AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS, N-30D, 1999-02-19

AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
N-30D, 1999-02-19

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[front cover] DECEMBER 31, 1998

ANNUAL REPORT
- ----------------
AMERICAN CENTURY

[graphic of glasses]

AMERICAN CENTURY GROUP
- ------------------------------------
EQUITY GROWTH
INCOME & GROWTH
SMALL CAP QUANTITATIVE

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

AMERICAN CENTURY BROKERAGE
- --------------------------------------------------------------------------------

We're pleased to introduce American Century's new brokerage service, which
offers a wide range of investment options and features:

* FundChoice Service--Invest in over 8,000 no-load and load mutual funds
from hundreds of different fund companies, many with no transaction fees

* Buy individual stocks and bonds

* 24-hour Internet and automated phone trades are just $24.95 for up to
1,000 shares of stock, and 2 cents per share thereafter

* Strong research capability

* Build and track model portfolios
* Get news, quotes and charts
* Check free Standard & Poor's stock reports
* Access Wall Street on Demand(tm), a research service with more than
500,000 reports on industry trends, corporate earnings, and mutual
fund analysis

* Track your brokerage account on one easy-to-read statement

* Unlimited check writing and a Gold MasterCard(reg.tm) ATM/debit card
with an American Century Brokerage Access AccountSM (minimum $10,000)

To talk with a Brokerage Associate, call 1-888-345-2071.

WHAT'S NEW . . .

AMERICAN CENTURY CATALOG OF TOOLS & SERVICES lists all the free educational
materials available to investors.

We now have FOUR-PAGE PROFILES of many of our funds. The profiles follow a
standard SEC format and are intended to allow investors to compare funds easily.
You can request a profile or the full prospectus. Full prospectuses contain more
detailed fund information and you will continue to receive one after investing.

In 1999, we will provide SIMPLIFIED PROSPECTUSES that highlight important
information about our funds, including fees and expenses. More detailed data
will be in the Statement of Additional Information.

To order any of these materials, please call 1-800-345-2021.

[left margin]

AMERICAN CENTURY GROUP
EQUITY GROWTH
(BEQGX)
- ----------------------------------
AMERICAN CENTURY GROUP
INCOME & GROWTH
(BIGRX)
- ----------------------------------
AMERICAN CENTURY GROUP
SMALL CAP QUANTITATIVE
(N/A)
- ----------------------------------

Our Message to You
- --------------------------------------------------------------------------------
/photo of James E. Stowers III and James E. Stowers, Jr./
James E. Stowers III, seated, with James E. Stowers, Jr.

On the whole, 1998 was an eventful but favorable year for U.S. stocks. It
was a year of extremes--dramatic economic and financial problems in many regions
of the world led to significant stock market volatility and a substantial
decline in interest rates. Volatility was so rampant that the Federal Reserve
(the U.S. central bank) cut interest rates three times to help stabilize markets
worldwide.

Amid the wild market fluctuations, many investors flocked to the perceived
stability of the stocks of large companies, such as those represented in the S&P
500. Large-cap stocks have been the market leaders over the past several years.
From 1995-98, the S&P 500 averaged a return of just over 30% a year--a
compounded return of 190%.

It's not surprising, then, that the stock market's influence on the U.S.
economy has grown. Ten years ago, the average household had stock holdings that
were worth about 80% of its annual income; today, these stock holdings are worth
more than twice the average household's annual income (according to Lehman
Brothers). This increase in wealth has had a significant effect on consumer
behavior. Knowing that they have healthy reserves in the stock market, consumers
are spending more of their paychecks. Because consumer spending accounts for
two-thirds of U.S. economic growth, this trend has provided a major boost to the
economy in recent years.

But there is a corresponding downside to this "wealth effect." A stock
market decline could cause consumers to curtail their spending and contribute to
an economic downturn. That possibility, combined with the increased stock market
volatility over the past year, illustrates the importance of a diversified
investment portfolio. Diversifying your assets among stocks, bonds, and money
market funds can help your portfolio weather changes in the economic or
investment climate.

Looking ahead, one of the challenges in the coming year is preparation of
the world's computer systems for the year 2000. At American Century, we're
devoting substantial resources to this endeavor. Our technology team modified
the computer code in our critical systems in 1998 and will be extensively
testing the systems in 1999, including those involved with fund performance and
dividend payments.

In addition, our investment management team is busy gathering publicly
available information about the year-2000 readiness of the issuers of securities
owned by American Century funds.

We appreciate your continued confidence in American Century.

Sincerely,

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

[right margin]

Table of Contents
Report Highlights ........ 2
Market Perspective ....... 3
EQUITY GROWTH
Performance Information .. 5
Management Q&A ........... 6
Schedule of Investments .. 9
INCOME & GROWTH
Performance Information .. 13
Management Q&A ........... 14
Schedule of Investments .. 17
SMALL CAP QUANTITATIVE
Performance Information .. 22
Management Q&A ........... 23
Schedule of Investments .. 26
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities .............. 30
Statements of Operations . 31
Statements of Changes
in Net Assets ............ 32
Notes to Financial
Statements ............... 33
Financial Highlights ..... 38
Report of Independent
Accountants .............. 45
OTHER INFORMATION
Share Class and Retirement
Account Information ...... 46
Background Information
Investment Philosophy
and Policies .......... 47
Comparative Indices ... 47
Lipper Rankings ....... 47
Investment Team
Leaders ............... 47
Glossary ................. 48

www.americancentury.com 1

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

MARKET PERSPECTIVE

* A volatile year in the U.S. stock market ended with healthy returns for
large-company stocks and subdued performance for smaller-company stocks.

* After reaching all-time highs in the first half of the year, the major stock
indices experienced a dramatic plunge and subsequent rebound during the
second half of the year.

* The best-performing industries in 1998 were telecommunications, retail, and
technology. In contrast, energy and financial services stocks struggled.

EQUITY GROWTH

* In 1998, the fund beat the average growth fund (according to Lipper Inc.)
but trailed its benchmark index, the S&P 500.

* The main reason Equity Growth underperformed the S&P 500 was an
overweighting in financial services stocks, which suffered in the third
quarter.

* Equity Growth benefited from overweightings in the stocks of
telecommunications and big technology companies.

* We added a transaction costs element to our computer model that considers
the market impact of trading on each stock's expected return.

* Going forward, we continue to favor telephone and technology stocks, and
we're sticking with financial services companies that have strong prospects
according to our model.

INCOME & GROWTH

* In 1998, the fund beat the average growth & income fund (according to Lipper
Inc.) but trailed its benchmark index, the S&P 500.

* The main reason Income & Growth underperformed the S&P 500 was an
overweighting in financial services stocks, which suffered in the third
quarter.

* Income & Growth benefited from overweightings in the stocks of big
technology and telecommunications companies, as well as an underweighting in
energy stocks.

* We added a transaction costs element to our computer model that considers
the market impact of trading on each stock's expected return.

* Going forward, we continue to favor telephone and technology stocks, and
we're sticking with financial services companies that have strong prospects
according to our model.

SMALL CAP QUANTITATIVE

* From the fund's inception on July 31, 1998, through December 31, the fund's
return kept pace with its benchmark index, the S&P SmallCap 600, and the
average small-cap fund (according to Lipper Inc.).

* Small Cap Quantitative's portfolio emphasized computer and financial
services stocks.

* The fund's biggest individual holdings were vehicle manufacturers and home
sellers that benefited from the low interest rate environment.

* Going forward, we like the prospects for small-cap stocks--we think they are
undervalued compared with large-cap shares.

[left margin]

EQUITY GROWTH(1)
(BEQGX)
TOTAL RETURNS: AS OF 12/31/98
6 Months 6.01%(2)
1 Year 25.45%
NET ASSETS: $2.0 billion
INCEPTION DATE: 5/9/91

INCOME & GROWTH(1)
(BIGRX)
TOTAL RETURNS: AS OF 12/31/98
6 Months 8.39%(2)
1 Year 27.67%
NET ASSETS: $4.3 billion
INCEPTION DATE: 12/17/90

SMALL CAP QUANTITATIVE(1)
TOTAL RETURNS: AS OF 12/31/98
SINCE INCEPTION 0.40%(2)
NET ASSETS: $15.0 million
INCEPTION DATE: 7/31/98

(1) Investor Class.
(2) Not annualized.

See Total Returns on pages 5, 13 and 22. Investment terms are defined in the
Glossary on page 48.

2 1-800-345-2021

Market Perspective from Mark Mallon
- --------------------------------------------------------------------------------
/photo of Mark Mallon/

Mark Mallon, senior vice president and managing director of American Century
Investments

MIXED EQUITY PERFORMANCE

In a year dominated by narrow market leadership and dramatic volatility,
U.S. stock performance was widely divergent but generally positive in 1998. The
S&P 500, representing the stocks of the largest domestic companies, continued
its decade-long trend of above-average returns, producing a return of better
than 20% for an unprecedented fourth consecutive calendar year. Smaller
companies didn't fare as well--many small-company stocks posted flat or negative
returns for the year (see the table at right for major index returns).

MARKET TURNED VOLATILE

Stocks took investors on a wild ride throughout 1998. After steamrolling to
all-time highs in the first half of the year, the stock market entered one of
its most volatile periods since the end of World War II. A series of financial
crises in Asia, Russia, and Latin America wreaked havoc on market psychology,
and wide day-to-day swings became common.

Smaller-company stocks saw even greater volatility. The S&P SmallCap 600
peaked in mid-April and then plunged 37% over the following six months. In
mid-October, the index shifted direction again and retraced two-thirds of its
decline by the end of the year.

The market's decline and subsequent rebound provided a tangible lesson
about long-term investing and staying the course. Those who panicked and sold
their stock holdings in August or September missed the opportunity to recoup
their losses, while patient investors were rewarded by year's end.

SIZE MATTERED

On the face of it, the solid returns of many stock indices suggest that it
was another great year for equities. However, index performance was
deceptive--the robust returns of a handful of large, blue-chip companies masked
price declines in the rest of the market. The vast majority of the 9,000 stocks
traded in the U.S. began to decline earlier--and fell further--than the major
market indices.

For example, the Nasdaq 100, an index of the stocks of the 100 largest
companies traded over the counter in the United States, rose a phenomenal 86% in
1998. On a capitalization-weighted basis, the 25 largest stocks in the S&P 500
returned 66%; the remaining 475 returned just 5%.

Small-company stocks repeatedly lagged the shares of larger companies,
peaking earlier in the year and suffering more during the market decline in the
third quarter. Despite better values and faster

[right margin]

"INDEX PERFORMANCE WAS DECEPTIVE--THE ROBUST RETURNS OF A HANDFUL OF LARGE,
BLUE-CHIP COMPANIES MASKED PRICE DECLINES IN THE REST OF THE MARKET."

STOCK MARKET RETURNS
FOR THE YEAR ENDED DECEMBER 31, 1998
S&P 500 28.68%
S&P MIDCAP 400 19.11%
S&P SMALLCAP 600 -1.31%

Source: Lipper Inc.

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

[line chart - data below]

STOCK MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE YEAR ENDED DECEMBER 31, 1998

S&P 500 S&P MidCap 400 S&P SmallCap 600
12/31/97 $1.00 $1.00 $1.00
1/31/98 $1.01 $0.98 $0.98
2/28/98 $1.08 $1.06 $1.07
3/31/98 $1.14 $1.11 $1.11
4/30/98 $1.15 $1.13 $1.12
5/31/98 $1.13 $1.08 $1.06
6/30/98 $1.18 $1.09 $1.06
7/31/98 $1.16 $1.04 $0.98
8/31/98 $1.00 $0.85 $0.79
9/30/98 $1.06 $0.93 $0.84
10/31/98 $1.15 $1.01 $0.88
11/30/98 $1.22 $1.06 $0.93
12/31/98 $1.29 $1.19 $0.99

Source: Lipper Inc.

www.americancentury.com 3

Market Perspective from Mark Mallon
- --------------------------------------------------------------------------------
(Continued)

earnings growth than most large-company stocks, small-company stocks were
ignored as investors favored the shares of large, seasoned, well-known companies
that they could buy or sell at a moment's notice.

One notable exception to this general trend was the speculative focus on
Internet stocks. Huge demand for Internet-related businesses--many of which have
yet to turn a profit--pushed their stock prices to dizzying heights.

CHASING GROWTH

Another major market trend was the significant outperformance of growth
stocks over value stocks. Growth stocks are those whose earnings are growing at
a faster rate than the overall market. They tend to have high price/earnings
(P/E) ratios because investors are willing to pay high prices for their earnings
growth. In contrast, value stocks are those considered to be relatively
inexpensive, so they tend to have low P/E ratios.

As the chart at left illustrates, S&P 500 growth stocks (those with
above-average P/E ratios) dominated S&P 500 value stocks (those with
below-average P/E ratios) in 1998. This relationship also held true among the
stocks of midsized companies and, to a lesser extent, small companies (see the
table at left).

The economic crises in various parts of the world caused concerns about
weaker profits at U.S. corporations. As a result, there was heavy demand for
big-name stocks with relatively stable earnings growth, while investors punished
stocks that failed to meet earnings expectations.

INDUSTRY WINNERS AND LOSERS

U.S. stock returns varied widely by industry. Telecommunications stocks
were among the big winners, posting huge returns for the year. Substantial
merger activity--especially among long-distance carriers and regional Bell
operating companies--helped boost stock prices, and more open competition in
local and long-distance markets enabled many firms to expand their domestic
services.

Retail firms were very successful in 1998, when strong consumer spending
led to increased profits for many companies such as Wal-Mart and Home Depot. In
addition, products made in Asia cost less because of the currency weakness in
the region.

While some technology companies were hurt by weak demand in Asia, a number
of large tech stocks like Microsoft and Dell Computer more than made up for
Asian losses with strong demand in the U.S. and Europe.

On the downside, many financial services stocks suffered sizable overseas
losses from the problems in Russia and Latin America. As a result, these stocks
were among the primary casualties when the market went into a tailspin in
August, though many recovered in the fourth quarter.

Energy stocks and others that depend on natural resources also struggled.
Commodity prices declined dramatically in 1998, weakening profit margins for
many of these companies.

[left margin]

"THE ECONOMIC CRISES IN VARIOUS PARTS OF THE WORLD CAUSED CONCERNS ABOUT WEAKER
PROFITS AT U.S. CORPORATIONS. AS A RESULT, THERE WAS HEAVY DEMAND FOR BIG-NAME
STOCKS WITH RELATIVELY STABLE EARNINGS GROWTH."

[line chart - data below]

GROWTH VS. VALUE (GROWTH OF $1.00)
FOR THE YEAR ENDED DECEMBER 31, 1998

S&P 500/ S&P 500/
BARRA Growth BARRA Value
12/31/97 $1.00 $1.00
1/31/98 $1.03 $0.99
2/28/98 $1.11 $1.06
3/31/98 $1.16 $1.12
4/30/98 $1.17 $1.13
5/31/98 $1.15 $1.11
6/30/98 $1.23 $1.12
7/31/98 $1.23 $1.10
8/31/98 $1.07 $0.92
9/30/98 $1.14 $0.98
10/31/98 $1.24 $1.05
11/30/98 $1.32 $1.11
12/31/98 $1.42 $1.15

S&P 500/BARRA GROWTH 42.09%
S&P 500/BARRA VALUE 14.67%
S&P MIDCAP 400/BARRA GROWTH 34.86%
S&P MIDCAP 400/BARRA VALUE 4.67%
S&P SMALLCAP 600/BARRA GROWTH 2.29%
S&P SMALLCAP 600/BARRA VALUE -5.06%

Source: Bloomberg Financial Markets

4 1-800-345-2021

Equity Growth--Performance
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF DECEMBER 31, 1998

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 5/9/91) (INCEPTION 10/9/97) (INCEPTION 1/2/98)
EQUITY GROWTH FUNDS(2) EQUITY EQUITY
GROWTH S&P 500 AVERAGE RETURN FUND'S RANKING GROWTH S&P 500 GROWTH S&P 500
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) .... 6.01% 9.37% 6.21% -- 5.85% 9.37% 6.12% 9.37%
1 YEAR ......... 25.45% 28.68% 22.86% 436 OUT OF 980 25.14% 28.68% -- --
- -------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL
RETURNS
3 YEARS ........ 29.47% 28.17% 22.23% 64 OUT OF 585 -- -- -- --
5 YEARS ........ 23.88% 24.05% 18.63% 41 OUT OF 365 -- -- -- --
LIFE OF FUND ... 19.79% 19.39% 16.36% 29 OUT OF 209 19.55% 23.20% 25.59% 28.07%
</TABLE>

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

(2) According to Lipper Inc., an independent mutual fund ranking service.

See pages 46-48 for more information about share classes, returns, the
comparative index, and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND
Value on 12/31/98
Equity Growth $39,774
S&P 500 $38,767

Equity Growth S&P 500
DATE VALUE VALUE
5/9/91 $10,000 $10,000
6/30/91 $9,640 $9,769
9/30/91 $10,378 $10,291
12/31/91 $11,747 $11,152
3/31/92 $11,128 $10,871
6/30/92 $10,923 $11,078
9/30/92 $11,291 $11,426
12/31/92 $12,232 $12,000
3/31/93 $12,773 $12,523
6/30/93 $12,998 $12,583
9/30/93 $13,697 $12,908
12/31/93 $13,630 $13,207
3/31/94 $12,997 $12,707
6/30/94 $13,178 $12,760
9/30/94 $13,681 $13,383
12/31/94 $13,599 $13,380
3/31/95 $14,867 $14,682
6/30/95 $16,300 $16,081
9/30/95 $17,324 $17,358
12/31/95 $18,301 $18,403
3/31/96 $19,450 $19,392
6/30/96 $20,249 $20,260
9/30/96 $21,173 $20,886
12/31/96 $23,305 $22,626
3/31/97 $23,622 $23,235
6/30/97 $27,243 $27,287
9/30/97 $30,942 $29,331
12/31/97 $31,710 $30,173
3/31/98 $36,739 $34,379
6/30/98 $37,525 $35,520
9/30/98 $32,317 $31,996
12/31/98 $39,774 $38,767

$10,000 investment made 5/9/91

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

[bar chart - data below]

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDED DECEMBER 31)

Equity Growth S&P 500
DATE RETURN RETURN
12/31/91* 17.48% 11.47%
12/31/92 4.13% 7.61%
12/31/93 11.42% 10.03%
12/31/94 -0.23% 1.36%
12/31/95 34.56% 37.44%
12/31/96 27.34% 22.93%
12/31/97 36.06% 33.26%
12/31/98 25.45% 28.68%

* From 5/9/91 (the fund's inception date) to 12/31/91.

www.americancentury.com 5

Equity Growth--Q&A
- --------------------------------------------------------------------------------
/photo of John Schniedwind and Jeff Tyler/

An interview with John Schniedwind and Jeff Tyler, portfolio managers on
the Equity Growth fund investment team.

HOW DID EQUITY GROWTH PERFORM IN 1998?

The fund posted a strong return that beat the average growth fund but
trailed the S&P 500. Equity Growth's total return* in 1998 was 25.45%, compared
with the 28.68% return of the S&P 500 and the 22.86% average return of the 980
"Growth Funds" tracked by Lipper Inc.

Equity Growth's longer-term returns are also notable--its three- and
five-year returns ranked in the top 12% of all growth funds. (See the previous
page for other fund performance comparisons.)

THE FUND CONTINUED TO OUTPERFORM THE AVERAGE GROWTH FUND, BUT IT CAME UP SHORT
OF THE S&P 500 FOR THE FIRST TIME SINCE 1995. WHY?

A couple of broad portfolio traits were partly responsible. Equity Growth
held the stocks of companies that were, on average, smaller than those in the
S&P 500. This was a negative factor because larger-company stocks outperformed
smaller stocks. In addition, the fund has more of a value component than the
index does, and in 1998, growth stocks beat value stocks by a wide margin.

Another key reason for the fund's underperformance was an overweighting in
financial services stocks, which suffered substantial losses in the third
quarter.

WHY WERE YOU OVERWEIGHTED IN FINANCIAL STOCKS?

Because their earnings were growing at a much faster rate than the overall
market, and economic conditions were ideal--healthy growth with little
inflation. In 1997 and the first half of 1998, our overweighting paid off
because banking and brokerage stocks were among the best performers in the
domestic equity market.

In the third quarter of 1998, however, everything changed. The collapse of
Russia's currency and financial markets resulted in losses at many investment
firms, and a general slowdown in economic growth worldwide led to concerns about
the U.S. economy's strength. Losses at several high-profile hedge
funds--private, often-speculative funds for large investors--added to the damage
because many financial companies did business with them.

In the end, the entire financial sector suffered staggering price declines,
with many stocks falling 40% or more in the third quarter.

DID YOU CUT BACK ON YOUR FINANCIAL HOLDINGS?

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

[left margin]

"EQUITY GROWTH'S LONGER-TERM RETURNS ARE ALSO NOTABLE--ITS THREE- AND FIVE-YEAR
RETURNS RANKED IN THE TOP 12% OF ALL GROWTH FUNDS."

PORTFOLIO AT A GLANCE
12/31/98 12/31/97
NUMBER OF COMPANIES 175 165
DIVIDEND YIELD 1.44% 1.87%
PRICE/EARNINGS RATIO 19.5 16.8
PORTFOLIO TURNOVER 89% 161%
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.69% 0.67%

Investment terms are defined in the Glossary on page 48.

6 1-800-345-2021

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

the individual companies. We thought that the market overreacted dramatically
and that many of these stocks took more of a beating than they deserved, so we
held onto them.

We did trim our position slightly late in the year, but we remained
overweighted in financial stocks, especially banks like First Union and Chase
Manhattan (both top ten holdings) and brokerage firms like Morgan Stanley Dean
Witter Discover. Investor confidence in the financial sector revived in the
fourth quarter, and these stocks bounced back with strong returns.

BY AND LARGE, 1998 WAS A PRETTY GOOD YEAR FOR EQUITY GROWTH. CAN YOU TALK ABOUT
SOME OF THE FUND'S SUCCESSFUL POSITIONS?

One beneficial position was an overweighting in telecommunications stocks,
our biggest industry holding (see the table on page 8). Long-distance and
local-service phone companies--such as top ten holdings AT&T and BellSouth
- --produced steady earnings and benefited from services expansion and merger
activity. The mania for Internet stocks also lifted share prices because of the
wireless and Internet franchises held by many telecommunications companies.

Another overweighting that enhanced fund performance was the stocks of big
technology companies. Software makers like Microsoft, a core holding throughout
the year, produced great returns. Starting in September, we also added a sizable
position in Intel, a huge semiconductor company that we avoided for the first
eight months of the year. Intel shares performed very well in the fourth
quarter.

One theme that isn't apparent in Equity Growth's bigger holdings is our
efforts to take advantage of the resilience in consumer spending.

CAN YOU GIVE SOME EXAMPLES OF THIS STRATEGY?

Interest rates have been relatively low over the past six months, and when
that happens, consumers tend to buy more big-ticket items like appliances, cars,
and houses.

As a result, we increased our holdings of automobile manufacturers such as
Ford Motor and Chrysler (now DaimlerChrysler). Car and truck sales were very
strong in 1998, and this led to higher profits at these companies. Ford shares
returned more than 80% last year, and Chrysler's share price surged when the
company agreed to merge with German car maker Daimler-Benz.

We also boosted our holdings of home builders and construction companies.
Thanks in part to low mortgage rates, new and existing home sales reached record
highs in 1998. Stocks like Lone Star Industries, a cement maker, and Centex
Construction did well because of this trend, especially in the fourth quarter
after the Federal Reserve started cutting interest rates.

YOU RELY ON COMPUTER MODELS TO HELP YOU MANAGE THE PORTFOLIO. DID YOU MAKE ANY
CHANGES TO THE MODELS IN 1998?

We made a few minor adjustments to improve the effectiveness of our tools,
but the most significant change was the addition of a transaction costs model.
When evaluating a stock, our models now consider the effect of the transaction
itself on the stock's expected return.

[right margin]

"LONG-DISTANCE AND LOCAL-SERVICE PHONE COMPANIES--SUCH AS TOP TEN HOLDINGS AT&T
AND BELLSOUTH--PRODUCED STEADY EARNINGS AND BENEFITED FROM SERVICES EXPANSION
AND MERGER ACTIVITY."

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
MICROSOFT CORP. 3.8% 2.7%
AT&T CORP. 3.3% 2.6%
BELLSOUTH CORP. 3.1% 2.8%
FORD MOTOR CO. 2.7% 1.3%
UNITED TECHNOLOGIES
CORP. 2.5% 2.8%
INTEL CORP. 2.4% --
CHASE MANHATTAN
CORP. 2.2% 3.4%
FANNIE MAE 2.0% 2.2%
FIRST UNION CORP. 2.0% 2.4%
SCHERING-PLOUGH
CORP. 1.9% 1.2%

www.americancentury.com 7

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

Although brokerage commissions are part of this model, the main factor is
market impact. How easy is it to buy or sell shares of the stock? How much of an
impact do we expect to have on its price if we make the trade?

For example, buying or selling a huge stock like Microsoft has little
market impact--millions of shares are traded every day, and we're not likely to
have much of an effect on its price if we trade it. But trading the stock of a
smaller company that doesn't see much activity could have a significant impact
on its price, and that could affect the return the fund earns on it.

In addition to enhancing our decision making, the transaction costs model
has played an important role in managing portfolio turnover. The fund's
substantial asset growth over the past couple of years has led to higher trading
costs, and that's why we try to keep turnover below 100%. We were well above
that threshold in 1997, so one of our goals for 1998 was to manage turnover
better. The transaction costs model was a key part of this process--it improved
the efficiency of our trading and helped lower portfolio turnover (see the table
on page 6).

LOOKING AHEAD, WHAT DO YOU SEE IN STORE FOR THE U.S. STOCK MARKET IN 1999?

We have a modestly positive outlook. Economic conditions remain favorable
for stocks, investor demand for equities is still strong, and we expect earnings
growth to bounce back a little after a flat 1998.

However, some caution is warranted. Over the past four years, the S&P 500
has averaged a return of 30% a year--triple the long-term average. We hate to
sound like a broken record, but investors just can't count on that type of
return for stocks going forward.

One area of opportunity in the coming year may be small-company stocks,
which appear to be extremely undervalued compared with the rest of the market.
Large-company stocks are still riding a wave of momentum, but if the economy
remains healthy, we could see small-cap stocks outperform later in the year.

WITH THIS IN MIND, WHAT ARE YOUR PLANS FOR EQUITY GROWTH OVER THE NEXT SIX
MONTHS?

It's business as usual--the fund will remain fully invested in a
diversified portfolio of U.S. stocks, and we'll count on our models to help us
find attractive companies to own.

We still favor telecommunications and technology stocks, and they remain
among the biggest portfolio holdings. Although financial services stocks are
vulnerable to further trouble overseas, we continue to overweight the stocks of
banking and brokerage companies that we feel have strong prospects.

We are underweighted in large-cap growth stocks, maintaining our bias
toward value stocks and smaller-company stocks compared with the S&P 500. We
believe this will enhance fund performance if the economy strengthens.

[left margin]

"OVER THE PAST FOUR YEARS, THE S&P 500 HAS AVERAGED A RETURN OF 30% A
YEAR--TRIPLE THE LONG-TERM AVERAGE. WE HATE TO SOUND LIKE A BROKEN RECORD, BUT
INVESTORS JUST CAN'T COUNT ON THAT TYPE OF RETURN FOR STOCKS GOING FORWARD."

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
TELEPHONE
COMMUNICATIONS 10.4% 7.7%
COMPUTER SOFTWARE
& SERVICES 9.4% 9.4%
BANKING 7.5% 11.0%
PHARMACEUTICALS 7.4% 5.1%
INSURANCE 5.6% 6.5%

8 1-800-345-2021

Equity Growth--Schedule of Investments
- --------------------------------------------------------------------------------

DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS--96.8%
AEROSPACE & DEFENSE--4.6%
358,300 Cordant Technologies Inc. $ 13,436,233
142,100 EG&G, Inc. 3,952,156
140,000 General Dynamics Corp. 8,207,500
392,600 Goodrich (B.F.) Company (The) 14,084,525
104,000 Gulfstream Aerospace Corp.(1) 5,538,000
3,000 Litton Industries, Inc.(1) 195,750
478,800 United Technologies Corp. 52,069,500
--------------
97,483,664
--------------
AIRLINES--0.2%
35,800 AMR Corp.(1) 2,125,625
21,200 Delta Air Lines Inc. 1,102,400
17,100 US Airways Group Inc.(1) 889,200
--------------
4,117,225
--------------
AUTOMOBILES & AUTO PARTS--4.6%
96,000 Arvin Industries, Inc. 4,002,000
191,601 DaimlerChrysler AG(1) 18,405,671
380,800 Fleetwood Enterprises, Inc. 13,232,800
972,500 Ford Motor Co. 57,073,594
131,800 Navistar International Corp.(1) 3,756,300
16,000 PACCAR Inc. 656,000
--------------
97,126,365
--------------
BANKING--7.5%
438,238 Banc One Corp. 22,377,528
319,500 BankAmerica Corp. 19,209,938
677,400 Chase Manhattan Corp. 46,105,538
333,700 Citigroup Inc. 16,518,150
677,900 First Union Corp. 41,224,794
126,600 Imperial Bancorp(1) 2,104,725
257,300 Wells Fargo & Co. 10,275,919
--------------
157,816,592
--------------
BIOTECHNOLOGY--1.1%
224,500 Amgen Inc.(1) 23,460,250
--------------
BUILDING & HOME IMPROVEMENTS--1.7%
85,300 Centex Construction Products Inc. 3,465,313
369,200 Lafarge Corp. 14,952,600
231,200 Lone Star Industries, Inc. 8,511,050
160,200 USG Corp. 8,160,188
--------------
35,089,151
--------------
BUSINESS SERVICES & SUPPLIES--0.7%
278,200 Computer Horizons Corp.(1) 7,389,688
200,000 Gartner Group, Inc. Cl A(1) 4,250,000
33,100 Ogden Corp. 829,569

Shares Value
- --------------------------------------------------------------------------------
9,200 Reynolds & Reynolds Co. CI A $ 211,025
108,200 True North Communications Inc. 2,907,875
--------------
15,588,157
--------------
CHEMICALS & RESINS--1.4%
162,700 Dow Chemical Co. 14,795,531
212,800 du Pont (E.I.) de Nemours & Co. 11,291,700
89,100 Monsanto Co. 4,232,250
--------------
30,319,481
--------------
COMMUNICATIONS EQUIPMENT--2.1%
111,000 Comverse Technology, Inc.(1) 7,877,531
250,000 Lucent Technologies Inc. 27,500,000
176,700 Northern Telecom Ltd. 8,857,088
--------------
44,234,619
--------------
COMPUTER PERIPHERALS--1.4%
251,050 Cisco Systems Inc.(1) 23,308,423
58,100 Dialogic Corp.(1) 1,142,028
41,000 Lexmark International Group,
Inc. Cl A(1) 4,120,500
--------------
28,570,951
--------------
COMPUTER SOFTWARE & SERVICES--9.4%
83,000 America Online Inc. 13,280,000
131,800 Autodesk, Inc. 5,622,094
135,000 Compuware Corp.(1) 10,542,656
55,200 Electronic Data Systems Corp. 2,773,800
403,500 HBO & Co. 11,588,016
247,200 Keane, Inc.(1) 9,872,550
572,600 Microsoft Corp.(1) 79,322,994
168,300 NCR Corp.(1) 7,026,525
81,600 Network Associates Inc.(1) 5,413,650
468,900 Oracle Systems Corp.(1) 20,235,966
68,300 Sterling Commerce, Inc.(1) 3,073,500
422,400 Sterling Software, Inc.(1) 11,431,200
72,000 Synopsys, Inc.(1) 3,901,500
417,000 Unisys Corp.(1) 14,360,438
--------------
198,444,889
--------------
COMPUTER SYSTEMS--4.0%
620,300 Apple Computer, Inc.(1) 25,412,916
235,300 Dell Computer Corp.(1) 17,228,372
76,000 Gateway 2000, Inc.(1) 3,890,250
248,500 Hewlett-Packard Co. 16,975,656
98,900 International Business
Machines Corp. 18,271,775
28,800 Sun Microsystems, Inc.(1) 2,464,200
--------------
84,243,169
--------------
CONSTRUCTION & PROPERTY
DEVELOPMENT--1.5%
123,600 Centex Corp. 5,569,725
416,700 D.R. Horton, Inc. 9,584,100

See Notes to Financial Statements

www.americancentury.com 9

Equity Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

57,500 Fluor Corp. $ 2,447,344
43,400 Harsco Corp. 1,320,988
145,300 McDermott (J. Ray) S.A.(1) 3,550,769
113,900 Pulte Corp. 3,167,844
90,000 Southdown, Inc. 5,326,875
--------------
30,967,645
--------------
CONSUMER PRODUCTS--0.8%
44,900 Procter & Gamble Co. (The) 4,099,931
48,300 Russ Berrie and Co., Inc. 1,135,050
207,000 Whirlpool Corp. 11,462,625
--------------
16,697,606
--------------
DIVERSIFIED COMPANIES--2.8%
348,900 General Electric Co. (U.S.) 35,609,606
118,800 Tyco International Ltd. 8,961,975
176,000 Unilever N.V. New York Shares 14,597,000
--------------
59,168,581
--------------
ELECTRICAL & ELECTRONIC
COMPONENTS--2.6%
428,600 Intel Corp. 50,802,494
62,200 Philips Electronics N.V. New
York Shares 4,210,163
--------------
55,012,657
--------------
ENERGY (PRODUCTION & MARKETING)--0.9%
164,500 Keyspan Energy Corp. 5,099,500
28,000 Occidental Petroleum Corp. 472,500
343,000 Sunoco, Inc. 12,369,438
--------------
17,941,438
--------------
ENERGY (SERVICES)--1.1%
240,700 Schlumberger Ltd. 11,102,288
124,500 Tidewater Inc. 2,886,844
308,800 Transocean Offshore 8,279,700
--------------
22,268,832
--------------
FINANCIAL SERVICES--4.5%
135,500 Equitable Companies Inc. 7,842,063
559,700 Fannie Mae 41,417,800
286,800 Federal Home Loan Mortgage
Corporation 18,480,675
385,900 Morgan Stanley Dean Witter,
Discover & Co. 27,398,900
--------------
95,139,438
--------------
FOOD & BEVERAGE--1.9%
36,400 Coors (Adolph) Co. Cl B 2,055,463
80,500 Earthgrains Company 2,490,469
32,200 General Mills, Inc. 2,503,550
119,600 Hormel Foods Corp. 3,916,900

Shares Value
- --------------------------------------------------------------------------------

242,700 Interstate Bakeries Corp. $ 6,416,381
48,100 Lancaster Colony Corp. 1,542,206
363,000 Quaker Oats Co. (The) 21,598,500
--------------
40,523,469
--------------
FURNITURE & FURNISHINGS--0.3%
198,900 Miller (Herman), Inc. 5,333,006
--------------
HEALTHCARE--1.0%
194,600 Integrated Health Services, Inc.(1) 2,748,725
100,000 Mallinckrodt Inc. 3,081,250
59,700 Omnicare, Inc. 2,074,575
177,000 PacifiCare Health Systems, Inc.
Cl B(1) 14,065,969
--------------
21,970,519
--------------
INDUSTRIAL EQUIPMENT &
MACHINERY--0.9%
62,300 Caterpillar Inc. 2,865,800
324,500 Ingersoll-Rand Co. 15,231,219
--------------
18,097,019
--------------
INSURANCE--5.6%
816,000 Allstate Corp. 31,518,000
353,000 Conseco Inc. 10,788,563
494,120 Fidelity National Financial, Inc. 15,070,660
335,400 First American Financial
Corp. (The) 10,774,725
179,300 Gallagher (Arthur J.) & Co. 7,911,613
228,300 LandAmerica Financial Group, Inc. 12,741,994
307,700 Lincoln National Corp. 25,173,706
32,500 Loews Corp. 3,193,125
--------------
117,172,386
--------------
LEISURE--1.6%
74,900 Anchor Gaming(1) 4,236,531
27,600 Department 56, Inc.(1) 1,036,725
321,400 Eastman Kodak Co. 23,140,800
87,100 International Game Technology 2,117,619
50,600 Viacom, Inc. Cl B(1) 3,744,400
--------------
34,276,075
--------------
MACHINERY & EQUIPMENT--1.6%
409,700 Premark International, Inc. 14,185,863
391,500 Sundstrand Corp. 20,309,063
--------------
34,494,926
--------------
MEDICAL EQUIPMENT & SUPPLIES--1.0%
308,000 Hillenbrand Industries, Inc. 17,517,500
87,800 Teleflex Inc. 4,005,875
--------------
21,523,375
--------------
METALS & MINING--0.1%
22,800 Aluminum Co. of America 1,700,025
--------------

See Notes to Financial Statements

10 1-800-345-2021

Equity Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS(2)
7,200 Fort James Corporation $ 288,000
--------------
PERSONAL SERVICES--0.1%
68,000 Block (H & R), Inc. 3,060,000
--------------
PHARMACEUTICALS--7.4%
153,500 Bristol-Myers Squibb Co. 20,540,219
338,500 Genentech, Inc.(1) 26,974,219
137,200 Herbalife International, Inc. CI A 1,937,950
141,200 Johnson & Johnson 11,843,150
174,200 Lilly (Eli) & Co. 15,482,025
81,800 Medicis Pharmaceutical Corp.
Cl A(1) 4,877,325
47,200 Merck & Co., Inc. 6,970,850
96,500 Nature's Sunshine Products, Inc. 1,459,563
104,500 Pfizer, Inc. 13,108,219
143,800 Rexall Sundown, Inc.(1) 2,004,213
707,600 Schering-Plough Corp. 39,094,900
138,700 Warner-Lambert Co. 10,428,506
--------------
154,721,139
--------------
PRINTING & PUBLISHING--1.2%
716,500 Deluxe Corp. 26,197,031
--------------
RESTAURANTS--0.2%
156,090 CKE Restaurants, Inc. 4,594,899
--------------
RETAIL (APPAREL)--0.4%
54,400 Liz Claiborne, Inc. 1,717,000
138,200 Payless ShoeSource, Inc.(1) 6,547,225
--------------
8,264,225
--------------
RETAIL (FOOD & DRUG)--0.4%
263,900 Universal Corp. 9,269,488
--------------
RETAIL (GENERAL MERCHANDISE)--2.1%
45,000 Federated Department Stores,
Inc.(1) 1,960,313
401,700 Kmart Corp.(1) 6,151,031
114,000 Neiman-Marcus Group, Inc.(1) 2,842,875
408,500 Wal-Mart Stores, Inc. 33,267,219
--------------
44,221,438
--------------
RETAIL (SPECIALTY)--0.8%
182,200 Home Depot, Inc. 11,148,363
160,100 Zale Corp.(1) 5,163,225
--------------
16,311,588
--------------
STEEL--0.1%
10,500 Bethlehem Steel Corporation(1) 87,938
14,200 Nucor Corp. 614,150
14,300 USX-U.S. Steel Group 328,900
--------------
1,030,988
--------------

Shares Value
- --------------------------------------------------------------------------------
TELEPHONE COMMUNICATIONS--10.4%
913,300 AT&T Corp. $ 68,725,825
315,300 Ameritech Corp. 19,982,138
118,100 Bell Atlantic Corp. 6,259,300
1,317,200 BellSouth Corp. 65,695,350
267,900 GTE Corp. 17,413,500
367,600 SBC Communications Inc. 19,712,550
310,500 U S WEST Communications
Group 20,066,063
--------------
217,854,726
--------------
TEXTILES & APPAREL--1.0%
180,400 Dexter Corp. (The) 5,671,325
135,900 Tommy Hilfiger Corp.(1) 8,154,000
146,400 VF Corp. 6,862,500
--------------
20,687,825
--------------
TOBACCO--0.7%
123,800 Fortune Brands, Inc. 3,915,175
217,400 Philip Morris Companies Inc. 11,630,900
--------------
15,546,075
--------------
TRANSPORTATION--0.4%
168,900 Hertz Corp. Cl A 7,706,063
--------------
UTILITIES--4.7%
71,800 Avista Corp. 1,382,150
107,700 Baltimore Gas & Electric Co. 3,325,238
87,400 BEC Energy 3,599,788
130,300 Central & South West Corp. 3,575,106
70,200 Energy East Corp. 3,966,300
211,200 FPL Group, Inc. 13,015,200
340,900 Houston Industries Inc. 10,951,413
150,000 KN Energy, Inc. 5,456,250
333,700 LG&E Energy Corp. 9,447,881
202,300 Minnesota Power & Light Co. 8,901,200
165,000 Public Service Co. of New Mexico 3,372,188
363,900 Sempra Energy 9,233,963
584,800 Southern Co. 16,995,750
81,500 UGI Corp. 1,935,625
80,900 Utilicorp United Inc. 2,968,019
--------------
98,126,071
--------------
TOTAL COMMON STOCKS 2,036,661,066
--------------
(Cost $1,692,340,573)

See Notes to Financial Statements

www.americancentury.com 11

Equity Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS--3.2%
Repurchase Agreement, Merrill Lynch & Co.,
Inc., (U.S. Treasury obligations), in a joint
trading account at 4.75%, dated 12/31/98,
due 1/4/99 (Delivery value $67,535,625) $ 67,500,000
--------------
(Cost $67,500,000)

TOTAL INVESTMENT SECURITIES--100.0% $2,104,161,066
==============
(Cost $1,759,840,573)

FUTURES CONTRACTS
Underlying
Expiration Face Amount Unrealized
Purchased Date at Value Gain
- -------------------------------------------------------------------------
170 S&P 500 March
Futures 1999 $52,933,750 $6,880,158
==================================

NOTES TO SCHEDULE OF INVESTMENTS

(1) Non-income producing.

(2) Industry is less than 0.05% of total investment securities.

- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule shows you which
investments your fund owned on the last day of the reporting period.

The schedule includes:

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

12 1-800-345-2021

Income & Growth--Performance
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF DECEMBER 31, 1998

INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 12/17/90) (INCEPTION 12/15/97) (INCEPTION 1/28/98)
INCOME & GROWTH & INCOME FUNDS(2) INCOME & INCOME &
GROWTH S&P 500 AVERAGE RETURN FUND'S RANKING GROWTH S&P 500 GROWTH S&P 500
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ... 8.39% 9.37% 3.09% -- 8.25% 9.37% 8.51% 9.37%
1 YEAR ........ 27.67% 28.68% 15.61% 92 OUT OF 768 27.37% 28.68% -- --
- -------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL
RETURNS
3 YEARS ....... 28.63% 28.17% 21.25% 18 OUT OF 471 -- -- -- --
5 YEARS ....... 23.74% 24.05% 18.35% 8 OUT OF 310 -- -- -- --
LIFE OF FUND .. 21.88% 21.02% 17.41%(3) 4 OUT OF 165(3) 27.63% 28.72% 27.87% 27.75%
</TABLE>

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

(2) According to Lipper Inc., an independent mutual fund ranking service.

(3) Since 12/20/90, the date nearest the class's inception for which data are
available.

See pages 46-48 for more information about share classes, returns, the
comparative index, and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND
Value on 12/31/98
Income & Growth $49,051
S&P 500 $46,345

Income & Growth S&P 500
DATE VALUE VALUE
12/17/90 $10,000 $10,000
12/31/90 $10,129 $10,225
3/31/91 $11,821 $11,708
6/30/91 $11,784 $11,680
9/30/91 $12,689 $12,303
12/31/91 $14,083 $13,333
3/31/92 $13,598 $12,997
6/30/92 $13,602 $13,244
9/30/92 $13,997 $13,661
12/31/92 $15,190 $14,347
3/31/93 $15,930 $14,972
6/30/93 $16,296 $15,044
9/30/93 $16,981 $15,432
12/31/93 $16,908 $15,790
3/31/94 $16,147 $15,192
6/30/94 $16,231 $15,256
9/30/94 $16,851 $16,000
12/31/94 $16,814 $15,997
3/31/95 $18,285 $17,554
6/30/95 $20,009 $19,226
9/30/95 $21,672 $20,753
12/31/95 $23,013 $22,002
3/31/96 $24,300 $23,184
6/30/96 $25,284 $24,223
9/30/96 $26,146 $24,971
12/31/96 $28,572 $27,051
3/31/97 $29,081 $27,779
6/30/97 $33,655 $32,623
9/30/97 $37,445 $35,067
12/31/97 $38,419 $36,073
3/31/98 $44,251 $41,102
6/30/98 $45,251 $42,467
9/30/98 $40,142 $38,254
12/31/98 $49,051 $46,345

$10,000 investment made 12/17/90

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

[bar chart - data below]

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDED DECEMBER 31)

Income & Growth S&P 500
DATE RETURN RETURN
12/31/90* 1.29% 2.25%
12/31/91 39.08% 30.33%
12/31/92 7.86% 7.61%
12/31/93 11.31% 10.03%
12/31/94 -0.55% 1.36%
12/31/95 36.88% 37.44%
12/31/96 24.15% 22.93%
12/31/97 34.52% 33.36%
12/31/98 27.67% 28.68%

* From 12/17/90 (the fund's inception date) to 12/31/90.

www.americancentury.com 13

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

An interview with John Schniedwind and Jeff Tyler (pictured on page 6),
portfolio managers on the Income & Growth fund investment team.

HOW DID INCOME & GROWTH PERFORM IN 1998?

The fund posted a strong return that beat the average growth & income fund
but trailed the S&P 500. Income & Growth's total return* in 1998 was 27.67%,
compared with the 28.68% return of the S&P 500 and the 15.61% average return of
the 768 "Growth & Income Funds" tracked by Lipper Inc. The fund's 1998 return
ranked it in the top 12% of its Lipper category.

Income & Growth's longer-term returns are also notable--its three- and
five-year returns placed in the top 5% of all growth & income funds. (See the
previous page for other fund performance comparisons.)

THE FUND CONTINUED TO BE AMONG THE BETTER-PERFORMING GROWTH & INCOME FUNDS, BUT
IT CAME UP SHORT OF THE S&P 500 FOR THE FIRST TIME SINCE 1995. WHY?

A couple of broad portfolio traits were partly responsible. Income & Growth
held the stocks of companies that were, on average, smaller than those in the
S&P 500. This was a negative factor because larger-company stocks outperformed
smaller stocks. In addition, the fund has more of a value component than the
index does, and in 1998, growth stocks beat value stocks by a wide margin.

Another key reason for the fund's underperformance was an overweighting in
financial services stocks, which suffered substantial losses in the third
quarter.

WHY WERE YOU OVERWEIGHTED IN FINANCIAL STOCKS?

In the end, the entire financial sector suffered staggering price declines,
with many stocks falling 40% or more in the third quarter.

DID YOU CUT BACK ON YOUR FINANCIAL HOLDINGS?

A little, but we didn't give up on them. We felt that the financial stocks
in the fund's portfolio were good, quality companies that were "guilty by
association"--investors were punishing the whole sector without even looking at
the individual companies. We thought that the market overreacted dramatically
and that many of these stocks took more of a beating than they deserved, so we
held onto them.

We did trim our position slightly late in the year, but we remained
overweighted in financial stocks, especially

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

[left margin]

"INCOME & GROWTH'S LONGER-TERM RETURNS ARE ALSO NOTABLE--ITS THREE- AND
FIVE-YEAR RETURNS PLACED IN THE TOP 5% OF ALL GROWTH & INCOME FUNDS."

PORTFOLIO AT A GLANCE
12/31/98 12/31/97
NUMBER OF COMPANIES 274 239
DIVIDEND YIELD 1.72% 2.17%
PRICE/EARNINGS RATIO 20.4 17.5
PORTFOLIO TURNOVER 86% 102%(
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.69% 0.65%

Investment terms are defined in the Glossary on page 48.

14 1-800-345-2021

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

banks like First Union (a top ten holding) and Chase Manhattan. Investor
confidence in the financial sector revived in the fourth quarter, and these
stocks bounced back with strong returns.

BY AND LARGE, 1998 WAS A PRETTY GOOD YEAR FOR INCOME & GROWTH. CAN YOU TALK
ABOUT SOME OF THE FUND'S SUCCESSFUL POSITIONS?

One beneficial position was an overweighting in the stocks of big
technology companies. Software makers like Microsoft, a core holding throughout
the year, produced great returns. In addition, we added to our position in
Intel, a huge semiconductor company that we had underweighted in the first half
of the year, and it rebounded solidly. Very modest holdings in Internet firms
such as America Online and Yahoo! also boosted fund performance.

Another overweighting that enhanced fund returns was telecommunications
stocks. Long-distance and local-service phone companies--such as top ten
holdings AT&T and BellSouth --produced steady earnings and benefited from
services expansion and merger activity. The mania for Internet stocks also
lifted share prices because of the wireless and Internet franchises held by many
telecommunications companies.

An underweighted position in energy stocks was another positive factor.
Falling oil and commodities prices hurt this sector of the market, so the
underweighting helped limit the negative impact on fund performance.

PHARMACEUTICAL STOCKS WERE INCOME & GROWTH'S BIGGEST INDUSTRY HOLDING BY THE END
OF 1998 (SEE THE TABLE ON PAGE 16). WHAT WAS THE ATTRACTION?

We tend to maintain a healthy position in pharmaceutical stocks because it
is the biggest industry in the S&P 500. The larger drug stocks also have
relatively high dividend yields, which are good for the fund's income component.

But we were slightly overweighted in pharmaceuticals at year-end, including
large companies like Schering-Plough (a top ten holding). These stocks are
useful as "risk reducers"--the steady revenues and earnings growth of
pharmaceutical companies typically give their stocks less price volatility than
the overall market.

YOU RELY ON COMPUTER MODELS TO HELP YOU MANAGE THE PORTFOLIO. DID YOU MAKE ANY
CHANGES TO THE MODELS IN 1998?

For example, buying or selling a huge stock like Microsoft has little
market impact--millions of shares are traded

[right margin]

"LONG-DISTANCE AND LOCAL-SERVICE PHONE COMPANIES--SUCH AS TOP TEN HOLDINGS AT&T
AND BELLSOUTH--PRODUCED STEADY EARNINGS AND BENEFITED FROM SERVICES EXPANSION
AND MERGER ACTIVITY."

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
MICROSOFT CORP. 3.9% 2.9%
FORD MOTOR CO. 2.7% 2.0%
AT&T CORP. 2.6% 1.7%
INTEL CORP. 2.4% 0.7%
GENERAL ELECTRIC CO.
(U.S.) 2.2% 1.0%
BELLSOUTH CORP. 1.9% 1.9%
FIRST UNION CORP. 1.8% 2.3%
UNITED TECHNOLOGIES
CORP. 1.7% 2.2%
WAL-MART STORES, INC. 1.7% 1.3%
SCHERING-PLOUGH
CORP. 1.6% 1.3%

www.americancentury.com 15

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

every day, and we're not likely to have much of an effect on its price if we
trade it. But trading the stock of a smaller company that doesn't see much
activity could have a significant impact on its price, and that could affect the
return the fund earns on it.

In addition to enhancing our decision making, the transaction costs model
has played an important role in managing portfolio turnover. The fund's
substantial asset growth over the past couple of years has led to higher trading
costs, and that's why we try to keep turnover below 100%. We were slightly above
that threshold in 1997, so one of our goals for 1998 was to manage turnover
better. The transaction costs model was a key part of this process--it improved
the efficiency of our trading and helped lower portfolio turnover (see the table
on page 14).

LOOKING AHEAD, WHAT DO YOU SEE IN STORE FOR THE U.S. STOCK MARKET IN 1999?

WITH THIS IN MIND, WHAT ARE YOUR PLANS FOR INCOME & GROWTH OVER THE NEXT SIX
MONTHS?

It's business as usual--the fund will remain fully invested in a
diversified portfolio of U.S. stocks, and we'll count on our models to help us
find attractive companies to own.

[left margin]

"OVER THE PAST FOUR YEARS, THE S&P 500 HAS AVERAGED A RETURN OF 30% A YEAR--
TRIPLE THE LONG-TERM AVERAGE. WE HATE TO SOUND LIKE A BROKEN RECORD, BUT
INVESTORS JUST CAN'T COUNT ON THAT TYPE OF RETURN FOR STOCKS GOING FORWARD."

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
PHARMACEUTICALS 9.0% 7.8%
TELEPHONE
COMMUNICATIONS 8.5% 7.8%
COMPUTER SOFTWARE
& SERVICES 8.1% 7.7%
BANKING 7.8% 10.8%
UTILITIES 6.9% 5.5%

16 1-800-345-2021

Income & Growth--Schedule of Investments
- --------------------------------------------------------------------------------

DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS--96.6%
AEROSPACE & DEFENSE--3.8%
232,300 AlliedSignal Inc. $ 10,293,761
236,300 Boeing Co. 7,709,288
299,700 Cordant Technologies Inc. 11,238,750
341,500 EG&G, Inc. 9,497,969
269,900 General Dynamics Corp. 15,822,888
831,400 Goodrich (B.F.) Company (The) 29,826,475
86,500 Gulfstream Aerospace Corp.(1) 4,606,125
698,600 United Technologies Corp. 75,972,750
--------------
164,968,006
--------------
AIRLINES--0.2%
60,600 AMR Corp.(1) 3,598,125
45,600 Delta Air Lines Inc. 2,371,200
22,300 US Airways Group Inc.(1) 1,159,600
--------------
7,128,925
--------------
AUTOMOBILES & AUTO PARTS--4.1%
38,200 Arvin Industries, Inc. 1,592,463
345,078 DaimlerChrysler AG(1) 33,149,055
600,800 Fleetwood Enterprises, Inc. 20,877,800
2,031,900 Ford Motor Co. 119,247,131
110,400 Navistar International Corp.(1) 3,146,400
--------------
178,012,849
--------------
BANKING--7.8%
1,113,300 Banc One Corp. 56,847,881
245,800 BankBoston Corp. 9,570,838
865,654 BankAmerica Corp. 52,047,447
995,600 Chase Manhattan Corp. 67,763,025
810,200 Citigroup Inc. 40,104,900
1,294,100 First Union Corp. 78,697,456
328,800 Fleet Financial Group, Inc. 14,693,250
24,000 Mercantile Bancorporation Inc. 1,107,000
207,500 PNC Bank Corp. 11,230,938
295,800 Wells Fargo & Co. 11,813,513
--------------
343,876,248
--------------
BIOTECHNOLOGY--0.9%
351,800 Amgen Inc.(1) 36,763,100
26,500 Human Genome Sciences, Inc.(1) 939,922
--------------
37,703,022
--------------
BROADCASTING & MEDIA(2)
55,800 United Video Satellite Group Inc.
Cl A(1) 1,311,300
--------------
BUILDING & HOME IMPROVEMENTS--0.5%
317,300 Lafarge Corp. 12,850,650
109,800 USG Corp. 5,592,938
107,300 York International Corporation 4,379,181
--------------
22,822,769
--------------

Shares Value
- --------------------------------------------------------------------------------
BUSINESS SERVICES & SUPPLIES--1.0%
86,500 Cendant Corp.(1) $ 1,648,906
291,800 Computer Horizons Corp.(1) 7,750,938
207,400 Gartner Group, Inc. Cl A(1) 4,407,250
180,300 Kelly Services, Inc. Cl A 5,656,913
472,300 Ogden Corp. 11,837,019
164,400 Omnicom Group Inc. 9,535,200
143,300 True North Communications Inc. 3,851,188
--------------
44,687,414
--------------
CHEMICALS & RESINS--1.4%
291,400 Dow Chemical Co. 26,499,188
466,200 du Pont (E.I.) de Nemours & Co. 24,737,738
4,800 Ecolab Inc. 173,700
23,400 Grace (W.R.) & Co. (Del.)(1) 367,088
164,400 Monsanto Co. 7,809,000
7,900 Morton International, Inc. 193,550
17,200 Nalco Chemical Co. 533,200
7,500 Rohm and Haas Co. 225,938
2,400 Union Carbide Corp. 102,000
--------------
60,641,402
--------------
COMMUNICATIONS EQUIPMENT--2.2%
157,300 Comverse Technology, Inc.(1) 11,163,384
519,800 Lucent Technologies Inc. 57,178,000
328,800 Northern Telecom Ltd. 16,481,100
48,600 QUALCOMM Inc.(1) 2,515,050
167,300 Tellabs, Inc.(1) 11,470,506
--------------
98,808,040
--------------
COMPUTER PERIPHERALS--1.5%
545,750 Cisco Systems Inc.(1) 50,669,477
194,400 EMC Corp. (Mass.)(1) 16,524,000
--------------
67,193,477
--------------
COMPUTER SOFTWARE & SERVICES--8.1%
186,100 America Online Inc. 29,776,000
226,800 Autodesk, Inc. 9,674,438
68,000 BMC Software, Inc.(1) 3,032,375
127,400 Computer Associates
International, Inc. 5,430,425
106,500 Compuware Corp.(1) 8,316,984
203,700 Electronic Data Systems Corp. 10,235,925
650,600 HBO & Co. 18,684,419
64,000 Hyperion Solutions Corp.(1) 1,156,000
236,200 Keane, Inc.(1) 9,433,238
1,225,100 Microsoft Corp.(1) 169,714,634
174,600 NCR Corp.(1) 7,289,550
115,800 Network Associates Inc.(1) 7,682,606
644,500 Oracle Systems Corp.(1) 27,814,203
106,800 PeopleSoft, Inc.(1) 2,019,188
100,700 PLATINUM Technology, Inc.(1) 1,935,328
50,900 Shared Medical Systems Corp. 2,538,638
157,700 Siebel Systems, Inc.(1) 5,351,944

See Notes to Financial Statements

www.americancentury.com 17

Income & Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

477,900 Sterling Software, Inc.(1) $ 12,933,169
39,600 Synopsys, Inc.(1) 2,145,825
499,700 Unisys Corp.(1) 17,208,419
22,700 Yahoo! Inc.(1) 5,377,772
--------------
357,751,080
--------------
COMPUTER SYSTEMS--4.6%
777,200 Apple Computer, Inc.(1) 31,840,913
245,700 Compaq Computer Corp. 10,304,044
604,100 Dell Computer Corp.(1) 44,231,447
109,800 Gateway 2000, Inc.(1) 5,620,388
599,300 Hewlett-Packard Co. 40,939,681
322,700 International Business Machines
Corp. 59,618,825
90,300 Sun Microsystems, Inc.(1) 7,726,294
--------------
200,281,592
--------------
CONSTRUCTION & PROPERTY
DEVELOPMENT--1.2%
158,200 Centex Corp. 7,128,888
442,700 D.R. Horton, Inc. 10,182,100
265,900 Fluor Corp. 11,317,369
284,500 Harsco Corp. 8,659,469
51,100 Owens Corning 1,810,856
232,200 Pulte Corp. 6,458,063
107,600 Southdown, Inc. 6,368,575
--------------
51,925,320
--------------
CONSUMER PRODUCTS--1.5%
162,700 National Service Industries 6,182,600
404,300 Procter & Gamble Co. (The) 36,917,644
64,700 Russ Berrie and Co., Inc. 1,520,450
368,600 Whirlpool Corp. 20,411,225
--------------
65,031,919
--------------
DIVERSIFIED COMPANIES--3.6%
938,400 General Electric Co. (U.S.) 95,775,450
153,400 Minnesota Mining &
Manufacturing Co. 10,910,575
249,400 Tyco International Ltd. 18,814,113
344,700 Unilever N.V. New York Shares 28,588,556
76,200 Viad Corp 2,314,575
--------------
156,403,269
--------------
ELECTRICAL & ELECTRONIC
COMPONENTS--2.6%
26,600 DSP Group, Inc.(1) 550,288
894,800 Intel Corp. 106,061,763
62,300 Texas Instruments Inc. 5,330,544
36,300 Thomas & Betts Corp. 1,572,244
22,600 Vitesse Semiconductor Corp.(1) 1,029,713
--------------
114,544,552
--------------

Shares Value
- --------------------------------------------------------------------------------
ENERGY (PRODUCTION & MARKETING)--2.5%
23,500 Ashland Inc. $ 1,136,813
18,000 Atlantic Richfield Co. 1,174,500
136,900 Enron Corp. 7,811,856
509,000 Exxon Corp. 37,220,625
939,300 Keyspan Energy Corp. 29,118,300
134,100 Occidental Petroleum Corp. 2,262,938
505,500 Sunoco, Inc. 18,229,594
128,500 Texaco Inc. 6,794,438
290,600 Ultramar Diamond Shamrock Corp. 7,047,050
--------------
110,796,114
--------------
ENERGY (SERVICES)--1.3%
350,600 Diamond Offshore Drilling, Inc. 8,304,838
199,800 Ensco International Inc. 2,135,363
368,000 Halliburton Co. 10,902,000
233,600 Schlumberger Ltd. 10,774,800
374,500 Tidewater Inc. 8,683,719
485,100 Transocean Offshore 13,006,744
347,000 Varco International, Inc.(1) 2,689,250
--------------
56,496,714
--------------
FINANCIAL SERVICES--3.6%
201,700 Bear Stearns Companies Inc. 7,538,538
203,900 Countrywide Credit Industries, Inc. 10,233,231
112,300 Equitable Companies Inc. 6,499,363
716,000 Fannie Mae 52,984,000
291,900 Federal Home Loan Mortgage
Corporation 18,809,306
243,800 Lehman Brothers Holdings, Inc. 10,742,438
185,000 Merrill Lynch & Co., Inc. 12,348,750
543,300 Morgan Stanley Dean Witter,
Discover & Co. 38,574,300
--------------
157,729,926
--------------
FOOD & BEVERAGE--1.8%
56,800 Anheuser-Busch Companies, Inc. 3,727,500
85,600 Coca-Cola Company (The) 5,724,500
283,300 General Mills, Inc. 22,026,575
114,300 Hormel Foods Corp. 3,743,325
122,700 Interstate Bakeries Corp. 3,243,881
218,500 Lance, Inc. 4,356,344
481,400 Quaker Oats Co. (The) 28,643,300
193,000 Sara Lee Corp. 5,440,188
--------------
76,905,613
--------------
FURNITURE & FURNISHINGS(2)
41,200 Miller (Herman), Inc. 1,104,675
--------------

See Notes to Financial Statements

18 1-800-345-2021

Income & Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
HEALTHCARE--1.3%
34,600 Aetna Inc. $ 2,720,425
51,900 Bausch & Lomb Inc. CI A 3,114,000
114,600 Cardinal Health, Inc. 8,695,275
30,300 Hooper Holmes, Inc. 878,700
246,400 Humana Inc.(1) 4,389,000
323,200 Integrated Health Services, Inc.(1) 4,565,200
354,200 Mallinckrodt Inc. 10,913,788
206,800 PacifiCare Health Systems, Inc.
Cl B(1) 16,434,138
37,900 RehabCare Group, Inc.(1) 708,256
70,100 Trigon Healthcare, Inc.(1) 2,615,606
--------------
55,034,388
--------------
INDUSTRIAL EQUIPMENT &
MACHINERY--0.6%
162,600 Caterpillar Inc. 7,479,600
386,400 Ingersoll-Rand Co. 18,136,650
--------------
25,616,250
--------------
INSURANCE--4.1%
1,094,200 Allstate Corp. 42,263,475
687,100 Conseco Inc. 20,999,494
520,630 Fidelity National Financial, Inc. 15,879,215
393,900 First American Financial Corp.
(The) 12,654,038
163,900 Gallagher (Arthur J.) & Co. 7,232,088
173,900 LandAmerica Financial Group, Inc. 9,705,794
492,000 Lincoln National Corp. 40,251,750
141,900 Loews Corp. 13,941,675
277,100 Marsh & McLennan Companies,
Inc. 16,193,031
--------------
179,120,560
--------------
LEISURE--1.4%
71,800 Anchor Gaming(1) 4,061,188
48,800 Department 56, Inc.(1) 1,833,050
661,600 Eastman Kodak Co. 47,635,200
79,400 International Game Technology 1,930,413
103,600 Viacom, Inc. Cl B(1) 7,666,400
--------------
63,126,251
--------------
MACHINERY & EQUIPMENT--1.2%
172,700 Deere & Co. 5,720,688
41,200 Diebold, Inc. 1,470,325
11,200 Kennametal Inc. 238,000
25,300 NACCO Industries, Inc. Cl A 2,327,600
102,000 Pentair, Inc. 4,060,875
488,600 Premark International, Inc. 16,917,775
401,600 Sundstrand Corp. 20,833,000
--------------
51,568,263
--------------

Shares Value
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES--1.0%
220,400 Arterial Vascular
Engineering, Inc.(1) $ 11,550,338
453,600 Hillenbrand Industries, Inc. 25,798,500
70,200 Teleflex Inc. 3,202,875
54,600 Thermo Instrument Systems Inc.(1) 822,413
46,500 VISX, Inc.(1) 4,070,203
--------------
45,444,329
--------------
METALS & MINING--0.1%
49,700 Aluminum Co. of America 3,705,756
8,800 ASARCO Inc. 132,550
--------------
3,838,306
--------------
OFFICE--0.2%
350,000 CarrAmerica Realty Corp. 8,400,000
--------------
PACKAGING & CONTAINERS(2)
2,900 Crown Cork & Seal Co., Inc. 89,356
--------------
PAPER & FOREST PRODUCTS--0.3%
38,400 Fort James Corporation 1,536,000
162,600 Kimberly-Clark Corp. 8,861,700
31,400 Weyerhaeuser Co. 1,595,513
--------------
11,993,213
--------------
PERSONAL SERVICES--0.1%
143,800 Block (H & R), Inc. 6,471,000
--------------
PHARMACEUTICALS--9.0%
438,800 Abbott Laboratories 21,501,200
75,700 American Home Products Corp. 4,262,856
343,900 Bristol-Myers Squibb Co. 46,018,119
373,100 Genentech, Inc.(1) 29,731,406
144,400 Herbalife International, Inc. 2,039,650
560,000 Johnson & Johnson 46,970,000
467,400 Lilly (Eli) & Co. 41,540,175
103,600 McKesson Corp. 8,190,875
58,300 Medicis Pharmaceutical Corp.
Cl A(1) 3,476,138
296,300 Merck & Co., Inc. 43,759,806
97,900 Nature's Sunshine Products, Inc. 1,480,738
352,800 Pfizer, Inc. 44,254,350
147,800 Rexall Sundown, Inc.(1) 2,059,963
1,254,900 Schering-Plough Corp. 69,333,225
400,500 Warner-Lambert Co. 30,112,594
--------------
394,731,095
--------------
PRINTING & PUBLISHING--1.3%
1,297,100 Deluxe Corp. 47,425,219
340,400 Hollinger International Inc. 4,744,325
117,800 Knight-Ridder, Inc. 6,022,525
--------------
58,192,069
--------------

See Notes to Financial Statements

www.americancentury.com 19

Income & Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
RESTAURANTS--0.1%
184,030 CKE Restaurants, Inc. $ 5,417,383
--------------
RETAIL (APPAREL)--0.4%
51,700 Cato Corp. Cl A 508,922
50,300 Dress Barn, Inc.(1) 763,931
141,400 Jones Apparel Group, Inc.(1) 3,119,638
61,700 Limited, Inc. (The) 1,797,013
104,100 Liz Claiborne, Inc. 3,285,656
72,900 Payless ShoeSource, Inc.(1) 3,453,638
135,100 Ross Stores, Inc. 5,315,341
--------------
18,244,139
--------------
RETAIL (FOOD & DRUG)--0.1%
175,900 Universal Corp. 6,178,488
--------------
RETAIL (GENERAL MERCHANDISE)--2.6%
130,000 Best Buy Co., Inc.(1) 7,978,750
76,800 Dayton Hudson Corp. 4,166,400
45,300 Enesco Group, Inc. 1,053,225
323,600 Fortune Brands, Inc. 10,233,850
418,900 Kmart Corp.(1) 6,414,406
224,600 Penney (J.C.) Company, Inc. 10,528,125
48,400 Sears, Roebuck & Co. 2,057,000
903,400 Wal-Mart Stores, Inc. 73,570,638
--------------
116,002,394
--------------
RETAIL (SPECIALTY)--0.8%
437,000 Home Depot, Inc. 26,738,938
39,400 Lowe's Companies, Inc. 2,016,788
216,800 Zale Corp.(1) 6,991,800
--------------
35,747,526
--------------
RUBBER & PLASTICS--0.1%
381,000 Tupperware Corp. 6,262,688
--------------
STEEL(2)
24,800 Bethlehem Steel Corporation(1) 207,700
28,700 Nucor Corp. 1,241,275
30,100 USX-U.S. Steel Group 692,300
--------------
2,141,275
--------------
TELEPHONE COMMUNICATIONS--8.5%
1,537,100 AT&T Corp. 115,666,775
414,300 Ameritech Corp. 26,256,263
516,200 Bell Atlantic Corp. 27,358,600
1,672,400 BellSouth Corp. 83,410,950
561,100 GTE Corp. 36,471,500
38,500 MCI WorldCom, Inc.(1) 2,763,578
605,100 SBC Communications Inc. 32,448,488
761,200 U S WEST Communications
Group 49,192,550
--------------
373,568,704
--------------
TEXTILES & APPAREL--0.9%
310,200 Dexter Corp. (The) 9,751,913

Shares Value
- --------------------------------------------------------------------------------

25,100 Kellwood Co. $ 627,500
160,000 Nautica Enterprises, Inc.(1) 2,385,000
191,400 Tommy Hilfiger Corp.(1) 11,484,000
309,300 VF Corp. 14,498,438
--------------
38,746,851
--------------
TOBACCO--1.2%
799,700 Philip Morris Companies Inc. 42,783,950
313,500 RJR Nabisco Holdings Corp. 9,307,031
--------------
52,090,981
--------------
TRANSPORTATION--0.1%
99,000 Hertz Corp. Cl A 4,516,875
85,500 Laidlaw Inc. 860,344
19,000 Laidlaw Inc. ORD 191,825
--------------
5,569,044
--------------
UTILITIES--6.8%
168,200 Ameren Corp. 7,180,038
452,200 Baltimore Gas & Electric Co. 13,961,675
52,200 BEC Energy 2,149,988
494,100 Central & South West Corp. 13,556,869
547,800 Conectiv, Inc. 13,421,100
43,000 Conectiv, Inc. Cl A 1,698,500
9,400 CTG Resources, Inc. 246,750
409,100 Dominion Resources, Inc. (Va.) 19,125,425
487,600 Duke Energy Corp. 31,236,875
24,900 Eastern Enterprises 1,089,375
401,700 FIRSTENERGY CORP. 13,080,356
130,300 FPL Group, Inc. 8,029,738
250,000 Hawaiian Electric Industries, Inc. 10,062,500
612,500 Houston Industries Inc. 19,676,563
240,000 KN Energy, Inc. 8,730,000
499,100 LG&E Energy Corp. 14,130,769
519,000 MCN Energy Group Inc. 9,893,438
60,600 MDU Resources Group, Inc. 1,594,538
356,200 Minnesota Power & Light Co. 15,672,800
66,100 Piedmont Natural Gas Co., Inc. 2,387,863
168,900 Public Service Co. of New Mexico 3,451,894
1,163,600 Sempra Energy 29,526,350
911,200 Southern Co. 26,481,750
48,200 Southwest Gas Corp. 1,295,375
243,600 UGI Corp. 5,785,500
532,500 Utilicorp United Inc. 19,536,094
150,900 Western Resources, Inc. 5,017,425
--------------
298,019,548
--------------
WIRELESS COMMUNICATIONS--0.2%
93,600 AirTouch Communications, Inc.(1) 6,750,900
--------------
TOTAL COMMON STOCKS 4,244,489,227
--------------
(Cost $3,416,262,534)

See Notes to Financial Statements

20 1-800-345-2021

Income & Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS--0.1%
UTILITIES
300,000 Avista Corp. $ 5,812,500
--------------
(Cost $5,494,442)

TEMPORARY CASH INVESTMENTS--3.3%
Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 4.73%, dated 12/31/98,
due 1/4/99 (Delivery value $145,276,311) 145,200,000
--------------
(Cost $145,200,000)

TOTAL INVESTMENT SECURITIES--100.0% $4,395,501,727
==============
(Cost $3,566,956,976)

FUTURES CONTRACTS
Underlying
Expiration Face Amount Unrealized
Purchased Date at Value Gain
- -------------------------------------------------------------------------
338 S&P 500 March
Futures 1999 $105,244,750 $13,965,421
==================================

NOTES TO SCHEDULE OF INVESTMENTS

ORD = Foreign Ordinary Share

(1) Non-income producing.

(2) Industry is less than 0.05% of total investment securities.

The schedule includes:

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

www.americancentury.com 21

Small Cap Quantitative--Performance
- --------------------------------------------------------------------------------

TOTAL RETURNS AS OF DECEMBER 31, 1998

INVESTOR CLASS (INCEPTION 7/31/98)
SMALL CAP S&P SMALLCAP SMALL CAP FUNDS(2)
QUANTITATIVE 600 INDEX AVERAGE RETURN FUND'S RANKING
- -------------------------------------------------------------------------------
RETURNS
LIFE OF FUND(1) ... 0.40% 0.71% 0.74% --

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

(2) According to Lipper Inc., an independent mutual fund ranking service.

See pages 46-48 for more information about share classes, returns, the
comparative index, and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND Value on 12/31/98 S&P SmallCap 600 Index
$10,071 Small Cap Quantitative $10,040

Small Cap S&P SmallCap 600
Quantitative Index
DATE VALUE VALUE
7/31/98 $10,000 $10,000
8/31/98 $8,000 $8,070
9/30/98 $8,460 $8,564
10/31/98 $8,840 $8,961
11/30/98 $9,399 $9,466
12/31/98 $10,040 $10,071

$10,000 investment made 7/31/98

The graph at left shows the growth of a $10,000 investment over the life of the
fund. The S&P SmallCap 600 Index is provided for comparison. Small Cap
Quantitative's return includes operating expenses (such as transaction costs and
management fees) that reduce returns, while the return of the index does not.
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.

22 1-800-345-2021

Small Cap Quantitative--Q&A
- --------------------------------------------------------------------------------
/photo of Kurt Borgwardt and Bill Martin/

An interview with Kurt Borgwardt and Bill Martin, portfolio managers on the
Small Cap Quantitative fund investment team.

HOW DID SMALL CAP QUANTITATIVE PERFORM IN 1998?

The fund opened in late July, and its performance reflected the rough
environment for small-cap stocks during the second half of the year. From its
inception on July 31, 1998, through December 31, 1998, Small Cap Quantitative
posted a total return of 0.40%, compared with the 0.71% return of its benchmark,
the S&P SmallCap 600, and the 0.74% average return of the 708 "Small Cap
Funds" tracked by Lipper Inc.

HOW WOULD YOU CHARACTERIZE THE FUND'S PERFORMANCE?

You wouldn't know it from the fund's overall return, but Small Cap
Quantitative opened during a period of extreme volatility. Immediately after the
fund's inception, small-cap stocks began a precipitous decline. From July 31 to
its low point on October 8, Small Cap Quantitative plunged by more than 28%,
mirroring the 27% drop of the S&P 600.

The fund retraced that loss by the end of the year, rising just over 40%
from its low point. (Because its share price was 28% lower, the fund needed a
gain of more than 39% just to break even!) The S&P 600 posted a 38% return over
the same period.

COULD YOU GIVE A BRIEF EXPLANATION OF YOUR MANAGEMENT APPROACH?

We use a quantitative process, which means we use computer models to help
us make investment decisions. The first tool is a stock-ranking model, which
analyzes more than 2,000 small-cap stocks and ranks them based on their expected
return. The analysis includes factors like earnings growth, relative value, and
cash flow.

Once the stocks are ranked, another model called an "optimizer" takes over.
The optimizer's job is to strike a balance between potential return and risk. In
other words, it creates a portfolio that balances high-ranking stocks with an
overall risk level that matches the S&P SmallCap 600.

One of the key characteristics of this process is that it takes transaction
costs into account. This is especially useful in the small-cap area of the
market because trading costs tend to be higher and can have a big impact on
overall returns. In addition, buying or selling the stock of a small company
that doesn't trade very much could have a significant effect on its price. Our
models consider trading costs and the effect of the transaction itself on the
stock's expected return.

HOW WAS SMALL CAP QUANTITATIVE POSITIONED DURING ITS FIRST FIVE MONTHS?

Despite the turbulent market conditions, we were able to quickly build a
diversified portfolio of more than 200 small-company stocks that closely tracked
the benchmark index. We focus primarily on individual stock selection, but we
made a few modest industry underweightings and overweightings.

[right margin]

"YOU WOULDN'T KNOW IT FROM THE FUND'S OVERALL RETURN, BUT SMALL CAP QUANTITATIVE
OPENED DURING A PERIOD OF EXTREME VOLATILITY."

PORTFOLIO AT A GLANCE
12/31/98
NUMBER OF COMPANIES 230
DIVIDEND YIELD 0.65%
PRICE/EARNINGS RATIO 15.5
PORTFOLIO TURNOVER 30%
EXPENSE RATIO 0.94%*

* Annualized.

Investment terms are defined in the Glossary on page 48.

www.americancentury.com 23

Small Cap Quantitative--Q&A
- --------------------------------------------------------------------------------
(Continued)

One favorable overweighting was an emphasis on computer software and
hardware companies. Strong earnings growth helped software makers like Adobe
perform very well for us in the second half of the year. We also favored
hardware companies like Bel Fuse, a growing manufacturer of electronic
components that posted a 120% return during the last five months of 1998.

On the negative side, we were overweighted in financial services stocks,
many of which suffered losses in imploding overseas markets like Russia and
Latin America. We held the stocks of several small investment banks, such as
Everen and Raymond James, that saw reduced underwriting activity as a result of
the third-quarter stock market decline. This lowered their revenues and hurt
their profit margins.

SINCE YOU FOCUS ON INDIVIDUAL COMPANIES, LET'S TALK ABOUT THE FUND'S LARGEST
HOLDING, FLEETWOOD ENTERPRISES. WHAT'S THE ATTRACTION?

Fleetwood is one of several companies we own that is benefiting from the
low interest rate environment. When interest rates fall, consumers typically
start buying more goods that require major financing, like cars and houses.

Fleetwood makes recreational vehicles, trailers, and campers, as well as
manufactured homes. Thanks in part to low rates, the company has reported a
series of positive earnings surprises. And the stock is still inexpensive
considering Fleetwood's healthy growth rate--it has a price-to-earnings (P/E)
ratio of 11, which means an investor is paying $11 in share price for every
dollar of the company's earnings. By comparison, the average P/E ratio of the
S&P 600 is about 30.

Our second-biggest holding, M/I Schottenstein Homes, has a lot of the same
characteristics. The company sells single-family homes, and low mortgage rates
have boosted its revenues and earnings. But the stock still trades at a cheap
price--it has a very low P/E ratio of 7.

LOOKING AHEAD, WHAT DO YOU SEE IN STORE FOR SMALL-CAP STOCKS IN 1999?

We think small-cap stocks are extremely undervalued compared with the
shares of large companies. Historically, investors have been willing to pay a
higher price for small-cap stocks, relative to their earnings, than they have
for large-cap stocks--the average P/E ratio of small-cap stocks has typically
been about 1.5 times higher than the average for large-cap stocks. Currently,
though, the P/E ratio of the S&P SmallCap 600 is lower than that of the S&P 500,
a large-cap stock index. And many analysts expect small-cap stocks to have
higher earnings growth than large-cap stocks in 1999.

Unfortunately, small-cap stocks may continue to lag for a while. The stocks
of smaller companies typically do well when the economy is
rebounding--small-caps are often the first to experience earnings acceleration
after a slowdown. But investors have to be confident that the economic cycle is
on the upswing.

For example, the economy has been steadily improving over the past couple
of years, but small-cap stocks have still trailed large-caps. That's because the
economy's strength took investors by surprise--they were expecting the economy
to slow, so they gravitated to the perceived stability of large-cap stocks.

[left margin]

"FLEETWOOD MAKES RECREATIONAL VEHICLES, TRAILERS, AND CAMPERS, AS WELL AS
MANUFACTURED HOMES. THANKS IN PART TO LOW RATES, THE COMPANY HAS REPORTED A
SERIES OF POSITIVE EARNINGS SURPRISES."

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF
12/31/98
FLEETWOOD ENTERPRISES, INC. 2.7%
M/I SCHOTTENSTEIN HOMES, INC. 1.6%
FIDELITY NATIONAL FINANCIAL, INC. 1.6%
YORK INTERNATIONAL CORPORATION 1.5%
QUEST DIAGNOSTICS INC. 1.5%
ROSLYN BANCORP, INC. 1.5%
HCC INSURANCE HOLDINGS, INC. 1.4%
DARDEN RESTAURANTS, INC. 1.3%
LANDAMERICA FINANCIAL
GROUP, INC. 1.3%
BLACK HILLS CORP. 1.3%

24 1-800-345-2021

Small Cap Quantitative--Q&A
- --------------------------------------------------------------------------------
(Continued)

WHAT WOULD IT TAKE FOR SMALL-CAP STOCKS TO OUTPERFORM?

Given that the current economic expansion has been going for almost nine
years, investors may need to see a period of significantly slower economic
growth--and an accompanying drop-off in corporate earnings--before they start to
turn their attention to small-cap stocks. Large-cap stocks are still seeing the
lion's share of money flowing into the stock market, so they may get even more
overvalued relative to small-caps before conditions change.

But we believe that small-cap stocks are offering the best growth rates and
most attractive values available in today's market. Over the long term, we like
the prospects for smaller stocks.

WHAT ARE YOUR PLANS FOR SMALL CAP QUANTITATIVE IN THE COMING MONTHS?

We'll continue to focus on individual security selection while maintaining
a broadly diversified portfolio of small-cap stocks. In general, the stocks of
smaller companies are less widely followed and researched than the rest of the
market, so there are more opportunities for our models to find undiscovered
value. We think this research edge gives us an advantage.

[right margin]

"WE BELIEVE THAT SMALL-CAP STOCKS ARE OFFERING THE BEST GROWTH RATES AND MOST
ATTRACTIVE VALUES AVAILABLE IN TODAY'S MARKET."

TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF
12/31/98
INSURANCE 8.5%
COMPUTER SOFTWARE & SERVICES 8.1%
BUSINESS SERVICES & SUPPLIES 7.6%
FINANCIAL SERVICES 6.4%
CONSTRUCTION & PROPERTY
DEVELOPMENT 5.4%

www.americancentury.com 25

Small Cap Quantitative--Sched. of Investments
- --------------------------------------------------------------------------------

DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS--94.0%
AEROSPACE & DEFENSE--3.8%
1,900 AAR CORP. $ 45,335
400 Anaren Microwave, Inc.(1) 8,425
2,800 BE Aerospace, Inc.(1) 58,713
2,800 Cordant Technologies Inc. 105,000
3,500 EG&G, Inc. 97,344
600 Gulfstream Aerospace Corp.(1) 31,950
3,000 Nichols Research Corp.(1) 62,813
4,800 Triumph Group, Inc.(1) 153,600
-----------
563,180
-----------
AIRLINES--0.7%
3,900 Amtran, Inc.(1) 104,569
-----------
AUTOMOBILES & AUTO PARTS--4.3%
500 Arvin Industries, Inc. 20,844
11,500 Fleetwood Enterprises, Inc. 399,625
2,500 National R.V. Holdings, Inc.(1) 64,375
5,500 Navistar International Corp.(1) 156,750
-----------
641,594
-----------
BANKING--1.9%
200 Century Bancorp, Inc. Cl A 3,700
1,000 Cullen/Frost Bankers, Inc. 54,875
4,100 Golden State Bancorp Inc. 68,163
1,400 HUBCO, Inc. 42,394
1,300 Imperial Bancorp(1) 21,613
1,600 Silicon Valley Bancshares(1) 27,250
3,000 Southwest Bancorporation of
Texas, Inc.(1) 53,438
200 U.S. Trust Corp. 15,213
-----------
286,646
-----------
BUILDING & HOME IMPROVEMENTS--2.4%
1,500 Centex Construction Products Inc. 60,938
400 LSI Industries Inc. 8,975
1,100 Lafarge Corp. 44,550
400 USG Corp. 20,375
5,600 York International Corporation 228,550
-----------
363,388
-----------
BUSINESS SERVICES & SUPPLIES--7.6%
1,400 Advanced Marketing Services, Inc. 26,688
6,000 ADVO, Inc.(1) 158,250
5,300 Automobile Protection
Corp.-APCO(1) 62,441
1,000 Catalina Marketing Corp.(1) 68,375
7,000 Computer Horizons Corp.(1) 185,938
3,300 Corrpro Companies, Inc.(1) 40,219
4,300 Data Processing Resources
Corp.(1) 125,775

Shares Value
- --------------------------------------------------------------------------------
500 HA-LO Industries, Inc.(1) $ 18,813
3,700 Interim Services Inc.(1) 86,488
500 Labor Ready, Inc.(1) 9,844
1,700 National TechTeam, Inc.(1) 10,944
2,100 RCM Technologies, Inc.(1) 55,519
2,700 RWD Technologies, Inc.(1) 58,219
1,200 RemedyTemp, Inc. Cl A(1) 18,113
1,000 Right Management Consultants,
Inc.(1) 14,563
1,000 StaffMark, Inc.(1) 22,500
500 True North Communications Inc. 13,438
1,700 URS Corp.(1) 39,738
1,900 Valassis Communications, Inc.(1) 98,088
2,700 Westaff Inc.(1) 16,959
-----------
1,130,912
-----------
COMMUNICATIONS EQUIPMENT--1.5%
1,800 Applied Signal Technology, Inc.(1) 19,238
1,100 Aspect Telecommunications
Corp.(1) 19,181
3,600 Brightpoint, Inc.(1) 49,163
4,600 Brooktrout Technology, Inc.(1) 79,350
3,200 DSP Communications, Inc.(1) 49,000
-----------
215,932
-----------
COMPUTER PERIPHERALS--1.6%
900 C-Cube Microsystems Inc.(1) 24,441
300 Dialogic Corp.(1) 5,897
2,300 Digi International Inc.(1) 25,372
700 PSC Inc.(1) 6,584
2,400 Printronix, Inc.(1) 34,950
2,100 Storage Technology Corp.(1) 74,681
3,600 Xylan Corp.(1) 65,138
-----------
237,063
-----------
COMPUTER SOFTWARE & SERVICES--8.1%
2,100 4Front Technologies, Inc.(1) 23,034
2,600 Adobe Systems Inc. 121,713
300 Analysts International Corp. 5,794
2,400 ANSYS, Inc.(1) 26,550
1,200 Autodesk, Inc. 51,188
4,200 Avant! Corp.(1) 66,938
1,600 Boole & Babbage, Inc.(1) 47,000
3,800 Caere Corp.(1) 52,013
2,100 CIBER, Inc.(1) 58,669
3,100 Cognos Incorporated(1) 76,725
7,100 Health Management Systems,
Inc.(1) 57,244
3,575 Hyperion Solutions Corp.(1) 64,573
1,700 Infinium Software, Inc.(1) 10,306
1,900 Information Management
Associates, Inc.(1) 11,400
4,000 JetForm Corp.(1) 51,500

See Notes to Financial Statements

26 1-800-345-2021

Small Cap Quantitative--Sched. of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

4,500 MECON, Inc.(1) $ 47,531
900 Melita International Corp.(1) 18,675
1,900 Open Text Corp.(1) 46,313
2,100 Platinum Software Corp.(1) 26,775
900 PLATINUM Technology, Inc.(1) 17,297
100 Pomeroy Computer Resources,
Inc.(1) 2,253
900 Project Software & Development,
Inc.(1) 29,644
300 SS&C Technologies, Inc.(1) 3,731
2,200 Savoir Technology Group Inc.(1) 19,181
1,900 Software Spectrum, Inc.(1) 30,519
4,500 Sterling Software, Inc.(1) 121,781
1,800 Summit Design, Inc.(1) 16,594
800 Synopsys, Inc.(1) 43,350
1,400 THQ, Inc.(1) 39,113
1,300 Technology Solutions Co.(1) 13,934
-----------
1,201,338
-----------
CONSTRUCTION & PROPERTY
DEVELOPMENT--5.4%
3,900 Beazer Homes USA, Inc.(1) 97,500
1,700 Centex Corp. 76,606
4,400 D.R. Horton, Inc. 101,200
10,600 M/I Schottenstein Homes, Inc. 233,200
200 Modtech, Inc.(1) 3,000
1,300 NVR, Inc.(1) 61,994
2,700 Pulte Corp. 75,094
4,700 Ryland Group, Inc. (The) 135,713
100 Southdown, Inc. 5,919
1,100 Standard Pacific Corp. 15,538
-----------
805,764
-----------
CONSUMER PRODUCTS--1.3%
6,700 Handleman Co.(1) 94,219
2,700 NBTY, Inc.(1) 19,153
6,200 Twinlab Corp.(1) 81,181
-----------
194,553
-----------
CONTROL & MEASUREMENT--0.3%
600 SBS Technologies, Inc.(1) 10,894
2,000 Thermo BioAnalysis Corp.(1) 26,500
-----------
37,394
-----------
DIVERSIFIED COMPANIES--0.2%
800 Viad Corp 24,300
-----------
EDUCATION--0.3%
800 Children's Comprehensive
Services, Inc.(1) 11,000
4,000 Quest Education Corp.(1) 40,000
-----------
51,000
-----------

Shares Value
- --------------------------------------------------------------------------------
ELECTRICAL & ELECTRONIC COMPONENTS--4.4%
1,600 AFC Cable Systems, Inc.(1) $ 53,700
1,500 Aeroflex Inc.(1) 22,688
500 Alpha Industries, Inc.(1) 18,094
1,900 Bel Fuse Inc. Cl A(1) 74,575
1,100 CTS Corp. 47,850
500 DSP Group, Inc.(1) 10,344
3,200 NeoMagic Corporation(1) 70,700
2,200 Pinnacle Systems, Inc.(1) 77,963
1,100 SLI, Inc.(1) 30,525
800 Sanmina Corp.(1) 49,900
3,400 Smith (A.O.) Corp. 83,513
2,600 Vitesse Semiconductor Corp.(1) 118,463
-----------
658,315
-----------
ENERGY (PRODUCTION & MARKETING)--0.2%
3,300 World Fuel Services Corp. 35,475
-----------
ENERGY (SERVICES)--1.4%
6,000 Gulf Island Fabrication, Inc.(1) 46,875
10,300 Oceaneering International, Inc.(1) 154,500
1,000 Veritas DGC Inc.(1) 13,000
-----------
214,375
-----------
FINANCIAL SERVICES--6.4%
3,300 ADVANTA Corp. Cl A 43,519
3,800 AmeriCredit Corp.(1) 52,488
300 Dain Rauscher Corp. 8,850
7,500 Doral Financial Corp. 167,813
4,000 EVEREN Capital Corp. 91,000
6,700 ITLA Capital Corp.(1) 101,128
600 MASSBANK Corp. 23,663
3,700 Matrix Bancorp, Inc.(1) 50,181
500 Metris Companies Inc. 25,094
2,100 Morgan Keegan, Inc. 39,506
1,900 Ocwen Financial Corp.(1) 23,394
1,800 Raymond James Financial, Inc. 38,025
4,300 Resource Bancshares Mortgage
Group, Inc. 70,413
10,400 Roslyn Bancorp, Inc. 222,625
-----------
957,699
-----------
FOOD & BEVERAGE--1.3%
4,600 Ben & Jerry's Homemade, Inc.
Cl A(1) 102,638
2,800 Earthgrains Company 86,625
-----------
189,263
-----------
HEALTHCARE--4.1%
700 Concentra Managed Care, Inc.(1) 7,416
10,600 Integrated Health Services, Inc.(1) 149,725

See Notes to Financial Statements

www.americancentury.com 27

Small Cap Quantitative--Sched. of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

1,600 PacifiCare Health Systems, Inc.
Cl B(1) $ 127,150
1,300 Physician Reliance Network, Inc.(1) 17,144
12,600 Quest Diagnostics Inc.(1) 224,438
1,500 RehabCare Group, Inc.(1) 28,031
500 Sierra Health Services, Inc.(1) 10,531
2,100 Veterinary Centers of America,
Inc.(1) 41,934
-----------
606,369
-----------
INDUSTRIAL(2)
500 Chart Industries, Inc. 3,813
-----------
INDUSTRIAL EQUIPMENT &
MACHINERY--1.0%
1,700 Gardner Denver Inc.(1) 25,075
800 Gleason Corp. 14,500
500 Manitowoc Co., Inc. 22,188
3,300 Terex Corp.(1) 94,256
-----------
156,019
-----------
INSURANCE--8.5%
2,700 ARM Financial Group, Inc. Cl A 59,906
200 Advance Paradigm, Inc.(1) 6,925
600 Capital Re Corp. 12,038
3,500 FBL Financial Group, Inc. Cl A 84,875
7,590 Fidelity National Financial, Inc. 231,495
4,900 First American Financial Corp.
(The) 157,413
2,600 Fremont General Corp. 64,350
11,700 HCC Insurance Holdings, Inc. 206,213
3,500 LandAmerica Financial Group, Inc. 195,344
400 Pre-Paid Legal Services, Inc.(1) 13,200
2,100 SCPIE Holdings Inc. 63,656
3,100 Stewart Information Services Corp. 179,800
-----------
1,275,215
-----------
LEISURE--2.3%
1,300 Anchor Gaming(1) 73,531
1,000 Coastcast Corp.(1) 8,750
2,000 Department 56, Inc.(1) 75,125
4,300 Huffy Corp. 70,950
4,700 International Game Technology 114,269
-----------
342,625
-----------
MACHINERY & EQUIPMENT--2.9%
2,700 Brown & Sharpe Manufacturing
Co. Cl A(1) 21,600
4,400 Commercial Intertech Corp. 56,925
2,400 Graco Inc. 70,800
2,600 JLG Industries, Inc.(1) 40,625
900 Kaman Corp. Cl A 14,456
1,100 NACCO Industries, Inc. Cl A 101,200

Shares Value
- --------------------------------------------------------------------------------
3,900 National-Oilwell, Inc.(1) $ 43,631
900 SPX Corp.(1) 60,300
1,400 Tokheim Corporation(1) 13,650
500 Zebra Technologies Corp. Cl A(1) 14,391
-----------
437,578
-----------
MEDICAL EQUIPMENT & SUPPLIES--3.5%
300 Datascope Corp.(1) 6,881
5,000 Empi, Inc.(1) 125,938
3,000 ICU Medical, Inc.(1) 66,188
9,400 Minntech Corp. 143,938
3,400 Safeskin Corp.(1) 81,919
1,100 VISX, Inc.(1) 96,284
-----------
521,148
-----------
OFFICE EQUIPMENT & SUPPLIES--0.1%
400 Kronos Inc.(1) 17,788
-----------
PERSONAL SERVICES--0.7%
4,000 CPI Corp. 106,000
-----------
PHARMACEUTICALS--2.1%
3,200 Bergen Brunswig Corp. Cl A 111,600
800 D&K Healthcare Resources Inc.(1) 21,800
1,500 Herbalife International, Inc. 21,188
400 Medicis Pharmaceutical Corp.
Cl A(1) 23,850
4,900 Natural Alternatives International,
Inc.(1) 53,441
3,500 Rexall Sundown, Inc.(1) 48,781
1,600 Roberts Pharmaceutical Corp.(1) 34,800
-----------
315,460
-----------
PRINTING & PUBLISHING--0.8%
3,000 Banta Corp. 82,125
2,500 Hollinger International Inc. 34,844
-----------
116,969
-----------
RESTAURANTS--3.2%
9,200 Buffets, Inc.(1) 109,538
3,850 CKE Restaurants, Inc. 113,334
10,900 Darden Restaurants, Inc. 196,200
1,000 Rainforest Cafe, Inc.(1) 6,031
6,600 Taco Cabana, Inc. Cl A(1) 51,563
-----------
476,666
-----------
RETAIL (APPAREL)--1.4%
300 Braun's Fashions Corp.(1) 2,813
1,500 Buckle, Inc. (The)(1) 36,000
1,100 Catherines Stores Corp.(1) 11,619
3,600 Cato Corp. Cl A 35,438
1,500 Footstar, Inc.(1) 37,500

See Notes to Financial Statements

28 1-800-345-2021

Small Cap Quantitative--Sched. of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

500 Genesco Inc.(1) $ 2,844
1,200 Goody's Family Clothing, Inc.(1) 12,038
6,400 Wilsons The Leather Experts
Inc.(1) 69,600
-----------
207,852
-----------
RETAIL (FOOD & DRUG)--1.3%
2,400 Universal Corp. 84,300
2,400 Whole Foods Market, Inc.(1) 116,400
-----------
200,700
-----------
RETAIL (GENERAL MERCHANDISE)--0.7%
3,100 CHS Electronics, Inc.(1) 52,506
1,000 Fossil, Inc.(1) 28,625
1,200 Value City Department Stores,
Inc.(1) 16,725
-----------
97,856
-----------
RETAIL (SPECIALTY)--1.2%
2,900 Action Performance Cos. Inc.(1) 102,406
2,300 Jan Bell Marketing, Inc.(1) 14,806
100 Michaels Stores, Inc.(1) 1,809
500 Musicland Stores Corp.(1) 7,469
1,700 Travis Boats & Motors, Inc.(1) 34,744
400 Zale Corp.(1) 12,900
-----------
174,134
-----------
TEXTILES & APPAREL--2.3%
3,400 Fruit of the Loom, Inc.(1) 46,963
6,400 K-Swiss Inc. Cl A 169,600
200 Kenneth Cole Productions, Inc.
Cl A(1) 3,750
6,100 Oshkosh B'Gosh, Inc. Cl A 123,144
-----------
343,457
-----------
TRANSPORTATION--1.6%
2,000 Hertz Corp. Cl A 91,250
12,900 Offshore Logistics, Inc.(1) 152,784
-----------
244,034
-----------

Shares Value
- --------------------------------------------------------------------------------
UTILITIES--3.2%
2,100 Avista Corp. $ 40,425
500 BEC Energy 20,594
7,200 Black Hills Corp. 189,900
9,300 Central Maine Power Co. 175,538
2,000 KTI, Inc.(1) 43,375
-----------
469,832
-----------
TOTAL COMMON STOCKS 14,026,275
-----------
(Cost $12,748,366)

TEMPORARY CASH INVESTMENTS--6.0%
Repurchase Agreement, Merrill Lynch & Co.,
Inc., (U.S. Treasury obligations), in a joint
trading account at 4.75%, dated 12/31/98,
due 1/4/99 (Delivery value $300,158) 300,000
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 4.80%, dated 12/31/98,
due 1/4/99 (Delivery value $600,320) 600,000
-----------
TOTAL TEMPORARY CASH INVESTMENTS 900,000
-----------
(Cost $900,000)

TOTAL INVESTMENT SECURITIES--100.0% $14,926,275
===========
(Cost $13,648,366)

FUTURES CONTRACTS
Underlying
Expiration Face Amount Unrealized
Purchased Date at Value Gain
- -------------------------------------------------------------------------
2 Russell 2000 March
Futures 1999 $425,250 $16,192
==================================

NOTES TO SCHEDULE OF INVESTMENTS

(1) Non-income producing.

(2) Industry is less than 0.05% of total investment securities.

The schedule includes:

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

www.americancentury.com 29

<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------

DECEMBER 31, 1998
EQUITY INCOME & SMALL CAP
GROWTH GROWTH QUANTITATIVE
<S> <C> <C> <C>
ASSETS
Investment securities, at value
(identified cost of $1,759,840,573,
$3,566,956,976, and $13,648,366,
respectively) (Note 3) .............. $ 2,104,161,066 $ 4,395,501,727 $ 14,926,275
Cash .................................. 9,615,653 42,274,743 480,818
Receivable for investments sold ....... -- 11,428,106 110,844
Receivable for variation margin
on futures contracts ................ 2,439,500 4,850,300 25,750
Dividends and interest receivable ..... 2,245,255 5,552,868 5,125
--------------- --------------- ---------------
2,118,461,474 4,459,607,744 15,548,812
--------------- --------------- ---------------

LIABILITIES
Disbursements in excess of
demand deposit cash ................. 1,143,544 2,384,753 --
Payable for investments purchased ..... 7,048,682 34,597,492 567,029
Payable for capital shares redeemed ... 1,262,439 4,507,787 1,601
Accrued management fees (Note 2) ...... 1,142,570 2,402,589 9,455
Distribution fees payable (Note 2) .... 14,505 11,043 --
Service fees payable (Note 2) ......... 14,505 11,043 --
Payable for directors' fees
and expenses ........................ 10,731 22,430 73
--------------- --------------- ---------------
10,636,976 43,937,137 578,158
--------------- --------------- ---------------
Net Assets ............................ $ 2,107,824,498 $ 4,415,670,607 $ 14,970,654
=============== =============== ===============

NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) $ 1,754,083,444 $ 3,579,734,910 $ 13,670,931
Undistributed net investment income ... 581,971 1,067,283 5,774
Accumulated undistributed net
realized gain (loss) from investments 1,958,432 (7,641,758) (152)
Net unrealized appreciation
on investments ...................... 351,200,651 842,510,172 1,294,101
--------------- --------------- ---------------
$ 2,107,824,498 $ 4,415,670,607 $ 14,970,654
=============== =============== ===============

Investor Class, $10.00 Par Value
Net assets ............................ $ 2,026,303,881 $ 4,313,575,191 $ 14,970,654
Shares outstanding .................... 89,234,524 147,493,059 2,981,965
Net asset value per share ............. $ 22.71 $ 29.25 $ 5.02

Advisor Class, $10.00 Par Value
Net assets ............................ $ 72,954,249 $ 63,169,353 N/A
Shares outstanding .................... 3,213,438 2,162,035 N/A
Net asset value per share ............. $ 22.70 $ 29.22 N/A

Institutional Class, $10.00 Par Value
Net assets ............................ $ 8,566,368 $ 38,926,063 N/A
Shares outstanding .................... 377,246 1,330,033 N/A
Net asset value per share ............. $ 22.71 $ 29.27 N/A
</TABLE>

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the price of an
individual share, or the net asset value per share.

NET ASSETS are also broken down by capital (money invested by shareholders); net
investment income not yet paid to shareholders or net investment losses, if any;
net gains earned on investments but not yet paid to shareholders or net losses
on investments (known as realized gains or losses); and finally, gains or losses
on securities still owned by the fund (known as unrealized appreciation or
depreciation). This breakdown tells you the value of net assets that are
performance-related, such as investment gains or losses, and the value of net
assets that are not related to performance, such as shareholder investments and
redemptions.

See Notes to Financial Statements

30 1-800-345-2021

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

YEAR ENDED DECEMBER 31, 1998

EQUITY INCOME & SMALL CAP
GROWTH GROWTH QUANTITATIVE(1)
INVESTMENT INCOME

Income:
Dividends (net of foreign taxes
withheld of $19,708, $51,429,
and $35, respectively) ........... $ 22,734,592 $ 55,769,162 $ 21,665
Interest ........................... 2,801,849 5,586,073 10,914
------------ ------------ ------------
25,536,441 61,355,235 32,579
------------ ------------ ------------
Expenses (Note 2):
Management fees .................... 9,895,344 20,975,664 25,213
Distribution fees - Advisor Class .. 59,177 49,256 --
Service fees - Advisor Class ....... 59,177 49,256 --
Directors' fees and expenses ....... 36,318 62,284 1,592
------------ ------------ ------------
10,050,016 21,136,460 26,805
------------ ------------ ------------
Net investment income .............. 15,486,425 40,218,775 5,774
------------ ------------ ------------

REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 3)
Net realized gain (loss)
on investments ................... 35,760,449 142,119,705 (152)
Change in net unrealized
appreciation on investments ...... 272,888,031 559,106,533 1,294,101
------------ ------------ ------------
Net realized gain on investments ... 308,648,480 701,226,238 1,293,949
------------ ------------ ------------
Net Increase in Net Assets
Resulting from Operations ........ $324,134,905 $741,445,013 $ 1,299,723
============ ============ ============

(1) For the period July 31, 1998 (inception) through December 31, 1998.

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF OPERATIONS--This statement breaks down how each
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.

Fund OPERATIONS include:

* income earned from investments (dividends and interest)

* management fees and other expenses

* gains or losses from selling investments (known as realized gains or losses)

* gains or losses on current fund holdings (known as unrealized appreciation or
depreciation)

See Notes to Financial Statements

www.americancentury.com 31

<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997

EQUITY GROWTH INCOME & GROWTH SMALL CAP(1)
Increase in Net Assets 1998 1997 1998 1997 1998

OPERATIONS
<S> <C> <C> <C> <C> <C>
Net investment income .... $ 15,486,425 $ 7,052,656 $ 40,218,775 $ 22,556,333 $ 5,774
Net realized gain (loss)
on investments ......... 35,760,449 95,280,432 142,119,705 154,430,003 (152)
Change in net
unrealized appreciation
on investments ......... 272,888,031 44,869,649 559,106,533 178,014,272 1,294,101
--------------- --------------- --------------- --------------- ---------------
Net increase in net
assets resulting
from operations ........ 324,134,905 147,202,737 741,445,013 355,000,608 1,299,723
--------------- --------------- --------------- --------------- ---------------

DISTRIBUTIONS
TO SHAREHOLDERS
From net investment
income:
Investor Class ......... (14,886,016) (6,915,205) (41,096,754) (20,589,829) --
Advisor Class .......... (240,053) (1,492) (261,933) (5,232) --
Institutional Class .... (69,448) -- (329,375) -- --
From net realized gains on
investment transactions:
Investor Class ......... (58,918,572) (79,748,875) (168,684,571) (152,216,029) --
Advisor Class .......... (1,190,628) (55,620) (1,905,461) (326,667) --
Institutional Class .... (244,674) -- (1,110,386) -- --
--------------- --------------- --------------- --------------- ---------------
Decrease in net assets
from distributions ..... (75,549,391) (86,721,192) (213,388,480) (173,137,757) --
--------------- --------------- --------------- --------------- ---------------

CAPITAL SHARE
TRANSACTIONS
(NOTE 4)
Net increase in net
assets from capital
share transactions ..... 1,085,260,447 439,064,411 2,088,770,763 899,285,703 13,670,931
--------------- --------------- --------------- --------------- ---------------
Net increase in
net assets ............. 1,333,845,961 499,545,956 2,616,827,296 1,081,148,554 14,970,654

NET ASSETS
Beginning of period ...... 773,978,537 274,432,581 1,798,843,311 717,694,757 --
--------------- --------------- --------------- --------------- ---------------
End of period ............ $ 2,107,824,498 $ 773,978,537 $ 4,415,670,607 $ 1,798,843,311 $ 14,970,654
=============== =============== =============== =============== ===============
Undistributed net
investment income ...... $ 581,971 $ 291,999 $ 1,067,283 $ 2,534,900 $ 5,774
=============== =============== =============== =============== ===============
</TABLE>

(1) For the period July 31, 1998 (inception) through December 31, 1998.

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
each fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

* operations--a summary of the Statement of Operations from the previous page
for the most recent period

* distributions--income and gains distributed to shareholders

* capital share transactions--shareholders' purchases, reinvestments, and
redemptions

Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.

See Notes to Financial Statements

32 1-800-345-2021

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

DECEMBER 31, 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Quantitative Equity Funds (the
Corporation) is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company. American Century Equity
Growth Fund (Equity Growth), American Century Income & Growth Fund (Income &
Growth) and American Century Small Cap Quantitative Fund (Small Cap
Quantitative) (the Funds) are three of the six funds issued by the Corporation.
Equity Growth seeks capital appreciation by investing in common stocks. Income &
Growth seeks dividend growth, current income and capital appreciation by
investing in common stocks. Small Cap Quantitative seeks long-term capital
appreciation by investing primarily in equity securities of small companies.
Each Fund is authorized to issue three classes of shares: the Investor Class,
the Advisor Class and the Institutional Class. The three classes of shares
differ principally in their respective shareholder servicing and distribution
expenses and arrangements. All shares of each Fund represent an equal pro rata
interest in the net assets of the class to which such shares belong, and have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except for class specific expenses and exclusive rights to vote on
matters affecting only individual classes. Sale of the Institutional Class began
January 2, 1998 and January 28, 1998 for Equity Growth and Income & Growth,
respectively. Sale of the Advisor Class and Institutional Class for Small Cap
Quantitative had not commenced as of the report date. The following significant
accounting policies are in accordance with generally accepted accounting
principles.

SECURITY VALUATIONS -- Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. When valuations are
not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.

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

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

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

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

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

www.americancentury.com 33

Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

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

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income are declared
and paid quarterly for the Funds. Prior to June 26, 1998, net investment income
distributions for Income & Growth were declared daily and paid monthly.
Distributions from net realized gains for the Funds are expected to be declared
and paid annually.

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

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

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

The Corporation has entered into a Management Agreement with ACIM that
provides the Funds with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreements provide that all
expenses of the Funds, except brokerage commissions, taxes, portfolio insurance,
interest, fees and expenses of those directors who are not considered
"interested persons" as defined in the Investment Company Act of 1940 (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The annual rate
at which this fee is assessed is determined monthly in a two-step process:
First, a fee rate schedule is applied to the net assets of all of the funds in
the Fund's investment category which are managed by ACIM (the "Investment
Category Fee"). The overall investment objective of each Fund determines its
Investment Category. The three investment categories are: the Money Market Fund
Category, the Bond Fund Category and the Equity Fund Category. The Funds are
included in the Equity Fund Category. Second, a separate fee rate schedule is
applied to the net assets of all of the funds managed by ACIM (the "Complex
Fee"). The Investment Category Fee and the Complex Fee are then added to
determine the unified management fee rate. The management fee is paid monthly by
each Fund based on each Fund's class average daily closing net assets during the
previous month multiplied by the monthly management fee rate.

The annualized Investment Category Fee schedule for Equity Growth and
Income & Growth is as follows:

0.5200% of the first $1 billion
0.4600% of the next $5 billion
0.4160% of the next $15 billion
0.3690% of the next $25 billion
0.3420% of the next $50 billion
0.3390% of the next $150 billion
0.3380% of the average daily net assets over $246 billion

The annualized Investment Category Fee schedule for Small Cap Quantitative
is as follows:

0.7200% of the first $1 billion
0.6600% of the next $5 billion
0.6160% of the next $15 billion
0.5690% of the next $25 billion
0.5420% of the next $50 billion
0.5390% of the next $150 billion
0.5380% of the average daily net assets over $246 billion

The annualized Complex Fee schedule (Investor Class) is as follows:

0.3100% of the first $2.5 billion
0.3000% of the next $7.5 billion
0.2985% of the next $15 billion
0.2970% of the next $25 billion
0.2960% of the next $50 billion
0.2950% of the next $100 billion
0.2940% of the next $100 billion
0.2930% of the next $200 billion
0.2920% of the next $250 billion
0.2910% of the next $500 billion
0.2900% of the average daily net assets over $1,250 billion

34 1-800-345-2021

Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

The Complex Fee schedule for the Advisor Class is lower by 0.2500% at each
graduated step. For example, if the Investor Class Complex Fee is 0.3100% for
the first $2.5 billion, the Advisor Class Complex Fee is 0.0600% (0.3100% minus
0.2500%) for the first $2.5 billion. The Complex Fee schedule for the
Institutional Class is lower by 0.2000% at each graduated step.

The Board of Directors has adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The Plan provides that the Funds will pay ACIM an annual
distribution fee equal to 0.25% and service fee equal to 0.25%. The fees are
computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the Funds. The service
fee provides compensation for shareholder and administrative services rendered
by ACIM, its affiliates or independent third party providers. Fees incurred
under the Plan during the year ended December 31, 1998, were $118,354 and
$98,512 for Equity Growth and Income & Growth, respectively.

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

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

Investment transactions, excluding short-term investments, for the year ended
December 31, 1998, were as follows:

SMALL CAP
EQUITY GROWTH INCOME & GROWTH QUANTITATIVE

Purchases ............... $2,317,306,963 $4,350,456,527 $14,798,307
Proceeds from Sales ..... $1,337,141,518 $2,530,298,603 $2,050,226

On December 31, 1998, the composition of unrealized appreciation and
depreciaton of investment securities based on the aggregate cost of investments
for federal income tax purposes was as follows:

SMALL CAP
EQUITY GROWTH INCOME & GROWTH QUANTITATIVE

Appreciation ............ $396,028,581 $919,608,798 $1,673,139
Depreciation ............ (54,139,444) (96,478,626) (410,360)
----------------- ----------------- --------------
Net ..................... $341,889,137 $823,130,172 $1,262,779
================= ================= ==============
Federal Tax Cost ........ $1,762,271,929 $3,572,371,555 $13,663,496
================= ================= ==============

www.americancentury.com 35

Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS

The Corporation is authorized to issue 2,000,000,000 shares to each Fund.
Transactions in shares of the Funds were as follows:

<TABLE>
<CAPTION>
EQUITY GROWTH INCOME & GROWTH
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
<S> <C> <C> <C> <C>
Designated shares .......................... 1,000,000,000 1,000,000,000
============= =============
Year ended December 31,1998
Sold ....................................... 79,167,360 $1,635,239,405 116,830,264 $3,139,123,789
Issued in reinvestment of distributions .... 3,338,986 70,931,709 7,289,584 201,730,676
Redeemed ................................... (33,884,304) (694,135,413) (50,483,283) (1,344,449,467)
------------- ---------------- ------------- -----------------
Net increase ............................... 48,622,042 $1,012,035,701 73,636,565 $1,996,404,998
============= ================ ============= =================

Year ended December 31, 1997
Sold ....................................... 31,535,897 $ 591,260,618 49,806,519 $1,175,643,093
Issued in reinvestment of distributions .... 4,612,659 84,728,570 7,089,192 167,281,193
Redeemed ................................... (12,731,963) (237,525,884) (18,631,102) (447,642,533)
------------- ---------------- ------------- -----------------
Net increase ............................... 23,416,593 $438,463,304 38,264,609 $895,281,753
============= ================ ============= =================

ADVISOR CLASS
Designated shares .......................... 250,000,000 250,000,000
============= =============
Year ended December 31, 1998
Sold ....................................... 3,460,572 $71,291,106 2,114,996 $57,804,915
Issued in reinvestment of distributions .... 63,562 1,365,124 75,830 2,115,059
Redeemed ................................... (339,759) (7,034,401) (181,840) (4,869,268)
------------- ---------------- ------------- -----------------
Net increase ............................... 3,184,375 $65,621,829 2,008,986 $55,050,706
============= ================ ============= =================

Period ended December 31, 1997(1)
Sold ....................................... 29,050 $607,045 188,979 $4,885,920
Issued in reinvestment of distributions .... 3,111 57,112 14,057 331,899
Redeemed ................................... (3,098) (63,050) (49,987) (1,213,869)
------------- ---------------- ------------- -----------------
Net increase ............................... 29,063 $601,107 153,049 $4,003,950
============= ================ ============= =================

INSTITUTIONAL CLASS
Designated shares .......................... 250,000,000 250,000,000
Period ended December 31, 1998(2) ============= =============
Sold ....................................... 750,895 $15,738,872 2,515,749 $67,794,606
Issued in reinvestment of distributions .... 11,999 254,904 48,266 1,333,067
Redeemed ................................... (385,648) (8,390,859) (1,233,982) (31,812,614)
------------- ---------------- ------------- -----------------
Net increase ............................... 377,246 $ 7,602,917 1,330,033 $37,315,059
============= ================ ============= =================
</TABLE>
(1) October 9, 1997 (commencement of sale) through December 31, 1997 for Equity
Growth and December 15, 1997 (commencement of sale) through December 31,
1997 for Income & Growth.

(2) January 2, 1998 (commencement of sale) through December 31, 1998 for Equity
Growth and January 28, 1998 (commencement of sale) through December 31,
1998 for Income & Growth.

36 1-800-345-2021

The Corporation is authorized to issue 2,000,000,000 shares to each Fund.
Transactions in shares of the Funds were as follows:

SMALL CAP QUANTITATIVE
SHARES AMOUNT
INVESTOR CLASS
Designated shares ........................... 1,000,000,000
===============
Period ended December 31,1998(1)
Sold ........................................ 4,340,662 $19,938,978
Issued in reinvestment of distributions ..... -- --
Redeemed .................................... (1,358,697) (6,268,047)
--------------- --------------
Net increase ................................ 2,981,965 $13,670,931
=============== ==============

(1) July 31, 1998 (inception) through December 31, 1998.

- --------------------------------------------------------------------------------
5. BANK LOANS

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

www.americancentury.com 37

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

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31

Investor Class
1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ... $ 19.04 $ 15.96 $ 14.25 $ 11.53 $ 12.12
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net Investment Income .............. 0.22(1) 0.27(1) 0.27 0.26 0.30
Net Realized and Unrealized
Gain (Loss)
on Investment Transactions ......... 4.53 5.36 3.55 3.70 (0.33)
------------- ------------- ------------- ------------- -------------
Total From Investment Operations ... 4.75 5.63 3.82 3.96 (0.03)
------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment Income ......... (0.20) (0.24) (0.26) (0.23) (0.30)
From Net Realized Gains on
Investment Transactions ............ (0.88) (2.31) (1.85) (1.01) (0.26)
------------- ------------- ------------- ------------- -------------
Total Distributions ................ (1.08) (2.55) (2.11) (1.24) (0.56)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ......... $ 22.71 $ 19.04 $ 15.96 $ 14.25 $ 11.53
============= ============= ============= ============= =============
Total Return(2) .................... 25.45% 36.06% 27.34% 34.56% (0.23)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 0.69% 0.67% 0.63% 0.71% 0.75%
Ratio of Net Investment Income
to Average Net Assets .............. 1.07% 1.39% 1.74% 1.96% 2.26%
Portfolio Turnover Rate .............. 89% 161% 131% 126% 94%
Net Assets, End of Year
(in thousands) ..................... $ 2,026,304 $ 773,425 $ 274,433 $ 159,450 $ 97,437
</TABLE>

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

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

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These statements itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced during
the period

See Notes to Financial Statements

38 1-800-345-2021

Equity Growth--Financial Highlights
- --------------------------------------------------------------------------------
(Continued)

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED DECEMBER 31 (EXCEPT AS NOTED)

Advisor Class
1998 1997(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ......... $ 19.04 $ 21.61
---------- ----------
Income From Investment Operations
Net Investment Income(2) ................... 0.16 0.05
Net Realized and Unrealized Gain
(Loss) on Investment Transactions .......... 4.54 (0.25)
---------- ----------
Total From Investment Operations ........... 4.70 (0.20)
---------- ----------
Distributions
From Net Investment Income ................. (0.16) (0.06)
From Net Realized Gains on
Investment Transactions .................... (0.88) (2.31)
---------- ----------
Total Distributions ........................ (1.04) (2.37)
---------- ----------
Net Asset Value, End of Period ............... $ 22.70 $ 19.04
========== ==========
Total Return(3) ............................ 25.14% (0.50)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ...................... 0.94% 0.94%(4)
Ratio of Net Investment Income
to Average Net Assets ...................... 0.82% 1.14%(4)
Portfolio Turnover Rate ...................... 89% 161%
Net Assets, End of Period
(in thousands) ............................. $ 72,954 $ 553

(1) October 9, 1997 (commencement of sale) through December 31, 1997.

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

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

(4) Annualized.

See Notes to Financial Statements

www.americancentury.com 39

Equity Growth--Financial Highlights
- --------------------------------------------------------------------------------
(Continued)

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

Institutional
Class
1998(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period .................... $ 19.06
---------
Income From Investment Operations
Net Investment Income(2) .............................. 0.27
Net Realized and Unrealized
Gain on Investment Transactions ....................... 4.51
---------
Total From Investment Operations ...................... 4.78
---------
Distributions
From Net Investment Income ............................ (0.25)
From Net Realized Gains on
Investment Transactions ............................... (0.88)
---------
Total Distributions ................................... (1.13)
---------
Net Asset Value, End of Period .......................... $ 22.71
=========
Total Return(3) ....................................... 25.59%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................................. 0.49%(4)
Ratio of Net Investment Income t
o Average Net Assets .................................. 1.27%(4)
Portfolio Turnover Rate ................................. 89%
Net Assets, End of Period
(in thousands) ........................................ $ 8,566

(1) January 2, 1998 (commencement of sale) through December 31, 1998.

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

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

(4) Annualized.

See Notes to Financial Statements

40 1-800-345-2021

Income & Growth--Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31

Investor Class
1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ..$ 24.31 $ 20.16 $ 17.81 $ 13.92 $ 15.08
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net Investment Income ............. 0.36(1) 0.43(1) 0.44 0.42 0.44
Net Realized and Unrealized
Gain (Loss) on Investment
Transactions ...................... 6.23 6.40 3.79 4.64 (0.53)
------------- ------------- ------------- ------------- -------------
Total From Investment Operations .. 6.59 6.83 4.23 5.06 (0.09)
------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment Income ........ (0.35) (0.39) (0.44) (0.42) (0.43)
From Net Realized Gains on
Investment Transactions ........... (1.30) (2.29) (1.44) (0.75) (0.64)
------------- ------------- ------------- ------------- -------------
Total Distributions ............... (1.65) (2.68) (1.88) (1.17) (1.07)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ........$ 29.25 $ 24.31 $ 20.16 $ 17.81 $ 13.92
============= ============= ============= ============= =============
Total Return(2) ................... 27.67% 34.52% 24.15% 36.88% (0.55)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............. 0.69% 0.65% 0.62% 0.67% 0.73%
Ratio of Net Investment Income
to Average Net Assets ............. 1.31% 1.81% 2.32% 2.61% 2.96%
Portfolio Turnover Rate ............. 86% 102% 92% 70% 68%
Net Assets, End of Year
(in thousands) ....................$ 4,313,575 $ 1,795,124 $ 717,695 $ 373,701 $ 224,939
</TABLE>

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

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

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced during
the period

See Notes to Financial Statements

www.americancentury.com 41

Income & Growth--Financial Highlights
- --------------------------------------------------------------------------------
(Continued)

FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED DECEMBER 31 (EXCEPT AS NOTED)

Advisor Class
1998 1997(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ....... $ 24.30 $ 26.36
---------- ----------
Income From Investment Operations
Net Investment Income(2) ................. 0.31 0.01
Net Realized and Unrealized
Gain on Investment Transactions .......... 6.22 0.25
---------- ----------
Total From Investment Operations ......... 6.53 0.26
---------- ----------
Distributions
From Net Investment Income ............... (0.31) (0.03)
From Net Realized Gains on
Investment Transactions .................. (1.30) (2.29)
---------- ----------
Total Distributions ...................... (1.61) (2.32)
---------- ----------
Net Asset Value, End of Period ............. $ 29.22 $ 24.30
========== ==========
Total Return(3) .......................... 27.37% 1.28%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .................... 0.94% 0.94%(4)
Ratio of Net Investment Income
to Average Net Assets .................... 1.06% 1.22%(4)
Portfolio Turnover Rate .................... 86% 102%
Net Assets, End of Period
(in thousands) ........................... $ 63,169 $ 3,720

(1) December 15, 1997 (commencement of sale) through December 31, 1997.

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

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

(4) Annualized.

See Notes to Financial Statements

42 1-800-345-2021

Income & Growth--Financial Highlights
- --------------------------------------------------------------------------------
(Continued)

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

Institutional
Class
1998(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ................... $ 24.29
----------
Income From Investment Operations
Net Investment Income(2) ............................. 0.39
Net Realized and Unrealized
Gain on Investment Transactions ...................... 6.26
----------
Total From Investment Operations ..................... 6.65
----------
Distributions
From Net Investment Income ........................... (0.37)
From Net Realized Gains on
Investment Transactions .............................. (1.30)
----------
Total Distributions .................................. (1.67)
----------
Net Asset Value, End of Period ......................... $ 29.27
==========
Total Return(3) ...................................... 27.87%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................................ 0.49%(4)
Ratio of Net Investment Income
to Average Net Assets ................................ 1.51%(4)
Portfolio Turnover Rate ................................ 86%
Net Assets, End of Period
(in thousands) ....................................... $ 38,926

(1) January 28, 1998 (commencement of sale) through December 31, 1998.

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

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

(4) Annualized.

See Notes to Financial Statements

www.americancentury.com 43

Small Cap Quantitative--Financial Highlights
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

Investor
Class
1998(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period .................... $ 5.00
----------
Income From Investment Operations
Net Realized and Unrealized
Gain on Investment Transactions ....................... 0.02
----------
Net Asset Value, End of Period .......................... $ 5.02
==========
Total Return(2) ....................................... 0.40%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................................. 0.94%(3)
Ratio of Net Investment Income
to Average Net Assets ................................. 0.20%(3)
Portfolio Turnover Rate ................................. 30%
Net Assets, End of Period
(in thousands) ........................................ $ 14,971

(1) July 31, 1998 (inception) through December 31, 1998.

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

(3) Annualized.

- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--This statement itemizes current period
activity and statistics and provides comparison data for the last five fiscal
years (or less, if the class is not five years old).

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced during
the period

See Notes to Financial Statements

44 1-800-345-2021

Report of Independent Accountants
- --------------------------------------------------------------------------------

To the Directors of the American Century Quantitative Equity Funds and
Shareholders of the American Century Equity Growth Fund, American Century Income
& Growth Fund and American Century Small Cap Quantitative Fund:

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the American Century Equity Growth
Fund, American Century Income & Growth Fund and American Century Small Cap
Quantitative Fund (three of the six funds comprising American Century
Quantitative Equity Funds hereafter referred to as the "Funds") at December 31,
1998, the results of each of their operations, the changes in each of their net
assets for each of the two years in the period then ended for Equity Growth and
Income & Growth, for the period July 31, 1998 (commencement of operations) to
December 31, 1998, for Small Cap Quantitative and the financial highlights for
each of the periods presented therein, in conformity with generally accepted
accounting principles. The financial highlights for each of the three years in
the period ended December 31, 1996 for Equity Growth and Income & Growth were
audited by other auditors, whose report dated February 7, 1997, expressed an
unqualified opinion on those statements. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PricewaterhouseCoopers LLP

Kansas City, Missouri
February 1, 1999

www.americancentury.com 45

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

SHARE CLASSES

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

INVESTOR CLASS shareholders do not pay any commissions or other fees for
purchase of fund shares directly from American Century. Investors who buy
Investor Class shares through a broker-dealer may be required to pay the
broker-dealer a transaction fee. THE PRICE AND PERFORMANCE OF THE INVESTOR CLASS
SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS CURRENTLY LISTED.

ADVISOR CLASS shares are sold through banks, broker-dealers, insurance
companies, and financial advisors. Advisor Class shares are subject to a 0.50%
Rule 12b-1 service and distribution fee. Half of that fee is available to pay
for recordkeeping and administrative services, and half is available to pay for
distribution services provided by the financial intermediary through which the
Advisor Class shares are purchased. The total expense ratio of the Advisor Class
is 0.25% higher than the total expense ratio of the Investor Class. The Advisor
Class had not commenced as of December 31, 1998, for the Small Cap Quantitative
fund.

INSTITUTIONAL CLASS shares are available to endowments, foundations,
defined-benefit pension plans, or financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million in an American
Century fund or at least $10 million in multiple funds. In recognition of the
larger investments and account balances and comparatively lower transaction
costs, the total expense ratio of the Institutional Class is 0.20% less than the
total expense ratio of the Investor Class shares. The Institutional Class had
not commenced as of December 31, 1998, for the Small Cap Quantitative fund.

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

RETIREMENT ACCOUNT INFORMATION

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

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

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

46 1-800-345-2021

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

INVESTMENT PHILOSOPHY AND POLICIES

American Century's quantitative equity funds are managed using computer
models as key tools in making investment decisions. A stock-ranking model
analyzes a sizable universe of stocks based on their expected return. The model
looks at both growth and value measures such as cash flow, earnings growth, and
price/earnings ratio. Once the stocks are ranked, another model creates
portfolios that balance high-ranking stocks with an overall risk level that is
comparable to each fund's benchmark index.

EQUITY GROWTH seeks capital appreciation by investing in a diversified
portfolio of common stocks. Its goal is to achieve a total return that exceeds
the total return of the S&P 500.

INCOME & GROWTH seeks current income and capital appreciation by investing
in a diversified portfolio of common stocks. Its goal is to achieve a total
return that exceeds the total return of the S&P 500. The fund's management team
also targets a dividend yield that is higher than the yield of the S&P 500.

SMALL CAP QUANTITATIVE seeks capital appreciation by investing in the
common stocks of smaller companies. Its goal is to achieve a total return that
exceeds the total return of the S&P SmallCap 600. Historically, small-cap stocks
have been more volatile than the stocks of larger, more-established companies.

COMPARATIVE INDICES

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

The S&P 500 is composed of 500 large-capitalization stocks traded on
domestic exchanges. It is considered a broad measure of U.S. stock performance.

The S&P MIDCAP 400 is composed of 400 mid-capitalization stocks traded on
domestic exchanges. It is considered a broad measure of mid-sized stock
performance.

The S&P SMALLCAP 600 is composed of 600 small-capitalization stocks traded
on domestic exchanges. It is considered a broad measure of small-company stock
performance.

LIPPER RANKINGS

LIPPER INC. is an independent mutual fund ranking service that groups funds
according to their investment objectives. Rankings are based on average annual
returns for each fund in a given category for the periods indicated. Rankings
are not included for periods of less than one year.

The Lipper categories for the quantitative equity funds are:

GROWTH FUNDS (Equity Growth)--funds that normally invest in companies whose
long-term earnings are expected to grow significantly faster than the earnings
of the stocks represented in the major unmanaged stock indices.

GROWTH & INCOME FUNDS (Income & Growth)--funds that combine a
growth-of-earnings orientation and an income requirement for level and/or rising
dividends.

SMALL CAP FUNDS (Small Cap Quantitative)--funds that limit their
investments on the basis of the size of the company.

INVESTMENT TEAM LEADERS
PORTFOLIO MANAGERS
JOHN SCHNIEDWIND
JEFF TYLER
BILL MARTIN
KURT BORGWARDT

www.americancentury.com 47

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

RETURNS

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

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 38-44.

PORTFOLIO STATISTICS

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

* DIVIDEND YIELD--a percentage return calculated by dividing the fund's dividend
distributions over the past year by its current share price.

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

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

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

EQUITY TERMS

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

* GROWTH STOCKS--generally considered to be stocks of companies that have
experienced above-average earnings growth and appear likely to continue such
growth. These stocks often sell at high P/E ratios. Examples can include the
stocks of technology, healthcare, and consumer goods companies.

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

* LARGE-CAPITALIZATION (LARGE-CAP) STOCKS--generally considered to be stocks of
companies with a market capitalization (the total value of a company's
outstanding stock) of more than $5 billion. These tend to be the stocks that
make up the Dow Jones Industrial Average and the S&P 500.

* MEDIUM-CAPITALIZATION (MID-CAP) STOCKS--generally considered to be stocks of
companies with a market capitalization (the total value of a company's
outstanding stock) of between $1 billion and $5 billion. These tend to be the
stocks that make up the S&P MidCap 400.

* SMALL-CAPITALIZATION (SMALL-CAP) STOCKS--generally considered to be stocks of
companies with a market capitalization (the total value of a company's
outstanding stock) of less than $1 billion. These tend to be the stocks that
make up the S&P SmallCap 600.

48 1-800-345-2021

[inside back cover]

AMERICAN CENTURY FUNDS
- -------------------------------------------------------------------------------

BENHAM GROUP(reg.sm)
TAXABLE BOND FUNDS
U.S. TREASURY & GOVERNMENT
Short-Term Treasury
Short-Term Government
GNMA
Intermediate-Term Treasury
Long-Term Treasury
Inflation-Adjusted Treasury
Target Maturities Trust: 2000
Target Maturities Trust: 2005
Target Maturities Trust: 2010
Target Maturities Trust: 2015
Target Maturities Trust: 2020
Target Maturities Trust: 2025
CORPORATE & DIVERSIFIED
Limited-Term Bond
Intermediate-Term Bond
Bond
Premium Bond
High-Yield Bond
INTERNATIONAL
International Bond

TAX-FREE & MUNICIPAL BOND FUNDS
MULTIPLE-STATE
Limited-Term Tax-Free
Intermediate-Term Tax-Free
Long-Term Tax-Free
High-Yield Municipal
SINGLE-STATE
Arizona Intermediate-Term Municipal
California High-Yield Municipal
California Insured Tax-Free
California Intermediate-Term Tax-Free
California Limited-Term Tax-Free
California Long-Term Tax-Free
Florida Intermediate-Term Municipal

MONEY MARKET FUNDS
TAXABLE
Capital Preservation
Government Agency Money Market
Premium Capital Reserve
Premium Government Reserve
Prime Money Market
TAX-FREE & MUNICIPAL
California Municipal Money Market
California Tax-Free Money Market
Florida Municipal Money Market
Tax-Free Money Market

AMERICAN CENTURY(reg.sm) GROUP
ASSET ALLOCATION
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
BALANCED
Balanced
CONSERVATIVE EQUITY
Income and Growth
Equity Income
Value
Equity Growth
SPECIALTY
Utilities
Real Estate
Global Natural Resources
Global Gold
SMALL CAP
Small Cap Quantitative
Small Cap Value

TWENTIETH CENTURY GROUP
GROWTH
Select
Heritage
Growth
Ultra
AGGRESSIVE GROWTH
Vista
Giftrust
New Opportunities
INTERNATIONAL GROWTH
International Growth
International Discovery
Emerging Markets
GLOBAL
Global Growth

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

[right margin]

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

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

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

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS

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

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

FUNDS DISTRIBUTOR, INC.
(c) 1999 AMERICAN CENTURY SERVICES CORPORATION

[recycled logo]
Recycled

[back cover]

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

9902 Funds Distributor, Inc.
SH-BKT-15566 (c)1999 American Century Services Corporation
<PAGE>

[front cover] DECEMBER 31, 1998

ANNUAL REPORT
- ----------------
AMERICAN CENTURY

[graphic of glasses]

AMERICAN CENTURY GROUP
- ------------------------------------
GLOBAL GOLD
GLOBAL NATURAL RESOURCES

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

AMERICAN CENTURY BROKERAGE
- --------------------------------------------------------------------------------

We're pleased to introduce American Century's new brokerage service, which
offers a wide range of investment options and features:

* FundChoice Service--Invest in over 8,000 no-load and load mutual funds
from hundreds of different fund companies, many with no transaction fees

* Buy individual stocks and bonds

* 24-hour Internet and automated phone trades are just $24.95 for up to
1,000 shares of stock, and 2 cents per share thereafter

* Strong research capability

* Track your brokerage account on one easy-to-read statement

* Unlimited check writing and a Gold MasterCard(reg.tm) ATM/debit card
with an American Century Brokerage Access AccountSM (minimum $10,000)

To talk with a Brokerage Associate, call 1-888-345-2071.

WHAT'S NEW . . .

AMERICAN CENTURY CATALOG OF TOOLS & SERVICES lists all the free educational
materials available to investors.

To order any of these materials, please call 1-800-345-2021.

[left margin]

AMERICAN CENTURY GROUP
GLOBAL GOLD
(BGEIX)
- ----------------------------------
AMERICAN CENTURY GROUP
GLOBAL NATURAL RESOURCES
(BGRIX)
- ----------------------------------

On the whole, 1998 was a difficult year in global commodity markets. The
economic crises in Asia, Russia, and Latin America slowed global growth,
reducing demand for commodities. Meanwhile, many nations increased their
commodity output, hoping to export their way back to health. Less demand and
increased supply caused commodity price deflation. Weaker commodity prices led
to poor performance by natural resource-related stocks.

As a result, gold and natural resource-related mutual funds produced
negative returns for the year. Despite that disappointing absolute performance,
we're proud to report that Global Natural Resources was number one out of 52
natural resources funds in 1998, according to Lipper Inc. We believe the
portfolio's top ranking is a result of the diversification provided by the
quantitative equity management team's disciplined, benchmark-based approach.

While Global Gold and Global Natural Resources struggled in 1998, we
continue to believe they can play a constructive role as a small part in a
broadly diversified investment portfolio. That's because these funds generally
have a low correlation with the S&P 500, and can reduce the overall price
volatility of a well-diversified portfolio of domestic and foreign stock, bond,
and money market funds.

In addition, our investment management team is busy gathering publicly
available information about the year-2000 readiness of the issuers of securities
owned by American Century funds.

We appreciate your confidence in American Century. Please share with us our
belief that, "The best is yet to be."

Sincerely,

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

[right margin]

Table of Contents
Report Highlights ........ 2
Market Perspective ....... 3
GLOBAL GOLD
Performance Information .. 5
Management Q&A ........... 6
Portfolio at a Glance .... 6
Top Ten Holdings ......... 7
Geographic Composition ... 8
Schedule of Investments .. 9
GLOBAL NATURAL RESOURCES
Performance Information .. 11
Management Q&A ........... 12
Portfolio at a Glance .... 12
Industry Weightings ...... 12
Economic Growth
Forecasts ................ 13
Top Ten Holdings ......... 14
Geographic Composition ... 14
Schedule of Investments .. 15
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities .............. 17
Statements of Operations . 18
Statements of Changes
in Net Assets ............ 19
Notes to Financial
Statements ............... 20
Financial Highlights ..... 24
Report of Independent
Accountants .............. 27
OTHER INFORMATION
Share Class and Retirement
Account Information ...... 28
Background Information
Investment Philosophy
and Policies .......... 29
Comparative Indices ... 29
Lipper Rankings ....... 29
Investment Team
Leaders ............... 29
Glossary ................. 30

www.americancentury.com 1

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

MARKET PERSPECTIVE

GOLD

* Gold traded at an average price of $294 an ounce in 1998, its lowest average
annual level in 20 years, according to Gold Fields Mineral Services, Ltd.

* Gold supply rose, while demand for the metal fell because of the economic
and currency crises affecting Asia, Russia, and Latin America.

* Gold shares fluctuated widely in 1998, posting huge gains in September
before finishing lower for the year.

* Investors bought gold stocks in the third quarter looking for shelter from
the Russian debt default and the near collapse of several large hedge funds.

NATURAL RESOURCES

* Commodity prices were hit by deflation in 1998, when the Commodity Research
Bureau Commodity Index fell 16.6%.

* Commodity prices fell because the economic crises in Asia, Russia, and Latin
America slowed global growth and industrial production, reducing demand even
as supply was increasing.

* The performance of energy stocks varied--large, diversified oil refiners and
producers rose modestly, while shares of small exploration companies fell
sharply.

* Basic materials stock prices were very volatile, finishing lower in 1998,
but well above their lows for the year.

GLOBAL GOLD

* Global Gold's 1998 return mirrored the difficult environment for gold and
gold shares overall. For the year, the portfolio's Investor Class shares
fell 12.18%.

* Though the fund had a negative return for the year, during the third quarter
Global Gold was up and the S&P 500 was down, indicating that the fund can be
a useful part of a larger, diversified portfolio.

* Production costs for an ounce of gold fell in 1998, which explains in part
why gold supply increased even though prices declined, the opposite of what
you might expect.

* Going forward, we'll continue to try to give our shareholders a pure play on
the gold market, positioning the fund to take advantage of any bounce in
gold prices.

GLOBAL NATURAL RESOURCES

* Global Natural Resources' performance reflected the unfavorable environment
for natural resource-related stocks. However, the portfolio ranked number
one out of the 52 natural resources funds tracked by Lipper Inc. for all of
1998.

* The key to the portfolio's strong relative performance was our disciplined,
quantitative management approach that attempts to limit risk.

* Within the energy sector, we overweighted large, integrated oil producers
and underweighted small energy service and exploration companies. Large oil
companies were the best-performing natural resource-related stocks for the
year, while small oil stocks were the worst.

* Going forward, we'll take a steady-at-the-helm approach, trying to limit our
level of risk relative to the benchmark. However, we will consider making
modest sector bets if we see compelling relative values.

[left margin]

"COMMODITY PRICES FELL BECAUSE THE ECONOMIC CRISES IN ASIA, RUSSIA, AND LATIN
AMERICA SLOWED GLOBAL GROWTH AND INDUSTRIAL PRODUCTION, REDUCING DEMAND EVEN AS
SUPPLY WAS INCREASING."

GLOBAL GOLD(1)
(BGEIX)
TOTAL RETURNS: AS OF 12/31/98
6 Months -4.44%(2)
1 Year -12.18%
NET ASSETS: $228.8 million
INCEPTION DATE: 8/17/88

GLOBAL NATURAL RESOURCES(1)
(BGRIX)
TOTAL RETURNS: AS OF 12/31/98
6 Months -7.42%(2)
1 Year -6.30%
NET ASSETS: $39.8 million
INCEPTION DATE: 9/15/94

(1) Investor Class.
(2) Not annualized.

See Total Returns on pages 5 and 11. Investment terms are defined in the
Glossary on page 30.

2 1-800-345-2021

Market Perspective from Mark Mallon
- --------------------------------------------------------------------------------
/photo of Mark Mallon/

MARK MALLON, SENIOR VICE PRESIDENT AND MANAGING DIRECTOR OF AMERICAN CENTURY
INVESTMENTS

GOLD BULLION

In 1998, the price of gold bullion traded in a range between $270 and $315
an ounce, ultimately finishing the year at $288, about where it ended 1997.
Gold's average price for 1998 was $294 an ounce, its lowest average annual level
in 20 years, according to Gold Fields Mineral Services, Ltd.

Gold was hurt by reduced demand--bullion demand is estimated to have fallen
about 2% in 1998. That is largely a result of the economic crises affecting
Asia, Russia, and Latin America. Not only did slower growth reduce demand for
gold, but the economic meltdown also dramatically lowered the value of many of
these countries' currencies relative to the U.S. dollar. That pushed the price
of gold, which is priced in dollars, sharply higher for many foreign buyers.

On a positive note, Indian, North American, and European demand for gold
rose, offsetting somewhat the decline in demand from other markets.

Weaker currencies also had an effect on gold supply, which rose about 2%
for the year. East Asian countries and corporations in need of cash sold large
amounts of gold scrap metal in 1998. That surge in supply helped turn the region
into a net exporter of gold. The new supply also more than made up for the
decrease in the amount of hedging by gold producers last year.

GOLD STOCKS

While the price of gold bullion was rangebound, the price of gold shares
varied widely during the year, ultimately finishing lower in 1998. The FT-SE
Gold Mine Index was down almost 11%.

After bottoming in late August, gold stocks enjoyed an exceptional
September, with the FT-SE index up more than 50% for the month. Gold stocks
surged as investors moved into this traditionally defensive sector of the market
looking for some protection from the Russian debt default, the near collapse of
several large hedge funds, and the impeachment proceedings against the U.S.
president.

Investor interest in gold shares waned in the fourth quarter, however, and
prices declined as a result. Asset allocation decisions can have a big impact on
gold shares because the total capitalization of the gold market is relatively
small. For example, at the end of January 1999, the total market cap of the
FT-SE index was about $30 billion, compared with about $34 billion for Internet
company Yahoo alone.

By region, Australian and African companies benefited from consolidation,
outperforming North American gold stocks. However, African stocks suffered
modest losses in dollar terms as a result of the sharp decline in the South
African currency. (Weaker foreign currencies relative to the dollar mean lower
returns for U.S. investors because foreign investments translate into fewer
dollars.)

[right margin]

"WHILE THE PRICE OF GOLD BULLION WAS RANGEBOUND, THE PRICE OF GOLD SHARES
VARIED WIDELY DURING THE YEAR, ULTIMATELY FINISHING LOWER IN 1998."

MAJOR GOLD INDEX RETURNS
FOR THE YEAR ENDED DECEMBER 31, 1998
FT-SE GOLD MINE INDEX -10.90%
Africa -10.27%
North America -15.38%
Australia 1.82%
Spot Price of Gold Bullion -0.24%

Source: Bloomberg Financial Markets

"AFTER BOTTOMING IN LATE AUGUST, GOLD STOCKS ENJOYED AN EXCEPTIONAL SEPTEMBER."

www.americancentury.com 3

Market Perspective from Mark Mallon
- --------------------------------------------------------------------------------
(Continued)
COMMODITIES

Commodity prices were hit by deflation in 1998--lower demand caused by
weakening global economic conditions and falling industrial production pushed
prices lower. For the year, the Commodity Research Bureau Commodities Index
declined 16.6%. The Goldman Sachs Commodities Index, which is heavily weighted
toward energy, fell a whopping 38.8%.

A series of financial crises around the world threatened to apply the
brakes to global economic growth. Financial and economic problems that first
surfaced in Asia in late 1997 mushroomed in 1998. By mid-1998, the "Asian
contagion" had spread to Russia and Latin America. Trouble in Japan and the
world's emerging economies cast a pall over the commodities markets, especially
base metals.

While demand for base metals decreased, supply increased. As a result,
producers built up big surpluses of aluminum and copper, which weighed heavily
on prices. Analysts expect the supply overhang to persist through 1999.

The supply and demand imbalance also affected the energy sector, where
crude oil traded at a 12-year low. World oil production rose-- Iraq and several
non-OPEC countries increased supply --while Asian demand was shrinking.

Natural gas prices, which tend to mirror movements in oil, also fell
sharply. Here again, oversupply contributed to the declines. In addition, a
relatively mild winter in the Western Hemisphere in 1997-98 reduced energy
demand.

NATURAL RESOURCES STOCKS

The sharp decline in commodity prices led to generally poor performance by
natural resource-related stocks. Energy stocks--which include oil, oil services,
and natural gas companies--outperformed basic materials stocks--which include
paper, steel, nonferrous metals, mining, and precious metals companies (see the
graph at left).

Performance within the energy sector varied widely, however. Large,
integrated oil companies performed best for several reasons. First, they have
many sides to their business, so their profits weren't directly tied to the
price of oil. Second, they benefited from several high-profile mergers intended
to cut costs and boost productivity. Finally, investors concerned about
volatility in the equity market tended to buy larger, more easily traded stocks.

However, small exploration stocks, which move in line with crude prices,
performed very poorly. These stocks had strong returns during the last several
years as the price of oil rose (see the accompanying graph). But their prices
followed crude oil on a steep downward spiral after the Asian economic and
currency crisis hit.

Basic materials stocks endured a volatile 1998, finishing the year down,
but well above their lows. Movements in these stocks closely mirrored changes in
the global economy. For example, basic materials shares bottomed in the summer,
when the Russian economic meltdown was at its worst. But a series of coordinated
interest rate cuts by world central banks intended to boost the global economy
helped these stocks rally back from their lows.

[left margin]

[line chart - data below]

ENERGY & BASIC MATERIALS STOCKS
(PERFORMANCE OF $1.00)

DATE Basic Materials Energy
02-Jan-98 $1.00 $1.00
09-Jan-98 $0.92 $0.92
16-Jan-98 $0.95 $0.96
23-Jan-98 $0.99 $0.93
30-Jan-98 $1.04 $0.96
06-Feb-98 $1.08 $0.99
13-Feb-98 $1.07 $0.98
20-Feb-98 $1.06 $0.99
27-Feb-98 $1.08 $1.01
06-Mar-98 $1.09 $1.02
13-Mar-98 $1.12 $1.02
20-Mar-98 $1.12 $1.06
27-Mar-98 $1.13 $1.08
03-Apr-98 $1.12 $1.08
09-Apr-98 $1.14 $1.06
17-Apr-98 $1.18 $1.08
24-Apr-98 $1.18 $1.07
01-May-98 $1.17 $1.12
08-May-98 $1.16 $1.10
15-May-98 $1.14 $1.11
22-May-98 $1.13 $1.08
29-May-98 $1.08 $1.07
05-Jun-98 $1.07 $1.08
12-Jun-98 $0.99 $1.03
19-Jun-98 $1.00 $1.03
26-Jun-98 $0.99 $1.05
02-Jul-98 $1.01 $1.07
10-Jul-98 $1.00 $1.03
17-Jul-98 $1.03 $1.04
24-Jul-98 $0.99 $1.01
31-Jul-98 $0.96 $0.99
07-Aug-98 $0.92 $0.94
14-Aug-98 $0.87 $0.93
21-Aug-98 $0.85 $0.94
28-Aug-98 $0.78 $0.88
04-Sep-98 $0.82 $0.91
11-Sep-98 $0.83 $0.96
18-Sep-98 $0.83 $0.95
25-Sep-98 $0.86 $0.99
02-Oct-98 $0.83 $0.98
09-Oct-98 $0.87 $0.96
16-Oct-98 $0.91 $1.00
23-Oct-98 $0.90 $0.96
30-Oct-98 $0.91 $0.98
06-Nov-98 $0.96 $1.00
13-Nov-98 $0.92 $0.99
20-Nov-98 $0.94 $0.99
27-Nov-98 $0.94 $1.02
04-Dec-98 $0.90 $0.95
11-Dec-98 $0.88 $0.97
18-Dec-98 $0.88 $0.98
24-Dec-98 $0.88 $0.99
31-Dec-98 $0.90 $0.99

Source: FactSet

[line chart - data below]

ENERGY STOCK PERFORMANCE VS.
OIL PRICES (1995-98)

Exploration & Integrated Oil
Crude Oil Production Stocks Stocks
DATE (left scale) (right scale- (right scale-
performance of $1) performance of $1)
30-Dec-94 $17.76 $1.00 $1.00
31-Jan-95 $18.39 $0.95 $1.01
28-Feb-95 $18.49 $0.99 $1.03
31-Mar-95 $19.17 $1.06 $1.09
28-Apr-95 $20.38 $1.11 $1.12
31-May-95 $18.89 $1.13 $1.15
30-Jun-95 $17.40 $1.15 $1.12
31-Jul-95 $17.56 $1.11 $1.16
31-Aug-95 $17.84 $1.15 $1.12
29-Sep-95 $17.54 $1.18 $1.15
31-Oct-95 $17.64 $1.14 $1.16
30-Nov-95 $18.18 $1.21 $1.19
29-Dec-95 $19.55 $1.31 $1.27
31-Jan-96 $17.74 $1.31 $1.26
29-Feb-96 $19.54 $1.34 $1.26
29-Mar-96 $21.47 $1.44 $1.32
30-Apr-96 $21.20 $1.56 $1.35
31-May-96 $19.76 $1.67 $1.36
28-Jun-96 $20.92 $1.73 $1.38
31-Jul-96 $20.42 $1.69 $1.35
30-Aug-96 $22.25 $1.86 $1.37
30-Sep-96 $24.38 $1.98 $1.44
31-Oct-96 $23.35 $2.17 $1.50
29-Nov-96 $23.75 $2.32 $1.57
31-Dec-96 $25.92 $2.53 $1.61
31-Jan-97 $24.15 $2.84 $1.68
28-Feb-97 $20.30 $2.44 $1.61
31-Mar-97 $20.41 $2.60 $1.72
30-Apr-97 $20.21 $2.45 $1.72
30-May-97 $20.88 $2.66 $1.81
30-Jun-97 $19.80 $2.71 $1.88
31-Jul-97 $20.14 $2.74 $2.00
29-Aug-97 $19.61 $2.93 $1.95
30-Sep-97 $21.18 $2.98 $2.10
31-Oct-97 $21.08 $2.88 $2.04
28-Nov-97 $19.15 $2.71 $1.99
31-Dec-97 $17.64 $2.64 $1.99
30-Jan-98 $17.21 $2.35 $1.91
27-Feb-98 $15.44 $2.47 $2.02
31-Mar-98 $15.61 $2.54 $2.12
30-Apr-98 $15.39 $2.48 $2.21
29-May-98 $15.20 $2.36 $2.16
30-Jun-98 $14.18 $2.21 $2.18
31-Jul-98 $14.21 $1.87 $2.07
31-Aug-98 $13.34 $1.46 $1.93
30-Sep-98 $16.14 $1.54 $2.16
30-Oct-98 $14.42 $1.69 $2.15
30-Nov-98 $11.22 $1.39 $2.25
31-Dec-98 $12.05 $1.14 $2.20

Source: FactSet

4 1-800-345-2021

Global Gold--Performance
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF DECEMBER 31, 1998

INVESTOR CLASS (INCEPTION 8/17/88) ADVISOR CLASS (INCEPTION 5/6/98)
GLOBAL FUND MSCI WORLD GOLD-ORIENTED FUNDS(2) GLOBAL FUND MSCI WORLD
GOLD BENCHMARK STOCK INDEX AVERAGE RETURN FUND'S RANKING GOLD BENCHMARK STOCK INDEX
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ....... -4.44% -1.45% 6.60% -2.21% -- -4.64% -1.45% 6.60%
1 YEAR ............ -12.18% -7.25% 24.34% -10.92% 29 OUT OF 42 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL
RETURNS
3 YEARS ........... -20.60% -20.35% 17.77% -18.24% 26 OUT OF 36 -- -- --
5 YEARS ........... -14.58% -14.43% 15.68% -13.69% 18 OUT OF 27 -- -- --
10 YEARS .......... -3.51% -2.84% 10.66% -3.83% 15 OUT OF 22 -- -- --
LIFE OF FUND ...... -4.36% -3.54%(3) 11.89%(3) -4.14%(3) 14 OUT OF 20(3) -24.00% -10.68%(4) 9.11%(4)
</TABLE>

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

(2) According to Lipper Inc., an independent mutual fund ranking service.

(3) Since 8/31/88, the date nearest the class's inception for which data are
available.

(4) Since 5/31/98, the date nearest the class's inception for which data are
available.

See pages 28-30 for more information about share classes, returns, the fund's
benchmark, and Lipper fund rankings.

[mountain chart - data below]

PERFORMANCE OF $10,000 OVER 10 YEARS
Value on 12/31/98
MSCI World Stock Index $27,531
Fund Benchmark $7,501
Global Gold $6,994

Global Gold Fund Benchmark MSCI World Stock Index
DATE VALUE VALUE VALUE
12/31/88 $10,000 $10,000 $10,000
12/31/89 $12,993 $13,413 $11,661
12/31/90 $10,468 $10,886 $9,676
12/31/91 $9,293 $9,782 $11,445
12/31/92 $8,489 $8,984 $10,847
12/31/93 $15,384 $16,345 $13,287
12/31/94 $12,807 $13,599 $13,962
12/31/95 $13,992 $14,847 $16,855
12/31/96 $13,605 $13,936 $19,127
12/31/97 $7,963 $8,087 $22,141
12/31/98 $6,994 $7,501 $27,531

$10,000 investment made 12/31/88

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

[bar chart - data below]

ONE-YEAR RETURNS OVER 10 YEARS (PERIODS ENDED DECEMBER 31)

Global Gold Fund Benchmark
DATE RETURN RETURN
12/31/89 29.93% 34.13%
12/31/90 -19.43% -18.84%
12/31/91 -11.23% -10.14%
12/31/92 -8.65% -8.16%
12/31/93 81.22% 81.94%
12/31/94 -16.75% -16.80%
12/31/95 9.25% 9.18%
12/31/96 -2.76% -6.63%
12/31/97 -41.47% -41.97%
12/31/98 -12.18% -7.25%

www.americancentury.com 5

Global Gold--Q&A
- --------------------------------------------------------------------------------
/photo of Bill Martin/

An interview with Bill Martin, a portfolio manager on the Global Gold
investment team.

HOW DID GLOBAL GOLD PERFORM IN 1998?

The portfolio's 1998 return reflects the poor performance of gold and gold
shares overall. For the year, Global Gold returned -12.18%*, while the 42
"Gold-Oriented Funds" tracked by Lipper Inc. returned -10.92% on average. The
fund's custom benchmark--which is about two-thirds North American gold stocks,
20% or so African shares, and another 10% or so Australian stocks--had a return
of -7.25% for the same period. (See the Total Returns table on the previous page
for additional performance comparisons.)

YOU OFTEN SAY AN INVESTMENT IN GOLD AND GOLD SHARES IS A FORM OF INSURANCE
AGAINST THE UNEXPECTED. THERE WERE SEVERAL BIG SURPRISES IN WORLD FINANCIAL
MARKETS IN 1998, YET THE FUND FINISHED THE YEAR LOWER. WHY?

While 1998 will be remembered as a year of extreme stock market volatility,
shareholders should keep in mind that the S&P 500 stock index finished with an
unprecedented fourth consecutive year of greater than 20% gains. Meanwhile, U.S.
inflation rose just 1.2% for the year. That's the lowest annual inflation rate
in a dozen years. When stocks soar and inflation is dormant, the fund will tend
to lag as demand for gold and gold shares wanes. But when the markets experience
volatility like we saw in the third quarter, the fund should perform well. So
looking at the year in aggregate, the fund did about what you'd expect in 1998.

HOW DID THE FUND RESPOND TO THE U.S. STOCK MARKET DOWNTURN?

From the market peak in mid-July to the bottom in early October, Global
Gold was up about 19%, while the S&P 500 was down more than 17%. During that
time, the fund had a low correlation with the S&P 500. The benefit of holding an
investment that has a low correlation with the broader market as part of a
well-diversified portfolio is that it can help lower your risk overall.

At the root of the fund's positive return for that period was its excellent
performance in September. For the month, Global Gold was up about 53%. By
comparison, the average gold fund returned around 43% for the same period,
according to Lipper. Investors looking for shelter from the Russian debt
default, the fallout from the near collapse of several hedge funds, and the
decline in the dollar associated with the impeachment proceedings against the
president drove the short but intense rally in gold shares.

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

[left margin]

"THE PORTFOLIO'S 1998 RETURN REFLECTS THE POOR PERFORMANCE OF GOLD AND GOLD
SHARES OVERALL."

PORTFOLIO AT A GLANCE
12/31/98 12/31/97
NUMBER OF COMPANIES 65 54
PORTFOLIO TURNOVER 68% 28%
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.69% 0.67%

"FROM THE MARKET PEAK IN MID-JULY TO THE BOTTOM IN EARLY OCTOBER, GLOBAL GOLD
WAS UP ABOUT 19%, WHILE THE S&P 500 WAS DOWN MORE THAN 17%."

Investment terms are defined in the Glossary on page 30.

6 1-800-345-2021

Global Gold--Q&A
- --------------------------------------------------------------------------------
(Continued)

HOW DID YOU POSITION THE PORTFOLIO LAST YEAR?

We try to give our investors the broadest possible exposure to the gold
market. To do that, we've created a portfolio that mirrors the structure of the
market, which has a number of small exploration companies, a handful of big
producers, and a modest number of companies in between. That structure keeps the
portfolio positioned to give shareholders a pure play on gold. That strategy
looks poor when gold and gold shares are down, but it can work very well during
up markets, as we saw in September.

HOW DID THE PERFORMANCE OF GOLD STOCKS VARY BY SIZE?

Mid-cap stocks performed reasonably well. They make up about 20% of the
portfolio and gave Global Gold a modest boost to performance.

Small-cap gold shares did less well. Absent exploration successes or new
mining claims, the fate of small-cap gold stocks is closely tied to the price of
the underlying metal. Gold traded at its lowest average annual level in about 20
years in 1998, so the fund's small-cap stocks generally had negative returns.

Large-cap gold shares posted modest losses for the year. Companies with low
production costs and sophisticated hedging strategies held up best; however,
companies without those characteristics were pummeled, no matter their size. For
example, Newmont Mining, a large-cap stock with little or no hedging activity
and too-high production costs, fell over 30% for the year.

WHAT ABOUT PRODUCTION COSTS FOR GOLD? HAVE THEY BEEN DECLINING?

Industry wide, the average production cost for an ounce of gold fell from
$215 an ounce to below $200 last year, but that's not good for the gold market
as a whole. Individual companies benefit when they lower their cost of
production faster than the rest of the industry. That's because they can
increase their profit margin, likely boosting their stock price. But a side
effect is that the company often boosts production to capitalize on its greater
productivity, or it may borrow gold from dealers and sell forward at a slightly
lower price. Those factors tend to result in greater supply, which has the
effect of lowering gold prices overall.

Now expand that example from a single company to an entire industry.
Coupled with a lack of investment demand for gold, it's that steady decline in
production costs over the last few years that explains in part why gold supply
increased while prices decreased.

WHAT'S YOUR OUTLOOK FOR GOLD BULLION?

We expect gold to continue to trade within a relatively narrow range
between about $270 and $320 an ounce, though that range could head even lower if
production costs continue to fall. Gold could also break out of that range to
the downside if we get more currency devaluations. Weaker currencies relative to
the dollar hurt gold. That's because they make bullion--which is priced in
dollars--more expensive for foreign buyers and because many distressed countries
sell gold to help raise much-needed cash.

[right margin]

"WE EXPECT GOLD TO CONTINUE TO TRADE WITHIN A RELATIVELY NARROW RANGE BETWEEN
ABOUT $270 AND $320 AN OUNCE, THOUGH THAT RANGE COULD HEAD EVEN LOWER IF
PRODUCTION COSTS CONTINUE TO FALL."

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
BARRICK GOLD CORP. 18.7% 17.0%
ANGLOGOLD LIMITED 8.4% 7.0%
PLACER DOME INC. 6.8% 7.6%
NEWMONT MINING
CORP. 6.7% 9.5%
EURO-NEVADA MINING
CORPORATION 4.5% 3.3%
STILLWATER MINING CO. 4.3% 2.9%
FRANCO NEVADA
MINING CORP. LTD. 4.1% 4.4%
NORMANDY MINING
LIMITED 3.8% 3.8%
GOLDFIELDS LIMITED 3.7% 0.4%
HOMESTAKE MINING
COMPANY 3.2% 5.6%

www.americancentury.com 7

Global Gold--Q&A
- --------------------------------------------------------------------------------
(Continued)

There is a scenario, however, where currency devaluations could turn out to
be positive for gold. If, say, China devalues its currency, or if economic
weakness finally catches up with Europe or the United States, we could see more
interest rate cuts by world central banks. That's a potential positive because
for gold to really thrive, you'd like to see zero or negative real interest
rates ("real" rates are nominal interest rates minus the rate of inflation).
Some of gold's best performances, such as those in the early 1980s and 1990s,
came during periods of negative real interest rates. Negative real rates are
good for gold because they're seen as being inflationary.

WHAT'S YOUR OUTLOOK FOR GOLD SHARES?

We think gold shares are probably fairly valued for the first time in the
last few years. Valuations improved because the industry cut costs, and because
stock prices for gold companies fell about another 10% last year. That means
shares should track movements in the price of gold pretty well for the
foreseeable future. And if gold bullion has bottomed, then the shares would seem
to have a lot of upside potential.

GIVEN YOUR OUTLOOK, HOW WILL YOU MANAGE GLOBAL GOLD FOR THE NEXT SEVERAL MONTHS

It's a steady-at-the-helm approach. We're going to continue to try to give
shareholders a pure play on the gold market, positioning the fund to benefit
from any bounce in gold prices. To do that, we'll continue to rely on our
disciplined, benchmark-based approach. That means a continued concentration in
North American names, with modest positions in Australian and South African
stocks. As always, we'll try to focus on the best stocks within those
weightings--companies that have proven management, sophisticated hedging
strategies, and low production costs.

[left margin]

"WE THINK GOLD SHARES ARE PROBABLY FAIRLY VALUED FOR THE FIRST TIME IN THE LAST
FEW YEARS."

[pie charts - data below]

GEOGRAPHIC COMPOSITION

AS OF DECEMBER 31, 1998
Canada 48%
U.S. 17%
South Africa 17%
Australia 14%
Ghana 3%
Papua-New Guinea 1%

AS OF JUNE 30, 1998
Canada 49%
U.S. 22%
South Africa 14%
Australia 12%
Ghana 2%
Papua-New Guinea 1%

8 1-800-345-2021

Global Gold--Schedule of Investments
- --------------------------------------------------------------------------------

DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS--98.1%
AUSTRALIA--14.0%
2,181,000 Acacia Resources Limited $ 3,220,051
600,000 Aurora Gold Limited(1) 476,853
1,431,069 Delta Gold NL 2,169,712
923,300 Goldfields Limited(1) 762,020
1,500,000 Great Central Mines Limited 1,072,919
399,500 Homestake Mining Company 3,663,515
5,170,196 Lihir Gold Limited(1) 5,784,263
1,516,578 Newcrest Mining Limited(1) 2,097,236
9,490,079 Normandy Mining Limited 8,760,657
200,000 Ranger Minerals NL(1) 489,080
1,400,000 Resolute Limited 984,274
949,342 Sons of Gwalia Limited 2,692,964
286,213 Zimbabwe Platinum Mines
Limited(1) 55,992
--------------
32,229,536
--------------
CANADA--47.7%
250,000 Agnico-Eagle Mines Ltd. 1,031,250
100,000 America Mineral Fields Inc.(1) 107,822
329,500 Banro Resource Corporation(1) 172,254
2,214,066 Barrick Gold Corp. 43,174,287
1,344,000 Battle Mountain Gold Co. 5,544,000
392,700 Bema Gold Corp.(1) 318,204
100,000 Breakwater Resources, Ltd.(1) 62,079
309,900 Cambior, Inc. 1,518,820
100,000 Dayton Mining Corp.(1) 22,218
47,900 Dia Met Minerals Ltd. Cl B(1) 626,021
100,000 DiamondWorks Ltd.(1) 13,723
329,800 Echo Bay Mines Ltd.(1) 577,150
629,100 Euro-Nevada Mining Corporation 10,277,543
17,100 Farallon Resources Ltd.(1) 15,085
105,000 Francisco Gold Corp.(1) 590,080
496,300 Franco Nevada Mining Corp. Ltd. 9,518,660
85,700 Glamis Gold Ltd.(1) 162,406
540,000 Goldcorp, Inc. Cl A(1) 3,069,986
400,000 Golden Knight Resources, Inc.(1) 117,624
100,000 Golden Star Resources Ltd.(1) 106,250
510,000 Greenstone Resources Ltd.(1) 456,577
545,000 IAMGOLD, International African
Mining Gold Corp.(1) 1,424,557
175,000 Indochina Goldfields Ltd.(1) 86,911
1,520,180 Kinross Gold Corp.(1) 3,509,202
1,316,500 Meridian Gold Inc.(1) 7,640,520
566,300 Miramar Mining(1) 481,207
450,000 Nevsun Resources Ltd.(1) 276,416
74,500 NovaGold Resources Inc.(1) 26,776

Shares Value
- --------------------------------------------------------------------------------

1,365,000 Placer Dome Inc. $ 15,697,500
100,000 Pure Gold Minerals Inc.(1) 13,396
70,000 Rio Narcea Gold Mines, Ltd.(1) 116,644
395,000 Romarco Minerals, Inc.(1) 387,179
202,000 Sutton Resources Ltd.(1) 871,202
1,040,000 TVX Gold, Inc.(1) 1,834,680
100,000 Vengold Inc.(1) 61,426
100,000 Viceroy Resource Corp.(1) 156,832
--------------
110,066,487
--------------
GHANA--2.4%
577,773 Ashanti Goldfields Company
Ltd. GDR 5,416,622
--------------
PAPUA-NEW GUINEA--0.3%
557,199 Niugini Mining Limited(1) 776,667
--------------
SOUTH AFRICA--17.0%
498,301 Anglogold Limited 19,389,769
150,000 Anglogold Limited ADR 2,934,375
1,442,892 Avgold Ltd.(1) 786,331
1,306,300 Driefontein Consolidated Ltd. 5,211,672
1,540,732 Gold Fields Ltd. 8,501,132
235,000 Randfontein Estates Limited(1) 518,654
584,600 Western Areas Limited(1) 1,900,614
--------------
39,242,547
--------------
UNITED STATES--16.7%
418,100 Crown Resources, Inc.(1) 842,733
187,100 Getchell Gold Corp.(1) 5,098,475
790,376 Homestake Mining Co. 7,261,580
850,575 Newmont Mining Corp. 15,363,511
240,000 Stillwater Mining Co.(1) 9,840,000
--------------
38,406,299
--------------
TOTAL COMMON STOCKS 226,138,158
--------------
(Cost $310,903,855)

TEMPORARY CASH INVESTMENTS--1.9%
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 4.80%, dated 12/31/98,
due 1/4/99 (Delivery value $4,402,347) 4,400,000
--------------
(Cost $4,400,000)

TOTAL INVESTMENT SECURITIES--100.0% $230,538,158
==============
(Cost $315,303,855)

See Notes to Financial Statements

www.americancentury.com 9

Global Gold--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

GDR = Global Depositary Receipt

(1) Non-income producing.

The schedule includes:

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percentage of investments in each country, as applicable

See Notes to Financial Statements

10 1-800-345-2021

Global Natural Resources--Performance
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
TOTAL RETURNS AS OF DECEMBER 31, 1998

INVESTOR CLASS (INCEPTION 9/15/94)
GLOBAL NATURAL FUND DJ WORLD NATURAL RESOURCES FUNDS(2)
RESOURCES BENCHMARK STOCK INDEX AVERAGE RETURN FUND'S RANKING
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6 MONTHS(1) ...... -7.42% -6.81% 5.31% -19.08% --
1 YEAR ........... -6.30% -2.85% 21.27% -23.92% 1 OUT OF 52
- ----------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS .......... 3.49% 5.64% 14.86% 0.17% 11 OUT OF 36
LIFE OF FUND ..... 4.83% 6.70%(3) 13.94%(3) 2.73%(3) 12 OUT OF 26(3)
</TABLE>

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

(2) According to Lipper Inc., an independent mutual fund ranking service.

(3) Since 9/30/94, the date nearest the fund's inception for which data are
available.

See pages 28-30 for more information about share classes, returns, the fund's
benchmark, and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND Value on 12/31/98 DJ World Stock Index
$17,420 Fund Benchmark $13,174 Global Natural Resources $12,417

Global Fund DJ World
Natural Resources Benchmark Stock Index
DATE VALUE VALUE VALUE
9/30/94 $10,000 $10,000 $10,000
12/31/94 $9,789 $9,711 $9,815
3/31/95 $10,227 $10,157 $10,053
6/30/95 $10,471 $10,409 $10,526
9/30/95 $10,729 $10,673 $11,022
12/31/95 $11,200 $11,173 $11,496
3/31/96 $11,872 $11,818 $11,888
6/30/96 $11,997 $12,086 $12,153
9/30/96 $12,114 $12,283 $12,268
12/31/96 $12,929 $12,956 $12,763
3/31/97 $12,951 $13,200 $12,651
6/30/97 $14,004 $14,480 $14,470
9/30/97 $15,014 $15,308 $14,907
12/31/97 $13,252 $13,561 $14,365
3/31/98 $13,968 $14,614 $16,193
6/30/98 $13,412 $14,136 $16,542
9/30/98 $12,327 $12,944 $14,890
12/31/98 $12,417 $13,174 $17,420

$10,000 investment made 9/30/94

The graph at left shows the growth of a $10,000 investment in over the life of
the fund, while the graph below shows the fund's year-by-year performance. The
Dow Jones World Stock Index and fund benchmark are provided for comparison.
Global Natural Resources' returns include operating expenses (such as
transaction costs and management fees) that reduce returns, while the returns of
the indices do not. Past performance does not guarantee future results.
Investment return and principal value will fluctuate, and redemption value may
be more or less than original cost.

[bar chart - data below]

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDED DECEMBER 31)

Global
Natural Resources Fund Benchmark
DATE RETURN RETURN
12/31/94* -2.11% -2.89%
12/31/95 14.41% 15.06%
12/31/96 15.45% 15.95%
12/31/97 2.50% 4.67%
12/31/98 -6.30% -2.85%

* From 9/30/94 (the date nearest the fund's inception for which index data are
available) to 12/31/94.

www.americancentury.com 11

Global Natural Resources--Q&A
- --------------------------------------------------------------------------------
/photo of Joe Sterling/

An interview with Joe Sterling, a portfolio manager on the Global Natural
Resources investment team.

HOW DID THE FUND PERFORM IN 1998?

Global Natural Resources' performance reflected negative investor sentiment
toward natural resource-related stocks caused by commodity price deflation and
global economic weakness. Relative to its peers, however, the portfolio
performed very well.

For all of 1998, Global Natural Resources returned -6.30%, which, though
low in absolute terms, ranked number one out of 52 "Natural Resources Funds"
tracked by Lipper Inc. The average return of the 52 funds in 1998 was -23.92%.
The portfolio's benchmark, an index based on companies in the Basic Materials
and Energy sectors of the Dow Jones World Stock Index, returned -2.85% for the
year. (See the Total Returns table on the previous page for additional
performance comparisons.)

HOW DID GLOBAL NATURAL RESOURCES ACHIEVE ITS #1 RANKING?

The key to the fund's strong relative performance was our disciplined,
benchmark-based management approach. Instead of concentrating assets in
relatively few sectors or countries, Global Natural Resources is managed against
an index of eight industries in 30 countries. In addition, we use a computer
model to help us determine the level of risk we want to take relative to the
benchmark. Using a broad, benchmark-based approach that attempts to limit risk
helped the fund's performance relative to its peers, as did some of our sector
weighting decisions.

CAN YOU GIVE AN EXAMPLE OF A SECTOR YOU LIKED?

Sure. First, keep in mind that we're talking about two industries that were
hurt by commodity price deflation last year. Because we've been in a down
market, we didn't see a big advantage to making large sector plays relative to
the benchmark. For example, a neutral position compared with the benchmark would
be about 75% energy and 25% basic materials at today's market cap. For the last
year or more, we've slightly overweighted energy stocks and underweighted basic
materials shares (see the Industry Weightings charts at left).

Energy outperformed basic materials last year, so modestly overweighting
the portfolio in energy stocks contributed positively to performance. That's
particularly true of the last six months, when the energy shares in our
benchmark index fell about 4%, while the basic materials stocks were down about
8%.

HOW DID YOU POSITION THE FUND WITHIN THE ENERGY SECTOR?

We overweighted large, integrated international oil producers and
underweighted small energy service and exploration companies. That helped
returns quite a bit because integrated oil companies were the best-performing
natural resource-related stocks of 1998, though they were up just 2% in absolute
terms, while service and exploration companies were the two worst-performing
sectors.

[left margin]

"THE KEY TO THE FUND'S STRONG RELATIVE PERFORMANCE WAS OUR DISCIPLINED,
BENCHMARK-BASED MANAGEMENT APPROACH."

PORTFOLIO AT A GLANCE
12/31/98 12/31/97
NUMBER OF COMPANIES 72 77
PORTFOLIO TURNOVER 76% 41%
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.69% 0.73%

[pie charts - data below]

INDUSTRY WEIGHTINGS

AS OF DECEMBER 31, 1998
Energy 78%
Basic Materials 20%
Temporary Cash
Investments 2%

AS OF JUNE 30, 1998
Energy 77%
Basic Materials 19%
Temporary Cash
Investments 4%

Investment terms are defined in the Glossary on page 30.

12 1-800-345-2021

Global Natural Resources--Q&A
- --------------------------------------------------------------------------------
(Continued)

Two huge corporate acquisitions helped support the stock prices of big
multinational oil companies despite the decline in the price of crude oil.
British Petroleum bought Amoco, while Exxon agreed to acquire Mobil--these were
four of our largest holdings on December 31. Normally, you'd expect such big
acquisitions to spark a market rally, but the huge decline in oil prices offset
gains by these stocks. The mergers should help promote efficiency and cut costs,
which would be positives for the sector down the road.

YOU MENTIONED EARLIER THAT WE'RE EXPERIENCING COMMODITY PRICE DEFLATION. CAN YOU
EXPAND ON THAT A LITTLE?

The unifying theme in commodity markets over the last year and a half or so
is deflationary pressure on prices caused by oversupply and a huge drop in
demand. Take a look at any major commodity index, or the prices of oil, copper,
or aluminum, for example, and you'll see that they're all at their lowest levels
in years. That's because the Asian economic crisis has slowed down global growth
dramatically.

Global growth is important because it helps determine the level of
commodity demand. Asia in particular plays a vital part in that
demand--according to HSBC Securities, Asia (excluding China) accounts for about
a quarter of the world's metal consumption; add China and the figure exceeds a
third. It's a similar story for oil--growing Asian demand was essential to the
rise in crude oil prices between 1993 and about mid-1997.

WHAT DO YOU SEE FOR GLOBAL GROWTH?

Economists at J.P. Morgan expect average global growth of about 1% in 1999
(see the graph below for additional growth forecasts). Putting that in
perspective, global growth during the economic downturns of 1974-75, 1981-82,
and 1990-91 averaged 1%, 0.9%, and 2.2%, respectively.

But many economists expect better growth in 2000. That would suggest
commodity prices could bottom in 1999. Because financial markets tend to
anticipate economic changes, expectations for better growth in 2000 mean we
could see natural resource-related stock prices rise in late 1999.

However, Asia in particular appears to have overbuilt. That means they may
have already consumed--at least for a while--all the steel, copper, and other
base metals that they use in construction. So it's possible that base metal
demand might not snap back even if Asian economies do recover in 2000.

[right margin]

"THE UNIFYING THEME IN COMMODITY MARKETS OVER THE LAST YEAR AND A HALF OR SO IS
DEFLATIONARY PRESSURE ON PRICES CAUSED BY OVERSUPPLY AND A HUGE DROP IN DEMAND.

[bar chart - data below]

ECONOMIC GROWTH FORECASTS
1999 2000
USA 1.0% 1.5%
Japan 0.0% -1.0%
Euro Area 1.7% 2.7%
Emerging
Economies 1.2% 4.5%
Global 1.0% 2.0%

Source: J.P. Morgan

www.americancentury.com 13

Global Natural Resources--Q&A
- --------------------------------------------------------------------------------
(Continued)

WHAT'S YOUR OUTLOOK FOR BASE METALS THEN?

We think the most likely scenario calls for a continued downward trend for
the next six months or so, with a rebound possible in the second half of '99.
That said, prices for many commodities are very near their production costs,
which makes it unlikely that prices could go significantly lower.

Basic materials stocks typically follow movements in the underlying
commodity, but they can rally back when they've been oversold. A good example
would be the short-lived rally in paper stocks in the fourth quarter. These
stocks were so beaten up they started to look attractive. They were also helped
by a series of interest rate cuts by world central banks, which seemed to argue
for better economic growth and more demand for paper products. So even though
basic materials stocks are down, we think there are still opportunities to make
money in this sector.

HOW'S THE OUTLOOK FOR ENERGY?

Weaker demand and falling oil prices led many producers to reduce their
higher-cost production and cut capital expenditures. That has the effect of
increasing the time it takes producers to turn the oil tap back on when demand
finally bounces back. We would also like to see OPEC announce some production
cutbacks at their March meeting. That would help reduce excess supply. Then,
assuming demand comes back later in 1999, we could get a decent rebound in oil
prices.

GIVEN YOUR OUTLOOK, HOW WILL YOU MANAGE THE FUND OVER THE NEXT SIX MONTHS?

We will continue to try to limit our risk relative to the benchmark, using
the same diversified approach that helped the fund to its #1 ranking in 1998.
That said, we'll consider making modest sector bets if we find compelling
relative values in a particular industry. Within energy, we think the best
returns down the line will be in small oil exploration and service stocks.
Because these companies are closely tied to the price of oil, we will continue
to underweight them until we think crude prices are about to turn the corner.
Among basic materials shares, we'll try to position the fund to benefit from
rallies growing out of oversold conditions, as we discussed earlier.

[left margin]

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
EXXON CORP. 11.0% 10.3%
BRITISH PETROLEUM
CO. PLC 5.7% 5.0%
ROYAL DUTCH
PETROLEUM CO. 5.6% 7.4%
MOBIL CORP. 4.6% 3.9%
AMOCO CORP. 3.9% 2.2%
CHEVRON CORP. 3.8% 4.1%
ENI S.P.A. 3.3% 3.0%
RESPOL SA 3.0% 2.3%
TEXACO INC. 2.2% 2.3%
ELF AQUITAINE SA 2.2% 2.3%

[pie charts - data below]

GEOGRAPHIC COMPOSITION

AS OF DECEMBER 31, 1998
U.S. 54%
Europe 31%
Americas
(excluding U.S.) 8%
Asia/Pacific 5%
South Africa 2%

AS OF JUNE 30, 1998
U.S. 51%
Europe 38%
Americas
(excluding U.S.) 5%
Asia/Pacific 4%
South Africa 2%

14 1-800-345-2021

Global Natural Resources--Schedule of Investments
- --------------------------------------------------------------------------------

DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS--97.8%
ARGENTINA--1.4%
ENERGY
19,500 YPF Sociedad Anonima ADR $ 544,782
-------------
AUSTRALIA--1.9%
BASIC MATERIALS
175,000 Lihir Gold Limited(1) 195,785
285,000 Normandy Mining Limited 263,094
ENERGY
65,000 Woodside Petroleum Limited 290,086
-------------
748,965
-------------
BELGIUM--1.0%
ENERGY
3,000 Electrafina SA 392,322
-------------
CANADA--6.9%
BASIC MATERIALS
12,000 Barrick Gold Corp. 234,000
16,500 Euro-Nevada Mining Corporation 269,555
40,000 Meridian Gold Inc.(1) 235,248
16,000 Placer Dome Inc. 184,000
10,000 Rio Algom Ltd. ADR 108,125
65,000 Tembec Inc. Cl A(1) 354,669
ENERGY
45,000 Anderson Exploration Ltd.(1) 408,743
21,000 Petro-Canada 222,995
13,500 Suncor Energy, Inc. 405,803
20,000 Talisman Energy, Inc.(1) 352,219
-------------
2,775,357
-------------
FINLAND--0.8%
BASIC MATERIALS
12,000 UPM-Kymmene Oyj 334,186
-------------
FRANCE--4.1%
ENERGY
11,000 Bouygues Offshore S.A. 253,731
7,500 Elf Aquitaine SA 867,005
5,000 Total SA Cl B 506,424
-------------
1,627,160
-------------
ITALY--3.3%
ENERGY
200,000 ENI S.p.A. 1,307,755
-------------
JAPAN--2.9%
BASIC MATERIALS
40,000 Nippon Paper Industries Co. 181,265
120,000 Nippon Steel Corporation 216,883
40,000 Oji Paper Co. Ltd. 207,009
110,000 Sumitomo Metal Industries 125,105

Shares Value
- --------------------------------------------------------------------------------
ENERGY
36,000 General Sekiyu K.K. $ 130,447
35,000 Nippon Oil Company 121,578
30,000 Showa Shell Sekiyu 167,952
-------------
1,150,239
-------------
NETHERLANDS--5.6%
ENERGY
45,000 Royal Dutch Petroleum Co. 2,238,270
-------------
PORTUGAL--0.6%
BASIC MATERIALS
37,000 Portucel Industrial-Empresa
Produtora de Celulose, SA 242,311
-------------
SOUTH AFRICA--1.7%
BANKING
3,603 Standard Bank Investment
Corporation Limited 11,010
BASIC MATERIALS
8,000 Anglo American Corp. of South
Africa 225,186
5,000 Anglogold Limited 194,559
23,000 Driefontein Consolidated Ltd. 91,762
27,946 Gold Fields Ltd.(1) 154,195
3,000 Gold Fields of South Africa 5,602
-------------
682,314
-------------
SPAIN--4.1%
ENERGY
18,000 Endesa S.A. 476,838
22,100 Respol SA 1,178,687
-------------
1,655,525
-------------
UNITED KINGDOM--11.5%
BASIC MATERIALS
43,416 Rio Tinto plc 503,485
ENERGY
125,000 BG plc 786,493
75,000 British-Borneo Petroleum
Syndicate plc 124,429
152,493 British Petroleum Co. plc 2,270,617
130,000 Lasmo 215,677
115,000 Shell Transport & Trading Co. PLC 704,495
-------------
4,605,196
-------------
UNITED STATES--52.0%
BASIC MATERIALS
20,000 AK Steel Holding Corp. 470,000
7,000 Aluminum Co. of America 521,938
7,500 Bowater Inc. 310,781
10,000 Fort James Corporation 400,000
10,000 Mead Corp. (The) 293,125
5,000 Rayonier, Inc. 229,688
16,000 Stillwater Mining Co.(1) 656,000

See Notes to Financial Statements

www.americancentury.com 15

Global Natural Resources--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

6,000 Weyerhaeuser Co. $ 304,875
9,500 Willamette Industries, Inc. 318,250
ENERGY
25,600 Amoco Corp. 1,545,600
20,000 Anadarko Petroleum Corp. 617,500
20,500 Burlington Resources Inc. 734,156
18,400 Chevron Corp. 1,526,050
15,000 Coastal Corp. (The) 524,063
20,000 El Paso Natural Gas Co. 696,250
15,000 Enron Corp. 855,938
60,000 Exxon Corp. 4,387,500
8,000 Halliburton Co. 237,000
11,200 Kerr-McGee Corp. 428,400
21,300 Mobil Corp. 1,855,763
12,000 Murphy Oil Corp. 495,000
12,000 Phillips Petroleum Co. 511,500
9,000 Schlumberger Ltd. 415,125
16,500 Texaco Inc. 872,438
33,100 Tom Brown, Inc.(1) 332,034
10,000 Transocean Offshore $ 268,125
18,400 Unocal Corp. 537,050
11,800 Veritas DGC Inc.(1) 153,400
10,000 Williams Companies, Inc. (The) 311,875
-------------
20,809,424
-------------
TOTAL COMMON STOCKS 39,113,806
-------------
(Cost $35,924,603)

TEMPORARY CASH INVESTMENTS--2.2%
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 4.80%, dated 12/31/98,
due 1/4/99 (Delivery value $900,480) 900,000
-------------
(Cost $900,000)

TOTAL INVESTMENT SECURITIES--100.0% $40,013,806
=============
(Cost $36,824,603)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

(1) Non-income producing.

The schedule includes:

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percentage of investments in each country, as applicable

See Notes to Financial Statements

16 1-800-345-2021

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

GLOBAL GLOBAL NATURAL
DECEMBER 31, 1998 GOLD RESOURCES

ASSETS
Investment securities, at value
(identified cost of $315,303,855 and
$36,824,603, respectively) (Note 3) ........ $ 230,538,158 $ 40,013,806
Cash ......................................... 577,153 270,812
Dividends, interest and other receivables .... 69,940 69,841
------------- -------------
231,185,251 40,354,459
------------- -------------

LIABILITIES
Disbursements in excess of
demand deposit cash ........................ 1,979,546 14,111
Payable for investments purchased ............ -- 490,246
Payable for capital shares redeemed .......... 281,753 68,704
Accrued management fees (Note 2) ............. 134,418 22,416
Distribution and service fees
payable (Note 2) ........................... 9 --
Payable for directors' fees
and expenses ............................... 1,156 202
------------- -------------
2,396,882 595,679
------------- -------------
Net Assets ................................... $ 228,788,369 $ 39,758,780
============= =============

NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ...... $ 427,791,391 $ 38,354,063
Undistributed net investment
income (loss) .............................. (16,686) 10,124
Accumulated net realized loss on
investments and foreign
currency transactions ...................... (114,220,752) (1,795,116)
Net unrealized appreciation
(depreciation) on investments
and translation of assets and liabilities
in foreign currencies (Note 3) ............. (84,765,584) 3,189,709
------------- -------------
$ 228,788,369 $ 39,758,780
============= =============

Investor Class, $10.00 Par Value
Net assets ................................... $ 228,771,431 $ 39,758,780
Shares outstanding ........................... 41,438,261 3,755,984
Net asset value per share .................... $ 5.52 $ 10.59

Advisor Class, $10.00 Par Value
Net assets ................................... $ 16,938 N/A
Shares outstanding ........................... 3,067 N/A
Net asset value per share .................... $ 5.52 N/A

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's NET ASSETS. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the price of an
individual share, or the NET ASSET VALUE PER SHARE.

See Notes to Financial Statements

www.americancentury.com 17

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

GLOBAL GLOBAL NATURAL
YEAR ENDED DECEMBER 31, 1998 GOLD RESOURCES

INVESTMENT INCOME
Income:
Dividends (net of foreign taxes
withheld of $151,756 and
$63,696, respectively) ................... $ 3,512,161 $ 996,024
Interest ................................... 196,940 42,879
------------ ------------
3,709,101 1,038,903
------------ ------------
Expenses (Note 2):
Management fees ............................ 1,760,265 297,762
Distribution fees -- Advisor Class ......... 57 --
Service fees -- Advisor Class .............. 57 --
Directors' fees and expenses ............... 16,365 3,428
------------ ------------
1,776,744 301,190
------------ ------------
Net investment income ...................... 1,932,357 737,713
------------ ------------

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY (NOTE 3)
Net realized gain (loss) on:
Investments ................................ (78,044,491) (1,325,843)
Foreign currency transactions .............. 49,364 (34,388)
------------ ------------
(77,995,127) (1,360,231)
------------ ------------
Change in net unrealized
appreciation (depreciation) on:
Investments ................................ 47,502,697 (1,957,915)
Translation of assets and liabilities
in foreign currencies .................... 4,621 1,730
------------ ------------
47,507,318 (1,956,185)
------------ ------------
Net realized and unrealized loss
on investments and
foreign currency ......................... (30,487,809) (3,316,416)
------------ ------------
Net Decrease in Net Assets
Resulting from Operations ................ $(28,555,452) $ (2,578,703)
============ ============

Fund OPERATIONS include:

* income earned from investments (dividends and interest)

* management fees and other expenses

* gains or losses from selling investments (known as realized gains or losses)

* gains or losses on current fund holdings (known as unrealized appreciation or
depreciation)

See Notes to Financial Statements

18 1-800-345-2021

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

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997

GLOBAL GOLD GLOBAL NATURAL RESOURCES
Decrease in Net Assets 1998 1997 1998 1997

OPERATIONS
<S> <C> <C> <C> <C>
Net investment income .......... $ 1,932,357 $ 3,253,670 $ 737,713 $ 923,805
Net realized gain (loss) on
investments and
foreign currency transactions (77,995,127) (32,125,432) (1,360,231) 1,041,706
Change in net unrealized
appreciation (depreciation)
on investments and translation
of assets and liabilities in
foreign currencies ........... 47,507,318 (153,557,529) (1,956,185) 81,557
------------- ------------- ------------- -------------
Net increase (decrease) in
net assets
resulting from operations .... (28,555,452) (182,429,291) (2,578,703) 2,047,068
------------- ------------- ------------- -------------

DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income:
Investor Class ............... (1,999,679) (3,534,937) (688,139) (938,125)
Advisor Class ................ (144) -- -- --
From net realized gains on
investment transactions
Investor Class ............... -- (7,324,988) -- (1,946,841)
Advisor Class ................ -- -- -- --
------------- ------------- ------------- -------------
Decrease in net assets
from distributions ........... (1,999,823) (10,859,925) (688,139) (2,884,966)
------------- ------------- ------------- -------------

CAPITAL SHARE
TRANSACTIONS (NOTE 4)
Net increase (decrease)
in net assets from capital
share transactions ........... 13,328,332 6,717,979 (3,530,585) (18,627,281)
------------- ------------- ------------- -------------
Net decrease in net assets ..... (17,226,943) (186,571,237) (6,797,427) (19,465,179)

NET ASSETS
Beginning of year .............. 246,015,312 432,586,549 46,556,207 66,021,386
------------- ------------- ------------- -------------
End of year .................... $ 228,788,369 $ 246,015,312 $ 39,758,780 $ 46,556,207
============= ============= ============= =============
Undistributed net
investment income (loss) .... $ (16,686) $ 1,568 $ 10,124 $ (5,062)
============= ============= ============= =============
</TABLE>

* operations--a summary of the Statement of Operations from the previous page
for the most recent period

* distributions--income and gains distributed to shareholders

* capital share transactions--shareholders' purchases, reinvestments, and
redemptions

Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.

See Notes to Financial Statements

www.americancentury.com 19

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

DECEMBER 31, 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Quantitative Equity Funds (the
Corporation) is registered under the Investment Company Act of 1940 as an
open-end management investment company. American Century Global Gold Fund
(Global Gold) and American Century Global Natural Resources Fund (Global Natural
Resources) (the Funds) are two of the six funds issued by the Corporation. The
Funds are non-diversified under the 1940 Act. Global Gold's investment objective
is to seek to realize a total return (capital growth and dividends) consistent
with investment in securities of companies that are engaged in mining,
processing, fabricating or distributing gold or other precious metals throughout
the world. Global Natural Resources' investment objective is to seek to realize
a total return consistent with investment in companies that are engaged in the
natural resources industry. The Funds invest primarily in equity securities. The
Funds are authorized to issue two classes of shares: the Investor Class and the
Advisor Class. The two classes of shares differ principally in their respective
shareholder servicing and distribution expenses and arrangements. All shares of
the Funds represent an equal pro rata interest in the assets of the class to
which such shares belong, and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except for class specific
expenses and exclusive rights to vote on matters affecting only individual
classes. Sale of the Advisor Class for Global Gold commenced on May 6, 1998 and
sale of the Advisor Class for Global Natural Resources had not commenced as of
the report date. The following significant accounting policies are in accordance
with generally accepted accounting principles.

FOREIGN CURRENCY TRANSACTIONS -- The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are translated into U.S. dollars at prevailing exchange
rates. Purchases and sales of investment securities, dividend and interest
income, and certain expenses are translated at the rates of exchange prevailing
on the respective dates of such transactions.

Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.S. dollar value of the amounts
actually received or paid. Net unrealized foreign currency exchange gains or
losses arise from changes in the value of assets and liabilities, other than
portfolio securities, resulting from changes in the exchange rates.

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

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The Funds may enter into
forward foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Fund's exposure to foreign currency exchange rate fluctuations. When
required, the Funds will segregate assets in an amount sufficient to cover their
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Funds and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statements of Assets and Liabilities. The
Funds bear the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.

20 1-800-345-2021

Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

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

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

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

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

At December 31, 1998, Global Gold and Global Natural Resources had
accumulated net realized capital loss carryovers for federal income tax purposes
of $75,400,427 and $1,574,913, respectively, (expiring 2005 through 2006 for
Global Gold and 2006 for Global Natural Resources) which may be used to offset
future taxable gains.

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

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

The Corporation has entered into a Management Agreement with ACIM that
provides each Fund with investment advisory and management services in exchange
for a single, unified management fee per class. Expenses excluded from this
agreement are brokerage, taxes, portfolio insurance, interest, fees and expenses
of those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses. The annual rate at which this fee is assessed is determined monthly in
a two-step process: First, a fee rate schedule is applied to the net assets of
all of the funds in the Fund's investment category which are managed by ACIM
(the "Investment Category Fee"). The overall investment objective of each Fund
determines its Investment Category. The three investment categories are: the
Money Market Fund Category, the Bond Fund Category, and the Equity Fund
Category. The Funds are included in the Equity Fund Category. Second, a separate
fee rate schedule is applied to the net assets of all of the funds managed by
ACIM (the "Complex Fee"). The Investment Category Fee and the Complex Fee are
then added to determine the unified management fee rate. The management fee is
paid monthly by each Fund based on each Fund's aggregate average daily net
assets during the previous month multiplied by the monthly management fee rate.

The annualized Investment Category Fee schedule for each Fund is as
follows:

www.americancentury.com 21

Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

The annualized Complex Fee schedule (for the Investor Class) is as follows

The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Funds will pay ACIM
an annual distribution fee equal to 0.25% and service fee equal to 0.25%. The
fees are computed daily and paid monthly based on the Advisor Class's average
daily closing net assets during the previous month. The distribution fee
provides compensation for distribution expenses incurred by financial
intermediaries in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with respect to shares of
the Funds. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred under the Plan during the period ended December
31, 1998, were $114 for Global Gold.

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

Purchases of securities, excluding short-term investments, for Global Gold
and Global Natural Resources totaled $183,017,112 and $32,458,167, respectively.
Sales of securities, excluding short-term investments, for Global Gold and
Global Natural Resources totaled $169,186,542 and $35,941,391, respectively. As
of December 31, 1998, accumulated net unrealized appreciation (depreciation) for
Global Gold and Global Natural Resources was $(112,903,326) and $2,994,364,
respectively, based on the aggregate cost of investments for federal income tax
purposes of $343,441,484 and $37,019,442, respectively. Accumulated net
unrealized appreciation or depreciation consisted of unrealized appreciation of
$26,537,585 and $7,136,603 for Global Gold and Global Natural Resources and
unrealized depreciation of $139,440,911 and $4,142,240, respectively.

22 1-800-345-2021

<TABLE>
<CAPTION>
The Corporation is authorized to issue 2,000,000,000 shares to each Fund.
Transactions in shares of the Funds were as follows:

GLOBAL GOLD GLOBAL NATURAL RESOURCES
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
INVESTOR CLASS
Designated shares ......................... 1,000,000,000 1,000,000,000
============== =============
Year ended December 31, 1998
Sold ...................................... 104,258,706 $652,622,550 6,504,958 $73,091,465
Issued in reinvestment of distributions ... 333,504 1,863,311 59,439 657,579
Redeemed .................................. (101,985,910) (641,175,389) (6,865,254) (77,279,629)
-------------- -------------- ------------- --------------
Net increase (decrease) ................... 2,606,300 $13,310,472 (300,857) $(3,530,585)
============== ============== ============= ==============

Year ended December 31, 1997
Sold ...................................... 56,650,525 $498,502,780 5,448,117 $68,396,071
Issued in reinvestment of distributions ... 1,572,865 10,054,826 241,208 2,772,120
Redeemed .................................. (57,572,936) (501,839,627) (7,174,926) (89,795,472)
-------------- -------------- ------------- --------------
Net increase (decrease) ................... 650,454 $ 6,717,979 (1,485,601) $(18,627,281)
============== ============== ============= ==============

ADVISOR CLASS
Designated Shares ......................... 250,000,000
==============
Period ended December 31, 1998(1)
Sold ...................................... 21,411 $120,946
Issued in reinvestment of distributions ... 26 144
Redeemed .................................. (18,370) (103,230)
-------------- --------------
Net increase .............................. 3,067 $17,860
============== ==============
</TABLE>

(1) May 6, 1998 (commencement of sale) through December 31, 1998.

- --------------------------------------------------------------------------------
5. BANK LOANS

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

www.americancentury.com 23

Global Gold--Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31

Investor Class
1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 6.34 $ 11.33 $ 12.37 $ 11.33 $ 13.67
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income .......... 0.05(1) 0.09 0.06 0.02 0.03
Net Realized and Unrealized
Gain (Loss) on Investment
Transactions ................... (0.82) (4.79) (0.40) 1.03 (2.32)
----------- ----------- ----------- ----------- -----------
Total From Investment Operations (0.77) (4.70) (0.34) 1.05 (2.29)
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income ..... (0.05) (0.09) (0.06) (0.01) (0.02)
From Net Realized Gains
on Investment Transactions ..... -- (0.20) (0.64) -- --
In Excess of Net Realized Gains -- -- -- -- (0.03)
----------- ----------- ----------- ----------- -----------
Total Distributions ............ (0.05) (0.29) (0.70) (0.01) (0.05)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year ..... $ 5.52 $ 6.34 $ 11.33 $ 12.37 $ 11.33
=========== =========== =========== =========== ===========
Total Return(2) ................ (12.18)% (41.47)% (2.76)% 9.25% (16.75)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .......... 0.69% 0.67% 0.62% 0.61% 0.61%
Ratio of Net Investment Income
to Average Net Assets .......... 0.75% 0.92% 0.46% 0.17% 0.20%
Portfolio Turnover Rate .......... 68% 28% 45% 28% 42%
Net Assets, End of Year
(in thousands) ................. $ 228,771 $ 246,015 $ 432,587 $ 537,693 $ 568,030
</TABLE>

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

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

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced during
the period

See Notes to Financial Statements

24 1-800-345-2021

Global Gold--Financial Highlights
- --------------------------------------------------------------------------------

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

Advisor Class
1998(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ................... $ 7.31
----------
Income From Investment Operations
Net Investment Income(2) ............................. 0.01
Net Realized and Unrealized Loss
on Investment Transactions ........................... (1.76)
----------
Total From Investment Operations ..................... (1.75)
----------
Distributions
From Net Investment Income ........................... (0.04)
----------
Net Asset Value, End of Period ......................... $ 5.52
==========
Total Return(3) ...................................... (24.00)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................................ 0.94%(4)
Ratio of Net Investment Income
to Average Net Assets ................................ 0.20%(4)
Portfolio Turnover Rate ................................ 68%
Net Assets, End of Period .............................. $ 16,938

(1) May 6, 1998 (commencement of sale) through December 31, 1998.

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

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

(4) Annualized.

See Notes to Financial Statements

www.americancentury.com 25

Global Natural Resources--Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31 (EXCEPT AS NOTED)

1998 1997 1996 1995 1994(1)
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.48 $ 11.91 $ 10.66 $ 9.61 $ 10.00
---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Income ............ 0.19 0.22 0.17 0.16 0.07
Net Realized and Unrealized Gain
(Loss) on Investment Transactions (0.90) 0.08 1.46 1.22 (0.42)
---------- ---------- ---------- ---------- ----------
Total From Investment Operations . (0.71) 0.30 1.63 1.38 (0.35)
---------- ---------- ---------- ---------- ----------
Distributions
From Net Investment Income ....... (0.18) (0.23) (0.17) (0.16) (0.04)
From Net Realized Gains on
Investment Transactions .......... -- (0.50) (0.21) (0.17) --
---------- ---------- ---------- ---------- ----------
Total Distributions .............. (0.18) (0.73) (0.38) (0.33) (0.04)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ..... $ 10.59 $ 11.48 $ 11.91 $ 10.66 $ 9.61
========== ========== ========== ========== ==========
Total Return(2) .................. (6.30)% 2.50% 15.45% 14.41% (3.48)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............ 0.69% 0.73%(3) 0.76% 0.76% --
Ratio of Net Investment Income
to Average Net Assets ............ 1.70% 1.55%(3) 1.78% 2.02% 2.74%(4)
Portfolio Turnover Rate ............ 76% 41% 53% 39% --
Net Assets, End of Period
(in thousands) ................... $ 39,759 $ 46,556 $ 66,021 $ 30,157 $ 18,972
</TABLE>

(1) September 15, 1994 (inception) through December 31, 1994.

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

(3) A portion of the management fee was waived during the year ended December
31, 1997. In absence of the fee waiver, the ratio of operating expenses to
average net assets would have been 0.77% and the ratio of net investment
income to average net assets would have been 1.51%.

(4) Annualized.

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced during
the period

See Notes to Financial Statements

26 1-800-345-2021

Report of Independent Accountants
- --------------------------------------------------------------------------------

To the Directors of American Century Quantitative Equity Funds and Shareholders
of the American Century Global Gold Fund and American Century Global Natural
Resources Fund:

In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the American Century Global Gold
Fund and American Century Global Natural Resources Fund (two of the six funds
comprising American Century Quantitative Equity Funds hereafter referred to as
the "Funds") at December 31, 1998, the results of each of their operations for
the year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the two
years in the period then ended, in conformity with generally accepted accounting
principles. The financial highlights for each of the three years in the period
ended December 31, 1996 were audited by other auditors, whose report dated
February 7, 1997, expressed an unqualified opinion on those statements. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP

Kansas City, Missouri
February 1, 1999

www.americancentury.com 27

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

SHARE CLASSES

Two classes of shares are authorized for sale by the funds: Investor Class
and Advisor Class.

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

RETIREMENT ACCOUNT INFORMATION

28 1-800-345-2021

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

INVESTMENT PHILOSOPHY AND POLICIES

American Century offers four "specialty" funds that concentrate their
holdings in specific industries or sectors of the stock market. These funds
typically respond differently than general equity funds to changing market or
economic conditions. The funds are managed to provide a broad representation of
the respective industries. Due to the limited focus of these funds, they may
experience greater volatility than funds with a broader investment strategy.
They are not intended to serve as a complete investment program by themselves.
International investing also involves special risks, such as political
instability and currency fluctuations.

GLOBAL GOLD seeks to realize a total return consistent with investment in
securities of companies that are engaged in mining, processing, fabricating or
distributing gold or other precious metals throughout the world.

GLOBAL NATURAL RESOURCES seeks to realize a total return consistent with
investment in companies that are engaged in the natural resources industries.

COMPARATIVE INDICES

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

The Global Gold fund benchmark was the Benham North American Gold Equities
Index from inception through February 1996. From March 1996 through December
1997, the benchmark was the FT-SE Gold Mines Index. From January 1998 to the
present, the benchmark has been a proprietary index described in more detail on
page 6.

The FT-SE(reg.tm) GOLD MINES INDEX(1) consists of 31 gold mining companies
in five countries and is considered a broad measure of the worldwide gold
equities market.

The DOW JONES WORLD STOCK INDEX(2), created by the editors of THE WALL
STREET JOURNAL, consists of 2,800 stocks in 29 countries and is divided into
nine broad market sectors. We created the Global Natural Resources fund's
benchmark index using the companies represented in two of these sectors--Basic
Materials and Energy. We altered the Basic Materials sector to exclude chemical
companies because they do not stockpile natural resources.

The MORGAN STANLEY WORLD STOCK INDEX is a widely followed group of stocks
from 22 different countries including the U.S. and Canada.

LIPPER RANKINGS

The Lipper categories for Global Gold and Global Natural Resources are:

GOLD-ORIENTED FUNDS (Global Gold)--funds that invest at least 65% of their
assets in shares of gold mines, gold-oriented mining finance houses, gold coins
or bullion.

NATURAL RESOURCES FUNDS (Global Natural Resources)--funds that invest at
least 65% of their assets in natural resources stocks.

(1) The FT-SE Gold Mines Index is calculated by FT-SE International Limited in
conjunction with the Institute of Actuaries. The FT-SE Gold Mines Index is a
trademark of the London Stock Exchange Limited and the Financial Times Ltd.
and is used by FT-SE International Limited under license. FT-SE
International Limited does not sponsor, endorse, or promote the fund.

(2) The DJWSI is the property of Dow Jones & Company, Inc., which is not
affiliated with American Century.

[right martin]

INVESTMENT TEAM LEADERS
PORTFOLIO MANAGERS
BILL MARTIN
JOE STERLING

www.americancentury.com 29

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

RETURNS

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

PORTFOLIO STATISTICS

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

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

TYPES OF STOCKS

30 1-800-345-2021

Notes
- --------------------------------------------------------------------------------

www.americancentury.com 31

Notes
- --------------------------------------------------------------------------------

32 1-800-345-2021

[inside back cover]

AMERICAN CENTURY FUNDS
- -------------------------------------------------------------------------------

[right margin]

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

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

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

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS

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

FUNDS DISTRIBUTOR, INC.
(c) 1999 AMERICAN CENTURY SERVICES CORPORATION

[recycled logo]
Recycled

[back cover]

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

9902 Funds Distributor, Inc.
SH-BKT-15568 (c)1999 American Century Services Corporation
<PAGE>

[front cover] DECEMBER 31, 1998

ANNUAL REPORT
- ----------------
AMERICAN CENTURY

[graphic of glasses]

AMERICAN CENTURY GROUP
- ------------------------------------
UTILITIES

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

AMERICAN CENTURY BROKERAGE
- --------------------------------------------------------------------------------

We're pleased to introduce American Century's new brokerage service, which
offers a wide range of investment options and features:

* FundChoice Service--Invest in over 8,000 no-load and load mutual funds
from hundreds of different fund companies, many with no transaction fees

* Buy individual stocks and bonds

* 24-hour Internet and automated phone trades are just $24.95 for up to
1,000 shares of stock, and 2 cents per share thereafter

* Strong research capability

* Track your brokerage account on one easy-to-read statement

* Unlimited check writing and a Gold MasterCard(reg.tm) ATM/debit card
with an American Century Brokerage Access AccountSM (minimum $10,000)

To talk with a Brokerage Associate, call 1-888-345-2071.

WHAT'S NEW . . .

AMERICAN CENTURY CATALOG OF TOOLS & SERVICES lists all the free educational
materials available to investors.

To order any of these materials, please call 1-800-345-2021.

[left margin]

AMERICAN CENTURY GROUP
UTILITIES
(BULIX)
- ----------------------------------

In addition, our investment management team is busy gathering publicly
available information about the year-2000 readiness of the issuers of securities
owned by American Century funds.

We appreciate your confidence in American Century. Please share with us our
belief that, "The best is yet to be."

Sincerely,

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

[right margin]

Table of Contents
Report Highlights ........ 2
Market Perspective ....... 3
UTILITIES
Performance Information .. 5
Management Q&A ........... 6
Portfolio at a Glance .... 6
Top Ten Holdings ......... 7
Industry Breakdown ....... 8
Schedule of Investments .. 9
FINANCIAL STATEMENTS
Statement of Assets and
Liabilities .............. 11
Statement of Operations .. 12
Statements of Changes
in Net Assets ............ 13
Notes to Financial
Statements ............... 14
Financial Highlights ..... 17
Report of Independent
Accountants .............. 19
OTHER INFORMATION
Share Class and Retirement
Account Information ...... 20
Background Information
Investment Philosophy
and Policies .......... 21
Comparative Indices ... 21
Lipper Rankings ....... 21
Investment Team
Leaders ............... 21
Glossary ................. 22

www.americancentury.com 1

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

MARKET PERSPECTIVE

* The S&P 500, representing the stocks of the largest U.S. companies, returned
better than 20% for an unprecedented fourth consecutive year.

* Large-company (large-cap) stocks outperformed mid- and small-cap stocks,
overcoming market turbulence in the third quarter to post strong returns.

* Driven by merger and acquisition activity, increasing demand for their
products, and earnings growth, telecommunications companies helped power a
good year for utilities stocks. Telecommunications was one of the top
performing subsectors in the U.S. stock market.

* More traditional electric and natural gas utilities underperformed the
high-flying telecommunications companies. The performance of electric
utilities stocks reached double digits on average, but natural gas utilities
lagged significantly as demand and commodity prices sagged.

MANAGEMENT Q&A

* American Century Utilities performed well on both an absolute and relative
basis.

* Two keys to the fund's strong performance were its large weighting in
telecommunications companies and a relatively small stake in natural gas
stocks.

* The best-performing telecommunication stocks were those involved in merger
and acquisition activity, such as WorldCom, MCI, AT&T, and Bell Atlantic.

* Electric company stocks were helped by their "safe-haven" reputation and by
industry consolidation. They held their value better than most other stocks
during the third-quarter turmoil but lagged during market rallies.

* Natural gas utilities held down performance, but they could represent good
value if inflation remains low and a colder winter boosts demand.

* We're not planning any significant strategy changes for the beginning of
1999. We'll continue to manage the portfolio to track its benchmark,
investing in companies that offer a combination of attractive valuation and
good earnings growth potential over the long term.

[left margin]

"TWO KEYS TO THE FUND'S STRONG PERFORMANCE WERE ITS LARGE WEIGHTING IN
TELECOMMUNICATIONS COMPANIES AND A RELATIVELY SMALL STAKE IN NATURAL GAS
STOCKS."

UTILITIES(1)
(BULIX)
TOTAL RETURNS: AS OF 12/31/98
6 Months 17.39%(2)
1 Year 27.43%
NET ASSETS: $307.9 million
30-DAY SEC YIELD: 2.44%
INCEPTION DATE: 3/1/93

(1) Investor Class.
(2) Not annualized.

See Total Returns on page 5.
Investment terms are defined in the Glossary on page 22.

2 1-800-345-2021

Market Perspective from Mark Mallon
- --------------------------------------------------------------------------------
/photo of Mark Mallon/

Mark Mallon, senior vice president and managing director of American Century
Investments

U.S. STOCKS--MIXED PERFORMANCE

In a year dominated by narrow market leadership and dramatic volatility,
U.S. stock performance was widely divergent but generally positive. The S&P 500,
representing the stocks of the largest domestic companies, continued its
decade-long trend of above-average gains, producing a return of better than 20%
for an unprecedented fourth consecutive year. Smaller companies didn't fare as
well--many small-company stocks posted flat or negative returns for the year.

Stocks took investors on a wild ride. After steamrolling to all-time highs
in the first half of 1998, the stock market entered one of its most volatile
periods since the end of World War II. A series of financial crises in Asia,
Russia, and Latin America wreaked havoc on market psychology, and wide
day-to-day swings became common.

Between mid-July and the end of August, the S&P 500 fell almost 20%. After
struggling through six weeks of ups and downs, the index recovered from its
earlier losses and posted additional gains in the fourth quarter. The recovery
occurred after the Federal Reserve (the U.S. central bank) lowered short-term
interest rates three times between late September and mid-November--its first
rate cuts in three years--to combat slower economic growth and add stability to
the markets.

COMPANY SIZE MATTERED

On the face of it, the solid returns of many stock indices suggest that it
was another great year for equities. However, index performance was
deceptive--the robust returns of a handful of large, blue-chip companies masked
price declines in the rest of the market. For example, on a
capitalization-weighted basis, the 25 largest stocks in the S&P 500 returned
66%; the remaining 475 returned just 5%.

Small-company stocks repeatedly lagged the shares of larger companies,
peaking earlier in the year and suffering more during the market decline in the
third quarter. Despite better values and faster earnings growth than most
large-company stocks, small-company stocks were ignored as investors favored the
shares of large, seasoned, well-known companies that they could buy or sell at a
moment's notice.

[right margin]

"THE MARKET'S DECLINE AND SUBSEQUENT REBOUND PROVIDED A TANGIBLE LESSON ABOUT
LONG-TERM INVESTING AND STAYING THE COURSE."

BROAD MARKET RETURNS
FOR THE YEAR ENDED DECEMBER 31, 1998
S&P 500 28.68%
S&P MIDCAP 400 19.11%
S&P SMALLCAP 600 -1.31%

Source: Lipper Inc.

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

[line chart - data below]

BROAD MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE YEAR ENDED DECEMBER 31, 1998

Source: Lipper Inc.

Indices are defined on page 21.

www.americancentury.com 3

Market Perspective from Mark Mallon
- --------------------------------------------------------------------------------
(Continued)
INDUSTRY WINNERS AND LOSERS

On the downside, many financial services stocks suffered sizable overseas
losses from the problems in Russia and Latin America. Energy stocks and others
that depend on natural resources also struggled when commodity prices declined
dramatically.

THE UTILITIES MARKET

Utilities stocks benefited from the telecommunications surge and global
market turmoil, but they were hurt by commodity price declines that affected
natural gas. In general, utilities shares marched steadily higher in concert
with the overall market in the first half of the year, though not with as much
pep as other sectors. The tide turned in utilities' favor in the third quarter,
when problems in Russia and Latin America caused most equity markets to stumble.
In the wake of this turbulence, U.S. investors increasingly turned to the
relative safety of domestic-oriented, dividend-paying companies with
recession-resistant earnings. By neatly fitting that bill, utilities companies
weathered the storm better than most industry sectors. Utilities continued to
post gains during the powerful fourth-quarter rally but generally lagged
faster-growing segments of the market.

THE URGE TO MERGE

Telecommunications stocks significantly outpaced their electric and natural
gas company counterparts thanks largely to the record-setting pace of mergers
and acquisitions. The wave of telecommunications consolidation was motivated by
companies' desires to enter new lines of business, expand geographically,
broaden product lines, and increase sales, profits, and earnings. In addition,
the rapid expansion of the Internet, increased demand for voice and data
communications systems, and cost cutting combined to boost telecommunications
companies' earnings.

ELECTRIC AND GAS STOCKS LAGGED

The more staid and traditional utility companies, such as electric and
natural gas power companies, couldn't keep pace with their high-flying
telecommunications counterparts. Electric utility stocks posted respectable
gains for the year and were particularly strong in the third quarter, when
investors sought a safe haven from global uncertainty. In addition, electrics
received a boost from falling interest rates and a strong bond market because
their relatively high dividends give them bond-like traits. Natural gas stocks
proved disappointing throughout the year as commodity prices plunged,
inventories ballooned, and demand slowed due to a warmer-than-usual U.S. winter
in 1997-98.

[left margin]

"UTILITIES STOCKS BENEFITED FROM THE TELECOMMUNICATIONS SURGE AND GLOBAL MARKET
TURMOIL, BUT THEY WERE HURT BY COMMODITY PRICE DECLINES THAT AFFECTED NATURAL
GAS."

UTILITIES MARKET RETURNS
FOR THE YEAR ENDED DECEMBER 31, 1998
FUND BENCHMARK 33.29%
S&P Telecommunications 60.19%
(long distance) Index
S&P Electric Index 10.24%
S&P Natural Gas Index 7.01%

Source: Bloomberg Financial Markets

Indices and fund benchmark are defined on page 21.

4 1-800-345-2021

Utilities--Performance
- --------------------------------------------------------------------------------

TOTAL RETURNS AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
INVESTOR CLASS (INCEPTION 3/1/93) ADVISOR CLASS (INCEPTION 6/25/98)
FUND UTILITY FUNDS(2) FUND
UTILITIES S&P 500 BENCHMARK AVERAGE RETURN FUND'S RANKING UTILITIES S&P 500 BENCHMARK
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) ..... 17.39% 9.37% 19.54% 9.11% -- 17.25% 9.37% 19.54%
1 YEAR .......... 27.43% 28.68% 33.29% 18.30% 13 OUT OF 102 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL
RETURNS
3 YEARS ......... 21.92% 28.17% 24.87% 17.24% 9 OUT OF 82 -- -- --
5 YEARS ......... 17.24% 24.05% 18.77% 13.37% 6 OUT OF 53 -- -- --
LIFE OF FUND .... 15.86% 21.96% 17.06% 13.21%(3) 4 OUT OF 32(3) 18.43% 10.20% 19.54%(4)
</TABLE>

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

(2) According to Lipper Inc., an independent mutual fund ranking service.

(3) Since 3/4/93, the date nearest the class's inception for which data are
available.

(4) Since 6/30/98, the date nearest the class's inception for which data are
available.

See pages 20-22 for more information about share classes, returns, the fund's
benchmark, and Lipper fund rankings.

[mountain chart - data below]

GROWTH OF $10,000 OVER LIFE OF FUND
Value on 12/31/98
S&P 500 $31,858
Fund Benchmark $25,077
Utilities $23,690

Utilities S&P 500 Fund Benchmark
DATE VALUE VALUE VALUE
3/1/93 $10,000 $10,000 $10,000
3/31/93 $10,223 $10,287 $10,258
6/30/93 $10,589 $10,336 $10,455
9/30/93 $11,262 $10,603 $11,078
12/31/93 $10,659 $10,849 $10,614
3/31/94 $9,731 $10,438 $9,699
6/30/94 $9,639 $10,482 $9,562
9/30/94 $9,801 $10,993 $9,812
12/31/94 $9,590 $10,991 $9,618
3/31/95 $10,161 $12,060 $10,071
6/30/95 $10,862 $13,210 $10,795
9/30/95 $11,897 $14,259 $11,822
12/31/95 $13,014 $15,117 $12,877
3/31/96 $12,699 $15,929 $12,637
6/30/96 $13,135 $16,642 $13,237
9/30/96 $12,506 $17,157 $12,839
12/31/96 $13,642 $18,586 $13,988
3/31/97 $13,353 $19,086 $13,740
6/30/97 $14,870 $22,414 $15,193
9/30/97 $15,697 $24,093 $16,091
12/31/97 $18,529 $24,785 $18,814
3/31/98 $20,750 $28,240 $21,274
6/30/98 $20,111 $29,177 $20,978
9/30/98 $20,592 $26,283 $21,585
12/31/98 $23,690 $31,858 $25,077

$10,000 investment made 3/1/93

The graph at left shows the growth of a $10,000 investment over the life of
the fund, while the graph below shows the fund's year-by-year performance. The
S&P 500 and the fund's benchmark are provided for comparison. Until 1996, the
fund's benchmark was the NYSE Utilities Index. Beginning in 1996, the fund's
benchmark has been a custom utilities index, described on page 21. Utilities'
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the indices do
not. These graphs are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). Past performance does not guarantee future results. Investment return
and principal value will fluctuate, and redemption value may be more or less
than original cost.

[bar chart - data below]

ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDED DECEMBER 31)

Utilities Fund Benchmark
DATE RETURN RETURN
12/31/93* 6.60% 6.14%
12/31/94 -10.03% -9.39%
12/31/95 35.70% 33.89%
12/31/96 4.82% 8.63%
12/31/97 35.82% 34.50%
12/31/98 27.43% 33.29%

* From 3/1/93 (the fund's inception date) to 12/31/93.

www.americancentury.com 5

Utilities--Q&A
- --------------------------------------------------------------------------------
/photo of Joe Sterling, Kurt Borgwardt, John Schniedwind/

An interview with Joe Sterling, Kurt Borgwardt, and John Schniedwind,
portfolio managers on the Utilities fund investment team.

HOW DID THE FUND PERFORM DURING 1998?

American Century Utilities performed well on both an absolute and relative
basis. The fund's 1998 total return was 27.43%*, significantly higher than the
18.30% average return for the 102 utilities funds tracked by Lipper Inc. The
fund's returns placed it in the top 15% of its Lipper peer group for the
one-year, three-year, five-year, and life-of-fund periods ended December 31,
1998. (See the previous page for other fund performance comparisons).

WHY DID AMERICAN CENTURY UTILITIES OUTPACE ITS PEERS DURING 1998?

Two key reasons for the fund's strong performance were its large weighting
in telecommunications companies, which were far and away the best-performing
utilities sector in 1998, and its relatively small stake in poor-performing
natural gas stocks. Telecommunications stocks made up roughly 55% of the fund's
investments for much of the year, while many of our peers had around a 40%
stake.

One of our core investment strategies is to track our custom benchmark of
about 165 utilities stocks. In 1998, that benchmark had about 55% in telephone
and communications services companies, 35% in electric and gas utilities, and
the remaining 10% or so in utilities-related companies, such as communications
equipment manufacturers.

The fund's performance was also helped by our commitment to remain fully
invested in utilities stocks. That helped insulate us from the missed
opportunities that can occur when investors try to "time the market" and make
inopportune shifts in and out of the sector.

WHICH TELECOMMUNICATIONS HOLDINGS WERE THE STRONGEST PERFORMERS?

Companies involved in mergers and acquisitions performed best. Our holdings
in satellite company WorldCom received a boost when the company announced plans
to hook up with long-distance provider MCI. The consummation of that deal, and
the favorable market perception of the efficiencies it created, helped lift the
price of our holdings in the combined entity (MCI WorldCom) and made it our top
performer for 1998. Likewise, other high-profile deals involving AT&T, Bell
Atlantic, Ameritech, SBC Communications, GTE, and AirTouch Communications helped
boost our holdings in those companies as well.

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

[left margin]

"AMERICAN CENTURY UTILITIES PERFORMED WELL ON BOTH AN ABSOLUTE AND RELATIVE
BASIS."

PORTFOLIO AT A GLANCE
12/31/98 12/31/97
NUMBER OF COMPANIES 80 77
30-DAY SEC YIELD 2.44% 2.93%
PRICE/EARNINGS RATIO 17.4 17.2
PORTFOLIO TURNOVER 98% 92%
EXPENSE RATIO (FOR
INVESTOR CLASS) 0.69% 0.72%

Investment terms are defined in the Glossary on page 22.

6 1-800-345-2021

Utilities--Q&A
- --------------------------------------------------------------------------------
(Continued)

WHY DID THE "URGE TO MERGE" IN TELECOMMUNICATIONS PROMPT INVESTORS TO BID UP THE
PRICES OF TELECOMMUNICATIONS STOCKS?

Investors enthusiastically welcomed telecommunications consolidation for a
host of reasons. For one, acquirers typically offered or actually paid an
attractive premium for the companies they targeted. Second, industry
consolidation reduced the number of competitors but opened the markets up to
more competition. In a more competitive environment, investors reasoned that the
combined entities should benefit from the reduced costs of doing business by
eliminating redundancies and creating economies of scale.

However, merger activity wasn't the only positive factor fueling
telecommunications stocks. The rapid growth of the Internet and increased demand
for voice and data communications -- spurred by technological development and
deregulation -- resulted in healthy earnings growth for the industry.

WHILE THEIR PERFORMANCE DIDN'T RIVAL THE RETURNS OF TELECOM STOCKS, ELECTRIC
UTILITIES NONETHELESS TURNED IN RESPECTABLE GAINS FOR 1998. WHAT POWERED THEIR
SUCCESS?

Amid global market and economic uncertainty, electric company stocks were
helped by their "safe-haven" reputation, particularly in the third quarter. When
the strength of the world economy was called into question -- most notably in
the summer and fall -- investors increasingly sought out predictable earnings
that were less vulnerable to overseas problems. Electric utilities' relatively
high dividends, which give them bond-like characteristics, were also a plus
during that period because the bond market rallied.

In addition, mergers and acquisition activity in the electric industry
provided an added boost for the sector. And finally, the regulatory environment
remained positive for the companies. As more and more states marched toward
electric utility deregulation, the companies were allowed to recoup the costs of
facilities built earlier.

WHAT PREVENTED NATURAL GAS STOCKS FROM PERFORMING BETTER IN 1998?

Falling commodity prices and a warmer-than-normal winter in 1997-98 across
most of the U.S hindered performance. At the same time the warm weather
curtailed demand, natural gas prices fell as inventories grew. Weaker demand
coupled with growing supply caused most natural gas stocks to post losses for
the year. The fund's natural gas holdings fell to 5% of the portfolio at the end
of the year. We continued to hold onto a selection of natural gas stocks
because, despite their recent travails, we felt that some offered both
attractive prices and strong earnings growth potential.

WHY DID THE FUND'S DIVIDEND YIELD DECLINE THROUGHOUT THE YEAR?

It was basic math. As the fund's holdings appreciated, its share price
rose. As a result, the fund's yield -- the dividends it collects divided by its
share price -- declined. (See the Glossary on page 22 for a complete definition
of the fund's 30-day SEC yield.) To a lesser degree, the fund's dividend yield
was affected by smaller dividend payouts by utilities that increasingly deployed
profits toward funding growth and improvement.

[right margin]

"COMPANIES INVOLVED IN MERGERS AND ACQUISITIONS PERFORMED BEST."

TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
AT&T CORP. 7.1% 4.6%
BELLSOUTH CORP. 6.2% 6.6%
AMERITECH CORP. 5.1% 5.5%
SBC COMMUNICATIONS
INC. 5.1% 5.3%
MCI WORLDCOM, INC.(1) 4.9% 4.9%(2)
GTE CORP. 4.7% 5.1%
U S WEST
COMMUNICATIONS
GROUP 4.4% 3.9%
AIRTOUCH
COMMUNICATIONS,
INC. 4.3% 4.0%
BELL ATLANTIC CORP. 3.6% 4.5%
DUKE ENERGY CORP.(3) 3.4% 1.3%

(1) WorldCom, Inc. acquired MCI Communications on 9/15/98. The new name is MCI
WorldCom, Inc.

(2) Represents percentage of WorldCom, Inc. shares owned by the fund.

(3) Formerly known as Duke Power Co.

www.americancentury.com 7

Utilities--Q&A
- --------------------------------------------------------------------------------
(Continued)

WHAT'S YOUR OUTLOOK FOR UTILITIES STOCKS IN 1999?

Though we believe it will be difficult for telecommunications stocks to
repeat last year's stellar performance, we think they could continue to perform
well. The 60% gain posted by the S&P Telecommunications Index in 1998 was driven
in large part by mega-mergers. While we think that consolidation will continue,
we don't believe it will be as frenzied as it was last year. However, the focus
on reducing costs and adding and expanding products and services should help
telecommunications companies to continue to grow earnings at reasonably
attractive rates. Given that, we think that telecommunications stocks in general
are fairly priced.

In the electric utilities sector, we foresee continued consolidation, which
we believe will be a positive for the group. Furthermore, we think that electric
companies are in as good financial shape as they have been in nearly a decade.
As long as inflation remains low and investors continue to worry about global
economic weakness, electrics could do well, even without more industry
consolidation.

From a valuation standpoint, we think natural gas stocks offer the most
compelling story of the three subsectors in the utilities group. To the extent
that the price of natural gas firms up and winter demand strengthens, natural
gas stocks are poised to improve.

WITH THAT OUTLOOK IN MIND, HOW DO YOU PLAN TO MANAGE AMERICAN CENTURY UTILITIES
IN 1999?

For the foreseeable future, we're comfortable with the portfolio's current
allocation among telecommunications, electric, and natural gas stocks, which
closely matches that of its benchmark. As far as strategy is concerned, we'll
follow the same strategy that led to our strong longer-term performance --
looking for companies that offer a combination of attractive valuation and good
earnings growth potential over the long term. We'll also continue to remain
fully invested in utilities stocks, which means the fund's returns will be tied
to that sector no matter what its direction.

[left margin]

"FOR THE FORESEEABLE FUTURE, WE'RE COMFORTABLE WITH THE PORTFOLIO'S CURRENT
ALLOCATION AMONG TELECOMMUNICATIONS, ELECTRIC, AND NATURAL GAS STOCKS, WHICH
CLOSELY MATCHES THAT OF ITS BENCHMARK."

INDUSTRY BREAKDOWN
% OF FUND INVESTMENTS
AS OF AS OF
12/31/98 6/30/98
TELEPHONE
COMMUNICATIONS 49% 50%
ELECTRIC 35% 33%
WIRELESS
COMMUNICATIONS 6% 5%
NATURAL GAS 5% 10%
OTHER 5% 2%

8 1-800-345-2021

Utilities--Schedule of Investments
- --------------------------------------------------------------------------------

DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

COMMON STOCKS--98.8%
COMPUTER SOFTWARE & SERVICES--0.1%
10,000 ICG Communications Inc.(1) $ 215,625
--------------
ENERGY (PRODUCTION &
MARKETING)--3.7%
37,000 Coastal Corp. (The) 1,292,688
58,300 Enron Corp. 3,326,744
216,200 Keyspan Energy Corp. 6,702,200
8,400 Questar Corp. 162,750
--------------
11,484,382
--------------
NATURAL GAS--4.8%
4,000 Atmos Energy Corp. 129,000
12,000 Columbia Energy Group 693,000
6,100 Consolidated Natural Gas Co. 329,400
13,200 Eastern Enterprises 577,500
18,200 Energen Corp. 354,900
201,500 KN Energy, Inc. 7,329,563
53,400 MCN Energy Group Inc. 1,017,938
18,200 Piedmont Natural Gas Co., Inc. 657,475
17,800 Southwest Gas Corp. 478,375
141,100 TransCanada Pipelines Ltd. 2,081,225
24,900 Westcoast Energy Inc. 494,888
17,400 Williams Companies, Inc. (The) 542,663
--------------
14,685,927
--------------
TELEPHONE COMMUNICATIONS--49.2%
2,600 Aliant Communications, Inc. 106,031
57,000 ALLTEL Corp. 3,409,312
246,900 Ameritech Corp. 15,647,287
289,800 AT&T Corp. 21,807,450
193,100 BCE Inc. 7,325,731
207,500 Bell Atlantic Corp. 10,997,500
384,200 BellSouth Corp. 19,161,975
56,700 Cincinnati Bell Inc. 2,143,969
220,200 GTE Corp. 14,313,000
49,700 Hong Kong Telecommunications
Ltd. ADR 872,856
60,900 IDT Corp.(1) 934,434
210,300 MCI WorldCom, Inc.(1) 15,095,597
290,600 SBC Communications Inc. 15,583,425
66,300 Sprint Corp. 5,577,488
16,700 Telecom Corporation of New
Zealand Ltd. ADR 595,981
84,100 Telefonos de Mexico, S.A. Cl L
ADR 4,094,619
210,000 U S WEST Communications Group 13,571,250
26,800 West Teleservices Corp.(1) 269,675
--------------
151,507,580
--------------

Shares Value
- --------------------------------------------------------------------------------
UTILITIES (ELECTRIC)--35.0%
149,400 Avista Corp. $ 2,875,950
148,900 Baltimore Gas & Electric Co. 4,597,287
75,500 BEC Energy 3,109,656
103,300 Black Hills Corp. 2,724,537
82,400 Central & South West Corp. 2,260,850
50,500 Central Maine Power Co. 953,187
12,300 CMS Energy Corp. 595,781
40,250 Conectiv, Inc. 986,125
81,900 Dominion Resources, Inc. (Va.) 3,828,825
162,900 Duke Energy Corp. 10,435,781
175,100 Edison International 4,880,912
5,200 El Paso Electric Co.(1) 45,500
15,600 Empresa Nacional de Electricidad
S.A. (Chile) ADR 177,450
19,500 Energy East Corp. 1,101,750
117,000 Entergy Corp. 3,641,625
80,500 FIRSTENERGY CORP. 2,621,281
50,700 FPL Group, Inc. 3,124,388
89,400 Hawaiian Electric Industries, Inc. 3,598,350
162,300 Houston Industries Inc. 5,213,888
27,800 Idaho Power Co. 1,006,013
87,400 Kansas City Power & Light Co. 2,589,225
138,500 LG&E Energy Corp. 3,921,281
98,900 MDU Resources Group, Inc. 2,602,306
120,000 Minnesota Power & Light Co. 5,280,000
1,800 OGE Energy Corp. 52,200
39,400 Otter Tail Power Co. 1,578,463
6,900 PG&E Corp. 217,350
157,500 Public Service Co. of New Mexico 3,218,906
210,400 Sempra Energy 5,338,900
225,500 Southern Co. 6,553,594
72,100 Texas Utilities Co. 3,366,169
114,100 UGI Corp. 2,709,875
211,100 Utilicorp United Inc. 7,744,731
152,200 Western Resources, Inc. 5,060,650
--------------
108,012,786
--------------
WIRELESS COMMUNICATIONS--6.0%
185,200 AirTouch Communications, Inc.(1) 13,357,550
21,100 Cable & Wireless plc ADR 775,425
7,200 Cellular Communications
International, Inc.(1) 491,400
26,600 Cellular Communications of
Puerto Rico(1) 492,100
19,500 CommNet Cellular Inc.(1) 240,094
4,100 Paging Network, Inc.(1) 19,091
9,500 PanAmSat Corp.(1) 369,609
8,900 SkyTel Communications Inc.(1) 195,522
32,450 Sprint PCS(1) 750,406

See Notes to Financial Statements

www.americancentury.com 9

Utilities--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
DECEMBER 31, 1998

Shares Value
- --------------------------------------------------------------------------------

11,000 Vodafone Group plc ADR $ 1,772,375
1,300 Western Wireless Corp. Cl A(1) 28,559
--------------
18,492,131
--------------
TOTAL COMMON STOCKS 304,398,431
--------------
(Cost $232,102,327)

TEMPORARY CASH INVESTMENTS--1.2%
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury Securities), in a joint
trading account at 4.80%, dated 12/31/98,
due 1/4/99 (Delivery value $3,601,920) 3,600,000
--------------
(Cost $3,600,000)

TOTAL INVESTMENT SECURITIES--100.0% $307,998,431
==============
(Cost $235,702,327)

NOTES TO SCHEDULE OF INVESTMENTS

ADR = American Depositary Receipt

(1) Non-income producing.

The schedule includes:

* a list of each investment

* the number of shares of each stock

* the market value of each investment

* the percentage of investments in each industry, as applicable

* the percent and dollar breakdown of each investment category

See Notes to Financial Statements

10 1-800-345-2021

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

DECEMBER 31, 1998

ASSETS
Investment securities, at value
(identified cost of $235,702,327)
(Note 3) ................................................ $307,998,431
Cash ...................................................... 1,097,078
Dividends and interest receivable ......................... 790,685
------------
309,886,194
------------

LIABILITIES
Disbursements in excess
of demand deposit cash .................................. 470,284
Payable for investments purchased ......................... 1,324,499
Payable for capital shares redeemed ....................... 66,954
Accrued management fees (Note 2) .......................... 170,684
Distribution fees payable (Note 2) ........................ 16
Service fees payable (Note 2) ............................. 16
Payable for directors' fees and expenses .................. 1,572
------------
2,034,025
------------
Net Assets ................................................ $307,852,169
============

NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) ................... $234,746,992
Undistributed net investment income ....................... 246,713
Accumulated undistributed net realized
gain from investment transactions ....................... 561,823
Net unrealized appreciation
on investments (Note 3) ................................. 72,296,641
------------
$307,852,169
============

Investor Class, $10.00 Par Value
Net assets ................................................ $307,776,633
Shares outstanding ........................................ 19,286,193
Net asset value per share ................................. $ 15.96

Advisor Class, $10.00 Par Value
Net assets ................................................ $ 75,536
Shares outstanding ........................................ 4,734
Net asset value per share ................................. $ 15.96

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of shares outstanding gives you the price of an
individual share, or the net asset value per share.

NET ASSETS are also broken down by capital (money invested by shareholders); net
investment income not yet paid to shareholders or net investment losses; net
gains earned on investments but not yet paid to shareholders or net losses on
investments (known as realized gains or losses); and finally, gains or losses on
securities still owned by the fund (known as unrealized appreciation or
depreciation). This breakdown tells you the value of net assets that are
performance-related, such as investment gains or losses, and the value of net
assets that are not related to performance, such as shareholder investments and
redemptions.

See Notes to Financial Statements

www.americancentury.com 11

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

YEAR ENDED DECEMBER 31, 1998

INVESTMENT INCOME
Income:
Dividends (net of foreign tax
withheld of $46,292) ................................... $ 7,341,118
Interest ................................................. 138,175
-----------
7,479,293
-----------

Expenses (Note 2):
Management fees .......................................... 1,605,054
Distribution fees -- Advisor Class ....................... 33
Service fees -- Advisor Class ............................ 33
Directors' fees and expenses ............................. 16,589
-----------
1,621,709
-----------
Net investment income .................................... 5,857,584
-----------

REALIZED AND UNREALIZED
GAIN ON INVESTMENTS (NOTE 3)
Net realized gain on investments ......................... 25,812,319
Change in net unrealized
appreciation on investments ............................ 29,664,921
-----------
Net realized and unrealized
gain on investments .................................... 55,477,240
-----------

Net Increase in Net Assets
Resulting from Operations .............................. $61,334,824
===========

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENT OF OPERATIONS--This statement breaks down how the
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.

Fund OPERATIONS include:

* income earned from investments (dividends and interest)

* management fees and other expenses

* gains or losses from selling investments (known as realized gains or losses)

* gains or losses on current fund holdings (known as unrealized appreciation or
depreciation)

See Notes to Financial Statements

12 1-800-345-2021

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

YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997

Increase in Net Assets 1998 1997

OPERATIONS
Net investment income .................. $ 5,857,584 $ 4,813,402
Net realized gain on
investment transactions .............. 25,812,319 14,150,655
Change in net unrealized
appreciation on investments .......... 29,664,921 25,220,795
------------- -------------
Net increase in net assets
resulting from operations ............ 61,334,824 44,184,852
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ....................... (5,858,812) (4,602,845)
Advisor Class ........................ (418) --
From net realized gains
from investment transactions:
Investor Class ....................... (28,052,659) (10,451,945)
Advisor Class ........................ (6,429) --
------------- -------------
Decrease in net assets
from distributions ................... (33,918,318) (15,054,790)
------------- -------------

CAPITAL SHARE TRANSACTIONS
(NOTE 4)
Net increase in net assets from
capital share transactions ........... 70,473,943 35,697,995
------------- -------------
Net increase in net assets ............. 97,890,449 64,828,057

NET ASSETS
Beginning of year ...................... 209,961,720 145,133,663
------------- -------------
End of year ............................ $ 307,852,169 $ 209,961,720
============= =============
Undistributed net
investment income ................... $ 246,713 $ 249,655
============= =============

- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
the fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:

* operations--a summary of the Statement of Operations from the previous page
for the most recent period

* distributions--income and gains distributed to shareholders

* capital share transactions--shareholders' purchases, reinvestments, and
redemptions

Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.

See Notes to Financial Statements

www.americancentury.com 13

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

DECEMBER 31, 1998

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION -- American Century Quantitative Equity Funds (the
Corporation) is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company. American Century Utilities
Fund (the Fund) is one of the six funds issued by the Corporation. The Fund
seeks current income and long-term growth of capital and income. The Fund
invests primarily in equity securities of companies engaged in the utilities
industry. The Fund is authorized to issue two classes of shares: the Investor
Class and the Advisor Class. The two classes of shares differ principally in
their respective shareholder servicing and distribution expenses and
arrangements. All shares of the Fund represent an equal pro rata interest in the
assets of the class to which such shares belong, and have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
for class specific expenses and exclusive rights to vote on matters affecting
only individual classes. Sale of the Advisor Class commenced on June 25, 1998.
The following significant accounting policies are in accordance with generally
accepted accounting principles.

SECURITY VALUATIONS -- Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no sales price is available. Securities
traded over-the-counter are valued at the mean of the latest bid and asked
prices or, in the case of certain foreign securities, at the last reported sales
price, depending on local convention or regulation. Debt securities not traded
on a principal securities exchange are valued through a commercial pricing
service or at the mean of the most recent bid and asked prices. When valuations
are not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.

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

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

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

DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income were declared
daily and distributed monthly through June 25, 1998. Effective June 26, 1998,
distributions from net investment income were declared and paid quarterly.
Distributions from net realized gains are expected to be declared and paid
semi-annually.

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

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

14 1-800-345-2021

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

DECEMBER 31, 1998

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

The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified management fee. Expenses excluded from this agreement are
brokerage, taxes, portfolio insurance, interest, fees and expenses of those
Directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses. The annual rate at which this fee is assessed is determined monthly in
a two-step process: First, a fee rate schedule is applied to the net assets of
all of the funds in the Fund's investment category which are managed by ACIM
(the "Investment Category Fee"). The overall investment objective of each Fund
determines its Investment Category. The three investment categories are: the
Money Market Fund Category, the Bond Fund Category, and the Equity Fund
Category. The Fund is included in the Equity Fund Category. Second, a separate
fee rate schedule is applied to the net assets of all of the funds managed by
ACIM (the "Complex Fee"). The Investment Category Fee and the Complex Fee are
then added to determine the unified management fee rate. The management fee is
paid monthly by the Fund based on each class's average daily closing net assets
during the previous month multiplied by the monthly management fee rate.

The annualized Investment Category Fee schedule for the Fund is as follows

The annualized Complex Fee schedule (Investor Class) is as follows:

The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plan provides that the Fund will pay ACIM an
annual distribution fee equal to 0.25% and service fee equal to 0.25%. The fees
are computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the Fund. The service
fee provides compensation for shareholder and administrative services rendered
by ACIM, its affiliates or independent third party providers. Fees incurred by
the Fund under the Plan for the period ended December 31, 1998 were $66.

www.americancentury.com 15

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

DECEMBER 31, 1998

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

Purchases and sales of securities, excluding short-term investments, totaled
$272,864,268 and $227,987,596, respectively. On December 31, 1998, accumulated
net unrealized appreciation on investments was $71,077,951, based on the
aggregate cost of investments for federal income tax purposes of $236,920,480,
which consisted of unrealized appreciation of $75,799,670 and unrealized
depreciation of $4,721,719.

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

The Corporation is authorized to issue 2,000,000,000 shares to the Fund. Of
these 2,000,000,000 shares, the Fund has been designated 1,000,000,000 Investor
Class shares and 250,000,000 Advisor Class shares.

Transactions in shares of the Fund were as follows:

SHARES AMOUNT
INVESTOR CLASS
Year ended December 31, 1998
Sold ....................................... 15,422,169 $ 231,780,389
Issued in reinvestment of distributions .... 2,000,202 30,697,386
Redeemed ................................... (12,882,858) (192,079,380)
------------- -------------
Net increase ............................... 4,539,513 $ 70,398,395
============= =============

Year ended December 31, 1997
Sold ....................................... 8,043,039 $ 108,091,075
Issued in reinvestment of distributions .... 973,561 13,016,905
Redeemed ................................... (6,883,378) (85,409,985)
------------- -------------
Net increase ............................... 2,133,222 $ 35,697,995
============= =============

ADVISOR CLASS
Period Ended December 31, 1998(1)
Sold ....................................... 4,487 $ 71,713
Issued in reinvestment of distributions .... 247 3,835
------------- -------------
Net increase ............................... 4,734 $ 75,548
============= =============

(1) June 25, 1998 (commencement of sale) through December 31, 1998.

- --------------------------------------------------------------------------------
5. BANK LOANS

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

16 1-800-345-2021

Utilities--Financial Highlights
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31

Investor Class
1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ..$ 14.24 $ 11.51 $ 11.44 $ 8.79 $ 10.24
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income ............. 0.37 0.43 0.45 0.42 0.44
Net Realized and Unrealized
Gain (Loss) on Investment
Transactions ...................... 3.39 3.57 0.08 2.65 (1.45)
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .. 3.76 4.00 0.53 3.07 (1.01)
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income ........ (0.38) (0.42) (0.46) (0.42) (0.44)
From Net Realized Gains on
Investment Transactions ........... (1.66) (0.85) -- -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ............... (2.04) (1.27) (0.46) (0.42) (0.44)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year ........$ 15.96 $ 14.24 $ 11.51 $ 11.44 $ 8.79
=========== =========== =========== =========== ===========
Total Return(1) ................... 27.43% 35.82% 4.82% 35.70% (10.03)%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............. 0.69% 0.72% 0.71% 0.75% 0.75%
Ratio of Net Investment Income
to Average Net Assets ............. 2.51% 3.56% 3.88% 4.31% 4.67%
Portfolio Turnover Rate ............. 98% 92% 93% 68% 61%
Net Assets, End of Year
(in thousands) ....................$ 307,777 $ 209,962 $ 145,134 $ 218,794 $ 152,570
</TABLE>

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

On a per-share basis, it includes:

* share price at the beginning of the period

* investment income and capital gains or losses

* income and capital gains distributions paid to shareholders

* share price at the end of the period

It also includes some key statistics for the period:

* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions

* expense ratio--operating expenses as a percentage of average net assets

* net income ratio--net investment income as a percentage of average net assets

* portfolio turnover--the percentage of the portfolio that was replaced during
the period

See Notes to Financial Statements

www.americancentury.com 17

Utilities--Financial Highlights
- --------------------------------------------------------------------------------
(Continued)

FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED

Advisor Class
1998(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ...................... $14.90
------
Income From Investment Operations
Net Investment Income ................................... 0.16
Net Realized and Unrealized Gain
on Investment Transactions .............................. 2.52
------
Total From Investment Operations ........................ 2.68
------
Distributions
From Net Investment Income .............................. (0.19)
From Net Realized Gains on
Investment Transactions ................................. (1.43)
------
Total Distributions ..................................... (1.62)
------
Net Asset Value, End of Period ............................ $15.96
======
Total Return(2) ......................................... 18.43%

RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................................... 0.94%(3)
Ratio of Net Investment Income
to Average Net Assets ................................... 1.94%(3)
Portfolio Turnover Rate ................................... 98%
Net Assets, End of Period
(in thousands) .......................................... $ 76

(1) June 25, 1998 (commencement of sale) through December 31, 1998.

(2) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total return is not annualized.

(3) Annualized.

See Notes to Financial Statements

18 1-800-345-2021

Report of Independent Accountants
- --------------------------------------------------------------------------------

To the Directors of the American Century Quantitative Equity Funds and
Shareholders of the American Century Utilities Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the American Century Utilities Fund
(one of six funds comprising the American Century Quantitative Equity Funds,
hereafter referred to as the "Fund") at December 31, 1998, the results of its
operations for the year then ended, the changes in its net assets and the
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles. The financial
highlights for each of the three years in the period ended December 31, 1996
were audited by other auditors, whose report dated February 7, 1997, expressed
an unqualified opinion on those statements. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.

PricewaterhouseCoopers LLP

Kansas City, Missouri
February 1, 1999

www.americancentury.com 19

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

SHARE CLASS

Two classes of shares are authorized for sale by the fund: Investor Class
and Advisor Class.

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

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

RETIREMENT ACCOUNT INFORMATION

20 1-800-345-2021

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

INVESTMENT PHILOSOPHY AND POLICIES

American Century offers four "specialty" equity funds* that concentrate
their holdings in specific industries or sectors of the stock market. These
funds typically respond differently than general equity funds to changing market
or economic conditions. The funds are managed to provide a broad representation
of their respective industries.

AMERICAN CENTURY UTILITIES seeks current income and long-term growth of
capital and income. The fund invests primarily in the stocks of companies
engaged in the utilities industry, including electricity, natural gas, and
telecommunications services.

COMPARATIVE INDICES

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

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

The S&P MIDCAP 400 is composed of 400 mid-capitalization stocks traded on
domestic exchanges. It is considered a broad measure of mid-sized stock
performance.

The S&P SMALLCAP 600 is composed of 600 small-capitalization stocks traded
on domestic exchanges. It is considered a broad measure of small-company stock
performance.

The FUND BENCHMARK consists of approximately 165 utilities stocks that meet
the fund's investment criteria. The benchmark's composition by industry group in
1998 was approximately 55% telephone and communication services, 35% electric
and natural gas companies, and 10% in utilities-related companies, such as
manufacturers of communications equipment.

The S&P ELECTRIC INDEX is composed of 26 electric power companies in the
S&P 500.

The S&P NATURAL GAS INDEX is composed of 11 natural gas distributors and
pipeline companies in the S&P 500.

The S&P TELECOMMUNICATIONS (LONG DISTANCE) INDEX is composed of four
long-distance telephone companies in the S&P 500.

LIPPER RANKINGS

LIPPER INC. is an independent mutual fund ranking service that groups funds
according to their investment objective. Rankings are based on average annual
returns for each fund in a given category for the periods indicated. Rankings
are not included for periods less than one year.

The Lipper category for Utilities is:

UTILITY FUNDS--funds that invest at least 65% of their portfolios in
utilities stocks.

[right margin]

INVESTMENT TEAM LEADERS
PORTFOLIO MANAGERS
JOHN SCHNIEDWIND
KURT BORGWARDT
JOE STERLING

* Investing in these funds involves special risks resulting from their
concentrated investment objectives. They are not intended to serve as a
complete investment program by themselves.

www.americancentury.com 21

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

RETURNS

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

* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year total returns, please refer to the "Financial
Highlights" on pages 17-18.

PORTFOLIO STATISTICS

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

* 30-DAY SEC YIELD--net investment income earned by the fund over a 30-day
period, expressed as an annual percentage rate based on the fund's share price
at the end of the 30-day period. The SEC yield should be regarded as an estimate
of the fund's dividend income, and it may not equal the fund's actual income
distribution rate, the income paid to a shareholder's account, or the income
reported in the fund's financial statements.

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

TYPES OF STOCKS

22 1-800-345-2021

Notes
- --------------------------------------------------------------------------------

www.americancentury.com 23

Notes
- --------------------------------------------------------------------------------

24 1-800-345-2021

[inside back cover]

AMERICAN CENTURY FUNDS
- -------------------------------------------------------------------------------

[right margin]

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

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

INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575

AUTOMATED INFORMATION LINE:
1-800-345-8765

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

FAX: 816-340-7962

INTERNET: WWW.AMERICANCENTURY.COM

AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS

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

FUNDS DISTRIBUTOR, INC.
(c) 1999 AMERICAN CENTURY SERVICES CORPORATION

[recycled logo]
Recycled

[back cover]

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

9902 Funds Distributor, Inc.
SH-BKT-15567 (c)1999 American Century Services Corporation