AMERICAN CENTURY MUTUAL FUNDS INC, N-30D, 1999-12-22

AMERICAN CENTURY MUTUAL FUNDS INC
N-30D, 1999-12-22

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[front cover]

October 31, 1999

AMERICAN CENTURY(reg.sm)
Annual Report

[graphic of runners]
[graphic of person looking at computer screen]

Select
Heritage
Growth

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

[inside front cover]

Y2K Testing Efforts Pay Dividends in Preparedness
--------------------------------------------------------------------------------

Y2K, short for the year 2000, refers more specifically to the date change
from December 31, 1999, to January 1, 2000. This date change is significant for
computers because many were originally programmed to process dates with
two-character years -- 99 instead of 1999.

When the calendar rolls to 2000, this can create problems for computers
programmed this way because they will read the date as "00," and may
interpret it as 1900. Most companies have been working to reprogram their
computer systems with four-digit years. Reprogramming is very labor-intensive
and requires testing to ensure that there are no errors and that all lines of
code were successfully changed.

Recognizing the possible impact of the Y2K issue, our senior-level Steering
Committee, programmers, business partners and Y2K team have been working
diligently to make January 1, 2000, a non-event for American Century investors.

Currently, all of our computer systems have been modified, tested and
returned to production. We have an ongoing commitment to testing our systems
with our vendors and business partners and within the industry throughout the
rest of the year.

In March and April of this year, we participated in the Security Industry
Association's (SIA) industry-wide test and successfully processed transactions
for dates up to and beyond 2000. American Century transactions with our partner
firms were processed free of Y2K bugs. We also participated in the Market Data
Test conducted by the SIA and Financial Information Forum in May. Again, the
computer scripts were executed successfully with no Y2K-related errors.

In addition to our testing schedule, our Y2K team has developed contingency
plans. These plans are designed to minimize the impact on our investors and help
us maintain operations in the event of any Y2K-related incidents. We will
conduct practice drills of contingency scenarios during the rest of 1999 and
refine those plans to respond quickly and effectively so that the date change is
as seamless as possible for investors. We expect the year 2000 to be business as
usual at American Century.

Year 2000 Readiness Disclosure

[left margin]

SELECT
(TWCIX)
-----------------------------------------
HERITAGE
(TWHIX)
-----------------------------------------
GROWTH
(TWCGX)
-----------------------------------------

TURN TO THE INSIDE BACK COVER OF THIS REPORT TO SEE A LIST OF AMERICAN CENTURY
FUNDS CLASSIFIED BY OBJECTIVE AND RISK.

Tackling the Rollover Challenge
--------------------------------------------------------------------------------

Changing jobs or retiring? The American Century Personalized Rollover
Service(SM) provides individualized service that makes rolling over your
employer-sponsored retirement plan easy and stress free.

Our Rollover Expert Team will:

* Give personal guidance on which options best meet your retirement needs by
explaining the types of investments available through both our mutual funds
and American Century Brokerage.

* Assist you with the paperwork, helping to ensure it's completed right the
first time.

* Monitor retirement plan money as it rolls over from your employer-
sponsored plan to the American Century Rollover IRA account.

Call the Rollover Expert Team weekdays 7 a.m. to 7 p.m. (CT) at
1-888-345-2431, ext. 4232, or visit our Web site at www.americancentury.com.

Our Message to You
--------------------------------------------------------------------------------

[photo of James E. Stowers III and James E. Stowers, Jr.]
James E. Stowers III, seated, with James E. Stowers, Jr.

Growth-oriented investors--including those in Select, Heritage and Growth
-- were well-rewarded during the 12 months ended October 31, 1999. It was no
cakewalk, however--the period will be remembered as one of heightened stock
market volatility, particularly during the last six months when the Federal
Reserve raised interest rates twice. Nonetheless, several sectors of the
economy, especially those connected to the Internet, displayed strong earnings
growth, of which our funds took advantage.

On the corporate front, we are constantly looking for ways to enhance our
ability to generate investment returns and reduce costs associated with the
management of our funds. One priority, for example, has been reducing the costs
of buying and selling securities for our funds. To that end, we have been
investing in companies that provide technology for electronic communications
networks (ECNs). Today, more than one-third of our equity trades are executed
over these "alternative" networks. Savings in this area directly
affect the performance of your funds.

Heritage fund manager Harold Bradley was promoted to senior vice president
of Strategic Investments for American Century. He will oversee our private
equity investments in technology- based companies. These investments benefit you
by keeping American Century on the cutting edge of new investment technologies.
Heritage will continue to be managed by Linda Peterson and a team of seasoned
analysts. James Stowers III will assist the Heritage team.

We're also pleased to announce that American Century's investor account
statement is the first fund company statement to win the Communications Seal
from DALBAR Inc., an independent financial services research firm. DALBAR
commends us for meeting investors' needs with an attractive document that's easy
to read and understand.

This isn't American Century's first nod of approval from DALBAR. In June,
DALBAR recognized our statement's individual rate of return feature -- part of
the personalized performance section -- as the key reason it ranked our
statement second out of 88 mutual fund company statements in the nation.

One final note -- in the spirit of our ongoing Year 2000 readiness
disclosures, we've provided a complete update on our preparations for Y2K on the
inside front cover of this report. We understand that our diligence in this area
is very important to you.

As always, we appreciate your continued confidence in American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Vice Chairman of the Board and
Chief Executive Officer

[right margin]

Table of Contents

Report Highlights ...................................................... 2
Market Perspective ..................................................... 3
SELECT
Performance Information ................................................ 4
Management Q&A ..................................................... 5
Schedule of Investments ................................................ 8
HERITAGE
Performance Information ................................................ 11
Management Q&A ..................................................... 12
Schedule of Investments ................................................ 15
GROWTH
Performance Information ................................................ 18
Management Q&A ..................................................... 19
Schedule of Investments ................................................ 22
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities ......................................................... 24
Statements of Operations ............................................... 25
Statements of Changes
in Net Assets ....................................................... 26
Notes to Financial
Statements .......................................................... 27
Financial Highlights ................................................... 31
Independent Auditors'
Report .............................................................. 40
OTHER INFORMATION
Share Class and Retirement
Account Information ................................................. 41
Background Information
Investment Philosophy
and Policies ..................................................... 42
Comparative Indices ................................................. 42
Portfolio Managers .................................................. 42
Glossary ............................................................... 43

www.americancentury.com 1

Report Highlights
--------------------------------------------------------------------------------

MARKET PERSPECTIVE

* The year ended October 31, 1999, tested the mettle of common stock
investors, who will remember the period as one of heightened volatility.
When we closed the book on American Century's common stock funds, the
Standard & Poor's 500 Index had gained 25.67%. The NASDAQ was up a
stunning 67.46%, while the Dow Jones Industrials rose 26.97%.

* Market sentiment shifted suddenly, if briefly, in the second calendar
quarter. The Russell 2000, which tracks smaller firms, gained more than
15%. Undervalued larger-capitalization stocks surged and improving foreign
economies helped cyclical stocks.

* In July, the first of two Federal Reserve interest rate hikes left the
markets unscathed, and the major stock indices continued to climb. In
August, the second interest rate hike sent a ripple of anxiety through the
market. Investors quickly rewarded companies whose earnings exceeded
expectations and punished companies whose earnings did not.

SELECT

* Select posted a healthy 31.22% return for the year ended October 31. It
outperformed its benchmark, the Standard & Poor's 500 Index, which
gained 25.67% for the year, and also outpaced most of its peers. Select
ranked in the 16th percentile of 363 large-cap core funds, according to
Lipper Inc. Standardized ranking information can be found on page 5.

* Computer hardware companies, electrical equipment manufacturers and
semiconductor firms were among the fund's top-performing holdings. Names
that added to returns included Cisco Systems, Sun Microsystems and IBM.

* Semiconductor companies were also good performers. Their growth is being
fueled by innovation within the communications industry, which is demanding
smaller and more powerful integrated circuits.

* Select's holdings in food and beverage companies dampened performance. The
fund's stake in banks also weakened returns, as higher interest rates
increased concerns about asset quality and loan demand.

HERITAGE

* Heritage posted a strong gain for the year, significantly outperforming its
benchmark. Its larger positions fared particularly well.

* The fund had more than a third of its assets in technology-oriented firms,
an area of the economy that saw strong earnings growth. The wireless
industry was also a significant source of investments for Heritage.

* Heritage's health care stocks slowed performance, in part because of
uncertainty surrounding Medicare coverage for prescription drugs.

GROWTH

* Growth posted a 36.31% return for the year ended October 31, 1999,
outperforming its benchmark, the Russell 1000 Growth Index, which gained
34.25%.

* Technology-related companies, including semiconductor firms, computer
software and hardware makers, and Internet companies, were among the fund's
top-performing holdings.

* Telecommunications companies also contributed as increasing demand for
wireless and broadband technologies fueled their growth.

* Holdings in tobacco and food and beverage companies dampened performance.

[left margin]

SELECT(1)
(TWCIX)
TOTAL RETURNS: AS OF 10/31/99
6 Months 3.31%(2)
1 Year 31.22%
INCEPTION DATE: 6/30/71(3)
NET ASSETS: $7.3 billion(4)

HERITAGE(1)
(TWHIX)
TOTAL RETURNS: AS OF 10/31/99
6 Months 6.90%(2)
1 Year 30.71%
INCEPTION DATE: 11/10/87
NET ASSETS: $1.0 billion(4)

GROWTH(1)
(TWCGX)
TOTAL RETURNS: AS OF 10/31/99
6 Months 9.23%(2)
1 Year 36.31%
INCEPTION DATE: 6/30/71(3)
NET ASSETS: $8.3 billion(4)

(1) Investor Class.
(2) Not annualized.
(3) Although the original inception date was 10/31/58, this inception date
corresponds with the management company's implementation of its current
investment practices.
(4) Includes Investor, Advisor, and Institutional classes.

Investment terms are defined in the Glossary on pages 43-44.

2 1-800-345-2021

Market Perspective from James E. Stowers III
--------------------------------------------------------------------------------

[photo of James E. Stowers III]
James E. Stowers III, Chief Executive Officer of American Century

THE YEAR IN BRIEF

This has been a year of sharp contrasts. Consider the climate in which
stocks began our fiscal year, and the atmosphere in which they ended it. In
October 1998, we were coming off a substantial downturn, which saw the S&P
500 drop 18% in just over 80 days. The Asian financial crises were raging, and
the financial markets had been shaken by the collapse of a major U.S. hedge
fund.

Credit the Federal Reserve with quickly stepping in last fall and lowering
interest rates. Stocks began to recover -- to the point where the Dow Jones
Industrials went beyond the 10,000 level for the first time ever and closed
above 11,000 just a month later.

In the first half of the period, a handful of large growth stocks led the
market. In April, long-neglected value stocks and stocks of smaller companies
suddenly rallied amid signs of economic recovery in Asia, but their performance
run ended only a few weeks later. When the Federal Reserve reversed course and
raised rates in July and August, the market retreated. But inflation remained
dormant --despite the lowest unemployment rate in 30 years -- corporate earnings
strengthened, and stock prices rallied again in late October.

A GREAT YEAR FOR GROWTH

The period was rewarding for growth investors, particularly if you were
focused on technology, as many of our portfolios were. The Internet economy --
as measured by equipment and software spending -- grew by almost 70% over the
last 12 months. "Technology" once stood for microchips and computers.
Today it refers to a broad spectrum of companies involved in endeavors as
diverse as electronics, telecommunications, cable TV and media, software, and
medical products.

The growth enjoyed by many high-tech companies was reflected in the
performance of the NASDAQ Composite, where many such firms are represented.
NASDAQ gained a spectacular 67.46% during the 12 months ended October 31, 1999.

Unfortunately, value investors had a relatively difficult time. The S&P
500/BARRA Growth Index was up 31.29% for the 12 months, versus a 19.01% gain for
the S&P 500/BARRA Value Index.

A FINAL THOUGHT

The last 12 months saw heightened stock market volatility as earnings-
conscious investors quickly rewarded companies that exceeded expectations, and
swiftly punished those that fell short. Volatility can be unnerving, but it
doesn't always lead to negative returns, as our results this year demonstrate.

Ultimately, fiscal 1999 illustrates why we try to remain fully invested.
Market upturns tend to be sudden and powerful. We want investors in position to
take full advantage of "good" -- but unpredictable --volatility.

[right margin]

"THE PERIOD WAS REWARDING FOR GROWTH INVESTORS, PARTICULARLY IF YOU WERE
FOCUSED ON TECHNOLOGY, AS MANY OF OUR PORTFOLIOS WERE."

MARKET RETURNS
FOR THE YEAR ENDED OCTOBER 31, 1999

S&P 500 25.67%
S&P MIDCAP 400 21.07%
RUSSELL 2000 14.87%

Source: Lipper Inc.

These indices represent the performance of large-, medium-, and
small-capitalization stocks.

[line chart - data below]

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE YEAR ENDED OCTOBER 31, 1999

S&P 500 S&P Mid-Cap 400 Russell 2000
10/31/1998 $1.00 $1.00 $1.00
11/30/1998 $1.06 $1.05 $1.05
12/31/1998 $1.12 $1.18 $1.12
1/31/1999 $1.17 $1.13 $1.13
2/28/1999 $1.13 $1.07 $1.04
3/31/1999 $1.18 $1.10 $1.06
4/30/1999 $1.22 $1.19 $1.15
5/31/1999 $1.19 $1.19 $1.17
6/30/1999 $1.26 $1.26 $1.22
7/31/1999 $1.22 $1.23 $1.19
8/31/1999 $1.22 $1.19 $1.14
9/30/1999 $1.18 $1.15 $1.14
10/31/1999 $1.26 $1.21 $1.15

Value on 10/31/99
S&P 500 $1.26
S&P MidCap 400 $1.21
Russell 2000 $1.15

www.americancentury.com 3

Select--Performance
--------------------------------------------------------------------------------

TOTAL RETURNS AS OF OCTOBER 31, 1999

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 6/30/71)(1) (INCEPTION 8/8/97) (INCEPTION 3/13/97)

SELECT S&P 500 SELECT S&P 500 SELECT S&P 500

6 Months(2) 3.31% 2.74% 3.18% 2.74% 3.39% 2.74%
1 Year 31.22% 25.67% 30.87% 25.67% 31.47% 25.67%
-------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
-------------------------------------------------------------------------------------------
3 Years 27.37% 26.52% - - - -
5 Years 23.26% 26.02% - - - -
10 Years 15.09% 17.82% - - - -
Life of Fund 17.67% 13.75% 22.27% 19.22% 28.32% 24.81%

(1) Although the fund's actual inception date was 10/31/58, this inception date
corresponds with the management company's implementation of its current
investment philosophy and practices.

(2) Returns for periods less than one year are not annualized.

See pages 41--43 for information about share classes, the S&P 500 Index, and
returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS

Value on 10/31/99
S&P 500 $51,530
Select $40,758

Select S&P 500
10/31/1989 $10000 $10000
10/31/1990 $ 9796 $ 9252
10/31/1991 $12447 $12351
10/31/1992 $12667 $13582
10/31/1993 $15480 $15611
10/31/1994 $14340 $16215
10/31/1995 $16493 $20502
10/31/1996 $19752 $25443
10/31/1997 $25261 $33613
10/31/1998 $31061 $41004
10/31/1999 $40758 $51530

The graph at left shows the growth of a $10,000 investment in the fund over 10
years, while the graph below shows the fund's year-by-year performance. The
S&P 500 Index is provided for comparison in each graph. Select's total
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the total returns of the S&P 500 Index do
not. The graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see the Total Returns
table above). Past performance does not guarantee future results. Investment
return and principal value will fluctuate, and redemption value may be more or
less than original cost.

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING OCTOBER 31)

Select S&P 500
10/31/1990 -2.03% -7.52%
10/31/1991 27.05% 33.50%
10/31/1992 1.76% 9.93%
10/31/1993 22.20% 14.89%
10/31/1994 -7.37% 3.87%
10/31/1995 15.02% 26.36%
10/31/1996 19.76% 24.03%
10/31/1997 27.89% 32.10%
10/31/1998 22.96% 21.96%
10/31/1999 31.22% 25.67%

4 1-800-345-2021

Select--Q&A
--------------------------------------------------------------------------------

[photo of Kenneth Crawford and James E. Stowers III]
An interview with Kenneth Crawford and James E. Stowers III, portfolio
managers on the Select investment team.

HOW DID SELECT PERFORM DURING ITS FISCAL YEAR?

Select posted a healthy 31.22% return for the year ended October 31, 1999.*
It outperformed its benchmark, the Standard & Poor's 500 Index, which gained
25.67% for the year, and also outpaced most of its peers. For the year, Select
ranked in the 16th percentile of 363 large-cap core funds, according to Lipper,
Inc.**

WHAT HELPED THE FUND ACHIEVE THIS PERFORMANCE?

A major factor that worked in our favor was that investors continued to
reward growth--in other words, successful companies experiencing strong growth
in their earnings and revenues. These large, fast-growing companies are
precisely the type that make up the bulk of Select's portfolio.

A second factor that helped was that we took a fairly heavy stake in the
companies in which we had the most confidence. This strategy worked well. Seven
of Select's 10-largest holdings were among its best contributors.

WHAT SECTORS OR STOCKS CONTRIBUTED THE MOST TO RETURNS?

Several large industry groups performed exceptionally well, including
selected areas within technology, telecommunications, and financial services.
Select held a sizeable stake in many of the fastest-growing companies in these
areas.

Within technology, our best-performing holdings included computer hardware
companies, electrical equipment manufacturers, semiconductor firms, and software
providers. Companies that make computers and electronic gear are benefiting
nicely from ongoing strong demand for personal computers and the boom in
e-commerce, wireless communications, and the Internet. Names that added
significantly to returns included Cisco Systems and Sun Microsystems.

CAN YOU TELL US ABOUT THOSE COMPANIES?

Cisco makes hardware and software used in linking local and wide-area
computer networks. The company's success is driven in part through sales of its
software platform that ties such networks together --a product for which there
is dramatically increasing demand as more businesses move onto the Internet.

Sun Microsystems makes computer workstations, servers, storage devices, and
operating systems. Demand for its products has remained strong, fueled by the
continued move by corporations to company-wide networking and the Internet. The
company is also aggressively and successfully moving into new markets, including
the financial services market, where three major banks announced their
electronic bill-paying systems will use Sun technologies.

* All fund returns referenced in this interview are for Investor Class shares.

** According to Lipper, for the periods ending October 31, 1999, Select was
ranked 58 out of 363 large-cap core funds for one year, 47 out of 111 large-cap
core funds for five years, and 33 out of 47 large-cap core funds for 10 years.
Lipper rankings are based on average annual total returns.

[right margin}

"A MAJOR FACTOR THAT WORKED IN OUR FAVOR WAS THAT INVESTORS CONTINUED TO
REWARD GROWTH--IN OTHER WORDS, SUCCESSFUL COMPANIES EXPERIENCING STRONG GROWTH
IN THEIR EARNINGS AND REVENUES."

PORTFOLIO AT A GLANCE
10/31/99 10/31/98
NO. OF COMPANIES 89 96
MEDIAN P/E RATIO 34.8 32.0
MEDIAN MARKET $59.2 $31.6
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 130% 165%
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00% 1.00%

Investment terms are defined in the Glossary on pages 43-44.

www.americancentury.com 5

Select--Q&A
--------------------------------------------------------------------------------
(Continued)

WHAT OTHER AREAS WITHIN TECHNOLOGY HELPED?

Semiconductor companies were Select's third-best performing group.
Technical innovation is accelerating, and chips are now being used in everything
from digital cameras and cable TV set-top boxes to medical equipment and
automatic identification devices. Demand for personal computers, workstations,
and servers remains a strong driver for chipmakers. However, growth in this
group is shifting somewhat to communications, where need for Internet and
copper-line bandwidth has led makers of wireless communications devices and data
networking equipment to demand smaller, faster, and more powerful integrated
circuits. Given this environment, we have maintained our stake in companies that
have continued to perform well, including Texas Instruments, Intel, and Linear
Technology.

SELECT HAS A FAIRLY HEAVY STAKE IN GENERAL ELECTRIC. WHAT ATTRACTED YOU TO
THIS COMPANY?

General Electric was our largest holding and has been among our top
contributors for some time. The company is highly diversified, with business
segments in broadcasting, appliances, aircraft engines, lighting products, and
motors--as well as a rapidly expanding and profitable financial arm, GE Capital.
Nearly all of GE's operating segments are producing robust profit increases, and
the future appears equally bright. The company has undertaken a widespread
quality improvement effort resulting in better quality products and increasing
customer demand, which should eventually boost margins.

WHICH SECTORS OR HOLDINGS DETRACTED FROM PERFORMANCE?

Coca-Cola, a relatively small holding at slightly over 1% of investments,
detracted the most from returns. Food and beverage companies in general have
continued to struggle in the wake of the economic troubles that slowed their
sales in foreign markets in recent years.

WHICH OTHER INDUSTRIES STRUGGLED?

Select's stake in banks limited performance toward the end of the fiscal
year. Continued industry consolidation was boosting earnings and revenues for a
number of key players; however, the two interest rate hikes this summer dampened
investor enthusiasm for bank shares. Anticipation of rising rates contributed to
share-price volatility ahead of the hikes themselves. Higher interest rates are
considered harmful to banks because they decrease the value of banks' investment
portfolios, increase concern about asset quality, and potentially dampen loan
demand. In addition, banks are beginning to face competition from non-bank
financial-service providers (including new Internet companies) which is
increasing pricing pressure and making it harder for banks to expand their
revenues. Names that

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99

GENERAL ELECTRIC CO.
(U.S.) 5.4% 3.5%
MICROSOFT CORP. 4.9% 4.5%
CISCO SYSTEMS INC. 2.9% 2.4%
AMERICA ONLINE INC. 2.7% 2.2%
WAL-MART STORES, INC. 2.7% 2.5%
AMERICAN INTERNATIONAL
GROUP, INC. 2.5% 2.4%
PROCTER & GAMBLE
CO. (THE) 2.4% 2.3%
CITIGROUP INC. 2.2% 3.3%
BRISTOL-MYERS
SQUIBB CO. 2.2% 1.6%
MOBIL CORP. 2.1% -

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
DRUGS 9.3% 7.7%
BANKS 7.8% 10.1%
FINANCIAL SERVICES 7.1% 7.3%
ELECTRICAL EQUIPMENT 7.1% 8.0%
TELEPHONE 6.8% 6.0%

6 1-800-345-2021

Select--Q&A
--------------------------------------------------------------------------------
(Continued)

detracted from performance in the second half included First Union and Bank of
America.

DID YOU MAKE ANY MAJOR INDUSTRY SHIFTS IN SELECT'S PORTFOLIO IN RECENT MONTHS?

We made several. We significantly reduced our stake in computer hardware
companies, which went from more than 10% of investments to 2.6%.

Select's pharmaceutical weighting remains significant at 9.3% of
investments. However, we eliminated selected drug companies, including Abbott
Laboratories and American Home Products.

PLEASE ADDRESS THE CHANGES THAT OCCURRED IN SELECT'S MANAGEMENT EARLIER THIS
YEAR.

As we discussed in our semiannual report, the investment professionals who
previously managed Select resigned after accepting positions at another fund
company. We now co-manage Select's portfolio. Ken was previously an analyst on
American Century's Growth fund, and prior to that served as an analyst on
Select's team. He has also been a lead manager on two large-company investment
portfolios that American Century manages for institutional clients. Jim is Chief
Investment Officer for all of American Century's U.S. growth equity funds. We
work closely with a dedicated team of seasoned investment analysts. Thanks to
the team's depth of investment experience and our team approach, the change in
management has been virtually seamless, and performance has actually improved
since June.

[right margin]

"HIGHER INTEREST RATES ARE CONSIDERED HARMFUL TO BANKS BECAUSE THEY
DECREASE THE VALUE OF BANKS' INVESTMENT PORTFOLIOS, INCREASE CONCERN ABOUT ASSET
QUALITY, AND POTENTIALLY DAMPEN LOAN DEMAND."

[pie charts - data below]

TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF OCTOBER 31, 1999
Common Stocks 95%
Temporary Cash Investments 5%

AS OF APRIL 30, 1999
Common Stocks 99%
Temporary Cash Investments 1%

www.americancentury.com 7

Select--Schedule of Investments
--------------------------------------------------------------------------------
This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country. NOTE: For securities denominated in foreign
currencies, the market value is translated into U.S. dollars based on exchange
rates as of the last day of the reporting period. OCTOBER 31, 1999 Shares ($ in
Thousands) Value
--------------------------------------------------------------------------------

COMMON STOCKS -- 94.8%

ALCOHOL -- 1.0%
1,068,400 Anheuser-Busch Companies, Inc. $ 76,724
--------------------
APPAREL & TEXTILES -- 0.5%
631,600 NIKE, Inc. 35,646
--------------------
BANKS -- 7.8%
2,069,500 Bank of New York Co., Inc. (The) 86,660
1,420,500 Bank of America Corp. 91,445
897,500 Chase Manhattan Corp. 78,419
3,085,100 Citigroup Inc. 166,982
471,500 Fifth Third Bancorp 34,788
2,551,000 Wells Fargo & Co. 122,129
--------------------
580,423
--------------------
CHEMICALS -- 1.5%
661,106 du Pont (E.I.) de Nemours & Co. 42,600
718,900 Minnesota Mining
& Manufacturing Co. 68,340
--------------------
110,940
--------------------
COMPUTER HARDWARE &
BUSINESS MACHINES -- 2.6%
622,700 Dell Computer Corp.(1) 24,966
1,129,000 EMC Corp. (Mass.)(1) 82,417
190,200 Pitney Bowes Inc. 8,666
773,200 Sun Microsystems, Inc.(1) 81,790
--------------------
197,839
--------------------
COMPUTER SOFTWARE -- 6.7%
241,600 Computer Associates
International, Inc. 13,650
983,800 International Business
Machines Corp. 96,781
3,934,200 Microsoft Corp.(1) 364,159
591,000 Oracle Corp.(1) 28,128
--------------------
502,718
--------------------
DEFENSE/AEROSPACE -- 0.9%
745,000 AlliedSignal Inc. 42,418
508,300 Boeing Co. 23,414
--------------------
65,832
--------------------
DEPARTMENT STORES -- 3.3%
758,600 Dayton Hudson Corp. 49,025
3,500,000 Wal-Mart Stores, Inc. 198,406
--------------------
247,431
--------------------

Shares ($ in Thousands) Value
-------------------------------------------------------------------------------

DRUGS -- 9.3%
354,300 Amgen Inc.(1) $ 28,244
2,163,600 Bristol-Myers Squibb Co. 166,192
737,800 Lilly (Eli) & Co. 50,816
1,342,000 Merck & Co., Inc. 106,773
3,346,500 Pfizer, Inc. 132,187
570,000 Pharmacia & Upjohn Inc. 30,744
1,290,000 Schering-Plough Corp. 63,855
1,457,500 Warner-Lambert Co. 116,327
---------------------
695,138
---------------------
ELECTRICAL EQUIPMENT -- 7.1%
2,954,100 Cisco Systems Inc.(1) 218,696
402,600 Corning Inc. 31,654
2,234,300 Lucent Technologies Inc. 143,554
860,000 Motorola, Inc. 83,796
381,700 Nokia Corp. Cl A ADR 44,110
140,900 Tellabs, Inc.(1) 8,908
---------------------
530,718
---------------------
ELECTRICAL UTILITIES -- 0.7%
2,017,100 Southern Co. 53,579
---------------------
ENERGY RESERVES & PRODUCTION -- 5.4%
1,006,600 Atlantic Richfield Co. 93,803
1,463,937 Conoco Inc. Cl B 39,709
1,643,900 Mobil Corp. 158,636
370,000 Phillips Petroleum Co. 17,205
1,631,000 Royal Dutch Petroleum Co.
New York Shares 97,758
---------------------
407,111
---------------------
FINANCIAL SERVICES -- 7.1%
405,600 American Express Co. 62,462
612,400 Fannie Mae 43,327
462,400 Federal Home Loan Mortgage
Corporation 24,999
2,961,800 General Electric Co. (U.S.) 401,509
---------------------
532,297
---------------------
FOOD & BEVERAGE -- 1.8%
1,300,900 Coca-Cola Company (The) 76,753
1,708,900 PepsiCo, Inc. 59,277
---------------------
136,030
---------------------
FOREST PRODUCTS & PAPER -- 0.9%
1,087,700 Kimberly-Clark Corp. 68,661
---------------------
GAS & WATER UTILITIES -- 0.3%
510,000 Enron Corp. 20,368
---------------------

8 1-800-345-2021 See Notes to Financial Statements

Select--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------

HOME PRODUCTS -- 3.3%
1,137,800 Colgate-Palmolive Co. $ 68,837
1,734,000 Procter & Gamble Co. (The) 181,853
--------------------
250,690
--------------------
INDUSTRIAL PARTS -- 4.0%
520,700 Honeywell Inc. 54,901
365,000 Textron Inc. 28,173
3,840,200 Tyco International Ltd. 153,368
1,046,400 United Technologies Corp. 63,307
--------------------
299,749
--------------------
INFORMATION SERVICES -- 1.6%
1,959,000 First Data Corp. 89,502
760,300 SAP AG ADR(2) 27,799
--------------------
117,301
--------------------
INTERNET -- 2.7%
1,546,600 America Online Inc.(1) 200,575
--------------------
LEISURE -- 0.3%
368,500 Eastman Kodak Co. 25,404
--------------------
MEDIA -- 1.2%
820,200 CBS Corp.(1) 40,036
715,000 Time Warner Inc. 49,827
--------------------
89,863
--------------------
MEDICAL PRODUCTS & SUPPLIES -- 3.4%
1,014,800 Guidant Corp. 50,106
1,349,900 Johnson & Johnson 141,402
1,755,600 Medtronic, Inc. 60,788
--------------------
252,296
--------------------
OIL REFINING -- 0.1%
300,000 Williams Companies, Inc. (The) 11,250
--------------------
OIL SERVICES -- 1.4%
967,900 Halliburton Co. 36,478
1,175,300 Schlumberger Ltd. 71,179
--------------------
107,657
--------------------
PROPERTY AND CASUALTY
INSURANCE -- 2.5%
1,793,750 American International Group, Inc. 184,644
--------------------
PUBLISHING -- 0.1%
94,200 Gannett Co., Inc. 7,265
--------------------
RESTAURANTS -- 0.9%
1,567,500 McDonald's Corp. 64,659
--------------------
SECURITIES & ASSET MANAGEMENT -- 1.1%
680,200 AXA Financial, Inc. 21,809
516,500 Morgan Stanley Dean Witter & Co. 56,976
--------------------
78,785
--------------------

Shares/Prinicipal Amount ($ in Thousands) Value
-------------------------------------------------------------------------------

SEMICONDUCTOR -- 3.8%
433,900 Applied Materials, Inc.(1) $ 38,983
1,595,200 Intel Corp. 123,479
289,300 Linear Technology Corp. 20,224
1,150,000 Texas Instruments Inc. 103,213
---------------------
285,899
---------------------
SPECIALTY STORES -- 2.7%
1,065,200 CVS Corp. 46,270
2,100,000 Home Depot, Inc. 158,550
---------------------
204,820
---------------------
TELEPHONE -- 6.8%
551,000 AT&T Corp. 25,759
720,000 Bell Atlantic Corp. 46,755
801,100 GTE Corp. 60,083
1,775,500 MCI WorldCom, Inc.(1) 152,305
2,511,316 SBC Communications Inc. 127,920
723,000 Sprint Corp. 53,728
640,300 U S WEST, Inc. 39,098
---------------------
505,648
---------------------
WIRELESS TELECOMMUNICATIONS -- 2.0%
449,900 Nextel Communications, Inc.(1) 38,790
292,200 Sprint PCS(1) 24,234
1,749,500 Vodafone Group plc ADR 83,867
---------------------
146,891
---------------------
TOTAL COMMON STOCKS 7,094,851
---------------------
(Cost $5,045,959)

TEMPORARY CASH INVESTMENTS -- 5.2%
$99,346 FHLB Discount Notes, 5.16%,
11/1/99(3) $99,346
50,654 FNMA Discount Notes, 5.16%,
11/1/99(3) 50,654
50,000 FNMA Discount Notes, 5.09%,
11/22/99(3) 49,850
Repurchase Agreement, Morgan Stanley Group,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.16%, dated 10/29/99,
due 11/1/99 (Delivery value $110,748) 110,700
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 5.17%, dated 10/29/99,
due 11/1/99 (Delivery value $79,334) 79,300
--------------------
TOTAL TEMPORARY CASH INVESTMENTS 389,850
--------------------
(Cost $389,794)
TOTAL INVESTMENT SECURITIES -- 100.0% $7,484,701
=====================
(Cost $5,435,753)

See Notes to Financial Statements www.americancentury.com 9

Select--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

FUTURES CONTRACTS
($ in Thousands)
Expiration Underlying Face Unrealized
Purchased Date Amount at Value Gain
-----------------------------------------------------------------------------
370 S&P 500 December
Futures 1999 $127,372 $1,204
200 S&P 500 March
Futures 2000 69,600 4,356
-----------------------------------
$196,972 $5,560
===================================

FUTURES CONTRACTS are typically based on a stock index, such as the S&P 500,
and they tend to track the performance of the index while remaining very liquid
(easy to buy and sell). By investing its cash assets in index futures, the fund
can stay fully invested in stocks while having easy access to the money.

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt
FHLB = Federal Home Loan Bank
FNMA = Federal National Mortgage Association

(1) Non-income producing.

(2) Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. (See Note 5 in Notes to Financial Statements for
a summary of transactions for each issuer which is or was an affiliate at or
during the year ended October 31, 1999.

(3) Rate disclosed is the yield to maturity at purchase.

10 1-800-345-2021 See Notes to Financial Statements

Heritage--Performance
--------------------------------------------------------------------------------

TOTAL RETURNS AS OF OCTOBER 31, 1999

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 11/10/87) (INCEPTION 7/11/97) (INCEPTION 6/16/97)

HERITAGE S&P MIDCAP 400 HERITAGE S&P MIDCAP 400 HERITAGE S&P MIDCAP 400

6 MONTHS(1) 6.90% 1.86% 6.74% 1.86% 6.97% 1.86%
1 YEAR 30.71% 21.07% 30.37% 21.07% 30.92% 21.07%
----------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
----------------------------------------------------------------------------------------------------
3 YEARS 12.55% 19.67% -- -- -- --
5 YEARS 13.77% 19.51% -- -- -- --
10 YEARS 12.09% 16.71% -- -- -- --
LIFE OF FUND 14.81% 18.83%(2) 5.96% 15.17% 8.27% 15.64%(3)

(1) Returns for periods less than one year are not annualized.

(2) Since 11/30/87, the date nearest the class's inception for which data are
available.

(3) Since 6/19/97, the date nearest the class's inception for which data are
available.

See pages 41-43 for information about share classes, the S&P MidCap 400
Index, and returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS

Value on 10/31/1999
S&P MidCap 400 $46,896
Heritage $31,282

Heritage S&P MidCap 400 Index
10/31/1989 $10000 $10000
10/31/1990 $ 8837 $ 8660
10/31/1991 $11776 $14155
10/31/1992 $12913 $15460
10/31/1993 $16612 $18788
10/31/1994 $16424 $19236
10/31/1995 $19880 $23315
10/31/1996 $21955 $27361
10/31/1997 $28446 $36299
10/31/1998 $23931 $38735
10/31/1999 $31282 $46896

The graph at left shows the growth of a $10,000 investment in the fund over 10
years, while the graph below shows the fund's year-by-year performance. The
S&P MidCap 400 Index is provided for comparison in each graph. Heritage's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the S&P
MidCap 400 Index do not. The graphs are based on Investor Class shares only;
performance for other classes will vary due to differences in fee structures
(see the Total Returns table above). Past performance does not guarantee future
results. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost.

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING OCTOBER 31)

Heritage S&P MidCap 400 Index
10/31/1990 -11.62% -13.40%
10/31/1991 33.25% 63.45%
10/31/1992 9.65% 9.22%
10/31/1993 28.64% 21.53%
10/31/1994 -1.13% 2.38%
10/31/1995 21.04% 21.21%
10/31/1996 10.44% 17.35%
10/31/1997 29.56% 32.67%
10/31/1998 -15.87% 6.71%
10/31/1999 30.71% 21.07%

www.americancentury.com 11

Heritage--Q&A
--------------------------------------------------------------------------------

[photo of Harold Bradley and Linda Peterson]
An interview with Harold Bradley and Linda Peterson, portfolio managers on
the Heritage investment team.

HOW DID HERITAGE PERFORM FOR THE 12 MONTHS ENDED OCTOBER 31, 1999?

Heritage gained 30.71%, nearly 10 percentage points above the 21.07%
increase posted by its benchmark, the Standard & Poor's MidCap 400 Index.*

WHAT HELPED YOU ACHIEVE THAT INDEX-BEATING RETURN?

To begin with, we were invested heavily in the part of the market that
performed best --technology stocks. The average technology stock in the MidCap
400 Index was up 115% for the 12 months. More than a third of Heritage's assets
were invested in technology-oriented firms.

Our assets were also concentrated in several stocks that did particularly
well. We look for medium-sized companies whose earnings are accelerating. As
part of our strategy, Heritage carries larger weightings in
"high-confidence" holdings -- companies our research says have the
best chance to sustain their growth. When we closed the books in October, the
fund's 10 largest holdings accounted for 31% of assets, and our three largest
positions performed exceptionally well.

WHICH COMPANIES POWERED THE FUND?

Gemstar International Group, our largest position, continued to lead the
fund. Gemstar holds the patent on some much-needed technology for television
viewers: an on-screen, interactive program guide. Most cable systems are
delivering 100 or more channels, and that number is expected to grow. Gemstar's
pending merger with TV Guide, Inc., will make it the dominant player in this
space. As more users have access to the program guide, we believe it will become
an important future source of advertising revenue. Gemstar's shares gained more
than 200% during the year.

We've also been pleased with our investment in UnitedGlobalCom. The stock
has doubled since we bought it six months ago, and was our third-best
contributor for the year. UnitedGlobalCom is one of the largest cable firms in
Europe, and provides cable service in more than 20 countries. The cable industry
in the United States has broadened its offerings to include premium movie
channels, Internet access, and telephone service. We think the international
cable industry will undergo the same type of transformation.

WHICH OTHER HOLDINGS ADDED TO RETURNS?

QUALCOMM, another newcomer to the portfolio, also made a big impact. This
company's fortunes are tied directly to the exploding demand for wireless phone
service. QUALCOMM holds the patent for the dominant wireless technology known as
CDMA, or "code division multiple access." CDMA makes it possible to
more easily send data --words and pictures -- over wireless networks. In
essence, this technology turns cellular phones into tiny portable computers,
giving users the ability to reach for information whenever they need it,

* All fund returns referenced in this interview are for Investor Class shares.

[left margin]

"HERITAGE CARRIES LARGER WEIGHTINGS IN 'HIGH-CONFIDENCE'
HOLDINGS--COMPANIES OUR RESEARCH SAYS HAVE THE BEST CHANCE TO SUSTAIN THEIR
GROWTH."

PORTFOLIO AT A GLANCE
10/31/99 10/31/98
NO. OF COMPANIES 87 82
MEDIAN P/E RATIO 26.2 25.3
MEDIAN MARKET $3.51 $2.97
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 134% 148%
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00% 1.00%

Investment terms are defined in the Glossary on pages 43-44.

12 1-800-345-2021

Heritage--Q&A
--------------------------------------------------------------------------------
(Continued)

from wherever they may be at the time. QUALCOMM has licensed its technology to
more than 60 manufacturers of portable phones and other wireless products.

WHICH STOCKS DID NOT LIVE UP TO YOUR EXPECTATIONS?

One was the Metzler Group, now known as Navigant Consulting, Inc. This
consulting firm works with energy and utility companies, and has built itself
primarily through acquisitions, a method of growth that investors haven't
rewarded with much enthusiasm.

We also sold our stake in Mylan Laboratories during the summer after the
generic drug maker's pricing came under government scrutiny. We don't mind being
on the sidelines until Medicare coverage for prescription drugs is resolved.
Also on the Medicare front, a new nursing home payment plan that restricted
reimbursements to a fixed payment per patient caused us to sell Omnicare, a
company that provides drug therapy to those facilities.

WHAT MAJOR CHANGES DID YOU MAKE IN THE PORTFOLIO'S STRUCTURE?

As you saw with QUALCOMM, we are enthusiastic about the future of wireless
communications, and are spreading investments across that part of the
telecommunications arena. We own stock in the most prominent service provider,
Sprint PCS. We feel Sprint has the best wireless network in the United States.
That asset has attracted another investor -- MCI WorldCom, which is in the
process of acquiring Sprint.

The electrical equipment end of the wireless business is also fertile
ground. The makers of portable phones, and the companies that provide their
electronic ingredients, can't produce them fast enough. A great example is one
of our new investments, Vishay Intertechnology. If you own a portable phone,
chances are that Vishay made many of the 450 passive components inside it, such
as capacitors, diodes, and transistors. The Pennsylvania- based company is the
largest U.S. and European manufacturer of this kind of circuitry.

WERE THERE ANY OTHER SIGNIFICANT CHANGES?

At the beginning of the year, we made a sizeable investment in another area
within electrical equipment -- companies that make semiconductors (computer
chips that store, process, and send information). These tiny wafers are the
nerve centers of hundreds of everyday products -- computers, phones, TVs,
automobiles, and household appliances.

Novellus Systems and KLA-Tencor are two semiconductor equipment makers.
Novellus has anticipated the transition from aluminum to copper-based integrated
circuits. Copper is superior to aluminum as an electrical conductor. KLA-Tencor
makes measurement and inspection technologies that help customers increase
profitability in their semiconductor manufacturing operations.

YOU NEARLY DOUBLED HERITAGE'S INVESTMENTS IN COMPUTER SOFTWARE TO 8% OF ASSETS.
WHAT LED YOU TO INCREASE YOUR INVESTMENT IN THAT INDUSTRY?

We want to take advantage of demand for software in two areas: publishing
on the Internet and applications for server-based computing done by businesses.
To do so, we've added two software companies to our roster, Adobe Systems and
Citrix Systems.

[right margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99

GEMSTAR INTERNATIONAL
GROUP LTD. 7.3% 6.3%
UNITEDGLOBALCOM CL A 4.4% 2.8%(1)
QUALCOMM INC.
(CONVERTIBLE PREFERRED) 3.5% 0.5%
MONTANA POWER CO. 2.9% 4.5%
ALBERTA ENERGY CO.
LTD. ORD 2.5% 2.4%
CITREX SYSTEMS, INC.
(CONVERTIBLE BOND) 2.3% 1.0%
NATIONAL COMPUTER
SYSTEMS, INC. 2.2% 1.8%
GLOBAL TELESYSTEMS
GROUP, INC.
(CONVERTIBLE BOND) 2.2% 3.4%
ADOBE SYSTEMS INC. 2.0% 1.1%
CONCORD EFS, INC. 2.0% --

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99

INFORMATION SERVICES 11.0% 8.1%
MEDIA 9.0% 12.7%
ELECTRICAL EQUIPMENT 8.6% 4.1%
COMPUTER SOFTWARE 8.1% 4.8%
WIRELESS TELECOMMUNICATIONS 5.6% 0.5%

(1) Name change from United International Holdings, Inc. Cl A effective 7/26/99.

www.americancentury.com 13

Heritage--Q&A
--------------------------------------------------------------------------------
(Continued)

If you send or receive documents over your PC, chances are you've used
Adobe's Acrobat software. Adobe's Portable Document Format (PDF) has become the
standard file format for distributing documents online. The company also makes
popular Web design software. Adobe's shares have gained 275% since we bought the
stock late last year.

Citrix operates in the corporate computing realm. It provides software that
allows for software applications to reside on a server instead of the desktop.
This helps companies decrease their costs of desktop computing. Software
installations or updates are made only once --on the server --to be used by PCs
across the organization. It also enables employees to have remote access to
software, a growing trend in the industry.

IN THEIR MESSAGE, THE STOWERSES INDICATED THAT PORTFOLIO MANAGER HAROLD BRADLEY
IS LEAVING THE FUND TO TAKE ANOTHER POSITION AT AMERICAN CENTURY. WILL ANOTHER
PORTFOLIO MANAGER BE ADDED TO THE TEAM?

That's correct --Harold is managing American Century's private equity
investments in companies whose technology will enhance our ability to better
serve our investors. We appreciate Harold's hard work on behalf of Heritage
shareholders. Linda will continue to manage the fund, with analysts Michael
Orndorff, David Rose and Pat Warren. In addition, Jim Stowers III, who oversees
American Century's domestic growth funds, will assist the Heritage team. We plan
to hire an additional portfolio manager for the fund by the end of the year.

WHAT'S YOUR STRATEGY AND OUTLOOK FOR HERITAGE MOVING FORWARD?

The investment approach that drives Heritage is direct and disciplined. We
think your money belongs in successful firms whose earnings and revenues are
growing at an accelerating rate.

Hopefully, the stock market's leadership will begin to broaden past
technology. We see --and own --decidedly successful companies in other fields
that deserve investors' attention.

[left margin]

"THE INVESTMENT APPROACH THAT DRIVES HERITAGE IS DIRECT AND DISCIPLINED. WE
THINK YOUR MONEY BELONGS IN SUCCESSFUL FIRMS WHOSE EARNINGS AND REVENUES ARE
GROWING AT AN ACCELERATING RATE."

[pie charts - data below]

TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF OCTOBER 31, 1999

Common Stocks 77%
Convertible Bonds 7%
Convertible Preferred Stock 7%
Temporary Cash Investments 9%

AS OF APRIL 30, 1999

Common Stocks 89%
Convertible Bonds 6%
Convertible Preferred Stock 4%
Temporary Cash Investments 1%

14 1-800-345-2021

Heritage--Schedule of Investments
--------------------------------------------------------------------------------

This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country.

NOTE: For securities denominated in foreign currencies, the market value is
translated into U.S. dollars based on exchange rates as of the last day of the
reporting period.

OCTOBER 31, 1999

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------

COMMON STOCKS -- 76.7%

APPAREL & TEXTILES -- 0.6%
150,100 Liz Claiborne, Inc. $ 6,004
--------------------
BANKS -- 1.4%
98,900 Hudson United Bancorp 3,109
117,370 Huntington Bancshares Inc. 3,473
345,100 Toronto-Dominion Bank (The) ORD 7,916
--------------------
14,498
--------------------
BUILDING -- 1.6%
878,780 CRH plc ORD 16,631
--------------------
CHEMICALS -- 1.4%
83,700 Avery Dennison Corp. 5,231
150,900 Lubrizol Corp. 3,867
133,200 Rohm and Haas Co. 5,095
--------------------
14,193
--------------------
COMPUTER HARDWARE &
BUSINESS MACHINES -- 0.5%
29,900 Emulex Corp.(1) 4,662
--------------------
COMPUTER SOFTWARE -- 5.3%
290,800 Adobe Systems Inc. 20,347
68,000 Amdocs Ltd.(1) 1,891
281,500 Novell, Inc.(1) 5,639
309,900 Rational Software Corp.(1) 13,229
112,800 Siebel Systems, Inc.(1) 12,383
--------------------
53,489
--------------------
CONSTRUCTION & REAL PROPERTY -- 0.9%
303,600 Masco Corp. 9,260
--------------------
DEPARTMENT STORES -- 0.7%
330,800 Family Dollar Stores, Inc. 6,823
--------------------
DRUGS -- 2.3%
303,183 ALPHARMA INC. 10,668
174,400 BioChem Pharma Inc.(1) 3,591
75,400 Gilead Sciences, Inc.(1) 4,767
115,900 Pharmacyclics, Inc.(1) 4,064
--------------------
23,090
--------------------
ELECTRICAL EQUIPMENT -- 8.6%
220,000 ANTEC Corp.(1) 10,649
140,800 AVX Technology 5,632
35,400 Foundry Networks, Inc.(1) 6,704
280,300 Kent Electronics Corp.(1) 5,448
73,700 KLA-Tencor Corporation(1) 5,838

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------

397,700 Millipore Corp. $ 12,677
195,300 Molex Inc. 7,141
74,900 Novellus Systems, Inc.(1) 5,802
120,500 Optical Coating Laboratory, Inc. 12,946
579,450 Vishay Intertechnology, Inc.(1) 14,160
---------------------
86,997
---------------------
ELECTRICAL UTILITIES -- 3.1%
40,000 Calpine Corp.(1) 2,305
1,038,000 Montana Power Co. 29,518
---------------------
31,823
---------------------
ENERGY RESERVES & PRODUCTION -- 3.1%
822,200 Alberta Energy Co. Ltd. ORD 25,425
168,500 Burlington Resources Inc. 5,876
---------------------
31,301
---------------------
FINANCIAL SERVICES -- 2.8%
745,350 Concord EFS, Inc.(1) 20,148
305,700 MBNA Corp. 8,445
---------------------
28,593
---------------------
HEAVY ELECTRICAL EQUIPMENT -- 1.2%
231,000 Ballard Power Systems Inc.(1) 6,490
126,100 Dover Corp. 5,367
---------------------
11,857
---------------------
INDUSTRIAL PARTS -- 0.5%
186,200 Kennametal Inc. 5,353
---------------------
INDUSTRIAL SERVICES -- 1.5%
417,600 Manpower Inc. 14,668
---------------------
INFORMATION SERVICES -- 11.0%
846,500 Gemstar International Group Ltd.(1) 73,434
87,800 Getronics N.V. ORD 4,388
586,400 National Computer Systems, Inc. 22,192
393,300 Navigant Consulting, Inc.(1) 11,234
---------------------
111,248
---------------------
INTERNET -- 1.9%
7,200 Akamai Technologies, Inc.(1) 1,045
443,100 Digex, Inc.(1) 12,684
73,500 Verity, Inc.(1) 5,065
---------------------
18,794
---------------------
LEISURE -- 1.2%
116,800 Four Seasons Hotels Inc. 4,869
125,000 Harley-Davidson, Inc. 7,414
---------------------
12,283
---------------------

See Notes to Financial Statements www.americancentury.com 15

Heritage--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 1999

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
MEDIA -- 7.7%
145,100 Adelphia Communications
Corp. Cl A(1) $ 7,912
219,900 TV Guide, Inc. Cl A(1) 11,545
511,500 UnitedGlobalCom Cl A(1) 44,437
305,300 USA Networks Inc.(1) 13,748
--------------------
77,642
--------------------
MEDICAL PRODUCTS & SUPPLIES -- 2.5%
44,000 Affymetrix, Inc.(1) 3,883
108,700 Bausch & Lomb Inc. Cl A 5,870
123,200 MiniMed Inc.(1) 9,344
88,200 PE Corp-PE Biosystems Group 5,722
--------------------
24,819
--------------------
MINING & METALS -- 2.0%
122,600 Nucor Corp. 6,360
266,200 Stillwater Mining Co. (1) 5,357
532,800 Worthington Industries, Inc. 8,841
--------------------
20,558
--------------------
OIL SERVICES -- 3.9%
215,900 Diamond Offshore Drilling, Inc. 6,855
480,100 Ensco International Inc. 9,302
332,700 Petroleum Geo-Services ASA ADR(1) 4,866
96,700 Schlumberger Ltd. 5,856
230,400 Tidewater Inc. 6,912
219,600 Transocean Offshore 5,970
--------------------
39,761
--------------------
PROPERTY AND CASUALTY INSURANCE -- 2.6%
218,900 MGIC Investment Corp. 13,079
248,850 PMI Group, Inc. (The) 12,909
--------------------
25,988
--------------------
SECURITIES & ASSET MANAGEMENT -- 1.3%
4,455 Julius Baer Holding AG ORD 13,424
--------------------
SEMICONDUCTOR -- 4.6%
130,800 Analog Devices, Inc.(1) 6,949
240,600 CTS Corp. 13,609
550,100 International Rectifier Corp.(1) 10,693
291,700 National Semiconductor Corp.(1) 8,733
71,300 PMC-Sierra, Inc.(1) 6,718
--------------------
46,702
--------------------
TRUCKING, SHIPPING & AIR FREIGHT -- 0.4%
179,500 Alexander & Baldwin, Inc. 4,302
--------------------
WIRELESS TELECOMMUNICATIONS -- 2.1%
107,600 Sprint PCS(1) 8,924
127,100 VoiceStream Wireless Corp.(1) 12,555
--------------------
21,479
--------------------
TOTAL COMMON STOCKS 776,242
--------------------
(Cost $580,144)

Shares/Principal Amount ($ in Thousands) Value
-------------------------------------------------------------------------------

CONVERTIBLE PREFERRED STOCKS -- 7.2%

COMPUTER SOFTWARE -- 0.5%
185,100 Amdocs Automatic, 6.75%, 9/11/02 $ 4,928
---------------------
ELECTRICAL UTILITIES -- 0.9%
150,000 Calpine Capital Trust, 5.75%,
11/1/04() 8,869
---------------------
ENTERTAINMENT -- 1.5%
270,900 Premier Parks Inc., 7.50%, 4/1/01 14,629
---------------------
MEDIA -- 0.8%
50,000 Adelphia Communications Corp.,
Series D, 5.50%, 12/31/49 8,467
---------------------
WIRELESS TELECOMMUNICATIONS -- 3.5%
113,300 QUALCOMM Inc., 5.75%, 2/24/12 35,449
---------------------
TOTAL CONVERTIBLE PREFERRED STOCKS 72,342
---------------------
(Cost $55,175)

CONVERTIBLE BONDS -- 7.3%

COMPUTER SOFTWARE -- 2.3%
$45,408 Citrix Systems, Inc., 4.83%,
3/22/19(2) 22,931
---------------------
DRUGS -- 1.7%
2,000 Affymetrix, Inc., 5.00%, 10/1/06 1,876
10,292 Centocor, Inc., 4.75%, 2/15/05 15,123
---------------------
16,999
---------------------
MEDIA -- 0.5%
6,150 Comcast Corp., 2.00%, 10/15/29 5,127
---------------------
SEMICONDUCTOR -- 0.6%
3,000 Conexant Systems, Inc., 4.25%,
5/1/06 6,407
---------------------
TELEPHONE -- 2.2%
21,113 Global Telesystems Group, Inc.,
5.75%, 7/1/10 21,940
---------------------
TOTAL CONVERTIBLE BONDS 73,404
---------------------
(Cost $65,543)

TEMPORARY CASH INVESTMENTS -- 8.8%
Repurchase Agreement, BA Security Services,
(U.S. Treasury obligations), in a joint trading
account at 5.20%, dated 10/29/99,
due 11/1/99 (Delivery value $48,421) 48,400

16 1-800-345-2021 See Notes to Financial Statements

Heritage--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 1999
($ in Thousands) Value
--------------------------------------------------------------------------------
Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 5.19%, dated 10/29/99,
due 11/1/99 (Delivery value $41,018) $ 41,000
--------------------
TOTAL TEMPORARY CASH INVESTMENTS 89,400
--------------------
(Cost $89,400)
TOTAL INVESTMENT SECURITIES -- 100.0% $1,011,388
====================
(Cost $790,262)

FUTURES CONTRACTS
($ in Thousands)
Expiration Underlying Face Unrealized
Purchased Date Amount at Value Loss
--------------------------------------------------------------------------
197 S&P 400 December
Futures 1999 $39,548 $(744)
====================================

FUTURES CONTRACTS are typically based on a stock index, such as the S&P 400,
and they tend to track the performance of the index while remaining very liquid
(easy to buy and sell). By investing its cash assets in index futures, the fund
can stay fully invested in stocks while having easy access to the money.

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt
ORD = Foreign Ordinary Share

(1) Non-income producing.

(2) Zero-coupon bond. The yield to maturity at purchase is indicated.
Zero-coupon bonds are purchased at a substantial discount from their value
at maturity.

See Notes to Financial Statements www.americancentury.com 17

Growth--Performance
--------------------------------------------------------------------------------
TOTAL RETURNS AS OF OCTOBER 31, 1999

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 6/30/71)(1) (INCEPTION 6/4/97) (INCEPTION 6/16/97)
GROWTH RUSSELL S&P 500 GROWTH RUSSELL S&P 500 GROWTH RUSSELL S&P 500
1000 GROWTH 1000 GROWTH 1000 GROWTH
6 MONTHS(2) 9.23% 7.46% 2.74% 9.07% 7.46% 2.74% 9.32% 7.46% 2.74%
1 YEAR 36.31% 34.25% 25.67% 35.93% 34.25% 25.67% 36.62% 34.25% 25.67%
--------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
--------------------------------------------------------------------------------------------------------------------
3 YEARS 27.41% 29.73% 26.52% -- -- -- -- -- --
5 YEARS 22.30% 28.06% 26.02% -- -- -- -- -- --
10 YEARS 16.43% 19.03% 17.82% -- -- -- -- -- --
LIFE OF FUND 19.08% N/A(3) 13.75% 28.79% 26.47%(4) 22.01% 26.84% 26.47%(4) 22.01%(4)

(1) Although the fund's actual inception date was 10/31/58, this inception date
corresponds with the management company's implementation of its current
investment philosophy and practices.

(2) Returns for periods less than one year are not annualized.

(3) Benchmark began 1/1/79.

(4) Since 6/30/97, the date nearest the class's inception for which data are
available.

See pages 41-43 for information about share classes, the Russell 1000 Growth
Index, the S&P 500 Index, and returns.

[mountain chart - data below]

GROWTH OF $10,000 OVER 10 YEARS

Value on 10/31/1999
Russell 1000 Growth Index $57,110
S&P 500 $51,530
Growth $45,737

Growth Russell 1000 Growth Index S&P 500
10/31/1989 $10000 $10000 $10000
10/31/1990 $ 8828 $ 9434 $ 9252
10/31/1991 $14181 $13232 $12351
10/31/1992 $15028 $14664 $13582
10/31/1993 $16302 $15736 $15611
10/31/1994 $16736 $16586 $16215
10/31/1995 $20470 $21433 $20502
10/31/1996 $22144 $26160 $25443
10/31/1997 $28311 $34130 $33613
10/31/1998 $33557 $42540 $41004
10/31/1999 $45737 $57110 $51530

The graph at left shows the growth of a $10,000 investment in the fund over 10
years, while the graph below shows the fund's year-by-year performance. The
indices are provided for comparison in each graph. Growth's total returns
include operating expenses (such as transaction costs and management fees) that
reduce returns, while the total returns of the indices do not. The graphs are
based on Investor Class shares only; performance for other classes will vary due
to differences in fee structures (see the Total Returns table above). Past
performance does not guarantee future results. Investment return and principal
value will fluctuate, and redemption value may be more or less than original
cost.

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING OCTOBER 31)

Growth Russell 1000 Growth Index
10/31/1990 -11.72% -5.66%
10/31/1991 60.64% 40.26%
10/31/1992 5.96% 10.82%
10/31/1993 8.48% 7.31%
10/31/1994 2.66% 5.40%
10/31/1995 22.31% 29.23%
10/31/1996 8.18% 22.05%
10/31/1997 27.85% 30.47%
10/31/1998 18.53% 24.64%
10/31/1999 36.31% 34.25%

18 1-800-345-2021

Growth--Q&A
--------------------------------------------------------------------------------

[photo of Greg Woodhams and C. Kim Goodwin]
An interview with Greg Woodhams and C. Kim Goodwin, portfolio managers on
the Growth investment team.

HOW DID GROWTH PERFORM DURING ITS FISCAL YEAR?

Growth posted a 36.31% return for the year ended October 31, 1999,
outperforming its benchmark, the Russell 1000 Growth Index, which gained
34.25%.* Growth also outperformed the S&P 500 Index, considered to be
representative of the broad market, which gained 25.67%.

WHAT HELPED THE FUND ACHIEVE ITS STRONG PERFORMANCE?

The concentrated nature of the portfolio was an asset, in that many of the
fund's largest holdings were also its best contributors. In fact, as of October
31, Growth's top 10 holdings represented more than 36% of investments. We do
considerable research and analysis as we select stocks. As a result, we feel
confident taking substantial positions in those companies that we believe hold
the most promise.

Several large sectors performed especially well during the period,
including technology, telecommunications, and pharmaceuticals. Our heavier
stakes in the fastest-growing companies in these areas helped push Growth's
return above that of its benchmark.

It also helped that, aside from a brief period in the second calendar
quarter, investors continued to reward large- capitalization companies that came
through with healthy earnings -- precisely the types of companies we seek for
Growth's portfolio.

WHERE DID YOU FIND YOUR BEST OPPORTUNITIES?

So far, 1999 has been a banner year for many technology-related companies,
especially semiconductor firms, computer software and hardware makers, and
Internet companies. For these groups, growth is being fueled by demand for
wireless communications services, continued strong demand for computers and
software, increasing Internet traffic, and recovering global markets.

Semiconductor companies, which represented more than 8% of investments at
October 31, topped our list of contributors to performance. Demand in this group
has shifted from personal computers to communications, where end-user demand for
Internet and data capacity has led communications and data networking equipment
manufacturers, along with makers of wireless communications devices, to demand
faster and more powerful integrated circuits.

Texas Instruments (TI), one of Growth's largest holdings, is a global
manufacturer of semiconductors and the leading supplier of digital signal
processors and analog devices. Mounting demand in wireless communications and
mass storage applications and

* All fund returns referenced in this interview are for Investor Class shares.

[right margin]

"SO FAR, 1999 HAS BEEN A BANNER YEAR FOR MANY TECHNOLOGY-RELATED COMPANIES,
ESPECIALLY SEMICONDUCTOR FIRMS, COMPUTER SOFTWARE AND HARDWARE MAKERS, AND
INTERNET COMPANIES."

PORTFOLIO AT A GLANCE
10/31/99 10/31/98
NO. OF COMPANIES 60 53
MEDIAN P/E RATIO 43.7 34.9
MEDIAN MARKET $61.8 $32.2
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 92% 126%
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00% 1.00%

Investment terms are defined in the Glossary on pages 43-44.

www.americancentury.com 19

Growth--Q&A
--------------------------------------------------------------------------------
(Continued)

improving sales in global markets are driving TI's success. The company
continues to beat quarterly earnings expectations.

WHICH OTHER AREAS WITHIN TECHNOLOGY PERFORMED WELL?

Computer software and hardware companies are also reaping benefits from the
technology boom. Software giant Microsoft continued to rank among our
best-contributing stocks. Demand for its products has remained robust, despite
the recent litigation and adverse judgement, and the company will release its
upgraded Windows 2000 operating system early next year.

On the hardware side, strong performers included Cisco Systems, Growth's
top-contributing stock and third-largest holding, and EMC Corporation.

Cisco is the leading supplier of equipment used in linking local and
wide-area computer system networks. The rush of businesses embracing the
Internet has created a growing market niche for the firm.

EMC makes high-performance storage products and services for mainframe and
mid-range computer systems.

WHICH OTHER INDUSTRIES OR COMPANIES CONTRIBUTED TO PERFORMANCE?

Telecommunications companies have contributed significantly to Growth's
returns for several quarters and remain a good source of potential.
Consolidation within this industry is continuing at a swift pace, and the fund
has benefited from this trend. We maintained our focus on companies with strong
data or wireless capabilities, such as MCI WorldCom and Airtouch Communications.

AirTouch, meanwhile, was purchased by Vodafone, the leading international
mobile telecommunications provider, in a move to bolster Vodafone's
competitiveness and breadth of coverage in the United States.

During the year, we added to our investment in the German
telecommunications firm Mannesmann as the company's performance in the German
and Italian wireless markets continued to be strong. Mannesmann is now among our
10 largest positions.

WHICH STOCKS WERE DISAPPOINTING?

Growth's small stake in tobacco companies earlier in the year hurt
performance. Our only holding in this group, Philip Morris, performed poorly
amidst a backdrop of legal setbacks and unfavorable, precedent-setting rulings
that were troublesome for the tobacco industry in general. We eliminated this
stock from the portfolio in March.

Food and beverage companies struggled in a difficult relative environment
as international sales tapered off in line with slower activity in many
economies around the world. One holding in this group, Coca-Cola, suffered due
to sluggish international markets as well as a product recall in Europe.

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
GENERAL ELECTRIC CO.
(U.S.) 5.8% 2.6%
MICROSOFT CORP. 5.4% 4.4%
CISCO SYSTEMS INC. 4.8% 3.6%
AMERICA ONLINE INC. 3.6% 2.5%
WARNER-LAMBERT CO. 3.5% 1.8%
TEXAS INSTRUMENTS INC. 3.2% 1.8%
BRISTOL-MYERS
SQUIBB CO. 2.6% 1.1%
PFIZER, INC. 2.6% 2.0%
MANNESMANN AG ORD 2.5% 1.2%
CLEAR CHANNEL
COMMUNICATIONS, INC. 2.5% 2.5%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
DRUGS 12.9% 11.9%
COMPUTER SOFTWARE 11.4% 6.9%
ELECTRICAL EQUIPMENT 9.1% 6.5%
SEMICONDUCTOR 8.4% 6.6%
FINANCIAL SERVICES 5.8% 7.0%

20 1-800-345-2021

Growth--Q&A
--------------------------------------------------------------------------------
(Continued)

DID YOU MAKE ANY SIGNIFICANT CHANGES TO THE PORTFOLIO IN THE LAST SIX MONTHS?

Yes. Our most significant shifts were in technology, where we moved from
computer hardware companies, which represented nearly 8% of investments at
mid-year, to computer software, which went from about 7% of investments to more
than 11%.

We maintained a heavy stake in pharmaceuticals, which remains our largest
industry concentration. Our focus is concentrated on companies with appealing
product pipelines and low exposure to generic products, such as Pfizer,
Bristol-Myers, and Warner Lambert. In the case of Warner Lambert, we increased
our investment as a result of the strong performance of its anti-cholesterol
drug, Lipitor.

HAVE THERE BEEN ANY CHANGES TO THE MANAGEMENT TEAM?

Yes. We'd like to take this opportunity to introduce Prescott LeGard, an
investment analyst who joined Growth's investment team in March. He is a
Chartered Financial Analyst with more than six years of investment management
experience, and will focus on technology stocks. Our team's depth and breadth of
expertise is significant, given the research-intensive approach used in managing
Growth's portfolio. We believe we have the seasoned talent and resources in
place to continue providing very competitive performance over time.

[right margin]

"OUR TEAM'S DEPTH AND BREADTH OF EXPERTISE IS SIGNIFICANT, GIVEN THE
RESEARCH-INTENSIVE APPROACH USED IN MANAGING GROWTH'S PORTFOLIO."

[pie charts - data below}

TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF OCTOBER 31, 1999
Common Stocks 94%
Temporary Cash Investments 6%

AS OF APRIL 30, 1999
Common Stocks 92%
Temporary Cash Investments 8%

www.americancentury.com 21

Growth--Schedule of Investments
--------------------------------------------------------------------------------
This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country.

NOTE: For securities denominated in foreign currencies, the market value is
translated into U.S. dollars based on exchange rates as of the last day of the
reporting period.

OCTOBER 31, 1999
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------

COMMON STOCKS -- 94.4%

BANKS -- 3.3%
2,892,900 Citigroup Inc. $ 156,578
2,460,200 Wells Fargo & Co. 117,782
-------------------
274,360
-------------------
COMPUTER HARDWARE &
BUSINESS MACHINES -- 2.9%
2,588,500 EMC Corp. (Mass.)(1) 188,960
724,500 Hewlett-Packard Co. 53,658
-------------------
242,618
-------------------
COMPUTER SOFTWARE -- 11.4%
339,500 BMC Software, Inc.(1) 21,781
1,213,300 Computer Associates International, Inc 68,551
1,379,100 International Business Machines Corp. 135,669
4,898,000 Microsoft Corp.(1) 453,371
2,675,400 Oracle Corp.(1) 127,332
4,223,000 Parametric Technology Corp.(1) 80,633
1,025,800 Rational Software Corp.(1) 43,789
1,016,400 Unisys Corp.(1) 24,648
-------------------
955,774
-------------------
DEPARTMENT STORES -- 2.2%
3,330,600 Wal-Mart Stores, Inc. 188,803
-------------------
DRUGS -- 12.9%
467,700 Amgen Inc.(1) 37,284
2,871,000 Bristol-Myers Squibb Co. 220,529
5,488,200 Pfizer, Inc. 216,784
3,083,900 Pharmacia & Upjohn Inc. 166,338
3,020,200 Schering-Plough Corp. 149,500
3,723,500 Warner-Lambert Co. 297,182
-------------------
1,087,617
-------------------
ELECTRICAL EQUIPMENT -- 9.1%
5,441,500 Cisco Systems Inc.(1) 402,841
1,737,800 Lucent Technologies Inc. 111,654
979,400 Motorola, Inc. 95,430
1,181,000 Scientific-Atlanta, Inc. 67,612
1,232,000 Solectron Corp.(1) 92,708
-------------------
770,245
-------------------
ENERGY RESERVES & PRODUCTION -- 0.8%
827,160 BP Amoco Plc ADR 47,768
255,400 Exxon Corp. 18,916
-------------------
66,684
-------------------
Shares ($ in Thousands) Value
-------------------------------------------------------------------------------

FINANCIAL SERVICES -- 5.8%
3,574,700 General Electric Co. (U.S.) $ 484,595
---------------------
FOOD & BEVERAGE -- 3.4%
1,504,500 Coca-Cola Company (The) 88,766
3,745,700 Coca-Cola Enterprises, Inc. 95,749
3,034,700 PepsiCo, Inc. 105,266
---------------------
289,781
---------------------
GROCERY STORES -- 0.8%
1,906,000 Safeway Inc.(1) 67,306
---------------------
HOME PRODUCTS -- 2.2%
1,807,900 Procter & Gamble Co. (The) 189,604
---------------------
INDUSTRIAL PARTS -- 1.8%
826,248 Tyco International Ltd. 32,998
1,956,100 United Technologies Corp. 118,344
---------------------
151,342
---------------------
INFORMATION SERVICES -- 2.5%
3,035,600 First Data Corp. 138,689
1,549,000 Young & Rubicam Inc. 70,867
---------------------
209,556
---------------------
INTERNET -- 3.6%
2,318,300 America Online Inc.(1) 300,654
---------------------
MEDIA -- 5.1%
2,498,100 CBS Corp.(1) 121,938
2,578,600 Clear Channel Communications, Inc.(1) 207,255
2,836,900 Infinity Broadcasting Corp. Cl A(1) 98,050
---------------------
427,243
---------------------
MEDICAL PRODUCTS & SUPPLIES -- 3.3%
3,267,500 Guidant Corp. 161,333
3,328,400 Medtronic, Inc. 115,246
---------------------
276,579
---------------------
OIL SERVICES -- 0.7%
910,300 Schlumberger Ltd. 55,130
---------------------
PROPERTY & CASUALTY INSURANCE -- 1.8%
1,473,125 American International Group, Inc. 151,640
---------------------
RESTAURANTS -- 0.4%
870,000 McDonald's Corp. 35,888
---------------------
SECURITIES & ASSET MANAGEMENT -- 0.5%
1,256,500 Franklin Resources, Inc. 43,978
---------------------

22 1-800-345-2021 See Notes to Financial Statements

Growth--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 1999

Shares/Principal Amount ($ in Thousands) Value
--------------------------------------------------------------------------------

SEMICONDUCTOR -- 8.4%
1,324,100 Intel Corp. $ 102,494
897,000 JDS Uniphase Corp.(1) 149,659
766,700 Linear Technology Corp. 53,597
2,980,600 Texas Instruments Inc. 267,509
1,704,000 Xilinx, Inc.(1) 133,924
--------------------
707,183
--------------------
SPECIALTY STORES -- 2.9%
1,340,400 CVS Corp. 58,224
2,455,000 Home Depot, Inc. 185,352
--------------------
243,576
--------------------
TELEPHONE -- 4.0%
914,400 Bell Atlantic Corp. 59,379
1,626,100 GTE Corp. 121,958
253,600 MCI WorldCom, Inc.(1) 21,754
1,780,800 Sprint Corp. 132,336
--------------------
335,427
--------------------
WIRELESS TELECOMMUNICATIONS -- 4.6%
1,570,000 ALLTEL Corp. 130,702
1,321,060 Mannesmann AG ORD 208,790
1,058,500 Vodafone Group plc ADR 50,742
--------------------
390,234
--------------------
TOTAL COMMON STOCKS 7,945,817
---------------------
(Cost $5,576,009)

TEMPORARY CASH INVESTMENTS -- 5.6%

$ 50,000 U.S. Treasury Bills, 4.67%,
1/6/00(2) 49,567
201,300 FNMA Discount Notes, 5.16%,
11/1/99(2) 201,300
50,000 FNMA Discount Notes, 5.09%,
11/22/99(2) 49,850

Repurchase Agreement, Morgan Stanley Group,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.16%, dated 10/29/99,
due 11/1/99 (Delivery Value $173,875) 173,800
--------------------
TOTAL TEMPORARY CASH INVESTMENTS 474,517
--------------------
(Cost $474,523)
TOTAL INVESTMENT SECURITIES -- 100.0% $8,420,334
====================
(Cost $6,050,532)

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ in Thousands)
Contracts Settlement Unrealized
to Sell Date Value Loss
------------------------------------------------------------------------
97,646,149 EURO 11/30/99 $103,155 $(90)
=================================
(Value on Settlement Date $103,065)

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the
fund to exchange a foreign currency for U.S. dollars on a specific date in the
future--and at a prearranged exchange rate.

FUTURES CONTRACTS
($ in Thousands)
Expiration Underlying Face Unrealized
Purchased Date Amount at Value Gain
------------------------------------------------------------------------
595 S&P 500 December
Futures 1999 $204,829 $10,075
==================================

Futures contracts are typically based on a stock index, such as the S&P 500,
and they tend to track the performance of the index while remaining very liquid
(easy to buy and sell). By investing its cash assets in index futures, the fund
can stay fully invested in stocks while having easy access to the money.

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt
FNMA = Federal National Mortgage Association
ORD = Foreign Ordinary Share

(1) Non-income producing.

(2) Rate disclosed is the yield to maturity at purchase.

See Notes to Financial Statements www.americancentury.com 23

Statements of Assets and Liabilities
--------------------------------------------------------------------------------

This statement breaks down the fund's ASSETS (such as securities, cash, and
other receivables) and LIABILITIES (money owed for securities purchased,
management fees and other liabilities) as of the last day of the reporting
period. Subtracting the liabilities from the assets results in the fund's NET
ASSETS. For each class of shares, the net assets divided by shares outstanding
is the share price, or NET ASSET VALUE PER SHARE. This statement also breaks
down the fund's net assets into capital (shareholder investments) and
performance (investment income and gains/losses).

OCTOBER 31, 1999
SELECT HERITAGE GROWTH
ASSETS
(In Thousands Except Per-Share Amounts)
Investment securities -- unaffiliated, at value
(identified cost of $5,407,728,
$790,262 and $6,050,532, respectively) (Note 3) .............. $ 7,456,902 $ 1,011,388 $ 8,420,334
Investment securities -- affiliated, at value
(identified cost of $28,025) (Note 5) ........................ 27,799 -- --
Cash ........................................................... 321 2,324 --
Receivable for investments sold ................................ 73,816 20,461 217,214
Dividends and interest receivable .............................. 4,309 1,283 4,761
Receivable for variation margin on futures contracts ........... 14,382 2,745 22,431
-------------- -------------- --------------
7,577,529 1,038,201 8,664,740
-------------- -------------- --------------

LIABILITIES
Disbursements in excess of demand deposit cash ................. -- -- 440
Payable for investments purchased .............................. 227,477 36,268 303,559
Payable for forward foreign currency exchange contracts ........ -- -- 90
Payable for capital shares redeemed ............................ 7,402 -- 7,035
Accrued management fees (Note 2) ............................... 5,944 816 6,756
Distribution and service fees payable (Note 2) ................. 3 -- 5
Payable for directors' fees and expenses (Note 2) .............. 5 1 5
Accrued expenses and other liabilities ......................... 6 1 8
-------------- -------------- --------------
240,837 37,086 317,898
-------------- -------------- --------------
NET ASSETS ..................................................... $ 7,336,692 $ 1,001,115 $ 8,346,842
============== ============== ==============

NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) ........................ $ 4,620,745 $ 662,839 $ 4,899,024
Undistributed net investment income ............................ -- 3,419 --
Accumulated undistributed net realized gain on
investments and foreign currency transactions ................ 661,439 114,478 1,068,029
Net unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies (Note 3) ..... 2,054,508 220,379 2,379,789
-------------- -------------- --------------
$ 7,336,692 $ 1,001,115 $ 8,346,842
============== ============== ==============
INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
Net assets ..................................................... $7,216,030,744 $ 999,963,034 $8,332,629,608
Shares outstanding ............................................. 135,347,102 76,818,292 263,727,208
Net asset value per share ...................................... $ 53.32 $ 13.02 $ 31.60
ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
Net assets ..................................................... $ 8,368,886 $ 1,059,946 $ 12,759,009
Shares outstanding ............................................. 157,336 81,665 404,778
Net asset value per share ...................................... $ 53.19 $ 12.98 $ 31.52
INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
Net assets ..................................................... $ 112,292,521 $ 91,728 $ 1,453,231
Shares outstanding ............................................. 2,102,440 7,033 45,907
Net asset value per share ...................................... $ 53.41 $ 13.04 $ 31.66

24 1-800-345-2021 See Notes to Financial Statements

Statements of Operations
--------------------------------------------------------------------------------

This statement shows how the fund's net assets changed during the reporting
period as a result of the fund's operations. In other words, it shows how much
money the fund made or lost as a result of dividend and interest income, fees
and expenses, and investment gains or losses.

YEAR ENDED OCTOBER 31, 1999
SELECT HERITAGE GROWTH

INVESTMENT INCOME (LOSS) (In Thousands)
INCOME:
Dividends (net of foreign taxes withheld of $362,
$119, and $394, respectively) ............................ $ 61,545 $ 7,854 $ 41,233
Interest ................................................... 9,131 3,823 16,218
----------- ----------- -----------
70,676 11,677 57,451
----------- ----------- -----------
EXPENSES (NOTE 2):
Management fees ............................................ 68,824 9,827 75,413
Distribution fees - Advisor Class .......................... 13 3 23
Service fees - Advisor Class ............................... 13 3 23
Directors' fees and expenses ............................... 60 12 66
----------- ----------- -----------
68,910 9,845 75,525
----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ............................... 1,766 1,832 (18,074)
----------- ----------- -----------

REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3
NET REALIZED GAIN ON:
Investments (includes $47 from affiliates for Heritage) .... 754,322 124,089 1,109,967
Foreign currency transactions .............................. -- 1,955 8,414
----------- ----------- -----------
754,322 126,044 1,118,381
----------- ----------- -----------
CHANGE IN NET UNREALIZED APPRECIATION ON:
Investments ................................................ 987,482 138,236 1,113,415
Translation of assets and liabilities in
foreign currencies ....................................... 21 (51) (115)
----------- ----------- -----------
987,503 138,185 1,113,300
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS ............ 1,741,825 264,229 2,231,681
----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $ 1,743,591 $ 266,061 $ 2,213,607
=========== =========== ===========

See Notes to Financial Statements www.americancentury.com 25

Statements of Changes in Net Assets
--------------------------------------------------------------------------------

This statement shows how the fund's net assets changed over the past two
reporting periods. It details how much a fund grew or shrank as a result of
operations (as detailed on the previous page for the most recent period), income
and capital gain distributions, and shareholder investments and redemptions.

YEARS ENDED OCTOBER 31, 1999 AND OCTOBER 31, 1998

SELECT HERITAGE GROWTH

INCREASE (DECREASE) IN NET ASSETS 1999 1998 1999 1998 1999 1998
OPERATIONS (In Thousands)
Net investment income (loss) ........... $ 1,766 $ 13,526 $ 1,832 $ 3,622 $ (18,074) $ (1,257)
Net realized gain (loss) on
investments and
foreign currency transactions ........ 754,322 1,121,814 126,044 (10,562) 1,118,381 1,170,010
Change in net unrealized
appreciation on investments and
translation of assets and
liabilities in foreign currencies .... 987,503 (62,308) 138,185 (186,843) 1,113,300 (252,884)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net
assets resulting from operations ..... 1,743,591 1,073,032 266,061 (193,783) 2,213,607 915,869
----------- ----------- ----------- ----------- ----------- -----------

DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ....................... (19,060) (19,490) (1,950) (6,440) (7) --
Advisor Class ........................ (1) (4) -- (1) -- --
Institutional Class .................. (1) (65) -- (1) -- --
From net realized gains on
investment transactions:
Investor Class ....................... (1,107,773) (783,150) -- (241,135) (1,171,233) (763,692)
Advisor Class ........................ (328) (208) -- (22) (1,110) (362)
Institutional Class .................. (34) (1,889) -- (23) (36) (26)
----------- ----------- ----------- ----------- ----------- -----------
Decrease in net assets from
distributions ........................ (1,127,197) (804,806) (1,950) (247,622) (1,172,386) (764,080)
----------- ----------- ----------- ----------- ----------- -----------

CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase (decrease) in net
assets from capital share
transactions ......................... 1,127,193 542,668 (242,256) 99,150 1,202,428 836,256
----------- ----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
NET ASSETS ........................... 1,743,587 810,894 21,855 (342,255) 2,243,649 988,045

NET ASSETS
Beginning of period .................... 5,593,105 4,782,211 979,260 1,321,515 6,103,193 5,115,148
----------- ----------- ----------- ----------- ----------- -----------
End of period .......................... $ 7,336,692 $ 5,593,105 $ 1,001,115 $ 979,260 $ 8,346,842 $ 6,103,193
=========== =========== =========== =========== =========== ===========
Undistributed net investment
income (loss) ........................ -- $ 13,643 $ 3,419 $ 1,960 -- $ (2,892)
=========== =========== =========== =========== =========== ===========

26 1-800-345-2021 See Notes to Financial Statements

Notes to Financial Statements
--------------------------------------------------------------------------------

OCTOBER 31, 1999

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 as an open-end management
investment company. Select Fund (Select), Heritage Fund (Heritage), and Growth
Fund (Growth) (the funds) are three of the thirteen series of funds issued by
the corporation. The funds are diversified under the 1940 Act. The funds'
investment objective is to seek capital growth by investing primarily in equity
securities. The following significant accounting policies are in accordance with
generally accepted accounting principles; these policies may require the use of
estimates by fund management.

MULTIPLE CLASS -- The funds are authorized to issue three classes of shares:
the Investor Class, the Advisor Class and the Institutional Class. The three
classes of shares differ principally in their respective shareholder servicing
and distribution expenses and arrangements. All shares of each fund represent an
equal pro rata interest in the assets of the class to which such shares belong,
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except for class specific expenses and exclusive rights to
vote on matters affecting only individual classes.

SECURITY VALUATIONS -- Portfolio 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.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through a commercial
pricing service or at the mean of the most recent bid and asked prices. When
valuations are not readily available, securities are valued at fair value as
determined in accordance with procedures adopted by the Board of Directors.

SECURITY TRANSACTIONS -- Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.

INVESTMENT INCOME -- Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.

FUTURES CONTRACTS -- The funds may enter into stock index futures contracts
in order to manage the funds' exposure to changes in market conditions. One of
the risks of entering into futures contracts is the possibility that the change
in value of the contract may not correlate with the changes in value of the
underlying securities. Upon entering into a futures contract, the fund is
required to deposit either cash or securities in an amount equal to a certain
percentage of the contract value (initial margin). Subsequent payments
(variation margin) are made or received daily, in cash, by the fund. The
variation margin is equal to the daily change in the contract value and is
recorded as unrealized gains and losses. The fund recognizes a realized gain or
loss when the contract is closed or expires. Net realized and unrealized gains
or losses occurring during the holding period of futures contracts are a
component of realized gain (loss) on investments and unrealized appreciation
(depreciation) on investments, respectively.

FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially
expressed in foreign currencies are translated into U.S. dollars at prevailing
exchange rates at period end. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the rates
of exchange prevailing on the respective dates of such transactions. For assets
and liabilities, other than investments in securities, net realized and
unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates.

Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investment securities are a component of
realized gain (loss) on investments and unrealized appreciation (depreciation)
on investments, respectively.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into
forward foreign currency exchange contracts to facilitate transactions of
securities denominated in a foreign currency or to hedge the Fund's exposure to
foreign currency exchange rate fluctuations. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the funds and
the resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The funds bear the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.

REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with
institutions that the funds' investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. Each fund requires that the collateral, represented by securities,
received in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable each fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to each fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, each fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

www.americancentury.com 27

Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

INCOME TAX STATUS -- It is the funds' policy to distribute all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. The differences reflect the differing character of
certain income items and net realized gains and losses for financial statement
and tax purposes and may result in reclassification among certain capital
accounts.

ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is the corporation's
distributor. Certain officers of FDI are also officers of the corporation.

--------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The corporation has entered into a Management Agreement with ACIM, under
which ACIM provides each fund with investment advisory and management services
in exchange for a single, unified management fee per class. The Agreement
provides that all expenses of the funds, except brokerage commissions, taxes,
interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is
computed daily and paid monthly based on each fund's class average daily closing
net assets during the previous month. The annual management fee for the Investor
Class, Advisor Class and Institutional Class is 1.00%, 0.75% and 0.80%,
respectively, for each of the funds.

The Board of Directors has adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The plan provides that the funds will pay ACIM an annual
distribution fee equal to 0.25% and service fee equal to 0.25%. The fees are
computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the funds. The service
fee provides compensation for shareholder and administrative services rendered
by ACIM, its affiliates or independent third party providers. Fees incurred
under the plan during the year ended October 31, 1999 were $25,056, $5,512 and
$46,842 for Select, Heritage and Growth, respectively.

Certain officers and directors of the corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the corporation's investment manager, ACIM, and
the corporation's transfer agent, American Century Services Corporation.

--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Investment transactions, excluding short-term investments, for the year ended
October 31, 1999, were as follows:

SELECT HERITAGE GROWTH
(In Thousands)
PURCHASES .................. $8,673,498 $1,264,943 $6,564,303

(In Thousands)
PROCEEDS FROM SALES ........ $8,621,853 $1,578,679 $6,588,557

On October 31, 1999, the composition of unrealized appreciation and
depreciaton of investment securities based on the aggregate cost of investments
for federal income tax purposes was as follows:

SELECT HERITAGE GROWTH
(In Thousands)
Appreciation ............... $2,085,967 $238,132 $2,450,533
Depreciation ............... 63,794 18,004 (102,058)
------------ ------------ ------------
Net ........................ $2,022,173 $220,128 $2,348,475
============ ============ ============
Federal Tax Cost ........... $5,462,528 $791,260 $6,071,859
============ ============ ============

28 1-800-345-2021

Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

--------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS

Transactions in shares of the funds were as follows:

SELECT HERITAGE GROWTH
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS (In Thousands)
Shares Authorized ................... 360,000 354,000 710,000
============ ============ ============
Year ended October 31, 1999
Sold ................................ 23,866 $1,210,467 26,961 $ 312,108 51,420 $1,481,679
Issued in reinvestment of
distributions ..................... 23,864 1,081,597 179 1,912 44,062 1,134,197
Redeemed ............................ (25,239) (1,278,267) (48,363) (556,314) (49,284) (1,420,046)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) ............. 22,491 $1,013,797 (21,223) $(242,294) 46,198 $1,195,830
============ ============ ============ ============ ============ ============
Year ended October 31, 1998
Sold ................................ 19,809 $ 946,893 31,645 $ 368,862 52,968 $1,467,285
Issued in reinvestment
of distributions .................. 18,613 773,188 21,904 240,789 31,652 740,696
Redeemed ............................ (24,553) (1,165,999) (44,408) (511,235) (50,604) (1,375,210)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ........................ 13,869 $ 554,082 9,141 $ 98,416 34,016 $ 832,771
============ ============ ============ ============ ============ ============
ADVISOR CLASS (In Thousands)
Shares Authorized ................... 100,000 105,000 210,000
============ ============ ============
Year ended October 31, 1999
Sold ................................ 193 $9,734 225 $2,737 356 $10,388
Issued in reinvestment
of distributions .................. 7 314 -- -- 42 1,087
Redeemed ............................ (75) (3,833) (218) (2,701) (192) (5,674)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ........................ 125 $6,215 7 $ 36 206 $ 5,801
============ ============ ============ ============ ============ ============
Year ended October 31, 1998
Sold ................................ 17 $786 84 $950 122 $3,371
Issued in reinvestment
of distributions .................. 5 213 2 22 15 346
Redeemed ............................ (16) (745) (19) (217) (16) (447)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ........................ 6 $254 67 $755 121 $3,270
============ ============ ============ ============ ============ ============

INSTITUTIONAL CLASS (In Thousands)
Shares Authorized ................... 40,000 41,000 80,000
============ ============ ============
Year ended October 31, 1999
Sold ................................ 2,398 $122,740 5 $56 117 $3,195
Issued in reinvestment
of distributions .................. 1 35 -- -- 1 35
Redeemed ............................ (300) (15,594) (5) (54) (89) (2,433)
------------ ------------ ------------ ------------ ------------ ------------
Net increase ........................ 2,099 $107,181 0 $ 2 29 $ 797
============ ============ ============ ============ ============ ============
Year ended October 31, 1998
Sold ................................ 245 $ 12,081 -- -- 202 $5,257
Issued in reinvestment
of distributions .................. 47 1,953 2 $ 24 1 26
Redeemed ............................ (527) (25,702) (4) (45) (192) (5,068)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) ............. (235) $(11,668) (2) $(21) 11 $ 215
============ ============ ============ ============ ============ ============

www.americancentury.com 29

Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

--------------------------------------------------------------------------------
5. AFFILIATED COMPANY TRANSACTIONS

A summary of transactions for each issuer which is or was an affiliate at or
during the year ended October 31, 1999, follows:

OCTOBER 31, 1999
SHARE BALANCE PURCHASE SALES REALIZED
FUND/ISSUER 10/31/98 COST COST GAIN (LOSS) INCOME SHARE BALANCE MARKET VALUE
SELECT ($ in Thousands)
SAP AG ADR -- $28,025 -- -- -- 760,300 $27,799
========== ========== ========== ========== ==========
HERITAGE
($ in Thousands)
Biomatrix, Inc. 555,400 -- $27,096 $577 -- -- --
Reinsurance Group of
America, Inc. Cl A 257,500 -- 12,379 (797) $47 -- --
---------- ---------- ---------- ---------- ----------
-- $39,475 $(220) $47 --
========== ========== ========== ========== ==========

--------------------------------------------------------------------------------
6. BANK LOANS

Effective December 18, 1998, the funds, along with certain other funds
managed by ACIM, entered into an unsecured $570,000,000 bank line of credit
agreement with Chase Manhattan Bank. Borrowings under the agreement bear
interest at the Federal Funds rate plus 0.40%. The funds may borrow money for
temporary or emergency purposes to fund shareholder redemptions. The funds did
not borrow from the line during the period December 18, 1998 through October 31,
1999.

30 1-800-345-2021

Select--Financial Highlights
--------------------------------------------------------------------------------

This table itemizes investment results and distributions on a per-share basis to
illustrate share price changes for each of the last five fiscal years (or less,
if the share class is not five years old). It also includes several key
statistics for each reporting period, including TOTAL RETURN, INCOME RATIO (net
income as a percentage of average net assets), EXPENSE RATIO (operating expenses
as a percentage of average net assets), and PORTFOLIO TURNOVER (a gauge of the
fund's trading activity).

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31

Investor Class
1999 1998 1997 1996 1995

PER-SHARE DATA
Net Asset Value, Beginning of Period .....$ 49.54 $ 48.18 $ 41.52 $ 39.52 $ 37.67
--------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income(1) ............... 0.01 0.12 0.15 0.20 0.33
Net Realized and Unrealized Gain
on Investment Transactions ............. 13.73 9.37 10.51 6.73 4.68
--------- --------- --------- --------- ---------
Total From Investment Operations ....... 13.74 9.49 10.66 6.93 5.01
--------- --------- --------- --------- ---------
Distributions
From Net Investment Income ............. (0.17) (0.20) (0.32) (0.27) (0.28)
From Net Realized Gains on
Investment Transactions ............. (9.79) (7.93) (3.68) (4.66) (2.75)
In Excess of Net Realized Gains ........ -- -- -- -- (0.13)
--------- --------- --------- --------- ---------
Total Distributions .................... (9.96) (8.13) (4.00) (4.93) (3.16)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ...........$ 53.32 $ 49.54 $ 48.18 $ 41.52 $ 39.52
========= ========= ========= ========= =========

TOTAL RETURN(2) ........................ 31.22% 22.96% 27.89% 19.76% 15.02%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ..................... 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income to
Average Net Assets ..................... 0.03% 0.25% 0.33% 0.50% 0.90%
Portfolio Turnover Rate .................. 130% 165% 94% 105% 106%
Net Assets, End of Period (in millions) ..$ 7,216 $ 5,591 $ 4,769 $ 4,039 $ 4,008

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

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

See Notes to Financial Statements www.americancentury.com 31

Select--Financial Highlights
--------------------------------------------------------------------------------

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

Advisor Class

1999 1998 1997(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period ......$ 49.44 $ 48.16 $ 49.43
--------- --------- ---------
Income From Investment Operations
Net Investment Loss(2) .................. (0.13) -- (0.02)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ..... 13.71 9.37 (1.25)
--------- --------- ---------
Total From Investment Operations ........ 13.58 9.37 (1.27)
--------- --------- ---------
Distributions
From Net Investment Income .............. (0.04) (0.16) --
From Net Realized Gains on
Investment Transactions ............... (9.79) (7.93) --
--------- --------- ---------
Total Distributions ..................... (9.83) (8.09) --
--------- --------- ---------
Net Asset Value, End of Period ............$ 53.19 $ 49.44 $ 48.16
========= ========= =========

TOTAL RETURN(3) ......................... 30.87% 22.67% (2.57)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 1.25% 1.25% 1.25%(4)
Ratio of Net Investment Loss to
Average Net Assets ...................... 0.22)% -- (0.17)%(4)
Portfolio Turnover Rate ................... 130% 165% 94%
Net Assets, End of Period (in thousands) ..$ 8,369 $ 1,617 $ 1,289

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

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

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

(4) Annualized.

32 1-800-345-2021 See Notes to Financial Statements

Select--Financial Highlights
--------------------------------------------------------------------------------

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

Institutional Class

1999 1998 1997(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 49.63 $ 48.24 $ 40.56
----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ................ 0.02 0.22 0.13
Net Realized and Unrealized Gain on
Investment Transactions ............... 13.83 9.37 7.55
----------- ----------- -----------
Total From Investment Operations ........ 13.85 9.59 7.68
----------- ----------- -----------
Distributions
From Net Investment Income .............. (0.28) (0.27) --
From Net Realized Gains on
Investment Transactions ............... (9.79) (7.93) --
----------- ----------- -----------
Total Distributions ..................... (10.07) (8.20) --
----------- ----------- -----------
Net Asset Value, End of Period ............ $ 53.41 $ 49.63 $ 48.24
=========== =========== ===========
TOTAL RETURN(3) ......................... 31.47% 23.22% 18.93%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 0.80% 0.80% 0.80%(4)
Ratio of Net Investment Income to
Average Net Assets ...................... 0.23% 0.45% 0.45%(4)
Portfolio Turnover Rate ................... 130% 165% 94%
Net Assets, End of Period (in thousands) .. $ 112,293 $ 173 $ 11,486

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

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

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

(4) Annualized.

See Notes to Financial Statements www.americancentury.com 33

Heritage--Financial Highlights
--------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31
Investor Class

1999 1998 1997 1996 1995

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 9.98 $ 14.86 $ 12.24 $ 11.75 $ 10.32
--------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income(1) ................ 0.02 0.03 0.01 -- 0.05
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .............. 3.04 (2.14) 3.41 1.15 1.96
--------- --------- --------- --------- ---------
Total From Investment Operations ........ 3.06 (2.11) 3.42 1.15 2.01
--------- --------- --------- --------- ---------
Distributions
From Net Investment Income .............. (0.02) (0.07) (0.09) (0.05) (0.03)
From Net Realized Gains on
Investment Transactions ............... -- (2.70) (0.71) (0.61) (0.52)
In Excess of Net Realized Gains ......... -- -- -- -- (0.03)
--------- --------- --------- --------- ---------
Total Distributions ..................... (0.02) (2.77) (0.80) (0.66) (0.58)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ............ $ 13.02 $ 9.98 $ 14.86 $ 12.24 $ 11.75
========= ========= ========= ========= =========

TOTAL RETURN(2) ......................... 30.71% (15.87)% 29.56% 10.44% 21.04%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 1.00% 1.00% 1.00% 0.99% 0.99%
Ratio of Net Investment Income to
Average Net Assets ...................... 0.19% 0.29% 0.05% -- 0.50%
Portfolio Turnover Rate ................... 134% 148% 69% 122% 121%
Net Assets, End of Period (in millions) ... $ 1,000 $ 978 $ 1,321 $ 1,083 $ 1,008

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

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

34 1-800-345-2021 See Notes to Financial Statements

Heritage--Financial Highlights
--------------------------------------------------------------------------------

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

Advisor Class

1999 1998 1997(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 9.96 $ 14.85 $ 14.23
--------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss)(2) ......... (0.01) 0.02 (0.01)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ..... 3.03 (2.14) 0.63
--------- --------- ---------
Total From Investment Operations ........ 3.02 (2.12) 0.62
--------- --------- ---------
Distributions
From Net Investment Income .............. --(3) (0.07) --
From Net Realized Gains on
Investment Transactions ............... -- (2.70) --
--------- --------- ---------
Total Distributions ..................... -- (2.77) --
--------- --------- ---------
Net Asset Value, End of Period ............ $ 12.98 $ 9.96 $ 14.85
========= ========= =========
TOTAL RETURN(4) ......................... 30.37% (16.03)% 4.36%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 1.25% 1.25% 1.25%(5)
Ratio of Net Investment Income (Loss) to
Average Net Assets ...................... (0.06)% 0.04% (0.23)%(5)
Portfolio Turnover Rate ................... 134% 148% 69%
Net Assets, End of Period (in thousands) .. $ 1,060 $ 748 $ 120

(1) July 11, 1997 (commencement of sale) through October 31, 1997.

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

(3) Per-share amount was less than $0.005.

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

(5) Annualized.

See Notes to Financial Statements www.americancentury.com 35

Heritage--Financial Highlights
--------------------------------------------------------------------------------

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

Institutional Class

1999 1998 1997(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 10.00 $ 14.87 $ 13.60
------- ------- -------
Income From Investment Operations
Net Investment Income(2) ................ 0.04 0.06 0.01
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ..... 3.04 (2.14) 1.26
------- ------- -------
Total From Investment Operations ........ 3.08 (2.08) 1.27
------- ------- -------
Distributions
From Net Investment Income .............. (0.04) (0.09) --
From Net Realized Gains on
Investment Transactions ............... -- (2.70) --
------- ------- -------
Total Distributions ..................... (0.04) (2.79) --
------- ------- -------
Net Asset Value, End of Period ............ $ 13.04 $ 10.00 $ 14.87
======= ======= =======
TOTAL RETURN(3) ......................... 30.92% (15.67)% 9.34%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 0.80% 0.80% 0.80%(4)
Ratio of Net Investment Income to
Average Net Assets ...................... 0.39% 0.49% 0.21%(4)
Portfolio Turnover Rate ................... 134% 148% 69%
Net Assets, End of Period (in thousands) .. $ 92 $ 70 $ 129

(1) June 16, 1997 (commencement of sale) through October 31, 1997.

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

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

(4) Annualized.

36 1-800-345-2021 See Notes to Financial Statements

Growth--Financial Highlights
--------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31

Investor Class

1999 1998 1997 1996 1995

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 28.03 $ 27.86 $ 22.21 $ 23.88 $ 22.99
--------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss)(1) ......... (0.07) (0.01) 0.01 (0.01) 0.08
Net Realized and Unrealized Gain on
Investment Transactions ............... 9.03 4.35 6.07 1.47 4.08
--------- --------- --------- --------- ---------
Total From Investment Operations ........ 8.96 4.34 6.08 1.46 4.16
--------- --------- --------- --------- ---------
Distributions
From Net Investment Income .............. -- -- (0.18) (0.07) (0.05)
From Net Realized Gains on
Investment Transactions ............... (5.39) (4.17) (0.25) (2.98) (3.18)
In Excess of Net Realized Gains ......... -- -- -- (0.08) (0.04)
--------- --------- --------- --------- ---------
Total Distributions ..................... (5.39) (4.17) (0.43) (3.13) (3.27)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ............ $ 31.60 $ 28.03 $ 27.86 $ 22.21 $ 23.88
========= ========= ========= ========= =========
TOTAL RETURN(2) ......................... 36.31% 18.53% 27.85% 8.18% 22.31%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income (Loss) to
Average Net Assets ...................... (0.24)% (0.02)% 0.02% (0.10)% 0.40%
Portfolio Turnover Rate ................... 92% 126% 75% 122% 141%
Net Assets, End of Period (in millions) ... $ 8,333 $ 6,097 $ 5,113 $ 4,765 $ 5,130

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

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

See Notes to Financial Statements www.americancentury.com 37

Growth--Financial Highlights
--------------------------------------------------------------------------------

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

Advisor Class

1999 1998 1997(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 27.97 $ 27.84 $ 24.36
---------- ---------- ----------
Income From Investment Operations
Net Investment Loss(2) .................. (0.15) (0.08) (0.06)
Net Realized and Unrealized Gain on
Investment Transactions ............... 9.02 4.35 3.54
---------- ---------- ----------
Total From Investment Operations ........ 8.87 4.27 3.48
---------- ---------- ----------
Distributions
From Net Realized Gains on
Investment Transactions ............... (5.32) (4.14) --
---------- ---------- ----------
Net Asset Value, End of Period ............ $ 31.52 $ 27.97 $ 27.84
========== ========== ==========
TOTAL RETURN(3) ......................... 35.93% 18.23% 14.29%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 1.25% 1.25% 1.25%(4)
Ratio of Net Investment Loss to
Average Net Assets ...................... (0.49)% (0.27)% (0.47)%(4)
Portfolio Turnover Rate ................... 92% 126% 75%
Net Assets, End of Period (in thousands) .. $ 12,759 $ 5,520 $ 2,200

(1) June 4, 1997 (commencement of sale) through October 31, 1997.

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

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

(4) Annualized.

38 1-800-345-2021 See Notes to Financial Statements

Growth--Financial Highlights
--------------------------------------------------------------------------------

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

Institutional Class

1999 1998 1997(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period ...... $ 28.08 $ 27.88 $ 25.75
--------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss)(2) ......... (0.03) 0.05 0.01
Net Realized and Unrealized Gain on
Investment Transactions ............... 9.07 4.34 2.12
--------- --------- ---------
Total From Investment Operations ........ 9.04 4.39 2.13
--------- --------- ---------
Distributions
From Net Realized Gains on
Investment Transactions ............... (5.46) (4.19) --
--------- --------- ---------
Net Asset Value, End of Period ............ $ 31.66 $ 28.08 $ 27.88
========= ========= =========
TOTAL RETURN(3) ......................... 36.62% 18.77% 8.27%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 0.80% 0.80% 0.80%(4)
Ratio of Net Investment Income to
Average Net Assets ...................... (0.04)% 0.18% 0.07%(4)
Portfolio Turnover Rate ................... 92% 126% 75%
Net Assets, End of Period (in thousands) .. $ 1,453 $ 465 $ 171

(1) June 16, 1997 (commencement of sale) through October 31, 1997.

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

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

(4) Annualized.

See Notes to Financial Statements www.americancentury.com 39

Independent Auditors' Report
--------------------------------------------------------------------------------

The Board of Directors and Shareholders,
American Century Mutual Funds, Inc:

We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Select Fund, Heritage Fund and Growth
Fund, (collectively the "Funds"), three of the funds comprising
American Century Mutual Funds, Inc., as of October 31, 1999, and the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and the financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at October
31, 1999 by correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial positions of
Select Fund, Heritage Fund and Growth Fund as of October 31, 1999, the results
of their operations for the year then ended, the changes in their net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
December 7, 1999

40 1-800-345-2021

Share Class and Retirement Account Information
--------------------------------------------------------------------------------

SHARE CLASSES

Three classes of shares are authorized for sale by each fund: Investor
Class, Advisor Class and Institutional Class.

INVESTOR CLASS shareholders do not pay any commissions or other fees for
purchase of fund shares directly from American Century. Investors who buy
Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee.

ADVISOR CLASS shares are sold through banks, broker-dealers, insurance
companies, and financial advisors. Advisor Class shares are subject to a 0.50%
Rule 12b-1 service and distribution fee. Half of that fee is available to pay
for recordkeeping and administrative services, and half is available to pay for
distribution services provided by the financial intermediary through which the
Advisor Class shares are purchased. The total expense ratio of the Advisor Class
shares is 0.25% higher than the total expense ratio of the Investor Class
shares.

INSTITUTIONAL CLASS shares are available to endowments, foundations, defined
benefit pension plans, or financial intermediaries serving these investors. This
class recognizes the relatively lower cost of serving institutional customers
and others who invest at least $5 million in an American Century fund or at
least $10 million in multiple funds. In recognition of the larger investments
and account balances and comparatively lower transaction costs, the total
expense ratio of the Institutional Class shares is 0.20% less than the total
expense ratio of the Investor Class shares.

All classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)
account] are subject to federal income tax withholding at the rate of 10% of the
total amount withdrawn, unless you elect not to have withholding apply. If you
don't want us to withhold on this amount, you may send us a written notice not
to have the federal income tax withheld. Your written notice is valid from the
date of receipt at American Century. Even if you plan to roll over the amount
you withdraw to another tax-deferred account, the withholding rate still applies
to the withdrawn amount unless we have received a written notice not to withhold
federal income prior to the withdrawal.

When you plan to withdraw, you may make your election by completing our
Exchange/Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid from the date of receipt at American
Century. You may revoke your election at any time by sending a written notice to
us.

Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.

www.americancentury.com 41

Background Information
--------------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

American Century offers 13 growth funds including domestic equity, specialty,
international, and global. The philosophy behind these growth funds focuses on
three important principles. First, the funds seek to own successful companies,
which we define as those with growing earnings and revenues. Second, we attempt
to keep the funds fully invested, regardless of short-term market activity.
Experience has shown that market gains can occur in unpredictable spurts and
that missing those opportunities can significantly limit the potential for gain.
Third, the funds are managed by teams, rather than by one "star." We
believe this allows us to make better, more consistent management decisions. In
addition to these principles, each fund has its own investment policies:

AMERICAN CENTURY SELECT seeks large, established companies that show
accelerating growth rates. Also, at least 80% of the fund's assets must be
invested in stocks or securities that pay regular dividends or otherwise produce
income. These dividends, and the established nature of the companies in which
Select invests, help lessen the fund's short-term price fluctuations.

AMERICAN CENTURY HERITAGE seeks smaller and midsized firms showing accelerating
growth rates, and at least 60% of its assets must be in stocks or securities
paying regular dividends or otherwise producing income. While Heritage's
dividend requirement should make the fund less volatile than funds without
dividends, it should also display somewhat more price variability -- and greater
long-term growth potential -- than Select. Historically, small-cap stocks have
been more volatile than the stocks of larger, more established companies.

AMERICAN CENTURY GROWTH invests in larger, more established firms that exhibit
accelerating growth. Because the value of established firms tends to change
relatively slowly, Growth can ordinarily be expected to show more moderate price
fluctuations than growth funds that invest in smaller or midsized firms.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively
traded Blue Chip stocks, primarily industrials but including service-oriented
firms. Prepared and published by Dow Jones & Co., it is the oldest and most
widely quoted of all the market indicators.

The S&P 500 is a capitalization-weighted index of the stocks of 500 publicly
traded U.S. companies that are considered to be leading firms in dominant
industries. Created by Standard & Poor's Corporation, it is considered to be
a broad measure of U.S. stock market performance.

The S&P MIDCAP 400 is a capitalization-weighted index of the stocks of the
400 largest leading U.S. companies not included in the S&P 500. Created by
Standard & Poor's Corporation, it is considered to represent the performance
of mid-cap stocks generally.

The RUSSELL 1000 INDEX, created by Frank Russell Company, measures the
performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000
largest publicly traded U.S. companies, based on total market capitalization).

The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth rates.

[left margin]

PORTFOLIO MANAGERS
Select
JIM E. STOWERS III
KENNETH CRAWFORD

Heritage
HAROLD BRADLEY
LINDA PETERSON, CFA

Growth
C. KIM GOODWIN
GREG WOODHAMS, CFA

42 1-800-345-2021

Glossary
--------------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year total returns, please refer to the
"Financial Highlights" on pages 31-39.

INVESTMENT TERMS

* EXPENSE RATIO-- the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)

* MEDIAN MARKET CAPITALIZATION-- Market capitalization (market cap) is the total
value of a company's stock and is calculated by multiplying the number of
outstanding common shares by the current share price. The company whose market
cap is in the middle of the portfolio is the median market cap. Half the
companies in the portfolio have values greater than the median, and half have
values that are less. If there is an even number of companies, then the median
is the average of the two companies in the middle.

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

* PORTFOLIO TURNOVER-- the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.

* PRICE/BOOK RATIO-- a stock value measurement calculated by dividing a
company's stock price by its book value per share, with the result expressed as
a multiple instead of as a percentage. (Book value per share is calculated by
subtracting a company's liabilities from its assets, then dividing that value by
the number of outstanding shares.)

* PRICE/EARNINGS (P/E) RATIO-- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)

TYPES OF STOCKS

* BLUE CHIP STOCKS-- stocks of the most established companies in American
industry. They are generally large, fairly stable companies that have
demonstrated consistent earnings and usually have long-term growth potential.
Examples include General Electric and Coca-Cola.

* CYCLICAL STOCKS-- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers and textile
operators.

* GROWTH STOCKS-- stocks of companies that have experienced above-average
earnings growth and are expected to continue such growth. These stocks often
sell at high P/E ratios. Examples can include the stocks of high-tech,
healthcare and consumer staple companies.

* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS-- these are stocks
generally considered to be companies with a market capitalization (the total
value of a company's outstanding stock) of more than $8.2 billion. Though
dynamic given its sensitivity to market fluctuation, this is the market
capitalization breakpoint on October 31, 1999, as determined by Lipper Inc. The
Dow Jones Industrial Average and the S&P 500 Index generally consist of
stocks in this range.

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS-- these are stocks
generally considered to be companies with a market capitalization (the total
value of a company's outstanding stock) of between $1.9 billion and $8.2
billion. Though dynamic given its sensitivity to market fluctuation, this is the
market capitalization range on October 31, 1999, as determined by Lipper, Inc.
The S&P 400 Index and Russell 2500 Index generally consist of stocks in this
range.

www.americancentury.com 43

Glossary
--------------------------------------------------------------------------------
(Continued)

* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS-- these are stocks
generally considered to be companies with a market capitalization (the total
value of a company's outstanding stock) of less than $1.9 billion. Though
dynamic given its sensitivity to market fluctuation, this is the market
capitalization breakpoint on October 31, 1999, as determined by Lipper Inc. The
S&P 600 Index and the Russell 2000 Index generally consist of stocks in this
range.

* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

FUND CLASSIFICATIONS

INVESTMENT OBJECTIVE

The investment objective may be based on the fund's objective as stated in
its prospectus or fund profile, or the fund's categorization by independent
rating organizations based on its management style.

* CAPITAL PRESERVATION -- offers taxable and tax-free money market funds for
relative stability of principal and liquidity.

* INCOME -- offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.

* GROWTH & INCOME -- offers funds that emphasize both growth and income
provided by either dividend-paying equities or a combination of equity and
fixed-income securities.

* GROWTH -- offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.

RISK

The classification of funds by risk category is based on quantitative
historical measures as well as qualitative prospective measures. It is not
intended to be a precise indicator of future risk or return levels. The degree
of risk within each category can vary significantly, and some fund returns have
historically been higher than more aggressive funds or lower than more
conservative funds. Please be aware that the fund's category may change over
time. Therefore, it is important that you read a fund's prospectus or fund
profile carefully before investing to ensure its objectives, policies and risk
potential are consistent with your needs.

* CONSERVATIVE -- these funds generally provide lower return potential with
either low or minimal price fluctuation risk.

* MODERATE -- these funds generally provide moderate return potential with
moderate price fluctuation risk.

* AGGRESSIVE -- these funds generally provide high return potential with
corresponding high price fluctuation risk.

44 1-800-345-2021

[inside back cover]

===============================================================================
INVESTMENT OBJECTIVE - CAPITAL PRESERVATION
===============================================================================

RISK LEVEL - CONSERVATIVE

TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS

Premium Capital Reserve FL Municipal Money Market
Prime Money Market CA Municipal Money Market
Premium Government Reserve CA Tax-Free Money Market
Government Agency Tax-Free Money Market
Money Market
Capital Preservation

===============================================================================
INVESTMENT OBJECTIVE - INCOME
===============================================================================

RISK LEVEL - AGGRESSIVE

TAXABLE BONDS TAX-FREE BONDS

Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond

RISK LEVEL - MODERATE

TAXABLE BONDS TAX-FREE BONDS

Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond

RISK LEVEL - CONSERVATIVE

TAXABLE BONDS TAX-FREE BONDS

Intermediate-Term Bond CA Intermediate-Term Tax-Free
Intermediate-Term Treasury AZ Intermediate-Term Municipal
GNMA FL Intermediate-Term Municipal
Inflation-Adjusted Treasury Intermediate-Term Tax-Free
Limited-Term Bond CA Limited-Term Tax-Free
Target 2000* Limited-Term Tax-Free
Short-Term Government
Short-Term Treasury

===============================================================================
INVESTMENT OBJECTIVE - GROWTH AND INCOME
===============================================================================

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY

Small Cap Quantitative
Small Cap Value

RISK LEVEL - MODERATE

ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY

Strategic Allocation: Equity Growth Utilities
Aggressive Equity Index Real Estate
Balanced Tax-Managed Value
Strategic Allocation: Income & Growth
Moderate Value
Strategic Allocation: Large Cap Value
Conservative Equity Income

===============================================================================
INVESTMENT OBJECTIVE - GROWTH
===============================================================================

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY SPECIALTY INTERNATIONAL

New Opportunities Global Gold Emerging Markets
Giftrust(reg.tm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra(reg.tm)
Select

RISK LEVEL - MODERATE

SPECIALTY
Global Natural Resources

The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.

The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that a fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs. For a definition of fund categories, see the Glossary.

*While listed within the Income investment objective, the Target funds do not
pay current dividend income. Income dividends are distributed once a year in
December. The Target funds are listed in all three risk categories due to the
dramatic price volatility investors may experience during certain market
conditions. If held to their target dates, however, they can offer a
conservative, dependable way to invest for a specific time horizon.

Please call 1-800-345-2021 for a prospectus or profile on any American Century
fund. These documents contain important information including charges and
expenses, and you should read them carefully before you invest or send money.

--------------------------------------------------------------------------------
[back cover]

[graphic of runners]

Who we are

American Century offers investors more than 70 mutual funds that span the
investment spectrum. We currently manage $100 billion for roughly 2 million
individuals, institutions and corporations, with a range of services designed to
make investing easy and convenient.

For four decades, American Century has been a leader in performance, service and
innovation. From pioneering the use of computer technology in investing to
allowing investors to conduct transactions and receive financial advice over the
Internet, we have remained committed to building long-term relationships and to
helping investors achieve their dreams.

In a very real sense, investors put their future in our hands. With so much at
stake, our work continues to be guided by one central belief, shared by every
person at American Century: WE SUCCEED ONLY IF OUR INVESTORS SUCCEED.

[left margin]

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

P.O. BOX 419200
KANSAS CITY, MISSOURI 64141-6200
WWW.AMERICANCENTURY.COM

INVESTOR RELATIONS
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE
1-800-345-8765

FAX: 816-340-7962

TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 OR 816-444-3485

BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE
COMPANIES
1-800-345-6488

AMERICAN CENTURY MUTUAL FUNDS, INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.

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

American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9912 Funds Distributor, Inc. is the distributor for American Century funds
SH-ANN-18645 (c)1999 American Century Services Corporation

[front cover]

October 31, 1999

AMERICAN CENTURY(reg.sm)
Annual Report

[photo of runners]

Giftrust(reg.sm)

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

[inside front cover]

Y2K Testing Efforts Pay Dividends in Preparedness

When the calendar rolls to 2000, this can create problems for computers
programmed this way because they will read the date as "00," and may interpret
it as 1900. Most companies have been working to reprogram their computer systems
with four-digit years. Reprogramming is very labor-intensive and requires
testing to ensure that there are no errors and that all lines of code were
successfully changed.

Year 2000 Readiness Disclosure

Tackling the Rollover Challenge

Changing jobs or retiring? The American Century Personalized Rollover
Service(SM) provides individualized service that makes rolling over your
employer-sponsored retirement plan easy and stress free.

Our Rollover Expert Team will:

* Give personal guidance on which options best meet your retirement needs by
explaining the types of investments available through both our mutual funds and
American Century Brokerage.

* Assist you with the paperwork, helping to ensure it's completed right the
first time.

* Monitor retirement plan money as it rolls over from your employer-
sponsored plan to the American Century Rollover IRA account.

Call the Rollover Expert Team weekdays 7 a.m. to 7 p.m. (CT) at
1-888-345-2431, ext. 4232, or visit our Web site at www.americancentury.com.

[left margin]

GIFTRUST
(TWGTX)
-------------------

TURN TO THE INSIDE BACK COVER OF THIS REPORT TO SEE A LIST OF AMERICAN CENTURY
FUNDS CLASSIFIED BY OBJECTIVE AND RISK.

Our Message to You

[photo of James E. Stowers III and James E. Stowers, Jr.]
James E. Stowers III, seated, with James E. Stowers, Jr.

Growth-oriented investors -- especially those in Giftrust -- were rewarded
during the 12 months ended October 31, 1999. It was no cakewalk, however -- the
period will be remembered as one of heightened stock market volatility,
particularly during the last six months when the Federal Reserve twice raised
interest rates. Nonetheless, several sectors of the economy, especially those
connected to the Internet, displayed consistently strong earnings growth
throughout the period.

On the corporate front, we are proud to announce the upcoming launch of
Fund Advisor*, an online source of impartial, customized investment guidance.
Fund Advisor, which will be located at www.americancentury.com, was created to
help investors select mutual funds that are right for their particular
investment needs and goals. It provides specific, impartial guidance on no-load
mutual funds based on funds available through your current financial advisor --
including those offered by other fund families. Fund Advisor uses a
sophisticated fund selection process to help investors create and monitor their
investment portfolios. Watch your mail for more information about this unique
new service.

Fund Advisor is the most recent result of a year of hard work on the
American Century Web site. Early this year, our revamp of the site resulted in
the creation of OnePIN and "personalized homepage" features. OnePIN's single
log-on feature allows investors to manage all their investments from a single
page with one personal identification number. All account information can be
displayed simultaneously, giving investors a consolidated look at their entire
investment portfolio. OnePIN investors can also choose to receive most
shareholder information -- like this report -- electronically, rather than by
regular mail.

In 1999, visits to our Web site are up 40% over 1998 levels. With more and
more investors going online, we're very optimistic about the potential of the
Internet as a way to provide the best in service. It's easy to set up your
OnePIN the next time you visit our Web site. Call our representatives if you
have questions.

Finally, in the spirit of our ongoing Year 2000 readiness disclosure, we've
provided a complete update on our preparations for Y2K on the inside front cover
of this report.

As always, we appreciate your continued confidence in American Century.

Sincerely,

/s/James E. Stowers, Jr.
James E. Stowers, Jr.
Chairman of the Board and Founder

/s/James E. Stowers III
James E. Stowers III
Vice Chairman of the Board and Chief Executive Officer

[right margin]

Table of Contents

Report Highlights ...................................................... 2
Market Perspective ..................................................... 3

GIFTRUST

Performance Information ................................................ 4
Management Q&A ......................................................... 5
Portfolio at a Glance .................................................. 5
Top Ten Holdings ....................................................... 6
Top Five Industries .................................................... 6
Schedule of Investments ................................................ 8

FINANCIAL STATEMENTS

Statement of Assets and Liabilities .................................... 10
Statement of Operations ................................................ 11
Statements of Changes in Net Assets .................................... 12
Notes to Financial Statements .......................................... 13
Financial Highlights ................................................... 15
Independent Auditors' Report ........................................... 16

OTHER INFORMATION

Background Information
Investment Philosophy and Policies .................................. 17
Portfolio Managers .................................................. 17
Comparative Indices ................................................. 17
Glossary ............................................................... 18

*Patent pending. American Century may receive management, service, or other fees
from funds recommended through Fund Advisor.

www.americancentury.com 1

Report Highlights

MARKET PERSPECTIVE

* What a difference a year makes. In October 1998, the markets were still
reeling from the Asian financial crises and were slowly recovering from a
significant drop. Even though the past year was marked by heightened stock
market volatility, the period was rewarding for growth investors. The Dow
Jones Industrials went beyond the 10,000 mark for the first time and went
above 11,000 a month later.

* Technology stocks were the big winners, particularly companies involved
either directly or indirectly with what has become an economy within an
economy, the Internet. The NASDAQ Composite, home to many high-tech firms,
gained 67.46% for the 12 months ended October 31, 1999. However, value
stocks continued to lag growth stocks.

* Investors who stayed fully invested in the market were rewarded when the
robust recovery came quickly. The period showed that market volatility is a
two-way street, and doesn't always lead to negative returns.

GIFTRUST

* Giftrust had an extraordinary year, posting a return nearly twice that of
its benchmark. The fund's results for the second half of the period were
spectacular. From April to October, Giftrust gained over 35%, while its
benchmark gained less than 3%.

* Giftrust's investments in companies providing components for fiber optic
networks used by telecommunications and cable companies were among its top
performers. The fund also carried a large complement of companies that
manufacture semiconductors -- computer chips that store, process, and send
information. The huge volume of data riding the Internet is bringing with
it the need for a new generation of high-capacity, complex semiconductors.

* Additions to Giftrust's portfolio included media firms (cable TV), and
radio and TV broadcast companies serving the Hispanic population. The fund
was slowed by investments in the healthcare area, primarily drug makers and
medical services providers, as investors reacted to uncertainties
surrounding Medicare coverage of prescription drugs.

[left margin]

GIFTRUST
(TWGTX)
TOTAL RETURNS: AS OF 10/31/99
6 Months 35.83%*
1 Year 59.05%
INCEPTION DATE: 11/25/83
NET ASSETS: $1.3 billion

* Not annualized.

Investment terms are defined in the Glossary on pages 18-19.

2 1-800-345-2021

Market Perspective from James E. Stowers III

[photo of James E. Stowers III]
James E. Stowers III, Chief Executive Officer of American Century

THE YEAR IN BRIEF

This has been a year of sharp contrasts. Consider the climate in which
stocks began our fiscal year, and the atmosphere in which they ended it. In
October 1998, we were coming off a substantial downturn, which saw the S&P 500
drop 18% in just over 80 days. The Asian financial crises were with us, and the
financial markets had been shaken by the collapse of a major U.S. hedge fund.

Credit the Federal Reserve with quickly stepping in the fall of 1998 and
lowering interest rates. Stocks began to recover --to the point where the Dow
Jones Industrials went beyond the 10,000 level for the first time ever and
closed above 11,000 a month later.

For the first half of our fiscal year, a handful of large growth stocks led
the market. In April, long-neglected value stocks and those of smaller companies
suddenly rallied amid signs of economic recovery in Asia. Unfortunately, their
performance run ended only a few weeks later. When the Federal Reserve reversed
course and raised rates in July and August, the market retreated. But inflation
remained dormant -- despite the lowest unemployment rate in 30 years --
corporate earnings strengthened, and stock prices rallied again in late October.

A GREAT YEAR FOR GROWTH

The period was rewarding for growth investors, particularly for those
focused on technology, like many of our portfolios. The Internet economy --as
measured by equipment and software spending --grew by almost 70% over the last
12 months. "Technology" once stood for microchips and computers. Today it refers
to a broad spectrum of companies involved in endeavors as diverse as
electronics, telecommunications, cable TV and media, software, and medical
products.

However, value investors had a relatively difficult time. The S&P 500/
BARRA Growth Index was up 31.29% for the 12 months, versus a 19.01% gain for the
S&P 500/ BARRA Value Index.

A FINAL THOUGHT

The last 12 months saw heightened stock market volatility as
earnings-conscious investors quickly rewarded companies that exceeded
expectations, and swiftly punished those that fell short. Volatility can be
unnerving, but it doesn't always lead to negative returns, as our results this
year demonstrate.

Ultimately, fiscal 1999 illustrates why we try to remain fully invested.
Market upturns tend to be sudden and powerful. We want investors in position to
take full advantage of "good" volatility.

[right margin]

"ULTIMATELY, FISCAL 1999 ILLUSTRATES WHY WE TRY TO REMAIN FULLY INVESTED.
MARKET UPTURNS TEND TO BE SUDDEN AND POWERFUL. WE WANT INVESTORS IN POSITION TO
TAKE FULL ADVANTAGE OF 'GOOD' VOLATILITY."

MARKET RETURNS
FOR THE YEAR ENDED OCTOBER 31, 1999
S&P 500 25.67%
S&P MIDCAP 400 21.07%
RUSSELL 2000 14.87%

Source: Lipper Inc.

These indices represent the performance of large-, medium-, and
small-capitalization stocks.

[mountain chart data shown below]
MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE YEAR ENDED OCTOBER 31, 1999

S&P 500 S&P MidCap 400 Russell 2000
10/31/1998 $1.00 $1.00 $1.00
11/30/1998 $1.06 $1.05 $1.05
12/31/1998 $1.12 $1.18 $1.12
1/31/1999 $1.17 $1.13 $1.13
2/28/1999 $1.13 $1.07 $1.04
3/31/1999 $1.18 $1.10 $1.06
4/30/1999 $1.22 $1.19 $1.15
5/31/1999 $1.19 $1.19 $1.17
6/30/1999 $1.26 $1.26 $1.22
7/31/1999 $1.22 $1.23 $1.19
8/31/1999 $1.22 $1.19 $1.14
9/30/1999 $1.18 $1.15 $1.14
10/31/1999 $1.26 $1.21 $1.15

VALUE ON 10/31/99
S&P 500 $1.26
S&P MidCap 400 $1.21
Russell 2000 $1.15

www.americancentury.com 3

Giftrust--Performance

TOTAL RETURNS AS OF OCTOBER 31, 1999

GIFTRUST RUSSELL 2000 GROWTH

6 MONTHS(1) 35.83% 2.82%
1 YEAR 59.05% 29.28%

AVERAGE ANNUAL RETURNS

3 YEARS 3.54% 9.64%
5 YEARS 10.05% 12.49%
10 YEARS 16.83% 10.79%
LIFE OF FUND(2) 17.71% 8.94%(3)

(1) Returns for periods less than one year are not annualized.
(2) Inception was 11/25/83.
(3) Since 11/30/83, the date nearest the fund's inception for which data
are available.

See pages 17-19 for information about the Russell 2000 Growth Index and returns.

[chart data shown below]
GROWTH OF $10,000 OVER 10 YEARS

Giftrust Russell 2000 Growth Index
10/31/1989 $10,000 $10,000
10/31/1990 $8,022 $7,366
10/31/1991 $14,363 $12,267
10/31/1992 $15,847 $12,222
10/31/1993 $24,698 $15,604
10/31/1994 $29,329 $15,462
10/31/1995 $38,866 $18,646
10/31/1996 $42,644 $21,132
10/31/1997 $43,476 $25,605
10/31/1998 $29,759 $21,544
10/31/1999 $47,324 $27,852

VALUE ON 10/31/99
Giftrust $47,324
Russell 2000 Growth Index $27,852

The graph at left shows the growth of a $10,000 investment in the fund over 10
years, while the chart below shows the fund's year-by-year performance. The
Russell 2000 Growth Index is provided for comparison in each graph. Giftrust's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the Russell
2000 Growth Index do not. Past performance does not guarantee future results.
Investment return and principal value will fluctuate, and redemption value may
be more or less than original cost.

[chart data shown below]
ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDED OCTOBER 31)

Giftrust Russell 2000 Growth Index
10/31/1990 -19.78 -26.34
10/31/1991 79.05 66.53
10/31/1992 10.33 -0.36
10/31/1993 55.85 27.67
10/31/1994 18.75 -0.91
10/31/1995 32.52 20.59
10/31/1996 9.72 13.33
10/31/1997 1.95 21.17
10/31/1998 -31.55 -15.86
10/31/1999 59.05 29.28

4 1-800-345-2021

Giftrust--Q&A

[photo of Chris Boyd and John Seitzer]
An interview with Chris Boyd and John Seitzer, portfolio managers on the
Giftrust investment team.

HOW DID GIFTRUST PERFORM FOR THE 12 MONTHS ENDED OCTOBER 31, 1999?

Giftrust had an extraordinary year. The fund gained 59.05%, nearly 30
percentage points above the 29.28% increase posted by its benchmark, the Russell
2000 Growth Index.

Giftrust's results for the second half of the period were especially
compelling. Rising interest rates over the summer pressured stocks, particularly
at the smaller end of the market, yet Giftrust gained 35.83% from April to
October. Its benchmark managed just 2.82%.

We're pleased with this short-term experience, but we know that Giftrust's
results over the last few years have lagged those of its peers. We're working
earnestly to continue providing good returns.

WHAT HELPED YOU ACHIEVE YOUR RESULTS?

To start with, the period favored our style of investing. Growth stocks led
the market, and within that universe, technology firms performed the best. Our
disciplined search for companies with accelerating earnings led us to a number
of firms in technology-oriented businesses.

Giftrust focuses on successful firms in the mid- and small-cap universe. As
part of our strategy, we concentrate your investment in companies in which we
have the most confidence. That approach played out well during the year, as a
number of our largest holdings turned in strong performances.

WHICH COMPANIES FARED THE BEST THIS YEAR?

Gemstar International Group, our largest holding, again led the way.
Gemstar has invented some much-needed technology for television viewers -- an
on-screen, interactive program guide. Most cable systems provide as many as 100
channels, and more are on the way. Gemstar's technology enables consumers to
navigate, sort, select, and record TV programming. In addition to making life
easier for cable customers, the program guide has quickly gained the attention
of advertisers, and a new source of revenue is opening up for Gemstar. Giftrust
has a 6% position in the company. Our investment rewarded us with a 216% gain
over the year.

JDS Uniphase Corporation was another bright spot. This company is the
leading supplier of fiber optic technology for telecommunications and cable TV
networks. It makes transmitters, amplifiers, switches, and other high-speed
components that enable fiber optic communication systems to carry more
information, faster, over greater distances.

The demand for these components is exploding. The tidal wave of e-commerce,
e-trading, and e-tailing over the Internet has telecom carriers continually
expanding the capacity of their networks. Meanwhile, cable companies, drawn by
the speed and accuracy of light signals, are shifting to fiber optics to
distribute their programs

[right margin]

"GIFTRUST'S RESULTS FOR THE SECOND HALF OF THE PERIOD WERE ESPECIALLY
COMPELLING. RISING INTEREST RATES OVER THE SUMMER PRESSURED STOCKS, PARTICULARLY
AT THE SMALLER END OF THE MARKET, YET GIFTRUST GAINED 35.83% FROM APRIL TO
OCTOBER. ITS BENCHMARK MANAGED JUST 2.82%."

PORTFOLIO AT A GLANCE

10/31/99 10/31/98

NO. OF COMPANIES 76 105
MEDIAN P/E RATIO 43.8 26.4
MEDIAN MARKET $3.16 $1.16
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 117% 147%
EXPENSE RATIO 1.00% 1.00%

Investment terms are defined in the Glossary on pages 18-19.

www.americancentury.com 5

Giftrust--Q&A
(Continued)

over what can be great distances from central broadcast stations to local
distribution hubs.

JDS literally can't produce its fiber optic products fast enough. The
company has embarked on a capital expansion program to increase its
manufacturing capacity by three times. This is the type of investment we look
for: a leader in its industry, with pricing power and growing market share. The
stock gained 570% over the year.

WHAT MAJOR PORTFOLIO CHANGES DID YOU MAKE THIS YEAR?

We built a double-digit weighting in companies that make semiconductors --
"smart" computer chips that store, process, and send information. The tidal wave
of data traveling the Internet is triggering the need for ever-faster
transmission capabilities. PMC Sierra, one of the semiconductor companies in our
portfolio, estimates that within 10 years, data will account for 98% of all
network traffic, with voice a mere two percent. In fact, voice service may
eventually become free as part of data services arrangements for businesses and
PC users.

That's keeping businesses we own --like Vitesse Semiconductor -- very busy.
Vitesse is one of only a handful of companies that make complex semiconductors
using a substance called gallium arsenide, instead of the more-traditional
silicon. These are high-end semiconductors that increase the capacity of
communications networks, so they're in great demand. Gallium arsenide is a
difficult substance to work with, but it enables Vitesse to put more circuitry
on a chip. Qlogic, another of our investments, makes chips and other components
for computer data storage systems.

COMPUTER SOFTWARE IS ANOTHER SECTOR YOU APPEARED TO FOCUS ON.

We've seen good results so far from two new companies in the portfolio, BEA
Systems and Comverse Technology. BEA makes "middleware" -- software that
connects disparate computer systems and databases. These systems often belong to
companies that do a great deal of electronic commerce on the Internet, and thus
have a need for multiple computer systems to "talk" to each other. Firms whose
computer systems process thousands of transactions at once, such as financial
services companies or airlines, often rely on BEA's products.

We purchased stock in Comverse Technology during the first half of the
year. This firm's software enables telecommunications firms to provide services
such as voice messaging and prepaid calling services. It also makes applications
for large call centers, emergency service providers, financial institutions and
others that must archive large volumes of recorded information. Comverse's
client list includes AT&T, Bell Atlantic, Sprint PCS, Cable & Wireless in
Britain, and Germany's Deutsche Telekom.

WHERE ELSE DID YOU ADD TO THE PORTFOLIO?

We raised Giftrust's investments in media firms. Two major additions were
Cox Communications Inc., the nation's fourth-largest cable company, and Insight
Communications Company, which runs a cable system that covers

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
GEMSTAR INTERNATIONAL
GROUP LTD. 6.1% 4.9%
JDS UNIPHASE CORP. 3.7% 2.3%*
VITESSE
SEMICONDUCTOR CORP. 2.9% 2.3%
FISERV, INC. 2.9% 2.0%
BEA SYSTEMS, INC. 2.8% --
CALPINE CORP. 2.3% 0.8%
COMVERSE TECHNOLOGY,
INC. 2.3% 1.9%
EXPRESS SCRIPTS, INC.
CL A 2.2% 2.7%
FLEXTRONICS
INTERNATIONAL LTD. ADR 2.1% 0.9%
FAMILY DOLLAR STORES,
INC. 2.1% 2.4%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
SEMICONDUCTOR 16.5% 13.2%
INFORMATION SERVICES 13.4% 15.0%
COMPUTER SOFTWARE 10.9% 4.8%
ELECTRICAL EQUIPMENT 8.5% 13.6%
MEDIA 7.6% 3.9%

* Uniphase Corp. acquired JDS Fitel Inc. on 7/6/99. Surviving name is JDS
Uniphase Corp. Percentage represents ownership of Uniphase Corp.

6 1-800-345-2021

Giftrust--Q&A
(Continued)

Ohio, Kentucky, Indiana and Illinois. Two other new media investments are
Hispanic Broadcasting Company, a Hispanic radio firm with operations in Miami
and Los Angeles, and Univision Communications, a provider of Spanish TV
programming. The Hispanic population is one of the fastest-growing groups in the
United States, a fact that hasn't been lost on advertisers.

WHAT WERE OTHER ADDITIONS?

We also raised our stake in Sapient, a consulting firm that helps companies
understand how to use the Internet to market their products and services and how
to improve the efficiency and effectiveness of their operations. This is a
"one-stop shop" that handles everything from setting up the right systems, to
designing companies' Web sites, to providing Internet-based brand strategies.
One of its best-known clients is E*Trade, the company that pioneered online
securities trading in 1992.

Jabil Circuit was another firm in which we increased our investment. This
contract manufacturer of circuit boards serves the communications, personal
computer, peripherals, and automotive markets. Contract manufacturing is now
commonplace -- and necessary -- in the electronics industry. As the technology
in circuitboards has become more complex, so has the level of engineering
involved in making them. Jabil's customers, which include Cisco Systems and
Gateway Computers, choose to focus on product design and marketing as their core
competencies and outsource the manufacturing to a firm like Jabil.

WHICH STOCKS OR SECTORS DIDN'T WORK OUT AS YOU EXPECTED?

Giftrust's progress was slowed by investments in the healthcare area, which
included drug makers and medical services providers. Investors are a bit wary of
the healthcare sector as a result of election-year rhetoric and congressional
hearings concerning Medicare coverage of prescription drugs. One of our
disappointments was Express Scripts, the largest independent pharmacy-benefits
manager. Near the end of the period, the firm's shares fell 33% after an
independent financial research firm released a negative report on Express
Scripts' accounting methods. After discussions with management, we are
comfortable -- for the time being -- with Express Scripts' condition and
outlook.

LOOKING AHEAD, WHAT'S YOUR STRATEGY FOR GIFTRUST AS WE MOVE TOWARD THE YEAR
2000?

Our strategy will remain the same. We want to own successful companies
whose earnings are growing at an accelerating pace. When our database flags
companies that appear to fit our strict requirements, we want answers to two
questions: What's driving the firm's growth, and does that growth appear to be
sustainable? We depend on our database to lead us to individual firms across the
economy, not specific sectors, that appear to be doing well. This improves our
chances of owning the best possible set of companies.

[right margin]

"WE WANT TO OWN SUCCESSFUL COMPANIES WHOSE EARNINGS ARE GROWING AT AN
ACCELERATING PACE."

TYPES OF INVESTMENTS IN THE PORTFOLIO

[data from pie charts shown below]

AS OF OCTOBER 31, 1999
Temporary Cash Investments -- 2%
Common Stocks -- 98%

AS OF APRIL 30, 1999
Temporary Cash Investments -- 1%
Common Stocks -- 99%

www.americancentury.com 7

Giftrust--Schedule of Investments

OCTOBER 31, 1999

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
COMMON STOCKS -- 97.8%

AIRLINES -- 0.8%
357,500 Atlas Air, Inc.(1) $ 9,652
-----------
BANKS -- 2.0%
302,500 Huntington Bancshares Inc. 8,952
155,000 Marshall & Ilsley Corp. 10,433
135,000 UnionBanCal Corp. 5,864
-----------
25,249
-----------
CHEMICALS -- 0.4%
200,000 ATMI, Inc.(1) 5,400
-----------
CLOTHING STORES -- 0.4%
125,000 Limited, Inc. (The) 5,141
-----------
COMPUTER HARDWARE & BUSINESS MACHINES -- 3.2%
93,400 Emulex Corp.(1) 14,562
366,900 Flextronics International Ltd. ADR(1) 26,039
-----------
40,601
-----------
COMPUTER SOFTWARE -- 10.9%
760,600 BEA Systems, Inc.(1) 34,631
258,000 Mercury Interactive Corp.(1) 20,914
165,900 MicroStrategy Inc.(1) 16,149
467,200 Rational Software Corp.(1) 19,944
543,600 SmartForce(1) 11,178
512,400 TIBCO Software Inc.(1) 19,968
132,000 Veritas Software Corp.(1) 14,235
-----------
137,019
-----------
CONSUMER DURABLES -- 0.5%
380,000 Yankee Candle Co., Inc. (The)(1) 5,795
-----------
DEPARTMENT STORES -- 2.1%
1,259,800 Family Dollar Stores, Inc. 25,983
-----------
DRUGS -- 3.9%
214,600 Biovail Corp. International(1) 11,843
79,200 Gilead Sciences, Inc.(1) 5,007
163,300 IDEXX Laboratories, Inc.(1) 2,460
160,000 MedImmune, Inc.(1) 17,905
170,000 Millennium Pharmaceuticals, Inc.(1) 11,937
-----------
49,152
-----------
ELECTRICAL EQUIPMENT -- 8.5%
433,500 ANTEC Corp.(1) 20,984
255,000 Comverse Technology, Inc.(1) 28,927
40,700 Foundry Networks, Inc.(1) 7,708
492,900 Jabil Circuit, Inc.(1) 25,754
263,800 L-3 Communications Holdings, Inc.(1) 11,129
326,800 Teradyne, Inc.(1) 12,582
-----------
107,084
-----------

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
ELECTRICAL UTILITIES -- 2.3%
511,000 Calpine Corp.(1) $ 29,446
-----------
FINANCIAL SERVICES -- 4.9%
897,200 Concord EFS, Inc.(1) 24,252
569,500 Express Scripts, Inc. Cl A(1) 27,906
222,400 NCO Group, Inc.(1) 9,452
-----------
61,610
-----------
FOOD & BEVERAGE -- 1.9%
1,243,800 U.S. Foodservice, Inc.(1) 23,865
-----------
HEAVY ELECTRICAL EQUIPMENT -- 1.4%
432,400 CommScope, Inc.(1) 17,242
-----------
INFORMATION SERVICES -- 13.4%
341,400 CSG Systems International, Inc.(1) 11,746
1,141,050 Fiserv, Inc.(1) 36,478
883,300 Gemstar International Group Ltd.(1) 76,627
295,100 MedQuist Inc.(1) 9,434
100,000 Proxicom, Inc.(1) 7,669
200,200 Sapient Corp.(1) 25,638
-----------
167,592
-----------
INTERNET -- 6.5%
110,000 CNET, Inc.(1) 5,187
121,600 eToys Inc.(1) 7,262
154,600 Exodus Communications, Inc.(1) 13,281
99,400 Inktomi Corp.(1) 10,092
117,500 RealNetworks, Inc.(1) 12,892
472,100 USWeb Corp.(1) 18,309
208,600 Verity, Inc.(1) 14,374
-----------
81,397
-----------
LEISURE -- 2.2%
330,000 Action Performance Cos. Inc.(1) 6,713
236,300 International Speedway Corp. Cl A 12,155
212,600 Speedway Motorsports, Inc.(1) 9,275
-----------
28,143
-----------
MEDIA -- 7.6%
350,000 Cox Communications, Inc. Cl A(1) 15,903
272,100 Hispanic Broadcasting Corp.(1) 21,972
545,200 Insight Communications Co., Inc.(1) 12,897
211,800 Spanish Broadcasting System, Inc.
Cl A(1) 5,659
396,300 TV Guide, Inc. Cl A(1) 20,806
210,000 Univision Communications Inc. Cl A(1) 17,863
-----------
95,100
-----------
MEDICAL PRODUCTS & SUPPLIES -- 1.6%
319,900 KeraVision, Inc.(1) 3,389
452,000 Sybron International Corp.(1) 10,763
240,800 Wesley Jessen VisionCare, Inc.(1) 6,456
-----------
20,608
-----------

8 1-800-345-2021 See Notes to Financial Statements

Giftrust--Schedule of Investments
(Continued)

OCTOBER 31, 1999

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
MEDICAL PROVIDERS & SERVICES -- 0.4%
125,400 QLT PhotoTherapeutics Inc.(1) $ 5,310
-----------
OIL SERVICES -- 1.8%
107,600 BJ Services Co.(1) 3,692
606,300 R&B Falcon Corp.(1) 7,541
333,400 Weatherford International, Inc.(1) 11,294
-----------
22,527
-----------
SEMICONDUCTOR -- 16.5%
302,300 Chartered Semiconductor
Manufacturing ADR(1) 10,023
260,000 Conexant Systems, Inc.(1) 24,278
280,284 JDS Uniphase Corp.(1) 46,764
376,600 Lattice Semiconductor Corp.(1) 13,334
243,900 PMC-Sierra, Inc.(1) 22,980
152,800 Power Integrations, Inc.(1) 15,528
368,700 PRI Automation, Inc.(1) 14,817
220,000 Qlogic Corp.(1) 22,914
802,200 Vitesse Semiconductor Corp.(1) 36,776
-----------
207,414
-----------

Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
SPECIALTY STORES -- 4.1%
760,000 Bed Bath & Beyond Inc.(1) $ 25,294
201,900 Lands' End, Inc.(1) 15,534
836,800 Sunglass Hut International, Inc.(1) 10,120
-----------
50,948
-----------
TELEPHONE -- 0.5%
345,200 Allied Riser Communications Corp.(1) 6,224
-----------
TOTAL COMMON STOCKS 1,228,502
-----------
(Cost $774,709)

TEMPORARY CASH INVESTMENTS -- 2.2%

Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.20%, dated 10/29/99,
due 11/1/99 (Delivery value $27,012) 27,000
-----------
(Cost $27,000)

TOTAL INVESTMENT SECURITIES -- 100.0% $1,255,502
===========
(Cost $801,709)

NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
(1) Non-income producing.

See Notes to Financial Statements www.americancentury.com 9

Statement of Assets and Liabilities

This statement breaks down the fund's ASSETS (such as securities, cash, and
other receivables) and LIABILITIES (money owed for securities purchased,
management fees and other liabilities) as of the last day of the reporting
period. Subtracting the liabilities from the assets results in the fund's NET
ASSETS. Net assets divided by shares outstanding is the share price, or NET
ASSET VALUE PER SHARE. This statement also breaks down the fund's net assets
into capital (shareholder investments) and performance (investment income and
gains/losses).

OCTOBER 31, 1999

ASSETS (In Thousands Except Per-Share Amounts)
Investment securities, at value
(identified cost of $801,709) (Note 3) ...................... $ 1,255,502
Cash .......................................................... 7,958
Receivable for investments sold ............................... 22,738
Dividends and interest receivable ............................. 45
-----------
1,286,243
-----------
LIABILITIES
Payable for investments purchased ............................. 34,984
Accrued management fees (Note 2) .............................. 989
Payable for director's fees and expenses ...................... 1
-----------
35,974
-----------
Net Assets .................................................... $ 1,250,269
===========
CAPITAL SHARES, $0.01 PAR VALUE
Authorized .................................................... 200,000
===========
Outstanding ................................................... 46,648
===========
Net Asset Value Per Share ..................................... $ 26.80
===========

NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) ....................... $ 920,595
Accumulated net realized loss on investment transactions ...... (124,119)
Net unrealized appreciation on investments (Note 3) ........... 453,793
-----------
$ 1,250,269
===========

10 1-800-345-2021 See Notes to Financial Statements

Statement of Operations

YEAR ENDED OCTOBER 31, 1999

INVESTMENT LOSS (In Thousands)
Income:
Interest ....................................................... $ 1,822
Dividends ...................................................... 1,429
---------
3,251
---------
Expenses (Note 2):
Management fees ................................................ 9,560
Directors' fees and expenses ................................... 8
---------
9,568
---------

Net investment loss ............................................ (6,317)
---------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3)
Net realized gain on investments ............................... 24,582
Change in net unrealized appreciation on investments ........... 440,765
---------
Net realized and unrealized gain on investments ................ 465,347
---------
Net Increase in Net Assets Resulting from Operations ........... $ 459,030
=========

See Notes to Financial Statements www.americancentury.com 11

Statements of Changes in Net Assets

YEARS ENDED OCTOBER 31, 1999 AND OCTOBER 31, 1998
Increase (Decrease) in Net Assets 1999 1998

OPERATIONS (In Thousands)

Net investment loss ............................ $ (6,317) $ (5,129)
Net realized gain (loss) on investments ........ 24,582 (147,006)
Change in net unrealized appreciation
(depreciation) on investments ............... 440,765 (188,500)
----------- -----------
Net increase (decrease) in net assets
resulting from operations ................... 459,030 (340,635)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains on investment
transactions ................................ -- (29,001)
In excess of net realized gains on
investment transactions ..................... -- (1,705)
----------- -----------
Decrease in net assets from distributions ...... -- (30,706)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ...................... 49,917 91,178
Proceeds from reinvestment of distributions .... -- 30,700
Payments for shares redeemed ................... (16,082) (16,773)
----------- -----------
Net increase in net assets from capital
share transactions .......................... 33,835 105,105
----------- -----------
Net increase (decrease) in net assets .......... 492,865 (266,236)

NET ASSETS
Beginning of period ............................ 757,404 1,023,640
----------- -----------
End of period .................................. $ 1,250,269 $ 757,404
=========== ===========
TRANSACTIONS IN SHARES OF THE FUND
Sold ........................................... 2,452 4,100
Issued in reinvestment of distributions ........ -- 1,395
Redeemed ....................................... (765) (740)
----------- -----------
Net increase ................................... 1,687 4,755
=========== ===========

12 1-800-345-2021 See Notes to Financial Statements

Notes to Financial Statements

OCTOBER 31, 1999

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 as an open-end management
investment company. Giftrust (the fund) is one of the thirteen series of funds
issued by the corporation. The fund is diversified under the 1940 Act. The
fund's investment objective is to seek capital growth by investing primarily in
common stocks. The following significant accounting policies are in accordance
with generally accepted accounting principles; these policies may require the
use of estimates by fund management.

FUTURES CONTRACTS -- The fund may enter into stock index futures contracts
in order to manage the fund's exposure to changes in market conditions. One of
the risks of entering into futures contracts is the possibility that the change
in value of the contract may not correlate with the changes in value of the
underlying securities. Upon entering into a futures contract, the fund is
required to deposit either cash or securities in an amount equal to a certain
percentage of the contract value (initial margin). Subsequent payments
(variation margin) are made or received daily, in cash, by the fund. The
variation margin is equal to the daily change in the contract value and is
recorded as unrealized gains and losses. The fund recognizes a realized gain or
loss when the contract is closed or expires. Net realized and unrealized gains
or losses occurring during the holding period of futures contracts are a
component of realized gain (loss) on investments and unrealized appreciation
(depreciation) on investments, respectively. There were no open futures
contracts at October 31, 1999.

REPURCHASE AGREEMENTS-- The fund may enter into repurchase agreements with
institutions that the fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

INCOME TAX STATUS -- It is the fund's policy to distribute all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes and may result in reclassification among certain
capital accounts.

At October 31, 1999, accumulated net realized capital loss carryovers of
$122,496,086 (expiring in 2006) may be used to offset future taxable gains.

ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is the corporation's
distributor. Certain officers of FDI are also officers of the corporation.

www.americancentury.com 13

Notes to Financial Statements
(Continued)

OCTOBER 31, 1999

--------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The corporation has entered into a Management Agreement with ACIM, under
which ACIM provides the fund with investment advisory and management services in
exchange for a single, unified management fee. The Agreement provides that all
expenses of the fund, except brokerage commissions, taxes, interest, expenses of
those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on the fund's average daily closing net assets during the previous month. The
annual management fee for the fund is 1.00%.

--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, for the year ended October 31, 1999, were $1,164,925,553 and
$1,079,075,916, respectively.

On October 31, 1999, accumulated net unrealized appreciation on investments
was $452,169,106, based on the aggregate cost of investments for federal income
tax purposes of $803,332,579, which consisted of unrealized appreciation of
$472,676,732 and unrealized depreciation of $20,507,626.

--------------------------------------------------------------------------------
4. BANK LOANS

Effective December 18, 1998, the fund, along with certain other funds
managed by ACIM, entered into an unsecured $570,000,000 bank line of credit
agreement with Chase Manhattan Bank. Borrowings under the agreement bear
interest at the Federal Funds rate plus 0.40%. The fund may borrow money for
temporary or emergency purposes to fund shareholder redemptions. The fund did
not borrow from the line during the period December 18, 1998 through October 31,
1999.

14 1-800-345-2021

Giftrust--Financial Highlights

This table itemizes investment results and distributions on a per-share basis to
illustrate share price changes for each of the last five fiscal years. It also
includes several key statistics for each reporting period, including TOTAL
RETURN, INCOME RATIO (net income as a percentage of average net assets), EXPENSE
RATIO (operating expenses as a percentage of average net assets), and PORTFOLIO
TURNOVER (a gauge of the fund's trading activity).

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31

1999 1998 1997 1996 1995
PER-SHARE DATA
Net Asset Value, Beginning of
Period ............................$ 16.85 $ 25.46 $ 25.79 $ 25.63 $ 20.50
--------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Loss (1) ........... (0.14) (0.12) (0.18) (0.20) (0.16)

Net Realized and Unrealized Gain
(Loss) on Investment Transactions .. 10.09 (7.74) 0.63 2.46 6.37
--------- --------- --------- --------- ---------
Total From Investment Operations .. 9.95 (7.86) 0.45 2.26 6.21
--------- --------- --------- --------- ---------
Distributions
From Net Realized Gains on
Investment Transactions ........... -- (0.75) (0.78) (2.10) (1.08)

In Excess of Net Realized Gains ... -- --(2) -- -- --
--------- --------- --------- --------- ---------
Total Distributions ............... -- (0.75) (0.78) (2.10) (1.08)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period .......$ 26.80 $ 16.85 $ 25.46 $ 25.79 $ 25.63
========= ========= ========= ========= =========
Total Return(3) ................... 59.05% (31.55)% 1.95% 9.72% 32.52%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets ............. 1.00% 1.00% 1.00% 0.98% 0.98%
Ratio of Net Investment Loss
to Average Net Assets ............. (0.66)% (0.54)% (0.74)% (0.80)% (0.70)%
Portfolio Turnover Rate .............. 117% 147% 118% 121% 105%
Net Assets, End of Period
(in millions) .....................$ 1,250 $ 757 $ 1,024 $ 866 $ 561

(1) Computed using average shares outstanding throughout the period.
(2) Per share amount was less than $0.005.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

See Notes to Financial Statements www.americancentury.com 15

Independent Auditors' Report

The Board of Directors and Shareholders,
American Century Mutual Funds, Inc:

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of Giftrust Fund (the "Fund"), one of the
funds comprising American Century Mutual Funds, Inc., as of October 31, 1999,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and the financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Giftrust Fund as of October 31, 1999, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP
Kansas City, Missouri
December 7, 1999

16 1-800-345-2021

Background Information

INVESTMENT PHILOSOPHY AND POLICIES

American Century offers 13 growth funds including domestic equity,
specialty, international, and global. The philosophy behind these growth funds
focuses on three important principles. First, the funds seek to invest in
successful companies, which we define as those with growing earnings and
revenues. Second, we attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing those opportunities can significantly
limit the potential for gain. Third, the funds are managed by teams, rather than
by one "star." We believe this allows us to make better, more consistent
management decisions.

In addition to these principles, each fund has its own policies.

AMERICAN CENTURY GIFTRUST generally invests in the securities of small- and
medium-sized companies that exhibit accelerating growth. Shares of Giftrust can
be given only as a gift to someone other than yourself or spouse, and all
investments must remain in the fund for a minimum of 10 years or until the
recipient reaches the age of majority, whichever is later. Historically,
small-cap stocks have been more volatile than the stocks of larger,
more-established companies. Therefore, the fund is subject to significant price
volatility but offers high long-term growth potential.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

The DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30
actively traded Blue Chip stocks, primarily industrials but including
service-oriented firms. Prepared and published by Dow Jones & Co., it is the
oldest and most widely quoted of all the market indicators.

The NASDAQ COMPOSITE is a market capitalization price-only index that
reflects the aggregate performance of domestic common stocks traded on the
regular NASDAQ market, as well as national market system-traded foreign common
stocks and American Depositary Receipts. It is considered to represent the
performance of smaller-capitalization and growth-oriented U.S. stocks generally.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly traded U.S. companies that are considered to be leading firms in
dominant industries. Created by Standard & Poor's Corporation, it is considered
to be a broad measure of U.S. stock market performance.

The S&P 500/BARRA VALUE INDEX is a capitalization-weighted index consisting
of S&P 500 stocks that have lower price-to-book ratios, and, in general, share
other characteristics with value-style stocks.

The RUSSELL 2000 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,000 smallest of the 3,000 largest publicly
traded U.S. companies, based on total market capitalization. The Russell 2000
represents approximately 10% of the total market capitalization of the top 3,000
companies. The index is further broken down into two mutually exclusive value
and growth indices. The RUSSELL 2000 GROWTH INDEX, used in this report, measures
the performance of those Russell 2000 companies with higher price-to-book ratios
and higher forecasted growth rates.

[left margin]

PORTFOLIO MANAGERS

GIFTRUST
CHRIS BOYD, CFA
JOHN SEITZER, CFA

www.americancentury.com 17

Glossary

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.

INVESTMENT TERMS

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

TYPES OF STOCKS

* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS-- these are stocks generally
considered to be companies with a market capitalization (the total value of a
company's outstanding stock) of more than $8.2 billion. Though dynamic given its
sensitivity to market fluctuation, this is the market capitalization breakpoint
on October 31, 1999, as determined by Lipper Inc. The Dow Jones Industrial
Average and the S&P 500 Index generally consist of stocks in this range.

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS--
these are stocks generally considered to be companies with a market
capitalization (the total value of a company's outstanding stock) of between
$1.9 billion and $8.2 billion. Though dynamic given its sensitivity to market
fluctuation, this is the market capitalization range on October 31, 1999, as
determined by Lipper Inc. The S&P 400 Index and Russell 2500 Index generally
consist of stocks in this range.

18 1-800-345-2021

Glossary

(Continued)

* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS-- these are stocks generally
considered to be companies with a market capitalization (the total value of a
company's outstanding stock) of less than $1.9 billion. Though dynamic given its
sensitivity to market fluctuation, this is the market capitalization breakpoint
on October 31, 1999, as determined by Lipper Inc. The S&P 600 Index and the
Russell 2000 Index generally consist of stocks in this range.

* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

FUND CLASSIFICATIONS

INVESTMENT OBJECTIVE

* CAPITAL PRESERVATION -- offers taxable and tax-free money market funds for
relative stability of principal and liquidity.

* INCOME -- offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.

* GROWTH & INCOME -- offers funds that emphasize both growth and income provided
by either dividend-paying equities or a combination of equity and fixed-income
securities.

* GROWTH -- offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.

RISK

* CONSERVATIVE -- these funds generally provide lower return potential with
either low or minimal price fluctuation risk.

* MODERATE -- these funds generally provide moderate return potential with
moderate price fluctuation risk.

* AGGRESSIVE -- these funds generally provide high return potential with
corresponding high price fluctuation risk.

www.americancentury.com 19

Notes

20 1-800-345-2021

[inside back cover]

--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE - CAPITAL PRESERVATION
--------------------------------------------------------------------------------

RISK LEVEL - CONSERVATIVE

TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS
Premium Capital Reserve FL Municipal Money Market
Prime Money Market CA Municipal Money Market
Premium Government Reserve CA Tax-Free Money Market
Government Agency Tax-Free Money Market
Money Market
Capital Preservation

--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE - INCOME
--------------------------------------------------------------------------------

RISK LEVEL - AGGRESSIVE

TAXABLE BONDS TAX-FREE BONDS
Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond

RISK LEVEL - MODERATE

TAXABLE BONDS TAX-FREE BONDS
Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond

RISK LEVEL - CONSERVATIVE

TAXABLE BONDS TAX-FREE BONDS
Intermediate-Term Bond CA Intermediate-Term Tax-Free
Intermediate-Term Treasury AZ Intermediate-Term Municipal
GNMA FL Intermediate-Term Municipal
Inflation-Adjusted Treasury Intermediate-Term Tax-Free
Limited-Term Bond CA Limited-Term Tax-Free
Target 2000* Limited-Term Tax-Free
Short-Term Government
Short-Term Treasury

--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE - GROWTH AND INCOME
--------------------------------------------------------------------------------

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY
Small Cap Quantitative
Small Cap Value

RISK LEVEL - MODERATE

ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY
Strategic Allocation: Equity Growth Utilities
Aggressive Equity Index Real Estate
Balanced Tax-Managed Value
Strategic Allocation: Income & Growth
Moderate Value
Strategic Allocation: Large Cap Value
Conservative Equity Income

--------------------------------------------------------------------------------
INVESTMENT OBJECTIVE - GROWTH
--------------------------------------------------------------------------------

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY SPECIALTY INTERNATIONAL
New Opportunities Global Gold Emerging Markets
Giftrust(reg.tm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra(reg.tm)
Select

RISK LEVEL - MODERATE

SPECIALTY
Global Natural Resources

The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.

The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that a fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs. For a definition of fund categories, see the Glossary.

* While listed within the Income investment objective, the Target funds do not
pay current dividend income. Income dividends are distributed once a year in
December. The Target funds are listed in all three risk categories due to the
dramatic price volatility investors may experience during certain market
conditions. If held to their target dates, however, they can offer a
conservative, dependable way to invest for a specific time horizon.

--------------------------------------------------------------------------------
[back cover]
[photo of runners]

Who we are

[left margin]

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

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

www.americancentury.com

INVESTOR RELATIONS
1-800-345-2021 or 816-531-5575

AUTOMATED INFORMATION LINE
1-800-345-8765

FAX: 816-340-7962

TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 or 816-444-3485

BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES
1-800-345-6488

AMERICAN CENTURY MUTUAL FUNDS, INC.

Investment Manager
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
Kansas City, Missouri

This report and the statements it contains are submitted for the general
information of our shareholders. The report is not authorized for distribution
to prospective investors unless preceded or accompanied by an effective
prospectus.

--------------------------------------------------------------------------------
American Century Investments BULK RATE
P.O. Box 419200 U.S POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9912 Funds Distributor, Inc. is the
SH-ANN-18646 distributor for American Century funds
(c)1999 American Century Services Corporation

[front cover]

October 31, 1999

AMERICAN CENTURY(reg.sm)
Annual Report

[photo of runner]
[photo of man looking at computer]
New Opportunities

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

[inside front cover]

Y2K Testing Efforts
Pay Dividends in Preparedness
---------------------------------------------------------------------------

Year 2000 Readiness Disclosure

[left margin]

NEW OPPORTUNITIES
(TWNOX)

TURN TO THE INSIDE BACK COVER OF THIS REPORT TO SEE A LIST OF AMERICAN CENTURY
FUNDS CLASSIFIED BY OBJECTIVE AND RISK.

Tackling the Rollover Challenge
----------------------------------------------------------------------------
Changing jobs or retiring? The American Century Personalized Rollover
Service(SM) provides individualized service that makes rolling over your
employer-sponsored retirement plan easy and stress free.

Our Rollover Expert Team will:

* Give personal guidance on which options best meet your retirement needs by
explaining the types of investments available through both our mutual funds
and American Century Brokerage.

* Assist you with the paperwork, helping to ensure it's completed right the
first time.

* Monitor retirement plan money as it rolls over from your employer-sponsored
plan to the American Century Rollover IRA account.

Call the Rollover Expert Team weekdays 7 a.m. to 7 p.m. (CT) at
1-888-345-2431, ext. 4232, or visit our Web site at www.americancentury.com.

Our Message to You
--------------------------------------------------------------------------------

/photo of James E. Stowers III and James E. Stowers, Jr./
James E. Stowers III, seated, with James E. Stowers, Jr.

Growth-oriented investors--especially those in New Opportunities --were
well-rewarded during the 12 months ended October 31, 1999. It was no cakewalk,
however--the period will be remembered as one of heightened stock market
volatility. Nonetheless, several sectors of the economy, especially those
connected to the Internet, displayed consistently strong earnings growth
throughout the period, of which New Opportunities took advantage.

To enable New Opportunities to maintain its emphasis on small growth
companies, it has always been our intention to close the fund to new investors
when it reached $400 million in assets. The fund reached that asset level in
November and closed on November 22. If you are a shareholder in New
Opportunities, you may continue to invest in the fund.

On the corporate front, we are proud to announce the upcoming launch of
Fund Advisor*, an online source of impartial, customized investment guidance.
Fund Advisor, which will be located at www.americancentury.com, was created to
help investors select mutual funds that are right for their particular
investment needs and goals. It provides specific, impartial guidance on no-load
mutual funds based on funds available through your current financial
advisor--including those offered by other fund families. Fund Advisor uses a
sophisticated fund selection process to help investors create and monitor their
investment portfolios. Watch your mail for more information about this unique
new service.

Fund Advisor is the most recent result of a year of hard work on the
American Century Web site. Early this year, our revamp of the site resulted in
the creation of OnePIN and "personalized homepage" features. OnePIN's
single log-on feature allows investors to manage all their investments from a
single page with one personal identification number. All account information can
be displayed simultaneously, giving investors a consolidated look at their
entire investment portfolio. OnePIN investors can also choose to receive most
shareholder information--like this report--electronically, rather than by
regular mail. It's easy to set up your OnePIN the next time you visit our Web
site. Call our representatives if you have questions.

Finally, in the spirit of our ongoing Year 2000 readiness disclosure, we've
provided a complete update on our preparations for Y2K on the inside front cover
of this report.

As always, we appreciate your continued confidence in American Century.

Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Vice Chairman of the Board and
Chief Executive Officer

[right margin]

TABLE OF CONTENTS
Report Highlights ....................................................... 2
Market Perspective ...................................................... 3

NEW OPPORTUNITIES
Performance Information ................................................. 4
Management Q&A ...................................................... 5
Portfolio at a Glance ................................................... 5
Top Ten Holdings ........................................................ 6
Top Five Industries ..................................................... 6
Types of Investments .................................................... 7
Schedule of Investments ................................................. 8

FINANCIAL STATEMENTS
Statement of Assets and Liabilities ..................................... 10
Statement of Operations ................................................. 11
Statements of Changes in Net Assets ..................................... 12
Notes to Financial Statements ........................................... 13
Financial Highlights .................................................... 15
Independent Auditors' Report ............................................ 16

OTHER INFORMATION
Retirement Account Information .......................................... 17
Background Information
Investment Philosophy and Policies ................................... 18
Comparative Indices .................................................. 18
Portfolio Managers ................................................... 18
Glossary ................................................................ 19

*Patent pending. American Century may receive management, service, or other fees
from funds recommended through Fund Advisor.

www.americancentury.com 1

Report Highlights
--------------------------------------------------------------------------------

MARKET PERSPECTIVE

* Technology stocks were the big winners, particularly companies involved either
directly or indirectly with what has become an economy within an economy, the
Internet. The NASDAQ Composite, home to many high-tech firms, gained 67.46%
for the 12 months ended October 31, 1999. However, value stocks continued to
lag growth stocks.

NEW OPPORTUNITIES

* New Opportunities' remarkable fiscal year performance-its return was three
times greater than its benchmark-was fueled by the resurgence of the
technology sector, which comprised almost 46% of the fund's investments.

* New Opportunities' investments in companies providing components for
fiber-optic networks used by telecommunications and cable companies were among
its top performers. Harmonic, the portfolio's best-performing stock for the
period, makes fiber-optic equipment for cable, satellite, and wireless
networks.

* The Internet is, in one way or another, the major catalyst for revenue and
earnings growth among several of our largest holdings. Many of the fund's top
10 performing stocks were software and information services companies that
specialize in providing Internet-related solutions.

* The fund also carried a large complement of companies that manufacture
semiconductors--computer chips that store, process and send information. The
huge volume of data riding the Internet is bringing with it the need for a new
generation of high-capacity, complex semiconductors.

[left margin]

NEW OPPORTUNITIES
(TWNOX)
TOTAL RETURNS: AS OF 10/31/99
6 Months 44.71%*
1 Year 92.03%
INCEPTION DATE: 12/26/96
NET ASSETS: $401 million

* Not annualized.

Investment terms are defined in the Glossary on pages 19-20.

2 1-800-345-2021

Market Perspective from James E. Stowers III
--------------------------------------------------------------------------------
/photo of James E. Stowers III/
James E. Stowers III, Chief Executive Officer of American Century

THE YEAR IN BRIEF

This has been a year of sharp contrasts. Consider the climate in which
stocks began our fiscal year, and the atmosphere in which they ended it. In
October 1998, we were coming off a substantial downturn, which saw the S&P
500 drop 18% in just over 80 days. The Asian financial crises were with us, and
the financial markets had been shaken by the collapse of a major U.S. hedge
fund.

Credit the Federal Reserve with quickly stepping in the fall of 1998 and
lowering interest rates. Stocks began to recover-to the point where the Dow
Jones Industrials went beyond the 10,000 level for the first time ever and
closed above 11,000 a month later.

For the first half of our fiscal year, a handful of large growth stocks led
the market. In April, long-neglected value stocks and those of smaller companies
suddenly rallied amid signs of economic recovery in Asia. Unfortunately, their
performance run ended only a few weeks later. When the Federal Reserve reversed
course and raised rates in July and August, the market retreated. But inflation
remained dormant-despite the lowest unemployment rate in 30 years-corporate
earnings strengthened, and stock prices rallied again in late October.

A GREAT YEAR FOR GROWTH

The period was rewarding for growth investors, particularly for those
focused on technology, like many of our portfolios. The Internet economy-as
measured by equipment and software spending-grew by almost 70% over the last 12
months. "Technology" once stood for microchips and computers. Today it
refers to a broad spectrum of companies involved in endeavors as diverse as
electronics, telecommunications, cable TV and media, software, and medical
products.

However, value investors had a relatively difficult time. The S&P
500/BARRA Growth Index was up 31.29% for the 12 months, versus a 19.01% gain for
the S&P 500/BARRA Value Index.

A FINAL THOUGHT

The last 12 months saw heightened stock market volatility as
earnings-conscious investors quickly rewarded companies that exceeded
expectations, and swiftly punished those that fell short. Volatility can be
unnerving, but it doesn't always lead to negative returns, as our results this
year demonstrate.

Ultimately, fiscal 1999 illustrates why we try to remain fully invested.
Market upturns tend to be sudden and powerful. We want investors in position to
take full advantage of "good" volatility.

[right margin]

"ULTIMATELY, FISCAL 1999 ILLUSTRATES WHY WE TRY TO REMAIN FULLY INVESTED. MARKET
UPTURNS TEND TO BE SUDDEN AND POWERFUL. WE WANT INVESTORS IN POSITION TO TAKE
FULL ADVANTAGE OF 'GOOD' VOLATILITY."

MARKET RETURNS
FOR THE YEAR ENDED OCTOBER 31, 1999
---------------------------------
S&P 500 25.67%
S&P MIDCAP 400 21.07%
RUSSELL 2000 14.87%

Source: Lipper Inc.

These indices represent the performance of large-, medium-, and
small-capitalization stocks.

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE YEAR ENDED OCTOBER 31, 1999

[line chart - data below]
S&P 500 S&P Mid-Cap 400 Russell 2000
10/31/1998 $1.00 $1.00 $1.00
11/30/1998 $1.06 $1.05 $1.05
12/31/1998 $1.12 $1.18 $1.12
1/31/1999 $1.17 $1.13 $1.13
2/28/1999 $1.13 $1.07 $1.04
3/31/1999 $1.18 $1.10 $1.06
4/30/1999 $1.22 $1.19 $1.15
5/31/1999 $1.19 $1.19 $1.17
6/30/1999 $1.26 $1.26 $1.22
7/31/1999 $1.22 $1.23 $1.19
8/31/1999 $1.22 $1.19 $1.14
9/30/1999 $1.18 $1.15 $1.14
10/31/1999 $1.26 $1.21 $1.15

Value on 10/31/99
S&P 500 $1.26
S&P MidCap 400 $1.21
Russell 2000 $1.15

www.americancentury.com 3

New Opportunities--Performance
--------------------------------------------------------------------------------

TOTAL RETURNS AS OF OCTOBER 31, 1999

NEW OPPORTUNITIES RUSSELL 2000 GROWTH
======================================================================
6 MONTHS(1) .................... 44.71% 2.82%
1 YEAR ......................... 92.03% 29.28%
======================================================================
AVERAGE ANNUAL RETURNS
LIFE OF FUND(2) ................ 23.75% 8.44%(3)

(1) Returns for periods less than one year are not annualized.

(2) Inception was 12/26/96.

(3) Since 12/31/96, the date nearest the fund's inception for which data are
available.

See pages 18-19 for information about the Russell 2000 Growth Index and returns

GROWTH OF $10,000 OVER LIFE OF FUND

[mountain chart - data below]
New Russell 2000
Opportunities Growth Index
Date Value Value
12/31/1996 $10,000 $10,000
1/31/1997 $9,745 $10,250
2/28/1997 $8,763 $9,631
3/31/1997 $7,957 $8,951
4/30/1997 $7,860 $8,847
5/31/1997 $9,294 $10,177
6/30/1997 $9,962 $10,522
7/31/1997 $10,847 $11,061
8/31/1997 $10,945 $11,392
9/30/1997 $11,712 $12,301
10/31/1997 $10,434 $11,562
11/30/1997 $10,060 $11,287
12/31/1997 $10,316 $11,294
1/31/1998 $10,001 $11,144
2/28/1998 $10,826 $12,128
3/31/1998 $11,455 $12,636
4/30/1998 $11,829 $12,713
5/31/1998 $11,043 $11,789
6/30/1998 $11,633 $11,909
7/31/1998 $11,024 $10,914
8/31/1998 $8,784 $8,395
9/30/1998 $9,117 $9,247
10/31/1998 $9,373 $9,729
11/30/1998 $10,198 $10,484
12/31/1998 $11,691 $11,433
1/31/1999 $11,848 $11,948
2/28/1999 $10,885 $10,854
3/31/1999 $11,769 $11,241
4/30/1999 $12,437 $12,233
5/31/1999 $12,870 $12,253
6/30/1999 $14,383 $12,899
7/31/1999 $14,345 $12,500
8/31/1999 $14,855 $12,033
9/30/1999 $16,348 $12,265
10/31/1999 $17,996 $12,579

Value on 10/31/99
New Opportunities $17,996
Russell 2000 Growth Index $12,579

The graph at left shows the growth of a $10,000 investment over the life of the
fund (since 12/31/96, the date nearest the fund's inception for which index data
are available) while the graph below shows the fund's year-by-year performance.
The Russell 2000 Growth Index is provided for comparison in each graph. New
Opportunities' total returns include operating expenses (such as transaction
costs and management fees) that reduce returns, while the total returns of the
Russell 2000 Growth Index do not. Past performance does not guarantee future
results. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost.

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING OCTOBER 31)

[bar chart - data below]

New Russell 2000
Opportunities Growth Index
Date Return Return
10/31/1997* 6.20 15.64
10/31/1998 -10.17 -15.86
10/31/1999 92.03 29.28

* Fund return from 12/26/96 to 10/31/97. Index return from 12/31/96 to 10/31/97

4 1-800-345-2021

New Opportunities--Q&A
--------------------------------------------------------------------------------

/photo of Chris Boyd and John Seitzer/
An interview with Chris Boyd and John Seitzer, portfolio managers on the
New Opportunities investment team.

WHAT WAS NEW OPPORTUNITIES' RETURN FOR THE FISCAL YEAR ENDED OCTOBER 31?

New Opportunities had a remarkable year. Its 92.03% return was three times
greater than that of its benchmark, the Russell 2000 Growth Index, which gained
29.28%. That performance placed New Opportunities in the 4th percentile of its
peer group (9th out of 253 small-cap growth funds) for the one-year period,
according to Lipper Inc.*

WHAT FACTORS CONTRIBUTED TO NEW OPPORTUNITIES' STRONG PERFORMANCE?

Several factors helped us achieve our results. To begin with, our style of
investing was in favor over the year. Growth stocks led the market, and within
that universe, shares of technology-oriented firms generally provided the best
results. We were well-positioned, with nearly half of New Opportunities invested
in the technology sector.

In addition, this year has set a record for new issues in the stock market.
Many of these new companies making initial public offerings of their stock, or
IPOs, provide communications equipment, software, or other products associated
with the Internet, a theme that runs throughout New Opportunities. We have
invested in several new issues that fit our acceleration discipline and they
have generally provided excellent returns. Beyond boosting returns, our research
in the new issue arena has helped keep us abreast of leading-edge technology.

WILL YOU GIVE US EXAMPLES OF TECH COMPANIES IN THE PORTFOLIO THAT ARE BENEFITING
FROM THESE TRENDS?

Harmonic, a company we introduced in our last report, was the portfolio's
performance leader with a stunning 986% run-up over the last 12 months. Harmonic
makes fiber-optic transmission equipment for communications networks. The firm's
products are part of the communications pipelines linking cable companies to
subscribers' homes. Cable services are a two-way street for the first time:
Networks transmit programming to viewers, who in turn send e-mail and phone
calls through the same lines. Harmonic is benefiting from the billions of
dollars being spent by cable TV operators, such as Cox Communications, Comcast,
and Time Warner, to upgrade their networks so they can offer more channels,
faster Web access, and interactive services.

In a similar vein, suppliers of communications equipment and components
such as Vitesse Semiconductor and JDS Uniphase are getting a boost from
telecommunication firms' large outlays on fiber-optic networks that enable them
to keep up with the traffic

*Lipper rankings are based on average annual total returns. Past performance is
no guarantee of future results.

[right margin]

"GROWTH STOCKS LED THE MARKET, AND WITHIN THAT UNIVERSE, SHARES OF
TECHNOLOGY-ORIENTED FIRMS GENERALLY PROVIDED THE BEST RESULTS. WE WERE WELL-
POSITIONED, WITH NEARLY HALF OF NEW OPPORTUNITIES INVESTED IN THE TECHNOLOGY
SECTOR."

PORTFOLIO AT A GLANCE
10/31/99 10/31/98
NO. OF COMPANIES 87 95
MEDIAN P/E RATIO 29.5 23.7
MEDIAN MARKET $1.13 $446
CAPITALIZATION BILLION MILLION
PORTFOLIO TURNOVER 156% 147%
EXPENSE RATIO (FOR INVESTOR CLASS) 1.50% 1.50%

Investment terms are defined in the Glossary on pages 19-20.

www.americancentury.com 5

New Opportunities--Q&A
--------------------------------------------------------------------------------
(Continued)

traveling the Internet. As Internet and wireless phone use grows exponentially,
service providers must both add lines and upgrade existing ones. Vitesse sells
high-end chips to telecommunications equipment companies such as Alcatel,
Ericsson, and Lucent Technologies.

WHAT ABOUT YOUR LARGEST HOLDING, GEMSTAR INTERNATIONAL GROUP?

Gemstar is also a cable TV play. This company invented new technology for
videocassette recorders that makes it possible for consumers to record shows
with greater ease. More importantly, Gemstar has patented an on-screen,
interactive guide that will be a viewer's best friend in a digital world that
offers hundreds of channels. Advertisers already are eyeing the guide as an
electronic billboard. Our decision to boost our stake in the company was
handsomely rewarded--the stock price shot up 216% during the year.

WERE THERE ANY THEMES AMONG THE OTHER STOCKS THAT CONTRIBUTED TO PERFORMANCE?

The Internet is, in one way or another, the major catalyst for revenue and
earnings growth among several of our largest holdings. Many of our top 10
performing stocks were software and information services companies that enable
corporations to use the Internet as a communications medium for employees and
customers, and also as a sales channel.

Information services consulting companies, such as Diamond Technology,
Sapient, and Proxicom, usually offer one or all of three broad areas of software
and Internet expertise: technical know-how, strategic consulting, and creative
input. Technical know-how involves linking systems and software behind the
scenes, while creative input involves advising clients on Web site design and
presentation and marketing tactics. Strategic consulting involves answering
clients' big questions such as, "Will selling products on my Web site
reduce sales from other distribution channels?"

Calico Commerce, a San Jose-based provider of electronic commerce software,
may not be a household name yet, but their roster of clients includes some of
the largest Web retailers, including Dell Computer and Gateway. These companies'
Web sites use Calico software to help assess shoppers' needs and offer price
quotes on a variety of products and services. In other words, Calico's software
helps to simplifybuying computers and other sophisticated equipment on the
Internet.

WHICH SECTORS OR STOCKS DAMPENED PERFORMANCE?

Our largest disappointment was St. Louis-based Express Scripts, one of the
country's largest pharmacy benefits companies with 37 million members. The
company continues to demonstrate strong earnings and sales growth. In addition,
Express Scripts ramped up its Internet strategy in the third quarter when it
bought a 19.9% stake in online pharmacy company PlanetRx.com. However, the stock
declined 33% after an independent financial research firm released a negative
report on Express Scripts' accounting methods. After discussions with
management, we are comfortable -- for the time being --with Express Scripts'
business condition and outlook.

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
GEMSTAR INTERNATIONAL
GROUP LTD. 5.3% 4.6%
PINNACLE SYSTEMS,
INC. 4.3% 5.0%
DIAMOND TECHNOLOGY
PARTNERS, INC. 2.9% --
TV GUIDE, INC. CL A 2.7% --
VITESSE SEMICONDUCTOR
CORP. 2.7% 2.3%
BEA SYSTEMS, INC. 2.7% --
C-COR ELECTRONICS,
INC. 2.3% 1.6%
SAPIENT CORP. 2.2% 1.3%
POWERWAVE
TECHNOLOGIES, INC. 2.1% 0.9%
U.S. FOODSERVICE,
INC. 2.0% 1.4%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
INFORMATION SERVICES 18.7% 15.4%
ELECTRICAL EQUIPMENT 17.0% 20.1%
COMPUTER SOFTWARE 13.8% 6.4%
SEMICONDUCTOR 6.8% 5.4%
MEDIA 6.4% 0.3%

6 1-800-345-2021

New Opportunities--Q&A
--------------------------------------------------------------------------------
(Continued)

WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO?

Our search for companies experiencing accelerating growth led us to firms
in numerous high-tech endeavors. As a result, our weighting in technology stocks
was doubled to 46% of the fund's investments. Two more companies of note are
C-Cor.Net and Powerwave. C-Cor.Net is a Pennsylvania-based manufacturer of cable
TV network equipment (Time-Warner is its largest customer), and Powerwave builds
hardware for cellular phones and for two-way radio systems used by police and
emergency workers.

We also made a large investment in media companies, which now comprise more
than 6% of investments. We are optimistic about our stake in several Hispanic
media companies, including Univision Communications and Radio Unica. The
fast-growing Latino segment is expected to account for 40% of the U.S.
population growth, and to double its spending to $1 trillion annually over the
next 10 years. Despite that buying power, only 1% of all advertising dollars
spent by U.S. companies today are directed at this group. Hispanic media
properties should benefit from increasing advertising revenues as marketers try
to reach this segment of the population.

WHAT'S YOUR STRATEGY FOR THE FUND HEADING INTO 2000?

While the types of companies New Opportunities owns constantly change, our
basic underlying strategy remains the same: owning successful firms that are
growing faster this quarter than the last one, or the one before that. Our
database is designed to identify companies throughout the economy that are
displaying the growth characteristics we demand, giving us a rich list of
companies to choose from.

[right margin]

"OUR SEARCH FOR COMPANIES EXPERIENCING ACCELERATING GROWTH LED US TO FIRMS IN
NUMEROUS HIGH-TECH ENDEAVORS. AS A RESULT, OUR WEIGHTING IN TECHNOLOGY STOCKS
WAS DOUBLED TO 46% OF THE FUND'S INVESTMENTS."

TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF OCTOBER 31, 1999

[pie chart - data below]
Common Stocks 99%
Temporary Cash Investments 1%

AS OF APRIL 30, 1999
[pie chart - data below]
Common Stocks 99%
Temporary Cash Investments 1%

www.americancentury.com 7

New Opportunities--Schedule of Investments
--------------------------------------------------------------------------------

OCTOBER 31, 1999

Shares ($ in Thousands) Value
-----------------------------------------------------------------------------
COMMON STOCKS & WARRANTS -- 99.5%

COMPUTER HARDWARE & BUSINESS MACHINES -- 2.2%
27,600 Emulex Corp.(1) $ 4,303
60,000 Flextronics International Ltd. ADR(1) 4,258
-----------
8,561
-----------
COMPUTER SOFTWARE -- 13.8%
182,800 Active Software, Inc.(1) 6,644
233,600 BEA Systems, Inc.(1) 10,636
34,200 Calico Commerce Inc.(1) 2,119
932 Centennial Technologies
& Warrants(1) 4
60,900 Cysive, Inc.(1) 3,507
14,000 Liberate Technologies, Inc.(1) 956
49,100 Microstrategy, Inc.(1) 4,780
207,300 National Instruments Corp.(1) 6,238
218,000 Radiant Systems, Inc.(1) 3,427
148,300 Rational Software Corp.(1) 6,331
165,200 SmartForce(1) 3,397
167,100 TIBCO Software Inc.(1) 6,512
900 Vitria Technology, Inc.(1) 59
-----------
54,610
-----------
CONSTRUCTION & REAL PROPERTY -- 2.4%
106,650 Elcor Corp. 2,626
188,300 Insituform Technologies, Inc. Cl A(1) 4,531
93,500 Pinnacle Holdings Inc.(1) 2,256
-----------
9,413
-----------
DEFENSE/AEROSPACE -- 0.5%
32,400 Alliant Techsystems Inc.(1) 1,993
-----------
DEPARTMENT STORES -- 0.9%
180,100 Family Dollar Stores, Inc. 3,715
-----------
DRUGS -- 2.9%
69,300 Biovail Corp. International(1) 3,824
208,300 ChiRex Inc.(1) 5,891
67,100 IGEN International, Inc.(1) 1,648
-----------
11,363
-----------
ELECTRICAL EQUIPMENT -- 17.0%
98,000 Advanced Energy Industries, Inc.(1) 4,018
120,300 Brooks Automation, Inc.(1) 2,293
227,800 C-COR.net Corp.(1) 8,934
201,900 DII Group, Inc.(1) 7,275
110,600 Harmonic Lightwaves, Inc.(1) 6,574

Shares ($ in Thousands) Value
-----------------------------------------------------------------------------
142,300 Jabil Circuit, Inc.(1) $ 7,435
51,000 Optical Coating Laboratory, Inc. 5,479
604,200 Pinnacle Systems, Inc.(1) 16,859
129,800 Powerwave Technologies, Inc.(1) 8,392
-----------
67,259
-----------
ELECTRICAL UTILITIES -- 1.2%
80,900 Calpine Corp.(1) 4,662
-----------
FINANCIAL SERVICES -- 3.2%
6,200 Advance Paradigm, Inc.(1) 264
204,700 Concord EFS, Inc.(1) 5,533
135,100 Express Scripts, Inc. Cl A(1) 6,620
-----------
12,417
-----------
FOOD & BEVERAGE -- 2.6%
95,400 American Italian Pasta Co. Cl A(1) 2,397
409,400 U.S. Foodservice, Inc.(1) 7,855
-----------
10,252
-----------
GROCERY STORES -- 0.8%
84,100 Wild Oats Markets, Inc.(1) 2,954
-----------
HEAVY ELECTRICAL EQUIPMENT -- 1.4%
180,700 Cable Design Technologies Corp.(1) 3,501
61,300 Teleflex Inc. 2,088
-----------
5,589
-----------
INFORMATION SERVICES -- 18.7%
140,500 BISYS Group, Inc. (The)(1) 7,166
111,600 CSG Systems International, Inc.(1) 3,840
179,700 Diamond Technology Partners Inc.(1) 11,602
135,600 Fiserv, Inc.(1) 4,335
240,300 Gemstar International Group Ltd.(1) 20,846
37,400 HomeStore.com, Inc.(1) 1,757
40,000 Jupiter Communications, Inc.(1) 1,374
65,500 Luminant Worldwide Corp.(1) 2,591
88,300 MedQuist Inc.(1) 2,823
63,500 Proxicom, Inc.(1) 4,870
68,100 Sapient Corp.(1) 8,721
166,400 TenFold Corp.(1) 3,864
-----------
73,789
-----------
INTERNET -- 4.4%
93,700 E-Stamp Corp.(1) 2,167
70,000 Exodus Communications, Inc.(1) 6,013
32,500 Inktomi Corp.(1) 3,300
103,800 PlanetRx.com, Inc.(1) 2,443
33,000 RealNetworks, Inc.(1) 3,621
-----------
17,544
-----------

8 1-800-345-2021 See Notes to Financial Statements

New Opportunities--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

Shares ($ in Thousands) Value
-------------------------------------------------------------------------------
LEISURE -- 2.7%
90,600 Action Performance Cos. Inc.(1) $ 1,843
67,100 International Speedway Corp. Cl A 3,451
122,300 Speedway Motorsports, Inc.(1) 5,335
------------
10,629
------------
MEDIA -- 6.4%
115,000 Acme Communications, Inc.(1) 4,104
84,300 Radio Unica Corp.(1) 2,408
123,600 Salem Communications Corp. Cl A(1) 3,078
206,700 TV Guide, Inc. Cl A(1) 10,852
58,900 Univision Communications Inc. Cl A(1) 5,010
------------
25,452
------------
MEDICAL PRODUCTS & SUPPLIES -- 5.7%
76,700 ArthroCare Corp.(1) 5,522
161,600 Aurora Biosciences Corp.(1) 1,975
36,500 Chemdex Corp.(1) 1,396
226,800 CONMED Corp.(1) 5,649
94,600 KeraVision, Inc.(1) 1,002
131,500 Mentor Corp. 3,086
53,500 Novoste Corp.(1) 918
56,000 QIAGEN N.V.(1) 2,972
------------
22,520
------------
MEDICAL PROVIDERS & SERVICES -- 0.5%
322,600 NovaMed Eyecare, Inc.(1) 2,117
------------
MINING & METALS -- 0.4%
146,200 U.S. Aggregates, Inc.(1) 1,745
------------
MOTOR VEHICLES & PARTS -- 0.5%
101,400 National R.V. Holdings, Inc.(1) 2,072
------------

Shares ($ in Thousands) Value
------------------------------------------------------------------------------
SEMICONDUCTOR -- 6.8%
44,000 JDS Uniphase Corp.(1) $ 7,341
56,300 Kopin Corp.(1) 2,358
22,800 PMC-Sierra, Inc.(1) 2,148
105,600 PRI Automation, Inc.(1) 4,244
236,800 Vitesse Semiconductor Corp.(1) 10,856
------------
26,947
------------
SPECIALTY STORES -- 1.9%
94,700 Fred's, Inc. 1,154
240,500 Sunglass Hut International, Inc.(1) 2,909
153,700 Tuesday Morning Corp.(1) 3,578
------------
7,641
------------
TRUCKING, SHIPPING & AIR FREIGHT -- 2.6%
120,900 Eagle USA Airfreight, Inc.(1) 3,578
222,200 Forward Air Corp.(1) 6,583
------------
10,161
------------
TOTAL COMMON STOCKS & WARRANTS 393,405
------------
(Cost $263,839)

TEMPORARY CASH INVESTMENTS -- 0.5%
Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.20%, dated 10/29/99,
due 11/1/99 (Delivery value $1,801) 1,800
-------------
(Cost $1,800)

TOTAL INVESTMENT SECURITIES -- 100.0% $395,205
=============
(Cost $265,639)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

(1) Non-income producing.

See Notes to Financial Statements www.americancentury.com 9

Statement of Assets and Liabilities
-----------------------------------------------------------------------------

This statement breaks down the fund's ASSETS (such as securities, cash, and
other receivables) and LIABILITIES (money owed for securities purchased,
management fees, and other liabilities) as of the last day of the reporting
period. Subtracting the liabilities from the assets results in the fund's NET
ASSETS. Net assets divided by shares outstanding is the share price, or NET
ASSET VALUE PER SHARE. This statement also breaks down the fund's net assets
into capital (shareholder investments) and performance (investment income and
gains/losses).

OCTOBER 31, 1999

ASSETS (In Thousands Except Per Share Amounts)
Investment securities, at value
(identified cost of $265,639) (Note 3) .......................... $395,205
Cash ............................................................ 3,476
Receivable for investments sold ................................. 13,317
Dividends and interest receivable ............................... 6
--------
412,004
--------
LIABILITIES
Payable for investments purchased ............................... 10,566
Accrued management fees (Note 2) ................................ 476
--------
11,042
--------
NET ASSETS ...................................................... $400,962
========
CAPITAL SHARES, $0.01 PAR VALUE
Authorized ...................................................... 200,000
========
Outstanding ..................................................... 43,792
========
NET ASSET VALUE PER SHARE ....................................... $ 9.16
========
NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) ......................... $214,134
Accumulated undistributed net
realized gain on investment transactions ..................... 57,262
Net unrealized appreciation on investments (Note 3) ............. 129,566
--------
$400,962
========

10 1-800-345-2021 See Notes to Financial Statements

Statement of Operations
--------------------------------------------------------------------------------

YEAR ENDED OCTOBER 31, 1999

INVESTMENT LOSS (In Thousands)
INCOME:
Interest ....................................................... $ 437
Dividends ...................................................... 157
---------
594
---------
EXPENSES (Note 2):
Management fees ................................................ 4,175
Directors' fees and expenses ................................... 2
---------
4,177
---------
NET INVESTMENT LOSS ............................................ (3,583)
---------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 3)
Net realized gain on investments ............................... 74,553
Change in net unrealized appreciation on investments ........... 115,193
---------
Net realized and unrealized gain on investments ................ 189,746
---------
Net Increase in Net Assets Resulting from Operations ........... $ 186,163
=========

See Notes to Financial Statements www.americancentury.com 11

Statements of Changes in Net Assets
--------------------------------------------------------------------------------

YEARS ENDED OCTOBER 31, 1999 AND OCTOBER 31, 1998

INCREASE (DECREASE) IN NET ASSETS
1999 1998
OPERATIONS (In Thousands)
Net investment loss ............................................... $ (3,583) $ (2,780)
Net realized gain (loss) on investments ........................... 74,553 (9,957)
Change in net unrealized appreciation on investments .............. 115,193 (12,322)
--------- ---------
Net increase (decrease) in net assets resulting from operations ... 186,163 (25,059)
--------- ---------

CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ......................................... 49,239 45,749
Payments for shares redeemed ...................................... (47,931) (38,465)
--------- ---------
Net increase in net assets from capital share transactions ........ 1,308 7,284
--------- ---------
NET INCREASE (DECREASE) IN NET ASSETS ............................. 187,471 (17,775)

NET ASSETS
Beginning of period ............................................... 213,491 231,266
--------- ---------
End of period ..................................................... $ 400,962 $ 213,491
========= =========

TRANSACTIONS IN SHARES OF THE FUND
Sold .............................................................. 7,011 8,852
Redeemed .......................................................... (8,016) (7,584)
--------- ---------
Net increase (decrease) ........................................... (1,005) 1,268
========= =========

12 1-800-345-2021 See Notes to Financial Statements

Notes to Financial Statements
--------------------------------------------------------------------------------

OCTOBER 31, 1999

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 as an open-end management
investment company. New Opportunities Fund (the fund) is one of the thirteen
series of funds issued by the corporation. The fund is diversified under the
1940 Act. The fund's investment objective is to seek capital growth by investing
primarily in common stocks that are considered by management to have
better-than-average prospects for appreciation. The following significant
accounting policies are in accordance with generally accepted accounting
principles; these policies may require the use of estimates by fund management.

SECURITY VALUATIONS -- Portfolio 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.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. When valuations are
not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.

REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that the fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure that the value, including accrued interest, of
the securities under each repurchase agreement is equal to or greater than
amounts owed to the fund under each repurchase agreement.

JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the fund, along with other registered
investment companies having management agreements with ACIM may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.

The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes and may result in reclassification among certain
capital accounts.

ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is the corporation's
distributor. Certain officers of FDI are also officers of the corporation and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.

www.americancentury.com 13

Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

--------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The corporation has entered into a Management Agreement with ACIM, under
which ACIM provides the fund with investment advisory and management services in
exchange for a single, unified management fee. The Agreement provides that all
expenses of the fund, except brokerage commissions, taxes, interest, expenses of
those directors who are not considered "interested persons" as defined
in the Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on the fund's average daily closing net assets during the previous month. The
annual management fee is 1.50%.

--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, for the year ended October 31, 1999, were $432,396,120 and
$424,641,454, respectively.

At October 31, 1999, accumulated net unrealized appreciation was
$129,230,343, based on the aggregate cost of investments for federal income tax
purposes of $265,974,785, which consisted of unrealized appreciation of
$141,214,819 and unrealized depreciation of $11,984,476.

--------------------------------------------------------------------------------
4. BANK LOANS

14 1-800-345-2021

New Opportunities--Financial Highlights
--------------------------------------------------------------------------------

This table itemizes investment results and distributions on a per-share basis to
illustrate share price changes for each of the last five fiscal years (or less,
if the fund is not five years old). It also includes several key statistics for
each reporting period, including TOTAL RETURN, INCOME RATIO (net income as a
percentage of average net assets), EXPENSE RATIO (operating expenses as a
percentage of average net assets), and PORTFOLIO TURNOVER (a gauge of the fund's
trading activity).

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

1999 1998 1997(1)
PER-SHARE DATA

Net Asset Value, Beginning of Period ................. $ 4.77 $ 5.31 $ 5.00
----------- ----------- -----------
Income From Investment Operations
Net Investment Loss ................................ (0.08) (0.06) (0.04)
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ....................... 4.47 (0.48) 0.35
----------- ----------- -----------
Total From Investment Operations ................... 4.39 (0.54) 0.31
----------- ----------- -----------
Net Asset Value, End of Period ....................... $ 9.16 $ 4.77 $ 5.31
=========== =========== ===========
TOTAL RETURN(2) .................................... 92.03% (10.17)% 6.20%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .... 1.50% 1.50% 1.49%(3)
Ratio of Net Investment Loss to Average Net Assets ... (1.29)% (1.16)% (1.09)%(3)
Portfolio Turnover Rate .............................. 156% 147% 118%
Net Assets, End of Period (in thousands) ............. $ 400,962 $ 213,491 $ 231,266

(1) December 26, 1996 (inception) through October 31, 1997.

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

(3) Annualized.

See Notes to Financial Statements www.americancentury.com 15

Independent Auditors' Report
--------------------------------------------------------------------------------

The Board of Directors and Shareholders,
American Century Mutual Funds, Inc:

We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of New Opportunities Fund (the
"Fund"), one of the funds comprising American Century Mutual Funds,
Inc., as of October 31, 1999, and the related statement of operations for the
year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for the two years
in the period then ended and for the period December 26, 1996 (inception)
through October 31, 1997. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of New
Opportunities Fund as of October 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for the respective stated
periods, in conformity with generally accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
December 7, 1999

16 1-800-345-2021

Retirement Account Information
--------------------------------------------------------------------------------

RETIREMENT ACCOUNT INFORMATION

www.americancentury.com 17

Background Information
--------------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

American Century offers 13 growth funds including domestic equity,
specialty, international, and global. The philosophy behind these growth funds
focuses on three important principles. First, the funds seek to invest in
successful companies, which we define as those with growing earnings and
revenues. Second, we attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing those opportunities can significantly
limit the potential for gain. Third, the funds are managed by teams rather than
by one "star." We believe this allows us to make better, more
consistent management decisions.

In addition to these principles, each fund has its own investment policies.

AMERICAN CENTURY NEW OPPORTUNITIES generally invests in the securities of
small companies that exhibit accelerating growth. Historically, small-cap stocks
have been more volatile than the stocks of larger, more-established companies.
Therefore, the fund is subject to significant price volatility, but offers
long-term growth potential. To enable the fund to maintain its emphasis on small
growth companies, it has always been our intention to close New Opportunities to
new investors when it reached $400 million in assets. The fund reached that
asset level in November 1999 and closed to new investors on November 22, 1999.
Current shareholders as of that date may continue to invest in the fund.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly traded U.S. companies that are considered to be leading firms in
dominant industries. Created by Standard & Poor's Corporation, it is
considered to be a broad measure of U.S. stock market performance.

The S&P 500/BARRA VALUE INDEX is a capitalization-weighted index
consisting of S&P 500 stocks that have lower price-to-book ratios, and, in
general, share other characteristics with value-style stocks.

The S&P MIDCAP 400 is a capitalization-weighted index of the stocks of
the 400 largest leading U.S. companies not included in the S&P 500. Created
by Standard & Poor's Corporation, it is considered to represent the
performance of mid-cap stocks generally.

The RUSSELL 2000 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,000 smallest of the 3,000 largest publicly
traded U.S. companies based on total market capitalization. The Russell 2000
represents approximately 10% of the total market capitalization of the top 3,000
companies. The index is further broken down into two mutually exclusive value
and growth indices. The RUSSELL 2000 GROWTH INDEX, used in this report, measures
the performance of those Russell 2000 companies with higher price-to-book ratios
and higher forecasted growth rates.

[left margin]

PORTFOLIO MANAGERS
New Opportunities
CHRIS BOYD, CFA
JOHN SEITZER, CFA

18 1-800-345-2021

Glossary
--------------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all the fund's distributions
are reinvested.

INVESTMENT TERMS

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

TYPES OF STOCKS

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS-- these are stocks
generally considered to be companies with a market capitalization (the total
value of a company's outstanding stock) of between $1.9 billion and $8.2
billion. Though dynamic given its sensitivity to market fluctuation, this is the
market capitalization range on October 31, 1999, as determined by Lipper Inc.
The S&P 400 Index and Russell 2500 Index generally consist of stocks in this
range.

www.americancentury.com 19

Glossary
--------------------------------------------------------------------------------
(Continued)

* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

FUND CLASSIFICATIONS

INVESTMENT OBJECTIVE

* CAPITAL PRESERVATION -- offers taxable and tax-free money market funds for
relative stability of principal and liquidity.

* INCOME -- offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.

* GROWTH & INCOME -- offers funds that emphasize both growth and income
provided by either dividend-paying equities or a combination of equity and
fixed-income securities.

* GROWTH -- offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.

RISK

* CONSERVATIVE -- these funds generally provide lower return potential with
either low or minimal price fluctuation risk.

* MODERATE -- these funds generally provide moderate return potential with
moderate price fluctuation risk.

* AGGRESSIVE -- these funds generally provide high return potential with
corresponding high price fluctuation risk.

20 1-800-345-2021

[inside back cover]

RISK LEVEL - CONSERVATIVE

TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS

===============================================================================
INVESTMENT OBJECTIVE - INCOME
===============================================================================

RISK LEVEL - AGGRESSIVE

TAXABLE BONDS TAX-FREE BONDS

Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond

RISK LEVEL - MODERATE

TAXABLE BONDS TAX-FREE BONDS

Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond

RISK LEVEL - CONSERVATIVE

TAXABLE BONDS TAX-FREE BONDS

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY

Small Cap Quantitative
Small Cap Value

RISK LEVEL - MODERATE

ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY

===============================================================================
INVESTMENT OBJECTIVE - GROWTH
===============================================================================

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY SPECIALTY INTERNATIONAL

New Opportunities Global Gold Emerging Markets
Giftrust(reg.tm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra(reg.tm)
Select

RISK LEVEL - MODERATE

SPECIALTY

Global Natural Resources

The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.

The classification of funds by risk category is based on quantitative
historical measures as well as qualitative prospective measures. It is not
intended to be a precise indicator of future risk or return levels. The degree
of risk within each category can vary significantly, and some fund returns have
historically been higher than more aggressive funds or lower than more
conservative funds. Please be aware that a fund's category may change over time.
Therefore, it is important that you read a fund's prospectus or fund profile
carefully before investing to ensure its objectives, policies and risk potential
are consistent with your needs.For a definition of fund categories, see the
Glossary.

--------------------------------------------------------------------------------
[back]

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

P.O. BOX 419200
KANSAS CITY, MISSOURI 64141-6200

WWW.AMERICANCENTURY.COM

INVESTOR RELATIONS
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE
1-800-345-8765

FAX: 816-340-7962

TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 OR 816-444-3485

BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED
RETIREMENT PLANS
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES
1-800-345-6488

AMERICAN CENTURY MUTUAL FUNDS, INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI

WHO WE ARE

[photo of runner]

--------------------------------------------------------------------------------
American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES

9910 Funds Distributor, Inc. is the distributor for American Century funds
SH-ANN-18647 (c)1999 American Century Services Corporation

[front cover]

OCTOBER 31, 1999

AMERICAN CENTURY (reg. sm)
Annual Report

[graphic of runners]
[graphic of person looking at computer screen]

Tax-Managed Value

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

[inside front cover]

Y2K Testing Efforts Pay Dividends in Preparedness
--------------------------------------------------------------------------------

Year 2000 Readiness Disclosure

[left margin]

Tax-Managed Value
(ACTIX)
-------------------------------------------------------------------------------

TURN TO THE INSIDE BACK COVER OF THIS REPORT TO SEE A LIST OF AMERICAN CENTURY
FUNDS CLASSIFIED BY OBJECTIVE AND RISK.

Tackling the Rollover Challenge
--------------------------------------------------------------------------------

Changing jobs or retiring? The American Century Personalized Rollover
Service(SM) provides individualized service that makes rolling over your
employer-sponsored retirement plan easy and stress free.

Our Rollover Expert Team will:

* Give personal guidance on which options best meet your retirement needs by
explaining the types of investments available through both our mutual funds and
American Century Brokerage.

* Assist you with the paperwork, helping to ensure it's completed right the
first time.

* Monitor retirement plan money as it rolls over from your employer-sponsored
plan to the American Century Rollover IRA account.

Call the Rollover Expert Team weekdays 7 a.m. to 7 p.m. (CT) at
1-888-345-2431, ext. 4232, or visit our Web site at www.americancentury.com.

Our Message to You
--------------------------------------------------------------------------------

[photo of James E. Stowers III and James E Stowers Jr.]
James E. Stowers III, seated, with James E. Stowers, Jr.

Common stock investors, particularly those who invest in "value"
stocks, can be forgiven if we look back on the seven months ending October 31,
1999-- Tax-Managed Value's first months in operation--with a little frustration.
When the fund was launched on March 31, 1999, investors in search of predictable
earnings in an unpredictable economy were still clutching tightly to what the
Street had anointed the "Nifty Twenty"--a trusted group of
household-name growth stocks. For funds like Tax-Managed Value, which hunts for
stocks selling at attractive prices, it appeared that some water-treading was in
store.

Or so we thought. In a move so fast some analysts labeled it "panic
buying," the market stampeded toward value stocks, which had been disdained
for almost three years. Value stocks took off--but it was a short flight. Two
interest rate increases over the summer by the Federal Reserve sent investors
retreating to the Nifty Twenty.

On the corporate front, we are constantly looking for ways to enhance our
ability to generate investment returns and reduce costs associated with the
management of our funds. One priority, for example, has been reducing the costs
of buying and selling securities for our funds. Thus, we have been investing in
companies that provide technology for electronic communications networks (ECNs).
Today, more than one-third of our equity trades are executed over these
"alternative" networks. Savings in this area directly affect the
performance of your funds.

We're also pleased to report that American Century's investor account
statement is the first fund company statement to win the Communications Seal
from DALBAR Inc., an independent financial services research firm. DALBAR
commends us for meeting investors' needs with an attractive document that's easy
to read and understand.

Finally, in the spirit of our ongoing Year 2000 readiness disclosure, we've
provided a complete update on our preparations for Y2K on the inside front cover
of this report.

As always, we appreciate your continued confidence in American Century.

Sincerely,

/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Vice Chairman of the Board and
Chief Executive Officer

Table of Contents

Report Highlights ...................................................... 2
Market Perspective ..................................................... 3
TAX-MANAGED VALUE
Performance Information ................................................ 4
Management Q&A ..................................................... 5
Portfolio at a Glance .................................................. 5
Top Ten Holdings ....................................................... 6
Top Five Industries .................................................... 6
Types of Investments ................................................... 7
Schedule of Investments ................................................ 8
FINANCIAL STATEMENTS
Statement of Assets and
Liabilities ............................................................ 10
Statement of Operations ................................................ 11
Statement of Changes
in Net Assets .......................................................... 12
Notes to Financial
Statements ............................................................. 13
Financial Highlights ................................................... 15
Independent
Auditors' Report ....................................................... 16
OTHER INFORMATION
Share Class and Retirement
Account Information .................................................... 17
Background Information
Investment Philosophy
and Policies ........................................................... 18
Comparative Indices ................................................. 18
Portfolio Managers .................................................. 18
Glossary ............................................................... 19

www.americancentury.com 1

Report Highlights
--------------------------------------------------------------------------------

MARKET PERSPECTIVE

* The year ended October 31, 1999, was a trying one for value investors, who
will remember the period as one of heightened volatility.

* In the second calendar quarter, the Russell 2000, which tracks smaller
firms, gained more than 15%. Undervalued larger-capitalization stocks
surged and improving foreign economies helped cyclical stocks. The first of
two Federal Reserve interest rate hikes left the markets unscathed, and the
major stock indices continued to climb.

* In August, a second interest rate hike by the Fed sent a ripple of anxiety
through the market. Investors quickly rewarded companies whose earnings
exceeded expectations and punished those that fell short.

TAX-MANAGED VALUE

* Tax-Managed Value was launched on March 31, 1999. From its inception
through October 31, 1999, the fund returned 3.60%. Its benchmark, the
S&P 500/BARRA Value Index, rose 6.25%, and the S&P 500 posted a
6.71% gain.

* Fund performance was influenced by the market's ambivalent relationship
with value stocks. Two interest-rate hikes over the summer sent investors
away from value-oriented and cyclical stocks to the relative safety of a
handful of high-growth companies.

* Tax-Managed Value benefited from a modest exposure to the technology
sector. The fund's stake in electric utilities was also beneficial.

* Performance was dampened by insurance holdings. The insurance industry in
general struggled through an environment made difficult by increasing price
competition and a glut of capital in the industry.

[left margin]

TAX-MANAGED VALUE
(ACTIX)
TOTAL RETURNS: AS OF 10/31/99
6 Months -5.99%*
Since Inception 3.60%
INCEPTION DATE: 3/31/99
NET ASSETS: $46.1 million

*Not annualized.

Investment terms are defined in the Glossary on pages 19-20.

2 1-800-345-2021

Market Perspective from Mark Mallon
--------------------------------------------------------------------------------
[photo of Mark Mallon]
Mark Mallon, head of growth and income equity, specialty, and asset allocation
funds at American Century

A TOUGH PERIOD

The seven months ended October 31, 1999, tested the mettle of common stock
investors, who will remember the period as one of heightened volatility. When we
closed the book on American Century Tax-Managed Value's first seven months in
existence, the Standard & Poor's Index had eked out a 6.71% gain.

Nestled in the seven-month period was a sharp but short-lived shift in
stock market sentiment. Stocks entered the calendar quarter buoyed by a strong
economy in the 33rd calendar quarter of its expansion. Actually,
"stocks" might be overstating the case. In reality, investors seemed
content holding only a handful of large, well-known growth stocks, their first
line of defense in case this was the quarter the economy began to slow.

A SUDDEN SHIFT

In April, though, investors suddenly moved to smaller and midsized
companies, whose valuations were (and remain) the most attractive they've been
in decades. In the second calendar quarter alone, the Russell 2000 Index, which
tracks smaller firms, gained more than 15%. Undervalued larger-capitalization
stocks surged and improving foreign economies enabled cyclical stocks to fare
well. Not even the first of two interest rate hikes by the Federal Reserve could
spoil the party as the major stock indices climbed to record highs in mid-July.

The music stopped when Fed Chairman Alan Greenspan warned that the Fed was
ready to act "promptly and forcefully" to raise interest rates at the
first sign of inflation. Wall Street waited nervously for the next Fed move,
which came in August after government reports showed lower productivity gains.

A VOLATILE THIRD QUARTER

In the third calendar quarter alone, the Dow Jones Industrials moved 100
points or more over 20 times, divided almost equally between advances and
declines. The volatility was evidence of an atmosphere in which investors,
struggling to get a clear read on the economy, quickly rewarded companies whose
earnings exceeded expectations, and swiftly punished those that fell short. Put
simply, if you didn't own high-growth technology companies, particularly those
involved in what has become an economy within an economy--the Internet--you were
bruised in the third quarter.

STAYING THE COURSE

In my last message to you, I indicated that we were finding terrific value
opportunities, particularly in the small-and mid-cap universe. You saw evidence
of that in the two months immediately following Tax-Managed Value's launch,
when, with the value style in vogue, this fledgling fund posted a 9.40% gain.
Frustrating as they may be, volatile periods are a normal part of the investment
experience. Some are longer than others. The key is to remain patient and true
to your investment discipline.

[right margin]

"PUT SIMPLY, IF YOU DIDN'T OWN HIGH-GROWTH TECHNOLOGY COMPANIES, PARTICULARLY
THOSE INVOLVED IN WHAT HAS BECOME AN ECONOMY WITHIN AN ECONOMY--THE
INTERNET--YOU WERE BRUISED IN THE THIRD QUARTER."

MARKET RETURNS

FOR THE SEVEN MONTHS ENDED OCTOBER 31, 1999

S&P 500/BARRA VALUE 6.25%
S&P MIDCAP 400/BARRA VALUE 5.82%
S&P SMALLCAP 600/BARRA VALUE 8.45%

Sources: Lipper Inc. and Russell/Mellon Analytical

These indices represent the performance of large-, medium- , and
small-capitalization value stocks.

[mountain chart data below]

MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SEVEN MONTHS ENDED OCTOBER 31, 1999

S&P 500 S&P 400 S&P 600
3/31/99 $1.00 $1.00 $1.00
4/30/99 $1.09 $1.10 $1.09
5/31/99 $1.07 $1.11 $1.13
6/30/99 $1.11 $1.15 $1.20
7/31/99 $1.07 $1.13 $1.18
8/31/99 $1.05 $1.09 $1.13
9/30/99 $1.01 $1.04 $1.11
10/31/99 $1.06 $1.06 $1.08

value on 10/31/99
S&P 500 $1.06
S&P 400 $1.06
S&P 600 $1.08

www.americancentury.com 3

Tax-Managed Value--Performance
--------------------------------------------------------------------------------

TOTAL RETURNS AS OF OCTOBER 31, 1999*

INVESTOR CLASS (INCEPTION 3/31/99)

TAX-MANAGED VALUE S&P 500/ BARRA VALUE
6 MONTHS ...................... -5.99% -2.18%
LIFE OF FUND .................. 3.60% 6.25%

* Returns for periods less than one year are not annualized.
See pages 18-19 for information about the S&P 500/BARRA Value Index and returns

[mountain chart data below]

GROWTH OF $10,000 OVER LIFE OF FUND

Tax-Managed Value S&P 500
3/31/99 $10,000 $10,000
4/30/99 $11,020 $10,962
5/31/99 $10,940 $10,670
6/30/99 $11,299 $11,079
7/31/99 $10,780 $10,738
8/31/99 $10,359 $10,467
9/30/99 $9,919 $10,057
10/31/99 $10,360 $10,625

Value as of 10/31/99
$10,360 Tax-Managed Value
$10,625 S&P 500

The graph at left shows the growth of a $10,000 investment over the life of the
fund. The S&P 500/BARRA Value Index is provided for comparison. Tax-Managed
Value's total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the S&P
500/BARRA Value Index do not. In addition, the S&P 500/BARRA Value Index is
rebalanced twice annually. Generally, stocks that are removed have appreciated
in price. However, the returns shown exclude any tax considerations associated
with such changes in the index. Past performance does not guarantee future
results. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost.

4 1-800-345-2021

Tax-Managed Value--Q&A
--------------------------------------------------------------------------------
[photo of Mark Mallon and Chuck Ritter]
An interview with Mark Mallon and Chuck Ritter, portfolio managers on the
Tax-Managed Value investment team.

TAX-MANAGED VALUE WAS INTRODUCED ON MARCH 31, 1999. HOW HAS IT PERFORMED SINCE
ITS INCEPTION?

Tax-Managed Value was fortunate to take advantage of a strong,
value-focused market during the first two months of its existence. From that
point through the end of October 1999, value stocks fell out of favor. From its
inception through October 31, 1999, the fund returned 3.60%. Its benchmark, the
S&P 500/BARRA Value Index, rose 6.25% and the S&P 500 posted a 6.71%
gain.

WHAT MARKET FACTORS INFLUENCED THE FUND'S PERFORMANCE?

First and foremost was the market's ambivalent relationship with value
stocks. Shortly after the fund's launch value stocks returned to favor. Many of
the stocks were economically sensitive companies, and good news from abroad
regarding a rebound in economic growth sent these battered stocks from the
bottom of the heap straight to the top. However, as we entered summer, interest
rates rose in anticipation of a tighter Federal Reserve monetary policy. Then
the Fed raised short-term interest rates in June and August to head off any
inflation the robust U.S. economy might spark. In response, the market
gravitated back toward an ever-narrowing group of high-growth stocks that paced
the market through the end of the period.

For its part, Tax-Managed Value lagged its performance benchmark because it
had more of a value bias than the index, and a moderately smaller average market
capitalization. In other words, it had a greater-than-average exposure to stocks
with low price-to-earnings or price-to-book ratios, and the fund's median
company size was somewhat smaller than that of the index.

HOW WOULD YOU DESCRIBE YOUR VALUE INVESTING APPROACH?

We look at what we are paying for a company's cash flow, and we look for
good relative value. By relative value, we mean that we are looking for stocks
that are cheap relative to their historical valuations and growth potential. At
times, we'll find that a stock is attractive because it currently trades at a
lower than normal premium to the market. We'll invest in such a stock if we feel
it will be rewarded by having its valuation bumped back towards its normal
range. For the most part, stocks that look attractive now are trading at larger
than normal discounts to the market, and we are investing in the expectation
that the valuations will improve and their discount to the market will narrow.
As such, we are now emphasizing many traditional value areas of the market.

Once we find a stock that looks good based on these parameters, we analyze
the company's prospects to make sure we are comfortable with the sustainability
of the company's fundamentals. Finally, we consider sector weightings. At times,
many stocks in an area of the market are priced cheaply and we will overweight
that sector. However, once we have a substantial overweight in a particular
sector, we'll think twice about

[right margin]

"ONCE WE FIND A STOCK THAT LOOKS GOOD BASED ON THESE PARAMETERS, WE ANALYZE
THE COMPANY'S PROSPECTS TO MAKE SURE WE ARE COMFORTABLE WITH THE SUSTAINABILITY
OF THE COMPANY'S FUNDAMENTALS."

PORTFOLIO AT A GLANCE
10/31/99
NO. OF COMPANIES 90
MEDIAN P/E RATIO 16.5
MEDIAN MARKET $19.5
CAPITALIZATION BILLION
PORTFOLIO TURNOVER 41%(1)
EXPENSE RATIO
(INVESTOR CLASS) 1.10%(2)

(1) From 3/31/99 to 10/31/99.

(2) Annualized.

Investment terms are defined in the Glossary on pages 19-20.

www.americancentury.com 5

Tax-Managed Value--Q&A
--------------------------------------------------------------------------------
(Continued)

adding a new position there. On the other hand, if we are interested in a
security that comes from a sector where the fund is substantially underweight
versus the index, that consideration might make the stock even more attractive
to us.

AT THE SAME TIME, THE FUND TRIES TO MINIMIZE THE IMPACT OF FEDERAL TAXES ON
SHAREHOLDER RETURNS.

That is correct, and Tax-Managed Value's strategy takes on two main guises.
First, we're less likely than other value managers to sell off a stock that has
had a sudden burst of performance. Other value managers often liquidate a
position as a stock advances to a predetermined price target. Instead, we'll
tend to buy something when it's cheap and then hold on to it for some time,
provided, of course, the company's fundamentals remain solid.

In addition, we'll actively manage positions for tax considerations. We may
reduce a position after a decline in order to realize capital losses, and then,
if it continues to trade at attractive levels, rebuild the position after the
IRS "wash sale" period has passed. This strategy helps us minimize net
capital gains because realized capital losses offset realized capital gains.
This allows us to then cash in on some of our winners without triggering capital
gains distributions.

LET'S TAKE A LOOK AT SOME OF THE LARGER SECTORS REPRESENTED IN THE FUND.

Banks had the largest industry representation at the end of the period, at
about 13%. Although this position is large in an absolute sense, it is
underweighted relative to the S&P 500/BARRA Value Index. Although banks
experienced a nice rebound in October, they struggled during most of the period
as a result of interest rate fears. That hurt our investments in Bank of America
and Bank One, for example. The latter was particularly impacted by disappointing
results in its First USA credit card division.

Telephone companies had the second largest representation. This industry
used to be a large part of the S&P 500/BARRA Value Index, which changes
twice a year. When several phone companies left the index, we thought they still
offered attractive prospects. The market agreed with us about Bell Atlantic and
GTE, two stocks that proved to be top performers for the fund. AT&T,
however, suffered from concerns that it wouldn't live up to the ambitious plans
it had set out for itself over the next few years in the cable TV and telephone
area.

WHICH INVESTMENTS PROVED MOST FRUITFUL?

Tax-Managed Value benefited from its modest exposure to the technology
sector. Unfortunately, technology provided scant opportunity for value
investors, because many of these stocks were trading at very high valuation
levels. Nevertheless, there were some opportunities for the fund to take
advantage of technology stocks that were undervalued relative to their
historical price-to-earnings ratios.

Nortel Networks proved to be the best performer; the telecommunications
equipment provider thrived on the expansion of the Internet. Small- to
medium-sized positions in Motorola, Texas Instruments, Computer Associates, and
Oracle also added strong contributions to Tax-Managed Value's performance.

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
EXXON CORP. 2.9% 3.6%
CITIGROUP INC. 2.8% 3.2%
MCI WORLDCOM, INC. 2.4% --
AT&T CORP. 2.3% 3.3%
BELL ATLANTIC CORP. 2.1% 2.2%
FORD MOTOR CO. 2.1% 2.5%
ROYAL DUTCH
PETROLEUM CO.
NEW YORK SHARES 2.0% 2.2%
PHILIP MORRIS
COMPANIES INC. 1.9% 0.5%
BANKAMERICA CORP. 1.9% 2.3%
ALLSTATE CORP. 1.7% 1.5%

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
10/31/99 4/30/99
BANKS 13.3% 14.2%
TELEPHONE 8.4% 9.2%
ENERGY RESERVES &
PRODUCTION 7.8% 9.5%
ELECTRICAL UTILITIES 6.7% 5.0%
PROPERTY AND CASUALTY
INSURANCE 6.6% 4.3%

6 1-800-345-2021

Tax-Managed Value--Q&A
--------------------------------------------------------------------------------
(Continued)

ELECTRIC UTILITIES AND INSURANCE COMPANIES WERE ALSO WELL-REPRESENTED IN THE
FUND. HOW HAVE THEY FARED?

Electric utility companies--more than 6% of the fund's holdings at the
close of the period--did very well. We made purchases in this area because we
found the stocks to be very cheap. They had lagged the market as their slow
growth prospects made them less appealing in a growth-oriented market. However,
that changed as investors came to appreciate that ongoing deregulation of the
industry has opened some opportunities. Companies such as fund holdings Edison
International, Dominion, and Constellation Energy have been able to grow
earnings by cutting costs and diversifying into other industries and across
borders.

Insurance companies, including Allstate, another of our investments,
suffered from reduced pricing power and a glut of capital in the industry. We've
purchased insurance stocks on the cheap with the feeling that the cycle will
turn for them at some point. The industry was certainly helped at the very end
of the period, when federal legislation was passed tearing down most of the
barriers that prevented banks, securities dealers, insurance companies, and
other financial services providers from engaging in each other's businesses.

YOU USE SEVERAL STRATEGIES FOR AVOIDING TAXABLE DISTRIBUTIONS, SUCH AS INVESTING
IN COMPANIES THAT YOU CAN HOLD FOR LONG PERIODS OF TIME AND BALANCING INVESTMENT
LOSSES AGAINST GAINS. WOULD REPLICATING THE COMPOSITION OF THE S&P 500/BARRA
VALUE INDEX BE A WAY OF AVOIDING CAPITAL GAINS TAXES ALTOGETHER?

No, because the composition of the index changes over time. For example,
between March 31, 1999--Tax-Managed Value's inception date--through June 30,
1999, 40 stocks were removed from the index. These 40 stocks represented 16.3%
of the index as of March 31, and had a weighted average return of 14.1% for the
three months ending June 30. An investor who replicated the index would have had
to sell these 40 stocks--and consequently, realize any capital gains they would
have earned during that period. At a 39.6% tax rate on short-term gains, a
taxable investor would have lost 0.9% of the index's pre-tax return. This
difference in returns also does not reflect any transaction costs that the
investor would have incurred in selling the stocks.

WHAT IS YOUR OUTLOOK HEADING INTO 2000?

We think the underpinnings of the economy remain strong, and that some of
the cyclical stocks could attract interest as their earnings improve. If that's
the case, Tax-Managed Value's holdings in these areas would be a big plus.
Regardless of the economic backdrop, we don't plan to change our approach. With
an eye toward softening the impact of federal taxes, we'll continue to build
Tax-Managed Value one stock at a time, looking for solid, fundamentally strong
companies selling at the most attractive prices. We believe these companies will
offer the best long-term opportunities when the market rewards value investors
again.

[right margin]

"WE THINK THE UNDERPINNINGS OF THE ECONOMY REMAIN STRONG, AND THAT SOME OF
THE CYCLICAL STOCKS COULD ATTRACT INTEREST AS THEIR EARNINGS IMPROVE."

[pie chart data below]
TYPES OF INVESTMENTS IN THE PORTFOLIO

AS OF OCTOBER 31, 1999
Temporary Cash Investments 2%
Common Stocks 98%

AS OF APRIL 30, 1999
Temporary Cash Investments 3%
Common Stocks 97%

www.americancentury.com 7

Tax-Managed Value--Schedule of Investments
--------------------------------------------------------------------------------

OCTOBER 31, 1999

Shares Value
--------------------------------------------------------------------------------
COMMON STOCKS -- 97.6%

APPAREL & TEXTILES -- 0.9%
10,200 Liz Claiborne, Inc. $ 408,000
-------------------------
BANKS -- 13.3%
19,000 Banc One Corp. 713,688
13,300 Bank of America 856,188
7,500 Chase Manhattan Corp. 655,312
24,200 Citigroup Inc. 1,309,829
12,000 First Union Corp. 512,250
9,600 Fleet Boston Corp. 418,800
12,600 KeyCorp 352,012
14,000 National City Corp. 413,000
10,000 Summit Bancorp. 346,250
15,000 U.S. Bancorp 555,938
-------------------------
6,133,267
-------------------------
CHEMICALS -- 2.6%
10,900 Air Products and Chemicals, Inc. 299,750
7,000 FMC Corp.(1) 284,812
2,400 Minnesota Mining &
Manufacturing Co. 228,150
18,000 Sherwin-Williams Co. 402,750
--------------------------
1,215,462
--------------------------
COMPUTER HARDWARE &
BUSINESS MACHINES -- 1.8%
7,500 Hewlett-Packard Co. 555,469
2,800 Sun Microsystems, Inc.(1) 296,188
--------------------------
851,657
--------------------------
COMPUTER SOFTWARE -- 4.0%
7,300 Computer Associates International, Inc. 412,450
7,500 International Business Machines Corp. 737,812
4,900 Microsoft Corp.(1) 453,556
5,500 Oracle Corp.(1) 261,766
--------------------------
1,865,584
-------------------------
CONSUMER DURABLES -- 1.0%
6,800 Whirlpool Corp. 473,875
-------------------------
DEFENSE/AEROSPACE -- 2.7%
9,000 Boeing Co. 414,562
6,300 Lockheed Martin Corp. 126,000
18,000 Raytheon Co. Cl A 493,875
5,000 TRW Inc. 214,375
-------------------------
1,248,812
-------------------------
Shares Value
------------------------------------------------------------------------------------

DEPARTMENT STORES -- 1.5%

16,500 Dillard's Inc. Cl A $ 311,438
13,200 Sears, Roebuck & Co. 372,075
-------------------------
683,513
-------------------------
DRUGS -- 3.0%
5,700 American Home Products Corp. 297,825
3,500 Lilly (Eli) & Co. 241,062
7,300 Merck & Co., Inc. 580,806
13,600 Mylan Laboratories Inc. 243,950
-------------------------
1,363,643
-------------------------
ELECTRICAL EQUIPMENT -- 3.5%
14,200 Harris Corp. 318,612
7,000 Lucent Technologies Inc. 449,750
2,400 Motorola, Inc. 233,850
10,000 Nortel Networks Corp. 619,375
-------------------------
1,621,587
-------------------------
ELECTRICAL UTILITIES -- 6.7%
12,500 American Electric Power Co., Inc. 431,250
17,000 Constellation Energy Group 521,688
12,000 Dominion Resources, Inc. (Va.) 577,500
22,100 Edison International 654,712
9,700 FPL Group, Inc. 488,031
20,000 Sempra Energy 408,750
-------------------------
3,081,931
-------------------------
ENERGY RESERVES & PRODUCTION -- 7.8%
4,200 Chevron Corp. 383,512
12,569 Conoco Inc. Cl B 340,934
18,000 Exxon Corp. 1,333,125
6,600 Mobil Corp. 636,900
15,100 Royal Dutch Petroleum Co.
New York Shares 905,056
-------------------------
3,599,527
-------------------------
ENVIRONMENTAL SERVICES -- 0.7%
17,000 Waste Management, Inc. 312,375
-------------------------
FINANCIAL SERVICES -- 4.0%
14,300 Countrywide Credit Industries, Inc. 485,306
10,700 Fannie Mae 757,025
14,000 Household International, Inc. 624,750
-------------------------
1,867,081
-------------------------
FOOD & BEVERAGE -- 2.0%
17,500 ConAgra, Inc. 456,094
13,500 PepsiCo, Inc. 468,281
-------------------------
924,375
-------------------------

8 1-800-345-2021 See Notes to Financial Statements

Tax-Managed Value--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
OCTOBER 31, 1999

Shares Value
--------------------------------------------------------------------------------
HEAVY ELECTRICAL EQUIPMENT -- 2.3%
8,400 Cooper Industries, Inc. $ 361,725
11,300 Emerson Electric Co. 678,706
--------------------------
1,040,431
--------------------------
INDUSTRIAL PARTS -- 2.8%
13,000 ITT Industries, Inc. 444,438
9,900 Parker-Hannifin Corp. 453,544
12,500 Snap-on Inc. 379,688
--------------------------
1,277,670
--------------------------
INFORMATION SERVICES -- 0.5%
4,000 Electronic Data Systems Corp. 234,000
--------------------------
LEISURE -- 1.9%
8,700 Eastman Kodak Co. 599,756
21,000 Mattel, Inc. 280,875
--------------------------
880,631
--------------------------
LIFE AND HEALTH INSURANCE -- 1.1%
16,500 Torchmark Corp. 514,594
--------------------------
MEDIA -- 2.2%
14,000 Disney (Walt) Co.(1) 369,250
8,900 MediaOne Group Inc.(1) 632,456
--------------------------
1,001,706
--------------------------
MEDICAL PROVIDERS & SERVICES -- 2.9%
20,500 Columbia/HCA Healthcare Corp. 494,562
55,000 HEALTHSOUTH Corp.(1) 316,250
10,500 United HealthCare Corp. 542,719
--------------------------
1,353,531
--------------------------
MINING & METALS -- 0.8%
15,000 Crown Cork & Seal Co., Inc. 359,062
--------------------------
MOTOR VEHICLES & PARTS -- 3.2%
17,800 Ford Motor Co. 976,775
7,000 General Motors Corp. 491,750
--------------------------
1,468,525
--------------------------
OIL REFINING -- 1.7%
5,100 Texaco Inc. 313,012
15,800 USX-Marathon Group 460,175
--------------------------
773,187
--------------------------
PROPERTY AND CASUALTY INSURANCE -- 6.6%
27,200 Allstate Corp. 782,000

Shares Value
-------------------------------------------------------------------------------------
9,100 Chubb Corp. (The) $ 499,362
10,000 MBIA Inc. 570,625
8,200 MGIC Investment Corp. 489,950
8,000 SAFECO Corp. 219,250
15,000 St. Paul Companies, Inc. 480,000
--------------------------
3,041,187
--------------------------
PUBLISHING -- 2.5%
8,600 American Greetings Corp. Cl A 222,525
11,300 Deluxe Corp. 319,225
9,400 Knight-Ridder, Inc. 596,900
-------------------------
1,138,650
-------------------------
RESTAURANTS -- 0.9%
10,200 McDonald's Corp. 420,750
-------------------------
SECURITIES & ASSET MANAGEMENT -- 0.6%
7,500 Franklin Resources, Inc. 262,500
-------------------------
SEMICONDUCTOR -- 0.6%
3,200 Texas Instruments Inc. 287,200
-------------------------
TELEPHONE -- 8.4%
22,200 AT&T Corp. 1,037,850
15,100 Bell Atlantic Corp. 980,556
9,800 GTE Corp. 735,000
13,000 MCI WorldCom, Inc.(1) 1,115,156
-------------------------
3,868,562
-------------------------
TOBACCO -- 1.9%
34,300 Philip Morris Companies Inc. 863,931
-------------------------
TOTAL COMMON STOCKS 44,983,056
-------------------------
(Cost $44,475,116)
===============================================================================

TEMPORARY CASH INVESTMENTS -- 2.4%

Repurchase Agreement, Goldman Sachs & Co.,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.13%, dated 10/29/99,
due 11/1/99 (Delivery Value $1,100,470) 1,100,000
-------------------------
(Cost $1,100,000)
TOTAL INVESTMENT SECURITIES -- 100.0% $46,083,056
=========================
(Cost $45,575,116)

NOTES TO SCHEDULE OF INVESTMENTS

(1) Non-income producing.

See Notes to Financial Statements www.americancentury.com 9

Statement of Assets and Liabilities
--------------------------------------------------------------------------------

This statement breaks down the fund's ASSETS (such as securities, cash, and
other receivables) and LIABILITIES (money owed for securities purchased,
management fees and other liabilities) as of the last day of the reporting
period. Subtracting the liabilities from the assets results in the fund's NET
ASSETS. The net assets divided by shares outstanding is the share price, or NET
ASSET VALUE PER SHARE. This statement also breaks down the fund's net assets
into capital (shareholder investments) and performance (investment income and
gains/losses).

OCTOBER 31, 1999

ASSETS

Investment securities, at value
(identified cost of $45,575,116) (Note 3) .................. $ 46,083,056
Cash ......................................................... 44,228
Dividends and interest receivable ............................ 45,900
-------------
46,173,184
-------------
LIABILITIES
Accrued management fees (Note 2) ............................. 40,987
Payable for directors' fees and expenses ..................... 29
-------------
41,016
-------------
Net Assets ................................................... $ 46,132,168
=============
CAPITAL SHARES, $0.01 PAR VALUE
Authorized - Investor Class .................................. 134,000,000
=============
Outstanding - Investor Class ................................. 8,903,049
=============
Net Asset Value Per Share .................................... $ 5.18
=============
NET ASSETS CONSIST OF:

Capital (par value and paid-in surplus) ...................... $ 45,511,107
Undistributed net investment income .......................... 286,032
Accumulated net realized loss on investment transactions ..... (172,911)
Net unrealized appreciation on investments (Note 3) .......... 507,940
-------------
$ 46,132,168
=============

10 1-800-345-2021 See Notes to Financial Statements

Statement of Operations
--------------------------------------------------------------------------------

MARCH 31, 1999 (INCEPTION) THROUGH OCTOBER 31, 1999

INVESTMENT INCOME
Income:
Dividends ....................................................... $ 503,067
Interest ........................................................ 59,575
---------
562,642
---------
Expenses (Note 2):
Management fees ................................................. 276,382
Directors' fees and expenses .................................... 228
---------
276,610
---------

Net investment income ........................................... 286,032
---------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3)
Net realized loss on investments ................................ (172,911)
Change in net unrealized appreciation on investments ............ 507,940
---------

Net realized and unrealized gain on investments ................. 335,029
---------

Net Increase in Net Assets Resulting from Operations ............ $ 621,061
=========

See Notes to Financial Statements www.americancentury.com 11

Statement of Changes in Net Assets
--------------------------------------------------------------------------------

This statement shows how the fund's net assets changed during the reporting
period. It details how much a fund grew or shrank as a result of operations (as
detailed on the previous page), income and capital gain distributions, and
shareholder investments and redemptions.

MARCH 31, 1999 (INCEPTION) THROUGH OCTOBER 31, 1999

Increase in Net Assets

OPERATIONS
Net investment income ......................................... $ 286,032
Net realized loss on investment transactions .................. (172,911)
Change in net unrealized appreciation on investments .......... 507,940
------------
Net increase in net assets resulting from operations .......... 621,061
------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ..................................... 47,330,405
Payments for shares redeemed .................................. (1,819,298)
------------
Net increase in net assets from capital share transactions .... 45,511,107
------------
Net increase in net assets .................................... 46,132,168
============
NET ASSETS
Beginning of period ........................................... --
------------

End of period ................................................. $ 46,132,168
Undistributed net investment income ........................... $ 286,032
============

TRANSACTIONS IN SHARES OF THE FUND
Sold .......................................................... 9,255,286
Redeemed ...................................................... (352,237)
------------
Net increase .................................................. 8,903,049
============

12 1-800-345-2021 See Notes to Financial Statements

Notes to Financial Statements
--------------------------------------------------------------------------------

OCTOBER 31, 1999

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 as an open-end management
investment company. Tax-Managed Value Fund (the fund) is one of the thirteen
series of funds issued by the corporation. The fund is diversified under the
1940 Act. The fund's investment objective is to seek long-term capital growth by
investing primarily in common stocks that management believes to be undervalued
at the time of purchase while attempting to minimize the impact of federal taxes
on shareholder returns. The following significant accounting policies are in
accordance with generally accepted accounting principles; these policies may
require the use of estimates by fund management.

MULTIPLE CLASS -- The fund is authorized to issue three classes of shares:
the Investor Class, the Advisor Class, and the Institutional Class. The three
classes of shares differ principally in their respective shareholder servicing
and distribution expenses and arrangements. All shares of the fund represent an
equal pro rata interest in the assets of the class to which such shares belong,
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except for class specific expenses and exclusive rights to
vote on matters affecting only individual classes. Sale of the Investor Class
commenced on March 31, 1999.

SECURITY VALUATIONS -- Portfolio 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.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of foreign securities, at the last reported sales
price, depending on local convention or regulation. When valuations are not
readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.

REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions the fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The fund requires that collateral, represented by securities, received in
a repurchase transaction be transferred to the custodian in a manner sufficient
to enable the fund to obtain those securities in the event of a default under
the repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to the
fund under each repurchase agreement.

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are generally declared and paid annually.

The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes and may result in reclassification among certain
capital accounts.

At October 31, 1999, accumulated net realized capital loss carryovers of
$172,911 (expiring in 2007) may be used to offset future taxable gains.

ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is the corporation's
distributor. Certain officers of FDI are also officers of the corporation.

www.americancentury.com 13

Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)

OCTOBER 31, 1999

--------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES

The corporation has entered into a Management Agreement with ACIM, under
which ACIM provides the fund with investment advisory and management services in
exchange for a single, unified management fee per class. The Agreement provides
that all expenses of the fund, except brokerage commissions, taxes, interest,
expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is
computed daily and paid monthly based on the fund's class average daily closing
net assets during the previous month. The annual management fee is 1.10% for the
Investor Class.

--------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS

Purchases and sales of investment securities, excluding short-term
investments, for the period March 31, 1999 through October 31, 1999, were
$61,254,712 and $16,606,685, respectively.

At October 31, 1999, accumulated net unrealized appreciation was $507,940,
which consisted of unrealized appreciation of $3,784,496 and unrealized
depreciation of $3,276,556 The aggregate cost of investments for federal income
tax purposes was the same as the cost for financial reporting purposes.

14 1-800-345-2021

Tax-Managed Value--Financial Highlights
--------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

1999(1)

PER-SHARE DATA
Net Asset Value, Beginning of Period .......................... $ 5.00
----------
Income From Investment Operations
Net Investment Income ....................................... 0.04
Net Realized and Unrealized Gain on Investment Transactions . 0.14
----------
Total From Investment Operations ............................ 0.18
----------
Net Asset Value, End of Period ................................ $ 5.18
==========
Total Return(2) ............................................. 3.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............. 1.10%(3)
Ratio of Net Investment Income to Average Net Assets .......... 1.14%(3)
Portfolio Turnover Rate ....................................... 41%
Net Assets, End of Period (in thousands) ...................... $ 46,132

(1) March 31, 1999 (inception) through October 31, 1999.

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

(3) Annualized.

See Notes to Financial Statements www.americancentury.com 15

Independent Auditors' Report
--------------------------------------------------------------------------------

The Board of Directors and Shareholders,
American Century Mutual Funds, Inc:

We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Tax-Managed Value Fund (the "Fund"),
one of the funds comprising American Century Mutual Funds, Inc., as of October
31, 1999, and the related statements of operations and changes in net assets for
the period March 31, 1999 (inception) through October 31, 1999, and the
financial highlights for the period March 31, 1999 (inception) through October
31, 1999. These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and the financial highlights
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at October 31, 1999 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Tax-Managed Value Fund as of October 31, 1999, the results of its operations for
the period then ended, the changes in its net assets for the period then ended,
and the financial highlights for the period then ended, in conformity with
generally accepted accounting principles.

Deloitte & Touche LLP
Kansas City, Missouri
December 7, 1999

16 1-800-345-2021

Share Class and Retirement Account Information
--------------------------------------------------------------------------------

SHARE CLASSES

Three classes of shares are authorized for sale by the fund: Investor Class,
Advisor Class and Institutional Class.

All classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.

RETIREMENT ACCOUNT INFORMATION

www.americancentury.com 17

Background Information
--------------------------------------------------------------------------------

INVESTMENT PHILOSOPHY AND POLICIES

American Century offers 14 growth and income funds including domestic
equity, balanced, asset allocation, and specialty. Tax-Managed Value is a
general equity fund managed to provide growth over time with less volatility
than more aggressive growth funds. The fund invests primarily in common stocks
while attempting to minimize the impact of federal taxes on shareholder returns.
Stock purchases are based on a company-by-company analysis to determine whether
a stock is trading below what the fund management team considers fair value.
Once the management team understands why the stock's price is depressed, if the
team believes the undervaluation is temporary, it may purchase the stock. Broad
diversification across many industries is stressed to prevent the performance of
one sector from dominating fund returns.

AMERICAN CENTURY TAX-MANAGED VALUE invests in the equity securities of
medium to large companies that the management team believes are temporarily
undervalued. This is determined by comparing a stock's share price with key
financial measures, including earnings, book value, cash flow, and dividends. If
the stock's price relative to these measures is low relative to where it
typically has traded, it is a candidate for purchase. The managers also will
attempt to minimize the impact of federal income taxes on shareholder returns by
attempting to minimize taxable distributions to shareholders.

COMPARATIVE INDICES

The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.

DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30
actively traded Blue Chip stocks, primarily industrials but including
service-oriented firms. Prepared and published by Dow Jones & Co., it is the
oldest and most widely quoted of all the market indicators.

The S&P 500 is a capitalization-weighted index of the stocks of 500
publicly traded U.S. companies that are considered to be leading firms in
leading industries. Created by Standard & Poor's Corporation, it is intended
to be a broad measure of U.S. stock market performance.

The S&P 500/BARRA VALUE INDEX is a capitalization-weighted index
consisting of S&P 500 stocks that have lower price- to-book ratios, and, in
general, share other characteristics associated with value-style stocks.

The S&P MIDCAP 400/BARRA VALUE INDEX is a capitalization-weighted index
consisting of S&P 400 stocks that have lower price-to-book ratios and, in
general, share other characteristics associated with value-style stocks.

The S&P SMALLCAP 600/BARRA VALUE INDEX is a capitalization-weighted
index consisting of S&P SmallCap 600 stocks that have lower price-to-book
ratios. The S&P SmallCap 600 Index consists of 600 domestic stocks chosen
for market size, liquidity, and industry group representation.

[left margin]

PORTFOLIO MANAGERS
TAX-MANAGED VALUE
MARK MALLON, CFA
CHARLES RITTER, CFA

18 1-800-345-2021

Glossary
--------------------------------------------------------------------------------

RETURNS

* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all the fund's distributions
are reinvested.

INVESTMENT TERMS

* NUMBER OF COMPANIES-- the number of different companies held by a fund on a
given date.

TYPES OF STOCKS

* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS-- these are stocks
generally considered to be companies with a market capitalization (the total
value of a company's outstanding stock) of between $1.9 billion and $8.2
billion. Though dynamic given its sensitivity to market fluctuation, this is the
market capitalization range on October 31, 1999, as determined by Lipper Inc.
The S&P 400 Index and Russell 2500 Index generally consist of stocks in this
range.

www.americancentury.com 19

Glossary
--------------------------------------------------------------------------------
(Continued)

* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.

FUND CLASSIFICATIONS

INVESTMENT OBJECTIVE

* CAPITAL PRESERVATION -- offers taxable and tax-free money market funds for
relative stability of principal and liquidity.

* INCOME -- offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.

* GROWTH & INCOME -- offers funds that emphasize both growth and income
provided by either dividend-paying equities or a combination of equity and
fixed-income securities.

* GROWTH -- offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.

RISK

* CONSERVATIVE -- these funds generally provide lower return potential with
either low or minimal price fluctuation risk.

* MODERATE -- these funds generally provide moderate return potential with
moderate price fluctuation risk.

* AGGRESSIVE -- these funds generally provide high return potential with
corresponding high price fluctuation risk.

20 1-800-345-2021

[inside back cover]

RISK LEVEL - CONSERVATIVE

TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS

===============================================================================
INVESTMENT OBJECTIVE - INCOME
===============================================================================

RISK LEVEL - AGGRESSIVE

TAXABLE BONDS TAX-FREE BONDS

Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond

RISK LEVEL - MODERATE

TAXABLE BONDS TAX-FREE BONDS

Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond

RISK LEVEL - CONSERVATIVE

TAXABLE BONDS TAX-FREE BONDS

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY

Small Cap Quantitative
Small Cap Value

RISK LEVEL - MODERATE

ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY

Strategic Allocation: Equity Growth Utilities
Aggressive Equity Index Real Estate
Balanced Tax-Managed Value
Strategic Allocation: Income &amp;amp; Growth
Moderate Value
Strategic Allocation: Large Cap Value
Conservative Equity Income

===============================================================================
INVESTMENT OBJECTIVE - GROWTH
===============================================================================

RISK LEVEL - AGGRESSIVE

DOMESTIC EQUITY SPECIALTY INTERNATIONAL

New Opportunities Global Gold Emerging Markets
Giftrust(reg.tm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra(reg.tm)
Select

RISK LEVEL - MODERATE

SPECIALTY
Global Natural Resources

The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.

The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that a fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs. For a definition of fund categories, see the Glossary.

--------------------------------------------------------------------------------
[back cover]
[graphic of runners]

WHO WE ARE

[left margin]

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

P.O. BOX 419200
KANSAS CITY, MISSOURI 64141-6200

WWW.AMERICANCENTURY.COM

INVESTOR RELATIONS
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE
1-800-345-8765

FAX: 816-340-7962

TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 OR 816-444-3485

BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS
1-800-345-3533

BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE
COMPANIES
1-800-345-6488

AMERICAN CENTURY MUTUAL FUNDS, INC.

INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.

KANSAS CITY, MISSOURI

9912 Funds Distributor, Inc is the distributor for American Century funds
SH-ANN-18861 (c) 1999 American Century Services Corporation