[front cover]
APRIL 30, 1999
SEMIANNUAL REPORT
AMERICAN CENTURY
[graphic of stairs]
ULTRA(reg.sm)
VISTA
[american century logo(reg.sm)]
American
Century
[inside front cover]
Y2K TESTING EFFORTS PAY DIVIDENDS IN PREPAREDNESS
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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 will 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
MINIMIZE YOUR MUTUAL FUND TAX HIT
American Century's newest equity fund, Tax-Managed Value, is designed for
long-term growth and to minimize the tax hit you take on your mutual fund
investments each year. The fund is managed to keep taxable distributions to
a minimum by using the following strategies:
* BUY AND HOLD --Low portfolio turnover helps limit realized capital gains
and takes advantage of long-term capital gains tax rates.
* OFFSET GAINS --When gains are realized in the portfolio, they are offset
with capital losses from securities sold in that tax year or losses
carried over from previous years.
* SELL HIGHER-COST SHARES FIRST --Selling shares that cost the most first
helps minimize the taxable gains incurred from a sale.
Ultra is a registered service mark of American Century Services Corporation.
[left margin]
ULTRA
(TWCUX)
VISTA
(TWCVX)
TURN TO THE INSIDE BACK COVER OF THIS REPORT TO SEE A LIST OF THE 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.
These are unusual times in the equity markets. The first half of Ultra's
and Vista's fiscal years, both ended April 30, 1999, was marked by dramatic
shifts in market sentiment. Much of the time a few large, popular growth stocks
continued to flourish, while almost anything smaller -- unless it was an
Internet-related company -- was caught in the market's crosscurrents. The
performance of mid-cap stocks came in bursts, one as the period began and
another as it ended.
Ultra continued to distinguish itself by generating better returns than
both its peer group and its benchmark, as you will see in the portfolio
managers' discussion. Vista's results also improved, but the fund continued to
fight the negative psychology that has impeded the performance of mid-cap stocks
for several years. Although mid-caps fared better in the first half of the year,
pessimism about mid-cap investing is still alive and well. We remain firm
believers that mid-cap stocks will return to favor.
At American Century, our focus continues to be on making it easier to do
business with us and on helping investors reach their financial goals. In March,
we consolidated all our funds under the American Century name. We believe the
American Century nameplate makes it simpler for you to identify your funds.
We have also reclassified our entire family of 71 funds, based on
investment goals and risk levels, so you can more easily choose the funds that
are right for you. A complete list of American Century funds, arranged by their
new classifications, is on the inside back cover of this report.
We also continued to expand the American Century investment team, which has
doubled over the last three years. Our portfolio teams have excellent depth,
with an array of experienced managers and analysts, and we remain committed to
building and maintaining a talented management group.
Finally, we redesigned and enhanced our Web site, www.americancentury.com.
There you'll find daily fund information, including performance and price data,
market and national news, and a Forms Center with access to the most-requested
investor forms and applications. You can also sign up to receive fund
prospectuses and shareholder reports electronically.
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
ULTRA
Performance ............................................................ 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 Highlights ................................................... 25
VISTA
Performance ............................................................ 12
Management Q&A ......................................................... 13
Portfolio at a Glance .................................................. 13
Top Ten Holdings ....................................................... 14
Top Five Industries .................................................... 14
Types of Investments ................................................... 15
Schedule of Investments ................................................ 16
Financial Highlights ................................................... 28
FINANCIAL STATEMENTS
Statements of Assets and Liabilities ................................... 18
Statements of Operations ............................................... 19
Statements of Changes in Net Assets .................................... 20
Notes to Financial Statements .......................................... 21
OTHER INFORMATION
Share Class and Retirement Account Information ......................... 31
Background Information
Investment Philosophy and Policies .................................. 32
Comparative Indices ................................................. 32
Portfolio Managers .................................................. 32
Glossary ............................................................... 33
www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* The six-month period was marked by dramatic shifts in market sentiment. Much
of the time, the market was led by a small group of large, popular growth
stocks. Investors, uncertain about the strength of the economy moving forward,
sought firms with predictable earnings. Meanwhile, the performance of small
stocks came in short bursts, one as the period began, another as it ended.
* All three growth stock categories -- small, midsize and large -- posted
double-digit returns during the six-month period.
* The Federal Reserve's lowering of short-term interest rates last fall sparked
rallies at both ends of the market, but the move was short-lived for smaller
stocks. In April, value stocks and those of large industrial companies shot
up, as the Dow Jones Industrial Average gained more than 10% during the month,
compared to a 3.79% increase in the S&P 500 Index. The Russell 2000, a
small-cap index, was up almost 9% during April as investors recognized the
attractive valuations of small and midsized firms.
ULTRA
* Ultra significantly outpaced the S&P 500 Index for the six months ended April
30, 1999, as the fund's largest holdings turned in some of its best results.
* Ultra continued to rely on its largest industry weighting --
telecommunications firms -- which account for almost 14% of the portfolio, for
solid gains. MCI WorldCom, the fund's second-largest holding, fared
particularly well. Positions in Internet-related companies, such as America
Online, the fund's top-performing stock, and Time Warner, also led the
portfolio.
* Ultra's double-digit weighting in pharmaceutical companies performed somewhat
below expectations as investors sought faster-growing technology companies.
The fund was also somewhat light in financial stocks, a part of the market
that declined last fall, but then ended up performing better than expected
over the six months.
VISTA
* Vista posted a strong gain over the six-month period, the best half-year for
the fund in more than three years. Vista's performance, which slightly trailed
that of its benchmark, was the result of a number of steps taken recently to
improve results.
* Vista's exposure to a broader group of industries has been increased. We have
fine-tuned our database with the goal of finding companies earlier in the
growth cycle before their potential has been recognized by other investors,
putting us in position to capture more of their price gains.
* Vista looked to three major industries for its returns -- electronic
components, communications equipment, and computer software and services.
Firms in those sectors represented more than one-third of assets.
* Among the best performers were two Internet stocks, At Home Network, an
Internet access service transmitted over cable, and Excite, an Internet access
portal. With Internet usage skyrocketing, and with it the need for
high-capacity communications pipelines, Vista significantly increased its
weightings in companies making the next generation of computer chips that
store and transmit data.
[left margin]
ULTRA(1)
(TWCUX)
TOTAL RETURNS: AS OF 4/30/99
6 Months 29.76%(2)
1 Year 25.52%
INCEPTION DATE: 11/2/81
NET ASSETS: $33.9 billion(3)
VISTA(1)
(TWCVX)
TOTAL RETURNS: AS OF 4/30/99
6 Months 23.19%(2)
1 Year -15.78%
INCEPTION DATE: 11/25/83
NET ASSETS: $886.0 million(3)
(1) Investor Class.
(2) Not annualized.
(3) Includes Investor, Advisor, and Institutional classes.
Investment terms are defined in the Glossary on pages 33-34.
2 1-800-345-2021
Market Perspective from James E. Stowers III
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[photo of James E. Stowers III]
James E. Stowers III, Chief Executive Officer of American Century
MARKET PERFORMANCE WAS BROADER
The chart in the lower right corner of this page, Market Performance, will
show you at a glance how stocks behaved over the six-month period ended April
30, 1999. The returns of all three stock categories--small, midsize, and
large--were squarely in double digits. That in itself is impressive. Over the
past several years it has been far more typical for the stocks of midsize and
small companies to lag, often by substantial margins, those of larger companies,
and especially those of the very largest multinational companies.
THE FEDERAL RESERVE STEPS IN
As you may recall, in September 1998, the financial markets were less
tranquil. Many were in crisis until the Federal Reserve Board (the U.S. central
bank) stepped in and stabilized the situation by lowering short-term interest
rates. The strategy worked and smaller stocks rallied. Large stocks moved higher
too, led by technology and Internet-related companies, but smaller stocks
appeared to fall back into familiar patterns--greater volatility and lower
returns. In early spring, however, this changed noticeably.
THE S&P 500 SLOWS
In April, value stocks and the stocks of large manufacturers such as Dow
Chemical and Caterpillar shot up. The Dow Jones Industrial Average jumped 10.25%
in April, trouncing the S&P 500's 3.79% gain. The S&P 400, the midsize stock
benchmark, also came out ahead, up 3.93% for the month, while the Russell 2000,
a small-cap index, rose 8.96%. The S&P 500/BARRA Value Index, a popular measure
of value stocks, leapt 8.62%, posting one of its best performances in years.
Several factors contributed to the change in market dynamics. For one,
market leadership had remained unusually narrow, with size the chief
differential in performance.
As a result, big growth companies became increasingly expensive, and the
fear grew that any reversion to normal performance could be costly. A perception
also arose, as the economy continued to grow, that perhaps the economic cycle
wasn't ending but instead was beginning anew, kicking off another growth cycle.
Given that forecast, economically sensitive companies (the industrials) were the
likely beneficiaries.
It's too early to tell whether this scenario will prove true, but the
perception sparked an unusually robust short-term reaction.
GOOD BUSINESSES, GOOD STOCKS
At American Century, we try hard not to overreact to short-term market
developments. Our focus is on helping shareholders build their capital over
time. We do that by owning the best businesses available, particularly those
with accelerating rates of earnings growth, no matter which sector of the
economy they represent.
[right margin]
"OVER THE PAST SEVERAL YEARS IT HAS BEEN FAR MORE TYPICAL FOR THE STOCKS OF
MIDSIZE AND SMALL COMPANIES TO LAG, OFTEN BY SUBSTANTIAL MARGINS, THOSE OF
LARGER COMPANIES, AND ESPECIALLY THOSE OF THE VERY LARGEST MULTINATIONAL
COMPANIES."
MARKET RETURNS
FOR THE SIX MONTHS ENDED APRIL 30, 1999
S&P 500 22.31%
S&P MIDCAP 400 18.86%
RUSSELL 2000 15.16%
Source: Lipper Inc.
These indices represent the performance of large-, medium- and
small-capitalization stocks.
[chart data shown below]
MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED APRIL 30, 1999
S&P 500 S&P Mid-Cap 400 Russell 2000
10/31/98 $1.00 $1.00 $1.00
11/30/98 $1.06 $1.05 $1.05
12/31/98 $1.12 $1.18 $1.12
1/31/99 $1.17 $1.13 $1.13
2/28/99 $1.13 $1.07 $1.04
3/31/99 $1.18 $1.10 $1.06
4/30/99 $1.22 $1.19 $1.15
Value on 4/30/99
S&P 500 $1.22
S&P MidCap 400 $1.19
Russell 2000 $1.15
www.americancentury.com 3
Ultra--Performance
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TOTAL RETURNS AS OF APRIL 30, 1999
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 11/2/81) (INCEPTION 10/2/96) (INCEPTION 11/14/96)
ULTRA S&P 500 ULTRA S&P 500 ULTRA S&P 500
6 MONTHS* 29.76% 22.31% 29.62% 22.31% 29.91% 22.31%
1 YEAR 25.52% 21.80% 25.21% 21.80% 25.79% 21.80%
AVERAGE ANNUAL RETURNS
3 YEARS 24.75% 29.04% -- -- -- --
5 YEARS 22.97% 26.82% -- -- -- --
10 YEARS 22.22% 18.77% -- -- -- --
LIFE OF FUND 19.04% 18.34% 26.11% 30.95% 26.00% 29.53%
* Returns for periods less than one year are not annualized.
See pages 31-34 for information about share classes, the S&P 500 Index, and
returns.
[chart data shown below]
GROWTH OF $10,000 OVER 10 YEARS
Ultra S&P 500
Date Value Value
4/30/89 $10,000 $10,000
4/30/90 $10,058 $11,052
4/30/91 $15,742 $12,995
4/30/92 $18,948 $14,814
4/30/93 $21,838 $16,180
4/30/94 $26,463 $17,039
4/30/95 $28,107 $20,011
4/30/96 $38,343 $26,050
4/30/97 $42,442 $32,594
4/30/98 $59,313 $45,977
4/30/99 $74,447 $55,922
Value on 4/30/99
Ultra $74,447
S&P 500 $55,922
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 S&P
500 Index is provided for comparison in each graph. Ultra'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.
[chart data shown below]
ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)
Ultra S&P 500
Date Return Return
4/30/90 0.58% 10.44%
4/30/91 56.51% 17.56%
4/30/92 20.37% 14.05%
4/30/93 15.25% 9.22%
4/30/94 21.18% 5.33%
4/30/95 6.21% 17.42%
4/30/96 36.42% 30.13%
4/30/97 10.69% 25.10%
4/30/98 39.75% 41.01%
4/30/99 25.52% 21.80%
4 1-800-345-2021
Ultra--Q&A
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[photo of John Sykora, Jim Stowers III and Bruce Wimberly]
John Sykora, Jim Stowers III and Bruce Wimberly, portfolio managers on the Ultra
investment team
An interview with Jim Stowers III, John Sykora and Bruce Wimberly,
portfolio managers on the Ultra investment team.
HOW DID THE FUND PERFORM FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999? (1)
Ultra turned in strong results. It gained 29.76% over the six months, well
above the 22.31% increase posted by the Standard & Poor's 500 Index. That
performance landed Ultra in the top 20% of its peer group (189th out of 1,115
growth funds) for the six-month period, according to Lipper Inc.(2)
Ultra is in an enviable position, with its largest holdings turning in the
best results. Maintaining large positions in successful companies is a hallmark
of our earnings-based investment approach. The fund's 10 largest holdings
accounted for about 40% of assets, and seven of its best contributors were on
that short list.
WHICH COMPANIES OR SECTORS CONTRIBUTED TO PERFORMANCE?
As was the case six months ago, America Online (AOL), the nation's largest
online service, was Ultra's top contributor. The stock, our third-largest
holding at about 5% of the fund, gained a stunning 349%. AOL's membership,
usage, and advertising revenues continue to climb.
Our other top contributors haven't changed much from our last report to
you. Ultra's positions in telecommunications companies, the major carriers of
Internet traffic, continued to post strong gains. MCI WorldCom, our
second-largest holding, fared extremely well. Revenues from its Internet
business rose 60% in the first quarter of 1999. This company provides many
needed services -- voice, data, Internet, and international traffic. In many
cases, it can transport these communications almost anywhere in the world
without leaving its own network, a significant competitive advantage.
Telecommunications companies account for almost 12% of our portfolio, our
largest industry weighting. This is a high-confidence sector for us.
Time Warner, another top-10 holding, saw its shares climb 50% over the
six-month period, as investors recognized the leadership position the company is
taking in the cable TV, entertainment, and publishing industries. A number of
positive trends are at work in the cable industry, including emerging consumer
demand for digital cable services that should bode well for future growth. This
is also an industry with true pricing power. Time Warner has invested heavily to
expand the capacity of its cable network, and in doing so has positioned itself
well. Over the next few years, capital spending on its cable plant is going to
decline at the same time revenues from value-added services such as digital
cable and video-on-demand are rising.
(1) All fund returns referenced in this interview are for Investor Class shares.
(2) According to Lipper for the periods ending April 30, Ultra was ranked 189
out of 1,035, in the top 19% for one year; 128 out of 391, top 33% for five
years; and 4 out of 171, top 3% for 10 years. Lipper rankings are based on
average annual total returns. Past performance is no guarantee of future
results.
[right margin]
"ULTRA IS IN AN ENVIABLE POSITION, WITH ITS LARGEST HOLDINGS TURNING IN THE BEST
RESULTS."
PORTFOLIO AT A GLANCE
4/30/99 10/31/98
NO. OF COMPANIES 192 193
MEDIAN P/E RATIO 33.9 32.0
MEDIAN MARKET $19.7 $17.4
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 17%(1) 128%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00%(3) 1.00%
(1) Six months ended 4/30/99.
(2) Year ended 10/31/98.
(3) Annualized.
Investment terms are defined in the Glossary on pages 33-34.
www.americancentury.com 5
Ultra--Q&A
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(Continued)
Cable networks have the capacity to carry large amounts of voice, data and
video to the home; we feel they are the communications pipelines of the future.
As a result, we're seeing front-page stories about marriages between cable
companies and other businesses that want direct access to millions of U.S.
households. This very situation was played out during the period with one of our
largest and best-performing holdings, Tele-Communications, Inc. AT&T acquired
this nationwide cable TV provider in March, instantly making the telephone
company the largest owner of cable homes. AT&T clearly intends to be a dominant
player in the delivery of communications services via cable. The company is now
one of Ultra's larger holdings.
Our optimism in a leading financial services company, American
International Group, also paid off. AIG, a premier international provider of
insurance products, benefited from a flight to quality by financial services
consumers in Asia and emerging markets. We took advantage of share price
weakness in financial companies last fall and added to our position in AIG.
During the period, AIG completed its purchase of SunAmerica, an industry leader
in variable annuity products--and a great fit. The acquisition extends
SunAmerica's reach into international markets, particularly in Asia.
PHARMACEUTICAL COMPANIES REPRESENTED YOUR SECOND-LARGEST WEIGHTING, YET THEIR
PERFORMANCE WAS SOMEWHAT SLUGGISH. IS THIS STILL A HIGH-CONFIDENCE AREA FOR
ULTRA?
We didn't get the boost we'd hoped for from our double-digit weighting in
pharmaceuticals. The big, household-name drug companies were the darlings of
1998 as investors sought safety amid concerns about the economy. Thus far in
1999, however, with the economy continuing to hum, investors have been giving
drug stocks a breather while they turn to faster-growing technology companies.
In addition, we've begun to see more head-to-head competition between drug
companies as various drugs come off patents, a potential pressure on earnings.
Just the same, we think this sector has plenty of long-term promise. Pfizer is a
good example of the type of pharmaceutical company we want to own. Its pipeline
of new drugs is strong. Pfizer makes Viagra and is co-marketing a new arthritis
medication called Celebrex.
WHICH STOCKS OR SECTORS HURT PERFORMANCE?
If we had it to do over again, we would have held our positions in
financial stocks -- firms such as Chase Manhattan, CitiGroup and BankAmerica --
when their shares declined last fall as a result of financial turmoil in
emerging markets. We
[left margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/99 10/31/98
MICROSOFT CORP. 5.3% 4.3%
MCI WORLDCOM, INC. 5.1% 4.5%
AMERICA ONLINE INC. 4.9% 1.8%
AMERICAN
INTERNATIONAL
GROUP, INC. 4.7% 3.5%
TIME WARNER INC. 4.3% 3.4%
AT&T CORP. 4.0% 0%(1)
GENERAL ELECTRIC CO.
(U.S.) 3.4% 3.5%
PFIZER, INC. 2.6% 3.0%
COCA-COLA COMPANY
(THE) 2.6% 1.3%
AT&T CORP. -
LIBERTY MEDIA
GROUP CL A 2.5% 1.0%(2)
TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/99 10/31/98
TELEPHONE
COMMUNICATIONS 11.7% 10.6%(3)
PHARMACEUTICALS 11.7% 15.4%
COMPUTER SOFTWARE
& SERVICES 11.1% 6.5%
BROADCASTING &
MEDIA 8.9% 9.1%(3)
DIVERSIFIED
COMPANIES 6.3% 6.0%
(1) AT&T was held at 10/31/98, but it represented less than 0.05% of the
investments.
(2) Represents Liberty Media Group shares owned by the fund.
(3) Percentages have been adjusted to reflect security industry
reclassification.
6 1-800-345-2021
Ultra--Q&A
- --------------------------------------------------------------------------------
(Continued)
sharply reduced our positions, only to see the stocks rally shortly after rate
cuts by the Federal Reserve. As a result, we were somewhat light in a part of
the market that ended up performing well.
WHAT CHANGES HAVE YOU MADE TO THE PORTFOLIO SINCE THE ANNUAL REPORT?
We sold Ultra's stake in Philip Morris. Continuing lawsuits (some going
against the cigarette companies), coupled with uncertainty about future growth
in U.S. and overseas markets, have raised the risk associated with tobacco
shares.
We also closed out holdings in several energy companies, among them
Chevron, Exxon and Royal Dutch Petroleum, which accounted for almost 4% of
assets at the start of the period. These companies had been steady performers
during a period of economic uncertainty. But as the economy continued its strong
pace into this year, we sought out faster-growing businesses.
The growing use of local advertising via the Internet led us to rethink
small holdings in newspaper companies, including the New York Times and News
Corp. Ltd. We lightened up on those stocks as well.
WHAT'S YOUR STRATEGY AND OUTLOOK FOR ULTRA GOING FORWARD?
The investment approach that drives Ultra is simple, disciplined, and
powerful. We think the best place for your money over time is in decidedly
successful businesses. Our radar screens are designed to flag firms that are
doing better this quarter than the previous one and the one before that;
companies whose businesses are growing -- today. As you examine our investments,
we think you'll see some common characteristics among the companies Ultra owns.
We look for smart, well-run, highly profitable businesses, leaders in their
respective industries, firms with pricing power, and growing market share. That
thinking has rewarded investors in Ultra over the years, and we think it will
continue to do so in the future.
[right margin]
"WE LOOK FOR SMART, WELL-RUN, HIGHLY PROFITABLE BUSINESSES . . ."
[pie chart data shown below]
TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF APRIL 30, 1999
U.S. Stocks 97.8%
Temporary Cash Investments 1.3%
Foreign & U.S. Preferred Stock 0.5%
Foreign Stocks 0.4%
AS OF OCTOBER 31, 1998
U.S. Stocks 94.1%
Temporary Cash Investments 3.3%
Foreign & U.S. Preferred Stock 1.0%
Foreign Stocks 1.6%
www.americancentury.com 7
Ultra--Schedule of Investments
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APRIL 30, 1999 (UNAUDITED)
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.2%
AEROSPACE & DEFENSE -- 0.2%
20,000 General Dynamics Corp. $ 1,405
10,000 Textron Inc. 921
445,000 United Technologies Corp. 64,469
----------
66,795
----------
AIRLINES(1)
30,000 Southwest Airlines Co. 977
----------
AUTOMOBILES & AUTO PARTS(1)
100,000 Ford Motor Co. 6,394
45,000 General Motors Corp. 4,002
----------
10,396
----------
BANKING -- 2.9%
20,000 BB&T Corp. 799
9,590,000 Bank of New York Co., Inc. (The) 383,600
115,000 BankAmerica Corp. 8,280
30,000 BankBoston Corp. 1,470
1,475,000 Chase Manhattan Corp. 122,056
2,805,000 Citigroup Inc. 211,076
20,000 Fifth Third Bancorp 1,433
40,000 Firstar Corp. 1,203
20,000 Huntington Bancshares Inc. 708
715,000 Mellon Bank Corp. 53,133
228,171 Northern Trust Corp. 21,206
4,285,000 Wells Fargo & Co. 185,058
----------
990,022
----------
BIOTECHNOLOGY -- 0.1%
240,000 Amgen Inc.(2) 14,737
10,000 Biogen, Inc.(2) 951
5,000 Immunex Corp.(2) 477
----------
16,165
----------
BROADCASTING & MEDIA -- 8.9%
13,362,200 AT&T Corp. -- Liberty Media Group Cl A(2) 853,511
70,000 CBS Corporation(2) 3,189
1,480,300 Clear Channel Communications, Inc.(2) 102,881
8,020,000 Comcast Corp. Cl A 526,814
15,000 Cox Communications, Inc. Cl A(2) 1,191
350,000 Jacor Communications, Inc.(2) 28,066
21,022,200 Time Warner Inc. 1,471,554
1,400,000 USA Networks Inc.(2) 52,325
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3,039,531
----------
BUSINESS SERVICES & SUPPLIES(1)
30,000 Omnicom Group Inc. 2,175
30,000 Paychex, Inc. 1,530
----------
3,705
----------
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
CHEMICALS & RESINS(1)
15,000 Dow Chemical Co. $ 1,968
60,000 du Pont (E.I.) de Nemours & Co. 4,238
15,000 Rohm and Haas Co. 672
----------
6,878
----------
COMMUNICATIONS EQUIPMENT -- 2.5%
30,000 ADC Telecommunications, Inc.(2) 1,438
30,000 Ascend Communications, Inc.(2) 2,897
15,000 Corning Inc. 859
3,765,000 Lucent Technologies Inc. 226,371
6,585,000 MediaOne Group Inc.(2) 537,089
40,000 Motorola, Inc. 3,205
355,000 QUALCOMM Inc.(2) 70,878
----------
842,737
----------
COMPUTER PERIPHERALS -- 4.1%
4,942,000 Cisco Systems Inc.(2) 563,851
7,700,000 EMC Corp. (Mass.)(2) 838,819
----------
1,402,670
----------
COMPUTER SOFTWARE & SERVICES -- 11.1%
11,588,400 America Online Inc. 1,654,244
35,000 Automatic Data Processing, Inc. 1,557
10,000 BMC Software, Inc.(2) 430
3,835,200 Compuware Corp.(2) 93,363
515,000 First Data Corp. 21,855
4,562,200 IMS Health Inc. 136,866
22,189,600 Microsoft Corp.(2) 1,803,598
372,500 Oracle Systems Corp.(2) 10,081
435,000 Siebel Systems, Inc.(2) 16,734
15,000 Unisys Corp.(2) 472
210,000 Veritas Software Corp.(2) 14,963
125,000 Yahoo! Inc.(2) 21,828
----------
3,775,991
----------
COMPUTER SYSTEMS -- 3.5%
9,187,200 Dell Computer Corp.(2) 378,111
3,456,200 International Business Machines Corp. 722,994
1,305,000 Sun Microsystems, Inc.(2) 78,096
----------
1,179,201
----------
CONSUMER PRODUCTS -- 3.9%
10,000 Avon Products, Inc. 543
1,244,000 Colgate-Palmolive Co. 127,432
10,000 Estee Lauder Companies, Inc. 1,001
11,040,000 Gillette Company 576,150
6,543,200 Procter & Gamble Co. (The) 613,834
10,000 Ralston Purina Co. 305
----------
1,319,265
----------
See Notes to Financial Statements
8 1-800-345-2021
Ultra--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
DIVERSIFIED COMPANIES -- 6.3%
5,691 Berkshire Hathaway Inc. Cl A(2) $ 434,792
2,006 Berkshire Hathaway Inc. Cl B(2) 4,955
10,937,500 General Electric Co. (U.S.) 1,153,906
10,000 Honeywell Inc. 948
20,000 Minnesota Mining & Manufacturing Co. 1,780
6,918,060 Tyco International Ltd. 562,092
----------
2,158,473
----------
ELECTRICAL & ELECTRONIC COMPONENTS -- 3.7%
20,000 Altera Corp.(2) 1,447
10,000 Eaton Corp. 917
11,612,000 Intel Corp. 710,146
460,000 KLA-Tencor Corporation(2) 22,770
1,998,600 Linear Technology Corp. 113,795
1,985,000 Maxim Integrated Products, Inc.(2) 111,532
10,000 Rockwell International Corp. 516
621,000 Solectron Corp.(2) 30,119
2,102,700 Texas Instruments Inc. 214,738
820,000 Xilinx, Inc.(2) 37,515
----------
1,243,495
----------
ENERGY -- 1.2%
5,318,000 Enron Corp. 400,180
----------
ENERGY (PRODUCTION & MARKETING)(1)
125,000 American Power Conversion Corp.(2) 4,121
20,000 Atlantic Richfield Co. 1,679
15,000 Mobil Corp. 1,571
10,000 Phillips Petroleum Co. 506
15,000 Unocal Corp. 623
----------
8,500
----------
ENVIRONMENTAL SERVICES -- 2.3%
13,671,422 Waste Management, Inc. 772,435
----------
FINANCIAL SERVICES -- 4.4%
1,754,200 American Express Co. 229,252
5,000 Ameritrade Holding Corp. Cl A(2) 669
467,832 Associates First Capital Corp. 20,731
15,000 Capital One Financial Corp. 2,605
10,000 Donaldson, Lufkin & Jenrette, Inc. 699
20,000 Equitable Companies Inc. 1,346
8,766,400 Fannie Mae 621,867
7,505,500 Federal Home Loan Mortgage Corporation 470,970
35,000 Household International, Inc. 1,761
7,000 Kansas City Southern Industries, Inc. 417
4,000 Knight/Trimark Group, Inc. Cl A(2) 614
20,000 Merrill Lynch & Co., Inc. 1,679
665,000 Morgan Stanley Dean Witter, Discover & Co. 65,960
25,000 Paine Webber Group, Inc. 1,173
996,400 Price (T. Rowe) Associates, Inc. 37,583
10,500 Providian Financial Corp. 1,355
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
85,000 Schwab (Charles) Corp. $ 9,329
375,000 State Street Corp. 32,813
30,000 Washington Mutual, Inc. 1,234
----------
1,502,057
----------
FOOD & BEVERAGE -- 3.6%
35,000 Anheuser-Busch Companies, Inc. 2,559
5,000 Bestfoods 251
13,061,700 Coca-Cola Company (The) 888,196
4,350,000 Coca-Cola Enterprises, Inc. 150,075
15,000 Kellogg Co. 555
4,505,000 PepsiCo, Inc. 166,403
10,000 Quaker Oats Co. (The) 646
----------
1,208,685
----------
HEALTHCARE(1)
10,000 Aetna Inc. 877
----------
INDUSTRIAL EQUIPMENT & MACHINERY(1)
20,000 Dover Corp. 739
----------
INSURANCE -- 4.7%
30,000 AFLAC Inc. 1,627
13,495,325 American International Group, Inc. 1,584,857
15,000 Marsh & McLennan Companies, Inc. 1,148
----------
1,587,632
----------
LEISURE -- 1.4%
85,000 Carnival Corp. Cl A 3,506
1,500,000 Disney (Walt) Co. 47,625
20,000 Eastman Kodak Co. 1,493
10,000 Harley-Davidson, Inc. 596
236,000 Viacom, Inc. Cl A(2) 9,573
10,468,000 Viacom, Inc. Cl B(2) 427,880
----------
490,673
----------
MACHINERY & EQUIPMENT -- 0.1%
625,000 Applied Materials, Inc.(2) 33,496
10,000 Danaher Corp. 664
----------
34,160
----------
MEDICAL EQUIPMENT & SUPPLIES -- 2.1%
30,000 Boston Scientific Corp.(2) 1,277
2,880,000 Guidant Corp. 154,620
7,866,700 Medtronic, Inc. 565,911
----------
721,808
----------
OFFICE EQUIPMENT & SUPPLIES(1)
25,000 Avery Dennison Corp. 1,706
20,000 Pitney Bowes Inc. 1,399
----------
3,105
----------
PAPER & FOREST PRODUCTS(1)
15,000 Georgia-Pacific Corp. 1,388
40,000 Kimberly-Clark Corp. 2,453
25,000 Weyerhaeuser Co. 1,678
----------
5,519
----------
See Notes to Financial Statements
www.americancentury.com 9
Ultra--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
PERSONAL SERVICES -- 0.4%
2,575,000 Block (H&R), Inc. $ 123,922
----------
PHARMACEUTICALS -- 11.7%
120,000 Abbott Laboratories 5,812
10,000 Allergan, Inc. 899
3,378,300 American Home Products Corp. 206,076
8,841,800 Bristol-Myers Squibb Co. 562,007
1,034,300 Elan Corp., plc ADR(2) 53,266
10,000 Genentech, Inc.(2) 846
4,868,000 Johnson & Johnson 474,630
4,142,000 Lilly (Eli) & Co. 304,955
9,505,800 Merck & Co., Inc. 667,782
7,720,500 Pfizer, Inc. 888,340
1,050,000 Pharmacia & Upjohn Inc. 58,800
7,408,400 Schering-Plough Corp. 357,918
5,644,900 Warner-Lambert Co. 383,500
----------
3,964,831
----------
PRINTING & PUBLISHING(1)
15,000 Tribune Co. 1,252
----------
RAILROAD(1)
15,000 CSX Corp. 739
30,000 Union Pacific Corp. 1,800
----------
2,539
----------
RESTAURANTS -- 0.6%
5,055,000 McDonald's Corp. 214,206
----------
RETAIL (APPAREL) -- 0.1%
80,000 Abercrombie & Fitch Co. Cl A(2) 7,610
110,000 Gap, Inc. (The) 7,322
20,000 Intimate Brands, Inc. 1,000
30,000 Limited, Inc. (The) 1,313
----------
17,245
----------
RETAIL (FOOD & DRUG) -- 0.7%
5,000 Albertson's, Inc. 257
20,000 CVS Corp. 952
3,425,000 Safeway Inc.(2) 184,736
20,000 SYSCO Corp. 594
2,245,000 Walgreen Co. 60,334
----------
246,873
----------
RETAIL (GENERAL MERCHANDISE) -- 2.7%
1,929,000 Costco Companies, Inc.(2) 156,068
1,394,500 Dayton Hudson Corp. 93,867
15,000 Federated Department Stores, Inc.(2) 700
10,000 Kohl's Corp.(2) 664
14,290,600 Wal-Mart Stores, Inc. 657,368
----------
908,667
----------
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
RETAIL (INTERNET)(1)
30,000 Amazon.com, Inc.(2) $ 5,161
10,000 eBay Inc.(2) 2,081
----------
7,242
----------
RETAIL (SPECIALTY) -- 1.1%
465,000 Best Buy Co., Inc.(2) 22,204
5,831,000 Home Depot, Inc. 349,496
20,000 Lowe's Companies, Inc. 1,055
150,000 Staples, Inc.(2) 4,505
6,000 Tandy Corp. 435
----------
377,695
----------
TELEPHONE COMMUNICATIONS -- 11.7%
27,078,810 AT&T Cor 1,367,480
5,000 ALLTEL Corp. 337
2,427,800 Ameritech Corp. 166,153
2,649,800 BellSouth Corp. 118,579
10,000 Frontier Corp. 552
25,000 Global Crossing Holdings Ltd.(2) 1,356
21,095,374 MCI WorldCom, Inc.(2) 1,733,117
35,000 Qwest Communications International Inc.(2) 2,989
10,720,000 SBC Communications Inc. 600,320
35,000 Sprint Corp. 3,590
----------
3,994,473
----------
TEXTILES & APPAREL(1)
35,000 NIKE, Inc. 2,177
----------
TRANSPORTATION(1)
7,000 Hertz Corp. Cl A 418
----------
UTILITIES(1)
10,000 Dominion Resources, Inc. (Va.) 411
10,000 PECO Energy Co. 474
----------
885
----------
WIRELESS COMMUNICATIONS -- 2.2%
6,881,000 AirTouch Communications, Inc.(2) 642,513
540,000 Nokia Corp. ADR Cl A 40,061
69,800 Vodafone Group plc ADR 12,520
3,527,000 Vodafone Group plc ORD 64,948
----------
760,042
----------
TOTAL COMMON STOCKS 33,415,138
(Cost $19,976,078) ----------
See Notes to Financial Statements
10 1-800-345-2021
Ultra--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.5%
PRINTING & PUBLISHING
5,217,000 News Corp. Ltd. ADR $ 159,445
(Cost $96,137) ----------
TEMPORARY CASH INVESTMENTS -- 1.3%
$101,000 FHLB Discount Notes, 4.89%, 5/3/99(3) 101,000
Repurchase Agreement, BA Security Services, Inc.
(U.S. Treasury obligations), in a joint trading account
at 4.80%, dated 4/30/99, due 5/3/99 (Delivery
value $154,362) 154,300
Repurchase Agreement, Merrill Lynch & Co., Inc.
(U.S. Treasury obligations), in a joint trading account
at 4.80%, dated 4/30/99, due 5/3/99 (Delivery
value $200,980) 200,900
----------
TOTAL TEMPORARY CASH INVESTMENTS 456,200
(Cost $456,173) ----------
TOTAL INVESTMENT SECURITIES -- 100.0% $34,030,783
(Cost $20,528,388) ============
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ in Thousands)
Contracts Settlement Unrealized
to Sell Date Value Gain
56,425,135 EURO 5/28/99 $59,770 $355
====================
(Value on Settlement Date $60,125)
Forward foreign currency exchange contracts are used by the portfolio management
team in an effort to protect foreign investments against declines in foreign
currencies. This is also known as hedging. The contracts are called "forward"
because they allow your fund to exchange a foreign currency for U.S. dollars at
a date in the future --and at a price (known as the exchange rate) agreed upon
when the contract is initially entered into.
NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt FHLB =
Federal Home Loan Bank ORD = Foreign Ordinary Share
(1) Industry is less than 0.05% of total investment securities.
(2) Non-income producing.
(3) Rate disclosed is the yield to maturity at purchase.
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule shows you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the number of shares of each stock
* the market value of each investment
* the percentage of total investments in each industry
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
www.americancentury.com 11
Vista--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF APRIL 30, 1999
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 11/25/83) (INCEPTION 10/2/96) (INCEPTION 11/14/96)
RUSSELL 2500 RUSSELL 2500 RUSSELL 2500
VISTA GROWTH INDEX VISTA GROWTH INDEX VISTA GROWTH INDEX
6 MONTHS(1) 23.19% 25.46% 22.97% 25.46% 23.39% 25.46%
1 YEAR -15.78% -1.79% -15.99% -1.79% -15.50% -1.79%
AVERAGE ANNUAL RETURNS
3 YEARS -6.71% 8.36% -- -- -- --
5 YEARS 7.77% 14.62% -- -- -- --
10 YEARS 9.68% 13.01% -- -- -- --
LIFE OF FUND 10.33% N/A(2) -9.33% 9.89%(3) -6.67% 10.41%(4)
(1) Returns for periods less than one year are not annualized.
(2) Benchmark began 1/1/86.
(3) Since 9/30/96, the date nearest the class's inception for which data are
available.
(4) Since 11/30/96, the date nearest the class's inception for which data are
available.
See pages 31-34 for information about share classes, the Russell 2500 Growth
Index, and returns.
[chart data shown below]
GROWTH OF $10,000 OVER 10 YEARS
Vista Russell 2500 Growth
Date Value Value
4/30/89 $10,000 $10,000
4/30/90 $11,507 $10,384
4/30/91 $13,178 $12,134
4/30/92 $15,497 $14,047
4/30/93 $16,029 $15,015
4/30/94 $17,346 $17,174
4/30/95 $21,069 $19,182
4/30/96 $31,060 $26,699
4/30/97 $23,742 $24,836
4/30/98 $29,946 $34,589
4/30/99 $25,216 $33,969
Value on 4/30/99
Russell 2500 Growth $33,969
Vista $25,216
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 2500 Growth Index is provided for comparison in each graph. Vista's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the Russell
2500 Growth 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.
[chart data shown below]
ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDING APRIL 30)
Vista Russell 2500 Growth
Date Return Return
4/30/90 15.07 3.84
4/30/91 14.52 16.85
4/30/92 17.60 15.77
4/30/93 3.43 6.89
4/30/94 8.22 14.38
4/30/95 21.46 11.69
4/30/96 47.42 39.19
4/30/97 -23.56 -6.98
4/30/98 26.13 39.27
4/30/99 -15.78 -1.79
12 1-800-345-2021
Vista--Q&A
- --------------------------------------------------------------------------------
[photo of Arnie Douville and Glenn Fogle]
Arnie Douville and Glenn Fogle, portfolio managers on the Vista investment team
An interview with Glenn Fogle and Arnie Douville, portfolio managers on the
American Century Vista investment team.
HOW DID VISTA PERFORM DURING THE FIRST SIX MONTHS OF ITS FISCAL YEAR?*
Vista gained 23.19% for the six months ended April 30, 1999. Its benchmark,
the Russell 2500 Growth Index, was up 25.46%. This represents the best six-month
period for the fund in over three years.
WHAT HELPED VISTA ACHIEVE THIS PERFORMANCE?
In our last report to you, we discussed several steps we were taking to
improve Vista's performance. We have fine-tuned our proprietary database that
tracks the 2,000 growth companies in Vista's mid-cap universe to help us find
more companies at the "sweet spot" -- that moment when earnings are just
beginning to accelerate. In addition, our information systems are examining and
measuring our stock selections and industry weightings against key mid-cap
benchmarks to help enable Vista to continue to perform more in line with other
funds in its asset class. This should not be construed as any sort of "indexing"
effort, but as a check on the construction of our portfolio. Next, we have
increased Vista's exposure to a broader group of industries and sectors. Vista
will still lean toward the fastest-growing sectors of the economy -- many of
them high technology in nature -- but we also want to make sure that we don't
overlook other sectors experiencing good performance.
Another important step has been to improve our timing. We're seeking to
purchase companies earlier in their growth cycle before their potential has been
widely recognized by the market, putting us in position to capture more of their
price gains.
WHICH SECTORS OR STOCKS CONTRIBUTED TO VISTA'S RESULTS?
The biggest contributors to the fund's performance, and among the strongest
areas in the market as a whole, were companies involved in three major
industries -- electric and electronic components, communications equipment, and
computer software and services. Together, firms in those sectors account for
more than a third of Vista's assets.
The Internet has been a major growth driver for all kinds of high-tech
firms, whether they're in the equipment end of the business or on the content
side. Our best Internet stocks included one of our largest holdings, At Home
Corp., an Internet access service transmitted over cable, and Excite, an
Internet access portal that At Home acquired during the period. As of March 31,
1999, At Home had 460,000 cable modem subscribers across North America, an
increase of 413% from 90,000 subscribers a year earlier. The stock gained 225%
during the six months.
* All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"THIS REPRESENTS THE BEST SIX-MONTH PERIOD FOR THE FUND IN OVER THREE YEARS."
PORTFOLIO AT A GLANCE
4/30/99 10/31/98
NO. OF COMPANIES 70 83
MEDIAN P/E RATIO 31.5 28.4
MEDIAN MARKET $3.87 $3.24
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 123%(1) 229%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.00%(3) 1.00%
(1) Six months ended 4/30/99.
(2) Year ended 10/31/98.
(3) Annualized.
Investment terms are defined in the Glossary on pages 33-34.
www.americancentury.com 13
Vista--Q&A
- --------------------------------------------------------------------------------
(Continued)
Other companies benefiting indirectly from the Internet phenomenon were
Ascend Communications, which provides components for the telecommunications
backbone of the Internet, and Uniphase, a manufacturer of fiber optic
telecommunications equipment and laser systems. Ascend supplies data switches
for Internet access providers and carriers, and has agreed to be purchased by
Lucent Technologies in an all-stock deal worth $20 billion. We sold the stock
near the end of the period because the market value of the combined company
would exceed our capitalization requirements.
WHAT ELSE BESIDES TECHNOLOGY ISSUES BENEFITED THE FUND?
There were positive contributions among the top 10 holdings from
non-technology industries such as financial services and retail. Our investment
in consumer lender Providian Financial Corp. is a result of the fact that
consumers continue to spend more than they save. Credit card issuers like
Providian are benefiting from customers carrying higher balances, as well as
increased sales of fee-based services and other types of loans.
AnnTaylor Stores was a turnaround story in 1998 after experiencing several
years of disappointing sales. The clothing chain refreshed its merchandise last
year and recovered its core base of upscale consumers. Improved customer service
and marketing programs also helped attract younger women. AnnTaylor's share
price rose 64% over the six months.
WHAT WERE SOME INVESTMENT DECISIONS THAT HURT PERFORMANCE?
Our holdings in computer wholesalers did not perform as expected. CHS
Electronics and Micro Warehouse were both squeezed by a drop in overall demand
for personal computers, and the fact that more consumers are electing to
purchase computers directly from manufacturers like Dell Computer. CHS was also
hurt by economic slowdowns in Europe and Latin America.
Biotech company Protein Design Labs was another disappointment. PDL
licenses its technology to other biotech companies. Over the period, however,
investors seemed to favor larger biotech companies with new blockbuster drugs.
WHAT CHANGES DID YOU MAKE IN THE PORTFOLIO DURING THE SIX MONTHS?
We significantly increased our investments in companies making electronic
components (primarily computer chips) and communications equipment. Xilinx and
Altera are two of our newer holdings in the electronic components field. They
are both leading suppliers of programmable logic chips that are sold to
electronic equipment manufacturers in computer systems, telecommunications and
industrial markets.
Qualcomm is a new holding in the communications equipment area. The company
owns critical technology and patents for CDMA, the dominant wireless technology.
We bought it when it became apparent that the industry would adopt a single
worldwide standard incorporating Qualcomm's patents.
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
4/30/99 10/31/98
UNIPHASE CORP. 5.1% 2.2%
QUALCOMM INC. 4.3% --
ANNTAYLOR STORES
CORP. 3.1% 2.3%
AT HOME CORP.
SERIES A 2.9% 1.4%
CAPITAL ONE
FINANCIAL CORP. 2.8% --
FOODMAKER, INC. 2.8% 1.9%
ZIONS
BANCORPORATION 2.6% 1.1%
NEWBRIDGE
NETWORKS CORP. 2.6% --
ECHOSTAR
COMMUNICATIONS
CORP. 2.6% --
UNITED INTERNATIONAL
HOLDINGS, INC. 2.5% --
TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
4/30/99 10/31/98
ELECTRICAL &
ELECTRONIC
COMPONENTS 16.7% 2.7%
COMMUNICATIONS
EQUIPMENT 10.4% 4.0%
BROADCASTING &
MEDIA 8.8% --
COMPUTER SOFTWARE
& SERVICES 7.1% 7.1%
FINANCIAL SERVICES 6.9% 0.9%
14 1-800-345-2021
Vista--Q&A
- --------------------------------------------------------------------------------
(Continued)
We sold most of our electric utility stocks, which comprised Vista's
largest industry group -- 12.5% of the fund -- at the start of the period. We
had been attracted to these stocks because they were experiencing earnings
acceleration as a result of deregulation and a sustained period of low interest
rates. Many of them had been excellent contributors to our results. But with
growing uncertainty about the future direction of interest rates, we redeployed
the money in stronger growth stories.
We increased our holdings in media and broadcasting companies to over 8% of
the fund. We don't own any of the big, well-known U.S. cable companies; they
exceed our market capitalization guidelines. We do own international cable
companies such as NTL and United International Holdings. UIH is a cable company
based in Denver that owns cable systems in Europe, Australia and Latin America.
NTL is a cable operator in the United Kingdom which also provides telephone and
Internet services to its subscribers.
WHAT IS YOUR OUTLOOK FOR VISTA?
Vista's performance and that of its peers shows that more and more
investors are noticing the attractive prices of mid-cap growth stocks. We hope
that sentiment will continue. A risk we will have to contend with along the way
is the possibility of rising interest rates as the Federal Reserve attempts to
keep inflation in check. Higher interest rates threaten corporate earnings,
particularly those of small- and medium-sized firms that might not have the
breadth of products or the financial war chests to ride out periods of slowing
business conditions. In such an environment, however, when growth stories are
relatively scarce, our investment approach of finding companies with
accelerating growth can be an advantage as investors are willing to pay more of
a premium for solidly growing companies.
[right margin]
"VISTA'S PERFORMANCE AND THAT OF ITS PEERS SHOWS THAT MORE AND MORE INVESTORS
ARE NOTICING THE ATTRACTIVE PRICES OF MID-CAP GROWTH STOCKS."
[pie chart data shown below]
TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF APRIL 30, 1999
U.S. Stocks 96.1%
Temporary Cash Investments 2.9%
Foreign Stocks 1.0%
AS OF OCTOBER 31, 1998
U.S. Stocks 90.0%
Temporary Cash Investments 9.5%
Foreign Stocks 0.5%
www.americancentury.com 15
Vista--Schedule of Investments
- --------------------------------------------------------------------------------
APRIL 30, 1999 (UNAUDITED)
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 97.1%
AUTOMOBILES & AUTO PARTS -- 2.7%
200,000 Cooper Tire and Rubber Company $ 4,388
255,000 Johnson Controls, Inc. 18,599
----------
22,987
----------
BANKING -- 3.7%
280,000 UnionBanCal Corp. 9,608
335,000 Zions Bancorporation 22,351
----------
31,959
----------
BIOTECHNOLOGY -- 1.9%
175,000 MedImmune, Inc.(1) 9,652
400,000 Protein Design Labs, Inc.(1) 6,188
----------
15,840
----------
BROADCASTING & MEDIA -- 8.8%
220,000 EchoStar Communications Corp. Cl A(1) 22,075
240,000 NTL Inc.(1) 18,292
200,000 RCN Corp.(1) 9,662
90,000 Telewest Communications plc ADR(1) 4,163
360,000 United International Holdings, Inc. Cl A(1) 21,488
----------
75,680
----------
BUSINESS SERVICES & SUPPLIES -- 5.3%
435,000 CSG Systems International, Inc.(1) 16,883
275,000 Quanta Services, Inc.(1) 7,923
390,000 Quintiles Transnational Corp.(1) 15,832
80,000 Valassis Communications, Inc.(1) 4,480
----------
45,118
----------
COMMUNICATIONS EQUIPMENT -- 10.4%
750,000 ANTEC Corp.(1) 20,414
275,000 FORE Systems, Inc.(1) 9,264
600,000 Newbridge Networks Corp.(1) 22,350
185,900 QUALCOMM Inc.(1) 37,116
----------
89,144
----------
COMPUTER PERIPHERALS -- 1.1%
335,000 Seagate Technology, Inc.(1) 9,338
----------
COMPUTER SOFTWARE & SERVICES -- 7.1%
170,000 At Home Corp. Series A(1) 24,474
850,000 Mentor Graphics Corp.(1) 10,333
750,000 Novell, Inc.(1) 16,664
100,000 Synopsys, Inc.(1) 4,744
60,000 Veritas Software Corp.(1) 4,275
----------
60,490
----------
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
ELECTRICAL & ELECTRONIC
COMPONENTS -- 16.7%
190,000 ASM Lithography Holding N.V. New York Shares(1) $ 7,422
60,000 Broadcom Corp. Cl A(1) 4,631
180,000 KLA-Tencor Corporation(1) 8,910
215,000 Micron Technology, Inc.(1) 7,982
50,000 PMC-Sierra, Inc.(1) 4,797
75,000 Qlogic Corp.(1) 5,250
210,000 Sanmina Corp.(1) 13,926
210,000 Sawtek Inc.(1) 7,481
175,000 Taiwan Semiconductor Manufacturing Co. Ltd. ADR(1) 4,200
325,000 Teradyne, Inc.(1) 15,336
360,000 Uniphase Corp.(1) 43,628
420,000 Xilinx, Inc.(1) 19,215
----------
142,778
----------
FINANCIAL SERVICES -- 6.9%
90,000 Bear Stearns Companies Inc. 4,196
140,000 Capital One Financial Corp. 24,316
70,000 Lehman Brothers Holdings Inc. 3,889
165,000 Providian Financial Corp. 21,295
50,000 TeleBanc Financial Corp.(1) 5,175
----------
58,871
----------
HEALTHCARE -- 1.0%
540,000 Apria Healthcare Group Inc.(1) 8,438
----------
LEISURE -- 3.2%
550,000 Circus Circus Enterprises, Inc.(1) 11,584
470,000 Mirage Resorts, Inc.(1) 10,546
450,000 Park Place Entertainment Corp.(1) 4,866
----------
26,996
----------
MACHINERY & EQUIPMENT -- 0.6%
140,000 Case Corp. 4,848
----------
MEDICAL EQUIPMENT & SUPPLIES -- 3.3%
455,000 Boston Scientific Corp.(1) 19,366
70,000 VISX, Inc.(1) 9,015
----------
28,381
----------
OFFICE EQUIPMENT -- 1.4%
250,000 Electronics for Imaging, Inc.(1) 11,820
----------
PAPER & FOREST PRODUCTS -- 2.3%
100,000 Georgia-Pacific Corp. 9,250
70,000 Weyerhaeuser Co. 4,699
115,000 Willamette Industries, Inc. 5,376
----------
19,325
----------
PERSONAL SERVICES -- 1.2%
269,000 Sunrise Assisted Living, Inc.(1) 10,659
----------
See Notes to Financial Statements
16 1-800-345-2021
Vista--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 1.6%
300,000 Forest Laboratories, Inc.(1) $ 13,350
----------
RESTAURANTS -- 3.5%
225,000 Brinker International, Inc.(1) 6,216
1,000,000 Foodmaker, Inc.(1) 24,125
----------
30,341
----------
RETAIL (APPAREL) -- 3.1%
560,000 AnnTaylor Stores Corp.(1) 26,600
----------
RETAIL (GENERAL MERCHANDISE) -- 1.1%
140,000 Ames Department Stores, Inc.(1) 4,896
145,000 ShopKo Stores, Inc.(1) 4,975
----------
9,871
----------
RETAIL (SPECIALTY) -- 4.9%
80,000 Best Buy Co., Inc.(1) 3,820
285,000 Circuit City Stores-Circuit City Group 17,527
38,600 O'Reilly Automotive, Inc.(1) 1,785
500,000 Starbucks Corp.(1) 18,484
----------
41,616
----------
TELEPHONE COMMUNICATIONS -- 1.6%
50,000 Aliant Communications, Inc. 2,208
100,000 ALLTEL Corp. 6,744
150,000 Intermedia Communications Inc.(1) 4,833
----------
13,785
----------
Shares ($ in Thousands) Value
- --------------------------------------------------------------------------------
UTILITIES -- 2.1%
240,000 Montana Power Co. $ 17,895
----------
WIRELESS COMMUNICATIONS -- 1.6%
115,000 Nextel Communications, Inc.(1) 4,704
225,000 Western Wireless Corp. Cl A(1) 9,211
----------
13,915
----------
TOTAL COMMON STOCKS 830,045
(Cost $647,750) ----------
TEMPORARY CASH INVESTMENTS -- 2.9%
Repurchase Agreement, Morgan Stanley Group, Inc.,
(U.S. Treasury obligations), in a joint trading
account at 4.84%, dated 4/30/99, due 5/3/99
(Delivery value $25,010) 25,000
(Cost $25,000) ----------
TOTAL INVESTMENT SECURITIES -- 100.0% $855,045
(Cost $672,750) ==========
NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt (1)
Non-income producing.
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule shows you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the number of shares of each stock
* the market value of each investment
* the percentage of total investments in each industry
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
www.americancentury.com 17
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
APRIL 30, 1999
(UNAUDITED) ULTRA VISTA
- ----------------------------------------------------------------------------------------
ASSETS (In Thousands Except Per-Share Amounts)
<S> <C> <C>
Investment securities, at value
(identified cost of $20,528,388 and
$672,750, respectively) (Note 3) ................$ 34,030,783 $ 855,045
Cash ............................................... 48,334 --
Receivable for investments sold .................... 48,083 42,907
Receivable for forward foreign currency
exchange contracts ............................... 355 --
Dividends and interest receivable .................. 22,127 99
---------------- ----------------
34,149,682 898,051
---------------- ----------------
LIABILITIES
Disbursements in excess of
demand deposit cash ................................ -- 3,126
Payable for investments purchased .................. 208,081 8,163
Payable for capital shares redeemed ................ -- 1
Accrued management fees (Note 2) ................... 28,329 739
Distribution fees payable (Note 2) ................. 38 1
Service fees payable (Note 2) ...................... 38 1
Payable for directors' fees and expenses ........... 31 1
Other liabilities .................................. 18 3
---------------- ----------------
236,535 12,035
---------------- ----------------
Net Assets .........................................$ 33,913,147 $ 886,016
================ ================
NET ASSETS CONSIST
OF:
Capital (par value and paid in surplus) ............$ 20,222,369 $ 695,134
Net investment loss ................................ (43,526) (1,789)
Accumulated undistributed net realized gain
on investment and foreign currency transactions .. 231,554 10,376
Net unrealized appreciation on investments
and translation of assets and liabilities in
foreign currencies (Note 3) ...................... 13,502,750 182,295
---------------- ----------------
$ 33,913,147 $ 886,016
================ ================
Investor Class, $0.01 Par Value
($ and shares in full)
Net assets .........................................$ 33,691,588,289 $ 880,626,946
Shares outstanding ................................. 918,937,017 77,083,327
Net asset value per share ..........................$ 36.66 $ 11.42
Advisor Class, $0.01 Par Value
($ and shares in full)
Net assets .........................................$ 187,497,146 $ 5,278,590
Shares outstanding ................................. 5,130,826 464,929
Net asset value per share ..........................$ 36.54 $ 11.35
Institutional Class, $0.01 Par Value
($ and shares in full)
Net assets .........................................$ 34,061,825 $ 110,247
Shares outstanding ................................. 925,972 9,588
Net asset value per share ..........................$ 36.78 $ 11.50
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the priceof an
individual share, or the net asset value per share.
NET ASSETS are also broken down by capital (money invested by shareholders);
netinvestment income not yet paid to shareholders or net investment losses; net
gains earned on investments but not yet paid to shareholders or net losses on
investments (known as realized gains or losses); and finally, gains or losses on
securities still owned by the fund (known as unrealized appreciation or
depreciation). This breakdown tells you the value of net assets that are
performance- related, such as investment gains or losses, and the value of net
assets that are not related to performance, such as shareholder investments and
redemptions.
See Notes to Financial Statements
18 1-800-345-2021
Statements of Operations
- --------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED) ULTRA VISTA
INVESTMENT LOSS (In Thousands)
Income:
Dividends (net of foreign taxes withheld
of $242 and $6, respectively) ..................$ 105,076 $ 2,044
Interest ......................................... 4,697 699
----------- -----------
109,773 2,743
----------- -----------
Expenses (Note 2):
Management fees .................................. 152,806 4,516
Distribution fees -- Advisor Class ............... 181 6
Service fees -- Advisor Class .................... 181 6
Directors' fees and expenses ..................... 131 4
----------- -----------
153,299 4,532
----------- -----------
Net investment loss .............................. (43,526) (1,789)
----------- -----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)
Net realized gain on:
Investments ...................................... 320,877 42,269
Foreign currency transactions .................... 22,126 --
343,003 42,269
----------- -----------
Change in net unrealized appreciation on:
Investments ...................................... 7,323,051 150,484
Translation of assets and liabilities
in foreign currencies .......................... 370 --
----------- -----------
7,323,421 150,484
----------- -----------
Net realized and unrealized gain on investments .. 7,666,424 192,753
----------- -----------
Net Increase in Net Assets Resulting
from Operations ................................$ 7,622,898 $ 190,964
=========== ===========
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS--This statement breaks down how the
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.
Fund OPERATIONS include:
* income earned from investments (dividend and interest)
* management fees and other expenses
* gains or losses from selling investments (known as realized gains or losses)
* gains or losses on current fund holdings (known as unrealized appreciation or
depreciation)
See Notes to Financial Statements
www.americancentury.com 19
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED) AND YEAR ENDED OCTOBER 31, 1998
ULTRA VISTA
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets 1999 1998 1999 1998
OPERATIONS (In Thousands)
Net investment loss .........................................$ (43,526) $ (19,332) $ (1,789) $ (5,907)
Net realized gain (loss) on investments and
foreign currency transactions ............................. 343,003 2,504,658 42,269 (27,871)
Change in net unrealized appreciation (depreciation)
on investments and translation of assets and liabilities
in foreign currencies ..................................... 7,323,421 1,250,224 150,484 (416,761)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations ................................................ 7,622,898 3,735,550 190,964 (450,539)
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS From net investment income:
Investor Class .......................................... -- (8,654) -- --
Institutional Class ..................................... -- (1) -- --
From net realized gains on investment transactions:
Investor Class .......................................... (2,558,609) (4,593,562) -- (98,425)
Advisor Class ........................................... (10,096) (6,944) -- (378)
Institutional Class ..................................... (1,995) (73) -- (750)
------------ ------------ ------------ ------------
Decrease in net assets from distributions ................... (2,570,700) (4,609,234) -- (99,553)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase (decrease) in net assets from
capital share transactions ................................ 3,329,700 4,679,017 (204,241) (398,837)
------------ ------------ ------------ ------------
Net increase (decrease) in net assets ....................... 8,381,898 3,805,333 (13,277) (948,929)
NET ASSETS
Beginning of period ......................................... 25,531,249 21,725,916 899,293 1,848,222
------------ ------------ ------------ ------------
End of period ...............................................$ 33,913,147 $ 25,531,249 $ 886,016 $ 899,293
============ ============ ============ ============
Net investment loss .........................................$ (43,526) -- $ (1,789) --
============ ============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show 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--a summary of the Statement of Operations from the previous page
for the most recent period
* distributions--income and gains distributed to shareholders
* share transactions--shareholders' purchases, reinvestments, and redemptions
Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.
See Notes to Financial Statements
20 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
APRIL 30, 1999 (UNAUDITED)
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 diversified
management investment company. Ultra Fund (Ultra) and Vista Fund (Vista) (the
funds) are two of the thirteen series of funds issued by the corporation. The
funds' investment objective is to seek capital growth by investing primarily in
equity securities. 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. The following significant
accounting policies are in accordance with generally accepted accounting
principles; these principles 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 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. Discount notes are
valued through a commercial pricing service. 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.
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.
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.
www.americancentury.com 21
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
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.
At October 31, 1998, Vista had accumulated net realized capital loss
carryovers for federal income tax purposes of $25,756,378 (expiring in 2006)
which may be used to offset future taxable realized gains.
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.
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The corporation has entered into a Management Agreement with ACIM that
provides the funds 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 is 1.00%, 0.75% and 0.80% for the Investor, Advisor,
and Institutional Classes, respectively.
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 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 by the funds
under the plan during the six months ended April 30, 1999, were $362,540 for
Ultra and $11,838 for Vista.
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
Purchases of investment securities, excluding short-term investments, for
Ultra and Vista totaled $6,075,517,401 and $1,075,619,421, respectively. Sales
of investment securities, excluding short-term investments, totaled
$5,095,973,056 and $1,260,884,774, respectively.
As of April 30, 1999, accumulated net unrealized appreciation for Ultra and
Vista was $13,391,783,139 and $176,157,981, respectively, based on the aggregate
cost of investments for federal income tax purposes of $20,638,999,767 and
$678,886,710 respectively. Accumulated net unrealized appreciation consisted of
unrealized appreciation of $13,437,801,420 and $201,769,299 for Ultra and Vista,
respectively, and unrealized depreciation of $46,018,281 and $25,611,318,
respectively.
22 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
<TABLE>
Transactions in shares of the funds were as follows:
ULTRA VISTA
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS (IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares authorized ...........................1,062,500 710,000
========== =========
Six months ended April 30, 1999
Sold ........................................ 132,567 $4,619,896 29,558 $ 308,497
Issued in reinvestment of distributions ..... 79,980 2,515,533 -- --
Redeemed .................................... (111,309) (3,863,446) (49,004) (512,960)
---------- ---------- ---------- ----------
Net increase (decrease) ..................... 101,238 $3,271,983 (19,446) $(204,463)
========== ========== ========== ==========
Year ended October 31, 1998
Sold ........................................ 224,437 $7,006,778 98,587 $1,196,006
Issued in reinvestment of distributions ..... 170,508 4,526,262 7,926 95,322
Redeemed .................................... (225,564) (6,959,796) (135,809) (1,678,583)
---------- ---------- ---------- ----------
Net increase (decrease) ..................... 169,381 $4,573,244 (29,296) $ (387,255)
========== ========== ========== ==========
ADVISOR CLASS (IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------
Shares authorized ........................... 312,500 210,000
========== ==========
Six months ended April 30, 1999
Sold ........................................ 2,513 $87,238 144 $1,496
Issued in reinvestment of distributions ..... 319 9,983 -- --
Redeemed .................................... (893) (31,177) (118) (1,233)
---------- ---------- ---------- ----------
Net increase ................................ 1,939 $66,044 26 $ 263
========== ========== ========== ==========
Year ended October 31, 1998
Sold ........................................ 2,873 $87,888 211 $2,555
Issued in reinvestment of distributions ..... 262 6,944 32 378
Redeemed .................................... (866) (26,625) (256) (3,132)
---------- ---------- ---------- ----------
Net increase (decrease) ..................... 2,269 $68,207 (13) $ (199)
========== ========== ========== ==========
INSTITUTIONAL CLASS (IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------
Shares authorized ........................... 125,000 80,000
========== ==========
Six months ended April 30, 1999
Sold ........................................ 920 $31,196 294 $3,201
Issued in reinvestment of distributions ..... 63 1,976 -- --
Redeemed .................................... (1,216) (41,499) (290) (3,242)
---------- ---------- ---------- ----------
Net increase (decrease) ..................... (233) $ (8,327) 4 $ (41)
========== ========== ========== ==========
Year ended October 31, 1998
Sold ........................................ 3,132 $98,660 998 $12,315
Issued in reinvestment of distributions ..... 2 49 62 750
Redeemed .................................... (1,985) (61,143) (1,986) (24,448)
---------- ---------- ---------- ----------
Net increase (decrease) ..................... 1,149 $37,566 (926) $(11,383)
========== ========== ========== ==========
</TABLE>
www.americancentury.com 23
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
APRIL 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
5. BANK LOANS
Effective December 18, 1998, the funds, along with certain other funds
managed by ACIM, entered into an unsecured $570,000,000 bank line of credit
agreement with Chase Manhattan Bank. Borrowings under the agreement bear
interest at the Federal Funds rate plus 0.40%. The funds may borrow money for
temporary or emergency purposes to fund shareholder redemptions. The funds did
not borrow from the line during the period December 18, 1998 through April 30,
1999.
- --------------------------------------------------------------------------------
6. FUND EVENTS
The following name changes became effective March 1, 1999:
NEW NAME FORMER NAME
FUND: Ultra Fund American Century -- Twentieth Century Ultra Fund
FUND: Vista Fund American Century -- Twentieth Century Vista Fund
24 1-800-345-2021
Ultra--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......$ 31.06 $ 33.46 $ 29.52 $ 28.03 $ 21.16 $ 21.61
---------- ---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Income (Loss) ............ (0.05)(2) (0.02)(2) 0.01(2) (0.05)(2) (0.07)(2) (0.03)
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ............ 8.77 4.70 5.62 2.84 7.58 (0.42)
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations ........ 8.72 4.68 5.63 2.79 7.51 (0.45)
---------- ---------- ---------- ---------- ---------- ----------
Distributions
From Net Investment Income .............. -- (0.01) -- -- -- --
From Net Realized Gains on Investment
Transactions ............................ (3.12) (7.07) (1.69) (1.19) (0.64) --
In Excess of Net Realized Gains ......... -- -- -- (0.11) -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions ..................... (3.12) (7.08) (1.69) (1.30) (0.64) --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ............$ 36.66 $ 31.06 $ 33.46 $ 29.52 $ 28.03 $ 21.16
========== ========== ========== ========== ========== ==========
Total Return(3) ......................... 29.76% 17.61% 19.95% 10.79% 36.89% (2.08)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average
Net Assets ................................ 1.00%(4) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment Income (Loss)
to Average Net Assets ...................(0.28)%(4) (0.08)% 0.03% (0.20)% (0.30)% (0.10)%
Portfolio Turnover Rate ................... 17% 128% 107% 87% 87% 78%
Net Assets, End of Period (in millions) ...$ 33,692 $ 25,396 $ 21,695 $ 18,266 $ 14,376 $ 10,344
</TABLE>
(1) Six months ended April 30, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the year.
(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.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These pages itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
www.americancentury.com 25
Ultra--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Advisor Class
1999(1) 1998 1997 1996(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......$ 31.00 $ 33.36 $ 29.52 $ 29.55
----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Loss(3) .................. (0.09) (0.11) (0.07) (0.02)
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ............ 8.75 4.73 5.60 (0.01)
----------- ----------- ----------- -----------
Total From Investment Operations ........ 8.66 4.62 5.53 (0.03)
----------- ----------- ----------- -----------
Distributions
From Net Realized Gains on Investment
Transactions ............................ (3.12) (6.98) (1.69) --
----------- ----------- ----------- -----------
Net Asset Value, End of Period ............$ 36.54 $ 31.00 $ 33.36 $ 29.52
=========== =========== =========== ===========
Total Return(4) ......................... 29.62% 17.36% 19.59% (0.10)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average
Net Assets .............................. 1.25%(5) 1.25% 1.25% 1.25%(5)
Ratio of Net Investment Loss to Average
Net Assets .............................. (0.53)%(5) (0.33)% (0.22)% (0.80)%(5)
Portfolio Turnover Rate ................... 17% 128% 107% 87%
Net Assets, End of Period (in thousands) ..$ 187,497 $ 98,965 $ 30,827 $ 13,051
</TABLE>
(1) Six months ended April 30, 1999 (unaudited).
(2) October 2, 1996 (commencement of sale) through October 31, 1996.
(3) Computed using average shares outstanding throughout the period.
(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
26 1-800-345-2021
Ultra--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Institutional Class
1999(1) 1998 1997(2)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 31.12 $ 33.53 $ 30.78
---------- ---------- ----------
Income From Investment Operations
Net Investment Income (Loss)(3) ...... (0.01) 0.03 0.06
Net Realized and Unrealized Gain on
Investment Transactions ............ 8.79 4.72 4.38
---------- ---------- ----------
Total From Investment Operations ..... 8.78 4.75 4.44
---------- ---------- ----------
Distributions
From Net Investment Income ........... -- (0.09) --
From Net Realized Gains on
Investment Transactions ............ (3.12) (7.07) (1.69)
---------- ---------- ----------
Total Distributions .................. (3.12) (7.16) (1.69)
---------- ---------- ----------
Net Asset Value, End of Period ......... $ 36.78 $ 31.12 $ 33.53
========== ========== ==========
Total Return(4) ...................... 29.91% 17.85% 15.28%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ................... 0.80%(5) 0.80% 0.80%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets ................ (0.08)%(5) 0.12% 0.23%(5)
Portfolio Turnover Rate ................ 17% 128% 107%
Net Assets, End of Period (in thousands) $ 34,062 $ 36,065 $ 334
</TABLE>
(1) Six months ended April 30, 1999 (unaudited).
(2) November 14, 1996 (commencement of sale) through October 31, 1997.
(3) Computed using average shares outstanding throughout the period.
(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 27
Vista--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ......$ 9.27 $ 14.53 $ 15.68 $ 15.73 $ 10.94 $ 12.24
--------- --------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Loss ..................... (0.02)(2) (0.05)(2) (0.10)(2) (0.11)(2) (0.08)(2) (0.08)
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .............. 2.17 (4.41) 0.13 1.09 4.90 0.45
--------- --------- --------- --------- --------- ---------
Total From Investment Operations ........ 2.15 (4.46) 0.03 0.98 4.82 0.37
--------- --------- --------- --------- --------- ---------
Distributions
From Net Realized Gains on Investment
Transactions .......................... -- (0.80) (1.18) (1.02) (0.03) (1.66)
In Excess of Net Realized Gains ......... -- -- -- (0.01) -- (0.01)
--------- --------- --------- --------- --------- ---------
Total Distributions ..................... -- (0.80) (1.18) (1.03) (0.03) (1.67)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period ............$ 11.42 $ 9.27 $ 14.53 $ 15.68 $ 15.73 $ 10.94
========= ========= ========= ========= ========= =========
Total Return(3) ......................... 23.19% (31.94)% 0.29% 6.96% 44.20% 4.16%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average
Net Assets ................................ 1.00%(4) 1.00% 1.00% 0.99% 0.98% 1.00%
Ratio of Net Investment Loss to Average
Net Assets ..............................(0.39)%(4) (0.42)% (0.73)% (0.70)% (0.60)% (0.80)%
Portfolio Turnover Rate ................... 123% 229% 96% 91% 89% 111%
Net Assets, End of Period (in millions) ...$ 881 $ 895 $ 1,828 $ 2,276 $ 1,676 $ 792
</TABLE>
(1) Six months ended April 30, 1999 (unaudited).
(2) Computed using average shares outstanding throughout the year.
(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.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These pages itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced during
the period
See Notes to Financial Statements
28 1-800-345-2021
Vista--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Advisor Class
1999(1) 1998 1997 1996(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...... $ 9.23 $ 14.50 $ 15.67 $ 16.87
--------- --------- --------- ---------
Income From Investment Operations
Net Investment Loss(3) .................. (0.03) (0.08) (0.14) (0.02)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ..... 2.15 (4.39) 0.15 (1.18)
--------- --------- --------- ---------
Total From Investment Operations ........ 2.12 (4.47) 0.01 (1.20)
--------- --------- --------- ---------
Distributions
From Net Realized Gains on
Investment Transactions ............... -- (0.80) (1.18) --
--------- --------- --------- ---------
Net Asset Value, End of Period ............ $ 11.35 $ 9.23 $ 14.50 $ 15.67
========= ========= ========= =========
Total Return(4) ......................... 22.97% (32.08)% 0.15% (7.11)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 1.25%(5) 1.25% 1.25% 1.25%(5)
Ratio of Net Investment Loss to
Average Net Assets ...................... (0.64)%(5) (0.67)% (0.98)% (1.20)%(5)
Portfolio Turnover Rate ................... 123% 229% 96% 91%
Net Assets, End of Period (in thousands) .. $ 5,279 $ 4,052 $ 6,553 $ 5,646
</TABLE>
(1) Six months ended April 30, 1999 (unaudited).
(2) October 2, 1996 (commencement of sale) through October 31, 1996.
(3) Computed using average shares outstanding throughout the period.
(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 29
Vista--Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED OCTOBER 31 (EXCEPT AS NOTED)
Institutional Class
1999(1) 1998 1997(2)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ......$ 9.32 $ 14.56 $ 15.73
---------- ---------- ----------
Income From Investment Operations
Net Investment Loss(3) .................. (0.02) (0.01) (0.07)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ..... 2.20 (4.43) 0.08
---------- ---------- ----------
Total From Investment Operations ........ 2.18 (4.44) 0.01
---------- ---------- ----------
Distributions
From Net Realized Gains on
Investment Transactions ............... -- (0.80) (1.18)
---------- ---------- ----------
Net Asset Value, End of Period ............$ 11.50 $ 9.32 $ 14.56
========== ========== ==========
Total Return(4) ......................... 23.39% (31.72)% 0.17%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to
Average Net Assets ...................... 0.80%(5) 0.80% 0.80%(5)
Ratio of Net Investment Loss to
Average Net Assets ......................(0.19)%(5) (0.22)% 0.53)%(5)
Portfolio Turnover Rate ................... 123% 229% 96%
Net Assets, End of Period (in thousands) ..$ 110 $ 60 $ 13,581
</TABLE>
(1) Six months ended April 30, 1999 (unaudited).
(2) November 14, 1996 (commencement of sale) through October 31, 1997.
(3) Computed using average shares outstanding throughout the period.
(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
30 1-800-345-2021
Share Class and Retirement Account Information
- --------------------------------------------------------------------------------
SHARE CLASSES
Three classes of shares are authorized for sale by the funds: 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 tax 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 31
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 ULTRA generally invests in the securities of mid-sized and
larger companies that exhibit growth. It typically will have significant price
fluctuations.
AMERICAN CENTURY VISTA invests mainly in the securities of smaller and
medium-sized firms that exhibit growth. The fund is subject to significant price
volatility but offers high long-term growth potential. Historically, small- and
mid-cap stocks have been more volatile than the stocks of larger, more
established companies.
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 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
straded 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 average market capitalization of the index is approximately $420
million.
The RUSSELL 2500 INDEX was created by the Frank Russell Company. It
measures the performance of the 2,500 smallest of the 3,000 largest publicly
traded U.S. companies based on total market capitalization. The Russell 2500
represents approximately 23% of the total market capitalization of the top 3,000
companies. The average market capitalization of the index is approximately $650
million. The RUSSELL 2500 GROWTH INDEX measures the performance of those Russell
2500 companies with higher price-to-book ratios and higher forecasted growth
rates.
[left margin]
PORTFOLIO MANAGERS
ULTRA
JIM STOWERS III
BRUCE WIMBERLY
JOHN SYKORA, CFA
VISTA
GLENN FOGLE, CFA
ARNIE DOUVILLE
32 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 25-30.
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
www.americancentury.com 33
Glossary
- --------------------------------------------------------------------------------
(Continued)
ratios. Examples can include the stocks of high-tech, healthcare, and consumer
staples companies.
* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS -- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average and the S&P 500.
* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS --generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P 400.
* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS -- generally considered to be stocks
of companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the Russell 2000 Index.
* 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 lower volatility levels than stock
funds.
*GROWTH & INCOME -- offers funds that emphasize both growth and income,
diversification, varying capitalization sizes, and different investment styles
and strategies.
*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.
34 1-800-345-2021
Notes
- --------------------------------------------------------------------------------
www.americancentury.com 35
Notes
- --------------------------------------------------------------------------------
36 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: Equity Income
Conservative
- --------------------------------------------------------------------------------
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]
[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
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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
9905 Funds Distributor, Inc.
SH-BKT-16617 (c)1999 American Century Services Corporation
