AMERICAN CENTURY MUTUAL FUNDS INC
485APOS, 2000-12-01
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               SECURITIES AND EXCHANGE COMMISSION
                    Washington, D.C.   20549

                           FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933               [X]

     Pre-Effective Amendment No.                                      [ ]

     Post-Effective Amendment No. 89                                  [X]

                             and/or

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

     Amendment No. 89                                                 [X]

                        (Check appropriate box or boxes.)


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


                  4500 Main Street, Kansas City, MO 64141-6200
       _________________________________________________________________
               (Address of Principal Executive Offices) (Zip Code)


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


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

           Approximate Date of Proposed Public Offering:  February 14, 2001

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

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

If appropriate, check the following box:

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

--------------------------------------------------------------------------------
<PAGE>
Your
AMERICAN CENTURY
PROSPECTUS

                                                            New Opportunities II
                                                               February 14, 2001

                                                                  INVESTOR CLASS

The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.


                         American Century Investment Services, Inc., Distributor



Dear Investor,

Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.

As you begin to read this Prospectus, take a look at the table of contents to
understand how it is organized. The first four sections take a close-up look at
the fund - the fund's investment objectives, strategies and risks.

As you continue to read, the Prospectus will acquaint you with the fund
management team and give you an overview about how to invest and manage your
account. You'll also find important financial information you'll need to make an
informed decision.

Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m., and Saturdays, 9 a.m. to 2 p.m.,
Central time. Give us a call at 1-800-345-2021.

Sincerely,


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





Table of Contents


An Overview of the Fund..................................................X

Fees and Expenses........................................................X

Objectives, Strategies and Risks.........................................X


Management...............................................................X

Investing with American Century.........................................XX

Share Price and Distributions...........................................XX

Taxes...................................................................XX






Callout
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.

This symbol highlights special information and helpful tips.








An Overview of the Fund




What is the fund's investment objective?

The fund seeks long-term capital growth.


What are the fund's primary investment strategy and principal risks?

The fund looks for common stocks of growing companies. The basis of the strategy
used by this fund is that, over the long term, stocks of companies with earnings
and revenue growth have a greater than average chance to increase in value over
time. A more detailed description of American Century's "growth" investment
style begins on page xx.

The fund's principal risks include

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

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

o    PRINCIPAL LOSS-As with all mutual funds, if you sell your shares when their
     value is less than the price you paid, you will lose money.


Who may want to invest in the fund?
The fund may be a good investment if you are

o seeking long-term capital growth from your investment
o comfortable with short-term price volatility
o comfortable with the risks associated with the investment strategy
o investing through an IRA

Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with short-term volatility in the value of your investment

Callout
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.



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

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








Fees and Expenses

There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares

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

Shareholder Fees (fees paid directly from your investment)

                                        Redemption/Exchange Fee (as a percentage
                                        of amount redeemed/exchanged)
New Opportunities II Fund
Shares held for less than 180 days(1)   2.0%
Shares held for 180 days or more        None

(1)The fee withheld from redemption proceeds is retained by the fund. Excludes
shares purchased through reinvested dividends or capital gains.

<TABLE>
Annual Operating Expenses (expenses that are deducted from fund assets)

                                    Management       Distribution and      Other        Total Annual Fund
                                    Fee              Service (12b-1) Fees  Expenses(1)  Operating Expenses
<S>                                 <C>              <C>                   <C>          <C>
New Opportunities II                x%               None                  0.00%        x%
</TABLE>

(1)Other expenses, which include the fees and expenses of the fund's independent
directors and their legal counsel, as well as interest, are expected to be less
than 0.005% for the current fiscal year.

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




Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .

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

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

                                            1 year            3 years
New Opportunities II                        $x                $x

Callout
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.







Objectives, Strategies and Risks


New Opportunities II



What is the fund's investment objective?

The fund seeks long-term capital growth.


How does the fund pursue its investment objective?

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

The managers use a bottom-up approach to select stocks to buy for the fund. That
means they first look for strong, growing companies to invest in, rather than
simply buying any company in a growing industry or sector. Using American
Century's extensive computer database, the managers track financial information
for thousands of companies to identify trends in the companies' earnings and
revenues. This information is used to help the fund managers select or decide to
continue to hold the stocks of companies they believe will be able to sustain
accelerating growth, and to sell stocks of companies whose growth begins to slow
down.

Although most of the fund's assets will be invested in U.S. companies, there is
no limit on the amount of assets the fund can invest in foreign companies. Most
of the fund's foreign investments are in companies located and doing business in
developed countries. Investments in foreign securities present some unique risks
that are more fully described in the fund's Statement of Additional Information.

The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, the fund may invest a portion of its assets in
convertible debt securities, equity-equivalent securities, foreign securities,
short-term securities, nonleveraged stock index futures contracts and other
similar securities. Stock index futures contracts, a type of derivative
security, can help the fund's cash assets remain liquid while performing more
like stocks. The fund has a policy governing stock index futures and similar
derivative securities to help manage the risk of these types of investments. For
example, the fund managers cannot invest in a derivative security if it would be
possible for the fund to lose more money than it invested. A complete
description of the derivatives policy is included in the Statement of Additional
Information.

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

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


What kinds of securities does the fund buy?

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

What are the principal risks of investing in the fund?

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

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

Because New Opportunities II generally invests in smaller companies than
American Century's similarly managed growth equity funds (such as Growth, Ultra
and Select), it may be more volatile, and subject to greater short-term risk,
than those funds. Smaller companies may have limited financial resources,
product lines and markets, and their securities may trade less frequently and in
more limited volumes than the securities of larger companies. In addition,
smaller companies may have less publicly available information and, when
available, it may be inaccurate or incomplete.

As with all funds, at any given time your shares may be worth more or less than
the price you paid for them. As a result, it is possible to lose money by
investing in the fund.

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

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

As a result of its investment strategy, the fund is intended for investors who
seek long-term capital growth through an aggressive equity fund and who are
willing to accept the risks associated with the fund's investment strategy.

Callout
Market capitalization is the value of a company as determined by multiplying the
number of shares of its stock outstanding by its current market price per share.
American Century uses the current Lipper Market Capitalization Boundaries when
determining the market capitalization ranges for the funds. These boundaries are
updated several times a year to reflect changes in stock valuations.







Management




Who manages the fund?

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


The Board of Directors

The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.


The Investment Advisor

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

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

For the services it provides to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of the Investor
Class shares of the funds. The amount of the management fee is calculated on a
class-by-class basis daily and paid monthly. New Opportunities II will pay the
advisor a unified management fee of x% of the average net assets of the fund.

The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor pays all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent directors (including legal
counsel fees), and extraordinary expenses.


The Fund Management Team

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

The portfolio managers on the investment team are identified below.


Christopher K. Boyd

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


John D. Seitzer

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


Tom Telford

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

Callout

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


Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objective of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.








Investing with American Century



Services Automatically Available to You
Most accounts automatically will have access to the services listed below when
the account is opened. If you do not want these services, see Conducting
Business in Writing. If you have questions about the services that apply to your
account type, please call us.


Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.


<TABLE>
Ways to Manage Your Account
---------------------------------- ---------------------------------------------- -----------------------------------------------
<S>                                <C>                                            <C>
By telephone                       Open an account                                Make additional investments
Investor Relations                 If you are a current investor, you can open    Call or use our Automated Information Line if
1-800-345-2021                     an account by exchanging shares from another   you have authorized us to invest from your
                                   American Century account.                      bank account.
Business, Not-For-Profit
and Employer-Sponsored             Exchange shares                                Sell shares
Retirement Plans                   Call or use our Automated Information Line     Call a Service Representative.
1-800-345-3533                     if you have authorized us to accept
                                   telephone instructions.
Automated Information Line
1-800-345-8765
---------------------------------- ---------------------------------------------- -----------------------------------------------
Online                             Open an account                                Make additional investments
www.americancentury.com            If you are a current or new investor, you      Make an additional investment into an
                                   can open an account by completing and          established American Century account if you
                                   submitting our online application. Current     have authorized us to invest from your bank
                                   investors also can open an account by          account.
                                   exchanging shares from another American
                                   Century account.                               Sell shares
                                                                                  Not available.
                                   Exchange shares
                                   Exchange shares from another American
                                   Century account.
---------------------------------- ---------------------------------------------- -----------------------------------------------
By mail or fax                     Open an account                                Make additional investments
P.O. Box 419200                    Send a signed, completed application and       Send your check or money order for at least
Kansas City, MO 64141-6200         check or money order payable to American       $50 with an investment slip or $250 without
                                   Century Investments.                           an investment slip. If you don't have an
Fax                                                                               investment slip, include your name, address
816-340-7962                       Exchange shares                                and account number on your check or money
                                   Send written instructions to exchange your     order.
                                   shares from one American Century account to
                                   another.                                       Sell shares
                                                                                  Send written instructions or a redemption
                                                                                  form to sell shares. Call a Service
                                                                                  Representative to request a form.
---------------------------------- ---------------------------------------------- -----------------------------------------------


A Note about Mailings to Shareholders
To reduce expenses and demonstrate respect for our environment, we will deliver
a single copy of most financial reports and prospectuses to investors who share
an address, even if the accounts are registered under different names. If you
would like to receive separate mailings, please call us and we will begin
individual delivery within 30 days. If you'd like to reduce mailbox clutter even
more, visit www.americancentury.com and sign up to receive these documents by
email. In most cases, we also will deliver account statements for all the
investors in a household in a single envelope.

Your Guide to Services and Policies
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the fund and the transfer agent.

-------------------------------- ------------------------------------------------ -----------------------------------------------
Automatically                    Open an account                                  Make additional investments
                                 Not available.                                   With the automatic investment privilege, you
                                                                                  can purchase shares on a regular basis. You
                                 Exchange shares                                  must invest at least $600 per year per
                                 Send written instructions to set up an           account.
                                 automatic exchange of your shares from one
                                 American Century account to another.             Sell shares
                                                                                  If you have at least $10,000 in your account,
                                                                                  you may sell shares automatically by
                                                                                  establishing Check-A-Month or Automatic
                                                                                  Redemption plans.
-------------------------------- ------------------------------------------------ -----------------------------------------------
By wire                          Open an account                                  Make additional investments
                                 Call to set up your account or mail a            Follow the wire instructions.
                                 completed application to the address provided
                                 in the "By mail" section. Give your bank the     Sell shares
                                 following information to wire money.             You can receive redemption proceeds by wire
                                 Our bank information                             or electronic transfer.
Please remember, if you                   Commerce Bank N.A.
request redemptions by wire,              Routing No. 101000019
$10 will be deducted from the             Account No. Please call for the
amount redeemed. Your bank       appropriate account number
also may charge a fee.           The fund name                                    Exchange shares
                                 Your American Century account number, if known*  Not available.
                                 Your name
                                 The contribution year (for IRAs only)

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

                                 4500 Main St.                                        4917 Town Center Drive
                                 Kansas City, Missouri                                Leawood, Kansas
                                 8 a.m. to 5:30 p.m., Monday - Friday                 8 a.m. to 6 p.m., Monday - Friday
                                                                                      8 a.m. to noon, Saturday

                                 1665 Charleston Road                                 9445 East County Line Road, Suite A
                                 Mountain View, California                            Englewood, Colorado
                                 8 a.m. to 5 p.m., Monday - Friday                    8 a.m. to 6 p.m., Monday - Friday
                                                                                      8 a.m. to noon, Saturday
-------------------------------- ------------------------------------------------ -----------------------------------------------
</TABLE>


Minimum Initial Investment Amounts To open an account, the minimum investments
are:

Individual or Joint                                  $10,000
Traditional IRA(1)                                   $10,000
Roth IRA(1)                                          $10,000
UGMA/UTMA                                            $10,000

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

Redemptions
If you sell your shares of New Opportunities II within 180 days of their
purchase, you will pay a redemption fee of 2.0% of the value of the shares sold.
The redemption fee does not apply to shares purchased through reinvested
distributions (dividends and capital gains). The redemption fee is retained by
the fund and helps cover transaction and tax costs long-term investors may bear
when the fund realizes capital gains as a result of selling securities to meet
investor redemptions.

Redemption of Shares in Low-Balance Accounts
If your redemption activity causes your account balance to fall below the
$10,000 minimum investment amount, we will notify you and give you 90 days to
meet the minimum. If you do not meet the deadline, American Century will redeem
the shares in the account and send the proceeds to your address of record.

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

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

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.


Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of the fund's assets if that amount is less than $250,000),
we reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The fund
managers would select these securities from the fund's portfolio. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.

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

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

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

|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments

Please contact your financial intermediary or plan sponsor for a
complete description of its policies.

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.

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

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



Share Price and Distributions


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

If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.

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


Distributions

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

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

Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For investors investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information about distributions and your options
for receiving them.

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

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






Taxes


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


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


Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.


Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:


<TABLE>
Type of Distribution                      Tax Rate for 15% Bracket       Tax Rate for 28% Bracket or Above
<S>                                       <C>                            <C>
Short-term capital gains                  Ordinary income rate           Ordinary income rate
Long-term capital gains (1-5 years)       10%                            20%
Long-term capital gains (>5 years         8%                             20%(1)
</TABLE>

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

The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. For taxable accounts, American Century
will inform you of the tax status of fund distributions for each calendar year
in an annual tax mailing (Form 1099-DIV).

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



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

If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and pay 31% of dividends, capital gains
distributions and redemption proceeds to the IRS.

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

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

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









More information about the fund is contained in these documents

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

Statement of Additional Information (SAI) The SAI contains a more detailed,
legal description of the fund's operations, investment restrictions, policies
and practices. The SAI is incorporated by reference into this Prospectus. This
means that it is legally part of this Prospectus, even if you don't request a
copy.

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

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

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

On the Internet            oEDGAR database at www.sec.gov
                           oBy email request at [email protected]

By mail                    SEC Public Reference Section
                           Washington, D.C. 20549-0102

Investment Company Act File No. 811-0816


                          American Century Investments
                                 P.O. Box 419287
                        Kansas City, Missouri 64141-6287

                         1-800-345-8810 or 816-531-5575


0103
SH-PRS-xxxxx
<PAGE>
Your
AMERICAN CENTURY
PROSPECTUS

                                                            New Opportunities II
                                                               February 14, 2001

                                                                   ADVISOR CLASS

The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.


                         American Century Investment Services, Inc., Distributor








Dear Investor,

Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.

As you begin to read this Prospectus, take a look at the table of contents to
understand how it is organized. The first four sections take a close-up look at
the fund - the fund's investment objectives, strategies and risks.

As you continue to read, the Prospectus will acquaint you with the fund
management team and give you an overview about how to invest and manage your
account. You'll also find important financial information you'll need to make an
informed decision.

Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, a Service Representative will be happy to
help weekdays, 8 a.m. to 5:30 p.m., Central time. Give us a call at
1-800-345-3533.

Sincerely,


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











Table of Contents


An Overview of the Fund........................................................X

Fees and Expenses..............................................................X

Objectives, Strategies and Risks...............................................X


Management.....................................................................X

Investing with American Century...............................................XX

Share Price and Distributions.................................................XX

Taxes.........................................................................XX






Callout
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.

This symbol highlights special information and helpful tips.








An Overview of the Fund




What is the fund's investment objective?

The fund seeks long-term capital growth.


What are the fund's primary investment strategy and principal risks?

The fund looks for common stocks of growing companies. The basis of the strategy
used by this fund is that, over the long term, stocks of companies with earnings
and revenue growth have a greater than average chance to increase in value over
time. A more detailed description of American Century's "growth" investment
style begins on page xx.

The fund's principal risks include

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

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

o    PRINCIPAL LOSS-As with all mutual funds, if you sell your shares when their
     value is less than the price you paid, you will lose money.


Who may want to invest in the fund?
The fund may be a good investment if you are

o seeking long-term capital growth from your investment
o comfortable with short-term price volatility
o comfortable with the risks associated with the investment strategy
o investing through an IRA

Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with short-term volatility in the value of your investment

Callout
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.



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

CALLOUT
For current performance information, please call us at 1-800-345-3533 or visit
us at www.americancentury.com.








Fees and Expenses

There are no sales loads, fees or other charges

o to buy fund shares directly from American Century
o to reinvest dividends in additional shares

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

Shareholder Fees (fees paid directly from your investment)

                                        Redemption/Exchange Fee (as a percentage
                                        of amount redeemed/exchanged)
New Opportunities II Fund
Shares held for less than 180 days(1)   2.0%
Shares held for 180 days or more        None

1The fee withheld from redemption proceeds is retained by the fund. Excludes
shares purchased through reinvested dividends or capital gains.

<TABLE>
Annual Operating Expenses (expenses that are deducted from fund assets)

                        Management   Distribution and        Other        Total Annual Fund
                        Fee          Service (12b-1) Fees(1) Expenses(2)  Operating
Expenses

<S>                     <C>          <C>                     <C>          <C>
New Opportunities II    x%           0.50%                   0.00%        x%
</TABLE>

1 The 12b-1 fee is designed to permit investors to purchase Advisor Class shares
through broker-dealers, banks, insurance companies and other financial
intermediaries. A portion of the fee is used to compensate them for ongoing
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor, and a portion is used to compensate them for
distribution and other shareholder services. For more information, see Service
and Distribution Fees, page XX.

2Other expenses, which include the fees and expenses of the fund's independent
directors and their legal counsel, as well as interest, are expected to be less
than 0.005% for the current fiscal year.

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




Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .

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

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

                                            1 year            3 years
New Opportunities II                        $x                $x

Callout
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.







Objectives, Strategies and Risks


New Opportunities II



What is the fund's investment objective?

The fund seeks long-term capital growth.


How does the fund pursue its investment objective?

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

The managers use a bottom-up approach to select stocks to buy for the fund. That
means they first look for strong, growing companies to invest in, rather than
simply buying any company in a growing industry or sector. Using American
Century's extensive computer database, the managers track financial information
for thousands of companies to identify trends in the companies' earnings and
revenues. This information is used to help the fund managers select or decide to
continue to hold the stocks of companies they believe will be able to sustain
accelerating growth, and to sell stocks of companies whose growth begins to slow
down.

Although most of the fund's assets will be invested in U.S. companies, there is
no limit on the amount of assets the fund can invest in foreign companies. Most
of the fund's foreign investments are in companies located and doing business in
developed countries. Investments in foreign securities present some unique risks
that are more fully described in the fund's Statement of Additional Information.

The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, the fund may invest a portion of its assets in
convertible debt securities, equity-equivalent securities, foreign securities,
short-term securities, nonleveraged stock index futures contracts and other
similar securities. Stock index futures contracts, a type of derivative
security, can help the fund's cash assets remain liquid while performing more
like stocks. The fund has a policy governing stock index futures and similar
derivative securities to help manage the risk of these types of investments. For
example, the fund managers cannot invest in a derivative security if it would be
possible for the fund to lose more money than it invested. A complete
description of the derivatives policy is included in the Statement of Additional
Information.

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


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


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


What are the principal risks of investing in the fund?

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

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

Because New Opportunities II generally invests in smaller companies than
American Century's similarly managed growth equity funds (such as Growth, Ultra
and Select), it may be more volatile, and subject to greater short-term risk,
than those funds. Smaller companies may have limited financial resources,
product lines and markets, and their securities may trade less frequently and in
more limited volumes than the securities of larger companies. In addition,
smaller companies may have less publicly available information and, when
available, it may be inaccurate or incomplete.

As with all funds, at any given time your shares may be worth more or less than
the price you paid for them. As a result, it is possible to lose money by
investing in the fund.

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

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

As a result of its investment strategy, the fund is intended for investors who
seek long-term capital growth through an aggressive equity fund and who are
willing to accept the risks associated with the fund's investment strategy.

Callout
Market capitalization is the value of a company as determined by multiplying the
number of shares of its stock outstanding by its current market price per share.
American Century uses the current Lipper Market Capitalization Boundaries when
determining the market capitalization ranges for the funds. These boundaries are
updated several times a year to reflect changes in stock valuations.







Management




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


The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.


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

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

For the services it provides to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of the Advisor
Class shares of the funds. The amount of the management fee is calculated on a
class-by-class basis daily and paid monthly. New Opportunities II will pay the
advisor a unified management fee of x% of the average net assets of the Advisor
Class shares of the fund.

The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor pays all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent directors (including legal
counsel fees), and extraordinary expenses.


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

The portfolio managers on the investment team are identified below.


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


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


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

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


Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objective of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.








Investing with American Century


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

Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments

Please contact your financial intermediary or plan sponsor for a
complete description of its policies. Certain financial intermediaries perform
recordkeeping and administrative services for their clients that would otherwise
be performed by American Century's transfer agent. In some circumstances,
American Century will pay the service provider a fee for performing those
services.

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

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








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

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

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.


Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of the fund's assets if that amount is less than $250,000),
we reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The fund
managers would select these securities from the fund's portfolio. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.

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

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








Share Price and Distributions


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

If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.

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


Distributions

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

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

Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For investors investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information about distributions and your options
for receiving them.

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

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






Taxes


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


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


Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.


Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:


<TABLE>
Type of Distribution                   Tax Rate for 15% Bracket     Tax Rate for 28% Bracket or Above
<S>                                    <C>                          <C>
Short-term capital gains               Ordinary income rate         Ordinary income rate
Long-term capital gains (1-5 years)    10%                          20%
Long-term capital gains (>5 years      8%                           20%(1)
</TABLE>

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

The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. For taxable accounts, American Century
will inform you of the tax status of fund distributions for each calendar year
in an annual tax mailing (Form 1099-DIV).

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



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

If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and pay 31% of dividends, capital gains
distributions and redemption proceeds to the IRS.

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

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

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









Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Advisor Class
shares and are offered primarily through employer-sponsored retirement plans, or
through institutions like banks, broker-dealers and insurance companies.

The other classes have different fees, expenses and/or minimum investment
requirements from the Advisor Class. The difference in the fee structures
between the classes is the result of their separate arrangements for shareholder
and distribution services and not the result of any difference in amounts
charged by the advisor for core investment advisory services. Accordingly, the
core investment advisory expenses do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this Prospectus, call us at

1-800-345-2021 for Investor Class shares
1-800-345-3533 for Institutional Class shares

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

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

Service and Distribution Fees
Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. The fund's Advisor Class shares have a 12b-1 Plan. Under the Plan,
the fund's Advisor Class pays an annual fee of 0.50% of Advisor Class average
net assets, half for certain shareholder and administrative services and half
for distribution services. The advisor, as paying agent for the fund, pays all
or a portion of such fees to the banks, broker-dealers and insurance companies
that make such shares available. Because these fees are paid out of the fund's
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. For
additional information about the Plan and its terms, see Multiple Class
Structure - Master Distribution and Shareholder Services Plan in the Statement
of Additional Information.








More information about the fund is contained in these documents

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

Statement of Additional Information (SAI) The SAI contains a more detailed,
legal description of the fund's operations, investment restrictions, policies
and practices. The SAI is incorporated by reference into this Prospectus. This
means that it is legally part of this Prospectus, even if you don't request a
copy.

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

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

In person                  SEC Public Reference Room
                           Washington, D.C.
                           Call 202-942-8090 for location and hours.
On the Internet            oEDGAR database at www.sec.gov
                           oBy email request at [email protected]
By mail                    SEC Public Reference Section
                           Washington, D.C. 20549-0102

Investment Company Act File No. 811-0816

                          American Century Investments
                                 P.O. Box 419385
                        Kansas City, Missouri 64141-6385

                         1-800-345-3533 or 816-531-5575


0103
SH-PRS-xxxxx
<PAGE>
Your
AMERICAN CENTURY
PROSPECTUS

                                                            New Opportunities II
                                                               February 14, 2001

                                                             INSTITUTIONAL CLASS

The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.


                         American Century Investment Services, Inc., Distributor








Dear Investor,

Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.

As you begin to read this Prospectus, take a look at the table of contents to
understand how it is organized. The first four sections take a close-up look at
the fund - the fund's investment objectives, strategies and risks.

As you continue to read, the Prospectus will acquaint you with the fund
management team and give you an overview about how to invest and manage your
account. You'll also find important financial information you'll need to make an
informed decision.

Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, a Service Representative will be happy to
help weekdays, 8 a.m. to 5:30 p.m., Central time. Give us a call at
1-800-345-3533.

Sincerely,


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











Table of Contents


An Overview of the Fund.......................................................X

Fees and Expenses.............................................................X

Objectives, Strategies and Risks..............................................X


Management....................................................................X

Investing with American Century..............................................XX

Share Price and Distributions................................................XX

Taxes........................................................................XX






Callout
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.

This symbol highlights special information and helpful tips.








An Overview of the Fund




What is the fund's investment objective?

The fund seeks long-term capital growth.


What are the fund's primary investment strategy and principal risks?

The fund looks for common stocks of growing companies. The basis of the strategy
used by this fund is that, over the long term, stocks of companies with earnings
and revenue growth have a greater than average chance to increase in value over
time. A more detailed description of American Century's "growth" investment
style begins on page xx.

The fund's principal risks include

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

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

o    PRINCIPAL LOSS-As with all mutual funds, if you sell your shares when their
     value is less than the price you paid, you will lose money.


Who may want to invest in the fund?

The fund may be a good investment if you are

o seeking long-term capital growth from your investment
o comfortable with short-term price volatility
o comfortable with the risks associated with the investment strategy
o investing through an IRA

Who may not want to invest in the fund?

The fund may not be a good investment if you are

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

Callout
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.



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

CALLOUT
For current performance information, please call us at 1-800-345-3533 or visit
us at www.americancentury.com.








Fees and Expenses

There are no sales loads, fees or other charges

o to buy fund shares directly from American Century
o to reinvest dividends in additional shares

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

Shareholder Fees (fees paid directly from your investment)

                                        Redemption/Exchange Fee (as a percentage
                                        of amount redeemed/exchanged)
New Opportunities II Fund
Shares held for less than 180 days(1)   2.0%
Shares held for 180 days or more        None

1The fee withheld from redemption proceeds is retained by the fund. Excludes
shares purchased through reinvested dividends or capital gains.

<TABLE>
Annual Operating Expenses (expenses that are deducted from fund assets)

                         Management       Distribution and      Other        Total Annual Fund
                         Fee              Service (12b-1) Fees  Expenses(1)  Operating Expenses
<S>                     <C>              <C>                    <C>           <C>
New Opportunities II     x%               None                  0.00%        x%
</TABLE>

1Other expenses, which include the fees and expenses of the fund's independent
directors and their legal counsel, as well as interest, are expected to be less
than 0.005% for the current fiscal year.

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




Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .

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

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

                                            1 year            3 years
New Opportunities II                        $x                $x

Callout
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.







Objectives, Strategies and Risks


New Opportunities II



What is the fund's investment objective?

The fund seeks long-term capital growth.


How does the fund pursue its investment objective?

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

The managers use a bottom-up approach to select stocks to buy for the fund. That
means they first look for strong, growing companies to invest in, rather than
simply buying any company in a growing industry or sector. Using American
Century's extensive computer database, the managers track financial information
for thousands of companies to identify trends in the companies' earnings and
revenues. This information is used to help the fund managers select or decide to
continue to hold the stocks of companies they believe will be able to sustain
accelerating growth, and to sell stocks of companies whose growth begins to slow
down.

Although most of the fund's assets will be invested in U.S. companies, there is
no limit on the amount of assets the fund can invest in foreign companies. Most
of the fund's foreign investments are in companies located and doing business in
developed countries. Investments in foreign securities present some unique risks
that are more fully described in the fund's Statement of Additional Information.

The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, the fund may invest a portion of its assets in
convertible debt securities, equity-equivalent securities, foreign securities,
short-term securities, nonleveraged stock index futures contracts and other
similar securities. Stock index futures contracts, a type of derivative
security, can help the fund's cash assets remain liquid while performing more
like stocks. The fund has a policy governing stock index futures and similar
derivative securities to help manage the risk of these types of investments. For
example, the fund managers cannot invest in a derivative security if it would be
possible for the fund to lose more money than it invested. A complete
description of the derivatives policy is included in the Statement of Additional
Information.

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

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


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


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

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

Because New Opportunities II generally invests in smaller companies than
American Century's similarly managed growth equity funds (such as Growth, Ultra
and Select), it may be more volatile, and subject to greater short-term risk,
than those funds. Smaller companies may have limited financial resources,
product lines and markets, and their securities may trade less frequently and in
more limited volumes than the securities of larger companies. In addition,
smaller companies may have less publicly available information and, when
available, it may be inaccurate or incomplete.

As with all funds, at any given time your shares may be worth more or less than
the price you paid for them. As a result, it is possible to lose money by
investing in the fund.

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

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

As a result of its investment strategy, the fund is intended for investors who
seek long-term capital growth through an aggressive equity fund and who are
willing to accept the risks associated with the fund's investment strategy.

Callout
Market capitalization is the value of a company as determined by multiplying the
number of shares of its stock outstanding by its current market price per share.
American Century uses the current Lipper Market Capitalization Boundaries when
determining the market capitalization ranges for the funds. These boundaries are
updated several times a year to reflect changes in stock valuations.







Management




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


The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.


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

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

For the services it provides to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of the
Institutional Class shares of the funds. The amount of the management fee is
calculated on a class-by-class basis daily and paid monthly. Small Company
Growth will pay the advisor a unified management fee of x% of the average net
assets of the Institutional Class of the fund.

The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor pays all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent directors (including legal
counsel fees), and extraordinary expenses.


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

The portfolio managers on the investment team are identified below.


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


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


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

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


Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objective of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.








Investing with American Century


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

Minimum Initial Investment Amounts
The minimum investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermediary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has an aggregate
investment in our family of funds of $10 million or more ($5 million for
endowments and foundations). In addition, financial intermediaries or plan
recordkeepers may require retirement plans to meet certain additional
requirements, such as plan size or a minimum level of assets per participant, in
order to be eligible to purchase Institutional Class shares.

Redemption of Shares in Low-Balance Accounts
If your redemption activity causes your account balance to fall below the
$10,000 minimum investment amount, we will notify you and give you 90 days to
meet the minimum. If you do not meet the deadline, American Century will redeem
the shares in the account and send the proceeds to your address of record.

Services Automatically Available to You
Most accounts automatically will have access to the services listed below when
the account is opened. If you do not want these services, see Conducting
Business in Writing. If you have questions about the services that apply to your
account type, please call us.


Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.

Your Guide to Services and Policies
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the fund and the transfer agent.


<TABLE>
Ways to Manage Your Account
---------------------------------- ---------------------------------------------- -----------------------------------------------
<S>                                 <C>                                          <C>
By telephone                       Open an account                                Make additional investments
Service Representative             If you are a current investor, you can open    Call if you have authorized us to invest from
1-800-345-3533                     an account by exchanging shares from another   your bank account.
                                   American Century account.
                                                                                  Sell shares
                                   Exchange shares                                Call a Service Representative.
                                   Call or use our Automated Information Line
                                   if you have authorized us to accept
                                   telephone instructions.
---------------------------------- ---------------------------------------------- -----------------------------------------------
By mail or fax                     Open an account                                Make additional investments
P.O. Box 419385                    Send a signed, completed application and       Send your check or money order for at least
Kansas City, MO 64141-6385         check or money order payable to American       $50 with an investment slip or $250 without
                                   Century Investments.                           an investment slip. If you don't have an
Fax                                                                               investment slip, include your name, address
816-340-4655                       Exchange shares                                and account number on your check or money
                                   Send written instructions to exchange your     order.
                                   shares from one American Century account to
                                   another.                                       Sell shares
                                                                                  Send written instructions or a redemption
                                                                                  form to sell shares. Call a Service
                                                                                  Representative to request a form.
---------------------------------- ---------------------------------------------- -----------------------------------------------
Automatically                      Open an account                                Make additional investments
                                   Not available.                                 With the automatic investment privilege, you
                                                                                  can purchase shares on a regular basis. You
                                   Exchange shares                                must invest at least $600 per year per
                                   Send written instructions to set up an         account.
                                   automatic exchange of your shares from one
                                   American Century account to another.           Sell shares
                                                                                  If you have at least $10,000 in your account,
                                                                                  you may sell shares automatically by
                                                                                  establishing Check-A-Month or Automatic
                                                                                  Redemption plans.
---------------------------------- ---------------------------------------------- -----------------------------------------------
By wire                            Open an account                                Make additional investments
                                   Call to set up your account or mail a          Follow the wire instructions.
                                   completed application to the address
                                   provided in the "By mail" section. Give your   Sell shares
                                   bank the following information to wire money.  You can receive redemption proceeds by wire
                                   Our bank information                           or electronic transfer.
*    Please remember, if you                Commerce Bank N.A.
     request redemptions by                 Routing No. 101000019
     wire, $10 will be deducted             Account No. Please call for the
     from the amount redeemed.     appropriate account number
     Your bank also may charge a   The fund name                                  Exchange shares
     fee.                          Your American Century account number*          Not available.
                                   Your name
                                   The contribution year (for IRAs only)
                                   *For additional investments only
---------------------------------- ---------------------------------------------- -----------------------------------------------
</TABLE>




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

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

Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.


Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of the fund's assets if that amount is less than $250,000),
we reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The fund
managers would select these securities from the fund's portfolio. A payment in
securities can help the fund's remaining shareholders avoid tax liabilities that
they might otherwise have incurred had the fund sold securities prematurely to
pay the entire redemption amount in cash.

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

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

Investing through Financial Intermediaries
If you own or are considering purchasing shares through a financial intermediary
or a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include

|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments

Please contact your financial intermediary or plan sponsor for a complete
description of its policies.

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.

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

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








Share Price and Distributions


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

If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.

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


Distributions

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

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

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

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

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






Taxes


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


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


Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.


Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:


<TABLE>
  Type of Distribution                      Tax Rate for 15% Bracket       Tax Rate for 28% Bracket or Above
<S>                                         <C>                            <C>
  Short-term capital gains                  Ordinary income rate           Ordinary income rate
  Long-term capital gains (1-5 years)       10%                            20%
  Long-term capital gains (>5 years         8%                             20%(1)
</TABLE>

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

The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. For taxable accounts, American Century
will inform you of the tax status of fund distributions for each calendar year
in an annual tax mailing (Form 1099-DIV).

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



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

If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and pay 31% of dividends, capital gains
distributions and redemption proceeds to the IRS.

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

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

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









Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Institutional
Class shares and are offered primarily through employer-sponsored retirement
plans, or through institutions like banks, broker-dealers and insurance
companies.

The other classes have different fees, expenses and/or minimum investment
requirements from the Institutional Class. The difference in the fee structures
between the classes is the result of their separate arrangements for shareholder
and distribution services and not the result of any difference in amounts
charged by the advisor for core investment advisory services. Accordingly, the
core investment advisory expenses do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this Prospectus, call us at

|X| 1-800-345-2021 for Investor Class shares
|X| 1-800-345-3533 for Advisor Class shares

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

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







More information about the fund is contained in these documents

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

Statement of Additional Information (SAI) The SAI contains a more detailed,
legal description of the fund's operations, investment restrictions, policies
and practices. The SAI is incorporated by reference into this Prospectus. This
means that it is legally part of this Prospectus, even if you don't request a
copy.

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

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

In person                  SEC Public Reference Room
                           Washington, D.C.
                           Call 202-942-8090 for location and hours.
On the Internet            oEDGAR database at www.sec.gov
                           oBy email request at [email protected]
By mail                    SEC Public Reference Section
                           Washington, D.C. 20549-0102

Investment Company Act File No. 811-0816


                          American Century Investments
                                 P.O. Box 419385
                        Kansas City, Missouri 64141-6385

                         1-800-345-3533 or 816-531-5575


0103
SH-PRS-xxxxx
<PAGE>
Statement of Additional Information

Growth Fund
Ultra(R)Fund
Select Fund
Vista Fund
Heritage Fund
Balanced Fund
Tax-Managed Value Fund
Giftrust(R)Fund
New Opportunities Fund
New Opportunities II Fund
Limited-Term Bond Fund
Intermediate-Term Bond Fund
Bond Fund
High-Yield Fund
Veedot(sm) Fund


American Century Mutual Funds, Inc.
FEBRUARY 14, 2001

   This Statement of Additional Information adds to the discussion in the funds'
Prospectuses, dated February 14, 2001, but is not a prospectus. The Statement of
Additional Information should be read in conjunction with the funds' current
prospectus. If you would like a copy of a Prospectus, please contact us at one
of the addresses or telephone numbers listed on the back cover or visit American
Century's Web site at www.americancentury.com.

   This Statement of Additional Information incorporates by reference certain
information that appears in the funds' annual and semiannual reports, which are
delivered to all investors. You may obtain a free copy of the funds' annual or
semiannual reports by calling 1-800-345-2021.



American Century Investment Services, Inc., Distributor


                       STATEMENT OF ADDITIONAL INFORMATION
                                February 14, 2001

TABLE OF CONTENTS
The Funds' History ................................................  2
Fund Investment Guidelines ........................................  2
          Growth, Ultra, Select, Vista, Heritage, Giftrust,
            New Opportunities and New Opportunities II ............  2
          Balanced ................................................  3
          Tax-Managed Value .......................................  3
          Limited-Term Bond, Intermediate-Term Bond and Bond ......  3
          Veedot ..................................................  3
Fund Investments and Risks ........................................  7
          Investment Strategies and Risks .........................  7
          Investment Policies ..................................... 17
          Portfolio Turnover ...................................... 18
Management ........................................................ 19
          The Board of Directors .................................. 19
          Officers ................................................ 21
The Funds' Principal Shareholders ................................. 23
Service Providers ................................................. 24
          Investment Advisor ...................................... 24
          Transfer Agent and Administrator ........................ 25
          Distributor ............................................. 25
Other Service Providers ........................................... 25
Custodian Banks
Independent Auditors
Brokerage Allocation .............................................. 27
          Growth, Ultra, Select, Vista, Heritage,Tax-Managed Value,
          Giftrust and the Equity Portion of Balanced ............. 27
          Limited-Term Bond, Intermediate-Term Bond, Bond,
          High-Yield and the Fixed-Income Portion of Balanced ..... 27
Information about Fund Shares ..................................... 28
          Multiple Class Structure ................................ 28
          Buying and Selling Fund Shares .......................... 30
          Valuation of a Fund's Securities ........................ 30
Taxes ............................................................. 31
How Fund Performance Information Is Calculated .................... 32
          Performance Comparisons ................................. xx
          Permissible Advertising Information ..................... xx
          Multiple Class Performance Advertising .................. xx
Financial Statements .............................................. 36
Explanation of Fixed-Income Securities Ratings .................... 37


THE FUNDS' HISTORY
   American Century Mutual Funds, Inc. is a registered open-end management
investment company that was organized in 1957 as a Delaware corporation under
the name Twentieth Century Investors, Inc. On June 2, 1990, the company
reorganized as a Maryland corporation, and in January 1997 it changed its name
to American Century Mutual Funds, Inc. Throughout this Statement of Additional
Information we refer to American Century Mutual Funds, Inc. as the corporation.

   Each fund described in this Statement of Additional Information is a separate
series of the corporation and operates for many purposes as if it were an
independent company. Each fund has its own investment objective, strategy,
management team, assets, tax identification and stock registration numbers.

FUND INVESTMENT GUIDELINES

   This section explains the extent to which the funds' advisor, American
Century Investment Management, Inc., can use various investment vehicles and
strategies in managing a fund's assets. Descriptions of the investment
techniques and risks associated with each appear in the section, Investment
Strategies and Risks, which begins on page 7. In the case of the funds'
principal investment strategies, these descriptions elaborate upon discussions
contained in the Prospectuses.
   Each fund, other than Veedot, is diversified as defined in the Investment
Company Act of 1940 (the Investment Company Act). Diversified means that, with
respect to 75% of its total assets, each fund will not invest more than 5% of
its total assets in the securities of a single issuer or own more than 10% of
the outstanding voting securities of a single issuer.
   Veedot does not hold itself out as diversified. The fund is nondiversified.
Although Veedot's managers expect that it will ordinarily satisfy the
requirements of a diversified fund, its nondiversified status gives it more
flexibility to invest heavily in the most attractive companies identified by the
fund's methodology.
   To meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year

   (1) no more than 25% of its total assets are invested in the securities of a
single issuer (other than the U.S. government or a regulated investment
company), and

   (2) with respect to at least 50% of its total assets, no more than 5% of its
total assets are invested in the securities of a single issuer.

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

   In general, within the restrictions outlined here and in the funds'
Prospectuses, the fund managers have broad powers to decide how to invest fund
assets, including the power to hold them uninvested.
   Investments are varied according to what is judged advantageous under
changing economic conditions. It is the advisor's policy to retain maximum
flexibility in management without restrictive provisions as to the proportion of
one or another class of securities that may be held, subject to the investment
restrictions described on the following pages. It is the advisor's intention
that each fund will generally consist of domestic and foreign common stocks and
equity equivalent securities. However, subject to the specific limitations
applicable to a fund, the funds' management teams may invest the assets of each
fund in varying amounts in other instruments and using other techniques, such as
those reflected in Table 1 on page 6, when such a course is deemed appropriate
in order to attempt to attain a fund's investment objective. Senior securities
that, in the opinion of the managers, are high-grade issues also may be
purchased for defensive purposes.
   So long as a sufficient number of acceptable securities are available, the
fund managers intend to keep the funds fully invested in stocks identified as
attractive by the funds' investment methodology, regardless of the movement of
stock prices, generally. However, should the funds' investment methodology fail
to identify sufficient candidates, or for any other reason including the desire
to take a temporary defensive position, the funds may invest up to 100% of their
assets in U.S. government securities. In most circumstances, the funds' actual
level of cash and cash equivalents will be less than 10%. The managers may use
S&P 500 Index futures as a way to expose the funds' cash assets to the market,
while maintaining liquidity. As mentioned in the Prospectuses, the managers may
not leverage the funds' portfolios; so there is no greater market risk to the
funds than if they purchase stocks. See Derivative Securities, page 10,
Short-Term Securities, page 12 and Futures and Options, page 13.


<TABLE>
                             Investor Class                Advisor Class         Institutional Class
                           Ticker       Inception     Ticker       Inception    Ticker       Inception
Fund                       Symbol       Date          Symbol       Date         Symbol       Date
<S>                        <C>         <C>            <C>          <C>          <C>         <C>
Growth                     TWCGX        10/31/1958    TWRAX        06/04/1997   TWGIX        06/16/1997
Ultra                      TWCUX        11/02/1981    TWUAX        10/02/1996   TWUIX        11/14/1996
Select                     TWCIX        10/31/1958    TWCAX        08/08/1997   TWSIX        03/13/1997
Vista                      TWCVX        11/25/1983    TWVAX        10/02/1996   TWVIX        11/14/1996
Heritage                   TWHIX        11/10/1987    ATHAX        07/11/1997   ATHIX        06/16/1997
Balanced                   TWBIX        11/20/1988    TWBAX        01/06/1997   N/A          N/A
Tax-Managed Value          ACTIX        03/01/1999    N/A          N/A          N/A          N/A
Giftrust                   TWGTX        11/25/1983    N/A          N/A          N/A          N/A
New Opportunities          TWNOX        12/26/1996    N/A          N/A          N/A          N/A
New Opportunities II       N/A          N/A           N/A          N/A          N/A          N/A
Limited-Term Bond          ABLIX        03/01/1994    ABLAX        11/12/1997   N/A          N/A
Intermediate-Term Bond     TWITX        03/01/1994    TWTAX        08/14/1997   N/A          N/A
Bond                       TWLBX        03/02/1987    ABBAX        08/08/1997   N/A          N/A
High-Yield                 ABHIX        09/30/1997    N/A          N/A          N/A          N/A
Veedot                     ABVIX        11/30/1999    N/A          N/A          N/A          N/A
</TABLE>

BALANCED

   In general, within the restrictions outlined here and in Balanced's
Prospectus, the fund managers have broad powers to decide how to invest fund
assets, including the power to hold them uninvested. As a matter of fundamental
policy, the managers will invest approximately 60% of the Balanced portfolio in
equity securities and the remainder in bonds and other fixed-income securities.
The equity portion of the fund generally will be invested in equity securities
of companies comprising the 1,500 largest publicly traded companies in the
United States. The fund's investment approach may cause its equity portion to be
more heavily invested in some industries than in others. However, it may not
invest more than 25% of its total assets in companies whose principal business
activities are in the same industry. In addition, as a diversified investment
company, its investments in a single issue are limited, as described above in
"Fund Investment Guidelines". The fund managers also may purchase foreign
securities, convertible securities, stock index futures contracts and similar
securities, and short-term securities. See Table 1, page 6.

   The fixed-income portion of the fund generally will be invested in a
diversified portfolio of high-grade government, corporate, asset backed and
similar securities. There are no maturity restrictions on the fixed-income
securities in which the fund invests, but under normal conditions the weighted
average maturity for the fixed-income portion of the fund will be in the 3-10
year range. The managers will actively manage the portfolio, adjusting the
weighted average portfolio maturity in response to expected changes in interest
rates. During periods of rising interest rates, a shorter weighted average
maturity may be adopted in order to reduce the effect of bond price declines on
the fund's net asset value. When interest rates are falling and bond prices
rising, a longer weighted average portfolio maturity may be adopted. The
restrictions on the quality of the fixed-income securities the fund may purchase
are described in the Prospectus. For a description of the fixed-income
securities rating system, see Explanation of Fixed-Income Securities Ratings, on
page 42.

TAX-MANAGED VALUE

   The fund managers will invest primarily in stocks of medium to large
companies that the managers believe are undervalued at the time of purchase. The
fund manager will usually purchase common stocks of U.S. and foreign companies,
but they can purchase other types of securities as well, such as domestic and
foreign preferred stocks, convertible securities, equity equivalent securities,
notes, bonds and other debt securities. See Table 1.

LIMITED-TERM BOND, INTERMEDIATE-TERM BOND AND BOND

   To achieve their objectives, these funds may invest in diversified portfolios
of high- and medium-grade debt securities payable in U.S. currency. Under normal
market conditions, each fund will maintain at least 65% of the value of its
total assets in investment-grade bonds and other debt instruments. Under normal
market conditions, each of the funds may invest up to 35% of its assets, and for
temporary defensive purposes, up to 100% of its assets, in short-term
securities.

   The funds may invest in securities that at the time of purchase are rated by
a nationally recognized statistical rating organization or, if not rated, are of
equivalent investment quality as determined by the advisor, as follows:
short-term notes within the two highest categories, e.g., at least MIG-2 by
Moody's Investor Services (Moody's) or SP-2 by Standard and Poor's Corporation
(S&P); corporate, sovereign government, and municipal bonds within the four
highest categories (for example, at least Baa by Moody's or BBB by S&P);
securities of the U.S. government and its agencies and instrumentalities
(described below); other types of securities rated at least P-2 by Moody's or
A-2 by S&P.

   The managers will actively manage the portfolios, adjusting the weighted
average portfolio maturities as necessary in response to expected changes in
interest rates. During periods of rising interest rates, the weighted average
maturity of a fund may be moved to the shorter end of its maturity range in
order to reduce the effect of bond price declines on that fund's net asset
value. When interest rates are falling and bond prices are rising, the weighted
average portfolio maturity may be moved toward the longer end of its maturity
range.

   The government securities in which the funds may invest include: (1) direct
obligations of the United States, such as Treasury bills, notes and bonds, which
are supported by the full faith and credit of the United States, and (2)
obligations (including mortgage-related securities) issued or guaranteed by
agencies and instrumentalities of the U.S. government that are established under
an act of Congress. The securities of some of these agencies and
instrumentalities, such as the Government National Mortgage Association, are
guaranteed as to principal and interest by the U.S. Treasury, and other
securities are supported by the right of the issuer, such as the Federal Home
Loan Banks, to borrow from the Treasury. Other obligations, including those
issued by the Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation, are supported only by the credit of the instrumentality.

   Mortgage-related securities in which the funds may invest include
collateralized mortgage obligations (CMOs) issued by a U.S. agency or
instrumentality. A CMO is a debt security that is collateralized by a portfolio
or pool of mortgages or mortgage-backed securities. The issuer's obligation to
make interest and principal payments is secured by the underlying pool or
portfolio of mortgages or securities.

   The market value of mortgage-related securities, even those in which the
underlying pool of mortgage loans is guaranteed as to the payment of principal
and interest by the U.S. government, is not insured. When interest rates rise,
the market value of those securities may decrease in the same manner as other
debt, but when interest rates decline, their market value may not increase as
much as other debt instruments because of the prepayment feature inherent in the
underlying mortgages. If such securities are purchased at a premium, the fund
will suffer a loss if the obligation is prepaid. Prepayments will be reinvested
at prevailing rates, which may be less than the rate paid by the prepaid
obligation.

   For the purpose of determining the weighted average portfolio maturity of the
funds, the managers shall consider the maturity of a mortgage-related security
to be the remaining expected average life of the security. The average life of
such securities is likely to be substantially less than the original maturity as
a result of prepayments of principal on the underlying mortgages, especially in
a declining interest rate environment. In determining the remaining expected
average life, the managers make assumptions regarding repayments on underlying
mortgages. In a rising interest rate environment, those prepayments generally
decrease, and may decrease below the rate of prepayment assumed by the managers
when purchasing those securities. Such slowdown may cause the remaining maturity
of those securities to lengthen, which will increase the relative volatility of
those securities and, hence, the fund holding the securities. See Basics of
Fixed-Income Investing, in the funds' Prospectus.

   As noted, each fund may invest up to 35% of its assets, and for temporary
defensive purposes as determined by the managers, up to 100% of its assets in
short-term securities. See Short-Term Securities, page 10. These investments
must meet the rating standards for the funds. To the extent a fund assumes a
defensive position, the weighted average maturity of its portfolio may not fall
within the ranges stated for the fund. The funds may buy and sell interest rate
futures contracts relating to debt securities and bond indexes and may write and
buy put and call options relating to interest rate futures contracts for the
purpose of achieving their investment objectives. See Futures and Options, page
13.

HIGH-YIELD
   The fund invests primarily in lower-rated, higher- yielding corporate bonds,
debentures and notes, which are subject to greater credit risk and consequently
offer higher yield. The fund also may purchase
   o  government securities
   o  zero-coupon, step-coupon and pay-in-kind securities
   o  convertible securities
   o  loan interests
   o  common stock or other equity-related securities
      (limited to 20% of fund assets)
   o  short-term securities

Up to 40% of the fund's assets may be invested in foreign securities. The
fund also may purchase and sell interest rate futures contracts and related
options. See Futures and Options, page 13.
   The securities purchased by the fund generally will be rated in the lower
rating categories of recognized rating agencies, as low as Caa by Moody's or D
by S&P, or in unrated securities that the managers deem of comparable quality.
The fund may hold securities with higher ratings when the yield differential
between low-rated and higher-rated securities narrows and the risk of loss may
be reduced substantially with only a relatively small reduction in yield.
   Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (such as an economic downturn or a prolonged period of rising
interest rates), political changes or adverse developments specific to the
issuer. Adverse economic, political or other developments may impair the
issuer's ability to service principal and interest obligations, to meet
projected business goals and to obtain additional financing. In the event of a
default, the fund would experience a reduction of its income and could expect a
decline in the market value of the defaulted securities.
   The market for lower quality securities is generally less liquid than the
market for higher quality securities. Adverse publicity and investor perceptions
as well as new or proposed laws also may have a greater negative impact on the
market for lower quality securities. Sovereign debt of foreign governments is
generally rated by country. Because these ratings do not take into account
individual factors relevant to each issue and may not be updated regularly, the
managers may elect to treat such securities as unrated debt.
   The fund will not purchase securities rated lower than B by both Moody's and
S&P unless, immediately after such purchase, no more than 10% of its total
assets are invested in such securities.

<TABLE>
Table 1
                                                             Limited-
                                                             Term Bond,
                                   Growth                    Intermediate-  New Opportunities II               Tax-
                                   Ultra   Vista     High    Term Bond,     New                                Managed
                                   Select  Heritage  Yield   Bond           Opportunities   Giftrust Balanced  Value       Veedot
<S>                                <C>     <C>       <C>     <C>            <C>             <C>      <C>       <C>         <C>
Foreign Securities                 X       X         40%     X              X               X        X         X           X
 Convertible Debt Securities       X       X         X                      X               X        X         X           X
Short Sales                        X       X         X                      X               X        X         X           X
 Portfolio Lending                 331/3%  331/3%    331/3%  331/3%         331/3%          331/3%   331/3%    331/3%      331/3%
 Derivative Securities             X       X         X       X              X               X        X         X           X
 Investments in Companies with
   Limited Operating Histories     5%      10%       15%     5%             10%             10%      5%        X           10%
 Other Investment Companies        10%     10%       10%     10%            10%             10%      10%       10%         10%
 Repurchase Agreement              X       X         X       X              X               X        X         X           X
 When-Issued and Forward
 Commitment Agreements             X       X         X       X              X               X        X         X           X
 Illiquid Securities               15%     15%       15%     15%            15%             15%      15%       15%         15%
 Restricted Securities             X       X         X       X              X               X        X         X           X
 Short-Term Securities             X       X         X       35%            X               X        X         X           X
 Futures & Options                 X       X         X       X              X               X        X         X           X
 Forward Currency
    Exchange Contracts             X       X         X       X              X               X        X         X           X
 Fixed Income Securities
   Municipal Notes                                   X       X                                       x         X
   Municipal Bonds                                   X       X                                       x         X
   Variable- and Floating-Rate
   Obligations                                       X       X                                       x         X
   Obligations with Term
    Puts Attached                                    X       X                                       x         X
   Tender Option Bonds                               X       X                                       x         X
  Zero-Coupon                                        X
  Inverse Floaters                                   X       X                                       x         X
  Loan Interests                                     X
</TABLE>




FUND INVESTMENTS AND RISKS
INVESTMENT STRATEGIES AND RISKS
   This section describes investment vehicles and techniques the fund managers
can use in managing a fund's assets. It also details the risks associated with
each, because each investment vehicle and technique contributes to a fund's
overall risk profile. To determine whether a fund may invest in a particular
investment vehicle, consult Table 1, page 6.

Foreign Securities

   Each fund may invest in the securities of foreign issuers, including foreign
governments, when these securities meet its standards of selection. Securities
of foreign issuers may trade in the U.S. or foreign securities markets.
   An unlimited portion of each fund's total assets may be invested in the
securities of foreign issuers, except for High-Yield. High-Yield may invest up
to 40% of its assets in foreign securities.
   Investments in foreign securities may present certain risks, including:

   Currency Risk
   The value of the foreign investments held by the funds may be significantly
affected by changes in currency exchange rates. The dollar value of a foreign
security generally decreases when the value of the dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the dollar falls against such currency. In addition, the value of
fund assets may be affected by losses and other expenses incurred in converting
between various currencies in order to purchase and sell foreign securities, and
by currency restrictions, exchange control regulation, currency devaluations and
political developments.
   Political and Economic Risk
   The economies of many of the countries in which the funds invest are not as
developed as the economy of the United States and may be subject to
significantly different forces. Political or social instability, expropriation,
nationalization, confiscatory taxation and limitations on the removal of funds
or other assets, also could adversely affect the value of investments. Further,
the funds may encounter difficulties or be unable to enforce ownership rights,
pursue legal remedies or obtain judgments in foreign courts.
   Regulatory Risk
   Foreign companies generally are not subject to the regulatory controls
imposed on U.S. issuers and, in general, there is less publicly available
information about foreign securities than is available about domestic
securities. Many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the funds may be reduced by a withholding tax at the
sources, which would reduce dividend income payable to shareholders.
   Market and Trading Risk
   Brokerage commission rates in foreign countries, which generally are fixed
rather than subject to negotiation as in the United States, are likely to be
higher. The securities markets in many of the countries in which the funds
invest will have substantially less trading volume than the principal U.S.
markets. As a result, the securities of some companies in these countries may be
less liquid and more volatile than comparable U.S. securities. Furthermore, one
securities broker may represent all or a significant part of the trading volume
in a particular country, resulting in higher trading costs and decreased
liquidity due to a lack of alternative trading partners. There generally is less
government regulation and supervision of foreign stock exchanges, brokers and
issuers, which may make it difficult to enforce contractual obligations.
   Clearance and Settlement Risk
   Foreign securities markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in clearance and settlement could
result in temporary periods when assets of the funds are uninvested and no
return is earned. The inability of the funds to make intended security purchases
due to clearance and settlement problems could cause the funds to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to clearance and settlement problems could result either in
losses to the funds due to subsequent declines in the value of the portfolio
security or, if the fund has entered into a contract to sell the security,
liability to the purchaser.
   Ownership Risk
   Evidence of securities ownership may be uncertain in many foreign countries.
As a result, there is a risk that a fund's trade details could be incorrectly or
fraudulently entered at the time of the transaction, resulting in a loss to the
fund.

Convertible Debt Securities
   A convertible debt security is a fixed-income security that offers the
potential for capital appreciation through a conversion feature that enables the
holder to convert the fixed-income security into a stated number of shares of
common stock. As fixed-income securities, convertible debt securities provide a
stable stream of income, with generally higher yields than common stocks.
Convertible debt securities offer the potential to benefit from increases in the
market price of the underlying common stock, however, they generally offer lower
yields than non-convertible securities of similar quality. Of course, as with
all fixed- income securities, there can be no assurance of current income
because the issuers of the convertible debt securities may default on their
obligations. In addition, there can be no assurance of capital appreciation
because the value of the underlying common stock will fluctuate.
   Convertible debt securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
   Unlike a convertible security that is a single security, a synthetic
convertible security is comprised of two distinct securities that together
resemble convertible securities in certain respects. Synthetic convertible
securities are created by combining non-convertible bonds or preferred stocks
with warrants or stock call options. The options that will form elements of
synthetic convertible securities will be listed on a securities exchange or
NASDAQ. The two components of a synthetic convertible security, which will be
issued with respect to the same entity, generally are not offered as a unit, and
may be purchased and sold by the fund at different times. Synthetic convertible
securities differ from convertible securities in certain respects. Each
component of a synthetic convertible security has a separate market value and
responds differently to market fluctuations. Investing in a synthetic
convertible security involves the risk normally found in holding the securities
comprising the synthetic convertible security.

Short Sales

   A fund may engage in short sales if, at the time of the short sale, the fund
owns or has the right to acquire securities equivalent in kind and amount to the
securities being sold short.
   In a short sale, the seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
To make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If a fund engages in a short sale, the collateral account will be
maintained by the fund's custodian. While the short sale is open, the fund will
maintain in a segregated custodial account an amount of securities convertible
into, or exchangeable for, such equivalent securities at no additional cost.
These securities would constitute the fund's long position.
   A fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes. There will be
certain additional transaction costs associated with short sales, but the fund
will endeavor to offset these costs with income from the investment of the cash
proceeds of short sales.

Portfolio Lending
   In order to realize additional income, a fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's total assets
valued at market except

o through the purchase of debt securities in accordance with its investment
objectives, policies and limitations, or

o by engaging in repurchase agreements with respect to portfolio securities.

Derivative Securities

   To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as derivative
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or derived from, a traditional security, asset or market
index. Certain derivative securities are described more accurately as
index/structured securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators (reference indices).
   Some derivatives, such as mortgage-related and other asset-backed securities,
are in many respects like any other investment, although they may be more
volatile or less liquid than more traditional debt securities.
   There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices, or currency exchange rates and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.
   No fund may invest in a derivative security unless the reference index or the
instrument to which it relates is an eligible investment for the fund. For
example, a security whose underlying value is linked to the price of oil would
not be a permissible investment because the funds may not invest in oil and gas
leases or futures.
   The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.
   There are risks associated with derivative investments, including:
   o  the risk that the underlying security, interest rate, market index or
      other financial asset will not move in the direction the fund managers
      anticipate;
   o  the possibility that there may be no liquid secondary market, or the
      possibility that price fluctuation limits may be imposed by the exchange,
      either of which may make it difficult or impossible to close out a
      position when desired;
   o  the risk that adverse price movements in an instrument can result in a
      loss substantially greater than a fund's initial investment; and
   o  the risk that the counterparty will fail to perform its obligations.
   The Board of Directors has approved the advisor's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The advisor will report on fund activity in
derivative securities to the Board of Directors as necessary.

Investment in Companies with Limited Operating Histories
   The funds may invest a portion of their assets in the securities of issuers
with limited operating histories. The managers consider an issuer to have a
limited operating history if that issuer has a record of less than three years
of continuous operation. The managers will consider periods of capital
formation, incubation, consolidations, and research and development in
determining whether a particular issuer has a record of three years of
continuous operation.
   Investments in securities of issuers with limited operating histories may
involve greater risks than investments in securities of more mature issuers. By
their nature, such issuers present limited operating histories and financial
information upon which the managers may base their investment decision on behalf
of the funds. In addition, financial and other information regarding such
issuers, when available, may be incomplete or inaccurate.

Repurchase Agreements
   Each fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of that fund.
   A repurchase agreement occurs when, at the time a fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.
   Because the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.
   The funds will limit repurchase agreement transactions to securities issued
by the U.S. government and its agencies and instrumentalities, and will enter
into such transactions with those banks and securities dealers who are deemed
creditworthy by the funds' advisor.
   Repurchase agreements maturing in more than seven days would count toward a
fund's 15% limit on illiquid securities.

When-Issued and Forward Commitment Agreements
   The funds may sometimes purchase new issues of securities on a when-issued or
forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future
date (typically 15 to 45 days later, but not more than 120 days later).
   For example, a fund may sell a security and at the same time make a
commitment to purchase the same or a comparable security at a future date and
specified price. Conversely, a fund may purchase a security and at the same time
make a commitment to sell the same or a comparable security at a future date and
specified price. These types of transactions are executed simultaneously in what
are known as dollar-rolls, cash and carry, or financing transactions. For
example, a broker-dealer may seek to purchase a particular security that a fund
owns. The fund will sell that security to the broker-dealer and simultaneously
enter into a forward commitment agreement to buy it back at a future date. This
type of transaction generates income for the fund if the dealer is willing to
execute the transaction at a favorable price in order to acquire a specific
security.
   When purchasing securities on a when-issued or forward commitment basis, a
fund assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of that security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.
   In purchasing securities on a when-issued or forward commitment basis, a fund
will establish and maintain until the settlement date a segregated account
consisting of cash, cash equivalents or other appropriate liquid securities in
an amount sufficient to meet the purchase price. When the time comes to pay for
the when-issued securities, the fund will meet its obligations with available
cash, through the sale of securities, or, although it would not normally expect
to do so, by selling the when-issued securities themselves (which may have a
market value greater or less than the fund's payment obligation). Selling
securities to meet when-issued or forward commitment obligations may generate
taxable capital gains or losses.

Restricted and Illiquid Securities
   The funds may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the funds' criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among
qualified institutional investors rather than the general public. Although Rule
144A securities are considered restricted securities, they are not necessarily
illiquid.
   With respect to securities eligible for resale under Rule 144A, the staff of
the Securities and Exchange Commission (SEC) has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the funds has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the fund
managers. The board retains the responsibility to monitor the implementation of
the guidelines and procedures it has adopted.
   Because the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A or other
security that is illiquid. In such an event, the fund managers will consider
appropriate remedies to minimize the effect on such fund's liquidity.

Short-Term Securities
   In order to meet anticipated redemptions, to hold pending the purchase of
additional securities for a fund's portfolio, or, in some cases, for temporary
defensive purposes, these funds may invest a portion of their assets in money
market and other short-term securities.
   Examples of those securities include:
   o Securities issued or guaranteed by the U.S. government and its agencies and
   instrumentalities
   o Commercial Paper o Certificates of Deposit and Euro Dollar Certificates of
   Deposit
   o Bankers' Acceptances
   o Short-term notes, bonds, debentures or other debt instruments
   o Repurchase agreements

   Under the Investment Company Act, a fund's investment in other investment
companies (including money market funds) currently is limited to (a) 3% of the
total voting stock of any one investment company; (b) 5% of the fund's total
assets with respect to any one investment company; and (c) 10% of a fund's total
assets in the aggregate. These investments may include investments in money
market funds managed by the advisor. Any investments in money market funds must
be consistent with the investment policies and restrictions of the fund making
the investment.

Other Investment Companies
   Each of the funds may invest up to 10% of its total assets in other mutual
funds provided that the investment is consistent with the fund's investment
policies and restrictions. Under the Investment Company Act, a fund's investment
in such securities, subject to certain exceptions, currently is limited to
(a) 3% of the total voting stock of any one investment company;
(b) 5% of the fund's total assets with respect to any one investment company;
    and
(c) 10% of a fund's total assets in the aggregate.

   Such purchases will be made in the open market where no commission or profit
to a sponsor or dealer results from the purchase other than the customary
brokers' commissions. As a shareholder of another investment company, a fund
would bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the management fee that each fund bears directly in connection
with its own operations.

Futures and Options
   Each fund may enter into futures contracts, options or options on futures
contracts. Generally, futures transactions will be used to:
   o protect against a decline in market value of the fund's securities (taking
   a short futures position), or
   o protect against the risk of an increase in market value for securities
   in which the fund generally invests at a time when the fund is not fully
   invested (taking a long futures position), or
   o  provide a temporary substitute for the purchase of an individual security
      that may not be purchased in an orderly fashion.
   Some futures and options strategies, such as selling futures, buying puts and
writing calls, hedge a fund's investments against price fluctuations. Other
strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure.
   Although other techniques may be used to control a fund's exposure to market
fluctuations, the use of futures contracts may be a more effective means of
hedging this exposure. While a fund pays brokerage commissions in connection
with opening and closing out futures positions, these costs are lower than the
transaction costs incurred in the purchase and sale of the underlying
securities.
   For example, the sale of a future by a fund means the fund becomes obligated
to deliver the security (or securities, in the case of an index future) at a
specified price on a specified date. The purchase of a future means the fund
becomes obligated to buy the security (or securities) at a specified price on a
specified date. Futures contracts provide for the sale by one party and purchase
by another party of a specific security at a specified future time and price.
The fund managers may engage in futures and options transactions based on
securities indices that are consistent with the fund's investment objectives.
Examples of indices that may be used include the Bond Buyer Index of Municipal
Bonds for fixed-income funds, or the S&P 500 Index for equity funds. The
managers also may engage in futures and options transactions based on specific
securities, such as U.S. Treasury bonds or notes. Futures contracts are traded
on national futures exchanges. Futures exchanges and trading are regulated under
the Commodity Exchange Act by the Commodity Futures Trading Commission (CFTC), a
U.S. government agency.
   Index futures contracts differ from traditional futures contracts in that
when delivery takes place, no stocks or bonds change hands. Instead, these
contracts settle in cash at the spot market value of the index. Although other
types of futures contracts by their terms call for actual delivery or acceptance
of the underlying securities, in most cases the contracts are closed out before
the settlement date. A futures position may be closed by taking an opposite
position in an identical contract (i.e., buying a contract that has previously
been sold or selling a contract that has previously been bought).
   Unlike when the fund purchases or sells a bond, no price is paid or received
by the fund upon the purchase or sale of the future. Initially, the fund will be
required to deposit an amount of cash or securities equal to a varying specified
percentage of the contract amount. This amount is known as initial margin. The
margin deposit is intended to ensure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. A margin deposit does do not constitute a margin
transaction for purposes of the fund's investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.
In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin accounts generally is not
income-producing. Subsequent payments to and from the broker, called variation
margin, will be made on a daily basis as the price of the underlying debt
securities or index fluctuates, making the future more or less valuable , a
process known as marking the contract to market. Changes in variation margin are
recorded by the fund as unrealized gains or losses. At any time prior to
expiration of the future, the fund may elect to close the position by taking an
opposite position that will operate to terminate its position in the future. A
final determination of variation margin is then made; additional cash is
required to be paid by or released to the fund and the fund realizes a loss or
gain.

Risks Related to Futures and Options Transactions
   Futures and options prices can be volatile, and trading in these markets
involves certain risks. If the fund managers apply a hedge at an inappropriate
time or judge interest rate or equity market trends incorrectly, futures and
options strategies may lower a fund's return.
   A fund could suffer losses if it is unable to close out its position because
of an illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the fund managers consider it appropriate or desirable to
do so. In the event of adverse price movements, a fund would be required to
continue making daily cash payments to maintain its required margin. If the fund
had insufficient cash, it might have to sell portfolio securities to meet daily
margin requirements at a time when the fund managers would not otherwise elect
to do so. In addition, a fund may be required to deliver or take delivery of
instruments underlying futures contracts it holds. The fund managers will seek
to minimize these risks by limiting the contracts entered into on behalf of the
funds to those traded on national futures exchanges and for which there appears
to be a liquid secondary market.
   A fund could suffer losses if the prices of its futures and options positions
were poorly correlated with its other investments, or if securities underlying
futures contracts purchased by a fund had different maturities than those of the
portfolio securities being hedged. Such imperfect correlation may give rise to
circumstances in which a fund loses money on a futures contract at the same time
that it experiences a decline in the value of its hedged portfolio securities. A
fund also could lose margin payments it has deposited with a margin broker, if,
for example, the broker became bankrupt.
   Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of the trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.

Options on Futures
   By purchasing an option on a futures contract, a fund obtains the right, but
not the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is exercised.
   Although they do not currently intend to do so, the funds may write (or sell)
call options that obligate them to sell (or deliver) the option's underlying
instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the funds would give up some
ability to participate in a price increase on the underlying security. If a fund
were to engage in options transactions, it would own the futures contract at the
time a call were written and would keep the contract open until the obligation
to deliver it pursuant to the call expired.

Restrictions on the Use of Futures Contracts and Options
   Each fund may enter into futures contracts, options or options on futures
contracts.
   Under the Commodity Exchange Act, a fund may enter into futures and options
transactions (a) for hedging purposes without regard to the percentage of assets
committed to initial margin and option premiums or (b) for purposes other than
hedging, provided that assets committed to initial margin and option premiums do
not exceed 5% of the fund's total assets. To the extent required by law, each
fund will segregate cash or securities on its records in an amount sufficient to
cover its obligations under the futures contracts and options.

Forward Currency Exchange Contracts
   Each fund may purchase and sell foreign currency on a spot (i.e., cash) basis
and may engage in forward currency contacts, currency options and futures
transactions for hedging or any other lawful purpose. See Derivative Securities,
page 10.
   The funds expect to use forward contracts under two circumstances:
   (1) When the fund managers wish to lock in the U.S. dollar price of a
security when a fund is purchasing or selling a security denominated in a
foreign currency, the fund would be able to enter into a forward contract to do
so; or
   (2) When the fund managers believe that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, a fund would
be able to enter into a forward contract to sell foreign currency for a fixed
U.S. dollar amount approximating the value of some or all of its portfolio
securities either denominated in, or whose value is tied to, such foreign
currency.
   In the first circumstance, when a fund enters into a trade for the purchase
or sale of a security denominated in a foreign currency, it may be desirable to
establish (lock in) the U.S. dollar cost or proceeds. By entering into forward
contracts in U.S. dollars for the purchase or sale of a foreign currency
involved in an underlying security transaction, the fund will be able to protect
itself against a possible loss between trade and settlement dates resulting from
the adverse change in the relationship between the U.S. dollar and the subject
foreign currency.
   Under the second circumstance, when the fund managers believe that the
currency of a particular country may suffer a substantial decline relative to
the U.S. dollar, a fund could enter into a forward contract to sell for a fixed
dollar amount the amount in foreign currencies approximating the value of some
or all of its portfolio securities either denominated in, or whose value is tied
to, such foreign currency. The fund will segregate on its records cash or
securities in an amount sufficient to cover its obligations under the contract.
   The precise matching of forward contracts in the amounts and values of
securities involved generally would not be possible because the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The fund managers do not intend to enter into such
contracts on a regular basis. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the fund
managers believe that it is important to have flexibility to enter into such
forward contracts when they determine that a fund's best interests may be
served.
   At the maturity of the forward contract, the fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate the obligation to deliver the foreign currency by
purchasing an offsetting forward contract with the same currency trader
obligating the fund to purchase, on the same maturity date, the same amount of
the foreign currency.
   It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for a fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.

Municipal Notes
   Municipal notes are issued by state and local governments or government
entities to provide short-term capital or to meet cash flow needs.
   Tax Anticipation Notes (TANs) are issued in anticipation of seasonal tax
revenues, such as ad valorem property, income, sales, use and business taxes,
and are payable from these future taxes. TANs usually are general obligations of
the issuer. General obligations are secured by the issuer's pledge of its full
faith and credit (i.e., taxing power) for the payment of principal and interest.
   Revenue Anticipation Notes (RANs) are issued with the expectation that
receipt of future revenues, such as federal revenue sharing or state aid
payments, will be used to repay the notes. Typically, these notes also
constitute general obligations of the issuer.
   Bond Anticipation Notes (BANs) are issued to provide interim financing until
long-term financing can be arranged. In most cases, the long-term bonds provide
the money for repayment of the notes.

Municipal Bonds
   Municipal bonds, which generally have maturities of more than one year when
issued, are designed to meet longer-term capital needs. These securities have
two principal classifications: general obligation bonds and revenue bonds.
   General Obligation (GO) bonds are issued by states, counties, cities, towns
and regional districts to fund a variety of public projects, including
construction of and improvements to schools, highways, and water and sewer
systems. GO bonds are backed by the issuer's full faith and credit based on its
ability to levy taxes for the timely payment of interest and repayment of
principal, although such levies may be constitutionally or statutorily limited
as to rate or amount.
   Revenue Bonds are not backed by an issuer's taxing authority; rather,
interest and principal are secured by the net revenues from a project or
facility. Revenue bonds are issued to finance a variety of capital projects,
including construction or refurbishment of utility and waste disposal systems,
highways, bridges, tunnels, air and sea port facilities, schools and hospitals.
Many revenue bond issuers provide additional security in the form of a
debt-service reserve fund that may be used to make payments of interest and
repayments of principal on the issuer's obligations. Some revenue bond
financings are further protected by a state's assurance (without obligation)
that it will make up deficiencies in the debt-service reserve fund.
   Industrial Development Bonds (IDBs), a type of revenue bond, are issued by or
on behalf of public authorities to finance privately operated facilities. These
bonds are used to finance business, manufacturing, housing, athletic and
pollution control projects, as well as public facilities such as mass transit
systems, air and sea port facilities and parking garages. Payment of interest
and repayment of principal on an IDB depend solely on the ability of the
facility's user to meet financial obligations, and on the pledge, if any, of the
real or personal property financed. The interest earned on IDBs may be subject
to the federal alternative minimum tax.

Variable- and Floating-Rate Obligations
   Variable- and floating-rate demand obligations (VRDOs and FRDOs) carry rights
that permit holders to demand payment of the unpaid principal plus accrued
interest, from the issuers or from financial intermediaries. Floating-rate
securities, or floaters, have interest rates that change whenever there is a
change in a designated base rate; variable-rate instruments provide for a
specified, periodic adjustment in the interest rate, which typically is based on
an index. These rate formulas are designed to result in a market value for the
VRDO or FRDO that approximates par value.

Obligations with Term Puts Attached
   Fixed-rate bonds subject to third-party puts and participation interests in
such bonds held by a bank in trust or otherwise have tender options or demand
features that permit the funds to tender (or put) their bonds to an institution
at periodic intervals and to receive the principal amount thereof.
   The fund managers expect that the funds will pay more for securities with
puts attached than for securities without these liquidity features. The fund
managers may buy securities with puts attached to keep a fund fully invested in
municipal securities while maintaining sufficient portfolio liquidity to meet
redemption requests or to facilitate management of the funds' investments.
   To ensure that the interest on municipal securities subject to puts is
tax-exempt to the funds, the advisor limits the funds' use of puts in accordance
with applicable interpretations and rulings of the Internal Revenue Service
(IRS).
   Because it is difficult to evaluate the likelihood of exercise or the
potential benefit of a put, puts normally will be determined to have a value of
zero, regardless of whether any direct or indirect consideration is paid.
Accordingly, puts as separate securities are not expected to affect the funds'
weighted average maturities. When a fund has paid for a put, the cost will be
reflected as unrealized depreciation on the underlying security for the period
the put is held. Any gain on the sale of the underlying security will be reduced
by the cost of the put.
   There is a risk that the seller of a put will not be able to repurchase the
underlying obligation when (or if) a fund attempts to exercise the put. To
minimize such risks, the funds will purchase obligations with puts attached only
from sellers deemed creditworthy by the fund managers under the direction of the
Board of Directors.

Tender Option Bonds
   Tender Option Bonds (TOBs) were created to increase the supply of
high-quality, short-term tax-exempt obligations, and thus they are of particular
interest to money market funds. However, any of the funds may purchase these
instruments.
   TOBs are created by municipal bond dealers who purchase long-term tax-exempt
bonds in the secondary market, place the certificates in trusts, and sell
interests in the trusts with puts or other liquidity guarantees attached. The
credit quality of the resulting synthetic short-term instrument is based on the
guarantor's short-term rating and the underlying bond's long-term rating.
   There is some risk that a remarketing agent will renege on a tender option
agreement if the underlying bond is downgraded or defaults. Because of this, the
fund managers monitor the credit quality of bonds underlying the funds' TOB
holdings and intend to sell or put back any TOB if the rating on its underlying
bond falls below the second-highest rating category designated by a rating
agency.
   The fund managers also take steps to minimize the risk that the fund may
realize taxable income as a result of holding TOBs. These steps may include
consideration of (a) legal opinions relating to the tax-exempt status of the
underlying municipal bonds, (b) legal opinions relating to the tax ownership of
the underlying bonds, and (c) other elements of the structure that could result
in taxable income or other adverse tax consequences. After purchase, the fund
managers monitor factors related to the tax-exempt status of the fund's TOB
holdings in order to minimize the risk of generating taxable income.

Zero-Coupon, Step-Coupon and Pay-In-Kind Securities
   Zero-coupon, step-coupon and pay-in-kind securities are debt securities that
do not make regular cash interest payments. Zero-coupon and step-coupon
securities are sold at a deep discount to their face value. Pay-in-kind
securities pay interest through the issuance of additional securities. Because
such securities do not pay current cash income, the price of these securities
can be volatile when interest rates fluctuate. While these securities do not pay
current cash income, federal income tax law requires the holders of zero-coupon,
step-coupon and pay-in-kind securities to include in income each year the
portion of the original issue discount and other noncash income on such
securities accrued during that year. In order to continue to qualify for
treatment as a "regulated investment company" under the Internal Revenue Code
and avoid certain excise tax, the funds may be required to dispose of other
portfolio securities, which may occur in periods of adverse market prices, in
order to generate cash to meet these distribution requirements.

Inverse Floaters
   An inverse floater is a type of derivative security that bears an interest
rate that moves inversely to market interest rates. As market interest rates
rise, the interest rate on inverse floaters goes down, and vice versa.
Generally, this is accomplished by expressing the interest rate on the inverse
floater as an above-market fixed rate of interest, reduced by an amount
determined by reference to a market-based or bond-specific floating interest
rate (as well as by any fees associated with administering the inverse floater
program).
   Inverse floaters may be issued in conjunction with an equal amount of Dutch
Auction floating-rate bonds (floaters), or a market-based index may be used to
set the interest rate on these securities. A Dutch Auction is an auction system
in which the price of the security is gradually lowered until it meets a
responsive bid and is sold. Floaters and inverse floaters may be brought to
market by (1) a broker-dealer who purchases fixed-rate bonds and places them in
a trust, or (2) by an issuer seeking to reduce interest expenses by using a
floater/inverse floater structure in lieu of fixed-rate bonds.
   In the case of a broker-dealer structured offering (where underlying
fixed-rate bonds have been placed in a trust), distributions from the underlying
bonds are allocated to floater and inverse floater holders in the following
manner:
   (i) Floater holders receive interest based on rates set at a six-month
interval or at a Dutch Auction, which is typically held every 28 to 35 days.
Current and prospective floater holders bid the minimum interest rate that they
are willing to accept on the floaters, and the interest rate is set just high
enough to ensure that all of the floaters are sold.
   (ii) Inverse floater holders receive all of the interest that remains on the
underlying bonds after floater interest and auction fees are paid.
   Procedures for determining the interest payment on floaters and inverse
floaters brought to market directly by the issuer are comparable, although the
interest paid on the inverse floaters is based on a presumed coupon rate that
would have been required to bring fixed-rate bonds to market at the time the
floaters and inverse floaters were issued.
   Where inverse floaters are issued in conjunction with floaters, inverse
floater holders may be given the right to acquire the underlying security (or to
create a fixed-rate bond) by calling an equal amount of corresponding floaters.
The underlying security may then be held or sold. However, typically, there are
time constraints and other limitations associated with any right to combine
interests and claim the underlying security.
   Floater holders subject to a Dutch Auction procedure generally do not have
the right to put back their interests to the issuer or to a third party. If a
Dutch Auction fails, the floater holder may be required to hold its position
until the underlying bond matures, during which time interest on the floater is
capped at a predetermined rate.
   The secondary market for floaters and inverse floaters may be limited. The
market value of inverse floaters tends to be significantly more volatile than
fixed-rate bonds. The interest rates on inverse floaters may be significantly
reduced, even to zero, if interest rates rise.

Loan Interests
   Loan interests are interests in amounts owed by a corporate, governmental or
other borrower to lenders or lending syndicates. Loan interests purchased by the
funds may have a maturity of any number of days or years, and may be acquired
from U.S. and foreign banks, insurance companies, finance companies or other
financial institutions that have made loans or are members of a lending
syndicate or from the holders of loan interests. Loan interests involve the risk
of loss in case of default or bankruptcy of the borrower and, in the case of
participation interests, involve a risk of insolvency of the agent lending bank
or other financial intermediary. Loan interests are not rated by any nationally
recognized securities rating organization and are, at present, not readily
marketable and may be subject to contractual restrictions on resale.

INVESTMENT POLICIES
   Unless otherwise indicated, with the exception of the percentage limitations
on borrowing, the restrictions described below apply at the time a fund enters
into a transaction. Accordingly, any later increase or decrease beyond the
specified limitation resulting from a change in a fund's net assets will not be
considered in determining whether it has complied with its investment
restrictions.
   Fundamental Investment Policies
   The funds' fundamental investment restrictions are set forth below. These
investment restrictions may not be changed without approval of a majority of the
outstanding votes of shareholders of a fund, as determined in accordance with
the Investment Company Act.

--------------------------------------------------------------------------------
Subject                    Policy
--------------------------------------------------------------------------------
Senior Securities          A fund may not issue senior securities, except as
                           permitted under the Investment Company Act.
--------------------------------------------------------------------------------
Borrowing                  A fund may not borrow money, except for temporary or
                           emergency purposes (not for leveraging or investment)
                           in an amount not exceeding 33-1/3% of the fund's
                           total assets.
--------------------------------------------------------------------------------
Lending                    A fund may not lend any security or make any other
                           loan if, as a result, more than 33-1/3% of the fund's
                           total assets would be lent to other parties, except
                           (i) through the purchase of debt securities in
                           accordance with its investment objective, policies
                           and limitations or (ii) by engaging in repurchase
                           agreements with respect to portfolio securities.
--------------------------------------------------------------------------------
Real Estate                A fund may not purchase or sell real estate
                           unless acquired as a result of ownership of
                           securities or other instruments. This policy shall
                           not prevent a fund from investing in securities or
                           other instruments backed by real estate or securities
                           of companies that deal in real estate or are engaged
                           in the real estate business.
--------------------------------------------------------------------------------
Concentration              A fund may not concentrate its investments in
                           securities of issuers in a particular industry (other
                           than securities issued or guaranteed by the U.S.
                           government or any of its agencies or
                           instrumentalities).
--------------------------------------------------------------------------------
Underwriting               A fund may not act as an underwriter of securities
                           issued by others, except to the extent that the fund
                           may be considered an underwriter within the meaning
                           of the Securities Act of 1933 in the disposition of
                           restricted securities.
--------------------------------------------------------------------------------
Commodities                A fund may not purchase or sell physical commodities
                           unless acquired as a result of ownership of
                           securities or other instruments, provided that this
                           limitation shall not prohibit the fund from
                           purchasing or selling options and futures contracts
                           or from investing in securities or other instruments
                           backed by physical commodities.
--------------------------------------------------------------------------------
Control                    A fund may not invest for purposes of exercising
                           control over management.
--------------------------------------------------------------------------------

   For purposes of the investment restrictions relating to lending and
borrowing, the funds have received an exemptive order from the SEC regarding
interfund lending. Under the terms of the exemptive order, the funds may borrow
money from or lend money to other funds, advised by ACIM, that permit such
transactions. All such transactions will be subject to the limits set above for
borrowing and lending. The funds will borrow money through the program only when
the costs are equal to or lower than the cost of short-term bank loans.
Interfund loans and borrowings normally extend only overnight, but can have a
maximum duration of seven days. The funds will lend through the program only
when the returns are higher than those available from other short-term
instruments (such as repurchase agreements). The funds may have to borrow from a
bank at a higher interest rate if an interfund loan is called or not renewed.
Any delay in repayment to a lending fund could result in a lost investment
opportunity or additional borrowing costs.
   For purposes of the investment restriction relating to concentration, a fund
shall not purchase any securities that would cause 25% or more of the value of
the fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry, provided that (a) there is no limitation with respect to
obligations issued or guaranteed by the U.S. government, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions and
repurchase agreements secured by such instruments, (b) wholly owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents, (c)
utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each be considered a
separate industry, and (d) personal credit and business credit businesses will
be considered separate industries.


Nonfundamental Investment Policies
   In addition, the funds are subject to the following investment restrictions
that are not fundamental and may be changed by the Board of Directors.

--------------------------------------------------------------------------------
Subject                  Policy
--------------------------------------------------------------------------------
Leveraging               A fund may not purchase additional investment
                         securities at any time during which outstanding
                         borrowings exceed 5% of the total assets of the fund.
--------------------------------------------------------------------------------
Liquidity                A fund may not purchase any security or enter into a
                         repurchase agreement if, as a result, more than 15% of
                         its net assets would be invested in illiquid
                         securities. Illiquid securities include repurchase
                         agreements not entitling the holder to payment of
                         principal and interest within seven days, and
                         securities that are illiquid by virtue of legal or
                         contractual restrictions on resale or the absence of a
                         readily available market.
--------------------------------------------------------------------------------
Short Sales              A fund may not sell securities short, unless it
                         owns or has the right to obtain securities equivalent
                         in kind and amount to the securities sold short, and
                         provided that transactions in futures contracts and
                         options are not deemed to constitute selling securities
                         short.
--------------------------------------------------------------------------------
Margin                   A fund may not purchase securities on margin, except to
                         obtain such short-term credits as are necessary for the
                         clearance of transactions, and provided that margin
                         payments in connection with futures contracts and
                         options on futures contracts shall not constitute
                         purchasing securities on margin.

--------------------------------------------------------------------------------
Futures and Options      A fund may enter into futures contracts
                         and write and buy put and call options relating to
                         futures contracts. A fund may not, however, enter
                         into leveraged futures transactions if it would be
                         possible for the fund to lose more money than it
                         invested.
--------------------------------------------------------------------------------
Issuers with             A fund may invest up to 10% of its assets in the
Limited Operating        securities of issuers with limited operating histories.
Histories                An issuer is considered to have a limited operating
                         history if that issuer has a record of less than three
                         years of continuous operation. Periods of capital
                         formation, incubation, consolidations, and research
                         and development may be considered indetermining whether
                         a particular issuer has a record of three years of
                         continuous operation.
--------------------------------------------------------------------------------

   The Investment Company Act imposes certain additional restrictions upon
acquisition by the funds of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership. Neither the SEC nor any other agency of the
federal or state government participates in or supervises the management of the
funds or their investment practices or policies.

PORTFOLIO TURNOVER
   The portfolio turnover rates of the funds are shown in the Financial
Highlights table in the Prospectuses.

Tax-Managed Value Fund
   The fund managers of Tax-Managed Value seek to minimize realized capital
gains by keeping portfolio turnover low and generally holding its investments
for long periods. Because a higher turnover rate may increase taxable capital
gains, the managers carefully weigh the potential benefits of short-term
investing against the tax impact such investing would have on the fund's
shareholders. However, the fund managers may sell securities to realize losses
that can be used to offset realized capital gains. They will take such actions
when they believe the tax benefits from realizing losses offset the near-term
investment potential of that security.

Other Funds
   With respect to each other fund, the managers will purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, each fund's rate of portfolio turnover may be substantial.
   The fund managers intend to purchase a given security whenever they believe
it will contribute to the stated objective of the fund. In order to achieve each
fund's investment objective, the managers may sell a given security, no matter
for how long or for how short a period it has been held in the portfolio, and no
matter whether the sale is at a gain or at a loss, if the managers believe that
the security is not fulfilling its purpose, either because, among other things,
it did not live up to the managers' expectations, or because it may be replaced
with another security holding greater promise, or because it has reached its
optimum potential, or because of a change in the circumstances of a particular
company or industry or in general economic conditions, or because of some
combination of such reasons.
   When a general decline in security prices is anticipated, the equity funds
may decrease or eliminate entirely their equity positions and increase their
cash positions, and when a rise in price levels is anticipated, the equity funds
may increase their equity positions and decrease their cash positions. However,
it should be expected that the funds will, under most circumstances, be
essentially fully invested in equity securities.
   Because investment decisions are based on the anticipated contribution of the
security in question to a fund's objectives, the managers believe that the rate
of portfolio turnover is irrelevant when they believe a change is in order to
achieve the objective. As a result, a fund's annual portfolio turnover rate
cannot be anticipated and may be higher than that of other mutual funds with
similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions, which is a cost the funds pay directly. Portfolio
turnover also may affect the character of capital gains realized and distributed
by the fund, if any, because short-term capital gains are taxable as ordinary
income. This disclosure regarding portfolio turnover is a statement of
fundamental policy and may be changed only by a vote of the shareholders.
   Because the managers do not take portfolio turnover rate into account in
making investment decisions, (1) the managers have no intention of accomplishing
any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as representative
of the rates that will be attained in the future.

MANAGEMENT

The Board of Directors

   The Board of Directors oversees the management of the funds and meets at
least quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired the advisor to do so.
Two-thirds of the directors are independent of the funds' advisor; that is, they
are not employed by and have no financial interest in the advisor.
   The individuals listed in the following table whose names are marked by an
asterisk (*) are interested persons of the funds (as defined in the Investment
Company Act) by virtue of, among other considerations, their affiliation with
the funds; the advisor, American Century Investment Management, Inc. (ACIM); the
funds' agent for transfer and administrative services, American Century Services
Corporation (ACSC); the parent corporation, American Century Companies, Inc.
(ACC) or ACC's subsidiaries (including ACIM and ACSC); the funds' distribution
agent, American Century Investment Services, Inc. (ACIS); or other funds advised
by the advisor. Each director listed below (except James E. Stowers III) serves
as a director of six registered investment companies in the American Century
family of funds, which are also advised by the advisor. James E. Stowers III
serves as a director of 13 other registered investment companies in the American
Century family of funds


<TABLE>

Name (Age)                          Position(s) Held With Fund         Principal Occupation(s) during Past five Years
------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>                                 <C>
James E. Stowers, Jr.* (77)         Director,                          Chairman, Director and controlling shareholder, ACC,
4500 Main Street                    Chairman of the Board              Chairman, ACIM, ACSC and seven other ACC
Kansas City, MO 64111                                                  subsidiaries
                                                                       Director, ACIM, ACSC and 11 other ACC subsidiaries(1)
------------------------------------------------------------------------------------------------------------------------------------
James E. Stowers III* (41)          Director                           Co-Chairman and Director, ACC
4500 Main Street                                                       Chief Executive Officer, ACIM, ACSC and seven other
Kansas City, MO 64111                                                  ACC subsidiaries
                                                                       Director, ACIM, ACSC and 13 other ACC subsidiaries(2)
------------------------------------------------------------------------------------------------------------------------------------
Thomas A. Brown (60)                Director                           Area Vice President, Plains States Development, Applied
4500 Main Street                                                       Industrial Technologies, Inc., a corporation engaged
Kansas City, MO 64111                                                  in the sale of bearings and power transmission products
------------------------------------------------------------------------------------------------------------------------------------
Robert W. Doering, M.D. (68)        Director                           Retired, formerly a general surgeon
4500 Main Street
Kansas City, MO 64111
------------------------------------------------------------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. (56)          Director                           Senior Vice President and Associate Director,
Midwest 4500 Main Street                                               Research Institute
Kansas City, MO 64111
------------------------------------------------------------------------------------------------------------------------------------
D.D. (Del) Hock (66)                Director                           Retired, formerly Chairman, Public Service Company
4500 Main Street                                                       of Colorado; Director, RMI.NET Inc., Hathaway
Kansas City, MO 64111                                                  Corporation, and J.D. Edwards & Company
------------------------------------------------------------------------------------------------------------------------------------
Donald H. Pratt (63)                Director,                          Chairman and Director, Butler Manufacturing
4500 Main Street                    Vice Chairman of the Board         Company
Kansas City, MO 64111                                                  Director, Atlas-Copco North America Inc.
------------------------------------------------------------------------------------------------------------------------------------
Gale E. Sayers (57)                 Director                           President, Chief Executive Officer and Founder,
4500 Main Street                                                       Sayers Computer Source
Kansas City, MO 64111
------------------------------------------------------------------------------------------------------------------------------------
M. Jeannine Strandjord (55)         Director                           Senior Vice President, Long Distance Finance,
4500 Main Street                                                       Sprint Corporation; Director, DST Systems, Inc.
Kansas City, MO 64111
------------------------------------------------------------------------------------------------------------------------------------
(1)Father of James E. Stowers III
(2)Son of James E. Stowers, Jr.
</TABLE>


Committees
   The Board has four standing committees to oversee specific functions of the
funds' operations. Information about these committees appears in the table
below. The director first named serves as chairman of the committee.

<TABLE>
Committee             Members                         Function of Committee
------------------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                             <C>
Executive             James E. Stowers, Jr.           The Executive Committee performs the functions of the Board of
                      James E. Stowers III            Directors between Board meetings, subject to the limitations on its
                      Donald H. Pratt                 power set out in the Maryland General Corporation Law, and except
                                                      for matters required by the Investment Company Act to be acted
                                                      upon by the whole Board.
------------------------------------------------------------------------------------------------------------------------------------
Compliance            Thomas A. Brown                 The Compliance Committee reviews the results of the funds'
and                   Donald H. Pratt                 compliance testing program, reviews quarterly reports from the
Communications        Gale E. Sayers                  advisor to the Board regarding various compliance
                      Andrea C. Hall, Ph.D            matters and monitors the implementation of the funds' Code of
                                                      Ethics, including any violations.
------------------------------------------------------------------------------------------------------------------------------------
Audit                 Jeanine Strandjord              The Audit Committee recommends the engagement of the funds'
                      Robert W. Doering, M.D.         independent auditors and oversees its activities. The Committee
                      D.D. (Del) Hock                 receives reports from the advisor's Internal Audit Department,
                                                      which is accountable to the Committee. The Committee also
                                                      receives reporting about compliance matters affecting the funds.
------------------------------------------------------------------------------------------------------------------------------------
Nominating            Donald H. Pratt                 The Nominating Committee primarily considers and recommends
                      D.D. (Del) Hock                 individuals for nomination as directors. The names of potential
                      Andrea C. Hall, PhD             director candidates are drawn from a number of sources, including
                                                      recommendations from members of the Board, management and
                                                      shareholders. This committee also reviews and makes
                                                      recommendations to the Board with respect to the composition of
                                                      Board committees and other Board-related matters, including its
                                                      organization, size, composition, responsibilities, functions and compensation.
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Compensation of Directors
   The directors also serve as directors for five American Century investment
companies other than the corporation. Each director who is not an interested
person as defined in the Investment Company Act receives compensation for
service as a member of the Board of all six such companies based on a schedule
that takes into account the number of meetings attended and the assets of the
funds for which the meetings are held. These fees and expenses are divided among
the six investment companies based, in part, upon their relative net assets.
Under the terms of the management agreement with the advisor, the funds are
responsible for paying such fees and expenses.
   The following table shows the aggregate compensation paid by the corporation
for the periods indicated and by the six investment companies served by the
Board to each director who is not an interested person as defined in the
Investment Company Act.

Aggregate Director Compensation for Fiscal Year Ended October 31, 2000
--------------------------------------------------------------------------------
                             Total               Total Compensation
                             Compensation        from the
                             from the            American Century
Name of Director             Funds (1)           Family of Funds(2)
Thomas A. Brown              $x                  $x
Robert W. Doering, M.D.      x                   x
Andrea C. Hall, Ph.D.        x                   x
D.D. (Del) Hock              x                   x
Donald H. Pratt              x                   x
Gale E. Sayers  (3)          0                   0
Lloyd T. Silver, Jr. (4)     x                   x
M. Jeannine Strandjord       x                   x
--------------------------------------------------------------------------------

1  Includes compensation paid to the directors during the fiscal year ended
   October 31, 1999, and also includes amounts deferred at the election of the
   directors under the Amended and Restated American Century Mutual Funds
   Deferred Compensation Plan for Non-Interested Directors. The total amount of
   deferred compensation included in the preceding table is as follows: Mr.
   Brown, $x; Dr. Hall, $x; Mr. Hock, $x; Mr. Pratt, $x; Mr. Silver, $x and Ms.
   Strandjord, $x.

2  Includes compensation paid by the six investment company members of the
   American Century family of funds served by this Board.

3  Mr. Sayers joined the board on November 18, 2000.

4  Mr. Silver retired from the board on March 4, 2000.

   The funds have adopted the Amended and Restated American Century Deferred
Compensation Plan for Non-Interested Directors. Under the plan, the independent
directors may defer receipt of all or any part of the fees to be paid to them
for serving as directors of the funds.
   All deferred fees are credited to an account established in the name of the
directors. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the director. The account balance continues
to fluctuate in accordance with the performance of the selected fund or funds
until final payment of all amounts credited to the account. Directors are
allowed to change their designation of mutual funds from time to time.
   No deferred fees are payable until such time as a director resigns, retires
or otherwise ceases to be a member of the Board of Directors. Directors may
receive deferred fee account balances either in a lump sum payment or in
substantially equal installment payments to be made over a period not to exceed
10 years. Upon the death of a director, all remaining deferred fee account
balances are paid to the director's beneficiary or, if none, to the director's
estate.
   The plan is an unfunded plan and, accordingly, the funds have no obligation
to segregate assets to secure or fund the deferred fees. To date, the funds have
voluntarily funded their obligations. The rights of directors to receive their
deferred fee account balances are the same as the rights of a general unsecured
creditor of the funds. The plan may be terminated at any time by the
administrative committee of the plan. If terminated, all deferred fee account
balances will be paid in a lump sum.
   No deferred fees were paid to any director under the plan during the fiscal
year ended October 31, 2000.

Officers
   Background information about the officers of the funds is provided in the
following table. All persons named as officers of the funds also serve in
similar capacities for the 13 other investment companies advised by ACIM. Not
all officers of the funds are listed; only those officers with policy-making
functions for the funds are listed. No officer is compensated for his or her
service as an officer of the funds. The individuals listed in the following
table are interested persons of the funds (as defined in the Investment Company
Act) by virtue of, among other considerations, their affiliation with the funds,
ACC or ACC's subsidiaries (including ACIM, ACSC and ACIS).

<TABLE>
------------------------------------- ----------------------------------- ----------------------------------------------------------
Name (Age)                            Positions Held with                 Principal Occupation(s)
Address                               the Funds                           During Past Five Years
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
<S>                                  <C>                                 <C>
William M. Lyons (45)                 President                           Chief Executive Officer, ACC (September 2000 to present)
4500 Main St.                                                             President, ACC (June 1997 to present)
Kansas City, MO 64111                                                     Chief Operating Officer, ACC (June 1995 to present)
                                                                          General Counsel, ACC, ACIM, ACIS, ACSC and other ACC
                                                                          subsidiaries (June 1989 to June 1998)
                                                                          Executive Vice President, ACC, (January 1995 to June 1997)
                                                                          Also serves as:  Executive Vice President and Chief
                                                                          Operating Officer, ACIM, ACIS, ACSC and other ACC
                                                                          subsidiaries, and
                                                                          Executive Vice President of other ACC subsidiaries
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Robert T. Jackson (55)                Executive Vice President and        Chief Administrative Officer and Chief Financial Officer,
4500 Main St.                         Chief Financial Officer             ACC (August 1997 to present)
Kansas City, MO 64111                                                     President, ACSC (January 1999 to present)
                                                                          Executive Vice President, ACC (May 1995 to present)
                                                                          Also serves as: Executive Vice President, ACIM, ACIS and
                                                                          other ACC subsidiaries, and Treasurer of ACC and other ACC
                                                                          subsidiaries
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Maryanne Roepke, CPA (45)             Senior Vice President, Treasurer    Senior Vice President and Assistant Treasurer, ACSC
4500 Main St.                         and Chief Accounting Officer
Kansas City, MO 64111
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
David C. Tucker (42)                  Senior Vice President and General   Senior Vice President, ACIM, ACIS, ACSC and other ACC
4500 Main St.                         Counsel                             subsidiaries (June 1998 to present)
Kansas City, MO 64111                                                     General Counsel, ACC, ACIM, ACIS, ACSC and other ACC
                                                                          subsidiaries (June 1998 to present)
                                                                          Consultant to mutual fund industry
                                                                          (May 1997 to April 1998)
                                                                          Vice President and General Counsel, Janus Companies (1990
                                                                          to 1997)
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Charles A. Etherington (43)           Vice President                      Vice President (October 1996 to present) and Associate
4500 Main St.                                                             General Counsel (December 1998 to present), ACSC
Kansas City, MO 64111                                                     Counsel to ACSC (February 1994 to December 1998)
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Charles C. S. Park (33)               Vice President                      Vice President (February 2000 to present) and Assistant
1665 Charleston Road                                                      General Counsel (January 1998 to present), ACSC
Mountain View, CA 04043                                                   Counsel to ACSC (October 1995 to January 1998)
                                                                          Attorney, Howard & Howard Attorneys, P.C.(June 1992 to
                                                                          October 1995)
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
David H. Reinmiller (37)              Vice President                      Vice President (February 2000 to present) and Assistant
4500 Main Street                                                          General Counsel (August 1996 to present), ACSC
Kansas City, MO 64111                                                     Counsel to ACSC (January 1994 to August 1996)
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Paul Carrigan Jr. (51)                Secretary                           Secretary, ACC (February 1998 to present)
4500 Main St.                                                             Director of Legal Operations, ACSC (February 1996 to
Kansas City, MO 64111                                                     present)
                                                                          Board Communications Manager (April 1994 to January 1996)
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
C. Jean Wade (36)                     Controller                          Vice President and Controller, Fund Accounting, ACSC
4500 Main St.
Kansas City, MO 64111
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Robert Leach (34)                     Controller                          Vice President and Controller, Fund Accounting, ACSC
4500 Main St.
Kansas City, MO 64111
------------------------------------- ----------------------------------- ----------------------------------------------------------
------------------------------------- ----------------------------------- ----------------------------------------------------------
Jon Zindel (33)                       Tax Officer                         Vice President of Taxation, ACSC (1996 to present)
4500 Main Street                                                          Vice President, ACIM, ACIS and other ACC subsidiaries
Kansas City, MO 64111                                                     (April 1999 to present)
                                                                          President, American Century Employee Benefit Services,
                                                                          Inc. (January 2000 to present)
                                                                          Treasurer, American Century Ventures, Inc. (December 1999
                                                                          to present)
                                                                          Tax Manager, Price Waterhouse LLP (1989 to 1996)
------------------------------------- ----------------------------------- ----------------------------------------------------------
</TABLE>



Code of Ethics
The funds, their investment advisor and principal underwriter have adopted a
code of ethics under Rule 17j-1 of the Investment Company Act and the code of
ethics permits personnel subject to the code to invest in securities, including
securities that may be purchased or held by the funds, provided that they first
obtain approval from the compliance department before making such investments.





 THE FUNDS' principal SHAREHOLDERS
   As of February 5, 2001, the following companies were the record owners of
more than 5% of the outstanding shares of any class of the fund:


<TABLE>
Fund                     Shareholder                                    Percentage of Outstanding Shares Owned
----                     -----------                                    --------------------------------------
Growth
<S>                      <C>                                           <C>
Investor                 State Street Bank and Trust Co. Trustee
                         Martin Marietta Profit Sharing Plan and Trust
                         Boston, Massachusetts                          x%

Advisor                  UMBSC & CO FBO Diamant Boart,
                         Kansas City, Missouri                          x%
                         UMB NA Trustee
                         Trendwest Resorts Inc 401K Plan and Trust
                         Kansas City, Missouri                          x%

Institutional            Charles Schwab & Co Inc.
                         San Francisco, California                      x%
                         North Carolina Engineering Foundation Inc.
                         Raleigh, North Carolina                        x%
                         American Century Profit Sharing and 401K
                         Savings Plan and Trust
                         Kansas City, Missouri                          x%

Growth                   American Century Services Corporation
Institutional            Stock Option Surrender Plan Trust
                         Kansas City, Missouri                          x%
                         American Century Money Purchase
                         Plan and Trust
                         Kansas City, Missouri                          x%

Select
Advisor                  Saxon & Co, FBO
                         Philadelphia, Pennsylvania                     x%
                         Principal Life Insurance Company
                         Des Moines, Iowa                               x%
                         United Missouri Bank Trustee
                         Carolina First Bancshares Profit Sharing Plan
                         Kansas City, Missouri                          x%

Institutional            The Chase Manhattan Bank NA Trustee
                         Robert Bosch Corporation New Star
                         Plan and Trust
                         New York, New York                             x%
                         UMB NA Trustee
                         Buckeye Pipe Line Services Company
                         Retirement and Savings Plan
                         Kansas City, Missouri                          x%

Heritage
Investor                 Bankers Trust Company Trustee
                         Kraft General Foods Inc. Master Savings
                         Plan and Trust
                         Jersey City, New Jersey                        x%
                         Bankers Trust Company Trustee
                         Philip Morris Deferred Profit Sharing
                         Plan and Trust
                         Jersey City, New Jersey                        x%

Advisor                  Saxon & Co, FBO
                         Philadelphia, Pennsylvania                     x%
                         North Carolina Trust Company TTEE
                         Greensboro Orthopedic Century Inc.
                         Employees Savings PL & PS Plan,
                         Greensboro, North Carolina                     x%

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

Ultra
Investor                 Charles Schwab & Co Inc.
                         San Francisco, California                      x%

Advisor                  First Union National Bank Custodian for
                         Various Retirement Plans
                         Charlotte, North Carolina                      x%
                         Invesco Trust Co TTTEE, Magellan Health
                         Services Retirement Savings Plan
                         Concord, California                            x%
                         Principal Life Insurance Company
                         Des Moines, Iowa                               x%
                         American Chamber of Commerce Executives
                         Amended & Restated MPP Plan and Trust
                         Springfield, Missouri                          x%

Ultra
Institutional            The Chase Manhattan Bank NA Trustee
                         Robert Bosch Corporation New Star Plan and Trust
                         New York, New York                             x%
                         Deferred PS Plan of Morgan Guaranty Trust Co of
                         NY and Affiliated Companies for US Employees
                         New York, New York                             x%
                         American Century Profit Sharing and 401K
                         Savings Plan and Trust
                         Kansas City, Missouri                          x%
                         A G Investments Co
                         Wilmington, Delaware                           x%
                         Morgan Guaranty Trust Company of New York Trustee
                         Champion International Corporation Savings Plan
                         For Salaried Employees Plan Trust
                         New York, New York                             x%

Vista
Advisor                  DB Alex. Brown LLC, FBO
                         Baltimore, Maryland                            x%
                         American Chamber of Commerce Executives
                         Amended & Restated MPP Plan and Trust
                         Springfield, Missouri                          x%

Institutional            American Century Profit Sharing and 401K
                         Savings Plan and Trust
                         Kansas City, Missouri                          x%
                         American Century Services Corporation Stock
                         Option Surrender Plan Trust
                         Kansas City, Missouri                          x%
                         American Century Money Purchase Plan and Trust
                         Kansas City, Missouri                          x%

Bond
Investor                 Charles Schwab & Co Inc.
                         San Francisco, CA                              x%

Advisor                  UMBSC & CO, FBO Manufacturers Bank & Trust,
                         Kansas City, Missouri                          x%
                         HOCO
                         Kansas City, Missouri                          x%
                         Bauer & Co
                         New York, New York                             x%
                         Blush & Co 867795
                         New York, New York                             x%

Balanced
Advisor                  UMBSC & CO, FBO Fike Corp
                         Kansas City, Missouri                          x%
                         UMBSC & CO, FBO Bud Brown Chrysler
                         Kansas City, Missouri                          x%
                         Fulvest & Co
                         Lancaster, Pennsylvania                        x%

Limited Term Bond
Investor                 F. Woodrow Coleman III
                         Tampa, Florida                                 x%
                         American Century Investment Management Inc.
                         Portfolio Accounting Separate Account
                         Kansas City, Missouri                          x%

Advisor                  UMBSC & CO, FBO First American Bank Co
                         Kansas City, Missouri                          x%
                         Dai Ichi Kangyo Bank of California Trustee
                         FBO Plan Member Services
                         Los Angeles, California                        x%

Intermediate-Term Bond
Investor                 Charles Schwab & Co Inc
                         San Francisco, California                      x%
                         American Century Investment Management Inc.
                         Portfolio Accounting Separate Account
                         Kansas City, Missouri                          x%
                         The Chase Manhattan Bank NA Trustee
                         GZA GEO Environmental Inc. Restated 401K
                         Profit Sharing Plan and Trust
                         New York, New York                             x%

Advisor                  Donaldson Lufkin Jenrette Securities Corporation Inc.
                         Jersey City, New Jersey                        x%
                         United Missouri Bank Trustee
                         Carolina First Bancshares Profit Sharing Plan
                         Kansas City, Missouri                          x%

New Opportunities        None

High Yield               American Century Investment Management Inc.
                         Portfolio Accounting Separate Account
                         Kansas City, Missouri                          x%

Veedot                   None

Tax-Managed Value        None
</TABLE>


   The funds are unaware of any other shareholders, beneficial or of record, who
own more than 5% of any class of a fund's outstanding shares. As of February 5,
2001, the officers and directors of the funds, as a group, owned less than 1% of
any class of a fund's outstanding shares.



SERVICE PROVIDERS

   The funds have no employees. To conduct the funds' day-to-day activities, the
funds have hired a number of service providers. Each service provider has a
specific function to fill on behalf of the funds and is described below.

   ACIM, ACSC and ACIS are wholly owned by ACC. James E. Stowers Jr., Chairman
of ACC, controls ACC by virtue of his ownership of a majority of its voting
stock.

INVESTMENT ADVISOR

   American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for each of the funds. A description of the responsibilities of the
advisor appears in each Prospectus under the heading Management.

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

Fund                       Class            Percentage of Net Assets
--------------------------------------------------------------------------------

ULTRA                      Investor         1.00% of first $20 billion
                                            0.95% over $20 billion
                           -----------------------------------------------------
                           Institutional    0.80% of first $20 billion
                                            0.75% over $20 billion
                           -----------------------------------------------------
                           Advisor          0.75% of first $20 billion
                                            0.70% over $20 billion
                           -----------------------------------------------------
BALANCED                   Investor         0.90% of first $1 billion
                                            0.80% over $1 billion
                           -----------------------------------------------------
                           Institutional    0.70% of first $1 billion
                                            0.60% over $1 billion
                           -----------------------------------------------------
                           Advisor          0.65% of first $1 billion
                                            0.55% over $1 billion
                           -----------------------------------------------------
TAX-MANAGED VALUE          Investor         1.10% of first $500 million
                                            1.00% of next $500 million
                                            0.90% of over $1 billion
                           -----------------------------------------------------
                           Institutional    0.90% of first $500 million
                                            0.80% of next $500 million
                                            0.70% over $1 billion
                           -----------------------------------------------------
                           Advisor          0.85% of first $500 million
                                            0.75% of next $500 million
                                            0.65% over $1 billion
                           -----------------------------------------------------
VEEDOT                     Investor         1.50% of first $500 million
                                            1.45% of next $500 million
                                            1.40% of over $1 billion
                           -----------------------------------------------------
                           Institutional    1.30% of first $500 million
                                            1.25% of next $500 million
                                            1.20% over $1 billion
                           -----------------------------------------------------
                           Advisor          1.25% of first $500 million
                                            1.20% of next $500 million
                                            1.15% over $1 billion
                           -----------------------------------------------------

   The other funds do not have a stepped fee. Their management fee is described
in their respective Prospectuses.
   On the first business day of each month, the funds pay a management fee to
the advisor for the previous month at the specified rate.
   The fee for the previous month is calculated by multiplying the applicable
fee for the fund by the aggregate average daily closing value of a fund's net
assets during the previous month. This number is then multiplied by a fraction,
the numerator of which is the number of days in the previous month and the
denominator of which is 365 (366 in leap years).
   The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by

(1) the funds' Board of Directors, or a majority of outstanding shareholder
   votes (as defined in the Investment Company Act) and

(2) the vote of a majority of the directors of the funds who are not parties to
   the agreement or interested persons of the advisor, cast in person at a
   meeting called for the purpose of voting on such approval.

   The management agreement provides that it may be terminated at any time
without payment of any penalty by the funds' Board of Directors, or by a vote of
a majority of outstanding votes, on 60 days' written notice to the advisor, and
that it shall be automatically terminated if it is assigned.
   The management agreement states the advisor shall not be liable to the funds
or their shareholders for anything other than willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties.
   The management agreement also provides that the advisor and its officers,
directors and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
   Certain investments may be appropriate for the funds and also for other
clients advised by the advisor. Investment decisions for the funds and other
clients are made with a view to achieving their respective investment objectives
after consideration of such factors as their current holdings, availability of
cash for investment and the size of their investment generally. A particular
security may be bought or sold for only one client or fund, or in different
amounts and at different times for more than one but less than all clients or
funds. In addition, purchases or sales of the same security may be made for two
or more clients or funds on the same date. Such transactions will be allocated
among clients in a manner believed by the advisor to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by a fund.
   The advisor may aggregate purchase and sale orders of the funds with purchase
and sale orders of its other clients when the advisor believes that such
aggregation provides the best execution for the funds. The Board of Directors
has approved the policy of the advisor with respect to the aggregation of
portfolio transactions. Where portfolio transactions have been aggregated, the
funds participate at the average share price for all transactions in that
security on a given day and allocate transaction costs on a pro rata basis. The
advisor will not aggregate portfolio transactions of the funds unless it
believes such aggregation is consistent with its duty to seek best execution on
behalf of the funds and the terms of the management agreement. The advisor
receives no additional compensation or remuneration as a result of such
aggregation.
   Unified management fees incurred by each fund by class for the fiscal periods
ended October 31, 2000, 1999 and 1998, are indicated in the following tables.
Unified Management Fees (Investor Class)

Fund                        2000              1999                  1998
--------------------------------------------------------------------------------
Growth                      $x                $75,334,938           $57,367,329
Ultra                       x                 323,012,542           246,426,714
Select                      x                 68,649,039            53,760,572
Vista                       x                 9,522,370             13,820,810
Heritage                    x                 9,817,953             12,484,448
Balanced                    x                 9,452,864             9,501,108
Tax-Managed Value           x                 276,382               N/A
Giftrust                    x                 9,559,715             9,584,768
New Opportunities           x                 4,174,987             3,605,875
New Opportunities II        N/A               N/A                   N/A
Veedot                      x                 N/A                   N/A
Limited-Term Bond           x                 130,779               129,239
Intermediate-Term Bond      x                 215,378               159,444
Bond                        x                 1,084,745             1,088,573
High-Yield                  x                 360,784               245,103
--------------------------------------------------------------------------------

Unified Management Fees (Advisor Class and Institutional Class)

                            Years Ended October 31,

Fund                     2000             1999          1998
---------------------------------------------------------------------
Growth
  Advisor                x                70,294        26,893
  Institutional          x                8,214         3,902
Ultra
  Advisor                x                1,351,217     502,147
  Institutional          x                423,827       72,042
Select
  Advisor                x                $37,600       $  11,281
  Institutional          x                137,485       106,461
Vista
  Advisor                x                41,307        41,497
  Institutional          x                1,048         27,834
Heritage
  Advisor                x                8,268         5,250
  Institutional          x                660           737
Balanced
  Advisor                x                67,602        48,200
Limited-Term Bond
  Advisor                x                5,538         2,289
Intermediate-Term Bond
  Advisor                x                21,941        13,376
Bond
  Advisor                x                10,937        7,793
---------------------------------------------------------------------

1 The inception dates for the Advisor Class of the funds are Growth, June 4,
  1997; Select, August 8, 1997; Heritage, July 11, 1997; Balanced, January 6,
  1997; Intermediate-Term Bond, August 14, 1997; and Bond, August 8, 1997.

2 The inception dates for the Institutional Class shares of the funds are Growth
  and Heritage, June 16, 1997; Select, March 13, 1997; and Ultra and Vista,
  November 14, 1996.

TRANSFER AGENT AND ADMINISTRATOR
   American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, serves as transfer agent and dividend-paying agent for the
funds. It provides physical facilities, computer hardware and software and
personnel, for the day-to-day administration of the funds and the advisor. The
advisor pays ACSC for these services.
   From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the advisor.
DISTRIBUTOR
   The funds' shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer. The distributor is a wholly owned subsidiary
of ACC and its principal business address is 4500 Main Street, Kansas City,
Missouri 64111.
   The distributor is the principal underwriter of the funds' shares. The
distributor makes a continuous, best-efforts underwriting of the funds' shares.
This means the distributor has no liability for unsold shares.



OTHER SERVICE PROVIDERS
CUSTODIAN BANKS
   Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York
10003-9598, and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105,
each serves as custodian of the funds' assets. The custodians take no part in
determining the investment policies of the funds or in deciding which securities
are purchased or sold by the funds. The funds, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.
INDEPENDENT AUDITORS
   Deloitte & Touche LLP is the independent auditors of the funds. The address
of Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas City, Missouri 64106.
As the independent auditors of the funds, Deloitte & Touche LLP provides
services including
(1) audit of the annual financial statements for each fund,
(2) assistance and consultation in connection with SEC filings and
(3) review of the annual federal income tax return filed for each fund.




BROKERAGE ALLOCATION

GROWTH, ULTRA, SELECT, VISTA, HERITAGE,
TAX-MANAGED VALUE, GIFTRUST, NEW OPPORTUNITIES, New Opportunities II, VEEDOT AND
THE EQUITY PORTION OF BALANCED
   Under the management agreement between the funds and the advisor, the advisor
has the responsibility of selecting brokers and dealers to execute portfolio
transactions. The funds' policy is to secure the most favorable prices and
execution of orders on its portfolio transactions. So long as that policy is
met, the advisor may take into consideration the factors discussed below when
selecting brokers.
   The advisor receives statistical and other information and services,
including research, without cost from brokers and dealers. The advisor evaluates
such information and services, together with all other information that it may
have, in supervising and managing the investments of the funds. Because such
information and services may vary in amount, quality and reliability, their
influence in selecting brokers varies from none to very substantial. The advisor
proposes to continue to place some of the funds' brokerage business with one or
more brokers who provide information and services. Such information and services
will be in addition to and not in lieu of services required to be performed by
the advisor. The advisor does not utilize brokers that provide such information
and services for the purpose of reducing the expense of providing required
services to the funds.
   In the years ended October 31, 2000, 1999 and 1998, the brokerage commissions
of each fund were:



Fund                            2000                  1999                  1998
--------------------------------------------------------------------------------
Growth                             x             6,844,600            10,326,945
Ultra                              x            13,462,555            46,022,210
Select                             x           $10,047,034            12,083,920
Vista                              x             2,964,425             5,035,186
Heritage                           x             2,371,345             3,733,656
Balanced                           x             1,352,613             1,112,389
Tax-Managed Value                  x                32,592                   N/A
Giftrust                           x             1,495,040             1,848,117
New Opportunities                  x               513,503               420,737
New Opportunities II             N/A                   N/A                   N/A
Veedot                             x                   N/A                   N/A
--------------------------------------------------------------------------------
   The brokerage commissions paid by the funds may exceed those that another
broker might have charged for effecting the same transactions, because of the
value of the brokerage and research services provided by the broker. Research
services furnished by brokers through whom the funds effect securities
transactions may be used by the advisor in servicing all of its accounts, and
not all such services may be used by the advisor in managing the portfolios of
the funds.
   The staff of the SEC has expressed the view that the best price and execution
of over-the-counter transactions in portfolio securities may be secured by
dealing directly with principal market makers, thereby avoiding the payment of
compensation to another broker. In certain situations, the officers of the funds
and the advisor believe that the facilities, expert personnel and technological
systems of a broker often enable the funds to secure as good a net price by
dealing with a broker instead of a principal market maker, even after payment of
the compensation to the broker. The funds regularly place their over-the-counter
transactions with principal market makers, but also may deal on a brokerage
basis when utilizing electronic trading networks or as circumstances warrant.

LIMITED-TERM BOND, INTERMEDIATE-TERM BOND,
BOND, HIGH-YIELD AND THE FIXED-INCOME PORTION OF BALANCED
   Under the management agreement between the funds and the advisor, the advisor
has the responsibility of selecting brokers and dealers to execute portfolio
transactions. In many transactions, the selection of the broker or dealer is
determined by the availability of the desired security and its offering price.
In other transactions, the selection of broker or dealer is a function of the
selection of market and the negotiation of price, as well as the broker's
general execution and operational and financial capabilities in the type of
transaction involved. The advisor will seek to obtain prompt execution of orders
at the most favorable prices or yields. The advisor may choose to purchase and
sell portfolio securities to and from dealers who provide services or research,
statistical and other information to the funds and to the advisor. Such
information or services will be in addition to and not in lieu of the services
required to be performed by the advisor, and the expenses of the advisor will
not necessarily be reduced as a result of the receipt of such supplemental
information.
   The funds generally purchase and sell debt securities through principal
transactions, meaning the funds normally purchase securities on a net basis
directly from the issuer or a primary market-maker acting as principal for the
securities. The funds do not pay brokerage commissions on these transactions,
although the purchase price for debt securities usually includes an undisclosed
compensation. Purchases of securities from underwriters typically include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market-makers typically include a dealer's mark-up
(i.e., a spread between the bid and asked prices). During the fiscal years ended
October 31, 1998, 1999, and 2000, the funds did not pay any brokerage
commissions.



 INFORMATION ABOUT FUND SHARES
   Each of the 15 funds named on the front of this Statement of Additional
Information is a series of shares issued by the corporation, and shares of each
fund have equal voting rights. In addition, each series (or fund) may be divided
into separate classes. See "Multiple Class Structure," which follows. Additional
funds and classes may be added without a shareholder vote.
   Each fund votes separately on matters affecting that fund exclusively. Voting
rights are not cumulative, so investors holding more than 50% of the
corporation's (i.e., all funds') outstanding shares may be able to elect a Board
of Directors. The corporation undertakes dollar-based voting, meaning that the
number of votes a shareholder is entitled to is based upon the dollar amount of
the shareholder's investment. The election of directors is determined by the
votes received from all the corporation's shareholders without regard to whether
a majority of shares of any one fund voted in favor of a particular nominee or
all nominees as a group.
   The assets belonging to each series or classes of shares are held separately
by the custodian and the shares of each series or class represent a beneficial
interest in the principal, earnings and profit (or losses) of investments and
other assets held for each series or class. Within their respective series or
class, all shares have equal redemption rights. Each share, when issued, is
fully paid and non-assessable.
   In the event of complete liquidation or dissolution of the funds,
shareholders of each series or class of shares will be entitled to receive, pro
rata, all of the assets less the liabilities of that series or class.
   Each shareholder has rights to dividends and distributions declared by the
fund he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.

MULTIPLE CLASS STRUCTURE
   The corporation's Board of Directors has adopted a multiple class plan (the
Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such
plan, the funds may issue up to four classes of shares: an Investor Class, an
Institutional Class, a Service Class and an Advisor Class. Not all funds offer
all four classes.
   The Investor Class is made available to investors directly without any load
or commission, for a single unified management fee. The Institutional, Service
and Advisor Classes are made available to institutional shareholders or through
financial intermediaries that do not require the same level of shareholder and
administrative services from the advisor as Investor Class shareholders. As a
result, the advisor is able to charge these classes a lower total management
fee. In addition to the management fee, however the Advisor Class shares are
subject to a Master Distribution and Shareholder Services Plan (described
below). The plan has been adopted by the funds' Board of Directors and initial
shareholder in accordance with Rule 12b-1 adopted by the SEC under the
Investment Company Act.

Rule 12b-1
   Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the its Board of
Directors and approved by its shareholders. Pursuant to such rule, the Board of
Directors and initial shareholder of the funds' Advisor Class have approved and
entered into a Master Distribution and Shareholder Services Plan, with respect
to the Advisor Class (the Plan). The Plan is described below.
   In adopting the Plan, the Board of Directors (including a majority of
directors who are not interested persons of the funds [as defined in the
Investment Company Act], hereafter referred to as the independent directors)
determined that there was a reasonable likelihood that the Plan would benefit
the funds and the shareholders of the affected class. Pursuant to Rule 12b-1,
information with respect to revenues and expenses under the Plan is presented to
the Board of Directors quarterly for its consideration in connection with its
deliberations as to the continuance of the Plan. Continuance of the Plan must be
approved by the Board of Directors (including a majority of the independent
directors) annually. The Plan may be amended by a vote of the Board of Directors
(including a majority of the independent directors), except that the Plan may
not be amended to materially increase the amount to be spent for distribution
without majority approval of the shareholders of the affected class. The Plan
terminates automatically in the event of an assignment and may be terminated
upon a vote of a majority of the independent directors or by vote of a majority
of the outstanding voting securities of the affected class.
   All fees paid under the Plan will be made in accordance with Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers
(NASD).

Master Distribution and Shareholder Services Plan
   As described in the Prospectuses, the funds' Advisor Class shares are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through financial intermediaries such as banks,
broker-dealers and insurance companies. The funds' distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries, with respect to the sale of the funds' shares and/or
the use of the funds' shares in various investment products or in connection
with various financial services.
   Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for Advisor Class
investors. In addition to such services, the financial intermediaries provide
various distribution services.
   To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
advisor has reduced its management fee by 0.25% per annum with respect to the
Advisor Class shares and the funds' Board of Directors has adopted a Master
Distribution and Shareholder Services Plan. Pursuant to the Plan, the Advisor
Class pays the distributors a fee of 0.50% annually of the aggregate average
daily asset value of the funds' Advisor Class shares, 0.25% of which is paid for
shareholder services (as described below) and 0.25% of which is paid for
distribution services. During the fiscal year ended October 31, 2000, the
aggregate amount of fees paid under the Plan were:
   Growth         $x
   Ultra          $x
   Select         $x
   Vista          $x
   Heritage       $x
   Balanced       $x
   Limited-Term Bond       $x
   Intermediate-Term Bond  $x
   Bond  $x

   Payments may be made for a variety of shareholder services, including, but
not limited to:

(a)  receiving, aggregating and processing purchase, exchange and redemption
     requests from beneficial owners (including contract owners of insurance
     products that utilize the funds as underlying investment media) of shares
     and placing purchase, exchange and redemption orders with the funds'
     distributor;

(b)  providing shareholders with a service that invests the assets of their
     accounts in shares pursuant to specific or pre-authorized instructions;

(c)  processing dividend payments from a fund on behalf of shareholders and
     assisting shareholders in changing dividend options, account designations
     and addresses;

(d)  providing and maintaining elective services such as check writing and wire
     transfer services;

(e)  acting as shareholder of record and nominee for beneficial owners;

(f)  maintaining account records for investors and/or other beneficial owners;

(g)  issuing confirmations of transactions;

(h)  providing subaccounting with respect to shares beneficially owned by
     customers of third parties or providing the information to a fund as
     necessary for such subaccounting;

(i)  preparing and forwarding investor communications from the funds (such as
     proxies, shareholder reports, annual and semi-annual financial statements
     and dividend, distribution and tax notices) to investors and/or other
     beneficial owners; and

(j)  providing other similar administrative and sub-transfer agency services

(k)  paying service fees for the provision of personal, continuing services to
     the investors as contemplated by the Rules of Fair Practice of the NASD.

     Shareholder services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the funds.
During the fiscal year ended October 31, 2000, the amount of fees paid under the
Plan for shareholder services were:

Growth $x
Ultra $x
Select $x
Vista $x
Heritage $x
Balanced $x
Limited-Term Bond $x
Intermediate-Term Bond     $x
Bond $x

   Distribution services include any activity undertaken or expense incurred
that is primarily intended to result in the sale of Advisor Class shares, which
services may include but not limited to:

(a)  the payment of sales commissions, on-going commissions and other payments
     to brokers, dealers, financial institutions or others who sell Advisor
     Class shares pursuant to selling agreements;

(b)  compensation to registered representatives or other employees of
     distributor who engage in or support distribution of the funds' Advisor
     Class shares;

(c)  compensation to, and expenses (including overhead and telephone expenses)
     of, distributor;

(d)  the printing of prospectuses, statements of additional information and
     reports for other-than-existing shareholders;

(e)  the preparation, printing and distribution of sales literature and
     advertising materials provided to the funds' investors and prospective
     investors;

(f)  receiving and answering correspondence from prospective investors,
     including distributing prospectuses, statements of additional information,
     and shareholder reports;

(g)  the providing of facilities to answer questions from prospective investors
     about fund shares;

(h)  complying with federal and state securities laws pertaining to the sale of
     fund shares;

(i)  assisting investors in completing application forms and selecting dividend
     and other account options;

(j)  the providing of other reasonable assistance in connection with the
     distribution of fund shares;

(k)  the organizing and conducting of sales seminars and payments in the form of
     transactional and compensation or promotional incentives;

(l)  profit on the foregoing;

(m)  the payment of service fees for the provision of personal, continuing
     services to investors, as contemplated by the Rules of Fair Practice of the
     NASD; and

(n)  such other distribution and services activities as the advisor determines
     may be paid for by the funds pursuant to the terms of the agreement between
     the corporation and the fund's distributor and in accordance with Rule
     12b-1 of the Investment Company Act.

During the fiscal year ended October 31, 2000, the amount of fees paid under the
Plan for distribution services were:
Growth $x
Ultra $x
Select $x
Vista $x
Heritage $x
Balanced $x
Limited-Term Bond $x
Intermediate-Term Bond $x
Bond $x

BUYING AND SELLING FUND SHARES
   Information about buying, selling and exchanging fund shares is contained in
the funds' Prospectuses and in Your Guide to American Century Services. The
Prospectuses and guide are available to investors without charge and may be
obtained by calling us.

VALUATION OF A FUND'S SECURITIES
   Each fund's net asset value per share (NAV) is calculated as of the close of
business of the New York Stock Exchange (the Exchange) each day the Exchange is
open for business. The Exchange usually closes at 4 p.m. Eastern time. The
Exchange typically observes the following holidays: New Year's Day, Martin
Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. Although the funds expect
the same holidays to be observed in the future, the Exchange may modify its
holiday schedule at any time.
   Each fund's NAV is calculated by adding the value of all portfolio securities
and other assets, deducting liabilities and dividing the result by the number of
shares outstanding. Expenses and interest earned on portfolio securities are
accrued daily.
   The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges generally are valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
   Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.
   Because there are hundreds of thousands of municipal issues outstanding, and
the majority of them do not trade daily, the prices provided by pricing services
for these types of securities are generally determined without regard to bid or
last sale prices. In valuing securities, the pricing services generally take
into account institutional trading activity, trading in similar groups of
securities, and any developments related to specific securities. The methods
used by the pricing service and the valuations so established are reviewed by
the advisor under the general supervision of the Board of Directors. There are a
number of pricing services available, and the advisor, on the basis of ongoing
evaluation of these services, may use other pricing services or discontinue the
use of any pricing service in whole or in part.
   Securities maturing within 60 days of the valuation date may be valued at
cost, plus or minus any amortized discount or premium, unless the directors
determine that this would not result in fair valuation of a given security.
Other assets and securities for which quotations are not readily available are
valued in good faith at their fair value using methods approved by the Board of
Directors.
   The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange, if that
is earlier. That value is then translated to dollars at the prevailing foreign
exchange rate.
   Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established, but before the net
asset value per share was determined, that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
   Trading of these securities in foreign markets may not take place on every
exchange business day. In addition, trading may take place in various foreign
markets and on some electronic trading networks on Saturdays or on other days
when the exchange is not open and on which the funds' net asset values are not
calculated. Therefore, such calculations do not take place contemporaneously
with the determination of the prices of many of the portfolio securities used in
such calculation and the value of the funds' portfolios may be affected on days
when shares of the funds may not be purchased or redeemed.


 TAXES
Federal Income Tax
   Each fund intends to qualify annually as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). By so
qualifying, a fund will be exempt from federal income taxes to the extent that
it distributes substantially all of its net investment income and net realized
capital gains (if any) to investors. If a fund fails to qualify as a regulated
investment company, it will be liable for taxes, significantly reducing its
distributions to investors and eliminating investors' ability to treat
distributions of the funds in the manner they were realized by the funds.
   If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. Dividends from domestic corporations may qualify for the 70%
dividends-received deduction for corporations to the extent that the fund held
shares receiving the dividend for more than 45 days. Distributions from gains on
assets held longer than 12 months are taxable as long-term gains regardless of
the length of time you have held the shares. However, you should note that any
loss realized upon the sale or redemption of shares held for six months or less
will be treated as a long-term capital loss to the extent of any distributions
of long-term capital gains to you with respect to such shares.
   Dividends and interest received by a fund on foreign securities may give rise
to withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Foreign countries generally do not impose taxes on capital gains with
respect to investments by non-resident investors. The foreign taxes paid by a
fund will reduce its dividends.
   If more than 50% of the value of a fund's total assets at the end of its
fiscal year consists of securities of foreign corporations, the fund may qualify
for and make an election with the Internal Revenue Service with respect to such
fiscal year so that fund shareholders may be able to claim a foreign tax credit
in lieu of a deduction for foreign income taxes paid by the fund. If such an
election is made, the foreign taxes paid by the fund will be treated as income
received by you. In order for you to utilize the foreign tax credit, the you
must have held your shares for 16 days or more during the 30-day period,
beginning 15 days prior to the ex-dividend date for the mutual fund shares. The
mutual fund must meet a similar holding period requirement with respect to
foreign securities to which a dividend is attributable. Any portion of the
foreign tax credit that is ineligible as a result of the fund not meeting the
holding period requirement will be deducted in computing net investment income.
   If a fund purchases the securities of certain foreign investment funds or
trusts called passive foreign investment companies (PFIC), capital gains on the
sale of such holdings will be deemed to be ordinary income regardless of how
long the fund holds its investment. The fund also may be subject to corporate
income tax and an interest charge on certain dividends and capital gains earned
from these investments, regardless of whether such income and gains are
distributed to shareholders. In the alternative, the fund may elect to recognize
cumulative gains on such investments as of the last day of its fiscal year and
distribute them to shareholders. Any distribution attributable to a PFIC is
characterized as ordinary income.
   If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, either American Century or your financial intermediary is
required by federal law to withhold and remit 31% of reportable payments (which
may include dividends, capital gains distributions and redemptions) to the IRS.
Those regulations require you to certify that the Social Security number or tax
identification number you provide is correct and that you are not subject to 31%
withholding for previous under-reporting to the IRS. You will be asked to make
the appropriate certification on your application. Payments reported by us that
omit your Social Security number or tax identification number will subject us to
a penalty of $50, which will be charged against your account if you fail to
provide the certification by the time the report is filed, and is not
refundable.
   Redemption of shares of a fund (including redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
you generally will recognize gain or loss in an amount equal to the difference
between the basis of the shares and the amount received. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the "wash sale"
rules of the Code, resulting in a postponement of the recognition of such loss
for federal income tax purposes.

State and Local Taxes
   Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.

HOW FUND PERFORMANCE INFORMATION IS CALCULATED
   The funds may quote performance in various ways. Fund performance may be
shown by presenting one or more performance measurements, including cumulative
total return, average annual total return or yield.
   All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.

EQUITY FUNDS
   Total returns quoted in advertising and sales literature reflect all aspects
of a fund's return, including the effect of reinvesting dividends and capital
gain distributions (if any) and any change in the fund's NAV during the period.
   Average annual total returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in a fund during a
stated period and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual return of 7.18%, which is
the steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the funds' performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
   The tables on page xx set forth the average annual total return for the
various classes of the equity funds and the equity portion of Balanced for the
one-, five- and 10-year periods (or the period since inception) ended October
31, 2000, the last day of the funds' fiscal year.
   In addition to average annual total returns, each fund may quote unaveraged
or cumulative total returns reflecting the simple change in value of an
investment over a stated period, including periods other than one, five and 10
years. Average annual and cumulative total returns may be quoted as percentages
or as dollar amounts and may be calculated for a single investment, a series of
investments, or a series of redemptions over any time period. Total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of these
factors and their contributions to total return.
   As a new fund, performance information for New Opportunities II is not
available as of the date of this Statement of Additional Information.

<TABLE>
Average Annual Total Returns - Investor Class
-------------------------------------------------------------------------------------------------------------------
Fund                   1 year          5 years           10 years         From Inception   Inception Date
-------------------------------------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>              <C>                <C>

Growth                  x%             x%                 x%                 x%               June 30, 1971(1)
Ultra                   x%             x%                 x%                 x%               November 2, 1981
Select                  x%             x%                 x%                 x%               June 30, 1971(1)
Vista                   x%             x%                 x%                 x%               November 25, 1983
Heritage                x%             x%                 x%                 x%               November 10, 1987
Balanced                x%             x%                 x%                 x%               October 20, 1988
Giftrust                x%             x%                 x%                 x%               November 25, 1983
New Opportunities       x%             N/A               N/A                 x                December 26, 1996
Tax-Managed Value        x             N/A               N/A                 x                March 31, 1999
Veedot                   x             N/A               N/A                 N/A              November 30, 1999
</TABLE>

     1 Commenced operations on June 30, 1971. Although the fund's actual
inception date was October 31, 1958, this inception date corresponds with the
management company's implementation of its current investment philosophy and
practices.


   Average Annual Total Returns - Advisor Class
-------------------------------------------------------------------------

Fund              1 year       From Inception       Inception Date
-------------------------------------------------------------------------
Growth                   x%         x%              June 4, 1997
Ultra                    x%         x%              October 2, 1996
Select                   x%         x%              August 8, 1997
Vista                    x%         x%              October 2, 1996
Heritage                 x%         x%              July 11, 1997
Balanced                 x%         x%              January 6, 1997
Tax-Managed Value        N/A        N/A             N/A
Veedot                   N/A        N/A             N/A

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

   Average Annual Total Returns - Institutional Class
-------------------------------------------------------------------------

Fund                  1 year        From Inception   Inception Date
-------------------------------------------------------------------------
Growth(1)             x%            x%               June 16, 1997
Ultra(2)              x%            x%               November 14, 1996
Select(3)             x%            x%               March 13, 1997
Vista(4)              x%            x%               November 14, 1996
Heritage(5)           x%            x%               June 16, 1997
Tax-Managed Value     N/A           N/A              N/A
Veedot                N/A           N/A              N/A

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

FIXED INCOME FUNDS AND BALANCED
   Yield is calculated by adding over a 30-day (or one-month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one-month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
   The following table sets forth yield quotations for the various classes of
the fixed-income funds and Balanced for the 30-day period ended October 31,
2000, the last day of the fiscal year pursuant to computation methods prescribed
by the SEC.
---------------------------------------------------------------------------

Fund                           Investor Class          Advisor Class
---------------------------------------------------------------------------
Limited-Term Bond              x%                      x%
Intermediate-Term Bond   x%    x%
Bond                           x%                      x%
Balanced                       x%                      x%
High-Yield                     x%                      N/A

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

   The fixed-income funds may also elect to advertise cumulative total return
and average annual total return, computed as described above.
   The following table shows the cumulative total return and the average annual
total return of the Investor Class of the fixed income funds since their
respective dates of inception (as noted) through October 31, 2000.

--------------------------------------------------------------------------------
                             Cumulative
                             Total Return   Average
                             Since          Annual           Date of
Fund                         Inception      Total Return     Inception
--------------------------------------------------------------------------------
Limited-Term Bond            x%             x%               March 1, 1994
Intermediate-TermBond        x%             x%               March 1, 1994
Bond                         x%             x%               March 3, 1987
Balanced                     x%             x%               October 20, 1988
High-Yield                   x%             x%               September 30, 1997

--------------------------------------------------------------------------------
Performance Comparisons
   The funds' performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indices of market
performance. This may include comparisons with funds that, unlike the American
Century funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be used for such comparisons may include, but are not
limited to: U.S. Treasury bill, note and bond yields, money market fund yields,
U.S. government debt and percentage held by foreigners, the U.S. money supply,
net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated, tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper, Inc. or Morningstar, Inc.; mutual fund
rankings published in major, nationally distributed periodicals; data provided
by the Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills,
and Inflation; major indices of stock market performance; and indices and
historical data supplied by major securities brokerage or investment advisory
firms. The funds also may utilize reprints from newspapers and magazines
furnished by third parties to illustrate historical performance or to provide
general information about the funds.

Permissible Advertising Information
   From time to time, the funds may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to shareholders:

(1)  discussions of general economic or financial principles (such as the
     effects of compounding and the benefits of dollar-cost averaging);

(2)  discussions of general economic trends;

(3)  presentations of statistical data to supplement such discussions;

(4)  descriptions of past or anticipated portfolio holdings for one or more of
     the funds;

(5)  descriptions of investment strategies for one or more of the funds;

(6)  descriptions or comparisons of various savings and investment products
     (including, but not limited to, qualified retirement plans and individual
     stocks and bonds), which may or may not include the funds;

(7)  comparisons of investment products (including the funds) with relevant
     market or industry indices or other appropriate benchmarks;

(8)  discussions of fund rankings or ratings by recognized rating organizations;
     and

(9)  testimonials describing the experience of persons who have invested in one
     or more of the funds. The funds also may include calculations, such as
     hypothetical compounding examples, which describe hypothetical investment
     results. Such performance examples will be based on an express set of
     assumptions and are not indicative of the performance of any of the funds.

Multiple Class Performance Advertising
   Pursuant to the Multiple Class Plan, the corporation may issue additional
classes of existing funds or introduce new funds with multiple classes available
for purchase. To the extent a new class is added to an existing fund, the
advisor may, in compliance with SEC and NASD rules, regulations and guidelines,
market the new class of shares using the historical performance information of
the original class of shares. When quoting performance information for the new
class of shares for periods prior to the first full quarter after inception, the
original class' performance will be restated to reflect the expenses of the new
class and for periods after the first full quarter after inception, actual
performance of the new class will be used.

FINANCIAL STATEMENTS
   The financial statements of the funds (other than Veedot) are included in the
Annual Reports to shareholders for the fiscal year or period ended October 31,
1999. Each Annual Report is incorporated herein by reference. You may receive
copies of the reports without charge upon request to American Century at the
address and telephone number shown on the back cover of this Statement of
Additional Information.

EXPLANATION OF FIXED-INCOME SECURITIES RATINGS
   As described in the Prospectuses, some of the funds may invest in
fixed-income securities. Those investments, however, are subject to certain
credit quality restrictions, as noted in the Prospectuses. The following is a
summary of the rating categories referenced in the prospectus disclosure.

Bond Ratings

S&P              Moody's           Description
--------------------------------------------------------------------------------
AAA              Aaa               These are the highest ratings assigned by S&P
                                   and Moody's to a debt obligation. They
                                   indicate an extremely strong capacity to pay
                                   interest and repay principal.
--------------------------------------------------------------------------------
AA               Aa                Debt rated in this category is considered to
                                   have a very strong capacity to pay interest
                                   and repay principal and differs from AAA/Aaa
                                   issues only in a small degree.
--------------------------------------------------------------------------------
A                A                 Debt rated A has a strong capacity to pay
                                   interest and repay principal, although it is
                                   somewhat more susceptible to the adverse
                                   effects of changes in circumstances and
                                   economic conditions than debt in higher-rated
                                   categories.
--------------------------------------------------------------------------------
BBB              Baa               Debt rated BBB/Baa is regarded as having an
                                   adequate capacity to pay interest and repay
                                   principal. Whereas it normally exhibits
                                   adequate protection parameters, adverse
                                   economic conditions or changing circumstances
                                   are more likely to lead to a weakened
                                   capacity to pay interest and repay principal
                                   for debt in this category than in
                                   higher-rated categories.
--------------------------------------------------------------------------------
BB               Ba                Debt rated BB/Ba has less near-term
                                   vulnerability to default than other
                                   speculative issues. However, it faces major
                                   ongoing uncertainties or exposure to adverse
                                   business, financial or economic conditions
                                   that could lead to inadequate capacity to
                                   meet timely interest and principal payments.
                                   The BB rating category also is used for debt
                                   subordinated to senior debt that is assigned
                                   an actual or implied BBB- rating.
--------------------------------------------------------------------------------
B                B                 Debt rated B has a greater vulnerability to
                                   default but currently has the capacity to
                                   meet interest payments and principal
                                   repayments. Adverse business, financial or
                                   economic conditions will likely impair
                                   capacity or willingness to pay interest and
                                   repay principal. The B rating category is
                                   also used for debt subordinated to senior
                                   debt that is assigned an actual or implied
                                   BB/Ba or BB-/Ba3 rating.
--------------------------------------------------------------------------------
CCC              Caa               Debt rated CCC/Caa has a currently
                                   identifiable vulnerability to default and is
                                   dependent upon favorable business, financial
                                   and economic conditions to meet timely
                                   payment of interest and repayment of
                                   principal. In the event of adverse business,
                                   financial or economic conditions, it is not
                                   likely to have the capacity to pay interest
                                   and repay principal. The CCC/Caa rating
                                   category is also used for debt subordinated
                                   to senior debt that is assigned an actual or
                                   implied B or B-/B3 rating.
--------------------------------------------------------------------------------
CC               Ca                The rating CC/Ca typically is applied to debt
                                   subordinated to senior debt that is assigned
                                   an actual or implied CCC/Caa rating.
--------------------------------------------------------------------------------
C                C                 The rating C typically is applied to debt
                                   subordinated to senior debt, which is
                                   assigned an actual or implied CCC-/Caa3 debt
                                   rating. The C rating may be used to cover a
                                   situation where a bankruptcy petition has
                                   been filed, but debt service payments are
                                   continued.
--------------------------------------------------------------------------------
CI               -                 The rating CI is reserved for income bonds on
                                   which no interest is being paid.
--------------------------------------------------------------------------------
D                D                 Debt rated D is in payment default. The D
                                   rating category is used when interest
                                   payments or principal payments are not made
                                   on the date due even if the applicable grace
                                   period has not expired, unless S&P believes
                                   that such payments will be made during such
                                   grace period. The D rating also will be used
                                   upon the filing of a bankruptcy petition if
                                   debt service payments are jeopardized.
--------------------------------------------------------------------------------


   To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3) to designate relative standing within
its major bond rating categories. Fitch Investors Service, Inc. also rates bonds
and uses a ratings system that is substantially similar to that used by Standard
& Poor's.

   Commercial Paper Ratings
--------------------------------------------------------------------------------

S&P             Moody's        Description
--------------------------------------------------------------------------------
A-1             Prime-1        This indicates that the degree of safety
                 (P-1)         regarding timely payment is strong. Standard &
                               Poor's rates those issues determined to possess
                               extremely strong safety characteristics as A-1+.
--------------------------------------------------------------------------------
A-2             Prime-2        Capacity for timely payment on commercial paper
                (P-2)          is satisfactory, but the relative degree of
                               safety is not as high as for issues designated
                               A-1. Earnings trends and coverage ratios, while
                               sound, will be more subject to variation.
                               Capitalization characteristics, while still
                               appropriated, may be more affected by external
                               conditions.  Ample alternate liquidity is
                               maintained.
--------------------------------------------------------------------------------
A-3             Prime-3        Satisfactory capacity for timely repayment.
                 (P-3)         Issues that carry this rating are somewhat more
                               vulnerable to the adverse changes in
                               circumstances than obligations carrying the
                               higher designations.

Note Ratings
--------------------------------------------------------------------------------
S&P             Moody's             Description
--------------------------------------------------------------------------------
SP-1            MIG-1; VMIG-1       Notes are of the highest quality enjoying
                                    strong protection from established cash
                                    flows of funds for their servicing or from
                                    established and broad-based access to the
                                    market for refinancing, or both.
--------------------------------------------------------------------------------
SP-2            MIG-2; VMIG-2       Notes are of high quality, with margins of
                                    protection ample, although not so large
                                    as in the preceding group.
--------------------------------------------------------------------------------
SP-3            MIG-3; VMIG-3       Notes are of favorable quality, with all
                                    security elements accounted for, but lacking
                                    the undeniable strength of the preceding
                                    grades. Market access for refinancing, in
                                    particular, is likely to be less well
                                    established.
--------------------------------------------------------------------------------
SP-4            MIG-4; VMIG-4       Notes are of adequate quality, carrying
                                    specific risk but having protection and not
                                    distinctly or predominantly speculative.
--------------------------------------------------------------------------------


More information about the funds is contained in these documents
Annual and Semiannual Reports
   Annual and semiannual reports contain more information about the funds'
investments and the market conditions and investment strategies that
significantly affected the funds' performance during the most recent fiscal
period. The annual and semiannual reports are incorporated by reference into
this SAI. This means that these are legally part of this SAI.
   You can receive a free copy of the annual and semiannual reports, and ask
questions about the funds and your accounts, by contacting American Century at
the address or telephone numbers listed below.
   If you own or are considering purchasing fund shares through o an
   employer-sponsored retirement plan o a bank o a broker-dealer o an insurance
   company o another financial intermediary you can receive the annual and
   semiannual reports directly from them.

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

   o In person              SEC Public Reference Room
                            Washington, D.C.
                            Call 1-202-942-8090 for location and hours.
   o On the Internet       oEDGAR database at www.sec.gov
                           oBy email request at [email protected]
   o By mail                SEC Public Reference Section
                            Washington, D.C.
                            20549-0102



   Investment Company Act File No. 811-0816

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

   Investor Relations
   1-800-345-2021 or 816-531-5575

   Automated Information Line
   1-800-345-8765

   www.americancentury.com

   Fax
   816-340-7962
   Telecommunications Device for the Deaf
   1-800-634-4113 or 816-444-3485

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

   SH-PRS-xxxxx   0002
<PAGE>
PART C.   OTHER INFORMATION.

ITEM 23.  Exhibits  (all  exhibits  not filed  herewith  are being  incorporated
          herein by reference)

     (a)  (1)  Articles of Incorporation of Twentieth Century  Investors,  Inc.,
               dated June 26,  1990  (filed  electronically  as  Exhibit  b1a to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (2)  Articles of Amendment of Twentieth Century Investors, Inc., dated
               November  19,  1990  (filed  electronically  as  Exhibit  b1b  to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (3)  Articles  of Merger  of  Twentieth  Century  Investors,  Inc.,  a
               Maryland  corporation and Twentieth  Century  Investors,  Inc., a
               Delaware   corporation,    dated   February   22,   1991   (filed
               electronically as Exhibit b1c to Post-Effective  Amendment No. 73
               on Form N-1A on February 29, 1996).

          (4)  Articles of Amendment of Twentieth Century Investors, Inc., dated
               August  10,  1993  (filed   electronically   as  Exhibit  b1d  to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (5)  Articles  Supplementary  of Twentieth  Century  Investors,  Inc.,
               dated September 3, 1993 (filed  electronically  as Exhibit b1e to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (6)  Articles  Supplementary  of Twentieth  Century  Investors,  Inc.,
               dated  April 24,  1995  (filed  electronically  as Exhibit b1f to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (7)  Articles  Supplementary  of Twentieth  Century  Investors,  Inc.,
               dated  October 11, 1995 (filed  electronically  as Exhibit b1g to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (8)  Articles  Supplementary  of Twentieth  Century  Investors,  Inc.,
               dated  January 22, 1996 (filed  electronically  as Exhibit b1h to
               Post-Effective  Amendment  No.  73 on Form N-1A on  February  29,
               1996).

          (9)  Articles  Supplementary  of Twentieth  Century  Investors,  Inc.,
               dated  March 11,  1996  (filed  electronically  as Exhibit b1i to
               Post-Effective Amendment No. 75 on Form N-1A on June 14, 1996).

          (10) Articles Supplementary of Twentieth Century Investors, Inc. dated
               September  9,  1996  (filed  electronically  as  Exhibit  a10  to
               Post-Effective  Amendment  No.  85 on Form N-1A on  September  1,
               1999).

          (11) Articles of Amendment of Twentieth Century Investors, Inc., dated
               December  2,  1996  (filed   electronically  as  Exhibit  b1j  to
               Post-Effective  Amendment  No.  76 on Form N-1A on  February  28,
               1997).

          (12) Articles  Supplementary of American  Century Mutual Funds,  Inc.,
               dated  December 2, 1996 (filed  electronically  as Exhibit b1k to
               Post-Effective  Amendment  No.  76 on Form N-1A on  February  28,
               1997).

          (13) Articles  Supplementary of American  Century Mutual Funds,  Inc.,
               dated July 28,  1997  (filed  electronically  as  Exhibit  b1l to
               Post-Effective  Amendment  No.  78 on Form N-1A on  February  26,
               1998).

          (14) Articles  Supplementary of American  Century Mutual Funds,  Inc.,
               dated November 28, 1997 (filed  electronically  as Exhibit a13 to
               Post-Effective  Amendment  No.  83 on Form N-1A on  February  26,
               1999).

          (15) Certificate of Correction to Articles  Supplementary  of American
               Century  Mutual  Funds,  Inc.,  dated  December  18,  1997 (filed
               electronically as Exhibit a14 to Post-Effective  Amendment No. 83
               on Form N-1A on February 26, 1999).

          (16) Articles  Supplementary of American  Century Mutual Funds,  Inc.,
               dated December 18, 1997 (filed  electronically  as Exhibit b1m to
               Post-Effective  Amendment  No.  78 on Form N-1A on  February  26,
               1998).

          (17) Articles  Supplementary of American  Century Mutual Funds,  Inc.,
               dated  January 25, 1999 (filed  electronically  as Exhibit a16 to
               Post-Effective  Amendment  No.  83 on Form N-1A on  February  26,
               1999).

          (18) Articles  Supplementary of American  Century Mutual Funds,  Inc.,
               dated February 16, 1999 (filed  electronically  as Exhibit a17 to
               Post-Effective  Amendment  No.  83 on Form N-1A on  February  26,
               1999).

          (19) Article  Supplementary  of American  Century  Mutual Funds,  Inc.
               dated August 2, 1999 is included herein.

          (20) Articles  Supplementary  of American  Century Mutual Funds,  Inc.
               (filed electronically as Exhibit a19 to Post-Effective  Amendment
               No. 87 on Form N-1A on November 29, 1999).

          (21) Articles Supplementary of American Century Mutual Funds, Inc. (to
               be filed by amendment).

     (b)  (1)  By-laws   of   Twentieth   Century    Investors,    Inc.   (filed
               electronically as Exhibit b2 to  Post-Effective  Amendment No. 73
               on Form N-1A on February 29, 1996).

          (2)  Amendment to Bylaws of American Century Mutual Funds, Inc. (filed
               electronically as Exhibit b2b to  Post-Effective  Amendment No. 9
               on Form N-1A of American Century Capital  Portfolios,  Inc., File
               No. 33-64872, on February 17, 1998).

     (c)  Registrant hereby incorporates by reference, as though set forth fully
          herein,  Article  Fifth,  Article  Seventh,  and  Article  Eighth,  of
          Registrants Articles of Incorporation,  appearing as Exhibit (a)(1) to
          Post-Effective  Amendment No. 76 on Form N-1A of the  Registrant,  and
          Article  Fifth of  Registrants  Articles of  Amendment,  appearing  as
          Exhibit (a)(4) to Post-Effective  Amendment No. 76 to the Registration
          Statement on February 28, 1997;  and Sections 3, 4, 5, 6, 7, 8, 9, 10,
          11, 22, 24,  25,  30,  31,  33, 39, 45 and 46 of  Registrants  By-Laws
          appearing as Exhibit (b)(1) to Post-Effective Amendment No. 73 on Form
          N-1A,  and Sections 25, 30 & 31 of  Registrants  By-Laws  appearing as
          Exhibit  (b)(2)  to  Post-Effective  Amendment  No. 9 on Form  N-1A of
          American Century Capital Portfolios, Inc., Commission No. 33-64872.

     (d)  (1)  Management  Agreement between American Century Mutual Funds, Inc.
               and American Century Investment Management,  Inc. dated August 1,
               1997  (filed  electronically  as  Exhibit  b5  to  Post-Effective
               Amendment No. 78 on Form N-1A on February 26, 1998).

          (2)  Addendum to Management  Agreement between American Century Mutual
               Funds,  Inc. and American  Century  Investment  Management,  Inc.
               dated September 15, 1997 is included herein.

          (3)  Addendum to Management  Agreement between American Century Mutual
               Funds,  Inc. and American Century  Investment  Management,  Inc.,
               dated  February 16, 1999 (filed  electronically  as Exhibit d2 to
               Post-Effective  Amendment  No.  83 on Form N-1A on  February  26,
               1999).

          (4)  Addendum to Management  Agreement between American Century Mutual
               Funds,  Inc. and American  Century  Investment  Management,  Inc.
               dated  November 30, 1999 (filed  electronically  as Exhibit d3 to
               Post-Effective  Amendment  No.  87 on Form N-1A on  November  29,
               1999).

          (5)  Amendment  No. 1 to the  Management  Agreement  between  American
               Century  Mutual  Funds,  Inc.  and  American  Century  Investment
               Management, Inc. dated August 1, 2000 is included herein.

          (6)  Amendment  No. 2 to the  Management  Agreement  between  American
               Century  Mutual  Funds,  Inc.  and  American  Century  Investment
               Management Inc. (to be filed by amendment).

     (e)  (1)  Distribution  Agreement  between  American  Century Mutual Funds,
               Inc. and Funds  Distributor,  Inc.  dated January 15, 1998 (filed
               electronically as Exhibit b6 to  Post-Effective  Amendment No. 28
               on Form N-1A of American Century Target  Maturities  Trust,  File
               No. 2-94608, on January 30, 1998).

          (2)  Amendment No. 1 to the  Distribution  Agreement  between American
               Century Mutual Funds, Inc. and Funds Distributor, Inc. dated June
               1, 1998 (filed  electronically  as Exhibit b6b to  Post-Effective
               Amendment  No.  11 to  the  Registration  Statement  of  American
               Century Capital Portfolios,  Inc., File No. 33-64872, on June 26,
               1998).

          (3)  Amendment No. 2 to the  Distribution  Agreement  between American
               Century  Mutual Funds,  Inc. and Funds  Distributor,  Inc.  dated
               December  1,  1998  (filed   electronically  as  Exhibit  b6c  to
               Post-Effective  Amendment No. 12 to the Registration Statement of
               American Century World Mutual Funds, Inc., File No. 33-39242,  on
               November 13, 1998).

          (4)  Amendment No. 3 to the  Distribution  Agreement  between American
               Century  Mutual Funds,  Inc. and Funds  Distributor,  Inc.  dated
               January  29,  1999  (filed   electronically   as  Exhibit  e4  to
               Post-Effective  Amendment No. 24 to the Registration Statement of
               American Century Variable Portfolios, Inc., File No. 33-14567, on
               January 15, 1999).

          (5)  Amendment No. 4 to the  Distribution  Agreement  between American
               Century Mutual Funds, Inc. and Funds Distributor, Inc. dated July
               30, 1999 (filed  electronically  as Exhibit e5 to  Post-Effective
               Amendment  No.  16 to  the  Registration  Statement  of  American
               Century Capital Portfolios,  Inc., File No. 33-64872, on July 29,
               1999).

          (6)  Amendment No. 5 to the  Distribution  Agreement  between American
               Century Mutual Funds,  Inc. and Funds  Distributor,  Inc.  (filed
               electronically as Exhibit e6 to  Post-Effective  Amendment No. 87
               on Form N-1A on November 29, 1999).

          (7)  Distribution  Agreement  between  American  Century Mutual Funds,
               Inc. and American Century Investment  Services,  Inc. dated March
               13, 2000 (filed  electronically  as Exhibit e7 to  Post-Effective
               Amendment  No.  17 to  the  Registration  Statement  of  American
               Century  World  Mutual  Funds,  Inc. on March 30,  2000,  File No
               33-39242).

          (8)  Amendment No. 1 to the  Distribution  Agreement  between American
               Century  Mutual  Funds,  Inc.  and  American  Century  Investment
               Services,  Inc.  dated  June 1,  2000  (filed  electronically  as
               Exhibit e9 to Post-Effective Amendment No. 19 to the Registration
               Statement of American Century World Mutual Funds, Inc. on May 25,
               2000, File No. 33-39242).

          (9)  Amendment No. 2 to the  Distribution  Agreement  between American
               Century  Mutual  Funds,  Inc.  and  American  Century  Investment
               Services,  Inc. dated November 20, 2000 (filed  electronically as
               Exhibit   e10  to   Post-Effective   Amendment   No.  29  to  the
               Registration  Statement of American Century Variable  Portfolios,
               Inc. on December 1, 2000, File No. 33-14567).

     (f)  Not Applicable.

     (g)  (1)  Global Custody Agreement between The Chase Manhattan Bank and the
               Twentieth  Century and Benham Funds,  dated August 9, 1996 (filed
               electronically as Exhibit 8 to Post-Effective Amendment No. 31 on
               Form N-1A of American Century  Government  Income Trust, File No.
               2-99222, on February 7, 1997).

          (2)  Master Agreement by and between Commerce Bank, N.A. and Twentieth
               Century   Services,   Inc.   dated   January   22,   1997  (filed
               electronically as Exhibit 8e to  Post-Effective  Amendment No. 76
               on Form N-1A on February 28, 1997).

     (h)  (1)  Transfer Agency Agreement between  Twentieth  Century  Investors,
               Inc. and Twentieth  Century  Services,  Inc.  dated March 1, 1991
               (filed  electronically as Exhibit 9 to  Post-Effective  Amendment
               No. 76 on Form N-1A on February 28, 1997).

          (2)  Credit  Agreement  between  American  Century Funds and The Chase
               Manhattan Bank, as Administrative  Agent dated as of December 21,
               1999  (filed  electronically  as  Exhibit  h3  to  Post-Effective
               Amendment  No.  29 to  the  Registration  Statement  of  American
               Century  California   Tax-Free  and  Municipal  Funds,  File  No.
               2-82734, on December 29, 1999).

     (i)  Opinion and Consent of Counsel is included herein.

     (j)  (1)  Consent of Deloitte & Touche,  independent  auditors (to be filed
               by amendment).

          (2)  Power of Attorney dated November 18, 2000 is included herein.

     (k)  Not applicable.

     (l)  Not applicable.

     (m)  (1)  Master  Distribution  and Shareholder  Services Plan of Twentieth
               Century Capital  Portfolios,  Inc.,  Twentieth Century Investors,
               Inc.,  Twentieth  Century Strategic Asset  Allocations,  Inc. and
               Twentieth  Century World  Investors,  Inc.  (Advisor Class) dated
               September  3,  1996  (filed  electronically  as  Exhibit  b15a to
               Post-Effective  Amendment No. 9 on Form N-1A of American  Century
               Capital  Portfolios,  Inc.,  File No.  33-64872,  on February 17,
               1998).

          (2)  Amendment No. 1 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor  Class)  dated June 13,  1997 (filed  electronically  as
               Exhibit b15d to  Post-Effective  Amendment No. 77 on Form N-1A on
               July 17, 1997).

          (3)  Amendment No. 2 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor Class) dated September 30, 1997 (filed electronically as
               Exhibit b15c to  Post-Effective  Amendment No. 78 on Form N-1A on
               February 26, 1998).

          (4)  Amendment No. 3 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor  Class)  dated June 30,  1998 (filed  electronically  as
               Exhibit b15e to  Post-Effective  Amendment No. 11 on Form N-1A of
               American Century Capital Portfolios,  Inc., File No. 33-64872, on
               June 26, 1998).

          (5)  Amendment No. 4 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor Class) dated November 13, 1998 (filed  electronically as
               Exhibit b15e to  Post-Effective  Amendment No. 12 on Form N-1A of
               American Century World Mutual Funds, Inc., File No. 33-39242,  on
               November 13, 1998).

          (6)  Amendment No. 5 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor Class) dated February 16, 1999 (filed  electronically as
               Exhibit  m6 to  Post-Effective  Amendment  No. 83 on Form N-1A on
               February 26, 1999).

          (7)  Amendment No. 6 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor  Class)  dated July 30,  1999 (filed  electronically  as
               Exhibit  m7 to  Post-Effective  Amendment  No. 16 on Form N-1A of
               American Century Capital Portfolios,  Inc., File No. 33-64872, on
               July 29, 1999).

          (8)  Amendment No. 7 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor   Class)   (filed   electronically   as  Exhibit  m8  to
               Post-Effective  Amendment  No.  87 on Form N-1A on  November  29,
               1999).

          (9)  Amendment No. 8 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocation,.  Inc., and American Century World Mutual Funds, Inc.
               (Advisor   Class)   (filed   electronically   as  Exhibit  m9  to
               Post-Effective  Amendment No. 19 on Form N-1A of American Century
               World Mutual Funds, Inc., File No. 33-39242, on May 25, 2000).

          (10) Amendment No. 9 to Master  Distribution and Shareholder  Services
               Plan of  American  Century  Capital  Portfolios,  Inc.,  American
               Century Mutual Funds,  Inc.,  American  Century  Strategic  Asset
               Allocations,  Inc. and American Century World Mutual Funds,  Inc.
               (Advisor Class) (to be filed by amendment).

          (11) Shareholder   Services   Plan  of   Twentieth   Century   Capital
               Portfolios,  Inc.,  Twentieth Century Investors,  Inc., Twentieth
               Century Strategic Asset  Allocations,  Inc. and Twentieth Century
               World  Investors,  Inc.  (Service  Class) dated September 3, 1996
               (filed electronically as Exhibit b15b to Post-Effective Amendment
               No. 9 on Form N-1A of American Century Capital Portfolios,  Inc.,
               File No. 33-64872, on February 17, 1998).

     (n)  Not applicable.

     (o)  (1)  Multiple  Class Plan of  Twentieth  Century  Capital  Portfolios,
               Inc.,  Twentieth  Century  Investors,   Inc.,  Twentieth  Century
               Strategic  Asset  Allocations,  Inc. and Twentieth  Century World
               Investors,  Inc. dated September 3, 1996 (filed electronically as
               Exhibit  b18b  to  Post-Effective  Amendment  9 on  Form  N-1A of
               American Century Capital Portfolios,  Inc., File No. 33-64872, on
               February 17, 1998).

          (2)  Amendment  No.  1 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century  World  Mutual  Funds,  Inc.  dated June 13,  1997 (filed
               electronically as Exhibit b18b to Post-Effective Amendment No. 77
               on Form N-1A on July 17, 1997).

          (3)  Amendment  No.  2 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century World Mutual Funds,  Inc. dated September 30, 1997 (filed
               electronically as Exhibit b18c to Post-Effective Amendment No. 78
               on Form N-1A on February 26, 1998).

          (4)  Amendment  No.  3 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century  World  Mutual  Funds,  Inc.  dated June 30,  1998 (filed
               electronically as Exhibit b18d to Post-Effective Amendment No. 11
               on Form N-1A of American Century Capital  Portfolios,  Inc., File
               No. 33-64872, on June 26, 1998).

          (5)  Amendment  No.  4 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century World Mutual Funds,  Inc.  dated November 13, 1998 (filed
               electronically as Exhibit b18e to Post-Effective Amendment No. 12
               on Form N-1A of American  Century World Mutual Funds,  Inc., File
               No. 33-39242, on November 13, 1998).

          (6)  Amendment  No.  5 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century  World Mutual Funds,  Inc.  dated January 29, 1999 (filed
               electronically as Exhibit b18f to Post-Effective Amendment No. 14
               on Form N-1A of American Century Capital  Portfolios,  Inc., File
               No. 33-64872, on December 29, 1998).

          (7)  Amendment  No.  6 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century  World  Mutual  Funds,  Inc.  dated July 30,  1999 (filed
               electronically as Exhibit o7 to  Post-Effective  Amendment No. 16
               on Form N-1A of American Century Capital  Portfolios,  Inc., File
               No. 33-64872, on July 29, 1999).

          (8)  Amendment  No.  7 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century World Mutual Funds, Inc. (filed electronically as Exhibit
               o8 to  Post-Effective  Amendment  No. 87 on Form N-1A on November
               29, 1999).

          (9)  Amendment  No.  8 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century World Mutual Funds, Inc. (filed electronically as Exhibit
               o9 to  Post-Effective  Amendment  No. 19 on Form N-1A of American
               Century World Mutual Funds,  Inc., File No. 33-39242,  on May 25,
               2000.

          (10) Amendment  No.  9 to  Multiple  Class  Plan of  American  Century
               Capital  Portfolios,  Inc.,  American Century Mutual Funds, Inc.,
               American Century Strategic Asset  Allocations,  Inc. and American
               Century World Mutual Funds, Inc. (to be filed by amendment).

     (p)  (1)  American Century Investments Code of Ethics (filed electronically
               as Exhibit p1 to Post-Effective  Amendment No. 19 on Form N-1A of
               American Century World Mutual Funds, Inc., File No. 33-39242,  on
               March 10, 2000).

          (2)  Funds Distributor,  Inc. Code of Ethics (filed  electronically as
               Exhibit  p2 to  Post-Effective  Amendment  No. 19 on Form N-1A of
               American Century World Mutual Funds, Inc., File No. 33-39242,  on
               March 10, 2000).

ITEM 24. Persons  Controlled  by or Under Common  Control with  Registrant.

     Not Applicable.

ITEM 25. Indemnification.

     The  Corporation  is a Maryland  corporation.  Section 2-418 of the General
     Corporation Law of Maryland allows a Maryland  corporation to indemnify its
     directors,  officers,  employees and agents to the extent  provided in such
     statute.

     Article   Eighth   of  the   Articles   of   Incorporation   requires   the
     indemnification  of the corporation's  directors and officers to the extent
     permitted  by the  General  Corporation  Law of  Maryland,  the  Investment
     Company Act and all other applicable laws.

     The registrant has purchased an insurance  policy insuring its officers and
     directors against certain liabilities which such officers and directors may
     incur while acting in such  capacities and providing  reimbursement  to the
     registrant  for sums which it may be  permitted  or  required to pay to its
     officers and directors by way of indemnification  against such liabilities,
     subject  in  either   case  to   clauses   respecting   deductibility   and
     participation.

ITEM 26. Business and Other Connections of Investment Advisor.

     None.

ITEM 27. Principal Underwriters.

I.(a) Funds  Distributor,  Inc.  ("FDI") acts as principal  underwriter  for the
following investment companies.

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+ Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds, Inc.
GMO Trust
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
The Skyline Funds
St. Clair Funds, Inc.
TD Waterhouse Investors Family of Funds, Inc.
TD Waterhouse Trust

     FDI  is  registered  with  the  Securities  and  Exchange  Commission  as a
broker-dealer and is a member of the National Association of Securities Dealers.
FDI is located at 60 State Street, Suite 1300, Boston,  Massachusetts 02109. FDI
is an indirect  wholly-owned  subsidiary of Boston  Institutional Group, Inc., a
holding company all of whose outstanding shares are owned by key employees.

     (b)  The  following  is a list of the  executive  officers,  directors  and
partners of the Distributor:

<TABLE>
<CAPTION>
Name and Principal Business Address*  Positions and Offices with          Positions and Offices with
                                      Underwriter                         Registrant

<S>                                  <C>                                 <C>
Marie E. Connolly                     Director, President and Chief       none
                                      Executive Officer

George A. Rio                         Executive Vice President            none

Gary S. MacDonald                     Executive Vice President            none
                                      and Chief Administrative Officer

Charles W. Carr                       Executive Vice President            none

William S. Nichols                    Executive Vice President            none

Margaret W. Chambers                  Senior Vice President, General      none
                                      Counsel, Chief Compliance
                                      Officer, Secretary and Clerk

Joseph F. Tower, III                  Senior Vice President               none
                                      and Treasurer

Judith K. Benson                      Senior Vice President               none

William J. Nutt                       Chairman and Director               none

William J. Stetter                    Senior Vice President               none
                                      and Chief Financial Officer

Christopher J. Kelley                 Senior Vice President and           none
                                      Deputy General Counsel

John Lehning                          Senior Vice President               none

John Prosperi                         Senior Vice President               none

--------------------
* All addresses are 60 State Street, Suite 1300, Boston, Massachusetts 02109
</TABLE>

(c)  Not applicable.

II. (a) American  Century  Investment  Services,  Inc.  (ACIS) acts as principal
underwriter for the following investment companies:

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century Variable Portfolios II, Inc.
American Century World Mutual Funds, Inc.

     ACIS is  registered  with  the  Securities  and  Exchange  Commission  as a
broker-dealer and is a member of the National Association of Securities Dealers.
ACIS is located at 4500 Main Street,  Kansas  City,  Missouri  64111.  ACIS is a
wholly-owned subsidiary of American Century Companies, Inc.

     (b) The following is a list of the executive officers and partners of ACIS:

Name and Principal         Positions and Offices   Positions and Offices
Business Address*           with Underwriter         with Registrant
--------------------------------------------------------------------------------
W. Gordon Snyder           President                                none

James E. Stowers III       Co-Chairman and Director              Director

William M. Lyons           Chief Executive Officer,              President
                           Executive Vice President
                           and Director

Robert T. Jackson          Executive Vice President             Executive Vice
                           and Chief Financial Officer          President and
                                                                Chief Financial
                                                                Officer

Kevin Cuccias              Senior Vice President                    none

Brian Jeter                Senior Vice President                    none

Mark Killen                Senior Vice President                    none

Tom Kmak                   Senior Vice President                    none

David C. Tucker            Senior Vice President          Senior Vice President
                           and General Counsel


* All addresses are 4500 Main Street, Kansas City, Missouri 64111

          (c) Not applicable.

ITEM 28. Location of Accounts and Records.

     All  accounts,  books and other  documents  required  to be  maintained  by
     Section 31(a) of the 1940 Act, and the rules promulgated thereunder, are in
     the possession of American  Century Mutual Funds,  Inc.,  American  Century
     Services Corporation and American Century Investment Management,  Inc., all
     located at American Century Tower, 4500 Main Street, Kansas City, Missouri
     64111.

ITEM 29. Management Services

     Not Applicable.

ITEM 30. Undertakings.

     Not Applicable.
<PAGE>
                                   SIGNATURES

     Pursuant  to  the  requirements  of the  Securities  Act of  1933  and  the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this  Post-Effective  Amendment  No.  89 to be  signed  on  its  behalf  by  the
undersigned,  thereunto duly  authorized,  in the City of Kansas City,  State of
Missouri on the 1st day of December, 2000.

                                       American Century Mutual Funds, Inc.
                                       (Registrant)

                                       By: /*/William M. Lyons
                                       President and Principal Executive Officer

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
Post-Effective  Amendment No. 89 has been signed below by the following  persons
in the capacities and on the dates indicated.

Signature                   Title                              Date
---------                   -----                              ----

*William M. Lyons           President and                      December 1, 2000
William M. Lyons            Principal Executive Officer

*Maryanne Roepke            Senior Vice President,             December 1, 2000
Maryanne Roepke             Treasurer and Chief
                            Accounting Officer

*James E. Stowers, Jr.      Chairman of the Board and          December 1, 2000
James E. Stowers, Jr.       Director

*James E. Stowers III       Director                           December 1, 2000
James E. Stowers III

*Thomas A. Brown            Director                           December 1, 2000
Thomas A. Brown

*Robert W. Doering, M.D.    Director                           December 1, 2000
Robert W. Doering, M.D.

*Andrea C. Hall, Ph.D.      Director                           December 1, 2000
Andrea C. Hall, Ph.D.

*D. D. (Del) Hock           Director                           December 1, 2000
D. D. (Del) Hock

*Donald H. Pratt            Director                           December 1, 2000
Donald H. Pratt

*Gale E. Sayers             Director                           December 1, 2000
Gale E. Sayers

*M. Jeannine Strandjord     Director                           December 1, 2000
M. Jeannine Strandjord

*By /s/Charles A. Etherington
    Charles A. Etherington
    Attorney-in-Fact


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