's earnings and revenues. Using
an extensive computer database, as well as other primary analytical research
tools, American Century tracks financial information for thousands of individual
companies to identify and evaluate trends in earnings, revenues and other
business fundamentals. American Century's principal analytical technique
involves the identification of companies with earnings and revenues that are not
only growing, but growing at an accelerating pace. This includes companies whose
growth rates, although still negative, are less negative then in prior periods,
and companies whose growth rates are expected to accelerate. These techniques
help American Century to buy or hold the stocks of companies it believes have
favorable growth prospects and sell the stocks of companies whose
characteristics no longer meet its criteria. American Century does not attempt
to time the market. Instead, under normal market conditions, it attempts to keep
AC New Opportunities II Fund essentially fully invested in stocks.
As noted above, KIA will invest at least 65% of its assets in common stocks
of emerging and re-emerging growth companies, and at least 80% of its net assets
(plus any borrowings for investment purposes) in common stocks of emerging
growth companies. Companies considered by KIA to be "emerging growth" are often
in the same or related market sectors and therefore Kopp Emerging Growth Fund
may be heavily invested in one sector. Since one sector may include numerous
sub-sectors or industries, Kopp Emerging Growth Fund may be heavily invested in
one sector while being diversified among several industries. When purchasing
common stocks, KIA uses a "buy discipline" that involves three key components:
1. Research: KIA gathers research on potential investment candidates from
a wide variety of sources. To further qualify prospective investments,
it analyzes information from corporate contacts, attends industry
conferences and visits with company management.
2. Fundamentals: Once the research phase is complete, KIA reviews certain
fundamental attributes that it believes most "buy" candidates should
possess, including (i) management excellence, (ii) leading industry
position or product, (iii) projected annual revenues or sales growth
of 15% or more and projected earnings growth of 20% or more, (iv)
significant investment in research and development and (v) strong
financial position including a low debt-to-total capital ratio.
3. Valuation: Finally, KIA values companies by considering price-to-sales
ratios and price-to-earnings ratios within a peer group. For companies
with earnings, the price-to-earnings ratio relative to a company's
forecasted growth rate is the most important measure in KIA's
quantitative process.
KIA then constructs a list of securities for Kopp Emerging Growth Fund and
purchases them when their prices are within a pre-determined range.
KIA continually monitors the companies for variations from expectations and
makes sell decisions based on a number of factors, including, without
limitation, significant deterioration in a company's underlying fundamentals,
strong price appreciation suggesting an overweighted position or undervalued
security, change in theme or sector orientation, or better relative value in
other securities. KIA does not attempt to time the market and generally expects
to be fully invested in stocks. KIA believes in holding securities for their
long-term growth potential over at least a three-to five-year time frame and
will generally hold stocks that have performed well, even if it results in an
apparent "overweighting" of a stock from time to time.
COMPARISON OF RISKS.
The risks associated with AC New Opportunities II Fund and Kopp Emerging
Growth Fund are generally similar. It is possible to lose money by investing in
either fund. Both Funds are subject to market risk, risk of investing in growth
stocks, risk of investing in companies with small market capitalizations, sector
risks and other risks associated with investing in common stock of companies.
Kopp Emerging Growth Fund is not subject to the diversification rules of
the Investment Company Act of 1940, as amended ("1940 Act"), and therefore a
larger percentage of Kopp Emerging Growth Fund's assets may be invested in fewer
companies then AC New Opportunities II's portfolio. Therefore, the performance
of one, two or a few stocks may have a substantial effect on Kopp Emerging
Growth Fund's overall performance, both positive and negative.
AC New Opportunities II Fund may be subject to the risks of investing in
foreign securities to a greater extent then Kopp Emerging Growth Fund since it
may invest in foreign securities while Kopp Emerging Growth Fund does not.
Since AC New Opportunities II Fund may buy a large amount of a company's
stock quickly, and often will dispose of it quickly if the company's earnings or
revenue decline, AC New Opportunities II Fund may be subject to greater share
price volatility then the average stock fund.
Lastly, AC New Opportunities II Fund's investment in initial public
offerings ("IPOs") may have an impact on its performance. The impact will depend
on the strength of the IPO market and the asset size of AC New Opportunities II
Fund.
AMERICAN CENTURY'S UNIFIED FEE STRUCTURE
The American Century Funds feature a unified management fee structure,
which differs from the fee structure used by most funds. A basic understanding
of the unified fee will be helpful to you as you consider the proposals
discussed in this Proxy Statement/Prospectus.
Under a traditional fee structure, such as the one used by the Kopp Funds,
a fund is charged a variety of fees, including an investment advisory fee, a
transfer agency fee, an administrative fee, distribution charges, and other
expenses. The total expense of the fund is the sum of these expense components.
The fund incurs these expenses directly and, other than investment advisory fees
and Rule 12b-1 distribution fees, the amounts can fluctuate and increase without
shareholder approval.
By contrast, American Century uses a unified fee structure where each fund
pays the advisor a single, all-inclusive fee for providing all services for the
management and operation of the fund, except brokerage expenses, taxes,
interest, the fees and expenses of the independent directors (including their
independent legal counsel), and extraordinary costs. American Century and its
funds' boards believe that the unified fee structure is a benefit to fund
shareholders because it clearly discloses the cost of owning fund shares, and,
because the unified fee cannot be increased without a vote of fund shareholders,
it shifts to the advisor the increased costs of operating the fund and the risk
of administrative inefficiencies.
When comparing the American Century unified fee to the fees currently
charged by the Kopp Funds, the management fee component is not directly
comparable to the investment advisory fee charged by Kopp Funds, as American
Century's unified management fee includes substantially all expenses of
operating the American Century Funds. Given the differing fee structures, in
order to perform a more accurate comparison of information in the following Fee
Tables, the "Net Operating Expenses" line reflects the total costs a fund
shareholder could have paid.
COMPARATIVE FEE TABLES
The Kopp Funds and the American Century Funds, like all mutual funds, incur
certain expenses in their operations. These expenses include management fees, as
well as the costs of maintaining accounts, administration, providing shareholder
liaison and distribution services and other activities. Set forth in the tables
below is information regarding the fees and expenses incurred by the Kopp Funds
and the pro forma fees for the American Century Funds after giving effect to the
Reorganizations.
KOPP TQM FUND (CLASS A SHARES, CLASS C SHARES AND CLASS I SHARES)- AMERICAN
CENTURY EQUITY GROWTH FUND (ADVISOR CLASS SHARES, CLASS C SHARES AND INVESTOR
CLASS SHARES)
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Class A Shares, Class C Shares or Class I Shares of Kopp TQM
Fund as set forth in its most recent prospectus dated January 30, 2006; and (2)
the pro forma fees and expenses of Advisor Class, Class C Shares and Investor
Class of American Century Equity Growth Fund on a combined basis after giving
effect to the TQM Reorganization. The pro forma fees also represent the fees for
AC Equity Growth Fund as of December 31, 2005. The fees are not shown separately
because they are identical to the pro-forma fees.
KOPP TQM FUND (AS OF SEPTEMBER 30, 2005) AND AC EQUITY GROWTH FUND
(AS OF DECEMBER 31, 2005)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
KOPP TQM PRO FORMA KOPP TQM FUND PRO FORMA KOPP TQM FUND PRO FORMA
FUND AC EQUITY CLASS C AC EQUITY CLASS I AC EQUITY
CLASS A GROWTH FUND: GROWTH FUND: GROWTH FUND:
ADVISOR CLASS CLASS C INVESTOR CLASS
SHARES SHARES SHARES
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
SHAREHOLDER FEES (FEES PAID
DIRECTLY FROM YOUR
INVESTMENT):
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Maximum Sales Charge (Load) 3.50%(1) NONE NONE NONE NONE NONE
Imposed on Purchases (as a
percentage of offering
price)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Maximum Contingent Deferred 1.00%(2) NONE 1.00%(3) 1.00%(4) NONE NONE
Sales Charge (Load) (as a
percentage of original
purchase price or
redemption price, whichever
is lower)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Redemption Fee (as a 2.00%(5) NONE 2.00%(5) NONE 2.00%(6) NONE
percentage of amount
redeemed)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
ANNUAL FUND OPERATING
EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND
ASSETS)(7)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Management Fees (8) 1.00% 0.42%(9) 1.00% 0.67%(9) 1.00% 0.67%(9)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Distribution and/or Service 0.35% 0.50% 1.00% 1.00% NONE NONE
(12b-1) Fees (10)(11)
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Other Expenses (12)(13) 0.86% 0.00% 0.86% 0.00% 0.88% 0.00%
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Total Annual Fund Operating 2.21% 0.92% 2.86% 1.67% 1.88% 0.67%
Expenses Before Expense
Reimbursement
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Less: Fee Waiver/Expense 0.71%(14) __ 1.36%(14) __ 0.38%(14) __
Reimbursement
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
Net Annual Fund Operating 1.50% 0.92% 1.50% 1.67% 1.50% 0.67%
Expenses
----------------------------- ---------- -------------- -------------- -------------- -------------- --------------
(1) This sales charge is the maximum applicable to purchases of Class A shares.
You may not have to pay this sales charge because waivers and reduced sales
charges are available.
(2) A contingent deferred sales charge ("CDSC") of up to 1% may be imposed on
redemptions of certain Class A shares that were purchased without a sales
charge and redeemed within 24 months of purchase. For purposes of the CDSC,
all purchases made during a calendar month are counted as having been made
on the first day of the month.
(3) A CDSC of up to 1% may be imposed on redemptions of certain Class C shares
that are redeemed within 12 months of purchase. For purposes of the CDSC,
all purchases made during a calendar month are counted as having been made
on the first day of the month.
(4) The charge is 1% during the first year after purchase and is eliminated
thereafter.
(5) A redemption fee of 2% of the then current value of the shares redeemed may
be imposed on certain redemptions of Class A and Class C shares made within
30 days of purchase. The fee is retained by the fund and generally withheld
from redemption proceeds. If you redeem shares by wire, you will be charged
a $15 service fee.
(6) A redemption fee of 2% of the then current value of the shares redeemed may
be imposed on certain redemptions of Class I shares made within 24 months
of purchase. The fee is retained by the fund and generally withheld from
redemption proceeds. If you redeem shares by wire, you will be charged a
$15 service fee.
(7) For Kopp TQM Fund, fund operating expenses are deducted from fund assets
before computing the daily share price or making distributions. As a
result, they do not appear on your account statement, but instead reduce
the amount of total return you receive.
(8) Includes KIA advisory fees and American Century unified fees. These numbers
are not directly comparable due to American Century's unified fee structure
that includes substantially all expenses of operating the fund.
(9) The fund pays American Century a single, unified management fee for
arranging all services necessary for the fund to operate. The fee shown is
based on assets during the fund's most recent fiscal year. The fund has a
stepped fee schedule. As a result, the fund's unified management fee rate
generally decreases as fund assets increase and increases as fund assets
decrease.
(10) For Kopp TQM Fund, the distribution and shareholder servicing fees
applicable to Class A shares are currently set at 0.35%; however, the fund
has adopted a Rule 12b-1 distribution and shareholder servicing plan (the
"Rule 12b-1 Plan") that allows the fund to pay up to 0.50% in these fees.
The distribution and shareholder servicing fees applicable to Class C
shares under the Rule 12b-1 Plan are 1.00%, which is the amount currently
being paid by the fund. Further, while the fund currently has no intention
of paying any distribution or shareholder servicing fees for the Class I
shares, the Rule 12b-1 Plan allows the fund to pay up to 0.50% in those
fees.
(11) For AC Equity Growth Fund, the 12b-1 fee is designed to permit investors to
purchase shares through broker-dealers, banks, insurance companies and
other financial intermediaries. The fee may be used to compensate such
financial intermediaries for distribution and other shareholder services.
In addition, half of the Advisor Class 12b-1 fee (0.25%) is for ongoing
recordkeeping and administrative services provided by financial
intermediaries, which would otherwise be paid by the advisor out of the
unified management fee. The advisor has reduced its unified management fee
for Advisor Class shares, but the fee for core investment advisory services
is the same for all classes.
(12) For Kopp TQM Fund, other expenses include custodian, administration,
transfer agency and other customary fund expenses.
(13) For AC Equity Growth Fund, other expenses, which include the fees and
expenses of the fund's independent directors and their legal counsel, as
well as interest, were less than 0.005% for the most recent fiscal year.
(14) Through September 2007, KIA has contractually agreed to waive its
management fees and/or reimburse expenses to the extent such fees or
expenses would cause the total annual operating expenses of any class of
shares of the fund to exceed 1.50% of the average daily net assets of the
respective class.
KOPP EMERGING GROWTH FUND (CLASS A SHARES, CLASS C SHARES AND CLASS I SHARES)-
AMERICAN CENTURY NEW OPPORTUNITIES II FUND (CLASS A SHARES, CLASS C SHARES AND
INVESTOR CLASS SHARES)
This table describes (1) the actual fees and expenses that you may pay if
you buy and hold Class A Shares, Class C Shares or Class I Shares of Kopp
Emerging Growth Fund as set forth in its most recent prospectus dated January
30, 2006, and (2) the pro forma fees and expenses of Class A Shares, Class C
Shares and Investor Class of American Century New Opportunities II Fund on a
combined basis after giving effect to the Emerging Growth Reorganization.
KOPP EMERGING GROWTH FUND (AS OF SEPTEMBER 30, 2005) AND AC NEW OPPORTUNITIES II
FUND (AS OF OCTOBER 31, 2005)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Kopp AC New Pro Forma Kopp AC New Pro Forma Kopp AC New Pro Forma
Emerging Opport- AC New Emerging Opport- AC New Emerging Opport- AC New
Growth unities Opport- Growth unities Opport- Growth unities Opport-
Fund II Fund: unities Fund II Fund: unities Fund II Fund: unities
Class A Class A II Fund: Class C Class C II Fund: Class I Investor II Fund:
Shares Shares Class A Shares Shares Class C Shares Class Investor
Shares Shares Shares Class
Shares
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Shareholder
Fees (fees
paid directly
from your
investment):
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Maximum Sales 3.50%(1) 5.75% 5.75% None None None None None None
Charge (Load)
Imposed on
Purchases (as
a percentage
of offering
price)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Maximum 1.00%(2) None(3) None(3) 1.00%(4) 1.00%(5) 1.00%(5) None None None
Contingent
Deferred Sales
Charge (Load)
(as a
percentage of
original
purchase price
or redemption
price,
whichever is
lower)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Redemption Fee 2.00%(6) None None 2.00%(6) None None 2.00% (7) None (8) None (8)
(as a
percentage of
amount
redeemed)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Annual Fund
Operating
Expenses
(expenses that
are deducted
from Fund
assets)(9)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Management 1.00% 1.50%(11) 1.40%(12) 1.00% 1.50%(11) 1.40%(12) 1.00% 1.50%(11) 1.40%(12)
Fees (10)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Distribution 0.35% 0.25% 0.25% 1.00% 1.00% 1.00% None None None
and/or Service
(12b-1)
FEES(13)(14)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Other 0.37% 0.00% 0.00% 0.37% 0.00% 0.00% 0.37% 0.00% 0.00%
Expenses(15)(16)
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
Total Annual 1.72% 1.75% 1.65% 2.37% 2.50% 2.40% 1.37% 1.50% 1.40%
Fund Operating
Expenses
---------------- ---------- ----------- ------------ ---------- ---------- ----------- ---------- ----------- ------------
(1) This sales charge is the maximum applicable to purchases of Class A shares.
You may not have to pay this sales charge because waivers and reduced sales
charges are available.
(2) A contingent deferred sales charge ("CDSC") of up to 1% may be imposed on
redemptions of certain Class A shares that were purchased without a sales
charge and redeemed within 24 months of purchase. For purposes of the CDSC,
all purchases made during a calendar month are counted as having been made
on the first day of the month.
(3) Investments of $1 million or more in Class A shares may be subject to a
contingent deferred sales charge of 1.% if the shares are redeemed within
one year of the date of purchase.
(4) A CDSC of up to 1% may be imposed on redemptions of certain Class C shares
that are redeemed within 12 months of purchase. For purposes of the CDSC,
all purchases made during a calendar month are counted as having been made
on the first day of the month.
(5) The charge is 1% during the first year after purchase and is eliminated
thereafter.
(6) A redemption fee of 2% of the then current value of the shares redeemed may
be imposed on certain redemptions of Class A and Class C shares made within
30 days of purchase. The fee is retained by the fund and generally withheld
from redemption proceeds. If you redeem shares by wire, you will be charged
a $15 service fee.
(7) A redemption fee of 2% of the then current value of the shares redeemed may
be imposed on certain redemptions of Class I shares made within 24 months
of purchase. The fee is retained by the fund and generally withheld from
redemption proceeds. If you redeem shares by wire, you will be charged a
$15 service fee.
(8) The fund intends to impose a 2% redemption fee beginning March 1, 2007. The
fee applies only to shares purchased on or after March 1, 2007 and held for
less than 180 days, excluding shares purchased through reinvested dividends
or capital gains.
(9) For Kopp Emerging Growth Fund, fund operating expenses are deducted from
fund assets before computing the daily share price or making distributions.
As a result, they do not appear on your account statement, but instead
reduce the amount of total return you receive.
(10) Includes KIA advisory fees and American Century unified fees. These numbers
are not directly comparable due to American Century's unified fee structure
that includes substantially all expenses of operating the fund.
(11) The fund pays American Century a single, unified management fee for
arranging all services necessary for the fund to operate. The fee shown is
based on assets during the fund's most recent fiscal year. The fund has a
stepped fee schedule. As a result, the fund's unified management fee rate
generally decreases as fund assets increase and increases as fund assets
decrease.
(12) The fund pays American Century a single, unified management fee for
arranging all services necessary for the fund to operate. The fee shown is
based on anticipated assets after the reorganization of $426 million (based
on assets of AC New Opportunities II Fund and Kopp Emerging Growth Fund as
of June 30, 2006). The fund has a stepped fee schedule. As a result, the
fund's unified management fee rate generally decreases as fund assets
increase and increases as fund assets decrease.
(13) For Kopp Emerging Growth Fund, the distribution and shareholder servicing
fees applicable to Class A shares are currently set at 0.35%; however, the
fund has adopted a Rule 12b-1 distribution and shareholder servicing plan
(the "Rule 12b-1 Plan") that allows the fund to pay up to 0.50% in these
fees. The distribution and shareholder servicing fees applicable to Class C
shares under the Rule 12b-1 Plan are 1.00%, which is the amount currently
being paid by the fund. Further, while the fund currently has no intention
of paying any distribution or shareholder servicing fees for the Class I
shares, the Rule 12b-1 Plan allows the fund to pay up to 0.50% in those
fees.
(14) For AC New Opportunities II Fund, the 12b-1 fee is designed to permit
investors to purchase shares through broker-dealers, banks, insurance
companies and other financial intermediaries. The fee may be used to
compensate such financial intermediaries for distribution and other
shareholder services. In addition, half of the Advisor Class 12b-1 fee
(0.25%) is for ongoing recordkeeping and administrative services provided
by financial intermediaries, which would otherwise be paid by the advisor
out of the unified management fee. The advisor has reduced its unified
management fee for Advisor Class shares, but the fee for core investment
advisory services is the same for all classes.
(15) For Kopp Emerging Growth Fund, other expenses include custodian,
administration, transfer agency and other customary fund expenses.
(16) For AC New Opportunities II Fund, other expenses, which include the fees
and expenses of the fund's independent directors and their legal counsel,
as well as interest, were less than 0.005% for the most recent fiscal year.
The following examples compare the cost of investing in Kopp TQM Fund and the
corresponding shares of AC Equity Growth Fund.
Examples:
An investor would pay the following expenses on a $10,000 investment, assuming
(1) the Total Annual Fund Operating Expenses set forth in the table above for
the relevant fund and (2) a 5% annual return throughout the period.
CUMULATIVE EXPENSES
PAID FOR THE PERIOD OF:
--------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES IF YOU DID REDEEM YOUR SHARES AT THE END OF THE ------ ------- ------- --------
PERIOD:
Kopp TQM Fund: Class A(1) $497 $951 $1,431 $2,752
Kopp TQM Fund: Class A(2) $253 $623 $1,120 $2,489
AC Equity Growth Fund: Advisor Class $94 $293 $508 $1,127
Kopp TQM Fund: Class C(2) $253 $757 $1,388 $3,087
AC Equity Growth Fund: Class C $169 $523 $902 $1,961
Kopp TQM Fund: Class I(3) $360 $554 $981 $2,170
AC Equity Growth Fund: Investor Class $68 $214 $373 $833
(1) These expenses reflect only the 3.50% maximum sales charge.
(2) These expenses reflect a 1% CDSC, but do not reflect the
3.50% maximum sales charge.
(3) These expenses reflect a 2% redemption fee.
CUMULATIVE EXPENSES PAID
FOR THE PERIOD OF:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES IF YOU DID NOT REDEEM YOUR SHARES AT THE END OF THE ------ ------- ------- --------
PERIOD:
Kopp TQM Fund: Class A(1) $497 $951 $1,431 $2,752
Kopp TQM Fund: Class A(2) $153 $623 $1,120 $2,489
AC Equity Growth Fund: Advisor Class $94 $293 $508 $1,127
Kopp TQM Fund: Class C $153 $757 $1,388 $3,087
AC Equity Growth Fund: Class C $169 $523 $902 $1,961
Kopp TQM Fund: Class I $153 $554 $981 $2,170
AC Equity Growth Fund: Investor Class $68 $214 $373 $833
(1) These expenses reflect the 3.50% maximum sales charge.
(2) These expenses do not reflect the 3.50% maximum sales charge.
The following examples compare the cost of investing in Kopp Emerging Growth
Fund and the corresponding shares of AC New Opportunities II Fund.
EXAMPLES:
An investor would pay the following expenses on a $10,000 investment, assuming
(1) the Total Annual Fund Operating Expenses set forth in the table above for
the relevant fund and (2) a 5% annual return throughout the period.
CUMULATIVE EXPENSES
PAID FOR THE PERIOD OF:
-------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES IF YOU DID REDEEM YOUR SHARES AT THE END OF THE ------ ------- ------- --------
PERIOD:
Kopp Emerging Growth Fund: Class A(1) $519 $873 $1,251 $2,309
Kopp Emerging Growth Fund: Class A(2) $275 $542 $934 $2,030
AC New Opportunities II Fund: Class A $742 $1,091 $1,463 $2,503
Pro Forma AC New Opportunities II Fund: Class A $732 $1,063 $1,415 $2,403
Kopp Emerging Growth Fund: Class C(2) $340 $739 $1,265 $2,706
AC New Opportunities II Fund: Class C $251 $771 $1,317 $2,803
Pro Forma AC New Opportunities II Fund: Class C $241 $742 $1,268 $2,706
Kopp Emerging Growth Fund: Class I(3) $346 $434 $750 $1,646
AC New Opportunities II Fund: Investor Class $152 $472 $814 $1,778
Pro Forma AC New Opportunities II Fund: Investor Class $142 $441 $762 $1,669
(1) These expenses reflect only the 3.50% maximum sales charge.
(2) These expenses reflect a 1% CDSC, but do not reflect the 3.50% maximum
sales charge.
(3) These expenses reflect a 2% redemption fee.
CUMULATIVE EXPENSES PAID
FOR THE PERIOD OF:
------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXPENSES IF YOU DID NOT REDEEM YOUR SHARES AT THE END OF THE ------ ------- ------- --------
PERIOD:
Kopp Emerging Growth Fund: Class A(1) $519 $873 $1,251 $2,309
Kopp Emerging Growth Fund: Class A(2) $175 $542 $934 $2,030
AC New Opportunities II Fund: Class A $742 $1,091 $1,463 $2,503
Pro Forma AC New Opportunities II Fund: Class A $732 $1,063 $1,415 $2,403
Kopp Emerging Growth Fund: Class C $240 $739 $1,265 $2,706
AC New Opportunities II Fund: Class C $251 $771 $1,317 $2,803
Pro Forma AC New Opportunities II Fund: Class C $241 $742 $1,268 $2,706
Kopp Emerging Growth Fund: Class I $139 $434 $750 $1,646
AC New Opportunities II Fund: Investor Class $152 $472 $814 $1,778
Pro Forma AC New Opportunities II Fund: Investor Class $142 $441 $762 $1,669
(1) These expenses reflect the 3.50% maximum sales charge.
(2) These expenses do not reflect the 3.50% maximum sales charge.
FUND PERFORMANCE HISTORY
AC EQUITY GROWTH FUND
Annual Total Returns
The following bar chart shows the performance of AC Equity Growth 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 and
sales charges, if applicable, 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 will differ from those shown in the chart, depending on the
expenses of those classes. THE FUND'S PERFORMANCE WILL FLUCTUATE, AND PAST
PERFORMANCE (BEFORE AND AFTER TAXES) IS NO GUARANTEE OF FUTURE RESULTS.
AC EQUITY GROWTH FUND -- INVESTOR CLASS
The highest and lowest quarterly returns for the periods reflected in the bar
chart are:
HIGHEST LOWEST
--------------------------------------------------------------------------------
AC Equity Growth Fund 23.10% (4Q 1998) -16.80% (3Q 2002)
--------------------------------------------------------------------------------
Average Annual Total Returns
The following table shows the average annual total returns of the fund's
Investor Class shares calculated three different ways. Additional tables show
the average annual total returns of other share classes of the fund calculated
before the impact of taxes. Returns assume the deduction of all sales loads,
charges and other fees associated with a particular class. Your actual returns
may vary depending on the circumstances of your investment.
Return Before Taxes shows the actual change in the value of fund shares over the
time periods shown, but does not reflect the impact of taxes on fund
distributions or the sale of fund shares. The two after-tax returns take into
account taxes that may be associated with owning fund shares. Return After Taxes
on Distributions is a fund's actual performance, adjusted by the effect of taxes
on distributions made by the fund during the periods shown. Return After Taxes
on Distributions and Sale of Fund Shares is further adjusted to reflect the tax
impact on any change in the value of fund shares as if they had been sold on the
last day of the period.
After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs. After-tax
returns are shown only for the Investor 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 each table for performance comparison.
--------------------------------------------------------------------------------
INVESTOR CLASS
--------------------------------------------------------------------------------
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2005 1 YEAR 5 YEARS 10 YEARS
--------------------------------------------------------------------------------
Return Before Taxes 7.30% 2.47% 9.98%
--------------------------------------------------------------------------------
Return After Taxes on Distributions 7.08% 2.23% 8.50%
--------------------------------------------------------------------------------
Return After Taxes on Distributions 5.03% 2.01% 7.95%
and Sale of Fund Shares
--------------------------------------------------------------------------------
S&P 500 Index 4.91% 0.54% 9.08%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CLASS C
--------------------------------------------------------------------------------
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2005 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Return Before Taxes 6.23% 3.34%
--------------------------------------------------------------------------------
S&P 500 Index 4.91% 2.35%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE CLASS C IS JULY 18, 2001. ONLY CLASSES WITH
PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF CLASS.
(2) SINCE JULY 19, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR WHICH
DATA IS AVAILABLE.
--------------------------------------------------------------------------------
ADVISOR CLASS
--------------------------------------------------------------------------------
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2005 1 YEAR 5 YEARS CLASS(1)
--------------------------------------------------------------------------------
Return Before Taxes 6.99% 2.19% 4.69%
--------------------------------------------------------------------------------
S&P 500 Index 4.91% 0.54% 4.89%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE ADVISOR CLASS IS OCTOBER 9, 1997. ONLY CLASSES
WITH PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS FOR LIFE OF
CLASS.
(2) SINCE OCTOBER 1, 1997, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR WHICH
DATA IS AVAILABLE
AC NEW OPPORTUNITIES II FUND
Annual Total Returns
The following bar chart shows the performance of AC New Opportunities II Fund's
Investor Class shares for each full calendar year in the life of the fund. It
indicates the volatility of the fund's historical returns from year to year.
Account fees and sales charges, if applicable, are not reflected in the chart
below. If they had been included, returns would have been lower than those
shown. The returns of the fund's other classes of shares will differ from those
shown in the chart, depending on the expenses of those classes. THE FUND'S
PERFORMANCE WILL FLUCTUATE, AND PAST PERFORMANCE (BEFORE AND AFTER TAXES) IS NO
GUARANTEE OF FUTURE RESULTS.
AC NEW OPPORTUNITIES II FUND--INVESTOR CLASS
The highest and lowest quarterly returns for the periods reflected in the bar
chart are:
HIGHEST LOWEST
--------------------------------------------------------------------------------
AC New Opportunities II Fund 21.51% (4Q 2003) -17.80% (3Q 2002)
--------------------------------------------------------------------------------
Average Annual Total Returns
The following table shows the average annual total returns of AC New
Opportunities II Fund's Investor Class shares calculated three different ways.
Additional tables show the average annual total returns of other share classes
of the fund calculated before the impact of taxes. Returns assume the deduction
of all sales loads, charges and other fees associated with a particular class.
Your actual returns may vary depending on the circumstances of your investment.
Return Before Taxes shows the actual change in the value of fund shares over the
time periods shown, but does not reflect the impact of taxes on fund
distributions or the sale of fund shares. The two after-tax returns take into
account taxes that may be associated with owning fund shares. Return After Taxes
on Distributions is a fund's actual performance, adjusted by the effect of taxes
on distributions made by the fund during the periods shown. Return After Taxes
on Distributions and Sale of Fund Shares is further adjusted to reflect the tax
impact on any change in the value of fund shares as if they had been sold on the
last day of the period.
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 other
share classes will vary.
The benchmarks are unmanaged indices that have no operating costs and are
included in each table for performance comparison. The Russell 2000(R) Growth
Index measures the performance of those Russell 2000(R) companies (the 2,000
smallest of the 3,000 largest publicly traded U.S. companies, based on total
market capitalization) with higher price-to-book ratios and higher forecasted
growth rates. The S&P 500 Index is viewed as a broad measure of U.S. stock
performance.
INVESTOR CLASS
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2005 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Return Before Taxes 5.06% 8.67%
Return After Taxes on Distributions 4.38% 8.36%
Return After Taxes on Distributions 3.74% 7.41%
and Sale of Fund Shares
Russell 2000(R) Growth Index
(reflects no deduction for fees,
expenses or taxes) 4.15% 3.09%(2)
S&P 500 Index 4.91% 1.58%(2)
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE INVESTOR CLASS IS JUNE 1, 2001.
(2) SINCE MAY 31, 2001, THE DATE CLOSEST TO THE CLASS'S INCEPTION FOR WHICH
DATA IS AVAILABLE.
CLASS A
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2005 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Return Before Taxes -1.11% 18.78%(2)
Russell 2000(R) Growth Index 4.15% 22.74%
(reflects no deduction for fees,
expenses or taxes)
S&P 500 Index 4.91% 15.88%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE CLASS A IS JANUARY 31, 2003.
(2) RETURN WOULD HAVE BEEN LOWER IF SERVICE AND DISTRIBUTION FEES HAD NOT BEEN
WAIVED FROM FEBRUARY 1, 2003 TO FEBRUARY 21, 2003.
CLASS C
LIFE OF
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2005 1 YEAR CLASS(1)
--------------------------------------------------------------------------------
Return Before Taxes 4.03% 20.41%(2)
Russell 2000(R) Growth Index 4.15% 22.74%
(reflects no deduction for fees,
expenses or taxes)
S&P 500 Index 4.91% 15.88%
(reflects no deduction for fees,
expenses or taxes)
--------------------------------------------------------------------------------
(1) THE INCEPTION DATE FOR THE CLASS C IS JANUARY 31, 2003.
(2) RETURN WOULD HAVE BEEN LOWER IF SERVICE AND DISTRIBUTION FEES HAD NOT BEEN
WAIVED FROM FEBRUARY 1, 2003 TO JUNE 30, 2003.
INVESTMENT ADVISORS
AC New Opportunities II Fund and AC Equity Growth Fund are both governed by
their respective Boards of Directors (each an "AC Board"). Each AC Board meets
at least quarterly to review its respective funds' operations. The Boards select
and oversee the advisor, American Century Investment Management, Inc.
(previously defined as "American Century"). American Century serves as the
investment advisor for each of AC New Opportunities II Fund and AC Equity Growth
Fund. A description of the responsibilities of American Century appears in the
American Century Funds' prospectuses under the heading MANAGEMENT. For services
provided to each fund, American Century receives a unified management fee based
on a percentage of the net assets of each fund. For more information about the
unified management fee, see "SUMMARY- Comparison of Investment Objectives and
Policies- American Century's Unified Fee Structure." The amount of the fee is
calculated daily and paid monthly in arrears. A discussion regarding the basis
for the AC Board's approval of American Century's investment advisory contract
with AC Equity Growth Fund is available in AC Equity Growth Fund's shareholder
report dated June 30, 2006. A discussion regarding the basis for the AC Board's
approval of American Century's investment advisory contract with AC New
Opportunities II Fund is available in AC New Opportunities II Fund's shareholder
report dated October 31, 2005.
Kopp Emerging Growth Fund and Kopp TQM Fund have entered into an investment
advisory agreement with KIA, under which KIA manages the Kopp Funds' investments
and business affairs, subject to the supervision of the Kopp Board. A discussion
regarding the basis for the Kopp Board's approval of the Kopp Funds' investment
advisory contract with KIA is available in the Kopp Funds' reports to
shareholders for the period ended September 30, 2005.
ADVISORY AND OTHER FEES
AC EQUITY GROWTH FUND
The annual rate at which the advisory fee for AC Equity Growth Fund is
assessed is determined daily in a multi-step process. First, each of American
Century Quantitative Equity Funds, Inc.'s funds is categorized according to the
broad asset class in which it invests (e.g., money market, bond or equity), and
the assets of the funds in each category are totaled ("Fund Category Assets").
Second, the assets are totaled for certain other accounts managed by American
Century ("Other Account Category Assets"). To be included, these accounts must
have the same management team and investment objective as a fund in the same
category with the same Board of Directors as American Century Quantitative
Equity Funds, Inc.. Together, the Fund Category Assets and the Other Account
Category Assets comprise the "Investment Category Assets." The Investment
Category Fee Rate is then calculated by applying a fund's Investment Category
Fee Schedule to the Investment Category Assets and dividing the result by the
Investment Category Assets. Finally, a separate Complex Fee Schedule is applied
to the assets of all of the funds in the American Century family of funds (the
"Complex Assets"), and the Complex Fee Rate is calculated based on the resulting
total. The Investment Category Fee Rate and the Complex Fee Rate are then added
to determine the Management Fee Rate payable by a class of the fund to American
Century. The rates for the Complex Assets and the Category Assets are shown
below.
------------------------------------------------------
CATEGORY ASSETS FEE RATE
------------------------------------------------------
First $1 billion 0.5200%
------------------------------------------------------
Next $5 billion 0.4600%
------------------------------------------------------
Next $15 billion 0.4160%
------------------------------------------------------
Next $25 billion 0.3690%
------------------------------------------------------
Next $50 billion 0.3420%
------------------------------------------------------
Next $150 billion 0.3390%
------------------------------------------------------
Thereafter 0.3380%
------------------------------------------------------
------------------------------------------------------
INVESTOR AND C
CLASSES ADVISOR CLASS
COMPLEX ASSETS FEE RATE FEE RATE
------------------------------------------------------
First $2.5 billion 0.3100% 0.0600%
------------------------------------------------------
Next $7.5 billion 0.3000% 0.0500%
------------------------------------------------------
Next $15 billion 0.2985% 0.0485%
------------------------------------------------------
Next $25 billion 0.2970% 0.0470%
------------------------------------------------------
Next $25 billion 0.2870% 0.0370%
------------------------------------------------------
Next $25 billion 0.2800% 0.0300%
------------------------------------------------------
Next $25 billion 0.2700% 0.0200%
------------------------------------------------------
Next $25 billion 0.2650% 0.0150%
------------------------------------------------------
Next $25 billion 0.2600% 0.0100%
------------------------------------------------------
Next $25 billion 0.2550% 0.0050%
------------------------------------------------------
Thereafter 0.2500% 0.0000%
------------------------------------------------------
KOPP TQM FUND
1.00% of its average daily net assets attributable to each class of shares. The
advisory fee is accrued daily and paid monthly.
AC NEW OPPORTUNITIES II FUND*
AC New Opportunities II Fund does not use the same methodology to calculate its
advisory fee as AC Equity Growth Fund. AC New Opportunities Fund II calculates
its advisory fee according to the following schedule:
SHARE CLASS PERCENTAGE OF STRATEGY ASSETS **
----------- --------------------------------
INVESTOR, A AND C 1.50% of the first $250 million
1.25% of next $250 million
1.15% of next $250 million
1.10% over $750 million
* The fees shown are the unified management fees paid by the fund to American
Century, which includes substantially all of the costs of operating the
fund. For more information about the unified management fee, see "SUMMARY-
Comparison of Investment Objectives and Policies- American Century's
Unified Fee Structure."
** For an additional discussion see "INFORMATION ABOUT THE TRANSACTION-
Reasons for the Reorganization- Larger Fund CompleX."
KOPP EMERGING GROWTH FUND
1.00% of its average daily net assets attributable to each class of shares. The
advisory fee is accrued daily and paid monthly.
OTHER SERVICE PROVIDERS
American Century Investment Services, Inc., 4500 Main Street, Kansas City,
Missouri 64111, an affiliate of American Century, serves as the distributor to
the American Century Funds. Centennial Lakes Capital, LLC, 7701 France Avenue
South, Suite 500, Edina, Minnesota 55435, an affiliate of KIA serves as the
distributor to the Kopp Funds.
American Century Services, LLC, 4500 Main Street, Kansas City, Missouri
64111, an affiliate of American Century, serves as the transfer agent to the
American Century Funds. U.S. Bancorp Fund Services, LLC, 615 East Michigan
Street, Milwaukee, Wisconsin 53202, an affiliate of U.S. Bank, N.A., serves as
the administrator to the Kopp Funds.
SERVICE, DISTRIBUTION AND ADMINISTRATIVE FEES
Rule 12b-1 of the 1940 Act permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. Class A and Class C shares of AC New Opportunities II Fund and
Advisor Class and Class C shares of AC Equity Growth Fund each have a 12b-1
plan. The plans provide for the fund to pay annual fees of 0.25% for Class A,
1.00% for Class C and 0.50% for the Advisor Class to the distributor for certain
ongoing shareholder and administrative services and for distribution services,
including past distribution services. Under the Advisor Class Plan, the fund's
Advisor Class pays the distributor an annual fee of 0.50% of Advisor Class
average net assets, half for certain ongoing shareholder and administrative
services and half for distribution services, including past distribution
services. The distributor pays all or a portion of such fees to the financial
intermediaries that make the classes available. Because these fees are used to
pay for services that are not related to prospective sales of the fund, each
class will continue to make payments under its plan even if it is closed to new
investors. Because these fees are paid out of a fund's assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of charges. The higher fee for Class C
shares may cost you more over time than paying the initial sales charge for
Class A shares.
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 such
service providers a fee for performing those services. Also, American Century
and the fund's distributor may make payments for various additional services or
other expenses out of their profits or other available sources. Such payments
may be made for one or more of the following: (1) distribution services, which
include expenses incurred by intermediaries for their sales activities with
respect to the fund, such as preparing, printing and distributing sales
literature and advertising materials and compensating registered representatives
or other employees of such financial intermediary for their sales activities;
(2) shareholder services, such as providing individual and custom investment
advisory services to clients of the financial intermediary; and (3) marketing
and promotional services, including business planning assistance, educating
personnel about the fund, and sponsorship of sales meetings, which may include
covering costs of providing speakers, meals and other entertainment. The
distributor may sponsor seminars and conferences designed to educate
intermediaries about the fund and may cover the expenses associated with
attendance at such meetings, including travel costs. These payments and
activities are intended to provide an incentive to intermediaries to sell the
fund by ensuring that they are educated about the fund, and to help such
intermediaries defray costs associated with offering the fund. The amount of any
payments described by this paragraph is determined by the advisor or the
distributor, and all such amounts are paid out of the available assets of the
advisor and distributor, and not by you or the fund. As a result, the total
expense ratio of the fund will not be affected by any such payments.
FINANCIAL HIGHLIGHTS
The Financial Highlights of the American Century Funds are included as Exhibit E
to this Proxy Statement/Prospectus. Some of the information is presented on a
per-share basis. Total returns represent the rate an investor would have earned
(or lost) on an investment in a fund, assuming reinvestment of any dividends and
capital gains.
PORTFOLIO MANAGERS
The following portfolio managers also may be responsible for the day-to-day
management of other accounts. None of these accounts has an advisory fee based
on the performance of the account.
AC EQUITY GROWTH FUND
WILLIAM MARTIN
Mr. Martin, Senior Vice President and Senior Portfolio Manager, has been a
member of the team since June 1997. He joined American Century in 1989 and
became a portfolio manager in April 1991. He has a degree from the University of
Illinois. He is a CFA charterholder.
FEI ZOU
Mr. Zou, Vice President, Senior Quantitative Analyst and Portfolio Manager, has
been a member of the team since he joined American Century in September 2000 as
a quantitative analyst. He became a senior quantitative analyst in February 2003
and then became a portfolio manager in February 2004. He has a master's degree
in economics and a Ph.D. in finance, both from the University of Texas - Austin.
THOMAS P. VAIANA
Mr. Vaiana, Vice President and Portfolio Manager, has been a member of the team
since August 2000. He joined American Century in February 1997 and became a
portfolio manager in August 2000. He has a bachelor's degree in business finance
from California State University.
AC NEW OPPORTUNITIES II FUND
HAROLD S. BRADLEY
Mr. Bradley, Chief Investment Officer - U.S. Growth Equity for small cap, mid
cap and sector portfolios, has been a member of the team since June 2003. He
joined American Century in 1988 and has managed the global equity, futures, and
foreign exchange trading activities. He has been a portfolio manager for other
growth funds and has supervised research and development efforts. He has a
bachelor of arts degree from Marquette University.
MATTHEW FERRETTI
Mr. Ferretti, Portfolio Manager, rejoined the team in June 2006. He joined
American Century in July 2002 as an investment analyst for the fund. In May
2006, he became a senior investment analyst for the Select fund. He has a
bachelor's degree from the University of Notre Dame, a JD from Villanova
University and an MBA from the University of Texas. He is a CFA charterholder.
STAFFORD SOUTHWICK
Mr. Southwick, Portfolio Manager, has been a member of the team since joining
American Century in June 2001 as an investment analyst. He became a portfolio
manager in April 2006. He has a bachelor's degree in accounting from Southern
Utah University and an MBA from the University of Texas-Austin. He is a CFA
charterholder.
KOPP EMERGING GROWTH AND KOPP TQM FUND
LEROY C. KOPP AND SALLY A. ANDERSON
Mr. Kopp and Ms. Anderson are primarily responsible for the day-to-day
management of the Kopp Funds' assets. Mr. Kopp and Ms. Anderson have shared
equally the duties of managing Kopp Emerging Growth Fund and Kopp TQM Fund since
their inception in 1997 and 2005, respectively. Mr. Kopp founded KIA in 1990 and
he currently serves as Chairman, Chief Executive Officer, President and Chief
Investment Officer. Prior to founding KIA, Mr. Kopp spent 30 years with Dain
Bosworth Inc. ("Dain Bosworth"), a financial services company, where he was the
Manager of the Edina, Minnesota, branch and a Senior Vice President. Mr. Kopp
graduated with a bachelor's degree with distinction from the University of
Minnesota in 1956. Ms. Anderson joined KIA in 1991 and she currently serves as
Executive Vice President. Before joining KIA, Ms. Anderson spent 26 years with
Dain Bosworth, where she was First Vice President and Assistant Director of
Research of the Minneapolis, Minnesota branch.
PRINCIPAL RISK FACTORS
Many of the investment risks associated with an investment in the Kopp
Funds are substantially the same as those associated with an investment in the
corresponding American Century Fund. A comparison of the principal risks of
investing in the American Century Funds compared to the Kopp Funds is set forth
above under the section entitled "SUMMARY- Comparison of Investment Objectives
and Policies- Comparison of Risks". See the prospectuses and statements of
additional for the Kopp Funds and the American Century Funds for more detailed
discussions of the investment risks associated with an investment in the both
the Kopp Funds and American Century Funds. A copy of the prospectus of the
applicable American Century Fund is included with this Proxy
Statement/Prospectus. There is no guarantee that the investment objective of
either the Kopp Funds or the American Century Funds will be achieved or that the
value of a shareholder's investment in either the Kopp Funds or the American
Century Funds will not decrease. An investment in the American Century Funds or
the Kopp Funds is not a bank deposit, and it is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
PROPOSAL REGARDING APPROVAL OF SUBADVISORY AGREEMENT FOR KOPP EMERGING
GROWTH FUND
PURPOSE OF THE SUBADVISORY RELATIONSHIP
The purpose for appointing American Century as a subadvisor to Kopp
Emerging Growth Fund is to facilitate an orderly transition of Kopp Emerging
Growth Fund and AC New Opportunities II Fund portfolios prior to the
Reorganization. It is proposed that American Century serve as a subadvisor to
Kopp Emerging Growth Fund during the period from the shareholder approval of the
Emerging Growth Reorganization to the Closing Date (the "Subadvisory Period").
During the Subadvisory Period, American Century and KIA will cooperate to manage
the portfolio in preparation for the Reorganization.
KIA believes that it is in the best interests of Kopp Emerging Growth Fund
and American Century believes it is in the best interests of AC New
Opportunities II Fund to transition the portfolio in this manner prior to the
Reorganization.
In order to effect an orderly transition it is anticipated that KIA will
undertake the sale of all or substantially all of Kopp Emerging Growth Fund's
portfolio during the Subadvisory Period. American Century will work with KIA
during that time to reinvest the sale proceeds in securities consistent with the
investment objectives and policies of AC New Opportunities II Fund. It is
anticipated that all or substantially all of Kopp Emerging Growth Fund's
portfolio will be reinvested in securities selected by American Century prior to
the Closing Date.
For Kopp Emerging Growth Fund, this arrangement will allow KIA to sell
securities with a smoother transition and less market impact than if such
securities were sold immediately following the Reorganization by American
Century. This transition will also avoid the loss of market exposure (or cash
drag) to Kopp Emerging Growth Fund shareholders that would be experienced if KIA
were to sell such securities and deliver cash to American Century at Closing.
Given the relative size of the portfolios (Kopp Emerging Growth Fund at $__
million and AC New Opportunities II Fund at $__ million in net assets as of
September 30, 2006), American Century and KIA determined that it is not in the
best interests of the existing AC New Opportunities II shareholders to receive
cash or Kopp Emerging Growth Fund securities in the Reorganization due to the
cash drag and/or disruption in portfolio construction that would result to AC
New Opportunities II.
American Century currently serves as the adviser for AC New Opportunities
II Fund. The approval of the Subadvisory Agreement and the appointment of
American Century as subadvisor are conditions to the closing of the
Reorganizations. Shareholders of the Kopp TQM Fund are not being asked to
approve American Century as a subadvisor to Kopp TQM Fund because it is
anticipated that there will be substantially less rebalancing required as a
result of the TQM Reorganization.
EFFECTS OF PORTFOLIO TRANSITION
The anticipated purchase and sale of securities as a part of the portfolio
transition may result in increased transaction costs to Kopp Emerging Growth
Fund over the costs that might be incurred if such transition was effected
immediately following the Emerging Growth Reorganization. However, these costs
may be offset by a decrease in the market impact of such sales on the emerging
growth securities in which Kopp Emerging Growth Fund invests.
The sale of portfolio securities may result in the realization of capital
gains by Kopp Emerging Growth Fund. Given the significant unutilized capital
losses retained by Kopp Emerging Growth Fund, it is not anticipated that the
realization of any such gains will result in a distribution to shareholders.
However, if such portfolio securities appreciate significantly prior to their
sale, it is possible that capital gains could be distributed to Kopp Emerging
Growth Fund shareholders prior to the Closing Date. For more information
regarding the capital gains of Kopp Emerging Growth Fund, see "Federal Income
Tax Consequences of the Reorganizations."
MATERIAL PROVISIONS OF THE SUBADVISORY AGREEMENT
ADVISORY SERVICES
Under the proposed Subadvisory Agreement, American Century will have the
authority to manage the assets of Kopp Emerging Growth Fund subject to the
supervision of KIA and the Kopp Board. As previously noted, it is contemplated
that American Century will be investing the assets of Kopp Emerging Growth Fund
in securities that are compatible with those held by AC New Opportunities II
Fund. Under the Subadvisory Agreement, American Century will also be permitted
to place trade orders on behalf of Kopp Emerging Growth Fund with broker-dealers
selected by American Century.
TERM OF SUBADVISORY AGREEMENT
The proposed Subadvisory Agreement for Kopp Emerging Growth Fund will
commence upon shareholder approval of the Subadvisory Agreement, which is
anticipated to be January 12, 2007. The Subadvisory Agreement will terminate
upon the reorganization of Kopp Emerging Growth Fund into AC New Opportunities
II Fund. The Subadvisory Agreement provides that it may be terminated at any
time without penalty upon 60 days' written notice by American Century, KIA, a
vote of the Kopp Board or by vote of a majority of Kopp Emerging Growth Fund's
outstanding voting securities. The Subadvisory Agreement terminates
automatically in the event of its assignment or in the event that the investment
advisory agreement between KIA and Kopp Emerging Growth Fund is terminated.
LIMITATION OF LIABILITY
The Subadvisory Agreement provides that, in the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations or duties, American Century shall not be subject to any liability to
KIA, Kopp Emerging Growth Fund or to any shareholder of Kopp Emerging Growth
Fund for any act or omission in the course of, or connected with, rendering
services under the Subadvisory Agreement or for any losses that may be sustained
in the purchase, holding or sale of any security.
FEES AND EXPENSES
American Century will not receive any compensation for the services it
performs under the Subadvisory Agreement. American Century will not be
responsible for any out-of-pocket expenses associated with its services such as
brokerage commissions, taxes, interest, or fees paid to other service providers
to Kopp Emerging Growth Fund.
KOPP BOARD CONSIDERATIONS IN APPROVING SUBADVISORY AGREEMENT
At a meeting held on August 30, 2006, the Kopp Board, including the
Independent Trustees, approved a subadvisory arrangement between American
Century and KIA.
As discussed in more detail below, the Kopp Board believes that the scope
and quality of services to be provided to Kopp Emerging Growth Fund under the
Subadvisory Agreement will be appropriate.
BACKGROUND
The Kopp Board met on August 30, 2006 to consider the information and to
receive a presentation from executives of American Century. At the meeting,
after considering all information presented, the Kopp Board, including the
Independent Trustees, approved the subadvisory arrangement and determined to
recommend that shareholders approve the Subadvisory Agreement.
In connection with its review, the Kopp Board obtained information
regarding the management of American Century and the history of American
Century's business and operations. The Kopp Board also received information
regarding the terms of the Reorganizations, including the terms of the Emerging
Growth Reorganization.
No single factor was determinative in the Kopp Board's analysis. This
summary describes the most important, but not all, of the factors considered by
the Kopp Board.
1. NATURE, EXTENT AND QUALITY OF SERVICES
AMERICAN CENTURY, ITS PERSONNEL AND ITS RESOURCES. The Kopp Board
considered the depth and quality of the American Century's investment management
process, including its investment methodology and the experience, capability and
integrity of its management and other personnel.
SERVICES TO BE PROVIDED. The Kopp Board considered the services to be
provided by American Century under the subadvisory arrangement, including
placing purchase and sale orders on behalf of Kopp Emerging Growth Fund,
maintaining books and records with respect to the securities transactions of
Kopp Emerging Growth Fund, furnishing periodic, regular and special reports to
the Kopp Board with respect to Kopp Emerging Growth Fund and American Century's
services and acting in conformity with applicable securities laws and
regulations. The Kopp Board also considered that American Century was being
proposed as a subadvisor for the primary purpose of aligning the portfolio
holdings of Kopp Emerging Growth Fund with AC New Opportunities II Fund in
anticipation of the Emerging Growth Reorganization.
INVESTMENT PERFORMANCE. The Kopp Board considered the investment
performance of AC New Opportunities II Fund.
2. ADVISORY FEES AND TOTAL EXPENSES
In considering the subadvisory arrangement, the Kopp Board noted that there
would be no compensation paid to American Century under the Subadvisory
Agreement and that the net expense ratios of Kopp Emerging Growth Fund would not
be affected as a result of American Century's appointment as a subadvisor.
3. COSTS AND PROFITABILITY
The Kopp Board did not request any specific information regarding the costs
of services to be provided to the Kopp Funds because American Century had not
previously served as a subadvisor to the Kopp Funds, and American Century will
not be compensated for its services under the Subadvisory Agreement. Therefore,
this particular factor was not relevant to the Kopp Board's consideration of the
Subadvisory Agreement.
4. ECONOMIES OF SCALE
Given the limited scope of the subadvisory arrangement, the Kopp Board
considered and concluded that the assets of the Kopp Funds were not likely to
increase in the foreseeable future to such an extent that there would be
meaningful economies of scale realized in the management of the Kopp Funds.
5. BENEFITS TO AMERICAN CENTURY
The Kopp Board considered information presented regarding any benefits to
American Century or its affiliates from serving as subadvisor to the Kopp Funds.
The Kopp Board noted that American Century does not intend to participate in
soft-dollar arrangements with regard to the Kopp Funds' brokerage. The Board
concluded, however, that American Century's services to the Kopp Funds prior to
the closing of the Reorganizations may enhance the prospects of asset retention
following the Reorganizations.
6. CONCLUSIONS
Based on its review, including the consideration of each of the factors
referred to above, the Kopp Board concluded that the subadvisory arrangement was
fair and reasonable to Kopp Emerging Growth Fund and that approval of the
Subadvisory Agreement was in the best interests of Kopp Emerging Growth Fund.
The Kopp Board therefore also determined to recommend that shareholders approve
the Subadvisory Agreement.
ADDITIONAL INFORMATION REGARDING KIA AND AMERICAN CENTURY
KIA and Centennial Lakes Capital, LLC ("CLC"), the principal distributor of
the Kopp Funds, are wholly-owned subsidiaries of Kopp Holding Company, LLC,
which is a wholly-owned subsidiary of Kopp Holding Company. Mr. LeRoy C. Kopp
controls Kopp Holding Company. The principal business address of KIA, CLC, Kopp
Holding Company and Kopp Holding Company, LLC is 7701 France Avenue South, Suite
500, Edina, Minnesota 55435.
Mr. LeRoy C. Kopp is a director, Chairman, President and Chief Executive
Officer of Kopp Funds, Inc. and is the Chairman, Sole Governor, Chief Executive
Officer, President and Chief Investment Officer of KIA. Mr. John P. Flakne is
the Chief Financial Officer, Treasurer and Secretary of Kopp Funds, Inc. and is
the Executive Vice President, Chief Financial Officer and Secretary of KIA. Ms.
Pamela M. Krill is the Chief Compliance Officer of Kopp Funds, Inc. and KIA.
KIA currently serves as the investment adviser to the Kopp Funds pursuant
to an investment advisory contract dated as of October 1, 1997, as amended,
supplemented and modified from time to time, and approved most recently by the
Kopp Board and by a majority of the Kopp Independent Directors on August 30,
2006. The investment advisory contract was approved by the initial shareholder
of Kopp Emerging Growth Fund on September 8, 1997. For providing services under
the investment advisory agreement KIA receives a fee equal to 1.00% of its
average daily net assets attributable to each class of shares. The advisory fee
is accrued daily and paid monthly. For the fiscal year ended September 30, 2005,
KIA received management fees from the Kopp Emerging Growth Fund totaling
$2,988,934, $234,095, and $754,333 for Class A, C, and I shares, respectively.
For the fiscal year ended September 30, 2005, KIA received management fees from
Kopp TQM Fund totaling $25,353, $1,012, and $112,895 for Class A, C and I
shares, respectively.
For the fiscal year ended September 30, 2005, CLC received the following
compensation from the Kopp Funds: (i) net underwriting discounts and commissions
totaling $32, 705, (ii) compensation on redemptions and repurchases totaling
$31, 728 and (iii) other compensation relating to payments made under the Kopp
Funds' Rule 12b-1 Plan totaling $136,335. CLC did not receive any brokerage
commissions from the Kopp Funds during the fiscal year ended September 30, 2005.
Mr. LeRoy C. Kopp, a director of the Kopp Funds and the controlling
shareholder with a 100% equity interest in Kopp Holding Company, the ultimate
parent entity of KIA, has a material interest in the sale of assets contemplated
by the Transaction Agreement. Pursuant to the Transaction Agreement, KIA will
receive from American Century a lump sum payment on the closing date of the
Reorganizations based upon the net assets of the Kopp Funds. See "INFORMATION
ABOUT THE TRANSACTION - TRANSACTION AGREEMENT BY AND AMONG AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC., KOPP INVESTMENT ADVISORS, LLC AND KOPP HOLDING
COMPANY."
Listed below is the name, address and principal occupations of the
principal executive officer and sole governor of KIA.
NAME TITLE PRINCIPAL OCCUPATION(S)
---- ----- -----------------------
LeRoy C. Kopp, 7701 France Avenue Chairman, Sole Governor, Chief Chairman, Sole Governor, Chief
South, Suite 500, Edina, Minnesota Executive Officer, President and Executive Officer, President and
55435 Chief Investment Officer Chief Investment Officer of KIA
since 1990; Director, Chairman,
President and Chief Executive
Officer of Kopp Funds, Inc. since
December 2005 and formerly a
Director, Chairman, President and
Chief Executive Officer of Kopp
Funds, Inc. from September 1997 to
May 2004; Sole Governor of
Centennial Lakes Capital, LLC;
Chairman, Sole Governor/Sole
Director, Chief Executive Officer
and President of Kopp Holding
Company and Kopp Holding Company, LLC
American Century
American Century manages approximately $100 billion in total assets,
including $4 billion in separately managed and institutional portfolios, and
approximately $94 billion in mutual funds as of September 21, 2006. American
Century is registered as an investment adviser under the Investment Advisers Act
of 1940. The address of the Advisor is 4500 Main Street, Kansas City, Missouri
64111
Listed below are the name, address and principal occupation of the
principal executive officer and each Director of American Century.
------------------------------ ----------------------- -------------------------
NAME TITLE PRINCIPAL OCCUPATION(S)
------------------------------ ----------------------- -------------------------
WILLIAM M. LYONS, Chief Executive Chief Executive Officer,
4500 Main Street, Kansas Officer, President, AMERICAN CENTURY
City, MO 64111 Director COMPANIES (ACC)
(September 2000 to
present); President,
ACC (June 1997 to
present). Also serves
as: Chief Executive
Officer and President,
AMERICAN CENTURY
GLOBAL INVESTMENT
MANAGEMENT, INC.
(ACGIM), AMERICAN
CENTURY INVESTMENT
SERVICES, INC, (ACIS)
and other ACC
subsidiaries;
Executive Vice
President, ACS;
Director, ACC, ACGIM,
AMERICAN CENTURY
SERVICES, LLC (ACS),
ACIS and other ACC
subsidiaries
------------------------------ ----------------------- -------------------------
JAMES E. STOWERS, JR., 4500 Director Director, ACGIM, ACS,
Main Street, Kansas City, MO ACIS and other ACC
64111 subsidiaries
------------------------------ ----------------------- -------------------------
JAMES E. STOWERS III, 4500 Chairman, Director Chairman, ACC (January
Main Street, Kansas City, MO 2005 to present);
64111 Co-Chairman, ACC
(September 2000 to
December 2004);
Chairman, ACS and
other ACC
subsidiaries;
Director, ACC, ACGIM,
ACS, ACIS and other
ACC subsidiaries
------------------------------ ----------------------- -------------------------
THE BOARD OF DIRECTORS OF KOPP FUNDS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL
OF THE SUBADVISORY AGREEMENT
INFORMATION ABOUT THE TRANSACTION
TERMS OF THE PLANS OF REORGANIZATION
Set forth below is a summary of certain material terms of the Plans of
Reorganization ("Plans"). This summary is qualified in its entirety by the terms
and provisions of the form of Plan of Reorganization which is attached to this
Proxy Statement/Prospectus as Exhibit A.
The Plans provide that all of the assets of each Kopp Fund will be
transferred to the corresponding American Century Fund at 4:00 p.m., Eastern
Time, on the Closing Date of the Reorganizations (which is expected to be on or
about February 23, 2007). In exchange for the transfer of these assets, each
American Century Fund will simultaneously issue a number of full and fractional
shares to the corresponding Kopp Fund equal in value to the aggregate net asset
value of the corresponding Kopp Fund calculated at the time of the
Reorganizations.
When calculating the value of the assets of the Kopp Funds for purposes of
each Reorganization, the net asset value of each Kopp Fund will be determined in
accordance with the American Century Fund's valuation procedures. While the
valuation procedures used by the American Century Funds are comparable in most
respects to those used by the Kopp Funds, differences in the procedures may
result in individual securities held by the Kopp Funds having a different value
at the Reorganization than the value used prior to the Reorganization. As a
result, the dollar value of your investment may be slightly higher or lower
after the Reorganization than it was before. The amount of any such variation is
not anticipated to be material and will result solely from the differences in
valuation methods used by the Funds, not any change in the intrinsic value of
your investment.
Following the transfer of assets in exchange for the respective American
Century Fund shares, each corresponding Kopp Fund will distribute all the
American Century Funds' shares pro rata to its shareholders of record in
complete liquidation of such Kopp Fund. Shareholders of each Kopp Fund owning
shares at the time of the Reorganization will receive the same percentage of the
aggregate number of corresponding American Century shares issued as such
shareholder owned in the Kopp Fund at the time of the Reorganization. Such
distribution will be accomplished by the establishment of accounts in the names
of each Kopp Fund shareholder on the share records of the corresponding American
Century Fund's transfer agent. Each account will receive the respective pro rata
number of full and fractional American Century Fund shares due to the
shareholder of the corresponding Kopp Fund. The Kopp Funds will then be
terminated. The American Century Funds do not issue share certificates to
shareholders. American Century Fund shares to be issued will have no preemptive
or conversion rights. No sales charge will be imposed in connection with the
receipt of such shares by the Kopp Funds' shareholders.
The Plans contain customary representations, warranties and conditions.
Each Plan provides that the consummation of the Reorganization with respect to
each Kopp Fund and the corresponding American Century Fund is conditioned upon,
among other things: (i) approval of the Reorganization by the applicable Kopp
Fund's shareholders; and (ii) the receipt by the Kopp Funds and the American
Century Funds of a tax opinion to the effect that the Reorganizations will be
tax-free to the Kopp Funds and their respective shareholders, and the American
Century Funds. Any Plan may be terminated if, before the Closing Date, any of
the required conditions have not been met, the representations and warranties
are not true (and have not been cured within 30 days), or the Board of Directors
of the Kopp Funds or American Century Funds, as the case may be, determines that
the Reorganization is not in the best interest of the shareholders of a Kopp
Fund or the corresponding American Century Fund, respectively. The
Reorganizations are not anticipated to result in dilution of the net asset value
of the Kopp Funds or the American Century Funds immediately following their
consummation.
COSTS OF REORGANIZATION
The expenses of each Reorganization will be paid by KIA and American
Century. Reorganization expenses include, without limitation: (a) expenses
associated with the preparation and filing of this Proxy Statement/Prospectus;
(b) postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each
fund; (f) solicitation costs; and (g) other related administrative or
operational costs. Any registration or licensing fee will be borne by the
American Century Fund incurring such fee. Any brokerage charges associated with
the disposition of portfolio securities by a Kopp Fund, prior to the
Reorganization, will be borne by the Kopp Fund.
In connection with the Reorganizations, Kopp Fund shareholders will receive
the class of corresponding shares set forth in the chart below:
--------------------------------- -----------------------------------
KOPP FUNDS AMERICAN CENTURY FUNDS-
CORRESPONDING SHARES
--------------------------------- -----------------------------------
Kopp TQM Fund AC Equity Growth Fund
Class A shares----------------->> Advisor Class shares
Class C shares----------------->> Class C shares
Class I shares----------------->> Investor Class shares
--------------------------------- -----------------------------------
Kopp Emerging Growth Fund AC New Opportunities II Fund
Class A shares----------------->> Class A shares
Class C shares----------------->> Class C shares
Class I shares----------------->> Investor Class shares
--------------------------------- -----------------------------------
Shares of the American Century Funds to be issued to shareholders of the Kopp
Funds under the Plans will be fully paid and non-assessable when issued,
transferable without restriction and will have no subscription rights. Reference
is hereby made to the Prospectuses of the American Century Funds provided
herewith for additional information about shares of the American Century Funds.
REASONS FOR THE REORGANIZATIONS
In determining whether to approve the Reorganizations and to recommend
approval of the Reorganizations to shareholders of the Kopp Funds, the Kopp
Board made inquiries into all matters deemed relevant and considered the
following, among other things:
o The reputation, financial strength and resources of American Century;
o The capabilities, practices and resources of American Century's
management and the other service providers to the American Century
family of funds;
o The viability of the Kopp Funds absent approval of the proposed
Reorganizations;
o The broader product array of the American Century family of funds, and
the expanded range of investment options and exchange opportunities
available to shareholders;
o The shareholder services offered by American Century;
o The relative compatibility of investment objectives and principal
investment policies of the American Century Funds with those of the
Kopp Funds;
o The federal income tax treatment of the Reorganizations;
o The anticipated effect of the Reorganizations on expense ratios;
o The investment management experience of American Century; and
o The undertaking by KIA and American Century to share equally all the
costs and expenses of preparing, printing, and mailing this Proxy
Statement/Prospectus and solicitation expenses of the Reorganizations.
Some of these factors, which served as the basis for the Kopp Board's
determination to approve the Reorganizations, are discussed in greater detail
below.
BROADER PRODUCT ARRAY AND ENHANCED RANGE OF INVESTMENT OPTIONS
Investors in the American Century Funds enjoy a wide array of investment
options and strategies. Currently, the American Century family of funds has more
than 100 publicly-offered funds (26 of which are load funds), including equity
funds, international funds, asset allocation funds, tax-free funds and income
funds. This broad range of investment options will permit an investor in the
American Century Funds to diversify his or her investments and to participate in
investment styles not currently offered by KIA. Generally, shareholders may make
exchanges of the same class of shares between American Century Funds without
additional charge. Thus, if the Reorganizations are approved, Kopp Fund
shareholders will have increased investment options and greater flexibility to
change investments through exchanges. Such exchanges generally are taxable.
AMERICAN CENTURY SHAREHOLDER SERVICE CAPABILITIES
American Century has approximately $100 billion in assets under management.
In addition, the scale and financial resources of American Century allow it to
provide, relative to KIA, increased sales and service capabilities to fund
shareholders and their financial intermediaries. Investors in the American
Century Funds have access to a telephone service operation (for both
shareholders and their financial intermediaries), automated services and
internet services. Further, American Century provides three investor centers and
access to other financial products and services. These shareholder services will
be available to Kopp Fund shareholders if the Reorganizations are approved.
LARGER FUND COMPLEX
Kopp Fund shareholders have the potential to benefit from being part of a
larger group of funds with greater assets, thereby reducing certain fixed costs
(such as legal, compliance and board of directors/trustee expenses) as a
percentage of fund assets. In addition, as a result of the Reorganizations,
certain funds may benefit as a result of increased assets and the potential to
grow assets in the funds more quickly, which may result in reaching certain
breakpoints in American Century's fee schedules sooner than may otherwise have
been possible. In addition, American Century may aggregate certain other assets
under management in a particular investment category or strategy towards
achieving fund fee breakpoints. This also may allow fee breakpoints to be
reached sooner, potentially resulting in lower fees for shareholders.
PORTFOLIO MANAGEMENT
American Century has greater depth in its investment management personnel
than KIA.
COMPATIBLE INVESTMENT OBJECTIVES AND POLICIES
As discussed in the section entitled "SUMMARY-Comparison of Investment
Objectives and Policies," each American Century Fund and the corresponding Kopp
Fund have investment objectives and policies that are similar.
COMPARATIVE PERFORMANCE
The Kopp Board considered the performance of the Kopp Funds in relation to
the performance of the corresponding American Century Funds. As of July 31,
2006, the average annual performance of Kopp Funds in relation to their
respective acquiring American Century Funds was as follows:
---------------------------------------------- ------------ ------------ -----------------
FUND ONE-YEAR FIVE-YEAR SINCE INCEPTION
---------------------------------------------- ------------ ------------ -----------------
Kopp TQM Fund - Class A shares 1.71% N/A 8.62% (9/30/04)
---------------------------------------------- ------------ ------------ -----------------
AC Equity Growth Fund - Advisor Class shares 4.26% 4.28% 4.72% (10/9/97)
---------------------------------------------- ------------ ------------ -----------------
Kopp TQM Fund - Class C shares 1.71% N/A 8.62% (9/30/04)
---------------------------------------------- ------------ ------------ -----------------
AC Equity Growth Fund - Class C shares 3.51% 3.52% 3.47% (7/18/01)
---------------------------------------------- ------------ ------------ -----------------
Kopp TQM Fund - Class I shares 1.71% 1.23% 5.98% (9/30/94)
---------------------------------------------- ------------ ------------ -----------------
AC Equity Growth Fund - Investor Class shares 4.52% 4.15% 10.97% (5/9/91)
---------------------------------------------- ------------ ------------ -----------------
---------------------------------------------- ------------ ------------ -----------------
Kopp Emerging Growth Fund - Class A shares (9.98)% (7.59)% (1.44)% (10/1/97)
---------------------------------------------- ------------ ------------ -----------------
AC New Opportunities II Fund -Class A shares 7.64% N/A 19.14% (1/31/03)
---------------------------------------------- ------------ ------------ -----------------
Kopp Emerging Growth Fund - Class C shares (10.64)% (8.21)% 0.48% (10/1/97)
---------------------------------------------- ------------ ------------ -----------------
AC New Opportunities II Fund -Class C shares 6.79% N/A 18.38% (1/31/03)
---------------------------------------------- ------------ ------------ -----------------
Kopp Emerging Growth Fund - Class I shares (9.67)% (7.25)% (1.06)% (10/1/97)
---------------------------------------------- ------------ ------------ -----------------
AC New Opportunities II Fund - Investor Class 7.97% 9.39% 8.78% (6/1/01)
shares
---------------------------------------------- ------------ ------------ -----------------
OPERATING EXPENSES
The Kopp Board considered the operating expenses the Kopp Funds incur and
the unified fee American Century utilizes. American Century utilizes an
all-inclusive fee for mutual fund investment management and shareholder
servicing expenses. The Kopp Board noted that under the unified fee, the fees of
the American Century Funds after the Reorganizations may not be increased
without shareholder approval. As a result, any increase in costs after the
Reorganizations, other than those limited expenses not covered by the unified
fee, will be borne by American Century unless shareholders approve the increase.
The Kopp Board noted that, as a percentage of net assets, the pro forma total
annual operating expenses of the acquiring American Century Funds after giving
effect to fee waivers, except as noted below, are expected to be lower than the
current total annual operating expenses of the corresponding Kopp Funds.
The Kopp Board noted that the pro forma total annual operating expenses of the
Class C and Investor Class shares of AC New Opportunities II Fund are slightly
higher than the Class C and Class I shares of Kopp Emerging Growth Fund.
However, the Kopp Board noted that future asset growth in AC New Opportunities
II Fund may cause the Fund to reach breakpoints in its fee schedule that would
result in lower expenses to shareholders of AC New Opportunities II Fund.
The Kopp Board also noted that while total annual operating expenses for the
Class C shares of Kopp TQM Fund are substantially higher than the Class C shares
of AC Equity Growth Fund before giving effect to the voluntary fee and expense
waivers currently in place, the Class C shares of Kopp TQM Fund are lower than
the total annual operating expenses of the Class C shares of AC Equity Growth
Fund after giving effect to such waivers. The Kopp Board noted that the waivers
in place for Kopp TQM Fund were voluntary and could change at any time and that
future asset growth could result in lower expenses for shareholders of AC Equity
Growth Fund.
TAX-FREE REORGANIZATION
The Kopp Board also considered the expectation that the Reorganizations
will be treated as "tax-free" for federal income tax purposes. Prior to the
Reorganizations, if a Kopp Fund shareholder were to redeem its investment in the
Kopp Funds and invest the proceeds in another fund or other investment product,
such shareholder generally would recognize gain or loss for federal income tax
purposes upon the redemption of the shares. By contrast, it is intended that, as
a result of the Reorganizations: (i) Kopp Fund shareholders will not recognize a
taxable gain or loss on the exchange of their Kopp Funds shares for shares of
the corresponding Acquiring Fund; (ii) Kopp Fund shareholders will have the same
aggregate tax cost basis in the American Century Fund shares received in
connection with the Reorganizations as in their Kopp Fund shares; and (iii)
assuming that Kopp Fund shares are held as a capital asset on the Closing Date,
the holding period for American Century Fund shares will include the period for
which such shareholder held its Kopp Fund shares.
EXPENSES OF THE REORGANIZATIONS
American Century and KIA, or one or more of their affiliates, will bear the
cost of the Reorganizations, including proxy solicitation and tabulation costs.
Therefore, neither the Kopp Funds nor American Century Funds will bear any of
these expenses.
RECOMMENDATION IN FAVOR OF APPROVAL OF THE PLAN OF REORGANIZATION
Based on the foregoing, together with other factors and information
considered to be relevant, and recognizing that there can be no assurance that
any operating efficiencies or other benefits will in fact be realized, the Kopp
Board concluded that the Reorganizations present no significant risks or costs
(including legal, accounting and administrative costs) that would outweigh the
benefits to shareholders discussed above.
In approving the Reorganizations, the Kopp Board, including all of the Kopp
Independent Directors, determined that each Reorganization is in the best
interests of the respective Kopp Fund and its shareholders. In addition, the
Kopp Board, including all of the Kopp Independent Directors, also determined
that the interests of the shareholders of each Kopp Fund would not be diluted as
a result of effecting the respective Reorganization because each such
shareholder will receive corresponding shares of an American Century Fund having
an aggregate net asset value equal to the aggregate net asset value of his or
her shares of the respective Kopp Fund outstanding as determined under the
American Century Fund's policies at the Closing. Consequently, the Kopp Board
approved the Plans and directed that the Plans be submitted to the shareholders
of each respective Kopp Fund for approval.
THE KOPP BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS OF EACH KOPP
FUND APPROVE THE CORRESPONDING PLAN OF REORGANIZATION. CONSUMMATION OF THE
REORGANIZATIONS WITH RESPECT TO EACH KOPP FUND IS CONTINGENT UPON THE APPROVAL
OF THE PLAN OF REORGANIZATION BY THE OTHER KOPP FUND.
The Board of Directors of each of the relevant American Century Funds
unanimously approved the Plans on behalf of the American Century Funds.
TRANSACTION AGREEMENT BY AND AMONG AMERICAN CENTURY INVESTMENT MANAGEMENT,
INC., KOPP INVESTMENT ADVISORS, LLC AND KOPP HOLDING COMPANY
American Century, KIA and Kopp Holding Company, the ultimate owner of KIA,
have entered into a definitive agreement (the "Transaction Agreement") primarily
regarding the sale by KIA to American Century of certain assets relating to
KIA's business of providing investment advisory and investment management
services to the Kopp Funds and KIA's cooperation in the reorganization of the
Kopp Funds. Pursuant to the Transaction Agreement, KIA will receive from
American Century a lump sum payment on the closing date of the Reorganizations
based upon the net assets of the Kopp Funds. Consummation of the Transaction
Agreement is dependent upon the satisfaction or waiver of certain conditions
including, among other things, shareholders of the Kopp Funds approving the
Reorganizations and the Subadvisory Agreement, and the combined net assets of
the Kopp Funds being not less than $150 million on the Closing Date. If the
Reorganizations are not consummated due to a condition not being satisfied or
waived, the Kopp Funds may realize additional costs if KIA determines it to be
in the best interests of the Kopp Funds to realign its portfolios or liquidate
securities acquired during the Subadvisory Period.
Mr. LeRoy C. Kopp, the founder and chief executive of KIA, has significant
personal assets in the Kopp Funds. For additional information see "VOTING
INFORMATION- Security Ownership of Certain Beneficial Owners and Management of
the Funds." As a part of the Transaction Agreement, Mr. Kopp has agreed to
maintain those assets in the American Century Funds for not less than two years
following the Reorganizations.
As a part of the Transaction Agreement, American Century acknowledges that
KIA intends that the Reorganizations shall satisfy the applicable requirements
of Section 15(f) of the 1940 Act. Accordingly, American Century has agreed that,
for the minimum time periods specified in Section 15(f), American Century,
subject to compliance with its fiduciary duties, shall use commercially
reasonable efforts to, and shall use commercially reasonable efforts to cause
the directors of the American Century Funds to, take (or refrain from taking, as
the case may be) such actions as are necessary to ensure that: (i) at least
seventy-five percent (75%) of the directors of the American Century Funds shall
not be "interested persons" (as that term is defined in the 1940 Act) of
American Century, KIA or any "interested person" thereof; (ii) no "unfair
burden" (as that term is defined in Section 15(f)(2)(B) of the 1920 Act) shall
be imposed as a result of the Reorganizations; (iii) no "unfair burden" (as that
term is defined in Section 15(f)(2)(B) of the 1940 Act) shall be imposed as a
result of the Reorganizations; and (iv) each vacancy among the directors of the
American Century Funds shall be filled by a person who is not an "interested
person" of American Century or KIA shall be filled by a person who has been
selected and proposed for election by a majority of the directors of the
American Century Funds who are not such interested persons. American Century may
elect, in lieu of the covenants set forth in the preceding sentence, to apply
for and obtain an exemptive order under Section 6(c) of the 1940 Act from the
provisions of Section 15(f)(1)(A) of the 1940 Act, in form and substance
reasonably acceptable to the KIA.
BENEFITS TO AMERICAN CENTURY
The Reorganizations will increase American Century's assets under
management and result in increased management fee revenue to American Century.
In addition, the consummation of the Reorganizations and the activities
contemplated in connection there with will increase awareness of American
Century as an investment manager and provider of mutual funds to shareholders of
the Kopp Funds.
It is anticipated that Kopp Emerging Growth Fund will have capital loss
carryforwards that will be transferred to AC New Opportunities Fund II as part
of the Reorganization. These capital loss carryforwards, if realized, could be
utilized by the AC New Opportunities Fund II following the Reorganization. For
more information see "INFORMATION ABOUT THE TRANSACTION- Federal Income Tax
Consequences of the Reorganization."
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATIONS
As a condition to the Reorganizations, the Kopp Funds will receive an
opinion of counsel to the effect that, on the basis of the existing provisions
of the Code, current administrative rules and court decisions, for federal
income tax purposes:
o the Reorganizations as set forth in the Plans will each constitute a
tax-free reorganization under section 368(a) of the Code, and the Kopp
Funds and American Century Funds each will be a "party to a
reorganization" within the meaning of section 368(b) of the Code;
o no gain or loss will be recognized by AC New Opportunities II Fund
upon its receipt of Kopp Emerging Growth Fund's assets in exchange for
Class A Shares, Class C Shares and Investor Class Shares of AC New
Opportunities II Fund and no gain or loss will be recognized by AC
Equity Growth Fund upon its receipt of Kopp TQM Fund's assets in
exchange for Advisor Class Shares, Class C Shares and Investor Class
Shares of AC Equity Growth Fund;
o no gain or loss will be recognized by Kopp Emerging Growth Fund upon
transfer of its assets to AC New Opportunities II Fund in exchange for
Class A Shares, Class C Shares and Investor Class Shares of AC New
Opportunities II Fund or upon the distribution of Class A Shares,
Class C Shares and Investor Class Shares of AC New Opportunities II
Fund to Kopp Emerging Growth Fund's shareholders in exchange for their
shares of Kopp Emerging Growth Fund;
o no gain or loss will be recognized by Kopp TQM Fund upon transfer of
its assets to AC Equity Growth Fund in exchange for Advisor Class
Shares, Class C Shares and Investor Class Shares of AC Equity Growth
Fund or upon the distribution of Advisor Class Shares, Class C Shares
and Investor Class Shares of AC Equity Growth Fund to Kopp TQM Fund's
shareholders in exchange for their shares of Kopp TQM Fund;
o no gain or loss will be recognized by shareholders of Kopp Emerging
Growth Fund or Kopp TQM Fund upon exchange of their shares for Class A
Shares, Class C Shares and Investor Class Shares of AC New
Opportunities II Fund and for Advisor Class Shares, Class C Shares and
Investor Class Shares of AC Equity Growth Fund, respectively;
o the aggregate tax basis of Class A Shares, Class C Shares and Investor
Class Shares of AC New Opportunities II Fund and Advisor Class Shares,
Class C Shares and Investor Class Shares of AC Equity Growth Fund
received by each shareholder of Kopp Emerging Growth Fund and Kopp TQM
Fund, respectively, pursuant to the Reorganizations will be the same
as the aggregate tax basis of the shares of the Kopp Funds held by
such shareholder immediately prior to the Reorganizations;
o the holding period of the Class A Shares, Advisor Class Shares, Class
C Shares and Investor Class Shares of AC Equity Growth Fund received
by each shareholder of Kopp TQM Fund pursuant to the Plan will include
the period during which shares of Kopp TQM Fund exchanged therefor
were held by such shareholder, provided the shares of Kopp TQM Fund
were held as capital assets on the date of the Reorganization;
o the holding period of the Class A Shares, Advisor Class Shares, Class
C Shares and Investor Class Shares of AC New Opportunities II Fund
received by each shareholder of Kopp Emerging Growth Fund pursuant to
the Plan will include the period during which shares of Kopp Emerging
Growth Fund exchanged therefor were held by such shareholder, provided
the shares of Kopp Emerging Growth Fund were held as capital assets on
the date of the Reorganization;
o the tax basis of the assets of the Kopp Funds acquired by the American
Century Funds will be the same as the tax basis of such assets to the
Kopp Funds immediately prior to the Reorganizations; and
o the holding period of the Kopp Funds' assets in the hands of the
American Century Funds will include the period during which those
assets were held by the Kopp Funds.
The foregoing opinion may state that no opinion is expressed as to the
effect of the Reorganizations on the American Century Funds, the Kopp Funds or
the Kopp Funds' shareholders with respect to any asset as to which unrealized
gain or loss is required to be recognized for federal income tax purposes at the
end of a taxable year (or on the termination or transfer thereof) under a
mark-to-market system of accounting.
The parties have agreed to cooperate to facilitate the orderly
reorganization of the Kopp Funds into the American Century Funds and to reduce
potential adverse consequences to the American Century Funds. It is anticipated
that this transition will include the sale of certain portfolio securities of
the Kopp Funds prior to the Reorganizations. The sale of securities may result
in the realization of capital gains to the Kopp Funds that, to the extent not
offset by capital losses, would be distributed to shareholders prior to the
Closing Date. With respect to Kopp Emerging Growth Fund, it is anticipated that
all or substantially all of the fund's portfolio will be transitioned. Given the
significant unutilized capital losses retained by the fund, it is not
anticipated that the realization of any such gains will result in a distribution
to Kopp Emerging Growth Fund shareholders.
As noted above, Kopp Emerging Growth Fund had unutilized capital loss
carryovers as of the end of its fiscal year end. The final amount of unutilized
capital loss carryovers for Kopp Emerging Growth Fund is subject to change and
will not be determined until the time of the Reorganization.
FUND (FISCAL YEAR END) UNUTILIZED CAPITAL LOSS
CARRYOVERS
Kopp Emerging Growth
Fund (September 30,
2006)
The American Century Funds and Kopp Funds had the following tax basis
appreciation or (depreciation) as of each fund's fiscal year end.
FUND (FISCAL YEAR END) TAX BASIS APPRECIATION OR FUND (FISCAL YEAR END) TAX BASIS APPRECIATION OR
(DEPRECIATION) (DEPRECIATION)
Kopp TQM Fund AC Equity Growth Fund
(September 30, 2006) (December 31, 2005)
Kopp Emerging Growth AC New Opportunities II
Fund (September 30, Fund (October 31, 2005)
2006)
After and as a result of the Reorganizations, it is not anticipated that AC
New Opportunities II Fund will be limited under Section 382 of the Code in its
use of Kopp Emerging Growth Fund's capital loss carryovers. Since it is
anticipated that AC New Opportunities II Fund will have more assets than Kopp
Emerging Growth Fund after the Reorganization, the capital loss carryovers will
be available for use over a larger asset base.
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE EFFECT
OF THE REORGANIZATIONS IN LIGHT OF THEIR INDIVIDUAL CIRCUMSTANCES. AS THE
FOREGOING RELATES ONLY TO FEDERAL INCOME TAX CONSEQUENCES, SHAREHOLDERS ALSO
SHOULD CONSULT THEIR TAX ADVISORS AS TO THE NON-UNITED STATES, STATE, LOCAL AND
OTHER TAX CONSEQUENCES OF THE REORGANIZATIONS.
MATERIAL DIFFERENCES BETWEEN RIGHTS OF SHAREHOLDERS
Kopp TQM Fund and Kopp Emerging Growth Fund are both series of Kopp Funds,
Inc., a Minnesota corporation. AC New Opportunities II Fund is a separate series
of American Century Mutual Funds, Inc., a Maryland corporation ("ACMF"). AC
Equity Growth Fund is a separate series of American Century Quantitative Equity
Funds, Inc., a Maryland corporation ("ACQEF"). Generally, the rights of
shareholders in the American Century Funds and the Kopp Funds are similar. The
following discussion provides information with respect to the differences in the
rights of shareholders under Maryland law, Minnesota law and the respective
governing documents for the acquired Kopp Funds and the acquiring American
Century Funds. The Articles of Incorporation for the acquired Kopp Funds are
referred to below as the "Kopp Articles," the Articles of Incorporation for each
of ACMF, and ACQEF are referred to below as the "American Century Fund
Articles." This summary does not purport to be complete, and is qualified in its
entirety by reference to Kopp Funds' Articles of Incorporation and Bylaws,
ACMF's Articles of Incorporation and Bylaws, ACQEF's Articles of Incorporation
and Bylaws and the laws of the State of Maryland and the State of Minnesota.
TERMINATION AND DISSOLUTION
Pursuant to the Kopp Articles, in the event of a liquidation of a series or
class of Kopp Funds, Inc. the shareholders of such series or class are entitled
to receive the assets belonging to the class or series less the liabilities
allocated to that class or series. Under Minnesota law, the affirmative vote of
the holders of a majority of the voting power of shares is required to dissolve
a corporation. Additionally, the Kopp Board may transfer the assets of any class
or series of shares of the Kopp Funds, Inc. to another series or class provided
that approval of a majority of shareholders of each affected class or series is
obtained and at least 10% of the issued and outstanding shares of the affected
class or series is present at such shareholder meeting in person or by proxy.
Under Maryland law and the Articles of Incorporation for AC New Opportunities II
Fund the dissolution of such corporation must be approved by a majority of all
of the votes entitled to be cast on such dissolution. The Board of Directors of
ACQEF reserves the right to dissolve the corporation or any series thereof
without any action by the shareholders, to the extent permitted by law.
VOTING RIGHTS OF SHAREHOLDERS
The Kopp Bylaws provide that on each matter submitted to a vote of
shareholders, each holder of shares is entitled to one vote for each share
outstanding in such stockholder's name. The Kopp Articles do not specifically
grant shareholders the right to vote on any matter other than a liquidation of a
series or class of Kopp Funds, Inc. However, under the Minnesota law and 1940
Act, shareholders are entitled to vote on certain matters such as election and
removal of directors and certain extraordinary actions. The acquiring American
Century Fund's Articles provide that shareholders are entitled to one vote for
each dollar, and a fractional vote for each fraction of a dollar, of net asset
per share for each share of stock held, irrespective of the class or series,
provided, however, that (1) matters affecting only one class or series shall be
voted upon only by that class or series, and (2) where required by the 1940 Act
or the regulations adopted thereunder or any other applicable law, certain
matters shall be voted on separately by each class or series of shares affected.
The American Century Fund Articles do not specifically grant shareholders the
right to vote on any matter other than the election of directors at a meeting of
shareholders. However, under Maryland law and the Investment Company Act,
shareholders are entitled to vote on certain other matters.
AMENDMENTS TO GOVERNING DOCUMENTS
The Board of Directors may amend or alter the Bylaws of Kopp Funds, Inc.;
however, such power is subject to the power of the shareholders of Kopp Funds,
Inc. to modify or rescind any such action by a majority vote of the shareholders
present at any regular or special meeting of shareholders called for such
purpose. The Boards of Directors of ACMF and ACQEF have the exclusive authority
to alter or repeal the Bylaws of such entities. ACMF and ACQEF reserve the right
to make any amendments to their articles, including any amendment which alters
the contract rights of any outstanding stock.
LIABILITY OF SHAREHOLDERS
Under Maryland law, a stockholder or subscriber for stock of a corporation
is not obligated to the corporation or its creditors with respect to the stock,
except to the extent that: (i) the subscription price or other agreed
consideration for the stock has not been paid; or (ii) liability is imposed
under any other provision of Maryland law. This is applicable to ACMF and ACQEF.
Under Minnesota law, a shareholder is not obligated to the corporation or its
creditors with respect to the shares, unless (i) the subscription price or other
agreed consideration for the shares is unfair to the corporation, (ii) the
property or services received or to be received by the corporation as
consideration for the shares is overvalued, or (iii) liability is imposed under
any other provision of Minnesota law.
LIABILITY OF DIRECTORS AND OFFICERS; INDEMNIFICATION
The American Century Fund Articles indemnify directors and officers to the
fullest extent permitted under Maryland law. Under Maryland law, indemnification
of a corporation's directors and officers is mandatory if a director or officer
has been successful on the merits or otherwise in the defense of certain
proceedings. Maryland law permits indemnification for other matters unless it is
established that the act or omission giving rise to the proceeding was committed
in bad faith, a result of active and deliberate dishonesty, or one in which a
director or officer actually received an improper benefit. Under Minnesota law,
a director may be liable to the corporation for distributions made in violation
of Minnesota law or a restriction contained in a corporation's articles or
bylaws. The Kopp Funds indemnify directors and officers to the fullest extent
permitted by Minnesota law.
The Kopp Articles provide that a director shall not be personally liable to Kopp
Funds, Inc. or its shareowners for monetary liability relating to breach of
fiduciary duty as a director, unless the liability relates to:
o a breach of the director's duty of loyalty to Kopp Funds, Inc. or its
shareowners;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o liability based on the payment of an improper dividend or an improper
purchase of the shares of Kopp Funds, Inc., or on the sale of
unregistered securities or securities fraud; or
o transactions where the director gained an improper personal benefit.
The Kopp Articles provide that any repeal or modification of the
foregoing provisions shall not adversely affect any right or protection of
a director of Kopp Funds, Inc. existing at the time of such repeal or
modification.
ELECTION OF DIRECTORS; TERMS
Directors of Kopp Funds, Inc. hold office until the next regular meeting of
shareholders and until their successor is elected and qualifies, or until death,
resignation or removal. Shareholders may elect successors to such directors
either at each regular shareholders' meeting or at a special shareholders'
meeting which provides notice of the purpose of such meeting. The Kopp Board may
appoint a person, by a majority of the remaining directors, to fill a vacancy on
the Board, and each person so appointed shall be a director until his or her
successor is elected by the shareholders, who may make such election at their
next regular meeting or at any meeting duly called for that purpose. Directors
of ACMF and ACQEF serve until the next meeting of shareholders at which
directors are elected or until their successors are elected and qualify.
REMOVAL OF DIRECTORS
Under Maryland law, the shareholders of a corporation may remove any
director, with or without cause, by the affirmative vote of a majority of all
the votes entitled to be cast generally for the election of directors, except as
otherwise provided in the charter of the corporation. Under Minnesota law,
unless a corporation's articles of incorporation provide otherwise, a director
may be removed with or without cause by the affirmative vote of a majority of
the shareholders or, if the director was named by the board to fill a vacancy,
by the affirmative vote of a majority of the other directors. The Kopp Bylaws
provide that directors of Kopp may be removed, either with or without cause, at
any meeting of the shareholders by a vote of the majority of the shares entitled
to vote at an election of directors.
MEETINGS OF SHAREHOLDERS
The Bylaws of the Kopp Funds, Inc. do not require the funds to hold annual
shareholder meetings, unless required to do so in order to elect directors under
applicable law, including the 1940 Act. The Bylaws of Kopp Funds, Inc. provide
that a special meeting of shareholders may be called by the President, the
Chairman of the Board of Directors, any two or more directors, or by one or more
shareholders holding ten percent or more of the shares entitled to vote on the
matters to be presented to the meeting. For each of ACMF and ACQEF, no annual
meeting is required except if required to elect directors by the 1940 Act.
Special meetings may be called by the Boards or the Chairmen, Presidents, Vice
Presidents, Secretaries or Assistant Secretaries. Special meetings of the
shareholders of ACQEF shall be called by the Secretary upon written request of
shareholders entitled to cast at least ten percent of all the votes entitled to
be cast at such meeting. Special meetings of the shareholders of ACMF shall be
called by the Secretary upon written request of shareholders entitled to cast at
least twenty-five percent of all the votes entitled to be cast at such meeting.
DESCRIPTION OF FUND SHARES AND CAPITALIZATION
The following table sets forth the capitalization of each Kopp Fund and
each American Century Fund as of August 31, 2006, and the capitalization of each
American Century Fund, on a pro forma basis, as if the Reorganizations had
occurred on that date.
CAPITALIZATION
TOTAL NET ASSETS NET ASSET VALUE OUTSTANDING
PER SHARE SHARES
AC EQUITY GROWTH FUND $364,568,284 $24.19 15,069,109
ADVISOR CLASS SHARES
KOPP TQM FUND $7,050,829 $13.33 529,120
CLASS A SHARES
AC EQUITY GROWTH FUND PROFORMA COMBINED $371,619,113 $24.19 15,360,586
ADVISOR CLASS SHARES
TOTAL NET ASSETS NET ASSET VALUE OUTSTANDING
PER SHARE SHARES
AC EQUITY GROWTH FUND $8,263,994 $24.06 343,427
CLASS C SHARES
KOPP TQM FUND $732,409 $13.33 54,962
CLASS C SHARES
AC EQUITY GROWTH FUND PROFORMA COMBINED $8,996,403 $24.06 373,868
CLASS C SHARES
TOTAL NET ASSETS NET ASSET VALUE OUTSTANDING
PER SHARE SHARES
AC EQUITY GROWTH FUND $2,241,718,329 $24.22 92,559,508
INVESTOR CLASS SHARES
KOPP TQM FUND $18,406,665 $13.33 1,381,196
CLASS I SHARES
AC EQUITY GROWTH FUND PROFORMA COMBINED $2,241,718,329 $24.22 93,319,486
INVESTOR CLASS SHARES
TOTAL NET ASSETS NET ASSET VALUE OUTSTANDING
PER SHARE SHARES
AC NEW OPPORTUNITIES II FUND $63,519,234 $7.21 8,813,785
CLASS A SHARES
KOPP EMERGING GROWTH FUND $187,845,454 $8.89 21,140,694
CLASS A SHARES
AC NEW OPPORTUNITIES II FUND PROFORMA $251,364,688 $7.21 34,867,247
COMBINED CLASS A SHARES
TOTAL NET ASSETS NET ASSET VALUE OUTSTANDING
PER SHARE SHARES
AC NEW OPPORTUNITIES II FUND $3,888,334 $7.15 543,503
CLASS C SHARES
KOPP EMERGING GROWTH FUND $15,126,950 $8.46 1,787,875
CLASS C SHARES
AC NEW OPPORTUNITIES II FUND PROFORMA $19,015,284 $7.15 2,659,161
COMBINED CLASS C SHARES
TOTAL NET ASSETS NET ASSET VALUE OUTSTANDING
PER SHARE SHARES
AC NEW OPPORTUNITIES II FUND $47,280,865 $7.24 6,531,067
INVESTOR CLASS SHARES
KOPP EMERGING GROWTH FUND $84,780,523 $9.20 9,211,303
CLASS I SHARES
AC NEW OPPORTUNITIES II FUND PROFORMA $132,061,388 $7.24 18,241,084
COMBINED INVESTOR CLASS SHARES
INFORMATION ABOUT THE AMERICAN CENTURY FUNDS
ACMF, on behalf of AC New Opportunities II Fund, and ACQEF, on behalf of AC
Equity Growth Fund, are subject to the informational requirements of the
Securities Act of 1933, as amended, the Securities and Exchange Act of 1934, as
amended, and the 1940 Act, and in accordance therewith file reports and other
information with the SEC. Reports, proxy and information statements, and other
information filed by the American Century Funds, can be obtained by calling or
writing the American Century Funds and can also be inspected and copied by the
public at the public reference facilities maintained by the Securities and
Exchange Commission in Washington, D.C. and located at Room 1204, Everett
McKinley Dirksen Building, 219 South Dearborn Street, Chicago, IL 60604 and 233
Broadway, New York, NY 10007. Copies of such materials can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, Securities and Exchange Commission, Washington, D.C.
20549, or obtained electronically from the SEC's website (www.sec.gov).
This Proxy Statement/Prospectus, which constitutes part of a Registration
Statement filed by each American Century Fund with the SEC under the Securities
Act of 1933, as amended, omits certain of the information contained in the
Registration Statement. Reference is hereby made to the Registration Statement
and to the exhibits thereto for further information with respect to the
applicable American Century Funds and the shares offered hereby. Statements
contained herein concerning the provisions of documents are necessarily
summaries of such documents, and each such statement is qualified in its
entirety by reference to the copy of the applicable documents filed with the
SEC.
INFORMATION ABOUT THE KOPP FUNDS
Kopp Funds, Inc., on behalf of Kopp Emerging Growth Fund and Kopp TQM Fund,
is subject to the informational requirements of the Securities Act of 1933, as
amended, the Securities and Exchange Act of 1934, as amended, and the 1940 Act,
and in accordance therewith files reports and other information with the SEC.
Reports, proxy and information statements, and other information filed by the
Kopp Funds, can be obtained by calling or writing the Kopp Funds and can also be
inspected at the addresses listed in the previous section, or obtained
electronically from the SEC's website (www.sec.gov).
VOTING INFORMATION
GENERAL INFORMATION
This Proxy Statement/Prospectus is being furnished in connection with the
solicitation of proxies by the Kopp Board on behalf of the Kopp Funds. Proxies
may be solicited by officers of the Kopp Funds and the American Century Funds,
as well as their affiliates, employees and financial representatives. It is
anticipated that the solicitation of proxies will be primarily by mail,
internet, telephone, facsimile or personal interview. Shareholders who
communicate proxies by telephone or by other electronic means have the same
power and authority to issue, revoke, or otherwise change their voting
instructions as shareholders submitting proxies in written form. Telephonic
solicitations will follow procedures designed to ensure accuracy and prevent
fraud. American Century or KIA or an affiliate thereof will reimburse banks,
brokers and others for their reasonable expenses in forwarding proxy
solicitation materials to beneficial owners of the Kopp Funds and will reimburse
certain officers or employees that it may employ for their reasonable expenses
in assisting in the solicitation of proxies from such beneficial owners. The
cost of soliciting proxies will be borne equally by KIA and American Century.
DATE, TIME AND PLACE OF MEETING
The Meeting will be held on January 12, 2007, at the principal executive
offices of KIA, 7701 France Avenue South, Suite 500, Edina, Minnesota, at 10:00
a.m., Central Time.
USE AND REVOCATION OF PROXIES
A shareholder executing and returning a proxy has the power to revoke it at
any time prior to its exercise by executing a superseding proxy (i.e.,
later-dated and signed), by submitting a notice of revocation to the Secretary
of the Kopp Funds or by subsequently registering his or her vote by telephone or
via the Internet. In addition, although mere attendance at the Meeting will not
revoke a proxy, a shareholder present at the Meeting may withdraw his or her
proxy and vote in person. All shares represented by properly executed proxies
received at or prior to the Meeting, unless such proxies previously have been
revoked, will be voted at the Meeting in accordance with the directions on the
proxies; if no direction is indicated on a properly executed proxy, such shares
will be voted "FOR" approval of the Reorganizations and the Subadvisory
Agreement. It is not anticipated that any matters other than the approval of the
Reorganizations and the Subadvisory Agreement will be brought before the
Meeting. If, however, any other business properly is brought before the Meeting,
proxies will be voted in accordance with the judgment of the persons designated
on such proxies.
VOTING RIGHTS AND REQUIRED VOTE
A quorum of shareholders is necessary to hold a valid meeting. Shareholders
entitled to vote 50% of the issued and outstanding shares of each Kopp Fund must
be present in person or by proxy to constitute a quorum for purposes of voting
on the proposals relating to that Kopp Fund. Each share of a Kopp Fund is
entitled to one vote with fractional shares voting proportionally. Shareholders
of each Kopp Fund vote separately on whether to approve the Plans, and the
consummation of the Reorganizations is conditioned on the shareholders of each
Kopp Fund approving each Reorganization. Approval of the Plans by a Kopp Fund
requires the affirmative vote of a majority of the number of shares entitled to
vote and represented at the meeting at the time of the vote. "Majority" for this
purpose under the 1940 Act means the lesser of (i) more than 50% of the
outstanding shares of the applicable Kopp Fund or (ii) 67% or more of the shares
of that Kopp Fund present or represented by proxy at the Meeting if more than
50% of such shares are present or represented by proxy ("Majority Shareholder
Vote"). Broker-dealer firms holding shares of any of the Kopp Funds in "street
name" for the benefit of their customers and clients will request the
instructions of such customers and clients on how to vote their shares before
the Meeting. Each Kopp Fund will include shares held of record by broker-dealers
as to which such authority has been granted in its tabulation of the total
number of shares present for purposes of determining whether the necessary
quorum of shareholders exists. Properly executed proxies that are returned but
that are marked "abstain" or with respect to which a broker-dealer has declined
to vote on any proposal ("broker non-votes") will be counted as present for the
purposes of determining a quorum. Assuming the presence required by a Majority
Shareholder Vote, abstentions and broker non-votes (if applicable) will have the
same effect as a vote against approval of the Plans. If, by the time scheduled
for the Meeting, sufficient votes in favor of approval of the Plans are not
received from the shareholders of the applicable Kopp Fund, the persons named as
proxies may propose one or more adjournments of such Meeting to permit further
solicitation of proxies from shareholders. According to the Bylaws of Kopp
Funds, Inc. any meeting at which a quorum is present can be adjourned from time
to time without notice other than an announcement that such adjournment is
taking place. The shareholders may continue to conduct business where a quorum
is present notwithstanding the withdrawal of enough shareholders to leave less
than a quorum. The persons named as proxies will vote AGAINST an adjournment
those proxies that they are required to vote against the proposals, and will
vote in FAVOR of such an adjournment all other proxies that they are authorized
to vote. A shareholder vote may be taken on any of the proposals described in
this Proxy Statement/Prospectus prior to any such adjournment if sufficient
votes have been received for approval.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of shares of the Kopp Funds at the close of business
on November 13, 2006 (the "Record Date") are entitled to vote at the Meeting or
any adjournments thereof. The following chart sets forth the number of shares of
each class of the Kopp Funds issued and outstanding and entitled to vote at the
close of business on the Record Date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF THE FUNDS
The following table lists, as of October 31, 2006, the names, addresses and
percentage of ownership of each person who owned of record or is known to own
beneficially 5% or more of any class of an American Century Fund or Kopp Fund.
The percentages of shares to be owned after consummation of the Reorganizations
are based upon their holdings and the outstanding shares of the Funds as of
October 31, 2006. Beneficial ownership information is not required to be
disclosed to the Funds, so the information provided below reflects record
ownership.
At October 31, 2006, the Directors and officers of KIA, as a group owned __
of Kopp Emerging Growth Fund and __ of Kopp TQM Fund. The Directors and officers
intend to exercise their own discretion in voting their shares on the proposals
contained in this Proxy Statement/Prospectus and will not vote in proportion to
the votes received FOR or AGAINST the proposals by unaffiliated shareholders -
so-called "shadow voting."
At October 31, 2006, the directors, trustees and officers of the American
Century Funds as a group owned less than 1% of all classes of each American
Century Fund's outstanding shares.
OTHER MATTERS
The American Century Funds are not required, and do not intend, to hold
regular annual meetings of shareholders. Shareholders wishing to submit
proposals for consideration for inclusion in a proxy statement for the next
meeting of shareholders should send their written proposals to the Corporate
Secretary, American Century Funds, P.O. Box 410141, Kansas City, Missouri 64141
or by email to corporatesecretary@americancentury.com so that they are received
within a reasonable time before any such meeting.
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [__] day of [_____________], by and between [AMERICAN CENTURY ENTITY], a
Maryland corporation, with its principal place of business at 4500 Main Street,
Kansas City, Missouri 64111-0141 (the "Maryland Corporation"), with respect to
its [______] Fund (the "Acquiring Fund") and KOPP FUNDS, INC., a Minnesota
corporation, with its principal place of business at 7701 France Avenue South,
Suite 500, Edina, Minnesota 55435 (the "Minnesota Corporation"), with respect to
its [______] Fund, a series of the Minnesota Corporation (the "Acquired Fund"
and, collectively with the Acquiring Fund, the "Funds").
RECITALS
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368 of the United States Internal
Revenue Code of 1986, as amended (the "Code") and the Treasury Regulations
promulgated thereunder. The reorganization will consist of: (i) the transfer of
all of the assets of the Acquired Fund in exchange for Class A Shares, Class C
Shares and Investor Class Shares, par value $0.01 per share, of the Acquiring
Fund ("Acquiring Fund Shares"); and (ii) the distribution of Class A Shares of
the Acquiring Fund to the holders of Class A Shares of the Acquired Fund, the
distribution of Class C Shares of the Acquiring Fund to the holders of Class C
Shares of the Acquired Fund, the distribution of Investor Class Shares of the
Acquiring Fund to the holders of Class I Shares of the Acquired Fund, and the
liquidation of the Acquired Fund as provided herein, all upon the terms and
conditions set forth in this Agreement (the "Reorganization").
WHEREAS, the Acquired Fund is a separate series of the Minnesota
Corporation, the Acquiring Fund is a separate series of the Maryland
Corporation, and the Maryland Corporation and the Minnesota Corporation are
open-end, registered management investment companies and the Acquired Fund owns
securities that generally are assets of the character in which the Acquiring
Fund is permitted to invest;
WHEREAS, each of the Acquiring Fund and the Acquired Fund is authorized to
issue its respective shares;
WHEREAS, the Directors of the Maryland Corporation have determined that the
Reorganization, with respect to the Acquiring Fund, is in the best interests of
the Acquiring Fund and that the interests of the existing shareholders of the
Acquiring Fund will not be diluted as a result of the Reorganization; and
WHEREAS, the Directors of the Minnesota Corporation have determined that
the Reorganization, with respect to the Acquired Fund, is in the best interests
of the Acquired Fund and that the interests of the existing shareholders of the
Acquired Fund will not be diluted as a result of the Reorganization.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR
ACQUIRING FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein and
on the basis of the representations and warranties contained herein, the
Acquired Fund agrees to transfer all of its assets, as set forth in paragraph
1.2, to the Acquiring Fund. In exchange, the Acquiring Fund agrees to deliver to
the Acquired Fund the number of full and fractional Acquiring Fund Shares,
determined by dividing the assets of the Acquired Fund, computed in the manner
and as of the time and date set forth in paragraph 2.1 by the net asset value
per share of the Acquiring Fund Shares computed in the manner and as of the time
and date set forth in paragraph 2.2. Holders of Class A Shares of the Acquired
Fund will receive Class A Shares of the Acquiring Fund, holders of Class C
Shares of the Acquired Fund will receive Class C Shares of the Acquiring Fund
and holders of Class I Shares of the Acquired Fund will receive Investor Class
Shares of the Acquiring Fund. Such transactions shall take place at the closing
on the Closing Date provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of the Acquired Fund to be acquired
by the Acquiring Fund shall consist of property having a value equal to the
total net assets of the Acquired Fund, including, without limitation, cash,
securities, commodities, interests in futures and dividends or interest
receivable, owned by the Acquired Fund and any deferred or prepaid expenses
shown as an asset on the books of the Acquired Fund on the Closing Date.
The Acquired Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of the Acquired Fund's
assets as of the date of such statements. The Acquired Fund hereby represents
that as of the date of the execution of this Agreement, there have been no
changes in its financial position as reflected in such financial statements
other than as the result of changes in the market values of securities or
otherwise occurring in the ordinary course of business in connection with the
purchase and sale of securities, the issuance and redemption of Acquired Fund
shares and the payment of normal operating expenses, dividends and capital gains
distributions.
1.3 LIABILITIES TO BE DISCHARGED. The Acquired Fund will discharge all of
its liabilities and obligations prior to the Closing Date. The Acquiring Fund
will not assume any liabilities of any kind whatsoever, whether or not such
liability is accrued or fixed, known or unknown, absolute or contingent or
determined or determinable or when due or become due, of the Acquired Fund.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date as
is conveniently practicable: (a) the Acquired Fund will distribute in complete
liquidation of the Acquired Fund, pro rata to its shareholders of record,
determined as of the close of business on the Closing Date (the "Acquired Fund
Shareholders"), all of the Acquiring Fund Shares received by the Acquired Fund
pursuant to paragraph 1.1; and (b) the Acquired Fund will thereupon proceed to
dissolve and terminate as set forth in paragraph 1.8 below. Such distribution
will be accomplished by the transfer of Acquiring Fund Shares credited to the
account of the Acquired Fund on the books of the Acquiring Fund to open accounts
on the share records of the Acquiring Fund in the name of the Acquired Fund
Shareholders, and representing the respective pro rata number of Acquiring Fund
Shares due such shareholders. All issued and outstanding shares of the Acquired
Fund (the "Acquired Fund Shares") will simultaneously be canceled on the books
of the Acquired Fund. The Acquiring Fund shall not issue certificates
representing Acquiring Fund Shares in connection with such transfer. After the
Closing Date, the Acquired Fund shall not conduct any business except in
connection with its termination.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be shown
on the books of the Acquiring Fund's transfer agent. Acquiring Fund Shares will
be issued simultaneously to the Acquired Fund, in an amount equal in value to
the aggregate net asset value of the Acquired Fund Shares, to be distributed to
Acquired Fund Shareholders.
1.6 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Acquired
Fund Shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the Acquired
Fund is and shall remain the responsibility of the Acquired Fund.
1.8 TERMINATION. The Acquired Fund shall be terminated promptly following
the Closing Date and the making of all distributions pursuant to paragraph 1.4.
1.9 BOOKS AND RECORDS. All books and records of the Acquired Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940, as amended (the "1940 Act"), and the rules and regulations
thereunder, shall be available to the Acquiring Fund from and after the Closing
Date and shall be turned over to the Acquiring Fund as soon as practicable
following the Closing Date.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Acquired Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets at
the closing on the Closing Date, using the valuation procedures set forth in the
Acquiring Fund's Articles of Incorporation, Bylaws and the Acquiring Fund's then
current prospectus and statement of additional information.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring Fund
Shares shall be the net asset value per share computed at the closing on the
Closing Date, using the valuation procedures set forth in the Acquiring Fund's
Articles of Incorporation, Bylaws and the Acquiring Fund's then current
prospectus and statement of additional information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund's shares to be
issued (including fractional shares, if any) in exchange for the Acquired Fund's
assets, shall be determined as set forth in paragraph 1.1.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
American Century Investment Management, Inc., on behalf of the Acquiring Fund
and the Acquired Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The closing shall occur on or about February 23, 2007, or
such other date(s) as the parties may agree to in writing (the "Closing Date").
All acts taking place at the closing shall be deemed to take place at 4:00 p.m.,
Eastern Time, on the Closing Date unless otherwise provided herein. The closing
shall be held at the offices of American Century Investments, 4500 Main Street,
Kansas City, Missouri 64111-0141, or at such other time and/or place as the
parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. The Acquired Fund shall cause U.S. Bank, N.A.,
as custodian for the Acquired Fund (the "Custodian"), to deliver at the Closing
a certificate of an authorized officer stating that: (a) the Acquired Fund's
portfolio securities, cash, and any other assets have been delivered in proper
form to the Acquiring Fund on the Closing Date; and (b) all necessary taxes
including all applicable federal and state stock transfer stamps, if any, shall
have been paid, or provision for payment shall have been made, in conjunction
with the delivery of portfolio securities by the Acquired Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on the scheduled
Closing Date, either: (a) the New York Stock Exchange ("NYSE") or another
primary exchange on which the portfolio securities of the Acquiring Fund or the
Acquired Fund are purchased or sold, shall be closed to trading or trading on
such exchange shall be restricted; or (b) trading or the reporting of trading on
the NYSE or elsewhere shall be disrupted so that accurate appraisal of the value
of the net assets of the Acquiring Fund or the Acquired Fund is impracticable,
the Closing Date shall be postponed until the first business day after the day
when trading is fully resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. The Acquired Fund shall cause U.S.
Bancorp Fund Services, LLC, as transfer agent for the Acquired Fund as of the
Closing Date, to deliver at the Closing a certificate of an authorized officer
stating that its records contain the names and addresses of Acquired Fund
Shareholders, and the number and percentage ownership of outstanding shares
owned by each such shareholder immediately prior to the Closing. The Acquiring
Fund shall issue and deliver or cause American Century Services, LLC, its
transfer agent, to issue and deliver a confirmation evidencing Acquiring Fund
Shares to be credited on the Closing Date to the Secretary of the Minnesota
Corporation or provide evidence satisfactory to the Acquired Fund that the
Acquiring Fund Shares have been credited to the Acquired Fund's account on the
books of the Acquiring Fund. At the Closing, each party shall deliver to the
other such bills of sale, checks, assignments, share certificates, receipts,
officer's certificates, transfer agent certificates, custodian certificates,
opinions, and other certificates and documents, if any, as such other party or
its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE ACQUIRED FUND. The Minnesota Corporation, on
behalf of the Acquired Fund, represents and warrants to the Maryland Corporation
as follows:
a) The Acquired Fund is a legally designated, separate series of a
corporation duly organized, validly existing and in good standing
under the laws of Minnesota.
b) The Minnesota Corporation is registered as an open-end management
investment company under the 1940 Act, and the Minnesota Corporation's
registration with the Securities and Exchange Commission (the
"Commission") as an investment company under the 1940 Act is in full
force and effect.
c) The current prospectus and statement of additional information of the
Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, and the rules and regulations thereunder, and
do not include any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
d) The Acquired Fund is not, and the execution, delivery, and performance
of this Agreement (subject to shareholder approval) will not, result
in the violation of any provision of the Minnesota Corporation's
Articles of Incorporation or By-Laws or of any material agreement,
indenture, instrument, contract, lease, or other undertaking to which
the Acquired Fund is a party or by which it is bound.
e) The Acquired Fund has no material contracts or other commitments
(other than this Agreement) that will be terminated with liability to
it before the Closing Date, except for liabilities, if any, to be
discharged as provided in paragraph 1.3 hereof.
f) No litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquired Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquired Fund to carry out the
transactions contemplated by this Agreement. The Acquired Fund knows
of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transactions contemplated herein.
g) The financial statements of the Acquired Fund as of[ ], and for the
fiscal year then ended, have been prepared in accordance with
generally accepted accounting principles, and audited by [ ],
independent registered public accountants, and such statements (copies
of which have been furnished to the Acquiring Fund) fairly and
accurately reflect the financial condition of the Acquired Fund as of
such date, and there are no known contingent liabilities of the
Acquired Fund as of such date that are not disclosed in such
statements.
h) The unaudited financial statements of the Acquired Fund as of [ ], and
for the six months then ended, have been prepared in accordance with
generally accepted accounting principles, and such statements (copies
of which have been furnished to the Acquiring Fund) fairly and
accurately reflect the financial condition of the Acquired Fund as of
such date, and there are no known contingent liabilities of the
Acquired Fund as of such date that are not disclosed in such
statements.
i) Since the date of the financial statements referred to in subparagraph
(h) above, there have been no material adverse changes in the Acquired
Fund's financial condition, assets, liabilities or business (other
than changes occurring in the ordinary course of business), or any
incurrence by the Acquired Fund of indebtedness maturing more than one
year from the date such indebtedness was incurred, except as
identified and disclosed by the Acquired Fund on SCHEDULE 4.1 to this
Agreement. For the purposes of this subparagraph (i), a decline in the
net asset value of the Acquired Fund in and of itself shall not
constitute a material adverse change.
j) All federal and other tax returns and reports of the Acquired Fund
required by law to be filed, have been timely and accurately filed,
and all federal and other taxes shown due on such returns and reports
have been paid, or provision shall have been made for the payment
thereof. To the best of the Acquired Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with
respect to such returns.
k) All issued and outstanding Acquired Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquired
Fund. All of the issued and outstanding Acquired Fund Shares will, at
the time of the Closing Date, be held by the persons and in the
amounts set forth in the records of the Acquired Fund's transfer agent
as provided in paragraph 3.4. The Acquired Fund has no outstanding
options, warrants, or other rights to subscribe for or purchase any of
the Acquired Fund Shares, and has no outstanding securities
convertible into any of the Acquired Fund Shares.
l) At the Closing Date, the Acquired Fund will have good and marketable
title to the Acquired Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2, and full right, power, and authority
to sell, assign, transfer, and deliver such assets hereunder, free of
any lien or other encumbrance, except those liens or encumbrances to
which the Acquiring Fund has received notice, and, upon delivery and
payment for such assets, and the filing of any articles, certificates
or other documents under the laws of Minnesota, the Acquiring Fund
will acquire good and marketable title, subject to no restrictions on
the full transfer of such assets, other than such restrictions as
might arise under the 1933 Act, and other than as disclosed to and
accepted by the Acquiring Fund.
m) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquired
Fund and its Board of Directors. Subject to approval by the Acquired
Fund Shareholders, this Agreement constitutes a valid and binding
obligation of the Acquired Fund, enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting
creditors' rights and to general equity principles.
n) The information to be furnished by the Acquired Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
o) The Acquired Fund has elected to qualify and has qualified as a
"regulated investment company" under the Code (a "RIC"), as of and
since its first taxable year; has been a RIC under the Code at all
times since the end of its first taxable year when it so qualified;
and qualifies and will continue to qualify as a RIC under the Code for
its taxable year ending upon its liquidation.
p) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act or Minnesota law for the
execution of this Agreement by the Minnesota Corporation, for itself
and on behalf of the Acquired Fund, except for the effectiveness of
the Registration Statement (as defined in paragraph 5.7), and the
filing of any articles, certificates or other documents that may be
required under Minnesota law, and except for such other consents,
approvals, authorizations and filings as have been made or received,
and except for such consents, approvals, authorizations and filings as
may be required subsequent to the Closing Date, it being understood,
however, that this Agreement and the transactions contemplated herein
must be approved by the shareholders of the Acquired Fund as described
in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Maryland Corporation on
behalf of the Acquiring Fund represents and warrants to the Minnesota
Corporation as follows:
a) The Acquiring Fund is a legally designated, separate series of a
corporation duly organized, validly existing and in good standing
under the laws of Maryland.
b) The Maryland Corporation is registered as an open-end management
investment company under the 1940 Act, and the Maryland Corporation's
registration with the Commission as an investment company under the
1940 Act is in full force and effect.
c) The current prospectus and statement of additional information of the
Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act, and the rules and
regulations thereunder, and do not include any untrue statement of a
material fact or omit to state any material fact required to be stated
or necessary to make such statements therein, in light of the
circumstances under which they were made, not misleading.
d) The Acquiring Fund is not, and the execution, delivery and performance
of this Agreement will not, result in a violation of any provision of
the Maryland Corporation's Articles of Incorporation or By-Laws or of
any material agreement, indenture, instrument, contract, lease, or
other undertaking to which the Acquiring Fund is a party or by which
it is bound.
e) No litigation, administrative proceeding, or investigation of or
before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of its
properties or assets, which, if adversely determined, would materially
and adversely affect its financial condition, the conduct of its
business, or the ability of the Acquiring Fund to carry out the
transactions contemplated by this Agreement. The Acquiring Fund knows
of no facts that might form the basis for the institution of such
proceedings and it is not a party to or subject to the provisions of
any order, decree, or judgment of any court or governmental body that
materially and adversely affects its business or its ability to
consummate the transaction contemplated herein.
f) The financial statements of the Acquiring Fund as of [ ], and for the
fiscal year then ended, have been prepared in accordance with
generally accepted accounting principles, and audited by [ ],
independent registered public accountants, and such statements (copies
of which have been furnished to the Acquired Fund) fairly and
accurately reflect the financial condition of the Acquiring Fund as of
such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date that are not disclosed in such
statements.
g) The unaudited financial statements of the Acquiring Fund as of [ ],
and for the six months then ended, have been prepared in accordance
with generally accepted accounting principles, and such statements
(copies of which have been furnished to the Acquired Fund) fairly and
accurately reflect the financial condition of the Acquiring Fund as of
such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date that are not disclosed in such
statements.
h) Since the date of the financial statements referred to in subparagraph
(g) above, there have been no material adverse changes in the
Acquiring Fund's financial condition, assets, liabilities or business
(other than changes occurring in the ordinary course of business), or
any incurrence by the Acquiring Fund of indebtedness maturing more
than one year from the date such indebtedness was incurred, except as
identified and disclosed by the Acquiring Fund on SCHEDULE 4.2 to this
Agreement. For the purposes of this subparagraph (h), a decline in the
net asset value of the Acquiring Fund in and of itself shall not
constitute a material adverse change.
i) All federal and other tax returns and reports of the Acquiring Fund
required by law to be filed, have been timely and accurately filed and
all federal and other taxes shown due on such returns and reports have
been paid, or provision shall have been made for their payment. To the
best of the Acquiring Fund's knowledge, no such return is currently
under audit, and no assessment has been asserted with respect to such
returns.
j) All issued and outstanding Acquiring Fund Shares are duly and validly
issued and outstanding, fully paid and non-assessable by the Acquiring
Fund. The Acquiring Fund has no outstanding options, warrants, or
other rights to subscribe for or purchase any Acquiring Fund Shares,
and has no outstanding securities convertible into any Acquiring Fund
Shares.
k) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of the Acquiring
Fund and its Board of Directors, and this Agreement constitutes a
valid and binding obligation of the Acquiring Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium, and other laws relating to or
affecting creditors' rights and to general equity principles.
l) Acquiring Fund Shares to be issued and delivered to the Acquired Fund
for the account of the Acquired Fund Shareholders pursuant to the
terms of this Agreement will, at the Closing Date, have been duly
authorized. When so issued and delivered, such shares will be duly and
validly issued Acquiring Fund Shares, and will be fully paid and
non-assessable.
m) The information to be furnished by the Acquiring Fund for use in
no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in
connection with the transactions contemplated herein shall comply in
all material respects with federal securities and other laws and
regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
n) The Acquiring Fund has elected to qualify and has qualified as a RIC
under the Code, as of and since its first taxable year; has been a RIC
under the Code at all times since the end of its first taxable year
when it so qualified; and qualifies and shall continue to qualify as a
RIC under the Code for its current taxable year.
o) No governmental consents, approvals, authorizations or filings are
required under the 1933 Act, the 1934 Act, the 1940 Act or Maryland
law for the execution of this Agreement by the Maryland Corporation,
for itself, and behalf of the Acquiring Fund, except for the
effectiveness of the Registration Statement (as defined in paragraph
5.7), and the filing of any articles, certificates or other documents
that may be required under Maryland law, and except for such other
consents, approvals, authorizations and filings as have been made or
received, and except for such consents, approvals, authorizations and
filings as may be required subsequent to the Closing Date.
p) The Acquiring Fund agrees to use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act,
and any state blue sky or securities laws as it may deem appropriate
in order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Acquired Fund
will each operate its respective business in the ordinary course between the
date of this Agreement and the Closing Date, it being understood that such
ordinary course of business will include customary dividends and shareholder
purchases and redemptions.
5.2 APPROVAL OF SHAREHOLDERS. The Minnesota Corporation will call a special
meeting of the Acquired Fund Shareholders to consider and act upon this
Agreement and to take all other appropriate action necessary to obtain approval
of the transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. The Acquired Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Acquired Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund's shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Acquired Fund will each take or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but in
any case within sixty days after the Closing Date, the Acquired Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Acquired Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be certified by the Minnesota
Corporation's Treasurer.
5.7 PREPARATION OF REGISTRATION STATEMENT AND SCHEDULE 14A PROXY STATEMENT.
The Maryland Corporation will review and file with the Commission a registration
statement on Form N-14 relating to the Acquiring Fund Shares to be issued to
shareholders of the Acquired Fund (the "Registration Statement"). The
Registration Statement shall include a proxy statement and a prospectus of the
Acquiring Fund relating to the transaction contemplated by this Agreement. The
Registration Statement shall be in compliance with the 1933 Act, the 1934 Act
and the 1940 Act, as applicable. Each party will provide the other party with
the materials and information necessary to prepare the Registration Statement
(the "Proxy Materials"), for inclusion therein, in connection with the meeting
of the Acquired Fund Shareholders to consider the approval of this Agreement and
the transactions contemplated herein.
5.8 DISTRIBUTIONS. On or before the Closing Date, the Acquired Fund shall
have declared and paid a dividend or dividends which, together with all previous
such dividends, shall have the effect of distributing to the Acquired Fund
Shareholders all of the Acquired Fund's investment company taxable income
(computed without regard to any deduction for dividends paid), if any, plus the
excess, if any, of its interest income excludible from gross income under
Section 103(a) of the Code over its deductions disallowed under Sections 265 and
171(a)(2) of the Code for all taxable periods or years ending on or before the
Closing Date, and all of its net capital gains realized (after reduction for any
capital loss carry forward), if any, in all taxable periods or years ending on
or before the Closing Date.
5.9 TAX RETURNS. The Acquiring Fund and the Acquired Fund agree to
cooperate with each other after the Closing in filing any tax return, amended
return or claim for refund, determining a liability for taxes or a right to a
refund of taxes or participating in or conducting any audit or other proceeding
in respect of taxes.
5.10 CONFIRMATION OF TAX BASIS. The Acquired Fund shall deliver to the
Acquiring Fund on the Closing Date confirmations or other adequate evidence as
to the tax basis and holding period of each of the Assets delivered to the
Acquiring Fund hereunder.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by the Acquiring Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
subject to the following conditions:
6.1 All representations, covenants, and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. The Acquiring Fund shall have
delivered to the Acquired Fund on such Closing Date a certificate executed in
the Acquiring Fund's name by the Maryland Corporation's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquired Fund and dated as of the Closing Date, to such
effect and as to such other matters as the Acquired Fund shall reasonably
request.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all the obligations to be performed by the Acquired Fund
pursuant to this Agreement, on or before the Closing Date and, in addition,
shall be subject to the following conditions:
7.1 All representations, covenants, and warranties of the Acquired Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. The Acquired Fund shall have
delivered to the Acquiring Fund on such Closing Date a certificate executed in
the Acquired Fund's name by the Minnesota Corporation's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
satisfactory to the Acquiring Fund and dated as of such Closing Date, to such
effect and as to such other matters as the Acquiring Fund shall reasonably
request.
7.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities, together with a list of
the Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the Closing
Date, certified by the Treasurer of the Minnesota Corporation.
7.3 The reorganization involving the American Century _____ Fund and the
Kopp _______ Fund shall have been approved by the shareholders of the Kopp
_______ Fund.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE
ACQUIRING FUND AND ACQUIRED FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with respect
to the Acquired Fund, shall have been approved by the requisite vote of the
Board of Directors and the Acquired Fund Shareholders in accordance with
applicable law and the provisions of the Minnesota Corporation's Articles of
Incorporation and By-Laws. Certified copies of the resolutions evidencing such
approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Acquired
Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with this Agreement or the transactions
contemplated herein.
8.3 All required consents of other parties and all other consents, orders,
and permits of federal, state and local regulatory authorities (including those
of the Commission and of state securities authorities, including any necessary
"no-action" positions and exemptive orders from such federal and state
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent,
order, or permit would not involve a risk of a material adverse effect on the
assets or properties of the Acquiring Fund or the Acquired Fund, provided that
either party hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the 1933
Act, and no stop orders suspending the effectiveness thereof shall have been
issued. To the best knowledge of the parties to this Agreement, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 The parties shall have received an opinion of Reed Smith LLP
substantially to the effect that for federal income tax purposes:
a) The transfer of all of the Acquired Fund's assets to the Acquiring
Fund solely in exchange for Acquiring Fund Shares (followed by the
distribution of Acquiring Fund Shares to the Acquired Fund
Shareholders in dissolution and liquidation of the Acquired Fund) will
constitute a "reorganization" within the meaning of Section 368(a) of
the Code, and the Acquiring Fund and the Acquired Fund will each be a
"party to a reorganization" within the meaning of Section 368(b) of
the Code.
b) No gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund solely in exchange for
Acquiring Fund Shares.
c) No gain or loss will be recognized by the Acquired Fund upon the
transfer of the Acquired Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their Acquired Fund Shares.
d) No gain or loss will be recognized by any Acquired Fund Shareholder
upon the exchange of its Acquired Fund Shares for Acquiring Fund
Shares.
e) The aggregate tax basis of the Acquiring Fund Shares received by each
Acquired Fund Shareholder pursuant to the Reorganization will be the
same as the aggregate tax basis of the Acquired Fund Shares held by it
immediately prior to the Reorganization. The holding period of the
Acquiring Fund Shares received by each Acquired Fund Shareholder will
include the period during which the Acquired Fund Shares exchanged
therefor were held by such shareholder, provided the Acquired Fund
Shares are held as capital assets at the time of the Reorganization.
f) The tax basis of the Acquired Fund's assets acquired by the Acquiring
Fund will be the same as the tax basis of such assets to the Acquired
Fund immediately prior to the Reorganization. The holding period of
the assets of the Acquired Fund in the hands of the Acquiring Fund
will include the period during which those assets were held by the
Acquired Fund.
Such opinion shall be based on customary assumptions and such
representations Reed Smith LLP may reasonably request, and the
Acquired Fund and Acquiring Fund will cooperate to make and certify
the accuracy of such representations. The foregoing opinion may state
that no opinion is expressed as to the effect of the Reorganization on
the Acquiring Fund, the Acquired Fund or any Acquired Fund Shareholder
with respect to any asset as to which unrealized gain or loss is
required to be recognized for federal income tax purposes at the end
of a taxable year (or on the termination or transfer thereof) under a
mark-to-market system of accounting. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this paragraph 8.5.
ARTICLE IX
EXPENSES
As soon as practical after the Closing, American Century Investment
Management, Inc., as adviser to the Acquiring Fund and Kopp Investment Advisors,
LLC, as adviser to the Acquired Fund, or their affiliates, shall each pay
one-half of all expenses associated with the Acquiring Fund's and Acquired
Fund's participation in the Reorganization (provided, that American Century
Management, Inc. and Kopp Investment Advisors, LLC shall share reasonable and
necessary expenses associated with the Reorganization, together with reasonable
and necessary expenses associated with the reorganization involving the American
Century _____ Fund and the Kopp ___________ Fund, in excess of $630,000 in the
aggregate subject to mutual agreement), and, except as provided in the following
proviso, in no event shall the Acquiring Fund or Acquired Fund bear such
expenses; provided, however, that the Acquiring Fund shall bear expenses
associated with the qualification of Acquiring Fund Shares for sale in the
various states. Reorganization expenses include, without limitation: (a)
expenses associated with the preparation and filing of the Proxy Materials; (b)
postage; (c) printing; (d) accounting fees; (e) legal fees incurred by each
Fund; (f) solicitation costs of the transaction; and (g) other related
administrative or operational costs. American Century Investment Management,
Inc. and Kopp Investment Advisors, LLC have entered into a Transaction Agreement
dated September 13, 2006 in which they agreed, in Section 6.3 thereof, to pay
such expenses as contemplated in this Article IX. The Acquiring Fund and the
Acquired Fund are third party beneficiaries to Section 6.3 of that Transaction
Agreement.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Maryland Corporation, on behalf of the Acquiring Fund, and the
Minnesota Corporation, on behalf of the Acquired Fund, agree that neither party
has made to the other party any representation, warranty and/or covenant not set
forth herein, and that this Agreement constitutes the entire agreement between
the parties.
10.2 Except as specified in the next sentence set forth in this paragraph
10.2, the representations, warranties, and covenants contained in this Agreement
or in any document delivered pursuant to or in connection with this Agreement,
shall not survive the consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing Date shall continue in effect
beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
This Agreement may be terminated by the mutual agreement of the Maryland
Corporation and the Minnesota Corporation. In addition, either the Maryland
Corporation or the Minnesota Corporation may at its option terminate this
Agreement at or before the Closing Date due to:
a) a breach by the other of any representation, warranty, or agreement
contained herein to be performed at or before the Closing Date, if not
cured within 30 days;
b) a condition herein expressed to be precedent to the obligations of the
terminating party that has not been met and it reasonably appears that
it will not or cannot be met; or
c) a determination by a party's Board of Directors, as appropriate, that
the consummation of the transactions contemplated herein is not in the
best interest of the Minnesota Corporation or the Maryland
Corporation, respectively, and notice given to the other party hereto.
In the event of any such termination, in the absence of willful default, there
shall be no liability for damages on the part of the Acquiring Fund, the
Maryland Corporation, the Acquired Fund, the Minnesota Corporation, or their
respective directors or officers, to the other party or its directors or
officers.
ARTICLE XII
AMENDMENTS
This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the officers of the Minnesota
Corporation and the Maryland Corporation as specifically authorized by their
respective Board of Directors; provided, however, that following the meeting of
the Acquired Fund Shareholders called by the Acquired Fund pursuant to paragraph
5.2 of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of Acquiring Fund Shares to be issued to
the Acquired Fund Shareholders under this Agreement to the detriment of such
shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance with
the laws of the State of Missouri, without regard to the conflict of laws rules
of that or any other jurisdiction.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as
of the date first written above.
KOPP FUNDS, INC.
on behalf of its portfolio,
KOPP [_____] FUND
---------------------------------------
John P. Flakne, Secretary
[AMERICAN CENTURY ENTITY]
on behalf of its portfolio,
AMERICAN CENTURY [_______] FUND
---------------------------------------
David H. Reinmiller, Vice President
EXHIBIT B
FORM OF INVESTMENT SUBADVISORY AGREEMENT
THIS INVESTMENT SUBADVISORY AGREEMENT ("Agreement") is made as of the ____
day of ________, 2006, by and among KOPP INVESTMENT ADVISORS, LLC ("KIA"), a
Minnesota limited liability company and AMERICAN CENTURY INVESTMENT MANAGEMENT,
INC. (the "Subadvisor"), a Delaware corporation.
WITNESSETH:
WHEREAS, KIA is the investment advisor to the Kopp Emerging Growth Fund
(the "Fund"), a series of shares of Kopp Funds, Inc., organized as an open-end
management investment company registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "Investment
Company Act"); and
WHEREAS, KIA and the Subadvisor are both investment advisors registered
with the Securities and Exchange Commission under the Investment Advisers Act of
1940, as amended (the "Investment Advisers Act"); and
WHEREAS, Kopp Funds, Inc. has engaged KIA to serve as the investment
advisor for the Fund pursuant to an Investment Advisory Agreement dated as of
October 1, 1997, as amended, supplemented and otherwise modified from time to
time; and
WHEREAS, KIA desires to engage the Subadvisor as a subadvisor for the Fund,
and the Subadvisor desires to accept such engagement; and
WHEREAS, the Board of Directors of the Fund has determined that it is
advisable to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, and intending to be legally bound hereby, the
parties hereto covenant and agree as follows:
1. INVESTMENT DESCRIPTION - APPOINTMENT. KIA hereby appoints and authorizes
the Subadvisor to invest the Fund's portfolio in a manner consistent with
transitioning the Fund's portfolio of assets into the American Century New
Opportunities II Fund ( "AC New Opportunities II Fund"), a series of American
Century Mutual Funds, Inc. Such a transition shall occur prior to the closing
date of the reorganization pursuant to which AC New Opportunities II Fund will
acquire all of the Fund's assets. The Subadvisor accepts the appointment and
agrees to furnish the services described herein.
2. SERVICES AS INVESTMENT SUBADVISOR.
(a) Subject to the general supervision of the Fund's Board of Directors and
of KIA, the Subadvisor will (i) act in conformity with the Fund's Prospectus and
Statement of Additional Information, the Investment Company Act, the Investment
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code"), and
all other applicable federal and state laws and regulations, as the same may
from time to time be amended; (ii) place purchase and sale orders on behalf of
the Fund; (iv) maintain books and records with respect to the securities
transactions of the Fund; and (v) furnish the Fund's Board of Directors such
periodic, regular and special reports with respect to the Fund and its services
hereunder as the Board may reasonably request or as may be required by
applicable law or regulation.
(b) The Subadvisor will furnish Kopp Funds, Inc. or KIA whatever
information, including statistical data, Kopp Funds, Inc. or KIA may reasonably
request with respect to the securities or other permissible instruments that the
Fund may hold or contemplate purchasing.
(c) The Subadvisor will at all times comply with the policies adopted by
the Fund's Board of Directors of which it has received written notice. If the
Subadvisor believes that a change in any of such policies shall be advisable, it
shall recommend such change to KIA and the Fund's Board of Directors. Any change
to any such policies whether suggested by the Subadvisor or not shall be
approved by the Fund's Board of Directors prior to the implementation of such
change, and Subadvisor will be given reasonable notice of the anticipated
change.
(d) All cash, securities and other assets of the Fund shall be held at all
times by such entity or entities engaged by Kopp Funds, Inc. to be the custodian
(collectively, the "custodian") in compliance with Section 17(f) of the
Investment Company Act. The Subadvisor shall not be responsible for any custody
arrangements involving any assets of the Fund or for the payment of any
custodial charges or fees, nor shall the Subadvisor have possession or custody
of any such assets. All payments, distributions and other transactions in cash,
securities or other assets in respect of the Fund shall be made directly to or
from the custodian. KIA shall provide, or shall direct the custodian to provide,
to the Subadvisor from time to time such reports concerning assets, receipts and
disbursements with respect to the Fund as the Subadvisor may request, including
daily information on cash balances available for investment, Fund redemption
activity and market value of the securities or other permissible instruments
held by the Fund.
(e) KIA acknowledges and agrees that the Subadvisor is not the Fund's
pricing agent, and is not responsible for pricing the securities held by any
Fund, however the Subadvisor will provide reasonable assistance to the Fund's
pricing agents in valuing securities held by the Fund for which market
quotations are not readily available.
(f) The Subadvisor makes no representations or warranties, express or
implied, that any level of performance or investment results will be achieved by
the Fund or that the Fund will perform comparably with any standard, including
any other clients of the Subadvisor or index.
(g) The Subadvisor will not consult with any other subadvisors of the Fund
or other subadvisors to a series under common control with any Fund concerning
transactions of the Fund in securities or other assets.
(h) The Subadvisor will not advise or act for the Fund in any legal
proceedings, including bankruptcies or class actions, involving securities or
other permissible instruments held in the Fund or issues of those securities,
unless otherwise agreed, provided that the Subadvisor will provide reasonable
assistance to KIA and the custodian in connection with the filing and processing
of claims and actions on behalf of the Fund.
3. BROKERAGE.
(a) In executing transactions for the Fund and selecting brokers or
dealers, the Subadvisor will seek to obtain the best price and execution
available and shall execute or direct the execution of all such transactions as
permitted by law and in a manner that is consistent with its fiduciary
obligations to the Fund and its other clients. In assessing the best price and
execution available for any Fund transaction, the Subadvisor will consider all
factors it deems relevant including, but not limited to, breadth of the market
in the security, the price of the security, the financial condition and
execution capability of the broker or dealer and the reasonableness of any
commission for the specific transaction and on a continuing basis. Consistent
with this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Subadvisor may, at its discretion,
execute transactions with brokers and dealers who provide the Fund and/or other
accounts over which the Subadvisor exercises investment discretion with research
advice and other services, but in all instances best price and execution shall
control. The Subadvisor is authorized to place purchase and sale orders for the
Fund with brokers and/or dealers subject to the supervision of KIA and the Board
of Directors of the Fund and in accordance with the limitations set forth in the
registration statement for the Fund shares then in effect.
(b) On occasions when the Subadvisor deems the purchase or sale of a
security to be in the best interest of a Fund as well as one or more of its
other clients, the Subadvisor may to the extent permitted by applicable law, but
shall not be obligated to, aggregate the securities to be sold or purchased with
those of its other clients. In such event, allocation of the securities so
purchased or sold will be made by the Subadvisor in a manner it considers to be
equitable and consistent with its fiduciary obligations to Kopp Funds, Inc. and
to such other clients. KIA recognizes that, in some cases, this procedure may
limit the size of the position that may be acquired or sold for a Fund.
4. INFORMATION PROVIDED TO KOPP FUNDS, INC.
(a) The Subadvisor will keep Kopp Funds, Inc. and KIA informed of
developments materially affecting the Fund.
The Subadvisor will provide Kopp Funds, Inc. and KIA with such investment
records, ledgers, accounting and statistical data, written reports and analyses
and other information as Kopp Funds, Inc. and KIA require for the preparation of
registration statements, periodic and other reports and other documents required
by federal and state laws and regulations, and particularly as may be required
for the periodic review, renewal, amendment or termination of this Agreement,
and such additional documents and information as Kopp Funds, Inc. and KIA may
reasonably request for the management of their affairs.
(c) At the request of the Board of Directors, a representative of the
Subadvisor shall provide a presentation on the Fund's performance and such other
matters as the Board of Directors, the Subadvisor and KIA believe is
appropriate.
(d) The Subadvisor shall furnish to regulatory authorities any information
or reports in connection with such services as may be lawfully requested,
provided, however, that the Subadvisor shall not otherwise be responsible for
the preparation and filing of any other reports or statements (including,
without limitation, any tax returns or financial statements) required of the
Fund by any governmental or regulatory agency, except as expressly agreed to in
writing. The Subadvisor shall also, at Kopp Funds, Inc.'s request, certify to
Kopp Funds, Inc.'s independent auditors that sales or purchases aggregated with
those of other clients of the Subadvisor, as described in Section 3 above, were
allocated in a manner it considers to be equitable.
(e) In compliance with the requirements of the Investment Company Act, the
Subadvisor hereby agrees that all records that it maintains for the Fund are the
property of Kopp Funds, Inc. and further agrees to surrender to Kopp Funds, Inc.
promptly upon Kopp Funds, Inc.'s written request any of such records. In
addition, the Subadvisor agrees to cooperate with Kopp Funds, Inc. and KIA when
either of them is being examined by any regulatory authorities, and specifically
agrees to promptly comply with any request by such authorities to provide
information or records. The Subadvisor further agrees to preserve for the
periods of time prescribed by the Investment Company Act and the Investment
Advisers Act the records it maintains in accordance with Section 2(a)(iv)
hereof.
(f) KIA will vote the Fund's investment securities in accordance with its
proxy voting policy and procedures. The Subadvisor shall not be responsible for
any such voting.
(g) In connection with the purchase and sale of securities of the Fund, the
Subadvisor shall arrange for the transmission to KIA and the custodian for the
Fund on a daily basis such confirmation, trade tickets and other documents as
may be reasonably necessary to enable them to perform their administrative
responsibilities with respect to the Fund's investment portfolio. With respect
to portfolio securities to be purchased or sold through the Depository Trust
Company, the Subadvisor shall arrange for the automatic transmission of the I.D.
confirmation of the trade to the custodian of the Fund. The Subadvisor will be
responsible for providing portfolio trades to the Fund's accounting agent for
inclusion in the daily calculation of the Fund's net asset value in a manner,
and in accordance with such time requirements as KIA and the Subadvisor shall
agree on.
5. CONFIDENTIALITY. The parties to this Agreement agree that each shall
treat as confidential in accordance with its policies and procedures to protect
similar confidential information, and with applicable law, all information
provided by a party to the others regarding such party's business and
operations, including without limitation the investment activities, holdings, or
identities of shareholders of the Fund. All confidential information provided by
a party hereto shall be used by any other parties hereto solely for the purposes
of rendering services pursuant to this Agreement and, except as may be required
in carrying out the terms of this Agreement, shall not be disclosed to any third
party without the prior consent of such providing party. The foregoing shall not
be applicable to any information that is publicly available when provided or
which thereafter becomes publicly available other than in contravention of this
paragraph. The foregoing also shall not apply to any information which is
required to be disclosed by any regulatory authority in the lawful and
appropriate exercise of its jurisdiction over a party, by any auditor of the
parties hereto, by judicial or administrative process or otherwise by applicable
law or regulation; provided, however, that the disclosing party shall provide
reasonable notice to the other parties hereto prior to any such disclosure.
6. STANDARD OF CARE. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of its obligations or duties hereunder
on the part of the Subadvisor, it, as an inducement to it to enter into this
Agreement, shall not be subject to liability to KIA, the Fund or to any
shareholder of the Fund for any act or omission in the course of, or connected
with, rendering services hereunder for any losses that may be sustained in the
purchase, holding or sale of any security.
7. COMPENSATION. Subadvisor will not receive any compensation for the
services rendered pursuant to this Agreement.
8. EXPENSES. The Subadvisor shall not bear out-of-pocket expenses in
connection with the performance of its services under this Agreement. Without
limiting the foregoing, the Subadvisor will not be responsible for the following
expenses: (a) brokerage fees or commissions in connection with the execution of
securities transactions, (b) taxes and interest; and (c) custodian fees and
expenses.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS. KIA understands that the
Subadvisor or its affiliates may act as investment advisor to other clients and
KIA has no objection to the Subadvisor so acting. In addition, KIA understands
that the persons employed by the Subadvisor to assist in the performance of the
Subadvisor's duties hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or restrict the right of
the Subadvisor or any affiliate of the Subadvisor to engage in and devote time
and attention to other business or to render services of whatever kind or
nature.
10. TERM AND TERMINATION OF AGREEMENT.
(a) This Agreement shall become effective upon approval by shareholders of
the Fund of this Agreement and shall continue until the Fund is reorganized into
AC New Opportunities II Fund. The Agreement may continue thereafter so long as
such continuance is specifically approved at least annually by (i) the Board of
Directors of Kopp Funds, Inc. or (ii) a vote of a majority of the Fund's
outstanding voting securities, provided that in either event the continuance is
also approved by a majority of the Board of Directors who are not interested
persons (as defined in the Investment Company Act) of any party to this
Agreement, by a vote cast at a meeting called for the purpose of voting on such
approval.
(b) This Agreement is terminable without penalty as to the Fund on 60 days'
written notice by (i) the Board of Directors of Kopp Funds, Inc., (ii) by vote
of holders of a majority of a Fund's shares, (iii) by KIA, or (iv) by the
Subadvisor, and will terminate automatically upon any termination of the
investment advisory agreement between Kopp Funds, Inc. and KIA. This Agreement
will terminate automatically in the event of its assignment. The Subadvisor
agrees to notify KIA of any circumstances that might result in this Agreement
being deemed to be assigned.
11. REPRESENTATIONS.
(a) KIA and the Subadvisor each represents that it is registered as an
investment advisor under the Investment Advisers Act, that it will use its
reasonable best efforts to maintain such registration, and that it will promptly
notify the other if it ceases to be so registered, if its registration is
suspended for any reason, or if it is notified by any regulatory organization or
court of competent jurisdiction that it should show cause why its registration
should not be suspended or terminated. KIA and the Subadvisor each further
represents that it is registered under the laws of all jurisdictions in which
the conduct of its business hereunder requires such registration.
(b) KIA represents and warrants that (i) the appointment of the Subadvisor
has been duly authorized; (ii) it has full power and authority to execute and
deliver this Agreement and to perform the services contemplated hereunder, and
such execution, delivery and performance will not cause it to be in violation of
its Articles of Organization, Bylaws, or any material laws; and (iii) it has
received a copy of Part II of the Subadvisor's Form ADV no less than 48 hours
prior to entering into this Agreement.
(c) The Subadvisor represents and warrants that (i) its service as
subadvisor hereunder has been duly authorized; (ii) it has full power and
authority to execute and deliver this Agreement and to perform the services
contemplated hereunder, and such execution, delivery and performance will not
cause it to be in violation of its organizational documents, its Bylaws or
material laws; (iii) it will at all times in the performance of its duties
hereunder comply in all material respects with the provisions of the Investment
Company Act, the Investment Advisers Act, the Code and all other applicable
federal and state laws and regulations, as the same may be amended from time to
time; and (iv) it has all controls necessary to perform its obligations under
and comply with the representations and warranties it made in this Agreement.
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto on the subject matter described herein.
14. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
Subadvisor is and shall be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent Kopp Funds, Inc. or KIA in any way, or otherwise be deemed to be an
agent of Kopp Funds, Inc. or KIA.
15. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statue, rule or similar authority, the remainder of
this Agreement shall not be affected thereby.
16. NOTICES. All notices and other communications hereunder shall be given
or made in writing and shall be delivered personally, or sent by telex,
telecopy, express delivery or registered or certified mail, postage prepaid,
return receipt requested, to the party or parties to whom they are directed at
the following addresses, or at such other addresses as may be designated by
notice from such party to all other parties.
To the Subadvisor:
American Century Investment Management, Inc.
American Century Investments
4500 Main Street
Kansas City, Missouri 64111
Attention: David H. Reinmiller, Esq.
Attn: 816-340-4964
To KIA:
Kopp Investment Advisors, LLC
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Attn: John P. Flakne
Fax No.: 952-841-0475
Any notice, demand or other communication given in a manner prescribed in this
Section shall be deemed to have been delivered on receipt.
17. DISCLOSURE. KIA shall not, without the prior written consent of the
Subadvisor, make representations regarding or reference the Subadvisor or any
affiliates in any disclosure document, advertisement, sales literature or other
promotional materials; PROVIDED, HOWEVER, the Subadvisor need not review or
consent to any reference to its name only or any language that it has previously
approved for use in another document.
18. FORCE MAJEURE. The Subadvisor shall not be liable for any failure,
delay or interruption in the performance of its obligations hereunder if such
failure, delay or interruption results from the occurrence of any acts, events
or circumstances beyond the Subadvisor's reasonable control, and the Subadvisor
shall have no responsibility of any kind for any loss or damage thereby incurred
or suffered by KIA or Kopp Funds, Inc. In such case, the terms of this Agreement
shall continue in full force and effect and the Subadvisor obligations shall be
performed or carried out as soon as legally and practicably possible after the
cessation of such acts, events or circumstances.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first written
above.
KOPP INVESTMENT ADVISORS, LLC AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC.
By: By:
--------------------------------- -----------------------------------
Name: John P. Flakne Name: David C. Tucker
Title: Executive Vice President, Title: Senior Vice President
Chief Financial Officer and Secretary
EXHIBIT C
SUMMARY OF INVESTMENT LIMITATIONS
The following chart contains a summary of the fundamental and
non-fundamental investment limitations of AC Equity Growth Fund and Kopp TQM
Fund. A policy that is fundamental may not be changed without shareholder
approval.
------------------------------------------------------- -----------------------------------------------------
AC EQUITY GROWTH FUND KOPP TQM FUND
------------------------------------------------------- -----------------------------------------------------
FUNDAMENTAL INVESTMENT POLICIES FUNDAMENTAL INVESTMENT POLICIES
------------------------------------------------------- -----------------------------------------------------
SENIOR SECURITIES: SENIOR SECURITIES:
The Fund may not issue senior securities, except as The Fund may not issue senior securities, except as
permitted under the 1940 Act. permitted under the 1940 Act.
------------------------------------------------------- -----------------------------------------------------
BORROWINGS: BORROWINGS:
The Fund may not borrow money, except for temporary The Fund may (i) borrow money from banks and (ii)
or emergency purposes (not for leveraging or make other investments or engage in other
investment) in an amount not exceeding 33 1/3% of the transactions permissible under the 1940 Act which
Fund's total assets. For purposes of this policy, may involve a borrowing, provided that the
short positions held by the Fund will not be combination of (i) and (ii) shall not exceed 33
considered borrowings. 1/3% of the value of the Fund's assets (including
the amount borrowed), less the Fund's liabilities
(other than borrowings), except that the Fund may
borrow up to an additional 5% of its assets (not
including the amount borrowed) from a bank for
temporary or emergency purposes (but not for
leverage or the purchase of investments). The Fund
may also borrow money from other persons to the
extent permitted by applicable law.
------------------------------------------------------- -----------------------------------------------------
LENDING: LENDING:
The Fund may not lend any security or make any other The Fund may not make loans if, as a result, more
loan if, as a result, more than 33 1/3% of the Fund's than 33 1/3% of the Fund's assets would be lent to
total assets would be lent to other parties, except other persons, except through purchases of debt
(i) through the purchase of debt securities in securities or other debt instruments or engaging in
accordance with its investment objective, policies repurchase agreements.
and limitations or (ii) by engaging in repurchase
agreements with respect to portfolio securities. The Fund has the related non-fundamental policy:
The Fund may not make any loans other than loans of
portfolio securities, except through purchases of
debt securities or other debt instruments or
engaging in repurchase agreements with respect to
portfolio securities.
------------------------------------------------------- -----------------------------------------------------
REAL ESTATE: REAL ESTATE:
The Fund may not purchase or sell real estate unless The Fund may not purchase or sell real estate
acquired as a result of ownership of securities or unless acquired as a result of ownership of
other instruments. This policy shall not prevent the securities or other instruments (but this shall not
Fund from investing in securities or other prohibit the Fund from purchasing or selling
instruments backed by real estate or securities of securities or other instruments backed by real
companies that deal in real estate or are engaged in estate or of issuers engaged in real estate
the real estate business. activities).
------------------------------------------------------- -----------------------------------------------------
CONCENTRATION: CONCENTRATION:
The Fund may not concentrate (invest 25% or more of The Fund may not invest more than 25% of its assets
the Fund's total assets at the time of purchase) its in securities of companies in any one industry.
investments in securities of issuers in a particular "Industry" is defined to include groups of related
industry (other than securities issued or guaranteed industries. This restriction does not apply to
by the U.S. government or any of its agencies or obligations issued or guaranteed by the U.S.
instrumentalities). government, its agencies or instrumentalities.
------------------------------------------------------- -----------------------------------------------------
UNDERWRITING: UNDERWRITING:
The Fund may not act as an underwriter of securities The Fund may not act as an underwriter of another
issued by others, except to the extent that the Fund company's securities, except to the extent that the
may be considered an underwriter within the meaning Fund may be deemed to be an underwriter within the
of the Securities Act of 1933 in the disposition of meaning of the Securities Act of 1933, in
restricted securities. connection with the purchase and sale of portfolio
securities.
------------------------------------------------------- -----------------------------------------------------
COMMODITIES: COMMODITIES:
The Fund may not purchase or sell physical The Fund may not purchase or sell physical
commodities unless acquired as a result of ownership commodities unless acquired as a result of
of securities or other instruments provided this ownership of securities or other instruments (but
limitation shall not prohibit the Fund from this shall not prevent the Fund from purchasing or
purchasing or selling options and futures contracts selling options, futures contracts, or other
or investing in securities or other instruments derivative instruments, or from investing in
backed by physical commodities. securities or other instruments backed by physical
commodities).
------------------------------------------------------- -----------------------------------------------------
CONTROL: CONTROL:
The Fund may not invest for purposes of exercising No applicable limitation.
control over management.
------------------------------------------------------- -----------------------------------------------------
DIVERSIFICATION OF INVESTMENTS: DIVERSIFICATION OF INVESTMENTS:
The Fund is diversified as defined in the 1940 Act. The Fund may not, with respect to 75% of its total
Diversified means that, with respect to 75% of its assets, purchase securities of any issuer (except
total assets, the Fund will not invest more than 5% securities issued or guaranteed by the U.S.
of its total assets in the securities of a single government or any agency or instrumentality
issuer or own more than 10% of the outstanding voting thereof) if, as a result, (i) more than 5% of the
securities of a single issuer. Fund's total assets would be invested in the
securities of that issuer or (ii) the Fund would
hold more than 10% of the outstanding voting
securities of that issuer.
------------------------------------------------------- -----------------------------------------------------
NON-FUNDAMENTAL INVESTMENT POLICIES: NON-FUNDAMENTAL INVESTMENT POLICIES:
In addition, the Fund is subject to the following The following are the Fund's non-fundamental
investment policies that are not fundamental investment policies, which may be changed by
and may be changed by the Board of Directors: the Board of Directors without shareholder approval.
------------------------------------------------------- -----------------------------------------------------
SHORT SALES: SHORT SALES:
The Fund may not sell securities short, unless it The Fund may not sell securities short, unless the
owns or has the right to obtain securities equivalent Fund owns or has the right to obtain securities
in kind and amount to the securities sold short, and equivalent in kind and amount to the securities
provided that transactions in futures contracts and sold short, or unless it covers such short sale as
options are not deemed to constitute selling required by the current rules and positions of the
securities short. Securities and Exchange Commission or its staff,
and provided that transactions in options, futures
contracts, options on futures contracts or other
derivative instruments are not deemed to constitute
selling securities short.
------------------------------------------------------- -----------------------------------------------------
ILLIQUID SECURITIES: ILLIQUID SECURITIES:
The Fund may not purchase any security or enter into The Fund may not invest in illiquid securities if,
a repurchase agreement if, as a result, more than 15% as a result of such investment, more than 15% of
of its net assets would be invested in illiquid its net assets would be invested in illiquid
securities. Illiquid securities include repurchase securities, or such other amounts as may be
agreements not entitling the holder to payment of permitted under the 1940 Act.
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.
------------------------------------------------------- -----------------------------------------------------
BORROWINGS: BORROWINGS:
The Fund may not purchase additional investment The Fund may not borrow money except from banks or
securities at any time during which outstanding through reverse repurchase agreements or mortgage
borrowings exceed 5% of the total assets of the Fund. dollar rolls, and will not purchase securities when
For purposes of this policy, short positions held by bank borrowings exceed 5% of its assets.
the Fund will not be considered borrowings.
------------------------------------------------------- -----------------------------------------------------
PURCHASES ON MARGIN: PURCHASES ON MARGIN:
The Fund may not purchase securities on margin, The Fund may not purchase securities on margin,
except to obtain such short-term credits as are except that it may obtain such short-term credits
necessary for the clearance of transactions, and as are necessary for the clearance of transactions;
provided that margin payments in connection with and provided that margin deposits in connection
futures contracts and options on futures contracts with futures contracts, options on futures
shall not constitute purchasing securities on margin. contracts or other derivative instruments shall not
constitute purchasing securities on margin.
------------------------------------------------------- -----------------------------------------------------
SECURITIES OF OTHER INVESTMENT COMPANIES SECURITIES OF OTHER INVESTMENT COMPANIES:
The Fund may invest up to 10% of its total assets in The Fund may not purchase securities of other
other investment companies, such as mutual funds, investment companies except in compliance with the
provided that the investment is consistent with its 1940 Act.
investment policies and restrictions. These
investments may include investments in money market
funds managed by American Century. Under the 1940
Act, the 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 the Fund's total assets in the aggregate.
------------------------------------------------------- -----------------------------------------------------
INVESTMENT POLICY: INVESTMENT POLICY:
No applicable limitation. The Fund may not make any change in its investment
policy of investing at least 80% of its net assets
(plus any borrowings for investment purposes) in
the investments suggested by the Fund's name
without first providing shareholders of the Fund
with at least 60 days' notice.
------------------------------------------------------- -----------------------------------------------------
LOANS:
The Fund may not make any loans other than loans of
portfolio securities, except through purchases of
debt securities or debt instruments or engaging in
repurchase agreements with respect to portfolio
securities.
------------------------------------------------------- -----------------------------------------------------
The following chart contains a summary of the fundamental and non-fundamental
investment limitations of AC New Opportunities II Fund and Kopp Emerging Growth
Fund. A policy that is fundamental may not be changed without shareholder
approval.
---------------------------------------------------------- ------------------------------------------------------
AC NEW OPPORTUNITIES II FUND KOPP EMERGING GROWTH FUND
---------------------------------------------------------- ------------------------------------------------------
FUNDAMENTAL INVESTMENT POLICIES: FUNDAMENTAL INVESTMENT POLICIES:
---------------------------------------------------------- ------------------------------------------------------
ISSUING SENIOR SECURITIES: ISSUING SENIOR SECURITIES:
The Fund may not issue senior securities, except as The Fund may not issue senior securities, except as
permitted under the 1940 Act. permitted under the 1940 Act.
---------------------------------------------------------- ------------------------------------------------------
BORROWING: BORROWING:
The Fund may not borrow money, except for temporary or The Fund may (i) borrow money from banks and (ii) make
emergency purposes (not for leveraging or investment) in other investments or engage in other transactions
an amount not exceeding 33 1/3% of the Fund's total permissible under the 1940 Act which may involve a
assets. borrowing, provided that the combination of (i) and
(ii) shall not exceed 33 1/3% of the value of the
Fund's assets (including the amount borrowed), less
the Fund's liabilities (other than borrowings), except
that the Fund may borrow up to an additional 5% of its
assets (not including the amount borrowed) from a bank
for temporary or emergency purposes (but not for
leverage or the purchase of investments). The Fund may
also borrow money from other persons to the extent
permitted by applicable law.
---------------------------------------------------------- ------------------------------------------------------
LENDING: LENDING:
The Fund may not lend any security or make any other The Fund may not make loans if, as a result, more than
loan if, as a result, more than 331/3% of the Fund's 33 1/3% of the Fund's assets would be lent to other
total assets would be lent to other parties, except (i) persons, except through purchases of debt securities
through the purchase of debt securities in accordance or other debt instruments or engaging in repurchase
with its investment objective, policies and limitations agreements.
or (ii) by engaging in repurchase agreements with
respect to portfolio securities.
---------------------------------------------------------- ------------------------------------------------------
REAL ESTATE: REAL ESTATE:
The Fund may not purchase or sell real estate unless The Fund may not purchase or sell real estate unless
acquired as a result of ownership of securities or other acquired as a result of ownership of securities or
instruments. This policy shall not prevent the Fund from other instruments (but this shall not prohibit the
investing in securities or other instruments backed by Fund from purchasing or selling securities or other
real estate or securities of companies that deal in real instruments backed by real estate or of issuers
estate or are engaged in the real estate business. engaged in real estate activities).
---------------------------------------------------------- ------------------------------------------------------
CONCENTRATION: CONCENTRATION:
The Fund may not concentrate its investments in The Fund may not invest more than 25% of its assets in
securities of issuers in a particular industry (other securities of companies in any one industry.
than securities issued or guaranteed by the U.S. "Industry" is defined to include groups of related
government or any of its agencies or instrumentalities). industries. This restriction does not apply to
obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities.
---------------------------------------------------------- ------------------------------------------------------
UNDERWRITING: UNDERWRITING:
The Fund may not act as an underwriter of securities The Fund may not act as an underwriter of another
issued by others, except to the extent that the Fund may company's securities, except to the extent that the
be considered an underwriter within the meaning of the Fund may be deemed to be an underwriter within the
Securities Act of 1933 in the disposition of restricted meaning of the Securities Act of 1933, in connection
securities. with the purchase and sale of portfolio securities.
---------------------------------------------------------- ------------------------------------------------------
INVESTING IN COMMODITIES: INVESTING IN COMMODITIES:
The Fund may not purchase or sell physical commodities The Fund may not purchase or sell physical commodities
unless acquired as a result of ownership of securities unless acquired as a result of ownership of securities
or other instruments, provided that this limitation or other instruments (but this shall not prevent the
shall not prohibit the Fund from purchasing or selling Fund from purchasing or selling options, futures
options and futures contracts or from investing in contracts, or other derivative instruments, or from
securities or other instruments backed by physical investing in securities or other instruments backed by
commodities. physical commodities); and
---------------------------------------------------------- ------------------------------------------------------
CONTROL:
CONTROL:
The Fund may not invest for purposes of exercising No applicable limitation.
control over management.
---------------------------------------------------------- ------------------------------------------------------
DIVERSIFICATION OF INVESTMENTS: DIVERSIFICATION OF INVESTMENTS:
The Fund is diversified as defined in the 1940 Act. No applicable limitation because the Fund is a
Diversified means that, with respect to 75% of its total non-diversified investment company.
assets, the 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.
---------------------------------------------------------- ------------------------------------------------------
NON-FUNDAMENTAL INVESTMENT POLICIES NON-FUNDAMENTAL INVESTMENT POLICIES:
In addition, the Fund is subject to the following The following are the Fund's non-fundamental
investment policies that are not fundamental and may be investment policies, which may be changed by the Board
changed by the Board of Directors: of Directors without shareholder approval.
---------------------------------------------------------- ------------------------------------------------------
ILLIQUID SECURITIES: ILLIQUID SECURITIES:
The Fund may not purchase any security or enter into a The Fund may not invest in illiquid securities if, as
repurchase agreement if, as a result, more than 15% of a result of such investment, more than 15% of its net
its net assets would be invested in illiquid securities. assets would be invested in illiquid securities, or
Illiquid securities include repurchase agreements not such other amounts as may be permitted under the 1940
entitling the holder to payment of principal and Act.
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: SHORT SALES:
The Fund may not sell securities short, unless it owns The Fund may not sell securities short, unless the
or has the right to obtain securities equivalent in kind Fund owns or has the right to obtain securities
and amount to the securities sold short, and provided equivalent in kind and amount to the securities sold
that transactions in futures contracts and options are short, or unless it covers such short sale as required
not deemed to constitute selling securities short. by the current rules and positions of the Securities
and Exchange Commission or its staff, and provided
that transactions in options, futures contracts,
options on futures contracts or other derivative
instruments are not deemed to constitute selling
securities short.
---------------------------------------------------------- ------------------------------------------------------
MARGIN PURCHASES: MARGIN PURCHASES:
The Fund may not purchase securities on margin, except The Fund may not purchase securities on margin, except
to obtain such short-term credits as are necessary for that the Fund may obtain such short-term credits as
the clearance of transactions, and provided that margin are necessary for the clearance of transactions; and
payments in connection with futures contracts and provided that margin deposits in connection with
options on futures contracts shall not constitute futures contracts, options on futures contracts or
purchasing securities on margin. other derivative instruments shall not constitute
purchasing securities on margin.
---------------------------------------------------------- ------------------------------------------------------
FUTURES CONTRACTS: FUTURES CONTRACTS:
The Fund may enter into futures contracts and write and No applicable limitation.
buy put and call options relating to futures contracts.
The Fund may not, however, enter into leveraged futures
transactions if it would be possible for the Fund to
lose more than the notional value of the investment.
---------------------------------------------------------- ------------------------------------------------------
SECURITIES OF OTHER INVESTMENT COMPANIES SECURITIES OF OTHER INVESTMENT COMPANIES:
The Fund may invest up to 10% of its total assets in The Fund may not purchase securities of other
other investment companies, such as mutual funds, investment companies except in compliance with the
provided that the investment is consistent with its 1940 Act.
investment policies and restrictions. These investments
may include investments in money market funds managed by
American Century. Under the 1940 Act, the 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 the Fund's total assets in the aggregate.
---------------------------------------------------------- --------------------------------------------------------
BORROWING: BORROWING:
The Fund may not purchase additional investment The Fund may not borrow money except from banks or
securities at any time during which outstanding through reverse repurchase agreements or mortgage
borrowings exceed 5% of the total assets of the Fund. dollar rolls, and will not purchase securities when
bank borrowings exceed 5% of its assets.
---------------------------------------------------------- --------------------------------------------------------
INVESTMENT POLICY: INVESTMENT POLICY:
No applicable limitation. The Fund may not make any change in its investment
policy of investing at least 80% of its net assets
(plus any borrowings for investment purposes) in the
investments suggested by the Fund's name without first
providing shareholders of the Fund with at least 60
days' notice.
---------------------------------------------------------- --------------------------------------------------------
LOANS: LOANS:
No applicable limitation. The Fund may not make any loans other than loans of
portfolio securities, except through purchases of debt
securities or other debt instruments or engaging in
repurchase agreements with respect to portfolio
securities.
---------------------------------------------------------- --------------------------------------------------------
INVESTMENT IN ISSUES WITH LIMITED OPERATING HISTORIES: INVESTMENT IN ISSUES WITH LIMITED OPERATING HISTORIES:
The Fund may invest a portion of its equity assets in No applicable limitation.
the equity securities of issuers with limited operating
histories. An issuer is considered to have a limited
operating history if that issuer has a record of less
than three years of continuous operation. Periods of
capital formation, incubation, consolidations, and
research and development may be considered in
determining whether a particular issuer has a record of
three years of continuous operation.
---------------------------------------------------------- --------------------------------------------------------
EXHIBIT D
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
AC Equity Growth Fund
AC Equity Growth Fund - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made December 31, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended December 31
---------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
---------------------------------------------------------------------------------------------
Investor Class 27.34% 36.06% 25.45% 18.47% -10.95% -11.01% -20.32% 30.27% 13.98% 7.30%
---------------------------------------------------------------------------------------------
S&P 500 Index 22.96% 33.36% 28.58% 21.04% -9.10% -11.89% -22.10% 28.68% 10.88% 4.91%
---------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
AC Equity Growth Fund- Portfolio Commentary
PORTFOLIO MANAGERS: BILL MARTIN, TOM VAIANA, AND FEI ZOU
PERFORMANCE SUMMARY
In 2005, AC Equity Growth Fund outperformed its benchmark, the S&P 500 Index,
for the fifth consecutive year. The portfolio posted a total return of 7.30%*
for the year, while the S&P 500 returned 4.91%.
STOCK MARKET REVIEW
Stocks quietly generated modest gains in 2005, their third straight year of
positive performance. Energy was the dominant theme in the stock market for the
year, with oil prices reaching a record high of more than $70 a barrel in
August. Rising short-term interest rates and a devastating hurricane season also
served as headwinds for the stock market during the year.
Positive influences on the market included unexpectedly strong earnings, which
enabled the S&P 500 to extend its streak of double-digit earnings growth to 14
consecutive quarters. However, this growth was driven almost entirely by sharply
higher profits in the energy sector. The economy remained healthy, growing by
3.5% in 2005, and declining oil prices late in the year helped ease inflation
concerns.
Overall, the major stock indexes each advanced by approximately 5% in 2005.
Based on the performance of the Standard & Poor's indexes, mid-cap stocks posted
the best results, followed by small-cap and large-cap issues. In the large-cap
segment of the market, value stocks outperformed growth for the sixth year in a
row.
Eight of the ten sectors in the S&P 500 gained in 2005, led by energy and
utilities--the biggest beneficiaries of higher energy prices. The only two
sectors of the market to decline during the year were consumer discretionary and
telecommunication services.
HEALTH CARE STOCKS OUTPERFORMED
Successful stock selection was the key to AC Equity Growth Fund's outperformance
of the S&P 500 in 2005. The best results by far were in the health care sector,
which was responsible for nearly two-thirds of the portfolio's outperformance.
Five of the top ten contributors to relative results were health care stocks.
Health care providers posted the best results, led by wholesale drug
distributors McKesson and AmerisourceBergen. Both companies benefited from the
successful transition to a fee-for-services business model, which led to higher
profit margins and strong earnings growth.
TOP TEN HOLDINGS
AS OF DECEMBER 31, 2005
--------------------------------------------------------------------------------
% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
12/31/05 6/30/05
--------------------------------------------------------------------------------
Exxon Mobil Corp. 4.0% 3.7%
--------------------------------------------------------------------------------
Intel Corp. 2.4% 3.0%
--------------------------------------------------------------------------------
Johnson & Johnson 2.3% 3.0%
--------------------------------------------------------------------------------
Bank of America Corp. 2.2% 3.1%
--------------------------------------------------------------------------------
American Express Co. 2.0% 2.0%
--------------------------------------------------------------------------------
Amgen Inc. 1.9% 1.6%
--------------------------------------------------------------------------------
Wells Fargo & Co. 1.9% 2.0%
--------------------------------------------------------------------------------
Viacom, Inc. Cl B 1.8% 1.6%
--------------------------------------------------------------------------------
Capital One
Financial Corp. 1.7% 1.5%
--------------------------------------------------------------------------------
McKesson Corp. 1.7% 1.7%
--------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
AC Equity Growth Fund - Portfolio Commentary
Other top performers in health care included managed health care provider CIGNA,
which benefited from improving profit margins and stabilizing membership
numbers, and Kos Pharmaceuticals, which reported strong sales of its flagship
cholesterol drug.
WINNERS IN ENERGY AND INDUSTRIALS
Stock selection was also beneficial in the energy and industrials sectors. The
top individual contributor in the portfolio was oil & gas producer Sunoco, which
surged as refining profit margins increased sharply.
In the industrial sector, credit reporting agency Equifax was the best
contributor. The rise in credit card debt, personal bankruptcies, and identity
theft increased demand for the credit reports provided by Equifax.
TECHNOLOGY STOCKS WERE MIXED
Information technology stocks produced mixed results, with stock selection
detracting fractionally from relative performance. Two of the top contributors
in the portfolio were Apple Computer, which more than doubled during the year
thanks to the runaway success of the iPod, and cell phone maker Motorola, which
posted healthy earnings growth and captured a higher share of the U.S. market.
However, the fund's two worst contributors to relative results were also
technology stocks. Computer giant IBM declined after reporting disappointing
earnings and restructuring its European operations, while Internet provider
EarthLink suffered user losses early in the year that weighed on revenues.
CONSUMER STAPLES DETRACTED FROM RESULTS
The portfolio's only significant detractor from performance relative to the S&P
500 was the consumer staples sector. Although several fund holdings in this
sector underperformed during the year--including fresh produce distributor
Chiquita Brands International and battery maker Energizer Holdings--the worst
contributors were stocks in the index that performed well but were absent or
underrepresented in the portfolio. Examples include tobacco products company
Altria and beverage maker PepsiCo.
AC EQUITY GROWTH FUND'S FIVE LARGEST
OVERWEIGHTS AS OF DECEMBER 31, 2005
--------------------------------------------------------------------------------
% OF % OF
PORTFOLIO'S S&P 500
STOCKS INDEX
--------------------------------------------------------------------------------
McKesson Corp. 1.72% 0.14%
--------------------------------------------------------------------------------
Berkley (W.R.) Corp. 1.55% --
--------------------------------------------------------------------------------
Sunoco, Inc. 1.60% 0.09%
--------------------------------------------------------------------------------
Capital One Financial
Corp. 1.73% 0.23%
--------------------------------------------------------------------------------
Hospira Inc. 1.52% 0.06%
--------------------------------------------------------------------------------
AC EQUITY GROWTH FUND'S FIVE LARGEST
UNDERWEIGHTS AS OF DECEMBER 31, 2005
--------------------------------------------------------------------------------
% OF % OF
PORTFOLIO'S S&P 500
STOCKS INDEX
--------------------------------------------------------------------------------
General Electric Co. -- 3.29%
--------------------------------------------------------------------------------
Citigroup Inc. -- 2.18%
--------------------------------------------------------------------------------
Procter & Gamble Co.
(The) -- 1.72%
--------------------------------------------------------------------------------
Microsoft Corporation 0.41% 2.13%
--------------------------------------------------------------------------------
American International
Group, Inc. -- 1.57%
--------------------------------------------------------------------------------
AC New Opportunities II Fund - Performance
TOTAL RETURNS AS OF OCTOBER 31, 2005
--------------
AVERAGE ANNUAL
RETURNS
--------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR INCEPTION DATE
--------------------------------------------------------------------------------
INVESTOR CLASS 10.14% 7.66% 6/1/01
--------------------------------------------------------------------------------
RUSSELL 2000 GROWTH INDEX(1) 10.91% 1.96%(2) --
--------------------------------------------------------------------------------
A Class 1/31/03
No sales charge* 9.91% 20.18%(3)
With sales charge* 3.61% 17.66%(3)
--------------------------------------------------------------------------------
B Class 1/31/03
No sales charge* 9.03% 19.27%(3)
With sales charge* 5.02% 18.48%(3)
--------------------------------------------------------------------------------
C Class 9.16% 19.46%(3) 1/31/03
--------------------------------------------------------------------------------
*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial
sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B
Class shares redeemed within six years of purchase are subject to a CDSC that
declines from 5.00% during the first year after purchase to 0.00% the sixth year
after purchase. C Class shares redeemed within 12 months of purchase are subject
to a maximum CDSC of 1.00%. Please see the Share Class Information pages for
more about the applicable sales charges for each share class. The SEC requires
that mutual funds provide performance information net of maximum sales charges
in all cases where charges could be applied.
(1) (c) 2005 Reuters. All rights reserved. Any copying, republication or
redistribution of Lipper content, including by caching, framing or similar
means, is expressly prohibited without the prior written consent of Lipper.
Lipper shall not be liable for any errors or delays in the content, or for any
actions taken in reliance thereon. The data contained herein has been obtained
from company reports, financial reporting services, periodicals and other
resources believed to be reliable. Although carefully verified, data on
compilations is not guaranteed by Lipper Inc. -- A Reuters Company and may be
incomplete. No offer or solicitations to buy or sell any of the securities
herein is being made by Lipper.
(2) Since 5/31/01, the date nearest the Investor Class's inception for which
data are available.
(3) Class returns would have been lower if service and distribution fees had not
been waived from 2/1/03 to 2/21/03, 2/1/03 to 2/10/03, and 2/1/03 to 6/30/03 for
the A, B, and C Class shares, respectively. Data presented reflect past
performance. Past performance is no guarantee of future results. Current
performance may be higher or lower than the performance shown. Investment return
and principal value will fluctuate, and redemption value may be more or less
than original cost. To obtain performance data current to the most recent month
end, please call 1-800-345-2021 or visit americancentury.com. Historically small
company stocks have been more volatile than the stocks of larger, more
established companies.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
AC New Opportunities II Fund- Performance
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made June 1, 2001
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended October 31
--------------------------------------------------------------------------------
2001* 2002 2003 2004 2005
--------------------------------------------------------------------------------
Investor Class -9.60% -8.19% 38.55% 9.39% 10.14%
--------------------------------------------------------------------------------
Russell 2000 Growth Index -19.01% -21.57% 46.56% 5.53% 10.91%
--------------------------------------------------------------------------------
* From 6/1/01, the Investor Class's inception date. Index data from 5/31/01, the
date nearest the Investor Class's inception for which data are available. Not
annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. Historically small company stocks have been more volatile
than the stocks of larger, more established companies.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
are provided for comparison. The fund's total returns include operating expenses
(such as transaction costs and management fees) that reduce returns, while the
total returns of the index do not.
New Opportunities II - Portfolio Commentary
THE NEW OPPORTUNITIES II INVESTMENT TEAM: PORTFOLIO MANAGERS TOM TELFORD AND
HAROLD S. BRADLEY AND INVESTMENT ANALYSTS STAFFORD SOUTHWICK AND MATT FERRETTI.
American Century New Opportunities II advanced 10.14%* during the fiscal year
ended October 31, 2005, lagging the 10.91% return of its benchmark, the Russell
2000 Growth Index.
ECONOMIC REVIEW
The U.S. economy (as measured by gross domestic product -- GDP) grew at a
moderate rate during the fiscal year. The annualized "real" rate of GDP growth
(factoring out inflation) ranged from 3.3% to 4.3%. Energy costs and short-term
interest rates soared, but "core" inflation (excluding food and energy prices)
remained relatively stable.
Energy costs jumped 35% in the Consumer Price Index (CPI) for the year ended
September 30, 2005 (reported in October 2005) as crude oil futures flirted with
$70 a barrel. But the one-year percentage change in core CPI fell back to the
same 2% level as a year earlier. Attempting to keep inflation under control, the
Federal Reserve, in eight quarter-point increments, raised its overnight
interest rate target two full percentage points to 3.75% by October 2005 from
1.75% in October 2004.
STOCK MARKET REVIEW
Overcoming rising fuel and interest costs, corporate earnings for the Standard &
Poor's 500 Index (through the third quarter of 2005) extended their string of
double-digit growth to 12 straight quarters. The S&P 500, a key benchmark for
larger-capitalization companies, returned 8.72% in the fiscal year. That
performance trailed its smaller-cap counterparts, the S&P MidCap 400 and
SmallCap 600 indices, which gained 17.65% and 15.27%, respectively.
As a group, small-cap value stocks outpaced small-cap growth issues, as the
Russell 2000 Value Index gained 13.04%, 213 bps more than the 10.91% return of
the Russell 2000 Growth.
MATERIAL RESULTS
Solid security selection in the materials sector, especially in the metals and
mining industry, contributed significantly to New Opportunities II's fiscal-year
return. Titanium Metals Corp., a maker of titanium parts used in aircraft and
the portfolio's largest average individual weighting during the year,
exemplified the type of investment the New Opportunities II team targets.
TOP TEN HOLDINGS AS OF OCTOBER 31, 2005
AS A % OF NET ASSETS
--------------------------------------------------------------------------------
10/31/05 4/30/05
--------------------------------------------------------------------------------
Titanium Metals Corp. 3.6% 1.8%
--------------------------------------------------------------------------------
Quidel Corp. 2.5% --
--------------------------------------------------------------------------------
American Science
and Engineering Inc. 2.4% --
--------------------------------------------------------------------------------
Administaff, Inc. 1.9% --
--------------------------------------------------------------------------------
Matrix Service Co. 1.7% --
--------------------------------------------------------------------------------
Radiation Therapy
Services Inc. 1.7% 1.5%
--------------------------------------------------------------------------------
Grant Prideco Inc. 1.5% 1.2%
--------------------------------------------------------------------------------
Knight Capital
Group, Inc. Cl A 1.5% --
--------------------------------------------------------------------------------
FPIC Insurance
Group Inc. 1.5% --
--------------------------------------------------------------------------------
Ceradyne Inc. 1.5% --
--------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
(continued)
Benefiting from surging demand as aircraft makers sought more lightweight
materials, in part to combat rising jet fuel costs, Titanium Metals exhibited
both solid earnings acceleration and strong relative price strength -- two key
attributes for portfolio inclusion. The company's share price increased almost
five-fold in the 12-month period, composing about a third of the portfolio's
total return.
In the consumer discretionary sector, sound stock picks among specialty
retailers and an avoidance of struggling media companies and multi-line
retailers boosted relative performance for New Opportunities II. As a whole, the
sector ranked second only to materials in positive absolute contributions to the
portfolio.
Stock selection in industrials also generated positive results. The portfolio
bought a stake in Administaff, a provider of human resources staffing to small
and medium-sized businesses, and that company's shares surged along with its
earnings.
TRIPPING ON TECHNOLOGY
The information technology sector stripped more than any other from New
Opportunities II's return. The portfolio's underweight position couldn't
overcome weak stock selection in software, semiconductors and information
technology services. Six of the portfolio's 10 leading individual relative
detractors came from the IT sector. However, the portfolio did enjoy substantial
contributions from Itron, a maker of electronic meter and data collection
equipment for the utility industry.
The portfolio's biggest decliner, Able Laboratories, lost 90% of its value in a
two-month period in mid-2005. The generic drug maker abruptly suspended all
manufacturing and shipping operations as regulatory questions arose about its
laboratory and production procedures. Shortly after the second quarter of 2005
ended, the company lost its second chief executive in two months and has since
decided to auction all its assets. New Opportunities II shed the stock, but not
before incurring some of its damage.
An overweight in financials -- in large part reflecting a decision to avoid
bigger weights in IT and health care -- also hurt the portfolio's performance as
rising short-term interest rates and a flattening yield curve challenged
commercial banks, thrifts and other lenders.
INVESTMENT PHILOSOPHY
We remain committed to pursuing an investment approach of identifying small
companies that appear to have accelerating earnings and revenue growth. We
believe this approach provides the optimum potential for long-term investment
rewards.
TOP FIVE INDUSTRIES AS OF OCTOBER 31, 2005
AS A % OF NET ASSETS
--------------------------------------------------------------------------------
10/31/05 4/30/05
--------------------------------------------------------------------------------
Health Care Equipment
& Supplies 10.9% 5.6%
--------------------------------------------------------------------------------
Capital Markets 8.7% 0.8%
--------------------------------------------------------------------------------
Commercial Banks 6.2% 3.5%
--------------------------------------------------------------------------------
Commercial Services
& Supplies 5.5% 2.0%
--------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment 5.1% 1.2%
--------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
AS A % OF NET ASSETS
--------------------------------------------------------------------------------
10/31/05 4/30/05
--------------------------------------------------------------------------------
Common Stocks 100.1% 97.7%
--------------------------------------------------------------------------------
Temporary
Cash Investments 1.7% 1.2%
--------------------------------------------------------------------------------
Other Assets
and Liabilities (1.8)% 1.1%
--------------------------------------------------------------------------------
Exhibit E
FINANCIAL INFORMATION
AC Equity Growth Fund- Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31
------------------------------------------------------------------------------------------
INVESTOR CLASS
------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
------------------------------------------------------------------------------------------
PER-SHARE DATA
------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $22.08 $19.60 $15.19 $19.24 $21.77
------------------------------------------------------------------------------------------
Income From
Investment Operations
-------------------------
Net Investment
Income (Loss)(1) 0.22 0.25 0.17 0.15 0.13
-------------------------
Net Realized and
Unrealized Gain (Loss) 1.39 2.47 4.41 (4.05) (2.53)
------------------------------------------------------------------------------------------
Total From
Investment Operations 1.61 2.72 4.58 (3.90) (2.40)
------------------------------------------------------------------------------------------
Distributions
-------------------------
From Net
Investment Income (0.22) (0.24) (0.17) (0.15) (0.13)
-------------------------
From Net
Realized Gains (0.10) -- -- -- --
------------------------------------------------------------------------------------------
Total Distributions (0.32) (0.24) (0.17) (0.15) (0.13)
------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $23.37 $22.08 $19.60 $15.19 $19.24
==========================================================================================
TOTAL RETURN(2) 7.30% 13.98% 30.27% (20.32)% (11.01)%
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.67% 0.68% 0.69% 0.69% 0.68%
-------------------------
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.98% 1.24% 1.00% 0.86% 0.64%
-------------------------
Portfolio Turnover Rate 106% 97% 95% 100% 79%
-------------------------
Net Assets, End of Period
(in thousands) $1,962,596 $1,547,062 $1,188,103 $979,959 $1,465,026
------------------------------------------------------------------------------------------
(1) Computed using average shares outstanding throughout the period.
(2) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. 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.
See Notes to Financial Statements.
AC Equity Growth Fund - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31
------------------------------------------------------------------------------------------
ADVISOR CLASS
------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001
------------------------------------------------------------------------------------------
PER-SHARE DATA
------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $22.07 $19.59 $15.17 $19.23 $21.77
------------------------------------------------------------------------------------------
Income From
Investment Operations
-------------------------
Net Investment
Income (Loss)(1) 0.17 0.20 0.13 0.11 0.08
-------------------------
Net Realized and
Unrealized Gain (Loss) 1.37 2.47 4.41 (4.06) (2.54)
------------------------------------------------------------------------------------------
Total From
Investment Operations 1.54 2.67 4.54 (3.95) (2.46)
------------------------------------------------------------------------------------------
Distributions
-------------------------
From Net
Investment Income (0.16) (0.19) (0.12) (0.11) (0.08)
-------------------------
From Net
Realized Gains (0.10) -- -- -- --
------------------------------------------------------------------------------------------
Total Distributions (0.26) (0.19) (0.12) (0.11) (0.08)
------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $23.35 $22.07 $19.59 $15.17 $19.23
==========================================================================================
TOTAL RETURN(2) 6.99% 13.71% 30.05% (20.60)% (11.28)%
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.92% 0.93% 0.94% 0.94% 0.93%
-------------------------
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.73% 0.99% 0.75% 0.61% 0.39%
-------------------------
Portfolio Turnover Rate 106% 97% 95% 100% 79%
-------------------------
Net Assets, End of Period
(in thousands) $265,812 $160,427 $114,404 $99,615 $132,214
------------------------------------------------------------------------------------------
(1) Computed using average shares outstanding throughout the period.
(2) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. 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.
See Notes to Financial Statements.
AC Equity Growth Fund - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31 (EXCEPT AS NOTED)
------------------------------------------------------------------------------------------
C CLASS
------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001(1)
------------------------------------------------------------------------------------------
PER-SHARE DATA
------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $22.03 $19.55 $15.14 $19.23 $20.26
------------------------------------------------------------------------------------------
Income From
Investment Operations
-------------------------
Net Investment
Income (Loss)(2) --(3) 0.05 (0.01) (0.02) (0.04)
-------------------------
Net Realized and
Unrealized Gain (Loss) 1.37 2.47 4.43 (4.07) (0.99)
------------------------------------------------------------------------------------------
Total From
Investment Operations 1.37 2.52 4.42 (4.09) (1.03)
------------------------------------------------------------------------------------------
Distributions
-------------------------
From Net
Investment Income (0.02) (0.04) (0.01) -- --
-------------------------
From Net
Realized Gains (0.10) -- -- -- --
------------------------------------------------------------------------------------------
Total Distributions (0.12) (0.04) (0.01) -- --
------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $23.28 $22.03 $19.55 $15.14 $19.23
==========================================================================================
TOTAL RETURN(4) 6.23% 12.89% 29.20% (21.23)% (5.13)%
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.67% 1.68% 1.69% 1.69% 1.68%(5)
-------------------------
Ratio of Net Investment
Income (Loss) to Average
Net Assets (0.02)% 0.24% 0.00% (0.14)% (0.44)%(5)
-------------------------
Portfolio Turnover Rate 106% 97% 95% 100% 79%(6)
-------------------------
Net Assets, End of Period
(in thousands) $4,536 $2,088 $1,076 $268 $139
------------------------------------------------------------------------------------------
(1) July 18, 2001 (commencement of sale) through December 31, 2001.
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended December 31, 2001.
See Notes to Financial Statements.
AC Equity Growth Fund- Financial Highlights--Semiannual
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------------------
INVESTOR CLASS
----------------------------------------------------------------------------------------------------
2006(1) 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $23.37 $22.08 $19.60 $15.19 $19.24 $21.77
----------------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
Net Investment
Income (Loss)(2) 0.11 0.22 0.25 0.17 0.15 0.13
--------------------------
Net Realized and
Unrealized Gain (Loss) 0.57 1.39 2.47 4.41 (4.05) (2.53)
----------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.68 1.61 2.72 4.58 (3.90) (2.40)
----------------------------------------------------------------------------------------------------
Distributions
--------------------------
From Net
Investment Income (0.09) (0.22) (0.24) (0.17) (0.15) (0.13)
--------------------------
From Net
Realized Gains (0.03) (0.10) -- -- -- --
----------------------------------------------------------------------------------------------------
Total Distributions (0.12) (0.32) (0.24) (0.17) (0.15) (0.13)
----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $23.93 $23.37 $22.08 $19.60 $15.19 $19.24
====================================================================================================
TOTAL RETURN(3) 2.95% 7.30% 13.98% 30.27% (20.32)% (11.01)%
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.67%(4) 0.67% 0.68% 0.69% 0.69% 0.68%
--------------------------
Ratio of Net Investment
Income (Loss) to
Average Net Assets 0.87%(4) 0.98% 1.24% 1.00% 0.86% 0.64%
--------------------------
Portfolio Turnover Rate 54% 106% 97% 95% 100% 79%
--------------------------
Net Assets, End of Period
(in thousands) $2,210,452 $1,962,596 $1,547,062 $1,188,103 $979,959 $1,465,026
----------------------------------------------------------------------------------------------------
(1) Six months ended June 30, 2006 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two
decimal places is made in accordance with SEC guidelines and does not result
in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
AC Equity Growth Fund - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------------------
ADVISOR CLASS
----------------------------------------------------------------------------------------------------
2006(1) 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $23.35 $22.07 $19.59 $15.17 $19.23 $21.77
----------------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
Net Investment
Income (Loss)(2) 0.08 0.17 0.20 0.13 0.11 0.08
--------------------------
Net Realized and
Unrealized Gain (Loss) 0.58 1.37 2.47 4.41 (4.06) (2.54)
----------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.66 1.54 2.67 4.54 (3.95) (2.46)
----------------------------------------------------------------------------------------------------
Distributions
--------------------------
From Net
Investment Income (0.07) (0.16) (0.19) (0.12) (0.11) (0.08)
--------------------------
From Net
Realized Gains (0.03) (0.10) -- -- -- --
----------------------------------------------------------------------------------------------------
Total Distributions (0.10) (0.26) (0.19) (0.12) (0.11) (0.08)
----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $23.91 $23.35 $22.07 $19.59 $15.17 $19.23
====================================================================================================
TOTAL RETURN(3) 2.83% 6.99% 13.71% 30.05% (20.60)% (11.28)%
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.92%(4) 0.92% 0.93% 0.94% 0.94% 0.93%
--------------------------
Ratio of Net Investment
Income (Loss) to
Average Net Assets 0.62%(4) 0.73% 0.99% 0.75% 0.61% 0.39%
--------------------------
Portfolio Turnover Rate 54% 106% 97% 95% 100% 79%
--------------------------
Net Assets, End of Period
(in thousands) $351,466 $265,812 $160,427 $114,404 $99,615 $132,214
----------------------------------------------------------------------------------------------------
(1) Six months ended June 30, 2006 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
AC Equity Growth Fund- Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------------------
C CLASS
----------------------------------------------------------------------------------------------------
2006(1) 2005 2004 2003 2002 2001(2)
----------------------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $23.28 $22.03 $19.55 $15.14 $19.23 $20.26
----------------------------------------------------------------------------------------------------
Income From
Investment Operations
--------------------------
Net Investment
Income (Loss)(3) (0.01) --(4) 0.05 (0.01) (0.02) (0.04)
--------------------------
Net Realized and
Unrealized Gain (Loss) 0.57 1.37 2.47 4.43 (4.07) (0.99)
----------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.56 1.37 2.52 4.42 (4.09) (1.03)
----------------------------------------------------------------------------------------------------
Distributions
--------------------------
From Net
Investment Income -- (0.02) (0.04) (0.01) -- --
--------------------------
From Net
Realized Gains (0.03) (0.10) -- -- -- --
----------------------------------------------------------------------------------------------------
Total Distributions (0.03) (0.12) (0.04) (0.01) -- --
----------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $23.81 $23.28 $22.03 $19.55 $15.14 $19.23
====================================================================================================
TOTAL RETURN(5) 2.42% 6.23% 12.89% 29.20% (21.23)% (5.13)%
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.67%(6) 1.67% 1.68% 1.69% 1.69% 1.68%(6)
--------------------------
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.13)%(6) (0.02)% 0.24% 0.00% (0.14)% (0.44)%(6)
--------------------------
Portfolio Turnover Rate 54% 106% 97% 95% 100% 79%(7)
--------------------------
Net Assets, End of Period
(in thousands) $7,235 $4,536 $2,088 $1,076 $268 $139
----------------------------------------------------------------------------------------------------
(1) Six months ended June 30, 2006 (unaudited).
(2) July 18, 2001 (commencement of sale) through December 31, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount is less than $0.005.
(5) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset 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.
(6) Annualized.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended December 31, 2001.
See Notes to Financial Statements.
AC New Opportunities II Fund- Financial Highlights-Annual
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
----------------------------------------------------------------------------------------------
INVESTOR CLASS
----------------------------------------------------------------------------------------------
2005 2004 2003 2002 2001(1)
----------------------------------------------------------------------------------------------
PER-SHARE DATA
----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.29 $5.75 $4.15 $4.52 $5.00
----------------------------------------------------------------------------------------------
Income From Investment Operations
------------------------------------------
Net Investment Income (Loss)(2) (0.06) (0.07) (0.05) (0.05) (0.01)
------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.69 0.61 1.65 (0.32) (0.47)
----------------------------------------------------------------------------------------------
Total From Investment Operations 0.63 0.54 1.60 (0.37) (0.48)
----------------------------------------------------------------------------------------------
Distributions
------------------------------------------
From Net Realized Gains (0.17) -- -- -- --
----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.75 $6.29 $5.75 $4.15 $4.52
==============================================================================================
TOTAL RETURN(3) 10.14% 9.39% 38.55% (8.19)% (9.60)%
----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.50% 1.50% 1.50% 1.50% 1.50%(4)
------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.93)% (1.09)% (1.11)% (1.02)% (0.81)%(4)
------------------------------------------
Portfolio Turnover Rate 269% 255% 236% 182% 89%
------------------------------------------
Net Assets, End of Period (in thousands) $43,157 $38,917 $32,512 $25,479 $18,217
----------------------------------------------------------------------------------------------
(1) June 1, 2001 (fund inception) through October 31, 2001.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
AC New Opportunities II Fund - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
A CLASS
--------------------------------------------------------------------------------
2005 2004 2003(1)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.26 $5.74 $4.15
--------------------------------------------------------------------------------
Income From Investment Operations
-------------------------------------------
Net Investment Income (Loss)(2) (0.08) (0.08) (0.05)
-------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.70 0.60 1.64
--------------------------------------------------------------------------------
Total From Investment Operations 0.62 0.52 1.59
--------------------------------------------------------------------------------
Distributions
-------------------------------------------
From Net Realized Gains (0.16) -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $6.72 $6.26 $5.74
================================================================================
TOTAL RETURN(3) 9.91% 9.06% 38.31%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.75% 1.75% 1.75%(4)
-------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.18)% (1.34)% (1.47)%(4)
-------------------------------------------
Portfolio Turnover Rate 269% 255% 236%(5)
-------------------------------------------
Net Assets, End of Period (in thousands) $47,937 $20,337 $891
--------------------------------------------------------------------------------
(1) January 31, 2003 (commencement of sale) through October 31, 2003.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(4) Annualized.
(5) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
New Opportunities II - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
------------------------------------------------------------------------------------------
C CLASS
------------------------------------------------------------------------------------------
2005 2004 2003(1)
------------------------------------------------------------------------------------------
PER-SHARE DATA
------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.20 $5.73 $4.15
------------------------------------------------------------------------------------------
Income From Investment Operations
---------------------------------------------
Net Investment Income (Loss)(2) (0.13) (0.13) (0.07)
---------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.70 0.60 1.65
------------------------------------------------------------------------------------------
Total From Investment Operations 0.57 0.47 1.58
------------------------------------------------------------------------------------------
Distributions
---------------------------------------------
From Net Realized Gains (0.11) -- --
------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.66 $6.20 $5.73
==========================================================================================
TOTAL RETURN(3) 9.16% 8.20% 38.07%
------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50% 2.50% 2.22%(4)(5)
---------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets (1.93)% (2.09)% (1.97)%(4)(5)
---------------------------------------------
Portfolio Turnover Rate 269% 255% 236%(6)
---------------------------------------------
Net Assets, End of Period (in thousands) $3,414 $1,294 $34
------------------------------------------------------------------------------------------
(1) January 31, 2003 (commencement of sale) through October 31, 2003.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(4) Annualized.
(5) During a portion of the period ended October 31, 2003, the distributor
agreed to voluntarily waive the distribution and service fees. Had fees not
been waived the annualized ratio of operating expenses to average net
assets and the annualized ratio of net investment loss to average net
assets would have been 2.50% and (2.25)%, respectively.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
AC New Opportunities II Fund Financial Highlights--Semiannual
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------------------------
INVESTOR CLASS
--------------------------------------------------------------------------------------------------
2006(1) 2005 2004 2003 2002 2001(2)
--------------------------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.75 $6.29 $5.75 $4.15 $4.52 $5.00
--------------------------------------------------------------------------------------------------
Income From
Investment Operations
-------------------------------
Net Investment
Income (Loss)(3) (0.04) (0.06) (0.07) (0.05) (0.05) (0.01)
-------------------------------
Net Realized and
Unrealized Gain (Loss) 1.60 0.69 0.61 1.65 (0.32) (0.47)
--------------------------------------------------------------------------------------------------
Total From
Investment Operations 1.56 0.63 0.54 1.60 (0.37) (0.48)
--------------------------------------------------------------------------------------------------
Distributions
-------------------------------
From Net Realized Gains (0.22) (0.17) -- -- -- --
--------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.09 $6.75 $6.29 $5.75 $4.15 $4.52
==================================================================================================
TOTAL RETURN(4) 23.55% 10.14% 9.39% 38.55% (8.19)% (9.60)%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.50%(5) 1.50% 1.50% 1.50% 1.50% 1.50%(5)
-------------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets (1.21)%(5) (0.93)% (1.09)% (1.11)% (1.02)% (0.81)%(5)
-------------------------------
Portfolio Turnover Rate 120% 269% 255% 236% 182% 89%
-------------------------------
Net Assets, End of Period
(in thousands) $51,169 $43,157 $38,917 $32,512 $25,479 $18,217
--------------------------------------------------------------------------------------------------
(1) Six months ended April 30, 2006 (unaudited).
(2) June 1, 2001 (fund inception) through October 31, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
See Notes to Financial Statements.
AC New Opportunities II Fund - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
A CLASS
--------------------------------------------------------------------------------
2006(1) 2005 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.72 $6.26 $5.74 $4.15
--------------------------------------------------------------------------------
Income From
Investment Operations
----------------------------------
Net Investment
Income (Loss)(3) (0.05) (0.08) (0.08) (0.05)
----------------------------------
Net Realized and
Unrealized Gain (Loss) 1.60 0.70 0.60 1.64
--------------------------------------------------------------------------------
Total From
Investment Operations 1.55 0.62 0.52 1.59
--------------------------------------------------------------------------------
Distributions
----------------------------------
From Net Realized Gains (0.21) (0.16) -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $8.06 $6.72 $6.26 $5.74
================================================================================
TOTAL RETURN(4) 23.42% 9.91% 9.06% 38.31%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.75%(5) 1.75% 1.75% 1.75%(5)
----------------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets (1.46)%(5) (1.18)% (1.34)% (1.47)%(5)
----------------------------------
Portfolio Turnover Rate 120% 269% 255% 236%(6)
----------------------------------
Net Assets, End of Period
(in thousands) $60,590 $47,937 $20,337 $891
--------------------------------------------------------------------------------
(1) Six months ended April 30, 2006 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
AC New Opportunities II Fund- Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
--------------------------------------------------------------------------------
C CLASS
--------------------------------------------------------------------------------
2006(1) 2005 2004 2003(2)
--------------------------------------------------------------------------------
PER-SHARE DATA
--------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $6.66 $6.20 $5.73 $4.15
--------------------------------------------------------------------------------
Income From
Investment Operations
-------------------------------
Net Investment
Income (Loss)(3) (0.08) (0.13) (0.13) (0.07)
-------------------------------
Net Realized and
Unrealized Gain (Loss) 1.60 0.70 0.60 1.65
--------------------------------------------------------------------------------
Total From
Investment Operations 1.52 0.57 0.47 1.58
--------------------------------------------------------------------------------
Distributions
-------------------------------
From Net Realized Gains (0.15) (0.11) -- --
--------------------------------------------------------------------------------
Net Asset Value, End of Period $8.03 $6.66 $6.20 $5.73
================================================================================
TOTAL RETURN(4) 22.90% 9.16% 8.20% 38.07%
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50%(5) 2.50% 2.50% 2.22%(5)(6)
-------------------------------
Ratio of Net Investment
Income (Loss)
to Average Net Assets (2.21)%(5) (1.93)% (2.09)% (1.97)%(5)(6)
-------------------------------
Portfolio Turnover Rate 120% 269% 255% 236%(7)
-------------------------------
Net Assets, End of Period
(in thousands) $4,084 $3,414 $1,294 $34
--------------------------------------------------------------------------------
(1) Six months ended April 30, 2006 (unaudited).
(2) January 31, 2003 (commencement of sale) through October 31, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any, and does not reflect applicable sales charges.
Total returns for periods less than one year are not annualized. The total
return of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset values to
two decimal places. If net asset values were calculated to three decimal
places, the total return differences would more closely reflect the class
expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
(6) During a portion of the period ended October 31, 2003, the distributor
agreed to voluntarily waive the distribution and service fees. Had fees not
been waived the annualized ratio of operating expenses to average net
assets and the annualized ratio of net investment income (loss) to average
net assets would have been 2.50% and (2.25)%, respectively.
(7) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended October 31, 2003.
See Notes to Financial Statements.
STATEMENT OF ADDITIONAL INFORMATION
NOVEMBER __, 2006
ACQUISITION OF THE ASSETS OF
KOPP EMERGING GROWTH FUND,
A SERIES OF KOPP FUNDS, INC.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone No: 1-888-533-KOPP
BY AND IN EXCHANGE FOR SHARES OF
AMERICAN CENTURY NEW OPPORTUNITIES II FUND,
A SERIES OF AMERICAN CENTURY MUTUAL FUNDS, INC.
4500 Main Street
Kansas City, MO 64111-7709
Telephone No: 1-877-345-8836
This Statement of Additional Information dated November __, 2006, is not a
prospectus. A Proxy Statement/Prospectus dated November __, 2006, related to the
above-referenced matter may be obtained by writing or calling Kopp at the
address and telephone number shown above. This Statement of Additional
Information should be read in conjunction with such Proxy Statement/Prospectus.
TABLE OF CONTENTS
1. Statement of Additional Information of American Century New Opportunities
II Fund, a series of American Century Mutual Funds, Inc., dated May 1,
2006, as supplemented on June 1, 2006 and August 1, 2006.
2. Statement of Additional Information of Kopp Emerging Growth Fund, a series
of Kopp Funds, Inc., dated January 30, 2006, as supplemented on September
13, 2006.
3. Audited Financial Statements of American Century New Opportunities II Fund,
a series of American Century Mutual Funds, Inc., dated October 31, 2005.
4. Audited Financial Statements of Kopp Emerging Growth Fund, a series of Kopp
Funds, Inc., dated September 30, 2005.
5. Unaudited Financial Statements of American Century New Opportunities II
Fund, a series of American Century Mutual Funds, Inc., dated April 30,
2006.
6. Unaudited Financial Statements of Kopp Emerging Growth Fund, a series of
Kopp Funds, Inc., dated March 31, 2006.
7. Pro Forma Financial Information for the acquisition Kopp Emerging Growth
Fund by American Century New Opportunities II Fund.
INFORMATION INCORPORATED BY REFERENCE
1. The Statement of Additional Information of American Century New
Opportunities II Fund, a series of American Century Mutual Funds, Inc. ("AC
New Opportunities II Fund") dated May 1, 2006, as supplemented on June 1,
2006 and August 1, 2006, is incorporated by reference to the AC New
Opportunities II Fund's Post-Effective Amendment No. 118 to its
Registration Statement on Form N-1A (File No. 811-0816), which was filed
with the Securities and Exchange Commission on April 28, 2006. A copy may
be obtained from American Century at 1-877-345-8836.
2. The Statement of Additional Information of the Kopp Emerging Growth Fund, a
series of Kopp Funds, Inc. ("Kopp Growth Fund") dated January 30, 2006, is
incorporated by reference to the Kopp Growth Fund's Post-Effective
Amendment No. 15 to its Registration Statement on Form N-1A (File No.
811-8267), which was filed with the Securities and Exchange Commission on
January 27, 2006. A copy may be obtained from the Kopp Growth Fund at
1-888-533-KOPP.
3. The audited financial statements of AC New Opportunities II Fund dated
October 31, 2005, are incorporated by reference to the Annual Report to
shareholders of AC New Opportunities II Fund, which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the
Investment Company Act of 1940, as amended, on January 5, 2006.
4. The audited financial statements of Kopp Growth Fund dated September 30,
2005, are incorporated by reference to the Annual Report to shareholders of
Kopp Growth Fund, which was filed with the Securities and Exchange
Commission pursuant to Section 30(b) of the Investment Company Act of 1940,
as amended, on December 8, 2005.
5. The unaudited financial statements of AC New Opportunities II Fund dated
April 30, 2006, are incorporated by reference to the Semi-Annual Report to
shareholders of AC New Opportunities II Fund, which was filed with the
Securities and Exchange Commission pursuant to Section 30(b) of the
Investment Company Act of 1940, as amended, on June 30, 2006.
6. The unaudited financial statements of Kopp Growth Fund dated March 31,
2006, are incorporated by reference to the Semi-Annual Report to
shareholders of Kopp Growth Fund, which was filed with the Securities and
Exchange Commission pursuant to Section 30(b) of the Investment Company Act
of 1940, as amended, on June 6, 2006.
NEW OPPORTUNITIES II (FUND 1) / KOPP EMERGING GROWTH (FUND 2)
PRO FORMA COMBINED SCHEDULE OF INVESTMENTS APRIL 30, 2006
(UNAUDITED) PROFORMA
PROFORMA FUND 1 FUND 2 COMBINED
FUND 1 FUND 2 COMBINED MARKET MARKET MARKET
SHARES SHARES SHARES SECURITY DESCRIPTION VALUE VALUE VALUE
---------------------------------------- --------------------------- ------------ ------------ -----------
COMMON STOCKS (98.2%)
AEROSPACE & DEFENSE (0.9%)
29,376 29,376 Aviall Inc. (1) $ 1,107,475 $ 1,107,475
63,726 63,726 Ladish Co., Inc. (1) 2,273,107 2,273,107
110,896 110,896 Taser International Inc. (1) 1,186,587 1,186,587
----------- -----------
4,567,169 4,567,169
----------- -----------
BEVERAGES (0.4%)
14,102 14,102 Hansen Natural Corp. (1) 1,825,645 1,825,645
----------- -----------
BIOTECHNOLOGY (12.5%)
1,200,000 1,200,000 Array BioPharma Inc. (1) 8,892,000 8,892,000
2,000,000 2,000,000 Cell Genesys, Inc. (1) 13,600,000 13,600,000
600,000 600,000 Cepheid (1) 5,466,000 5,466,000
70,000 70,000 CuraGen Corp. (1) 280,700 280,700
1,500,000 1,500,000 Medarex, Inc. (1) 18,015,000 18,015,000
2,500,000 2,500,000 Neose Technologies, Inc. (1)(2) 6,375,000 6,375,000
6,586 6,586 Nuvelo Inc. (1) 107,813 107,813
76,125 76,125 QIAGEN N.V. (1) 1,134,262 1,134,262
20,947 1,100,000 1,120,947 Sangamo Biosciences Inc. (1) 111,648 5,863,000 5,974,648
200,000 200,000 ZymoGenetics, Inc. (1) 4,094,000 4,094,000
----------- ----------- -----------
1,353,723 62,585,700 63,939,423
----------- ----------- -----------
BUILDING PRODUCTS (0.3%)
25,120 25,120 AAON Inc. (1) 688,790 688,790
26,497 26,497 Imperial Industries Inc. (1) 664,810 664,810
----------- -----------
1,353,600 1,353,600
----------- -----------
CAPITAL MARKETS (1.3%)
9,795 9,795 Affiliated Managers Group 992,234 992,234
Inc. (1)
16,701 16,701 Greenhill & Co. Inc. 1,184,435 1,184,435
72,000 72,000 Marusan Securities Co. 1,103,797 1,103,797
Ltd. ORD
20,077 20,077 Nuveen Investments Inc. 966,105 966,105
Cl A
42,387 42,387 OptionsXpress Holdings, 1,335,191 1,335,191
Inc.
16,318 16,318 Piper Jaffray Companies(1) 1,140,628 1,140,628
----------- -----------
6,722,390 6,722,390
----------- -----------
CHEMICALS (1.5%)
55,959 55,959 Celanese Corp., Series A 1,228,300 1,228,300
158,731 158,731 PolyOne Corp. (1) 1,409,531 1,409,531
100,000 100,000 Symyx Technologies Inc. (1) 2,915,000 2,915,000
75,572 75,572 Zoltek Companies, Inc. (1) 1,926,331 1,926,331
----------- ----------- -----------
4,564,162 2,915,000 7,479,162
----------- ----------- -----------
COMMERCIAL BANKS (0.6%)
28,538 28,538 Intervest Bancshares 1,141,235 1,141,235
Corp. (1)
15,372 15,372 Sterling Bancshares, Inc. 254,560 254,560
20,238 20,238 Trico Bancshares 552,295 552,295
27,676 27,676 Virginia Commerce 1,004,639 1,004,639
Bancorp (1) ----------- -----------
2,952,729 2,952,729
----------- -----------
COMMERCIAL SERVICES & SUPPLIES (1.1%)
52,623 52,623 51job, Inc. ADR (1) 1,325,047 1,325,047
25,536 25,536 American Ecology Corp. 683,088 683,088
39,606 39,606 American Reprographics 1,404,824 1,404,824
Co. (1)
49,471 49,471 NCO Group, Inc. (1) 1,061,153 1,061,153
40,382 40,382 Watson Wyatt Worldwide 1,331,395 1,331,395
Inc. ----------- -----------
5,805,507 5,805,507
----------- -----------
COMMUNICATIONS EQUIPMENT (27.3%)
800,000 800,000 ADC Telecommunications, 17,912,000 17,912,000
Inc. (1)
320,000 320,000 Bookham Inc. (1) 1,948,800 1,948,800
1,500,000 1,500,000 Centillium 5,610,000 5,610,000
Communications, Inc. (1)
61,567 61,567 Ceragon Networks Ltd. (1) 331,846 331,846
4,000,000 4,000,000 Finisar Corp. (1) 18,800,000 18,800,000
455,072 455,072 JDS Uniphase Corp. (1) 1,588,201 1,588,201
231,197 231,197 MRV Communications Inc. (1) 880,861 880,861
750,000 750,000 Oplink Communications 14,460,000 14,460,000
Inc. (1)
1,400,000 1,400,000 Redback Networks Inc. (1) 31,359,999 31,359,999
31,256 31,256 Sierra Wireless (1) 562,921 562,921
4,000,000 4,000,000 Stratex Networks Inc. (1) 25,240,000 25,240,000
3,300,000 3,300,000 Tut Systems, Inc. (1)(2) 9,867,000 9,867,000
3,500,000 3,500,000 WJ Communications, Inc. (1)(2) 10,045,000 10,045,000
----------- ----------- -----------
3,363,829 135,242,799 138,606,628
----------- ----------- -----------
COMPUTERS & PERIPHERALS (0.2%)
61,086 61,086 LaserCard Corp. (1) 1,038,462 1,038,462
----------- -----------
CONSTRUCTION & ENGINEERING (0.3%)
16,787 16,787 Jacobs Engineering Group 1,388,285 1,388,285
Inc. (1) ----------- -----------
DIVERSIFIED TELECOMMUNICATION SERVICES (0.1%)
376,806 376,806 Mpower Holding Corp. (1) 629,266 629,266
----------- -----------
ELECTRICAL EQUIPMENT (1.0%)
26,168 26,168 AZZ Inc. (1) 628,032 628,032
34,641 34,641 Baldor Electric Co. 1,150,081 1,150,081
67,036 67,036 BTU International, Inc. (1) 1,354,798 1,354,798
52,278 52,278 Color Kinetics Inc. (1) 1,107,771 1,107,771
18,016 18,016 Energy Conversion 900,980 900,980
Devices Inc. (1) ----------- -----------
5,141,662 5,141,662
----------- -----------
ELECTRONIC EQUIPMENT & INSTRUMENTS (2.2%)
100,000 100,000 Cyberoptics Corp. (1) 1,528,000 1,528,000
34,857 34,857 Daktronics Inc. 1,367,091 1,367,091
17,672 17,672 Itron Inc. (1) 1,184,908 1,184,908
28,492 28,492 Littelfuse, Inc. (1) 920,007 920,007
12,435 12,435 OYO Geospace Corp. (1) 724,214 724,214
750,000 750,000 RAE Systems, Inc. (1) 2,670,000 2,670,000
640,000 640,000 Superconductor 2,860,800 2,860,800
Technologies Inc. (1)(2) ----------- ----------- -----------
4,196,220 7,058,800 11,255,020
----------- ----------- -----------
ENERGY EQUIPMENT & SERVICES (2.1%)
94,766 94,766 Awilco Offshore ASA ORD(1) 887,121 887,121
12,046 12,046 Helmerich & Payne, Inc. 876,226 876,226
209,814 209,814 Matrix Service Co. (1) 2,393,977 2,393,977
29,479 29,479 Oil States International, 1,190,067 1,190,067
Inc. (1)
14,387 14,387 Schoeller-Bleckmann 598,852 598,852
Oilfield Equipment AG ORD
101,087 101,087 Socotherm SpA ORD 1,860,313 1,860,313
23,143 23,143 TETRA Technologies, Inc. (1) 1,138,636 1,138,636
29,263 29,263 Universal Compression 1,635,802 1,635,802
Holdings Inc. (1) ----------- -----------
10,580,994 10,580,994
----------- -----------
FOOD PRODUCTS (0.4%)
179,170 179,170 SunOpta Inc. (1) 1,825,742 1,825,742
----------- -----------
HEALTH CARE EQUIPMENT & SUPPLIES (13.1%)
62,519 62,519 Abaxis, Inc. (1) 1,632,996 1,632,996
200,000 200,000 Arthrocare Corp. (1) 9,066,000 9,066,000
63,249 63,249 Biolase Technology Inc. 673,602 673,602
200,000 200,000 Cutera, Inc. (1) 5,264,000 5,264,000
250,000 250,000 DexCom, Inc. (1) 6,290,000 6,290,000
300,000 300,000 E-Z-Em-Inc. (1) 5,453,970 5,453,970
100,000 100,000 Gen-Probe Inc. (1) 5,347,000 5,347,000
200,000 200,000 IRIS International Inc. (1) 2,368,000 2,368,000
24,488 24,488 Neogen Corp. (1) 594,324 594,324
33,621 33,621 Nutraceutical International 531,548 531,548
Corp. (1)
500,000 500,000 NuVasive, Inc. (1) 9,960,000 9,960,000
360,000 360,000 Regeneration Technologies 2,746,800 2,746,800
Inc. (1)
950,000 950,000 RITA Medical Systems, 3,914,000 3,914,000
Inc. (1)
340,000 340,000 SonoSite Inc. (1) 12,835,000 12,835,000
----------- ----------- -----------
3,432,470 63,244,770 66,677,240
----------- ----------- -----------
HEALTH CARE PROVIDERS & SERVICES (1.0%)
44,230 44,230 Air Methods Corp. (1) 1,217,652 1,217,652
32,916 32,916 Five Star Quality Care Inc. (1) 339,035 339,035
100,000 100,000 Vital Images, Inc. (1) 3,343,000 3,343,000
----------- ----------- -----------
1,556,687 3,343,000 4,899,687
----------- ----------- -----------
HEALTH CARE TECHNOLOGY (1.9%)
700,000 700,000 Phase Forward Inc. (1) 9,590,000 9,590,000
----------- -----------
HOTELS, RESTAURANTS & LEISURE (1.0%)
13,627 13,627 Buffalo Wild Wings Inc. (1) 588,414 588,414
33,893 33,893 Gaming Partners 566,013 566,013
International Corp.
32,019 32,019 Penn National Gaming, Inc. (1) 1,303,814 1,303,814
44,984 44,984 Pinnacle Entertainment Inc. (1) 1,228,063 1,228,063
4,094,000 4,094,000 Regal Hotels International 390,747 390,747
Holdings Ltd. ORD
32,337 32,337 Shuffle Master Inc. 1,194,852 1,194,852
----------- -----------
5,271,903 5,271,903
----------- -----------
HOUSEHOLD DURABLES (0.0%)
12,500 12,500 Acme United Corp. 187,875 187,875
----------- -----------
INTERNET & CATALOG RETAIL (0.8%)
18,274 18,274 Alloy Inc. (1) 227,694 227,694
56,014 56,014 dELiA*s Inc. (1) 595,429 595,429
27,907 27,907 NutriSystem, Inc. (1) 1,893,769 1,893,769
41,048 41,048 VistaPrint Ltd. (1) 1,312,715 1,312,715
----------- -----------
4,029,607 4,029,607
----------- -----------
INTERNET SOFTWARE & SERVICES (0.4%)
23,757 23,757 Digital River Inc. (1) 1,034,380 1,034,380
30,227 30,227 Travelzoo Inc. (1) 1,164,344 1,164,344
----------- -----------
2,198,724 2,198,724
----------- -----------
IT SERVICES (0.7%)
30,745 30,745 Euronet Worldwide Inc. (1) 1,098,826 1,098,826
92,665 92,665 Ness Technologies, Inc. (1) 1,125,880 1,125,880
142,422 142,422 Sapient Corp. (1) 1,115,164 1,115,164
----------- -----------
3,339,870 3,339,870
----------- -----------
LEISURE EQUIPMENT & PRODUCTS (0.1%)
45,457 45,457 K2 Inc. (1) 535,938 535,938
----------- -----------
LIFE SCIENCES TOOLS & SERVICES (2.7%)
1,100,000 1,100,000 Caliper Life Sciences, Inc. (1) 6,699,000 6,699,000
223,140 223,140 Harvard Bioscience Inc. (1) 990,742 990,742
3,400,000 3,400,000 Transgenomic, Inc. (1)(2) 2,040,000 2,040,000
80,000 80,000 Ventana Medical Systems 3,896,000 3,896,000
Inc. (1) ----------- -----------
13,625,742 13,625,742
----------- -----------
MACHINERY (1.1%)
88,000 88,000 Aichi Corp. ORD 977,004 977,004
13,137 13,137 American Science and 1,125,972 1,125,972
Engineering Inc. (1)
167,835 167,835 Deutz AG ORD (1) 1,536,933 1,536,933
18,703 18,703 Gardner Denver Inc. (1) 1,393,935 1,393,935
7,818 7,818 Komax Holding AG 809,920 809,920
ORD(1) ----------- -----------
5,843,764 5,843,764
----------- -----------
MEDIA (0.1%)
82,668 82,668 MDC Partners Inc. Cl A (1) 739,879 739,879
----------- -----------
METALS & MINING (1.1%)
2,989 2,989 Olympic Steel Inc. 94,183 94,183
14,153 14,153 Oregon Steel Mills, Inc. (1) 700,998 700,998
69,758 69,758 Titanium Metals Corp. (1) 4,998,161 4,998,161
----------- -----------
5,793,342 5,793,342
----------- -----------
OIL, GAS & CONSUMABLE FUELS (0.2%)
58,620 58,620 MC Shipping Inc. 773,784 773,784
----------- -----------
PHARMACEUTICALS (2.4%)
85,536 85,536 Caraco Pharmaceutical 1,017,878 1,017,878
Laboratories Ltd. (1)
1,150,000 1,150,000 Depomed Inc. (1) 7,308,250 7,308,250
50,066 50,066 First Horizon 1,114,970 1,114,970
Pharmaceutical Corporation(1)
175,000 175,000 Salix Pharmaceuticals Ltd. (1) 2,397,500 2,397,500
653,100 653,100 Tempo Scan Pacific Tbk 531,489 531,489
PT ORD ----------- ----------- -----------
2,664,337 9,705,750 12,370,087
----------- ----------- -----------
REAL ESTATE (0.8%)
40,010 40,010 Eagle Hospitality 359,690 359,690
Properties Trust Inc.
67,749 67,749 Education Realty Trust, 1,010,815 1,010,815
Inc.
78,223 78,223 FelCor Lodging Trust Inc. 1,693,528 1,693,528
88,843 88,843 Highland Hospitality 1,146,075 1,146,075
----------- -----------
4,210,108 4,210,108
----------- -----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT (7.0%)
138,815 138,815 Anadigics, Inc. (1) 1,242,394 1,242,394
108,375 108,375 Chartered Semiconductor 1,227,889 1,227,889
Manufacturing Ltd. ADR (1)
2,000,000 2,000,000 Mindspeed Technologies 6,960,000 6,960,000
Inc. (1)
28,606 28,606 Nextest Systems Corp. (1) 444,251 444,251
136,664 136,664 ON Semiconductor Corp. (1) 979,881 979,881
400,000 400,000 PLX Technology, Inc. (1) 5,308,000 5,308,000
250,000 250,000 PMC-Sierra, Inc. (1) 3,107,500 3,107,500
840,000 840,000 QuickLogic Corporation (1) 5,073,600 5,073,600
157,619 157,619 Skyworks Solutions, Inc. (1) 1,126,976 1,126,976
140,965 140,965 STATS ChipPAC Ltd. ADR (1) 1,199,612 1,199,612
36,796 36,796 Trident Microsystems, Inc. (1) 978,774 978,774
189,090 189,090 Tvia, Inc. (1) 623,997 623,997
4,000,000 4,000,000 Vitesse Semiconductor 7,360,000 7,360,000
Corp. (1) ------------ ------------ -----------
7,823,774 27,809,100 35,632,874
----------- ----------- -----------
SOFTWARE (10.5%)
311,430 311,430 Adept Technology, Inc. (1)(2) 3,154,786 3,154,786
1,000,000 1,000,000 Digimarc Corporation (1) 6,800,000 6,800,000
1,289,000 1,289,000 Epicor Software Corp. (1) 15,635,570 15,635,570
250,000 250,000 Hyperion Solutions Corp. (1) 7,655,000 7,655,000
800,000 800,000 MapInfo Corporation (1) 11,120,000 11,120,000
350,000 350,000 MRO Software Inc. (1) 6,657,000 6,657,000
74,107 74,107 Opsware Inc. (1) 626,945 626,945
152,761 152,761 Smith Micro Software Inc. (1) 1,897,292 1,897,292
----------- ----------- -----------
2,524,237 51,022,356 53,546,593
----------- ----------- -----------
SPECIALTY RETAIL (1.1%)
37,362 37,362 Aeropostale Inc. (1) 1,147,387 1,147,387
70,354 70,354 Dress Barn Inc. (1) 1,779,252 1,779,252
21,948 21,948 Pantry Inc. (The) (1) 1,452,738 1,452,738
73,096 73,096 United Retail Group Inc. (1) 1,433,413 1,433,413
----------- -----------
5,812,790 5,812,790
----------- ----------- -----------
Total COMMON STOCKS (Combined Cost $509,246,479) 114,048,474 386,143,017 500,191,491
----------- ----------- -----------
TEMPORARY CASH INVESTMENTS (1.5%)
6,680,686 6,680,686 First American Prime 6,680,686 6,680,686
Obligations Fund, Class I
Repurchase Agreement, 500,000 500,000
Merrill Lynch & Co., Inc., ----------- ----------- -----------
(collateralized by various
U.S. Treasury obligations,
7.125% - 8.125%, 8/15/19 -
2/15/23, valued at $508,898), in
a joint trading account at
4.67%, dated 4/28/06, due
5/1/06 (Delivery value $500,195)
Total TEMPORARY CASH INVESTMENTS (Combined Cost $7,180,686) 500,000 6,680,686 7,180,686
----------- ----------- -----------
TOTAL INVESTMENTS (COMBINED COST $516,427,165) - 99.5% 114,548,474 392,823,703 507,372,177
OTHER ASSETS AND LIABILITIES - 0.5% 4,303,888 (1,648,641) 2,655,247
----------- ----------- -----------
TOTAL NET ASSETS - 100.0% $118,852,362 $391,175,062 $510,027,424
============ ============ ============
Percentages indicated are based on combined net assets of $510,027,424.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
NOTES TO PRO FORMA COMBINED SCHEDULE OF INVESTMENTS
ADR = American Depository Receipt
ORD = Foreign Ordinary Share
(1) Non-income producing.
(2) Affiliated company; the Fund owns 5% or more of the outstanding voting
securities of the issuer. See note 6 to the Notes to Pro Forma Combined
Financial Statements.
NEW OPPORTUNITIES II AND KOPP EMERGING GROWTH
PRO FORMA COMBINED STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2006 (UNAUDITED)
NEW KOPP PRO-FORMA
OPPORTUNITIES EMERGING COMBINING
II GROWTH ADJUSTMENTS (NOTE 1)
-----------------------------------------------------------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------------------------------------------------------
Investment securities - unaffiliated, at value
(cost of $88,793,697 and $345,389,200, respectively) $ 114,548,474 $ 358,481,117 $ - $ 473,029,591
Investment securities - affiliated, at value
(cost of $- and $82,244,268, respectively) - 34,342,586 - 34,342,586
-------------- -------------- -------------- --------------
Total investment securities, at value
(cost of $88,793,697 and $427,633,468, respectively) 114,548,474 392,823,703 - 507,372,177
Cash 2,486,458 - (1,928,876) (a) 557,582
Receivable for investments sold 8,188,135 1,481,059 - 9,669,194
Receivable for capital shares sold 65,785 174,800 - 240,585
Dividends and interest receivable 43,065 19,945 - 63,010
Prepaid expenses - 52,032 - 52,032
-------------- ------------- -------------- ----- --------------
125,331,917 394,551,539 (1,928,876) 517,954,580
-------------- ------------- -------------- ----- --------------
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------------------------------------------------------------
Disbursements in excess of demand deposit cash - 1,928,876 (1,928,876) (a) -
Payable for investments purchased 6,314,579 214,415 - 6,528,994
Payable for capital shares redeemed 3,648 422,530 - 426,178
Accrued management fees 143,515 330,403 - 473,918
Accrued expenses - 236,533 - 236,533
Accrued administrative fees - 74,864 - 74,864
Distribution payable 4,223 51,966 - 56,189
Service fees payable 13,590 107,048 - 120,638
Payable for directors' fees and expenses - 9,842 - 9,842
-------------- ------------- -------------- ----- --------------
6,479,555 3,376,477 (1,928,876) 7,927,156
-------------- ------------- -------------- ----- --------------
NET ASSETS $ 118,852,362 $ 391,175,062 $ - $ 510,027,424
============== ============= ============== ===== ==============
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
-----------------------------------------------------------------------------------------------------------------------------
Capital paid in $ 85,535,393 $ 541,300,544 $ - 626,835,937
Accumulated net investment loss (744,414) (3,431,587) - (4,176,001)
Accumulated net realized loss on investment 8,306,918 (111,884,130) - (103,577,212)
and foreign currency transactions
Net unrealized appreciation (depreciation) on 25,754,465 (34,809,765) - (9,055,300)
investments and translation of assets and
liabilities in foreign currencies -------------- ------------- -------------- ----- --------------
$ 118,852,362 $ 391,175,062 $ - $ 510,027,424
============== ============= ============== ===== ==============
NET ASSETS AND ACQUIRING FUND
SHARES ISSUED PLUS ADJUSTMENTS
-----------------------------------------------------------------------------------------------------------------------------
INVESTOR CLASS, $0.01 PAR VALUE
------------------------------------------------------
Net Assets $ 51,168,907 N/A $ 101,367,503 $ 152,536,410
------------------------------------------------------
Shares Outstanding 6,321,824 N/A 12,529,976 (b) 18,851,800
------------------------------------------------------
Net asset value per share $ 8.09 N/A $ 8.09 $ 8.09
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
I CLASS $0.01 PAR VALUE
------------------------------------------------------
Net Assets N/A $ 101,367,503 $ -
------------------------------------------------------
Shares Outstanding N/A 8,876,885 $ -
------------------------------------------------------
Net asset value per share N/A $ 11.42 $ -
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
A CLASS, $0.01 PAR VALUE
------------------------------------------------------
Net Assets $ 60,589,631 $ 268,638,781 $ 268,638,781 $ 329,228,412
------------------------------------------------------
Shares Outstanding 7,513,203 24,339,516 33,329,874 (b) 40,843,077
------------------------------------------------------
Net asset value per share $ 8.06 $ 11.04 $ 8.06 $ 8.06
-----------------------------------------------------------------------------------------------------------------------------
Maximum offering price (net asset value
divided by 0.9425 for New Opportunities II
and 0.965 for Emerging Growth) $ 8.55 $ 11.44 8.55 8.55
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
B CLASS, $0.01 PAR VALUE
------------------------------------------------------
Net Assets $ 3,009,664 N/A $ 3,009,664
------------------------------------------------------
Shares Outstanding 376,459 N/A 376,459
------------------------------------------------------
Net asset value per share $ 7.99 N/A $ 7.99
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE
------------------------------------------------------
Net Assets $ 4,084,160 $ 21,168,778 $ 21,168,778 $ 25,252,938
------------------------------------------------------
Shares Outstanding 508,850 2,009,772 2,636,211 (b) 3,145,061
------------------------------------------------------
Net asset value per share $ 8.03 $ 10.53 $ 8.03 $ 8.03
--------------------------------------------------------------------------------------------------------------------------------
(a) Reclass of disbursements in excess of demand deposit cash against cash to
reflect combined cash position.
(b) Adjustment to reflect the issuance of New Opportunities II shares in
exchange for Kopp Emerging Growth shares in connection with the proposed
reorganization.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
NEW OPPORTUNITIES II AND KOPP EMERGING GROWTH
PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED APRIL 30, 2006 (UNAUDITED)
KOPP PRO-FORMA
NEW EMERGING COMBINING
OPPORTUNITIES II GROWTH ADJUSTMENTS (NOTE 1)
------------------------------------------------------------------------------------------------------------------
INVESTMNET INCOME
------------------------------------------------------------------------------------------------------------------
INCOME:
Dividends (including from affiliates
of $-for Emerging Growth) $ 345,332 $ 282,948 - $ 628,280
Interest 50,033 - - 50,033
------------- ------------ ------------ ----- ------------
395,365 282,948 - 678,313
------------- ------------ ------------ ----- ------------
EXPENSES:
Management fees 1,508,807 3,685,434 1,410,790 (a) 6,605,031
Shareholder reporting fees - 62,278 (62,278) (a) -
Transfer agency fees - 556,625 (556,625) (a) -
Distribution fees: -
A Class - 259,486 (259,486) (a) -
B Class 18,457 - - 18,457
C Class 24,532 156,740 - 181,272
Service fees: -
A Class - 648,715 (648,715) (a) -
B Class 6,153 - - 6,153
C Class 8,177 52,246 - 60,423
Service and distribution fees A Class 123,606 - 648,715 (a) 772,321
Administrative fees - 286,333 (286,333) (a) -
Custody fees - 47,562 (47,562) (a) -
Federal and state registration fees - 41,756 (41,756) (a) -
Fund accounting fees - 89,354 (89,354) (a) -
Professional fees - 182,576 (182,576) (a) -
Directors' fees and expenses 2,459 28,110 (28,110) (a) 2,459
Other expenses 1,970 144,254 (144,254) (a) 1,970
------------- ------------ ------------ ----- ------------
1,694,161 6,241,469 (287,544) 7,648,086
------------- ------------ ------------ ----- ------------
NET INVESTMENT INCOME (1,298,796) (5,958,521) 287,544 (6,969,773)
------------- ------------ ------------ ----- ------------
----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
----------------------------------------------------------------------------------------------------------------
NET REALIZED GAIN (LOSS) ON
INVESTMENT TRANSACTIONS
Investment transactions (including
from affiliates of $(18,767,981)
for Emerging Growth) 13,285,371 (17,883,538) - (4,598,167)
Foreign currency transactions (22,232) - - (22,232)
------------- ------------ ------------ ----- ------------
13,263,139 (17,883,538) - (4,620,399)
------------- ------------ ------------ ----- ------------
CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS
Investments 21,007,432 166,318,013 - 187,325,445
Translation of assets and liabilities in
foreign currencies (313) - - (313)
------------- ------------ ------------ ----- ------------
21,007,119 166,318,013 - 187,325,132
------------- ------------ ------------ ----- ------------
NET REALIZED AND UNREALIZIED
GAIN (LOSS) 34,270,258 148,434,475 - 182,704,733
------------- ------------ ------------ ----- ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $32,971,462 142,475,954 $287,544 $175,734,960
============= ============ ============ ===== ============
(a) Adjustment for expenses based on fees in combined fund. See Note 3 in the
Notes to Pro Forma Combined Financial Statements for a description of
expenses and associated fees.
SEE NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)
APRIL 30, 2006
1. BASIS OF COMBINATION-The unaudited Pro Forma Combining Schedule of
Investments, Pro Forma Combining Statement of Assets and Liabilities and
Pro Forma Combining Statement of Operations reflect the accounts of the New
Opportunities II Fund ("New Opportunities II") issued by American Century
Mutual Funds, Inc. and the Kopp Emerging Growth Fund ("Emerging Growth")
issued by Kopp Funds, Inc. at and for the year ended April 30, 2006. The
Pro Forma Combining Schedule of Investments and Pro Forma Combining
Statement of Assets and Liabilities assume the combination was consummated
after the close of business April 30, 2006. The Pro Forma Combining
Statement of Operations assumes the combination was consummated at the
beginning of the fiscal year ended April 30, 2006.
The pro forma statements give effect to the proposed transfer of the assets
and stated liabilities of the non-surviving fund, Emerging Growth, in
exchange for shares of the surviving fund, for purposes of maintaining the
financial statements and performance, New Opportunities II. Financial
information for New Opportunities II as of April 30, 2006, has been
adjusted to reflect the plan of reorganization effective at the close of
business on February 26, 2007, for New Opportunities II and Emerging
Growth. New Opportunities II will acquire all of the assets of Emerging
Growth in exchange for shares of equal value of New Opportunities II and
the assumption of all liabilities of Emerging Growth.
In accordance with accounting principles generally accepted in the United
States of America, the historical cost of investment securities will be
carried forward to the surviving fund and the results of operations for
pre-combination periods for the surviving fund will not be adjusted. Under
the terms of the Agreement and Plan of Reorganization, neither New
Opportunities II nor Emerging Growth will bear any of the expenses
associated with the costs of the Reorganization, including proxy
solicitation and tabulation costs. Therefore, the pro forma financial
statements do not reflect these expenses. Under the terms of the Plan of
Reorganization, the combination of the funds will be treated as a tax-free
business combination and accordingly will be accounted for by a method of
accounting for tax-free mergers of investment companies.
The Pro Forma Combining Schedule of Investments, Statement of Assets and
Liabilities and Statement of Operations should be read in conjunction with
the historical financial statements of the funds included or incorporated
by reference in the Statement of Additional Information.
2. SECURITY VALUATION-New Opportunities II: Securities traded primarily on a
principal securities exchange are valued at the last reported sales price,
or at the mean of the latest bid and asked prices where no last sales price
is available. Depending on local convention or regulation, securities
traded over-the-counter are valued at the mean of the latest bid and asked
prices, the last sales price, or the official close price. Discount notes
may be valued through a commercial pricing service or at amortized cost,
which approximates fair value. If the funds determine that the market price
of a portfolio security is not readily available, or that the valuation
methods mentioned above do not reflect the security's fair value, such
security is valued at its fair value as determined by, or in accordance
with procedures adopted by, the Board of Directors or its designee if such
fair value determination would materially impact a fund's net asset value.
Emerging Growth: Common stocks and other equity-type securities traded
primarily on a national securities exchange are valued at the last sales
price. For securities traded on NASDAQ, the Funds utilize the NASDAQ
Official Closing Price which compares the last trade to the bid/ask price
of a security. If the last trade is below the bid, the Funds will use the
bid as the closing price. Securities traded on a national securities
exchange or NASDAQ for which there were no transactions on a given day, and
securities not listed on a national securities exchange or NASDAQ, are
valued at the average of the most recent bid and asked prices. Investments
for which the above valuation procedures are inappropriate, when valuations
are not readily available or when valuations are deemed not to reflect fair
value, are stated at fair value, as determined in good faith under
procedures approved by the Board of Directors. In addition, if events
materially affecting the value of foreign securities occur between the time
when the exchange on which they are traded closes and the time when the
Funds' net assets are calculated, such securities will be valued at fair
value in accordance with procedures adopted by the Board of Directors.
Generally, fixed income investments with a remaining maturity of 60 days or
less are valued on an amortized cost basis, which approximates market
value.
3. MANAGEMENT FEES - The combined fund will pay a single, unified management
fee per class. This fee provides that all expenses of the fund except
brokerage commissions, taxes, interest, fees and expenses of those
directors who are not considered "interested persons' as defined in the
1940 Act (including counsel fees) and extraordinary expenses will be paid
by the Advisor. The adjustments in the Statement of Operations reflect the
impact of the single, unified management fee per class.
4. USE OF ESTIMATES - The pro forma financial statements are prepared in
conformity with accounting principles generally accepted in the United
States of America, which may require management to make certain estimates
and assumptions at the date of the financial statements. Actual results
could differ from those estimates.
5. CAPITAL SHARES-The pro forma net asset value per share assumes the issuance
of shares of the surviving fund that would have been issued at April 30,
2006, in connection with the proposed reorganization. The number of shares
assumed to be issued is equal to the net asset value of shares of the
non-surviving fund, as of April 30, 2006, divided by the net asset value
per share of the shares of the surviving fund as of April 30, 2006. The pro
forma total number of shares outstanding for the combined fund consists of
the following at April 30, 2006:
--------------------- --------------------- ---------------------- ---------------------
SHARES OF ADDITIONAL SHARES
COMBINED FUND: TOTAL PRO FORMA SURVIVING FUND ASSUMED ISSUED IN
NEW OPPORTUNITIES II OUTSTANDING SHARES PRIOR TO COMBINATION REORGANIZATION
--------------------- --------------------- ---------------------- ---------------------
Investor 18,851,800 6,321,824 12,529,976
--------------------- --------------------- ---------------------- ---------------------
A Class 40,843,077 7,513,203 33,329,874
--------------------- --------------------- ---------------------- ---------------------
B Class 376,459 376,459 -
--------------------- --------------------- ---------------------- ---------------------
C Class 3,145,061 508,850 2,636,211
--------------------- --------------------- ---------------------- ---------------------
Total Fund 63,216,397 14,720,336 48,496,061
--------------------- --------------------- ---------------------- ---------------------
6. AFFILIATED COMPANY TRANSACTIONS - If a fund's holding represents ownership
of 5% or more of the voting securities of a company, the company is
affiliated as defined in the 1940 Act. A summary of transactions for each
company which is or was an affiliate at or during the year ended April 30,
2006 follows:
SHARE APRIL 30, 2006
BALANCE PURCHASE SALES REALIZED DIVIDEND SHARE MARKET
FUND/ISSUER APRIL 30, 2005 COST COST GAIN (LOSS) INCOME BALANCE VALUE
--------------------- --------------- ------------- ------------- -------------- ----------- ------------ ------------
EMERGING GROWTH
Adept Technology,
Inc. (1) 114,000 $1,801,951 $ - $ - $ - 311,430 $3,154,786
Neose Technologies,
Inc. (1) 1,120,120 3,300,791 - - - 2,500,000 6,375,000
Superconductor
Technologies Inc.
(1)(3) 200,000 2,683,200 - - - 640,000 2,860,800
Transgenomic, Inc. (1) 3,295,000 94,264 - - - 3,400,000 2,040,000
Tut Systems, Inc. (1) 2,100,000 3,956,101 - - - 3,300,000 9,867,000
WJ Communications,
Inc. (1) 2,400,000 2,804,475 - - - 3,500,000 10,045,000
Verilink Corporation
(1)(2) 81,620 2,264,177 7,297,277 (7,051,655) - - -
QuickLogic
Corporation (1)(2) 1,700,000 209,730 16,342,265 (11,716,326) - 840,000 5,073,600
--------------------- --------------- ------------- ------------- -------------- ----------- ------------ ------------
$17,114,689 $23,639,542 $(18,767,981) - $39,416,186
===================== =============== ============= ============= ============== =========== ============ ============
(1) Non-income producing.
(2) Company was not an affiliate at April 30, 2006.
(3) Shares adjusted to reflect a stock split.
AMERICAN CENTURY NEW OPPORTUNITIES II FUND,
A SERIES OF AMERICAN CENTURY MUTUAL FUNDS, INC.
INVESTMENT ADVISOR
American Century Investment Management, Inc.
4500 Main Street
Kansas City, Missouri 64111
DISTRIBUTOR
American Century Investment Services, Inc.
4500 Main Street
Kansas City, Missouri 64111
TRANSFER AGENT
American Century Services, LLC
4500 Main Street
Kansas City, Missouri 64111
KOPP EMERGING GROWTH FUND,
A SERIES OF KOPP FUNDS, INC.
INVESTMENT ADVISOR
KOPP INVESTMENT ADVISORS, LLC
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
DISTRIBUTOR
CENTENNIAL LAKES CAPITAL, LLC
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
TRANSFER AGENT AND ADMINISTRATOR
U.S. BANCORP FUND SERVICES, LLC
For overnight deliveries, use: For regular mail deliveries, use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o U.S. Bancorp Fund Services, LLC c/o U.S. Bancorp Fund Services, LLC
615 East Michigan Street P.O. Box 701
Third Floor Milwaukee, Wisconsin 53201-0701
Milwaukee, Wisconsin 53202-5207
AMERICAN CENTURY MUTUAL FUNDS, INC.
PART C OTHER INFORMATION
Item 15. Indemnification
The Registrant is a Maryland Corporation. Section 2-418 of the Maryland
General Corporation Law allows a Maryland corporation to indemnify its officers,
directors, employees and agents to the extent provided in such statute.
Article VIII of the Registrant's Articles of Incorporation, requires the
indemnification of the Registrant's directors and officers to the extent
permitted by Section 2-418 of the Maryland General Corporation Law, the
Investment Company Act of 1940 and all other applicable laws.
The Registrant has purchased an insurance policy insuring its officers and
directors against certain liabilities which such officers and directors may
incur while acting in such capacities and providing reimbursement to the
Registrant for sums which it may be permitted or required to pay to its officers
and directors by way of indemnification against such liabilities, subject in
either case to clauses respecting deductibility and participation.
Item 16. Exhibits
(1) (a) Articles of Incorporation of Twentieth Century Investors, Inc.,
dated June 26, 1990 (filed electronically as Exhibit b1a to Post-Effective
Amendment No. 73 to the Registration Statement of the Registrant on February 29,
1996, File No. 2-14213, and incorporated herein by reference).
(b) Articles of Amendment of Twentieth Century Investors, Inc., dated
November 19, 1990 (filed electronically as Exhibit b1b to Post-Effective
Amendment No. 73 to the Registration Statement of the Registrant on February 29,
1996, File No. 2-14213, and incorporated herein by reference).
(c) Articles of Merger of Twentieth Century Investors, Inc., a
Maryland corporation and Twentieth Century Investors, Inc., a Delaware
corporation, dated February 22, 1991 (filed electronically as Exhibit b1c to
Post-Effective Amendment No. 73 to the Registration Statement of the Registrant
on February 29, 1996, File No. 2-14213, and incorporated herein by reference).
(d) Articles of Amendment of Twentieth Century Investors, Inc., dated
August 10, 1993 (filed electronically as Exhibit b1d to Post-Effective Amendment
No. 73 to the Registration Statement of the Registrant on February 29, 1996,
File No. 2-14213, and incorporated herein by reference).
(e) Articles Supplementary of Twentieth Century Investors, Inc., dated
September 2, 1993 (filed electronically as Exhibit b1e to Post-Effective
Amendment No. 73 to the Registration Statement of the Registrant on February 29,
1996, File No. 2-14213, and incorporated herein by reference).
(f) Articles Supplementary of Twentieth Century Investors, Inc., dated
April 24, 1995 (filed electronically as Exhibit b1f to Post-Effective Amendment
No. 73 to the Registration Statement of the Registrant on February 29, 1996,
File No. 2-14213, and incorporated herein by reference).
(g) Articles Supplementary of Twentieth Century Investors, Inc., dated
October 11, 1995 (filed electronically as Exhibit b1g to Post-Effective
Amendment No. 73 to the Registration Statement of the Registrant on February 29,
1996, File No. 2-14213, and incorporated herein by reference).
(h) Articles Supplementary of Twentieth Century Investors, Inc., dated
January 22, 1996 (filed electronically as Exhibit b1h to Post-Effective
Amendment No. 73 to the Registration Statement of the Registrant on February 29,
1996, File No. 2-14213, and incorporated herein by reference).
(i) Articles Supplementary of Twentieth Century Investors, Inc., dated
March 11, 1996 (filed electronically as Exhibit b1i to Post-Effective Amendment
No. 75 to the Registration Statement of the Registrant on June 14, 1996, File
No. 2-14213, and incorporated herein by reference).
(j) Articles Supplementary of Twentieth Century Investors, Inc., dated
September 9, 1996 (filed electronically as Exhibit a10 to Post-Effective
Amendment No. 85 to the Registration Statement of the Registrant on September 1,
1999, File No. 2-14213, and incorporated herein by reference).
(k) Articles of Amendment of Twentieth Century Investors, Inc., dated
December 2, 1996 (filed electronically as Exhibit b1j to Post-Effective
Amendment No. 76 to the Registration Statement of the Registrant on February 28,
1997, File No. 2-14213, and incorporated herein by reference).
(l) Articles Supplementary of American Century Mutual Funds, Inc.,
dated December 2, 1996 (filed electronically as Exhibit b1k to Post-Effective
Amendment No. 76 to the Registration Statement of the Registrant on February 28,
1997, File No. 2-14213, and incorporated herein by reference).
(m) Articles Supplementary of American Century Mutual Funds, Inc.,
dated July 28, 1997 (filed electronically as Exhibit b1l to Post-Effective
Amendment No. 78 to the Registration Statement of the Registrant on February 26,
1998, File No. 2-14213, and incorporated herein by reference).
(n) Articles Supplementary of American Century Mutual Funds, Inc.,
dated November 28, 1997 (filed electronically as Exhibit a13 to Post-Effective
Amendment No. 83 to the Registration Statement of the Registrant on February 26,
1999, File No. 2-14213, and incorporated herein by reference).
(o) Certificate of Correction to Articles Supplementary of American
Century Mutual Funds, Inc., dated December 18, 1997 (filed electronically as
Exhibit a14 to Post-Effective Amendment No. 83 to the Registration Statement of
the Registrant on February 26, 1999, File No. 2-14213, and incorporated herein
by reference).
(p) Articles Supplementary of American Century Mutual Funds, Inc.,
dated December 18, 1997 (filed electronically as Exhibit b1m to Post-Effective
Amendment No. 78 to the Registration Statement of the Registrant on February 26,
1998, File No. 2-14213, and incorporated herein by reference).
(q) Articles Supplementary of American Century Mutual Funds, Inc.,
dated January 25, 1999 (filed electronically as Exhibit a16 to Post-Effective
Amendment No. 83 to the Registration Statement of the Registrant on February 26,
1999, File No. 2-14213, and incorporated herein by reference).
(r) Articles Supplementary of American Century Mutual Funds, Inc.,
dated February 16, 1999 (filed electronically as Exhibit a17 to Post-Effective
Amendment No. 83 to the Registration Statement of the Registrant on February 26,
1999, File No. 2-14213, and incorporated herein by reference).
(s) Articles Supplementary of American Century Mutual Funds, Inc.,
dated August 2, 1999 (filed electronically as Exhibit a19 to Post-Effective
Amendment No. 89 to the Registration Statement of the Registrant on December 1,
2000, File No. 2-14213, and incorporated herein by reference).
(t) Articles Supplementary of American Century Mutual Funds, Inc.,
dated November 19, 1999 (filed electronically as Exhibit a19 to Post-Effective
Amendment No. 87 to the Registration Statement of the Registrant on November 29,
1999, File No. 2-14213, and incorporated herein by reference).
(u) Articles Supplementary of American Century Mutual Funds, Inc.,
dated March 5, 2001 (filed electronically as Exhibit a21 to Post-Effective
Amendment No. 93 to the Registration Statement of the Registrant on April 20,
2001, File No. 2-14213, and incorporated herein by reference).
(v) Certificate of Correction to Articles Supplementary, dated April
3, 2001 (filed electronically as Exhibit a22 to Post-Effective Amendment No. 93
to the Registration Statement of the Registrant on April 20, 2001, File No.
2-14213, and incorporated herein by reference).
(w) Articles Supplementary of American Century Mutual Funds, Inc.,
dated June 14, 2002 (filed electronically as Exhibit a23 to Post-Effective
Amendment No. 98 to the Registration Statement of the Registrant on October 10,
2002, File No. 2-14213, and incorporated herein by reference).
(x) Certificate of Correction to Articles Supplementary of American
Century Mutual Funds, Inc., dated June 25, 2002 (filed electronically as Exhibit
a24 to Post-Effective Amendment No. 98 to the Registration Statement of the
Registrant on October 10, 2002, File No. 2-14213, and incorporated herein by
reference).
(y) Articles Supplementary of American Century Mutual Funds, Inc.,
dated February 12, 2003 (filed electronically as Exhibit a25 to Post-Effective
Amendment No. 100 to the Registration Statement of the Registrant on February
28, 2003, File No. 2-14213, and incorporated herein by reference).
(z) Certificate of Correction to Articles Supplementary of American
Century Mutual Funds, Inc., dated February 28, 2003 (filed electronically as
Exhibit a26 to Post-Effective Amendment No. 101 to the Registration Statement of
the Registrant on August 28, 2003, File No. 2-14213, and incorporated herein by
reference).
(aa) Articles Supplementary of American Century Mutual Funds, Inc.,
dated August 14, 2003 (filed electronically as Exhibit a27 to Post-Effective
Amendment No. 102 to the Registration Statement of the Registrant on August 28,
2003, File No. 2-14213, and incorporated herein by reference).
(bb) Articles Supplementary of American Century Mutual Funds, Inc.,
dated January 14, 2004 (filed electronically as Exhibit a28 to Post-Effective
Amendment No. 104 to the Registration Statement of the Registrant on February
26, 2004, File No. 2-14213, and incorporated herein by reference).
(cc) Articles Supplementary of American Century Mutual Funds, Inc.,
dated November 17, 2004 (filed electronically as Exhibit a29 to Post-Effective
Amendment No. 106 to the Registration Statement of the Registrant on November
29, 2004, File No. 2-14213, and incorporated herein by reference).
(dd) Articles Supplementary of American Century Mutual Funds, Inc.,
dated January 13, 2005 (filed electronically as Exhibit a30 to Post-Effective
Amendment No. 109 to the Registration Statement of the Registrant on February
25, 2005, File No. 2-14213, and incorporated herein by reference).
(ee) Articles Supplementary of American Century Mutual Funds, Inc.,
dated June 22, 2005 (filed electronically as Exhibit a31 to Post-Effective
Amendment No. 111 to the Registration Statement of the Registrant on July 28,
2005, File No. 2-14213, and incorporated herein by reference).
(ff) Articles Supplementary of American Century Mutual Funds, Inc.,
dated December 13, 2005 (filed electronically as Exhibit 1(ff) to the
Registration Statement on Form N-14 of the Registrant on December 22, 2005, File
No. 2-14213, and incorporated herein by reference).
(gg) Articles Supplementary of American Century Mutual Funds, Inc.,
dated March 15, 2006 (filed electronically as Exhibit a33 to Post-Effective
Amendment No. 116 to the Registration Statement of the Registrant on March 31,
2006, File No. 2-14213, and incorporated herein by reference).
(2) Amended and Restated By-laws, dated September 21, 2004 (filed
electronically as Exhibit b to Post-Effective Amendment No. 106 to the
Registration Statement of the Registrant on November 29, 2004, File No. 2-14213,
and incorporated herein by reference).
(3) Not applicable.
(4) Form of Agreement and Plan of Reorganization with Kopp Funds, Inc., is
included herein.
(5) Registrant hereby incorporates by reference, as though set forth fully
herein, Article Fifth, Article Seventh, Article Eighth, and Article Ninth of
Registrant's Articles of Incorporation, incorporated herein by reference as
Exhibit (1)(a) hereto and Article Fifth of Registrant's Articles of Amendment,
incorporated herein by reference as Exhibit (1)(d) hereto and Sections 3, 4, 5,
6, 7, 8, 9, 10, 11, 22, 24, 25, 30, 31, 33, 39, 45 and 46 of Registrant's
Amended and Restated By-Laws, incorporated herein by reference as Exhibit 2
hereto.
(6) (a) Management Agreement with American Century Investment Management,
Inc., dated August 1, 2006, is included herein.
(b) Management Agreement with American Century Investment Management,
Inc., dated March 30, 2006 (filed electronically as Exhibit d2 to Post-Effective
Amendment No. 116 to the Registration Statement of the Registrant on March 31,
2006, File No. 2-14213, and incorporated herein by reference).
(c) Investment Subadvisory Agreement with Mason Street Advisors LLC,
dated March 30, 2006 (filed electronically as Exhibit d3 to Post-Effective
Amendment No. 116 to the Registration Statement of the Registrant on March 31,
2006, File No. 2-14213, and incorporated herein by reference).
(d) Management Agreement with American Century Investment Management,
Inc., dated April 28, 2006 (filed electronically as Exhibit d5 to Post-Effective
Amendment No. 118 to the Registration Statement of the Registrant on April 28,
2006, File No. 2-14213, and incorporated herein by reference).
(7) (a) Amended and Restated Distribution Agreement with American Century
Investment Services, Inc., dated April 28, 2006 (filed electronically as Exhibit
e to Post-Effective Amendment No. 118 to the Registration Statement of the
Registrant on April 28, 2006, File No. 2-14213, and incorporated herein by
reference).
(b) Form of Dealer/Agency Agreement (filed electronically as Exhibit
e2 to Pre-Effective Amendment No. 1 to the Registration Statement of American
Century Growth Funds, Inc. on May 30, 2006, File No. 333-132114, and
incorporated herein by reference).
(8) Not applicable.
(9) (a) Master Agreement with Commerce Bank, N. A., dated January 22, 1997
(filed electronically as Exhibit b8e to Post-Effective Amendment No. 76 to the
Registration Statement of American Century Mutual Funds, Inc. on February 28,
1997, File No. 2-14213, and incorporated herein by reference).
(b) Global Custody Agreement with The Chase Manhattan Bank, dated
August 9, 1996 (filed electronically as Exhibit b8 to Post-Effective Amendment
No. 31 to the Registration Statement of American Century Government Income Trust
on February 7, 1997, File No. 2-99222, and incorporated herein by reference).
(c) Amendment to the Global Custody Agreement with The Chase Manhattan
Bank, dated December 9, 2000 (filed electronically as Exhibit g2 to
Pre-Effective Amendment No. 2 to the Registration Statement of American Century
Variable Portfolios II, Inc. on January 9, 2001, File No. 333-46922, and
incorporated herein by reference).
(d) Amendment No. 2 to the Global Custody Agreement between American
Century Investments and the JPMorgan Chase Bank, dated as of May 1, 2004 (filed
electronically as Exhibit g4 to Post-Effective Amendment No. 35 to the
Registration Statement of American Century Quantitative Equity Funds, Inc. on
April 29, 2004, File No. 33-19589, and incorporated herein by reference).
(e) Chase Manhattan Bank Custody Fee Schedule, dated October 19, 2000
(filed electronically as Exhibit g5 to Post-Effective Amendment No. 35 to the
Registration Statement of American Century Quantitative Equity Funds, Inc. on
April 29, 2004, File No. 33-19589, and incorporated herein by reference).
(f) Amendment No. 3 to the Global Custody Agreement between American
Century Investments and the JPMorgan Chase Bank, dated as of May 31, 2006 (filed
electronically as Exhibit g6 to Pre-Effective Amendment No. 1 to the
Registration Statement of American Century Growth Funds, Inc. on May 30, 2006,
File No. 333-132114, and incorporated herein by reference).
(g) Registered Investment Company Custody Agreement with Goldman,
Sachs & Co., dated February 6, 2006 (filed electronically as Exhibit g6 to
Post-Effective Amendment No. 114 to the Registration Statement of the Registrant
on February 28, 2006, File No. 2-14213, and incorporated herein by reference).
(h) Amendment to Futures and Options Account Agreement and Registered
Investment Company Custody Agreement with Goldman, Sachs & Co., effective May
12, 2006 (filed electronically as Exhibit g7 to Post-Effective Amendment No. 118
to the Registration Statement of the Registrant on April 28, 2006, File No.
2-14213, and incorporated herein by reference).
(i) Custodian and Investment Accounting Agreement with State Street
Bank and Trust Company, dated May 27, 2005 (filed electronically as Exhibit g6
to Post-Effective Amendment No. 27 to the Registration Statement of American
Century Investment Trust on May 27, 2005, File No. 33-65170, and incorporated
herein by reference).
(j) Amendment No. 1 to Custodian and Investment Accounting Agreement
with State Street Bank and Trust Company, effective September 30, 2005 (filed
electronically as Exhibit g8 to Post-Effective Amendment No. 41 to the
Registration Statement of American Century Quantitative Equity Funds, Inc. on
September 29, 2005, File No. 33-19589, and incorporated herein by reference).
(k) Amendment No. 2 to Custodian and Investment Accounting Agreement
with State Street Bank and Trust Company, effective March 31, 2006 (filed
electronically as Exhibit g9 to Post-Effective Amendment No. 32 to the
Registration Statement of American Century Investment Trust on March 31, 2006,
File No. 33-65170, and incorporated herein by reference).
(l) Third-Party Custodial Agreement with J.P. Morgan Futures Inc. and
State Street Bank and Trust Company, dated March 31, 2006 (filed electronically
as Exhibit g11 to Post-Effective Amendment No. 118 to the Registration Statement
of the Registrant on April 28, 2006, File No. 2-14213, and incorporated herein
by reference).
(10) a) Master Distribution and Shareholder Services Plan (Advisor Class),
dated September 3, 1996 (filed electronically as Exhibit b15a to Post-Effective
Amendment No. 9 to the Registration Statement of American Century Capital
Portfolios, Inc. on February 17, 1998, File No. 33-64872, and incorporated
herein by reference).
(b) Amendment No. 1 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated June 13, 1997 (filed electronically as
Exhibit b15b to Post-Effective Amendment No. 77 to the Registration Statement of
Registrant on July 17, 1997, File No. 2-14213, and incorporated herein by
reference).
(c) Amendment No. 2 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated September 30, 1997 (filed electronically as
Exhibit b15c to Post-Effective Amendment No. 78 to the Registration Statement of
Registrant on February 26, 1998, File No. 2-14213, and incorporated herein by
reference).
(d) Amendment No. 3 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated June 30, 1998 (filed electronically as
Exhibit b15e to Post-Effective Amendment No. 11 to the Registration Statement of
American Century Capital Portfolios, Inc. on June 26, 1998, File No. 33-64872,
and incorporated herein by reference).
(e) Amendment No. 4 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated November 13, 1998 (filed electronically as
Exhibit b15e to Post-Effective Amendment No. 12 to the Registration Statement of
American Century World Mutual Funds, Inc. on November 13, 1998, File No.
33-39242, and incorporated herein by reference).
(f) Amendment No. 5 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated February 16, 1999 (filed electronically as
Exhibit m6 to Post-Effective Amendment No. 83 to the Registration Statement of
Registrant on February 26, 1999, File No. 2-14213, and incorporated herein by
reference).
(g) Amendment No. 6 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated July 30, 1999 (filed electronically as
Exhibit m7 to Post-Effective Amendment No. 16 to the Registration Statement of
American Century Capital Portfolios, Inc. on July 29, 1999, File No. 33-64872,
and incorporated herein by reference).
(h) Amendment No. 7 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated November 19, 1999 (filed electronically as
Exhibit m8 to Post-Effective Amendment No. 87 to the Registration Statement of
Registrant on November 29, 1999, File No. 2-14213, and incorporated herein by
reference).
(i) Amendment No. 8 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated June 1, 2000 (filed electronically as
Exhibit m9 to Post-Effective Amendment No. 19 to the Registration Statement of
American Century World Mutual Funds, Inc. on May 24, 2000, File No. 33-39242,
and incorporated herein by reference).
(j) Amendment No. 9 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated April 30, 2001 (filed electronically as
Exhibit m10 to Post-Effective Amendment No. 24 to the Registration Statement of
American Century World Mutual Funds, Inc. on April 19, 2001, File No. 33-39242,
and incorporated herein by reference).
(k) Amendment No. 10 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated December 3, 2001 (filed electronically as
Exhibit m11 to Post-Effective Amendment No. 94 to the Registration Statement of
the Registrant on December 13, 2001, File No. 2-14213, and incorporated herein
by reference).
(l) Amendment No. 11 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated September 3, 2002 (filed electronically as
Exhibit m12 to Post-Effective Amendment No. 26 to the Registration Statement of
American Century World Mutual Funds, Inc. on October 1, 2002, File No. 33-39242,
and incorporated herein by reference).
(m) Amendment No. 12 to the Master Distribution and Shareholder
Services Plan (Advisor Class), dated August 1, 2004 (filed electronically as
Exhibit m13 to Post-Effective Amendment No. 32 to the Registration Statement of
American Century Capital Portfolios, Inc. on July 29, 2004, File No. 33-64872,
and incorporated herein by reference).
(n) Master Distribution and Individual Shareholder Services Plan (C
Class), dated March 1, 2001 (filed electronically as Exhibit m11 to
Post-Effective Amendment No. 24 to the Registration Statement of American
Century World Mutual Funds, Inc. on April 19, 2001, File No. 33-39242, and
incorporated herein by reference).
(o) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated April 30, 2001 (filed electronically
as Exhibit m12 to Post-Effective Amendment No. 24 to the Registration Statement
of American Century World Mutual Funds, Inc. on April 19, 2001, File No.
33-39242, and incorporated herein by reference).
(p) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated September 3, 2002 (filed
electronically as Exhibit m15 to Post-Effective Amendment No. 27 to the
Registration Statement of American Century World Mutual Funds, Inc. on October
10, 2002, File No. 33-39242, and incorporated herein by reference).
(q) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated February 27, 2004 (filed
electronically as Exhibit m16 to Post-Effective Amendment No. 104 to the
Registration Statement of the Registrant on February 26, 2004, File No. 2-14213,
and incorporated herein by reference).
(r) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated September 30, 2004 (filed
electronically as Exhibit m18 to Post-Effective Amendment No. 20 to the
Registration Statement of American Century Strategic Asset Allocations, Inc. on
September 29, 2004, File No. 33-79482, and incorporated herein by reference).
(s) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated November 17, 2004 (filed
electronically as Exhibit m19 to Post-Effective Amendment No. 106 to the
Registration Statement of the Registrant on November 29, 2004, File No. 2-14213,
and incorporated herein by reference).
(t) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (C Class), dated March 30, 2006 (filed electronically
as Exhibit m20 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 333-79482, and incorporated herein by reference).
(u) Master Distribution and Individual Shareholder Services Plan (A
Class), dated September 3, 2002 (filed electronically as Exhibit m6 to
Post-Effective Amendment No. 34 to the Registration Statement of American
Century California Tax-Free and Municipal Funds on October 1, 2002, File No.
2-82734, and incorporated herein by reference).
(v) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (A Class) dated February 27, 2004 (filed
electronically as Exhibit m18 to Post-Effective Amendment No. 104 to the
Registration Statement of the Registrant on February 26, 2004, File No. 2-14213,
and incorporated herein by reference).
(w) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated September 30, 2004 (filed
electronically as Exhibit m22 to Post-Effective Amendment No. 106 to the
Registration Statement of the Registrant on November 29, 2004, File No. 2-14213,
and incorporated herein by reference).
(x) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated November 17, 2004 (filed
electronically as Exhibit m23 to Post-Effective Amendment No. 106 to the
Registration Statement of the Registrant on November 29, 2004, File No. 2-14213,
and incorporated herein by reference).
(y) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated May 1, 2005 (filed electronically as
Exhibit m13 to Post-Effective Amendment No. 44 to the Registration Statement of
American Century Municipal Trust on May 13, 2005, File No. 2-91229, and
incorporated herein by reference).
(z) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated September 29, 2005 (filed
electronically as Exhibit m25 to Post-Effective Amendment No. 38 to the
Registration Statement of American Century World Mutual Funds, Inc. on November
30, 2005, File No. 33-39242, and incorporated herein by reference).
(aa) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (A Class), dated March 30, 2006 (filed electronically
as Exhibit m27 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).
(bb) Master Distribution and Individual Shareholder Services Plan (B
Class), dated September 3, 2002 (filed electronically as Exhibit m7 to
Post-Effective Amendment No. 34 to the Registration Statement of American
Century California Tax-Free and Municipal Funds on October 1, 2002, File No.
2-82734, and incorporated herein by reference).
(cc) Amendment No. 1 to the Master Distribution and Shareholder
Services Plan (B Class), dated February 27, 2004 (filed electronically as
Exhibit m20 to Post-Effective Amendment No. 104 to the Registration Statement of
the Registrant on February 26, 2004, File No. 2-14213, and incorporated herein
by reference).
(dd) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated September 30, 2004 (filed
electronically as Exhibit m26 to Post-Effective Amendment No. 106 to the
Registration Statement of the Registrant on November 29, 2004, File No. 2-14213,
and incorporated herein by reference).
(ee) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated November 17, 2004 (filed
electronically as Exhibit m27 to Post-Effective Amendment No. 106 to the
Registration Statement of the Registrant on November 29, 2004, File No. 2-14213,
and incorporated herein by reference).
(ff) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated May 1, 2005 (filed electronically as
Exhibit m18 to Post-Effective Amendment No. 44 to the Registration Statement of
American Century Municipal Trust on May 13, 2005, File No. 2-91229, and
incorporated herein by reference).
(gg) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated September 29, 2005 (filed
electronically as Exhibit m31 to Post-Effective Amendment No. 38 to the
Registration Statement of American Century World Mutual Funds, Inc. on November
30, 2005, File No. 33-39242, and incorporated herein by reference).
(hh) Amendment No. 6 to the Master Distribution and Individual
Shareholder Services Plan (B Class), dated March 30, 2006 (filed electronically
as Exhibit m34 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).
(ii) Master Distribution and Individual Shareholder Services Plan (R
Class), dated August 29, 2003 (filed electronically as Exhibit m16 to
Post-Effective Amendment No. 17 to the Registration Statement of American
Century Strategic Asset Allocations, Inc. on August 28, 2003, File No. 33-79482,
and incorporated herein by reference).
(jj) Amendment No. 1 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated May 1, 2004 (filed electronically as
Exhibit m15 to Post-Effective Amendment No. 35 to the Registration Statement of
American Century Quantitative Equity Funds, Inc. on April 29, 2004, File No.
33-19589, and incorporated herein by reference).
(kk) Amendment No. 2 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated February 24, 2005 (filed
electronically as Exhibit m30 to Post-Effective Amendment No. 22 of American
Century Strategic Asset Allocations, Inc. on March 30, 2005, File No. 33-79482,
and incorporated herein by reference).
(ll) Amendment No. 3 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated July 29, 2005 (filed electronically
as Exhibit m33 to Post-Effective Amendment No. 111 to the Registration Statement
of the Registrant on July 28, 2005, File No. 2-14213, and incorporated herein by
reference).
(mm) Amendment No. 4 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated September 29, 2005 (filed
electronically as Exhibit m22 to Post-Effective Amendment No. 41 to the
Registration Statement of American Century Quantitative Equity Funds, Inc. on
September 29, 2005, File No. 33-19589, and incorporated herein by reference).
(nn) Amendment No. 5 to the Master Distribution and Individual
Shareholder Services Plan (R Class), dated March 30, 2006 (filed electronically
as Exhibit m40 to Post-Effective Amendment No. 23 to the Registration Statement
of American Century Strategic Asset Allocations, Inc. on March 30, 2006, File
No. 33-79482, and incorporated herein by reference).
(oo) Amended and Restated Multiple Class Plan, dated September 3, 2002
(filed electronically as Exhibit n to Post-Effective Amendment No. 35 to the
Registration Statement of American Century California Tax-Free and Municipal
Funds on December 17, 2002, File No. 2-82734, and incorporated herein by
reference).
(pp) Amendment No. 1 to the Amended and Restated Multiple Class Plan,
dated December 31, 2002 (filed electronically as Exhibit n2 to Post-Effective
Amendment No. 39 to the Registration Statement of American Century Municipal
Trust on December 23, 2002, File No. 2-91229, and incorporated herein by
reference).
(qq) Amendment No. 2 to the Amended and Restated Multiple Class Plan,
dated August 29, 2003 (filed electronically as Exhibit n3 to Post-Effective
Amendment No. 17 to the Registration Statement of American Century Strategic
Asset Allocations, Inc. on August 28, 2003, File No. 33-79482, and incorporated
herein by reference).
(rr) Amendment No. 3 to the Amended and Restated Multiple Class Plan,
dated as of February 27, 2004 (filed electronically as Exhibit n4 to
Post-Effective Amendment No. 104 to the Registration Statement of the Registrant
on February 26, 2004, File No. 2-14213, and incorporated herein by reference).
(ss) Amendment No. 4 to the Amended and Restated Multiple Class Plan,
dated May 1, 2004 (filed electronically as Exhibit n5 to Post-Effective
Amendment No. 35 to the Registration Statement of American Century Quantitative
Equity Funds, Inc. on April 29, 2004, File No. 33-19589, and incorporated herein
by reference).
(tt) Amendment No. 5 to the Amended and Restated Multiple Class Plan,
dated August 1, 2004 (filed electronically as Exhibit n6 to Post-Effective
Amendment No. 24 to the Registration Statement of American Century Investment
Trust on July 29, 2004, File No. 33-65170, and incorporated herein by
reference).
(uu) Amendment No. 6 to the Amended and Restated Multiple Class Plan,
dated September 30, 2004 (filed electronically as Exhibit n7 to Post-Effective
Amendment No. 20 to the Registration Statement of American Century Strategic
Asset Allocations, Inc. on September 29, 2004, File No. 33-79482, and
incorporated herein by reference).
(vv) Amendment No. 7 to the Amended and Restated Multiple Class Plan,
dated November 17, 2004 (filed electronically as Exhibit n8 to Post-Effective
Amendment No. 106 to the Registration Statement of the Registrant on November
29, 2004, File No. 2-14213, and incorporated herein by reference).
(ww) Amendment No. 8 to the Amended and Restated Multiple Class Plan,
dated February 24, 2005 (filed electronically as Exhibit n9 to Post-Effective
Amendment No. 22 of American Century Strategic Asset Allocations, Inc. on March
30, 2005, File No. 33-79482, and incorporated herein by reference).
(xx) Amendment No. 9 to the Amended and Restated Multiple Class Plan,
dated July 29, 2005 (filed electronically as Exhibit n10 to Post-Effective
Amendment No. 111 to the Registration Statement of the Registrant on July 28,
2005, File No. 2-14213, and incorporated herein by reference).
(yy) Amendment No. 10 to the Amended and Restated Multiple Class Plan,
dated September 29, 2005 (filed electronically as Exhibit n11 to Post-Effective
Amendment No. 41 to the Registration Statement of American Century Quantitative
Equity Funds, Inc. on September 29, 2005, File No. 33-19589, and incorporated
herein by reference).
(zz) Amendment No. 11 to the Amended and Restated Multiple Class Plan,
dated March 30, 2006 (filed electronically as Exhibit n12 to the Registration
Statement of American Century Strategic Asset Allocations, Inc. on March 30,
2006, File No. 33-79482, and incorporated herein by reference).
(aaa) Letter Agreement with American Century Investment Management,
Inc., dated March 30, 2006 (filed electronically as Exhibit n13 to
Post-Effective Amendment No. 42 to the Registration Statement of American
Century World Mutual Funds, Inc. on March 30, 2006, File No. 33-39242, and
incorporated herein by reference).
(11) Opinion and Consent of Counsel, dated October 2, 2006, is included
herein.
(12) Form of Opinion and Consent of Counsel as to the tax matters and
consequences to shareholders, is included herein.
(13) (a) Transfer Agency Agreement with Twentieth Century Services, Inc.,
dated March 1, 1991 (filed electronically as Exhibit 9 to Post-Effective
Amendment No. 76 to the Registration Statement of the Registrant on February 28,
1997, File No. 2-14213, and incorporated herein by reference).
(b) Credit Agreement with JPMorgan Chase Bank, as Administrative
Agent, dated December 17, 2003 (filed electronically as Exhibit h9 to
Post-Effective Amendment No. 39 to the Registration Statement of American
Century Target Maturities Trust on January 30, 2004, File No. 2-94608, and
incorporated herein by reference).
(c) Termination, Replacement and Restatement Agreement with JPMorgan
Chase Bank N.A., as Administrative Agent, dated December 14, 2005 (filed
electronically as Exhibit h13 to Post-Effective Amendment No. 40 to the
Registration Statement of American Century California Tax-Free and Municipal
Funds on December 29, 2005, File No. 2-82734, and incorporated herein by
reference).
(d) Customer Identification Program Reliance Agreement (filed
electronically as Exhibit h2 to Pre-Effective Amendment No. 1 to the
Registration Statement of American Century Growth Funds, Inc. on May 30, 2006,
File No. 333-132114, and incorporated herein by reference).
(14) (a) Consent of Deloitte & Touche LLP, independent registered public
accounting firm, dated September 26, 2006, is included herein.
(b) Consent of PricewaterhouseCoopers LLP, independent registered
public accounting firm, dated October 2, 2006, is included herein.
(15) Not applicable.
(16) (a) Power of Attorney, dated September 12, 2006, is included herein.
(b) Secretary's Certificate, dated September 12, 2006, is included
herein.
(17) Form of proxy is included herein.
Item 17. Undertakings
Not applicable.
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the Registrant, in the City of Kansas
City, State of Missouri on the 2nd day of October, 2006.
AMERICAN CENTURY MUTUAL FUNDS, INC.
(Registrant)
By: *
-----------------------------------------
William M. Lyons
President and Principal Executive Officer
As required by the Securities Act of 1933, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
* President and October 2, 2006
---------------------- Principal Executive Officer
William M. Lyons
* Vice President, October 2, 2006
---------------------- Treasurer and Chief
Robert J. Leach Accounting Officer
* Co-Vice Chairman of the October 2, 2006
---------------------- Board and Director
James E. Stowers, Jr.
* Co-Vice Chairman of the October 2, 2006
---------------------- Board and Director
James E. Stowers III
* Director October 2, 2006
----------------------
Thomas A. Brown
* Director October 2, 2006
----------------------
Andrea C. Hall, Ph.D.
* Director October 2, 2006
----------------------
D. D. (Del) Hock
* Chairman of the October 2, 2006
---------------------- Board and Director
Donald H. Pratt
* Director October 2, 2006
----------------------
Gale E. Sayers
* Director October 2, 2006
----------------------
M. Jeannine Strandjord
* Director October 2, 2006
----------------------
Timothy S. Webster
*By: /s/ Brian L. Brogan
--------------------------------------------
Brian L. Brogan
Attorney-in-Fact
(pursuant to a Power of Attorney
dated September 12, 2006)