SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 16 [X]
(Check appropriate box or boxes.)
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
_________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
4500 Main Street, Kansas City, MO 64141-6200
_________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 531-5575
David C. Tucker, Esq., 4500 Main Street, Kansas City, MO 64141-6200
___________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: May 22, 2000
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<PAGE>
American Century
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Prospectus
Life Sciences Fund
[Effective Date]
Investor Class
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
Funds Distributor, Inc. and American Century Investment Services, Inc.,
Distributors
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this Prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Fund - Learn about fund goals, strategies and risks, and who
may or may not want to invest.
Fund Performance History - See how the fund performed from year to year.
Fees and Expenses - Find out about fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Fund section.
As you continue to read, the Management section will acquaint you with the fund
management teams, and Investing with American Century gives an overview about
how to invest and manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
Prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m. Central
time. Give us a call at 1-800-345-2021.
Sincerely,
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
Table of Contents
An Overview of the Fund....................................................X
Fund Performance History...................................................X
Fees and Expenses..........................................................X
Objectives, Strategies and Risks...........................................X
Management.................................................................X
Investing with American Century...........................................XX
Share Price and Distributions.............................................XX
Taxes.....................................................................XX
Multiple Class Information................................................XX
Financial Highlights......................................................XX
CALLOUTS
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in blue italics, look for its definition in
the left margin.
This symbol highlights special information and helpful tips.
An Overview of the Fund
What is the fund's investment objective?
This fund seeks capital growth.
What is the fund's primary investment strategies and principal risks?
The fund managers look for stocks of growing U.S. and foreign companies that
engage in the business of providing products and services that help promote
personal health and wellness. The investment strategy of this fund is based on
the belief that, over the long term, stocks of companies with earnings and
revenue growth have a greater-than-average chance to increase in value over
time. A more detailed description of American Century's growth investment style
and the fun's investment strategies and risks begins on [page x].
The fund's principal risks include
o Market Risk - The value of a fund's shares will go up and down based on the
performance of the companies whose securities it owns and other factors
generally affecting the securities market.
o Price Volatility - The value of a fund's shares may fluctuate significantly
in the short term.
o Concentration - The fund will focus on the medical and healthcare industry
and related industry groups. Because of this, companies in the fund's
portfolio may react similarly to market developments, such as government
regulation, subsidies, or technological advancements. As a result, the
fund's net asset values may be more volatile than those of less concentrated
funds.
o Principal Loss - As with all mutual funds, if you sell your shares when
their value is less than the price you paid, you will lose money.
o Foreign Risk - The fund may invest in foreign securities, which can be
riskier than investing in U.S. stocks.
Who may want to invest in the fund?
The fund may be a good investment if you are
o seeking long-term capital growth potential from your investment
o seeking diversification of your investment portfolio through investment in
life sciences related securities
o comfortable with the risks associated with investing in U.S. and foreign
life sciences related securities
o comfortable with the fund's short-term price volatility
o investing through an IRA or other tax-advantaged retirement plan
Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with the risks associated with this fund
o uncomfortable with short-term volatility in the value of your investment
CALLOUT
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Fund Performance History
As a new fund, it has no performance history as of the date of this Prospectus.
CALLOUT
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
Fees and Expenses
There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Investor Class shares of other American Century funds
o to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating Expenses
<S> <C> <C> <C> <C>
Life Sciences Fund x.xx% None 0.00% x.xx%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors and their legal counsel as well as interest, are expected
to be less than 0.005% for the current fiscal year.
Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
Life Sciences Fund $xxx $xxx
CALLOUT
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Objectives, Strategies and Risks
Life Sciences Fund
What is the fund's investment objective?
This fund seeks capital growth.
How does the fund pursue its investment objective?
The fund managers look for stocks of growing companies in the life sciences
industry. To achieve its objective, the fund invests primarily in companies
that engage in the business of providing products and services that help promote
health and wellness. Life sciences companies generally own, operate or support
health care facilities; design, manufacture or sell pharmaceuticals,
bio-pharmaceuticals, and medical devices and supplies; or may provide
biotechnology needed to improve agriculture, aquaculture, forestry, chemicals,
household products and cosmetics/personal care products, environmental cleanup,
food processing and forensics. The fund may invest in U.S. or foreign companies
of any size.
Sometimes a company will engage in multiple lines of business. We will generally
consider a company to be a life sciences company if
o at least 50% of its gross income or net assets come from activities in the
sector;
o at least 50% of its assets are devoted to producing revenues from the
sector; or
o based on other information we obtain, we determine that its primary business
should be categorized within the sector.
The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy. This strategy looks for
companies with earnings and revenues that are not only growing, but growing at a
successively faster, or accelerating pace. This strategy is based on the premise
that, over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.
The managers use a bottom-up approach to select stocks for the fund. That means
they first look for strong, growing companies to invest in, rather than simply
buying any company in a growing industry or sector. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the compa1nies' earnings and
revenues. This information is used to help the fund managers select and hold
stocks of companies they believe will be able to sustain accelerating growth and
to sell stocks of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund managers review and may invest in companies that experience a change in
their business that will stimulate future revenue and earnings acceleration and
lead to positive investor perception. The change typically is the result of key
events including: entry into a new market, a new product, patent or license, or
the presentation of clinical data showing efficacy for a new drug or medical
device. The fund managers also believe that it is important to diversify the
fund's holdings across different countries and geographical regions. For this
reason, the fund managers also consider the prospects for relative economic
growth among countries or regions, economic and political conditions, expected
inflation rates, currency exchange fluctuations and tax considerations when
making investments.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent,or if they are unable to find securities that meet the
fund's requirements, the fund may invest a portion of its assets in convertible
debt securities, short-term securities, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the fund's cash assets remain liquid while
performing more like stocks. The fund has a policy governing stock index futures
and similar derivative securities to help manage the risk of these types of
investments. For example, the managers cannot leverage the fund's assets by
investing in a derivative security. A complete description of the derivatives
policy is included in the Statement of Additional Information.
Additional information about the fund's investments is available in its annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
CALLOUT
Accelerating growth is shown, for example, by growth that is faster this quarter
than last or faster this year than the year before.
What kinds of securities does the fund buy?
The fund will generally purchase equity securities of both U.S. and foreign
companies. The fund can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, non-leveraged futures and options, notes, bonds and other debt
securities of companies, and obligations of domestic or foreign governments and
their agencies.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent the fund
assumes a defensive position, it will not be pursuing its objective of capital
growth.
What are the principal risks of investing in the fund?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
The fund will focus its investments among companies in the life
sciences sector. Because those investments are concentrated in a
comparatively narrow segment of the total market, the fund's investments are not
as diversified as many other mutual funds. Because of this, companies in the
fund's portfolio may react similarly to market developments, such as government
regulation, subsidies, or technological advancements. This means that the fund's
net asset values may be more volatile than those of less concentrated funds. As
a result, the value of an investment in the fund may rise or fall rapidly.
In addition, the fund is nondiversified. This means that the fund's managers may
choose to invest in a relatively small number of securities. If so, a price
change in any one of these securities may have a greater impact on the fund's
share price than would be the case if the fund were diversified. Although the
fund's managers expect it will ordinarily invest in enough securities to qualify
as a diversified fund, its nondiversified status gives them more flexibility to
invest heavily in the most attractive companies identified by the fund's
methodology.
Many faster-growing health care companies have limited operating histories and
their potential profitability may be dependent on regulatory approval of their
products. Many of these companies' activities are funded or subsidized by
government grants or other funding, which may be reduced or withdrawn. Changes
in government regulation can also have an impact on a company's profitability
and/or stock price. Continuing technological advances may mean rapid
obsolescence of key products and services. These business uncertainties may
increase the volatility of the prices for these companies' securities.
In addition to publicly traded securities, the fund may invest up to 15% in
privately placed securities. These securities may be considered illiquid if they
cannot be sold in seven days at approximately the price the fund is valuing
them. Privately placed securities are valued by the manager following procedures
established by the fund's Board of Directors.
The fund managers may buy a large amount of a company's stock quickly, and may
dispose of it quickly if it no longer meets their investment criteria. While the
managers believe this strategy provides substantial appreciation potential over
the long term, in the short term it can create a significant amount of portfolio
turnover and share price volatility. This portfolio turnover and share price
volatility can be greater than that of the average stock fund. Higher portfolio
turnover leads to higher brokerage costs, which are borne by the fund.
Market performance tends to be cyclical, and in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the style used by the fund's management team, the fund's gains may not be as big
as, or its losses may be bigger than, other equity funds using different
investment styles.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The fund may invest in companies regardless of size, which means it may invest
in smaller U.S. and foreign companies. Investing in smaller companies generally
presents unique risks. Smaller companies may have limited resources, trade less
frequently and have less publicly available information. They also may be more
sensitive to changing political and economic conditions. These factors may cause
investments in smaller companies to experience more price volatility.
Investing in foreign securities has certain unique risks that make it generally
riskier than investing in U.S. stocks. These risks include increased exposure to
political, social and economic events in world markets; limited availability of
public information about a company; less developed trading markets and
regulatory practices; and a lack of uniform financial reporting practices
compared to those that apply in the United States.
In addition, foreign securities are subject to currency risk, meaning that
because the fund's investments are generally held in foreign currencies, the
fund could experience gains or losses based solely on changes in the exchange
rate between foreign currencies and the U.S. dollar.
In summary, investing in this fund is intended for investors who find investing
in a global, all cap, life sciences sector fund an appropriate investment and
who are willing to accept the increased risk associated with a fund's investment
strategy.
These and other risks of investing in the fund are described in the fund's
Statement of Additional Information.
Management
Who manages the fund?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.
The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For the services it provided to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of each class of
shares of the fund. The amount of the management fee for a fund is calculated on
a class-by-class basis daily and paid monthly. Life Sciences will pay the
advisor a unified management fee for the Investor Class of shares of x.xx% of
the first $xxx million of average net assets, x.xx% of the next $xxx million of
average net assets and x.xx% of the average net assets over $xxx billion.
Out of that fee, the advisor paid all expenses of managing and operating the
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses. A portion of the management fee may be paid by the fund's advisor to
unaffiliated third parties who provide recordkeeping and administrative services
that would otherwise be performed by an affiliate of the advisor.
The Fund Management Team
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the funds' investment
objective and strategy.
The portfolio managers on the investment team are identified below:
Arnold K. Douville
Mr. Douville, Vice President and Portfolio Manager, has been a member of the
team that manages the Life Sciences Fund since its inception in June 2000, and
has been a member of the team that manages Vista since joining American Century
in November 1997. Before joining American Century, he served as Senior Portfolio
Manager for Munder Capital Management from September 1989 to October 1997. He
has a bachelor's degree in economics from the U.S. Air Force Academy and an MBA
in finance, statistics and economics from the University of Chicago.
Christy Turner
Ms. Turner, Portfolio Manager, has been a member of the team that manages the
Life Sciences Fund since its inception in June 2000. Prior to that, she worked
for four years as an investment analyst for the health care sector for other
American Century equity funds, including Ultra, Select, New Opportunities and
Giftrust. Before joining American Century in 1996, she worked as an investment
analyst for First Chicago Investment Management Company and as an audit manager
for KPMG Peat Marwick. She has a Bachelor of Science in Business Administration
in Accounting from the University of Central Florida and an MBA in Finance from
the University of North Carolina. She is a Chartered Financial Analyst.
CALLOUT
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.
Investing with American Century
Services Automatically Available to You
You automatically will have access to the services listed below when you open
your account. If you do not want these services, see Conducting Business in
Writing below.
Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.
<TABLE>
<CAPTION>
Ways to Manage Your Account
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<S> <C> <C>
By telephone Open an account Make additional investments
Investor Relations If you are a current investor, you can open Call or use our Automated Information Line if
1-800-345-2021 an account by exchanging shares from another you have authorized us to invest from your
American Century account. bank account.
Business, Not-For-Profit Exchange shares Sell shares
and Employer-Sponsored Call or use our Automated Information Line Call a Service Representative.
Retirement Plans if you have authorized us to accept
1-800-345-3533 telephone instructions.
Automated Information Line
1-800-345-8765
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Online Open an account Make additional investments
www.americancentury.com If you are a current investor, you can open Make an additional investment into an
an account by exchanging shares from another established American Century account if you
American Century account. have authorized us to invest from your bank
account.
Exchange shares
Exchange shares from another American Sell shares
Century account. Not available.
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By mail or fax Open an account Make additional investments
P.O. Box 419200 Send a signed, completed application and Send your check or money order for at least
Kansas City, MO 64141-6200 check or money order payable to American $50 with an investment slip or $250 without
Century Investments. an investment slip. If you don't have an
Fax investment slip, include your name, address
816-340-7962 Exchange shares and account number on your check or money
Send written instructions to exchange your order.
shares from one American Century account to
another. Sell shares
Send written instructions or a redemption form
to sell shares. Call a Service Representative
to request a form.
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A Note about Mailings to Shareholders
To reduce expenses and demonstrate respect for our environment, we will deliver
a single copy of most financial reports and prospectuses to investors who share
an address, even if the accounts are registered under different names. If you
would like to receive separate mailings, please call us and we will begin
individual delivery within 30 days. If you'd like to reduce mailbox clutter even
more, visit www.americancentury.com and sign up to receive these documents by
email. In most cases, we also will deliver account statements for all the
investors in a household in a single envelope.
Your Guide to Services and Policies
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the funds and the transfer agent.
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Automatically Open an account Make additional investments
Not available. With the automatic investment privilege, you
can purchase shares on a regular basis. You
Exchange shares must invest at least $600 per year per
Send written instructions to set up an account.
automatic exchange of your shares from one
American Century account to another. Sell shares
If you have at least $10,000 in your account,
you may sell shares automatically by
establishing Check-A-Month or Automatic
Redemption plans.
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By wire Open an account Make additional investments
Call to set up your account or mail a Follow the wire instructions.
completed application to the address provided
in the "By mail" section. Give your bank the Sell shares
following information to wire money. You can receive redemption proceeds by wire
Our bank information: or electronic transfer.
Please remember if you request Commerce Bank N.A.
redemptions by wire, $10 will Routing No. 101000019
be deducted from the amount Account No. 2804918
redeemed. Your bank also may The fund name
charge a fee. Your American Century account number* Exchange shares
Your name Not available.
The contribution year (for IRAs only)
*For additional investments only
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In person If you prefer to handle your
transactions in person, visit one of our
Investor Centers and a representative can help
you open an account, make additional
investments, and sell or exchange shares.
4500 Main St. 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5:30 p.m., Monday - Friday 8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday
1665 Charleston Road 9445 East County Line Road, Suite A
Mountain View, California Englewood, Colorado
8 a.m. to 5 p.m., Monday - Friday 8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday
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Minimum Initial Investment Amounts
To open an account, the minimum investments are: Life Sciences
Individual or Joint $2,500
Traditional IRA $1,000
Roth IRA $1,000
Education IRA $500
UGMA/UTMA $1,000
403(b) $1,000(1)
Qualified Retirement Plans $2,500(2)
1 For each fund you select, American Century will waive the fund minimum if you
make a contribution of at least $50 a month. If your contribution is less than
$50, you may make only one fund choice.
2 The minimum investment requirements may be different for some types of
retirement plans.
Redemption of Shares in Low-Balance Accounts
If your redemption activity causes your account balance to fall below the
minimum initial investment amount, we will notify you and give you 90 days to
meet the minimum. If you do not meet the deadline, American Century will redeem
the shares in the account and send the proceeds to your address of record.
Modifying or Canceling an Investment
Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and it reserves the right to reject any specific purchase order
(including purchases by exchange or conversion). Additionally, we may refuse a
purchase if, in our judgment, it is of a size that would disrupt the management
of the fund.
Abusive Trading Practices
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. These
securities would be selected from the fund's portfolio by the fund managers. A
payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to
pay brokerage or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments
Please contact your financial intermediary or plan sponsor for a
complete description of its policies. Copies of the fund's annual reports,
semiannual reports and Statement of Additional Information are available from
your intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although fund shares transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the fund.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The fund has authorized these
intermediaries to accept orders on the fund's behalf up to the time at which the
net asset value is determined. If those orders are transmitted to American
Century and paid for in accordance with the contract, they will be priced at the
net asset value next determined after your request is received in the form
required by the intermediary on the fund's behalf.
CALLOUT
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
Share Price and Distributions
Share Price
American Century determines the net asset value (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is not open
(including certain U.S. holidays), we do not calculate the NAV. The NAV of a
fund share is the current value of the fund's assets, minus any liabilities,
divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
Distributions
Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as capital gains realized on the
sale of investment securities. The fund generally pays distributions from net
income, if any, once a year in December. Distributions from realized capital
gains are paid twice a year, usually in March and December. A fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
CALLOUT
The net asset value, or NAV, of a fund is the price of the fund's shares.
Capital gains are increases in the values of capital assets, such as stock, from
the time the assets are purchased.
Taxes
The tax consequences of owning shares of the fund will vary depending on whether
you own it through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.
If you invest through a taxable account, you may be able to claim a foreign tax
credit for any foreign income taxes paid by the funds. In order to qualify for
this tax credit, certain requirements must be satisfied. Please consult the
Statement of Additional Information for a more complete discussion of the tax
consequences of owning shares of the funds.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28%
Bracket or Above
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
CALLOUT
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Investor
Class shares and have no up-front or deferred charges, commissions, or 12b-1
fees.
American Century offers the other classes of shares primarily through
employer-sponsored retirement plans, or through institutions like banks,
broker-dealers and insurance companies. The other classes have different fees,
expenses and/or minimum investment requirements from the Investor Class. The
difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at 1-800-345-3533 for Advisor or Institutional Class
shares. You also can contact a sales representative or financial intermediary
who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
More information about the fund is contained in these documents
Annual and Semiannual Reports
These reports contain more information about the
fund's investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent fiscal
period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.
You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-PRS-xxxxx
<PAGE>
AMERICAN CENTURY
- -------------------------------------------------------------------------------
PROSPECTUS
Life Sciences Fund
[Effective Date]
ADVISOR CLASS
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
Funds Distributor, Inc. and American Century Investment
Services, Inc., Distributors
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this Prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Fund - Learn about fund goals, strategies and risks, and who
may or may not want to invest.
Fund Performance History - See how the fund performed from year to year.
Fees and Expenses - Find out about fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Fund section.
As you continue to read, the Management section will acquaint you with the fund
management teams, and Investing with American Century gives an overview about
how to invest and manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
Prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m. Central
time. Give us a call at 1-800-345-2021.
Sincerely,
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
Table of Contents
An Overview of the Fund...................................................X
Fund Performance History..................................................X
Fees and Expenses.........................................................X
Objectives, Strategies and Risks..........................................X
Management................................................................X
Investing with American Century..........................................XX
Share Price and Distributions............................................XX
Taxes....................................................................XX
Multiple Class Information...............................................XX
Financial Highlights.....................................................XX
CALLOUTS
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.
This symbol highlights special information and helpful tips.
An Overview of the Fund
What is the fund's investment objective?
This fund seeks capital growth.
What is the fund's primary investment strategies and principal risks?
The fund managers look for stocks of growing U.S. and foreign companies that
engage in the business of providing products and services that help promote
personal health and wellness. The investment strategy of this fund is based on
the belief that, over the long term, stocks of companies with earnings and
revenue growth have a greater-than-average chance to increase in value over
time. A more detailed description of American Century's growth investment style
and the fund's investment strategies and risks begins on [page x].
The fund's principal risks include
o MARKET RISK - The value of a fund's shares will go up and down based on the
performance of the companies whose securities it owns and other factors
generally affecting the securities market.
o PRICE VOLATILITY - The value of a fund's shares may fluctuate significantly
in the short term.
o CONCENTRATION - The fund will focus on the medical and healthcare industry
and related industry groups. Because of this, companies in the fund's
portfolio may react similarly to market developments, such as government
regulation, subsidies, or technological advancements. As a result, the
fund's net asset values may be more volatile than those of less concentrated
funds.
o PRINCIPAL LOSS - As with all mutual funds, if you sell your shares when
their value is less than the price you paid, you will lose money.
o FOREIGN RISK - The fund may invest in foreign securities, which can be
riskier than investing in U.S. stocks.
Who may want to invest in the fund?
The fund may be a good investment if you are
o seeking long-term capital growth potential from your investment
o seeking diversification of your investment portfolio through investment in
life sciences related securities
o comfortable with the risks associated with investing in U.S. and foreign
life sciences related securities
o comfortable with the fund's short-term price volatility o investing through
an IRA or other tax-advantaged retirement plan
Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with the risks associated with this fund
o uncomfortable with short-term volatility in the value of your investment
CALLOUT
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Fund Performance History
As a new fund, it has no performance history as of the date of this Prospectus.
CALLOUT
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
Fees and Expenses
There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Advisor Class shares of other American Century funds
o to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees(2) Expenses(3) Operating Expenses
<S> <C> <C> <C> <C>
Life Sciences Fund x.xx% 0.50% 0.00% x.xx%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(2) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other financial
intermediaries. A portion of the fee is used to compensate them for ongoing
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor, and a portion is used to compenstate them for
distribution and other shareholder services. For more information, see Service
and Distribution Fees, page xx.
(3) Other expenses, which include the fees and expenses of the fund's
independent directors and their legal counsel as well as interest, are expected
to be less than 0.005% for the current fiscal year.
Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
Life Sciences Fund $xxx $xxx
CALLOUT
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Objectives, Strategies and Risks
Life Sciences Fund
What is the fund's investment objective?
This fund seeks capital growth.
How does the fund pursue its investment objective?
The fund managers look for stocks of growing companies in the life sciences
industry. To achieve its objective, the fund invests primarily in companies
that engage in the business of providing products and services that help promote
health and wellness. Life sciences companies generally own, operate or support
health care facilities; design, manufacture or sell pharmaceuticals,
bio-pharmaceuticals, and medical devices and supplies; or may provide
biotechnology needed to improve agriculture, aquaculture, forestry, chemicals,
household products and cosmetics/personal care products, environmental cleanup,
food processing and forensics. The fund may invest in U.S. or foreign companies
of any size.
Sometimes a company will engage in multiple lines of business. We will generally
consider a company to be a life sciences company if
o at least 50% of its gross income or net assets come from activities in the
sector;
o at least 50% of its assets are devoted to producing revenues from the
sector; or
o based on other information we obtain, we determine that its primary business
should be categorized within the sector.
The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy. This strategy looks for
companies with earnings and revenues that are not only growing, but growing at a
successively faster, or accelerating pace. This strategy is based on the premise
that, over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.
The managers use a bottom-up approach to select stocks for the fund. That means
they first look for strong, growing companies to invest in, rather than simply
buying any company in a growing industry or sector. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the companies' earnings and
revenues. This information is used to help the fund managers select and hold
stocks of companies they believe will be able to sustain accelerating growth and
to sell stocks of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund managers review and may invest in companies that experience a change in
their business that will stimulate future revenue and earnings acceleration and
lead to positive investor perception. The change typically is the result of key
events including: entry into a new market, a new product, patent or license, or
the presentation of clinical data showing efficacy for a new drug or medical
device. The fund managers also believe that it is important to diversify the
fund's holdings across different countries and geographical regions. For this
reason, the fund managers also consider the prospects for relative economic
growth among countries or regions, economic and political conditions, expected
inflation rates, currency exchange fluctuations and tax considerations when
making investments.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, or if they are unable to find securites that meet the
fund's requirements, the fund may invest a portion of its assets in convertible
debt securities, short-term securities, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the fund's cash assets remain liquid while
performing more like stocks. The fund has a policy governing stock index futures
and similar derivative securities to help manage the risk of these types of
investments. For example, the managers cannot leverage the fund's assets by
investing in a derivative security. A complete description of the derivatives
policy is included in the Statement of Additional Information.
Additional information about the fund's investments is available in its annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
CALLOUT
Accelerating growth is shown, for example, by growth that is faster this quarter
than last or faster this year than the year before.
What kinds of securities does the fund buy?
The fund will generally purchase equity securities of both U.S. and foreign
companies. The fund can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, non-leveraged futures and options, notes, bonds and other debt
securities of companies, and obligations of domestic or foreign governments and
their agencies.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent the fund
assumes a defensive position, it will not be pursuing its objective of capital
growth.
What are the principal risks of investing in the fund?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
The fund will focus its investments among companies in the life sciences sector.
Because those investments are concentrated in a comparatively narrow segment of
the total market, the fund's investments are not as diversified as many other
mutual funds. Because of this, companies in the fund's portfolio may react
similarly to market developments, such as government regulation, subsidies, or
technological advancements. This means that the fund's net asset values may be
more volatile than those of less concentrated funds. As a result, the value of
an investment in the fund may rise or fall rapidly.
In addition, the fund is nondiversified. This means that the fund's managers may
choose to invest in a relatively small number of securities. If so, a price
change in any one of these securities may have a greater impact on the fund's
share price than would be the case if the fund were diversified. Although the
fund's managers expect it will ordinarily invest in enough securities to qualify
as a diversified fund, its nondiversified status gives them more flexibility to
invest heavily in the most attractive companies identified by the fund's
methodology.
Many faster-growing health care companies have limited operating histories and
their potential profitability may be dependent on regulatory approval of their
products. Many of these companies' activities are funded or subsidized by
government grants or other funding, which may be reduced or withdrawn. Changes
in government regulation can also have an impact on a company's profitability
and/or stock price. Continuing technological advances may mean rapid
obsolescence of key products and services. These business uncertainties may
increase the volatility of the prices for these companies' securities.
In addition to publicly traded securities, the fund may invest up to 15% in
privately placed securities. These securities may be considered illiquid if they
cannot be sold in seven days at approximately the price the fund is valuing
them. Privately placed securities are valued by the manager following procedures
established by the fund's Board of Directors.
The fund managers may buy a large amount of a company's stock quickly, and may
dispose of it quickly if it no longer meets their investment criteria. While the
managers believe this strategy provides substantial appreciation potential over
the long term, in the short term it can create a significant amount of portfolio
turnover and share price volatility. This portfolio turnover and share price
volatility can be greater than that of the average stock fund. Higher portfolio
turnover leads to higher brokerage costs, which are borne by the fund.
Market performance tends to be cyclical, and in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the style used by the fund's management team, the fund's gains may not be as big
as, or its losses may be bigger than, other equity funds using different
investment styles.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The fund may invest in companies regardless of size, which means it may invest
in smaller U.S. and foreign companies. Investing in smaller companies generally
presents unique risks. Smaller companies may have limited resources, trade less
frequently and have less publicly available information. They also may be more
sensitive to changing political and economic conditions. These factors may cause
investments in smaller companies to experience more price volatility.
Investing in foreign securities has certain unique risks that make it generally
riskier than investing in U.S. stocks. These risks include increased exposure to
political, social and economic events in world markets; limited availability of
public information about a company; less developed trading markets and
regulatory practices; and a lack of uniform financial reporting practices
compared to those that apply in the United States.
In addition, foreign securities are subject to currency risk, meaning that
because the fund's investments are generally held in foreign currencies, the
fund could experience gains or losses based solely on changes in the exchange
rate between foreign currencies and the U.S. dollar.
In summary, investing in this fund is intended for investors who find investing
in a global, all cap, life sciences sector fund an appropriate investment and
who are willing to accept the increased risk associated with a fund's investment
strategy.
These and other risks of investing in the fund are described in the fund's
Statement of Additional Information.
Management
Who manages the fund?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.
The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For the services it provided to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of each class of
shares of the fund. The amount of the management fee for a fund is calculated on
a class-by-class basis daily and paid monthly. Life Sciences will pay the
advisor a unified management fee for the Advisor Class of shares of x.xx% of the
first $xxx million of average net assets, x.xx% of the next $xxx million of
average net assets and x.xx% of the average net assets over $xxx billion.
Out of that fee, the advisor paid all expenses of managing and operating the
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses.
The Fund Management Team
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the funds' investment
objective and strategy.
The portfolio managers on the investment team are identified below:
Arnold K. Douville
Mr. Douville, Vice President and Portfolio Manager, has been a member of the
team that manages the Life Sciences Fund since its inception in June 2000, and
has been a member of the team that manages Vista since joining American Century
in November 1997. Before joining American Century, he served as Senior Portfolio
Manager for Munder Capital Management from September 1989 to October 1997. He
has a bachelor's degree in economics from the U.S. Air Force Academy and an MBA
in finance, statistics and economics from the University of Chicago.
Christy Turner
Ms. Turner, Portfolio Manager, has been a member of the team that manages the
Life Sciences Fund since its inception in June 2000. Prior to that, she worked
for four years as an investment analyst for the health care sector for other
American Century equity funds, including Ultra, Select, New Opportunities and
Giftrust. Before joining American Century in 1996, she worked as an investment
analyst for First Chicago Investment Management Company and as an audit manager
for KPMG Peat Marwick. She has a Bachelor of Science in Business Administration
in Accounting from the University of Central Florida and an MBA in Finance from
the University of North Carolina. She is a Chartered Financial Analyst.
CALLOUT
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.
Investing with American Century
Eligibility for Advisor Class Shares
The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies, and other financial
intermediaries that provide various administrative and distribution services.
Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the fund's annual reports, semiannual
reports and Statement of Additional Information are available from your
intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although fund shares transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the fund.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The fund has authorized these
intermediaries to accept orders on the fund's behalf up to the time at which the
net asset value is determined. If those orders are transmitted to American
Century and paid for in accordance with the contract, they will be priced at the
net asset value next determined after your request is received in the form
required by the intermediary on the fund's behalf.
CALLOUT
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
Modifying or Canceling an Investment
Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and it reserves the right to reject any specific purchase order
(including purchases by exchange or conversion). Additionally, we may refuse a
purchase if, in our judgment, it is of a size that would disrupt the management
of the fund.
Abusive Trading Practices
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. These
securities would be selected from the fund's portfolio by the fund managers. A
payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to pay brokerage
or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
Share Price and Distributions
Share Price
American Century determines the NET ASSET VALUE (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is not open
(including certain U.S. holidays), we do not calculate the NAV. The NAV of a
fund share is the current value of the fund's assets, minus any liabilities,
divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
Distributions
Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as capital gains realized on the
sale of investment securities. The fund generally pays distributions from net
income, if any, once a year in December. Distributions from realized capital
gains are paid twice a year, usually in March and December. A fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
CALLOUT
The NET ASSET VALUE, or NAV, of a fund is the price of the fund's shares.
CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased.
Taxes
The tax consequences of owning shares of the fund will vary depending on whether
you own it through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.
If you invest through a taxable account, you may be able to claim a foreign tax
credit for any foreign income taxes paid by the funds. In order to qualify for
this tax credit, certain requirements must be satisfied. Please consult the
Statement of Additional Information for a more complete discussion of the tax
consequences of owning shares of the funds.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28%
Bracket or Above
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
CALLOUT
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Advisor Class
shares and have no up-front or deferred charges, commissions, or 12b-1 fees.
American Century offers the other classes of shares primarily through
employer-sponsored retirement plans, or through institutions like banks,
broker-dealers and insurance companies. The other classes have different fees,
expenses and/or minimum investment requirements from the Advisor Class. The
difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at 1-800-345-3533 for Advisor or Institutional Class
shares. You also can contact a sales representative or financial intermediary
who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Advisor Class of the
same fund.
Service and Distribution Fees
Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. The fund's Advisor Class shares have a 12b-1 Plan. Under the Plan,
the fund's Advisor Class pays an annual fee of 0.50% of Advisor Class average
net assets, half for certain shareholder and administrative services and half
for distribution services. The advisor, as paying agent for the fund, pays all
or a portion of such fees to the banks, broker-dealers and insurance companies
that make such shares available. Because these fees are paid out of the fund's
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. For
additional information about the Plan and its terms, see Multiple Class
Structure - Master Distribution and Shareholder Services Plan in the Statement
of Additional Information.
More information about the fund is contained in these documents
Annual and Semiannual Reports
These reports contain more information about the fund's investments and the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.
You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-PRS-xxxxx
<PAGE>
AMERICAN CENTURY
- ------------------------------------------------------------------------------
PROSPECTUS
Life Sciences Fund
[Effective Date]
INSTITUTIONAL CLASS
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
Funds Distributor, Inc. and
American Century Investment Services, Inc., Distributors
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this Prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Fund - Learn about fund goals, strategies and risks, and who
may or may not want to invest.
Fund Performance History - See how the fund performed from year to year.
Fees and Expenses - Find out about fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Fund section.
As you continue to read, the Management section will acquaint you with the fund
management teams, and Investing with American Century gives an overview about
how to invest and manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
Prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m. Central
time. Give us a call at 1-800-345-2021.
Sincerely,
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
Table of Contents
An Overview of the Fund.............................................X
Fund Performance History............................................X
Fees and Expenses...................................................X
Objectives, Strategies and Risks....................................X
Management..........................................................X
Investing with American Century....................................XX
Share Price and Distributions......................................XX
Taxes..............................................................XX
Multiple Class Information.........................................XX
Financial Highlights...............................................XX
CALLOUTS
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.
This symbol highlights special information and helpful tips.
An Overview of the Fund
What is the fund's investment objective?
This fund seeks capital growth.
What is the fund's primary investment strategies and principal risks?
The fund managers look for stocks of growing U.S. and foreign companies that
engage in the business of providing products and services that help promote
personal health and wellness. The investment strategy of this fund is based on
the belief that, over the long term, stocks of companies with earnings and
revenue growth have a greater-than-average chance to increase in value over
time. A more detailed description of American Century's growth investment style
and the fund's investment strategies and risks begins on [page x].
The fund's principal risks include
o MARKET RISK - The value of a fund's shares will go up and down based on the
performance of the companies whose securities it owns and other factors
generally affecting the securities market.
o PRICE VOLATILITY - The value of a fund's shares may fluctuate significantly
in the short term.
o CONCENTRATION - The fund will focus on the medical and healthcare industry
and related industry groups. Because of this, companies in the fund's
portfolio may react similarly to market developments, such as government
regulation, subsidies, or technological advancements. As a result, the
fund's net asset values may be more volatile than those of less concentrated
funds.
o PRINCIPAL LOSS - As with all mutual funds, if you sell your shares when
their value is less than the price you paid, you will lose money.
o FOREIGN RISK - The fund may invest in foreign securities, which can be
riskier than investing in U.S. stocks.
Who may want to invest in the fund?
The fund may be a good investment if you are
o seeking long-term capital growth potential from your investment
o seeking diversification of your investment portfolio through investment in
life sciences related securities
o comfortable with the risks associated with investing in U.S. and foreign
life sciences related securities
o comfortable with the fund's short-term price volatility
o investing through an IRA or other tax-advantaged retirement plan
Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with the risks associated with this fund
o uncomfortable with short-term volatility in the value of your investment
CALLOUT
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Fund Performance History
As a new fund, it has no performance history as of the date of this Prospectus.
CALLOUT
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
Fees and Expenses
There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Institutional Class shares of other American Century
funds
o to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating Expenses
<S> <C> <C> <C> <C>
Life Sciences Fund x.xx% None 0.00% x.xx%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors and their legal counsel as well as interest, are expected
to be less than 0.005% for the current fiscal year.
Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
Life Sciences Fund $xxx $xxx
CALLOUT
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Objectives, Strategies and Risks
Life Sciences Fund
What is the fund's investment objective?
This fund seeks capital growth.
How does the fund pursue its investment objective?
The fund managers look for stocks of growing companies in the life sciences
industry. To achieve its objective, the fund invests primarily in companies that
engage in the business of providing products and services that help promote
health and wellness. Life sciences companies generally own, operate or support
health care facilities; design, manufacture or sell pharmaceuticals,
bio-pharmaceuticals, and medical devices and supplies; or may provide
biotechnology needed to improve agriculture, aquaculture, forestry, chemicals,
household products and cosmetics/personal care products, environmental cleanup,
food processing and forensics. The fund may invest in U.S. or foreign companies
of any size.
Sometimes a company will engage in multiple lines of business. We will generally
consider a company to be a life sciences company if
o at least 50% of its gross income or net assets come from activities in the
sector;
o at least 50% of its assets are devoted to producing revenues from the
sector; or
o based on other information we obtain, we determine that its primary business
should be categorized within the sector.
The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy. This strategy looks for
companies with earnings and revenues that are not only growing, but growing at a
successively faster, or accelerating pace. This strategy is based on the premise
that, over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.
The managers use a bottom-up approach to select stocks for the fund. That means
they first look for strong, growing companies to invest in, rather than simply
buying any company in a growing industry or sector. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the companies' earnings and
revenues. This information is used to help the fund managers select and hold
stocks of companies they believe will be able to sustain accelerating growth and
to sell stocks of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund managers review and may invest in companies that experience a change in
their business that will stimulate future revenue and earnings acceleration and
lead to positive investor perception. The change typically is the result of key
events including: entry into a new market, a new product, patent or license, or
the presentation of clinical data showing efficacy for a new drug or medical
device. The fund managers also believe that it is important to diversify the
fund's holdings across different countries and geographical regions. For this
reason, the fund managers also consider the prospects for relative economic
growth among countries or regions, economic and political conditions, expected
inflation rates, currency exchange fluctuations and tax considerations when
making investments.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, or if they are unable to find securities that meet the
fund's requirements, the fund may invest a portion of its assets in convertible
debt securities, short-term securities, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the fund's cash assets remain liquid while
performing more like stocks. The fund has a policy governing stock index futures
and similar derivative securities to help manage the risk of these types of
investments. For example, the managers cannot leverage the fund's assets by
investing in a derivative security. A complete description of the derivatives
policy is included in the Statement of Additional Information.
Additional information about the fund's investments is available in its annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
CALLOUT
Accelerating growth is shown, for example, by growth that is faster this quarter
than last or faster this year than the year before.
What kinds of securities does the fund buy?
The fund will generally purchase equity securities of both U.S. and foreign
companies. The fund can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, non-leveraged futures and options, notes, bonds and other debt
securities of companies, and obligations of domestic or foreign governments and
their agencies.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent the fund
assumes a defensive position, it will not be pursuing its objective of capital
growth.
What are the principal risks of investing in the fund?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
The fund will focus its investments among companies in the life sciences sector.
Because those investments are concentrated in a comparatively narrow segment of
the total market, the fund's investments are not as diversified as many other
mutual funds. Because of this, companies in the fund's portfolio may react
similarly to market developments, such as government regulation, subsidies, or
technological advancements. This means that the fund's net asset values may be
more volatile than those of less concentrated funds. As a result, the value of
an investment in the fund may rise or fall rapidly.
In addition, the fund is nondiversified. This means that the fund's managers may
choose to invest in a relatively small number of securities. If so, a price
change in any one of these securities may have a greater impact on the fund's
share price than would be the case if the fund were diversified. Although the
fund's managers expect it will ordinarily invest in enough securities to qualify
as a diversified fund, its nondiversified status gives them more flexibility to
invest heavily in the most attractive companies identified by the fund's
methodology.
Many faster-growing health care companies have limited operating histories and
their potential profitability may be dependent on regulatory approval of their
products. Many of these companies' activities are funded or subsidized by
government grants or other funding, which may be reduced or withdrawn. Changes
in government regulation can also have an impact on a company's profitability
and/or stock price. Continuing technological advances may mean rapid
obsolescence of key products and services. These business uncertainties may
increase the volatility of the prices for these companies' securities.
In addition to publicly traded securities, the fund may invest up to 15% in
privately placed securities. These securities may be considered illiquid if they
cannot be sold in seven days at approximately the price the fund is valuing
them. Privately placed securities are valued by the manager following procedures
established by the fund's Board of Directors.
The fund managers may buy a large amount of a company's stock quickly, and may
dispose of it quickly if it no longer meets their investment criteria. While the
managers believe this strategy provides substantial appreciation potential over
the long term, in the short term it can create a significant amount of portfolio
turnover and share price volatility. This portfolio turnover and share price
volatility can be greater than that of the average stock fund. Higher portfolio
turnover leads to higher brokerage costs, which are borne by the fund.
Market performance tends to be cyclical, and in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the style used by the fund's management team, the fund's gains may not be as big
as, or its losses may be bigger than, other equity funds using different
investment styles.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The fund may invest in companies regardless of size, which means it may invest
in smaller U.S. and foreign companies. Investing in smaller companies generally
presents unique risks. Smaller companies may have limited resources, trade less
frequently and have less publicly available information. They also may be more
sensitive to changing political and economic conditions. These factors may cause
investments in smaller companies to experience more price volatility.
Investing in foreign securities has certain unique risks that make it generally
riskier than investing in U.S. stocks. These risks include increased exposure to
political, social and economic events in world markets; limited availability of
public information about a company; less developed trading markets and
regulatory practices; and a lack of uniform financial reporting practices
compared to those that apply in the United States.
In addition, foreign securities are subject to currency risk, meaning that
because the fund's investments are generally held in foreign currencies, the
fund could experience gains or losses based solely on changes in the exchange
rate between foreign currencies and the U.S. dollar.
In summary, investing in this fund is intended for investors who find investing
in a global, all cap, life sciences sector fund an appropriate investment and
who are willing to accept the increased risk associated with a fund's investment
strategy.
These and other risks of investing in the fund are described in the fund's
Statement of Additional Information.
Management
Who manages the fund?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.
The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For the services it provided to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of each class of
shares of the fund. The amount of the management fee for a fund is calculated on
a class-by-class basis daily and paid monthly. Life Sciences will pay the
advisor a unified management fee for the Institutional Class of shares of x.xx%
of the first $xxx million of average net assets, x.xx% of the next $xxx million
of average net assets and x.xx% of the average net assets over $xxx billion.
Out of that fee, the advisor paid all expenses of managing and operating the
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses. A portion of the management fee may be paid by the fund's advisor to
unaffiliated third parties who provide recordkeeping and administrative services
that would otherwise be performed by an affiliate of the advisor.
The Fund Management Team
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the funds' investment
objective and strategy.
The portfolio managers on the investment team are identified below:
Arnold K. Douville
Mr. Douville, Vice President and Portfolio Manager, has been a member of the
team that manages the Life Sciences Fund since its inception in June 2000, and
has been a member of the team that manages Vista since joining American Century
in November 1997. Before joining American Century, he served as Senior Portfolio
Manager for Munder Capital Management from September 1989 to October 1997. He
has a bachelor's degree in economics from the U.S. Air Force Academy and an MBA
in finance, statistics and economics from the University of Chicago.
Christy Turner
Ms. Turner, Portfolio Manager, has been a member of the team that manages the
Life Sciences Fund since its inception in June 2000. Prior to that, she worked
for four years as an investment analyst for the health care sector for other
American Century equity funds, including Ultra, Select, New Opportunities and
Giftrust. Before joining American Century in 1996, she worked as an investment
analyst for First Chicago Investment Management Company and as an audit manager
for KPMG Peat Marwick. She has a Bachelor of Science in Business Administration
in Accounting from the University of Central Florida and an MBA in Finance from
the University of North Carolina. She is a Chartered Financial Analyst.
CALLOUT
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.
Investing with American Century
Eligibility for Institutional Class Shares
The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
retirement plans, endowments, foundations and financial advisors that meet the
fund's minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.
Minimum Initial Investment Amounts
The minimum investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermeidary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has an aggregate
investment in our family of funds of $10 million or more ($5 million for
endowments and foundations). In addition, financial intermediaries or plan
recordkeepers may require retirement plans to meet certain additional
requirements, such as plan size or a minimum level of assets per participant, in
order to be eligible to purchase Institutional Class shares.
Redemption of Shares in Low-Balance Accounts
If your balance or the balance of your financial intermediary, if applicable,
falls below the minimum investment requirements due to redemptions or exchanges,
we reserve the right to convert your shares to Investor Class shares of the same
fund. The Investor Class shares have a unified managemnet fee that is 0.20%
higher than the Institutional Class.
Services Automatically Available to You
You automatically will have access to the services listed below when you open
your account. If you do not want these services, see Conducting Business in
Writing below.
Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.
<TABLE>
<CAPTION>
Ways to Manage Your Account
- -------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------- --------------------------------------------- -----------------------------------------------
<S> <C> <C>
By telephone Open an account Make additional investments
Service Representative If you are a current investor, you can open Call if you have authorized us to invest from
1-800-345-3533 an account by exchanging shares from your bank account.
another American Century account.
Sell shares
Exchange shares Call a Service Representative.
Call or use our Automated Information Line
if you have authorized us to accept
telephone instructions.
- ----------------------------------- --------------------------------------------- -----------------------------------------------
- ----------------------------------- --------------------------------------------- -----------------------------------------------
By mail or fax Open an account Make additional investments
P.O. Box 419385 Send a signed, completed application and Send your check or money order for at least
Kansas City, MO 64141-6385 check or money order payable to American $50 with an investment slip or $250 without
Century Investments. an investment slip. If you don't have an
Fax investment slip, include your name, address
816-340-4655 Exchange shares and account number on your check or money
Send written instructions to exchange your order.
shares from one American Century account to
another. Sell shares
Send written instructions or a redemption
form to sell shares. Call a Service Representative
to request a form.
- ----------------------------------- --------------------------------------------- -----------------------------------------------
- ----------------------------------- --------------------------------------------- -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
Automatically Open an account Make additional investments
Not available. With the automatic investment privilege, you
can purchase shares on a regular basis. You
Exchange shares must invest at least $600 per year per
Send written instructions to set up an account.
automatic exchange of your shares from one
American Century account to another. Sell shares
If you have at least $10,000 in your account,
you may sell shares automatically by
establishing Check-A-Month or Automatic
Redemption plans.
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
By wire Open an account Make additional investments
Call to set up your account or mail a Follow the wire instructions.
completed application to the address provided
in the "By mail" section. Give your bank the Sell shares
following information to wire money. You can receive redemption proceeds by wire
Our bank information: or electronic transfer.
Please remember if you request Commerce Bank N.A.
redemptions by wire, $10 will Routing No. 101000019
be deducted from the amount Account No. 2804918
redeemed. Your bank also may The fund name
charge a fee. Your American Century account number* Exchange shares
Your name Not available.
The contribution year (for IRAs only)
*For additional investments only
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------------------------------------------------------
</TABLE>
Modifying or Canceling an Investment
Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and it reserves the right to reject any specific purchase order
(including purchases by exchange or conversion). Additionally, we may refuse a
purchase if, in our judgment, it is of a size that would disrupt the management
of the fund.
Abusive Trading Practices
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. These
securities would be selected from the fund's portfolio by the fund managers. A
payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to
pay brokerage or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments
Please contact your financial intermediary or plan sponsor for a
complete description of its policies. Copies of the fund's annual reports,
semiannual reports and Statement of Additional Information are available from
your intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although fund shares transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the fund.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The fund has authorized these
intermediaries to accept orders on the fund's behalf up to the time at which the
net asset value is determined. If those orders are transmitted to American
Century and paid for in accordance with the contract, they will be priced at the
net asset value next determined after your request is received in the form
required by the intermediary on the fund's behalf.
CALLOUT
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
Share Price and Distributions
Share Price
American Century determines the NET ASSET VALUE (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is not open
(including certain U.S. holidays), we do not calculate the NAV. The NAV of a
fund share is the current value of the fund's assets, minus any liabilities,
divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
Distributions
Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as capital gains realized on the
sale of investment securities. The fund generally pays distributions from net
income, if any, once a year in December. Distributions from realized capital
gains are paid twice a year, usually in March and December. A fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
CALLOUT
The NET ASSET VALUE, or NAV, of a fund is the price of the fund's shares.
CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased.
Taxes
The tax consequences of owning shares of the fund will vary depending on whether
you own it through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.
If you invest through a taxable account, you may be able to claim a foreign tax
credit for any foreign income taxes paid by the funds. In order to qualify for
this tax credit, certain requirements must be satisfied. Please consult the
Statement of Additional Information for a more complete discussion of the tax
consequences of owning shares of the funds.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28%
Bracket or Above
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
CALLOUT
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Institutional
Class shares and are offered primarily through employer-sponsored retirement
plans, or through institutions like banks, broker-dealers and insurance
companies.
The Investor Class, which has no up-front or deferred charges, commissions or
12b-1 fees, is offered primarily to retail investors.
The other classes have different fees, expenses and/or minimum investment
requirements from the Institutional Class. The difference in the fee structures
between the classes is the result of their separate arrangements for shareholder
and distribution services and not the result of any difference in amounts
charged by the advisor for core investment advisory services. Accordingly, the
core investment advisory expenses do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this Prospectus, call us at
o 1-800-345-2021 for Investor Class shares
o 1-800-345-3533 for Advisor Class shares
You also can contact a sales representative or financial intermediary who offers
those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
More information about the fund is contained in these documents
Annual and Semiannual Reports
These reports contain more information about the fund's investments and the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.
You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-PRS-xxxxx
<PAGE>
Life Sciences Fund
[Effective Date]
American Century World
Mutual Funds, Inc.
This Statement of Additional Information adds to the discussion in the fund's
Prospectuses, dated [Effective Date], but is not a Prospectus. The Statement of
Additional Information should be read in conjunction with the fund's current
Prospectus. If you would like a copy of the Prospectus, please contact us at one
of the addresses or telephone numbers listed on the back cover or visit American
Century's Web site at www.americancentury.com.
This Statement of Additional Information incorporates by reference certain
information that appears in the fund's annual and semiannual reports, which are
delivered to all investors. You may obtain a free copy of the fund's annual or
semiannual reports by calling 1-800-345-2021.
Funds Distributor, Inc. and American
Century Investment Services, Inc., Distributors
Table of Contents
The Funds' History X
Fund Investment Guidelines X
Fund Investments and Risks X
Investment Strategies and Risks X
Investment Policies X
Portfolio Turnover X
Management X
The Board of Directors X
Officers X
The Funds' Principal Shareholders X
Service Providers X
Investment Advisor X
Transfer Agent and Administrator X
Distributor X
Other Service Providers X
Custodian Banks X
Independent Auditor X
Brokerage Allocation X
Information about Fund Shares X
Multiple Class Structure X
Buying and Selling Fund Shares X
Valuation of a Fund's Securities X
Taxes X
Federal Income Tax X
State and Local Income Tax X
How Fund Performance Information Is Calculated X
Performance Comparisons X
Permissible Advertising Information X
Multiple Class Performance Advertising X
Financial Statements X
Explanation of Fixed-Income Securities Ratings X
THE FUND'S HISTORY
American Century World Mutual Funds, Inc., is a registered open-end management
investment company that was organized in 1990 as a Maryland corporation under
the name Twentieth Century World Investors, Inc. In January 1997 it changed its
name to American Century World Mutual Funds, Inc. Throughout this Statement of
Additional Information we refer to American Century World Mutual Funds, Inc. as
the corporation.
The fund described in this Statement of Additional Information is a separate
series of the corporation and operates for many purposes as if it were an
independent company. The fund has its own investment objective, strategy,
management team, assets, tax identification and stock registration numbers.
<TABLE>
Investor Class Advisor Class Institutional Class
<S> <C> <C> <C> <C> <C> <C>
Ticker Inception Ticker Inception Ticker Inception
Fund Symbol Date Symbol Date Symbol Date
Life Sciences N/A [Effective Date] N/A [Effective Date] N/A N/A
</TABLE>
FUND INVESTMENT GUIDELINES
This section explains the extent to which the fund's advisor, American Century
Investment Management, Inc., can use various investment vehicles and strategies
in managing the fund's assets. Descriptions of the investment techniques and
risks associated with each appear in the section Investment Strategies and
Risks, which begins on [PAGE XX]. In the case of the fund's principal investment
strategies, these descriptions elaborate upon discussions contained in the
Prospectuses.
The fund is a diversified open-end investment company as defined in the
Investment Company Act of 1940 (the Investment Company Act). Diversified means
that, with respect to 75% of its total assets, the fund will not invest more
than 5% of its total assets in the securities of a single issuer or own more
than 10% of the outstanding voting securities of a single issuer.
To meet federal tax requirements for qualification as a regulated investment
company, the fund must limit its investments so that at the close of each
quarter of its taxable year (1) no more than 25% of its total assets are
invested in the securities of a single issuer (other than the U.S government or
a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities
of a single issuer.
In general, within the restrictions outlined here and in the fund's Prospectus,
the fund managers have broad powers to decide how to invest fund assets,
including the power to hold them uninvested.
Investments are varied according to what is judged advantageous under changing
economic conditions. It is the advisor's policy to retain maximum flexibility in
management without restrictive provisions as to the proportion of one or another
class of securities that may be held, subject to the investment restrictions
described below. It is the advisor's intention that the fund will generally
consist of U.S. and foreign equity securities. However, subject to the specific
limitations applicable to the fund, the fund's management team may invest the
assets of the fund in varying amounts in other instruments, such as those
reflected in Table 1 on [PAGE XX], when such a course is deemed appropriate.
So long as a sufficient number of acceptable securities are available, the fund
managers intend to keep the fund fully invested in equity securities, regardless
of the movement of stock prices, generally. In most circumstances, the fund's
actual level of cash and cash equivalents will be less than 10%. [The managers
may use stock index futures as a way to expose the fund's cash assets to the
market, while maintaining liquidity.] As mentioned in the Prospectus, the
managers may not leverage the fund's portfolios; so there is no greater market
risk to the fund than if it purchases stocks. See Short-term Securities, [PAGE
XX], Futures and Options, [PAGE XX], and Derivative Securities, [PAGE XX].
Table 1
Life Sciences
Foreign Securities X
Equity Equivalents X
Debt Securities X
Sovereign Debt Obligations X
Convertible Securities X
Short Sales
Portfolio Lending 33 1/3%
Derivative Securities X
Investments in Companies with Limited
Operating Histories 15%
Other Investment Companies 10%
Repurchase Agreements X
When-Issued and Forward Commitment
Agreements X
Restricted and Illiquid Securities 15%
Short-Term Securities X
Futures & Options X
Forward Currency Exchange Contracts X
FUND INVESTMENTS AND RISKS
INVESTMENT STRATEGIES AND RISKS
This section describes various investment vehicles and techniques that the fund
managers can use in managing the fund's assets. It also details the risks
associated with each investment vehicle or technique, because each investment
vehicle and technique contributes to the fund's overall risk profile. To
determine whether the fund may invest in a particular investment vehicle and
whether there is a limit on the amount of fund assets that can be invested in
such vehicle or utilize such technique, consult Table 1.
Foreign Securities
A description of the fund's investment strategy regarding foreign securities is
contained in the fund's Prospectus. Investing in securities of foreign issuers
generally involves greater risks than investing in the securities of domestic
companies including:
Currency Risk. The value of the foreign investments held by the fund may be
significantly affected by changes in currency exchange rates. The dollar value
of a foreign security generally decreases when the value of the dollar rises
against the foreign currency in which the security is denominated and tends to
increase when the value of the dollar falls against such currency. In addition,
the value of fund assets may be affected by losses and other expenses incurred
in converting between various currencies in order to purchase and sell foreign
securities, and by currency restrictions, exchange control regulation, currency
devaluations and political developments.
Political and Economic Risk. The economies of many of the countries in which the
fund invests are not as developed as the economy of the United States and may be
subject to significantly different forces. Political or social instability,
expropriation, nationalization, or confiscatory taxation, and limitations on the
removal of the fund or other assets, could also adversely affect the value of
investments. Further, the fund may encounter difficulties or be unable to
enforce ownership rights, pursue legal remedies or obtain judgments in foreign
courts.
Regulatory Risk. Foreign companies generally are not subject to the regulatory
controls imposed on U.S. issuers and, in general, there is less publicly
available information about foreign securities than is available about domestic
securities. Many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the fund may be reduced by a withholding tax at the source,
which would reduce dividend income payable to shareholders.
Market and Trading Risk. Brokerage commission rates in foreign countries, which
are generally fixed rather than subject to negotiation as in the United States,
are likely to be higher. The securities markets in many of the countries in
which the fund invests will have substantially less trading volume than the
principal U.S. markets. As a result, the securities of some companies in these
countries may be less liquid and more volatile than comparable U.S. securities.
Furthermore, one securities broker may represent all or a significant part of
the trading volume in a particular country, resulting in higher trading costs
and decreased liquidity due to a lack of alternative trading partners. There is
generally less government regulation and supervision of foreign stock exchanges,
brokers and issuers, which may make it difficult to enforce contractual
obligations.
Clearance and Settlement Risk. Foreign securities markets also have different
clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in clearance and settlement could result in temporary periods when assets
of the fund is uninvested and no return is earned thereon. The inability of the
fund to make intended security purchases due to clearance and settlement
problems could cause the fund to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to clearance and settlement
problems could result either in losses to the fund due to subsequent declines in
the value of the portfolio security or, if the fund has entered into a contract
to sell the security, liability to the purchaser.
Ownership Risk. Evidence of securities ownership may be uncertain in many
foreign countries. In many of these countries, the most notable of which is the
Russian Federation, the ultimate evidence of securities ownership is the share
register held by the issuing company or its registrar. While some companies may
issue share certificates or provide extracts of the company's share register,
these are not negotiable instruments and are not effective evidence of
securities ownership. In an ownership dispute, the company's share register is
controlling. As a result, there is a risk that a fund's trade details could be
incorrectly or fraudulently entered on the issuer's share register at the time
of the transaction, or that a fund's ownership position could thereafter be
altered or deleted entirely, resulting in a loss to the fund. While the fund
intends to invest directly in Russian companies that utilize an independent
registrar, there can be no assurance that such investments will not result in a
loss to the fund.
Emerging Markets. Investing in emerging market companies generally is also
riskier than investing in other foreign securities. Emerging market countries
may have unstable governments and/or economies that are subject to sudden
change. These changes may be magnified by the countries' emergent financial
markets, resulting in significant volatility to investments in these countries.
These countries also may lack the legal, business and social framework to
support securities markets.As a result, this fund is intended for aggressive
investors seeking gains through a health care sector fund that may make
investments in foreign, as well as U.S., securities. Those investors must be
willing and able to accept the significant risks associated with the investment
strategy that the fund will pursue. An investment in the fund is not appropriate
for individuals with limited investment resources or who are unable to tolerate
fluctuations in the value of their investment.
Equity Equivalents
The fund may make foreign investments either directly in foreign securities or
indirectly by purchasing depositary receipts, depositary shares or similar
instruments (DRs) for foreign securities. DRs are securities that are listed on
exchanges or quoted in over-the-counter markets in one country but represent
shares of issuers domiciled in another country. The fund also may purchase
securities of such issuers in foreign markets, either on foreign securities
exchanges, electronic trading networks or in over-the-counter markets.
The fund also may invest in other equity securities and equity equivalents.
Other equity securities and equity equivalents include securities that permit
the fund to receive an equity interest in an issuer, the opportunity to acquire
an equity interest in an issuer or the opportunity to receive a return on its
investment that permits the fund to benefit from the growth over time in the
equity of an issuer. Examples of other equity securities and equity equivalents
are preferred stock, convertible preferred stock and convertible debt
securities. Equity equivalents also may include securities whose value or return
is derived from the value or return of a different security. An example of one
type of derivative security in which the fund might invest is a depositary
receipt.
Debt Securities
The managers believe that common stocks and other equity and equity-equivalent
securities ordinarily offer the greatest potential for capital appreciation. The
fund may invest, however, in any security the managers believe has the potential
for capital appreciation. When the managers believe that the total return
potential of other securities equals or exceeds the potential return of equity
securities, the fund may invest [up to 35%] in such other securities. The other
securities the fund may invest in are bonds, notes and debt securities of
companies, and obligations of domestic or foreign governments and their
agencies. The fund will attempt to stay fully invested regardless of the
movement of stock and bond prices generally.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent a fund
assumes a defensive position, it will not be pursuing its objective of capital
growth. [Life Sciences will limit its purchases of debt securities to
investment-grade obligations. For long-term debt obligations, this includes
securities that are rated Baa or better by Moody's Investors Service, Inc. or
BBB or better by Standard & Poor's Corporation (S&P), or that are not rated but
are considered by the managers to be of equivalent quality. According to
Moody's, bonds rated Baa are medium-grade and possess some speculative
characteristics. A BBB rating by S&P indicates S&P's belief that a security
exhibits a satisfactory degree of safety and capacity for repayment, but is more
vulnerable to adverse economic conditions or changing circumstances than is the
case with higher-quality debt securities. See Explanation of Fixed-Income
Securities Ratings, [PAGE XX].]
[With respect to Life Sciences, there are no credit quality or maturity
restrictions with regard to the bonds, corporate debt securities and government
obligations in which the fund may invest, although less than [35%] of the fund's
assets will be invested in below-investment-grade fixed income securities. See
Explanation of Fixed-Income Securities Ratings, [PAGE XX]. Debt securities,
especially those of issuers in emerging market countries, may be of poor quality
and speculative in nature. While these securities will be chosen primarily for
their appreciation potential, the fund also may take the potential for income
into account when selecting investments.]
In addition to other factors that will affect its value, the value of the fund's
investments in fixed income securities will change as prevailing interest rates
change. In general, the prices of such securities vary inversely with interest
rates. As prevailing interest rates fall, the prices of bonds and other
securities that trade on a yield basis rise. When prevailing interest rates
rise, bond prices generally fall. These changes in value may, depending upon the
particular amount and type of fixed-income securities holdings of the fund,
impact the net asset value of that fund's shares.
Sovereign Debt Obligations
The fund may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of emerging market countries.
Sovereign debt may be in the form of conventional securities or other types of
debt instruments, such as loans or loan participations. Sovereign debt of
emerging market countries may involve a high degree of risk and may present a
risk of default or renegotiation or rescheduling of debt payments.
Convertible Debt Securities
A convertible debt security is a fixed-income security that offers the potential
for capital appreciation through a conversion feature that enables the holder to
convert the fixed-income security into a stated number of shares of common
stock. As fixed-income securities, convertible debt securities provide a stable
stream of income, with generally higher yields than common stocks. Convertible
debt securities offer the potential to benefit from increases in the market
price of the underlying common stock, however, they generally offer lower yields
than non-convertible securities of similar quality. Of course, as with all
fixed-income securities, there can be no assurance of current income because the
issuers of the convertible debt securities may default on their obligations. In
addition, there can be no assurance of capital appreciation because the value of
the underlying common stock will fluctuate.
Convertible debt securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
Unlike a convertible security that is a single security, a synthetic convertible
security is comprised of two distinct securities that together resemble
convertible securities in certain respects. Synthetic convertible securities are
created by combining non-convertible bonds or preferred stocks with warrants or
stock call options. The options that will form elements of synthetic convertible
securities will be listed on a securities exchange or NASDAQ. The two components
of a synthetic convertible security, which will be issued with respect to the
same entity, generally are not offered as a unit, and may be purchased and sold
by the fund at different times. Synthetic convertible securities differ from
convertible securities in certain respects. Each component of a synthetic
convertible security has a separate market value and responds differently to
market fluctuations. Investing in a synthetic convertible security involves the
risk normally found in holding the securities comprising the synthetic
convertible security.
Short Sales
The fund may engage in short sales if, at the time of the short sale, the fund
owns or has the right to acquire securities equivalent in kind and amount to the
securities being sold short.
In a short sale, the seller does not immediately deliver the securities sold and
is said to have a short position in those securities until delivery occurs. To
make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If the fund engages in a short sale, the collateral account will be
maintained by the fund's custodian. While the short sale is open, the fund will
maintain in a segregated custodial account an amount of securities convertible
into, or exchangeable for, such equivalent securities at no additional cost.
These securities would constitute the fund's long position.
The fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes. There will be
certain additional transaction costs associated with short sales, but the fund
will endeavor to offset these costs with income from the investment of the cash
proceeds of short sales.
Portfolio Lending
In order to realize additional income, the fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's total net assets
valued at market except
o through the purchase of debt securities in accordance with its investment
objectives, policies and limitations, or
o by engaging in repurchase agreements with respect to portfolio securities.
Derivative Securities
The fund may invest in securities that are commonly referred to as derivative
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or derived from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
index/structured securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators (reference indices). For example, Standard & Poor's Depositary
Receipts, also known as spiders, track the price performance and dividend yield
of the S&P Index by providing a stake in the stocks that make up that index.
Some derivatives, such as mortgage-related and other asset-backed securities,
are in many respects like any other investment, although they may be more
volatile or less liquid than more traditional debt securities.
There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices, or currency exchange rates and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.
The fund may not invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund.
The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.
There is a range of risks associated with derivative investments, including:
o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the fund managers anticipate;
o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;
o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and
o the risk that the counterparty will fail to perform its obligations.
The Board of Directors has approved the advisor's policy regarding investments
in derivative securities. That policy specifies factors that must be considered
in connection with a purchase of derivative securities. The policy also
establishes a committee that must review certain proposed purchases before the
purchases can be made. The advisor will report on fund activity in derivative
securities to the Board of Directors as necessary. In addition, the Board will
review the advisor's policy for investments in the derivative securities
annually.
Investments in Companies with Limited Operating Histories
The fund may invest a portion of its assets in the securities of issuers with
limited operating history. The fund managers consider an issuer to have a
limited operating history if that issuer has a record of less than three years
of continuous operation. The managers will consider periods of capital
formation, incubation, consolidations, and research and development in
determining whether a particular issuer has a record of three years of
continuous operation.
Investments in securities of issuers with limited operating history may involve
greater risks than investments in securities of more mature issuers. By their
nature, such issuers present limited operating history and financial information
upon which the managers may base their investment decision on behalf of the
fund. In addition, financial and other information regarding such issuers, when
available, may be incomplete or inaccurate.
Other Investment Companies
The fund may invest up to 10% of its total assets in other mutual funds,
including those managed by the advisor, provided that the investment is
consistent with the fund's investment policies and restrictions. Under the
Investment Company Act, a fund's investment in such securities, subject to
certain exceptions, currently is limited to (a) 3% of the total voting stock of
any one investment company, (b) 5% of the fund's total assets with respect to
any one investment company and (c) 10% of the fund's total assets in the
aggregate. Such purchases will be made in the open market where no commission or
profit to a sponsor or dealer results from the purchase other than the customary
brokers' commissions. As a shareholder of another investment company, the fund
would bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the management fee that the fund bears directly in connection
with its own operations.
Repurchase Agreements
The fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of that fund.
A repurchase agreement occurs when, at the time the fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.
Because the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.
The fund will limit repurchase agreement transactions to securities issued by
the U.S. government, its agencies and instrumentalities, and will enter into
such transactions with those banks and securities dealers who are deemed
creditworthy by the fund's advisor.
Repurchase agreements maturing in more than seven days would count toward the
fund's 15% limit on illiquid securities.
When-Issued and Forward Commitment Agreements
The fund may sometimes purchase new issues of securities on a when-issued or
forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future
date (typically 15 to 45 days later).
When purchasing securities on a when-issued or forward commitment basis, the
fund assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of the security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.
In purchasing securities on a when-issued or forward commitment basis, the fund
will establish and maintain until the settlement date a segregated account
consisting of cash, cash equivalents or other appropriate liquid securities in
an amount sufficient to meet the purchase price. When the time comes to pay for
the when-issued securities, the fund will meet its obligations with available
cash, through the sale of securities, or, although it would not normally expect
to do so, by selling the when-issued securities themselves (which may have a
market value greater or less than the fund's payment obligation). Selling
securities to meet when-issued or forward commitment obligations may generate
taxable capital gains or losses.
Restricted and Illiquid Securities
The fund may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the fund's criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among
qualified institutional investors rather than the general public. Although Rule
144A securities are considered restricted securities, they are not necessarily
illiquid.
With respect to securities eligible for resale under Rule 144A, the
staff of the Securities and Exchange Commission (SEC) has taken the position
that the liquidity of such securities in the portfolio of a fund offering
redeemable securities is a question of fact for the Board of Directors to
determine, such determination to be based upon a consideration of the readily
available trading markets and the review of any contractual restrictions.
Accordingly, the Board of Directors is responsible for developing and
establishing the guidelines and procedures for determining the liquidity of Rule
144A securities. As allowed by Rule 144A, the Board of Directors of the fund has
delegated the day-to-day function of determining the liquidity of Rule 144A
securities to the fund managers. The Board retains the responsibility to monitor
the implementation of the guidelines and procedures it has adopted.
Since the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and the fund may, from time to time, hold a Rule 144A or other
security that is illiquid. In such an event, the fund managers will consider
appropriate remedies to minimize the effect on such fund's liquidity.
Short-Term Securities
In order to meet anticipated redemptions, to hold pending the purchase of
additional securities for the fund's portfolio, or, in some cases, for temporary
defensive purposes, the fund may invest a portion of its assets in money market
and other short-term securities.
Examples of those securities include:
o Securities issued or guaranteed by the U.S. government and its agencies and
instrumentalities;
o Commercial Paper;
o Certificates of Deposit and Euro Dollar Certificates of Deposit;
o Bankers' Acceptances;
o Short-term notes, bonds, debentures, or other debt instruments; and
o Repurchase agreements.
In addition, the fund may invest up to 10% of its total assets in money market
mutual funds, including those managed by the advisor, with a limit of 5% of its
total assets in any one mutual fund. See the discussion under Other Investment
Companies, [PAGE XX], for more information about fund investments in other
mutual funds.
Futures and Options
The fund may enter into futures contracts, options or options on futures
contracts. Generally, futures transactions will be used to:
o protect against a decline in market value of the fund's securities (taking a
short futures position), or
o protect against the risk of an increase in market value for securities in
which the fund generally invests at a time when the fund is not
fully-invested (taking a long futures position), or
o provide a temporary substitute for the purchase of an individual security
that may be purchased in an orderly fashion.
Some futures and options strategies, such as selling futures, buying puts and
writing calls, hedge a fund's investments against price fluctuations. Other
strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure. Although other techniques may be used to control a
fund's exposure to market fluctuations, the use of futures contracts may be a
more effective means of hedging this exposure. While a fund pays brokerage
commissions in connection with opening and closing out futures positions, these
costs are lower than the transaction costs incurred in the purchase and sale of
the underlying securities.
For example, the sale of a future by a fund means the fund becomes obligated to
deliver the security (or securities, in the case of an index future) at a
specified price on a specified date. The purchase of a future means the fund
becomes obligated to buy the security (or securities) at a specified price on a
specified date. Futures contracts provide for the sale by one party and purchase
by another party of a specific security at a specified future time and price.
The fund managers may engage in futures and options transactions based on
securities indexes that are consistent with the fund's investment objectives.
Examples of indices that may be used include the MSCI EAFE Index and MSCI
Emerging Markets Free Index. The managers also may engage in futures and options
transactions based on specific securities, such as U.S. Treasury bonds or notes.
Futures contracts are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission (CFTC), a U.S. government agency.
Index futures contracts differ from traditional futures contracts in that when
delivery takes place, no stocks or bonds change hands. Instead, these contracts
settle in cash at the spot market value of the index. Although other types of
futures contracts by their terms call for actual delivery or acceptance of the
underlying securities, in most cases the contracts are closed out before the
settlement date. A futures position may be closed by taking an opposite position
in an identical contract (i.e., buying a contract that has previously been sold
or selling a contract that has previously been bought).
Unlike when the fund purchases or sells a bond, no price is paid or received by
the fund upon the purchase or sale of the future. Initially, the fund will be
required to deposit an amount of cash or securities equal to a varying specified
percentage of the contract amount. This amount is known as initial margin. The
margin deposit is intended to ensure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. A margin deposit does not constitute margin
transactions for purposes of the funds' investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.
In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin account is not income
producing. Subsequent payments, to and from the broker, called variation margin,
will be made on a daily basis as the price of the underlying debt securities or
index fluctuates, making the future more or less valuable, a process known as
marking the contract to market. Changes in variation margin are recorded by the
fund as unrealized gains or losses. At any time prior to expiration of the
future, the fund may elect to close the position by taking an opposite position
that will operate to terminate its position in the future. A final determination
of variation margin is then made; additional cash is required to be paid by or
released to the fund and the fund realizes a loss or gain.
Risks Related to Futures and Options Transactions
Futures and options prices can be volatile, and trading in these markets
involves certain risks. If the fund managers apply a hedge at an inappropriate
time or judge interest rate or equity market trends incorrectly, futures and
options strategies may lower a fund's return.
The fund could suffer losses if it were unable to close out its position because
of an illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the fund managers consider it appropriate or desirable to
do so. In the event of adverse price movements, the fund would be required to
continue making daily cash payments to maintain its required margin. If the fund
had insufficient cash, it might have to sell portfolio securities to meet daily
margin requirements at a time when the fund managers would not otherwise elect
to do so. In addition, the fund may be required to deliver or take delivery of
instruments underlying futures contracts it holds. The fund managers will seek
to minimize these risks by limiting the contracts entered into on behalf of the
fund to those traded on national futures exchanges and for which there appears
to be a liquid secondary market.
The fund could suffer losses if the prices of its futures and options positions
were poorly correlated with its other investments, or if securities underlying
futures contracts purchased by the fund had different maturities than those of
the portfolio securities being hedged. Such imperfect correlation may give rise
to circumstances in which the fund loses money on a futures contract at the same
time that it experiences a decline in the value of its hedged portfolio
securities. The fund also could lose margin payments it has deposited with a
margin broker, if, for example, the broker became bankrupt.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of the trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
Options on Futures
By purchasing an option on a futures contract, a fund obtains the right, but not
the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is exercised.
Although it does not currently intend to do so, the fund may write (or sell)
call options that obligate it to sell (or deliver) the option's underlying
instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the fund would give up some
ability to participate in a price increase on the underlying security. If the
fund were to engage in options transactions, it would own the futures contract
at the time a call were written and would keep the contract open until the
obligation to deliver it pursuant to the call expired.
Restrictions on the Use of Futures Contracts and Options
The fund may enter into futures contracts, options or options on futures
contracts.
Under the Commodity Exchange Act, the fund may enter into futures and options
transactions (a) for hedging purposes without regard to the percentage of assets
committed to initial margin and option premiums or (b) for other than hedging
purposes, provided that assets committed to initial margin and option premiums
do not exceed 5% of the fund's total assets. To the extent required by law, the
fund will segregate cash or securities on its records in an amount sufficient to
cover its obligations under the futures contracts and options.
Forward Currency Exchange Contracts
The fund may purchase and sell foreign currency on a spot (i.e., cash) basis and
may engage in forward currency contracts, currency options and futures
transactions for hedging or any other lawful purpose. See Derivative Securities,
[PAGE XX].
The fund expects to use forward contracts under two circumstances:
(1) When the fund managers wish to lock in the U.S. dollar price of a security
when the fund is purchasing or selling a security denominated in a foreign
currency, the fund would be able to enter into a forward contract to do so;
or
(2) When the fund managers believe that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, the fund
would be able to enter into a forward contract to sell foreign currency for
a fixed U.S. dollar amount approximating the value of some or all of its
portfolio securities either denominated in, or whose value is tied to, such
foreign currency.
In the first circumstance, when the fund enters into a trade for the purchase or
sale of a security denominated in a foreign currency, it may be desirable to
establish (lock in) the U.S. dollar cost or proceeds. By entering into forward
contracts in U.S. dollars for the purchase or sale of a foreign currency
involved in an underlying security transaction, the fund will be able to protect
itself against a possible loss between trade and settlement dates resulting from
the adverse change in the relationship between the U.S. dollar and the subject
foreign currency.
Under the second circumstance, when the fund managers believe that the currency
of a particular country may suffer a substantial decline relative to the U.S.
dollar, the fund could enter into a forward contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all
of its portfolio securities either denominated in, or whose value is tied to,
such foreign currency. The fund will segregate on its records cash or securities
in an amount sufficient to cover its obligations under the contract.
The precise matching of forward contracts in the amounts and values of
securities involved generally would not be possible because the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The fund managers do not intend to enter into such
contracts on a regular basis. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the managers
believe that it is important to have flexibility to enter into such forward
contracts when they determine that a fund's best interests may be served.
At the maturity of the forward contract, the fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate the obligation to deliver the foreign currency by
purchasing an offsetting forward contract with the same currency trader
obligating the fund to purchase, on the same maturity date, the same amount of
the foreign currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for the fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.
INVESTMENT POLICIES
Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the restrictions described below apply at the time a fund enters into
a transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment restrictions.
Fundamental Investment Policies
The fund's fundamental investment restrictions are set forth below. These
investment restrictions may not be changed without approval of a majority of the
outstanding votes of shareholders of the fund, as determined in accordance with
the Investment Company Act.
Subject Policy
Senior Securities The fund may not issue senior securities, except as
permitted under the Investment Company Act.
Borrowing The fund may not borrow money, except for temporary or
emergency purposes (not for leveraging or investment) in an
amount not exceeding 33-1/3% of the fund's total assets
(including the amount borrowed) less liabilities (other
than borrowings).
Lending The fund may not lend any security or make any other loan
if, as a result, more than 33-1/3% of the fund's total
assets would be lent to other parties, except, (i) through
the purchase of debt securities in accordance with its
investment objective, policies and limitations or (ii) by
engaging in repurchase agreements with respect to portfolio
securities.
Real Estate The fund may not purchase or sell real estate unless
acquired as a result of ownership of securities or other
instruments. This policy shall not prevent a fund from
investing in securities or other instruments backed by real
estate or securities of companies that deal in real estate
or are engaged in the real estate business.
Concentration The fund may not concentrate its investments in securities
of issuers in a particular industry (other than securities
issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities).
Underwriting The fund may not act as an underwriter of securities issued
by others, except to the extent that the fund may be
considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted
securities.
Commodities The fund may not purchase or sell physical commodities
unless acquired as a result of ownership of securities or
other instruments; provided that this limitation shall not
prohibit the fund from purchasing or selling options and
futures contracts or from investing in securities or other
instruments backed by physical commodities.
Control The fund may not invest for purposes of exercising control
over management.
For purposes of the investment restrictions relating to lending and borrowing,
the fund has received an exemptive order from the SEC regarding interfund
lending. Under the terms of the exemptive order, the fund may borrow money from
or lend money to other funds, advised by ACIM, that permit such transactions.
All such transactions will be subject to the limits set above for borrowing and
lending. The fund will borrow money through the program only when the costs are
equal to or lower than the cost of short-term bank loans. Interfund loans and
borrowings normally extend only overnight, but can have a maximum duration of
seven days. The fund will lend through the program only when the returns are
higher than those available from other short-term instruments (such as
repurchase agreements). The fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional borrowing costs.
Nonfundamental Investment Policies
In addition, the fund is subject to the following investment restrictions that
are not fundamental and may be changed by the Board of Directors.
Subject Policy
Leveraging The fund may not purchase additional investment securities at
any time during which outstanding borrowings exceed 5% of the
total assets of the fund.
Liquidity The fund may not purchase any security or enter into a
repurchase agreement if, as a result, more than 15% of its net
assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by
virtue of legal or contractual restrictions on resale or the
absence of a readily available market.
Short Sales The fund may not sell securities short, unless it owns
or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed
to constitute selling securities short.
Margin The fund may not purchase securities on margin, except that
the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities
on margin.
Futures and The fund may enter into futures contracts and write and buy
Options put and call options relating to futures contracts. The fund
may not, however, enter into leveraged futures transactions
if it would be possible for the fund to lose more money than
it invested.
Issuers with The fund may invest a portion of its assets in the securities
Limited of issuers with limited operating histories. An issuer is
Operating considered to have a limited operating history if that issuer
Histories has a record of less than three years of continuous operation.
Periods of capital formation, incubation, consolidations, and
research and development may be considered in determining
whether a particular issuer has a record of three years
of continuous operation.
The Investment Company Act imposes certain additional restrictions upon
acquisition by the fund of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership. Neither the SEC nor any other agency of the
federal or state agency participates in or supervises the management of the fund
or its investment practices or policies.
PORTFOLIO TURNOVER
The portfolio turnover rates of the fund will be shown in the Financial
Highlights table in the Prospectus.
The fund managers will purchase and sell securities without regard to the length
of time the security has been held. Accordingly, the fund's rate of portfolio
turnover may be substantial.
The fund managers intend to purchase a given security whenever they believe it
will contribute to the stated objective of the fund. In order to achieve the
fund's investment objective, the fund managers may sell a given security, no
matter for how long or for how short a period it has been held in the portfolio,
and no matter whether the sale is at a gain or at a loss, if the managers
believe that the security is not fulfilling its purpose, either because, among
other things, it did not live up to the managers' expectations, or because it
may be replaced with another security holding greater promise, or because it has
reached its optimum potential, or because of a change in the circumstances of a
particular company or industry or in general economic conditions, or because of
some combination of such reasons.
When a general decline in security prices is anticipated, the fund may decrease
or eliminate entirely its equity positions and increase its cash positions, and
when a rise in price levels is anticipated, the fund may increase its equity
positions and decrease its cash positions. However, it should be expected that
the fund will, under most circumstances, be essentially fully invested in equity
securities.
Because investment decisions are based on the anticipated contribution of the
security in question to the fund's objectives, the managers believe that the
rate of portfolio turnover is irrelevant when they believe a change is in order
to achieve those objectives. As a result, a fund's annual portfolio turnover
rate cannot be anticipated and may be higher than that of other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost the fund pays
directly. Portfolio turnover also may affect the character of capital gains
realized and distributed by the fund, if any, since short-term capital gains are
taxable as ordinary income. This disclosure regarding portfolio turnover is a
statement of fundamental policy and may be changed only by a vote of the
shareholders.
Because the managers do not take portfolio turnover rate into account in making
investment decisions, (1) the managers have no intention of accomplishing any
particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as representative
of the rates that will be attained in the future.
MANAGEMENT
THE BOARD OF DIRECTORS
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired the advisor to do so.
Two-thirds of the directors are independent of the fund's advisor; that is, they
are not employed by and have no financial interest in the advisor.
The individuals listed in the following table whose names are marked by an
asterisk (*) are interested persons of the fund (as defined in the Investment
Company Act) by virtue of, among other considerations, their affiliation with
either the fund; the advisor, American Century Investment Management, Inc.
(ACIM); the fund's agent for transfer and administrative services, American
Century Services Corporation (ACSC); the parent corporation, American Century
Companies, Inc. (ACC) or ACC's subsidiaries (including ACIM and ACSC); the
fund's distribution agent and co-administrator, Funds Distributor, Inc. (FDI);
the fund's other distribution agent, American Century Investment Services, Inc.
(ACIS); or other funds advised by the advisor. Each director listed below serves
as a director of five other registered investment companies in the American
Century family of funds, which are also advised by the advisor.
<TABLE>
<CAPTION>
Name (Age) Position(s) Held With Fund Principal Occupation(s) during Past five Years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James E. Stowers, Jr.* (76) Director, Chairman, Director and controlling shareholder, ACC,
4500 Main Street Chairman of the Board Chairman, ACIM, ACSC, ACIS and six other ACC
Kansas City, MO 64111 subsidiaries
Director, ACIM, ACSC, ACIS and 10 other ACC
subsidiaries(1)
- -----------------------------------------------------------------------------------------------------------------------------------
James E. Stowers III* (41) Director Chief Executive Officer and Director, ACC
4500 Main Street Chief Executive Officer, ACIM, ACSC, ACIS and six other
Kansas City, MO 64111 ACC subsidiaries
Director, ACIM, ACSC, ACIS and 11 other ACC
subsidiaries(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas A. Brown (59) Director Director of Plains States Development, Applied
4500 Main Street Industrial Technologies, Inc., a corporation engaged
Kansas City, MO 64111 in the sale of bearings and power transmission products
- ----------------------------------------------------------------------------------------------------------------------------------
Robert W. Doering, M.D. (67) Director Retired, formerly a general surgeon
4500 Main Street
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. (55) Director Senior Vice President and Director, Midwest
4500 Main Street Research Institute
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
D.D. (Del) Hock (65) Director Retired, formerly Chairman, Public Service Company
4500 Main Street of Colorado; Director, Service Tech, Inc., Hathaway
Kansas City, MO 64111 Corporation, and J.D. Edwards & Company
- ----------------------------------------------------------------------------------------------------------------------------------
Donald H. Pratt (62) Director, Chairman and Director, Butler Manufacturing
4500 Main Street Vice Chairman of the Board Company; Director, Atlas-Copco North America, Inc.
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
M. Jeannine Strandjord (54) Director Senior Vice President, Long Distance Finance, Sprint
4500 Main Street Director, DST Systems, Inc.
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
(1)Father of James E. Stowers III
(2)Son of James E. Stowers, Jr.
Committees
The Board has four standing committees to oversee specific functions of the fund's operations. Information about these
committees appears in the table below. The director first named acts as chairman of the committee.
Committee Members Function of Committee
- ----------------------------------------------------------------------------------------------------------------------------------
Executive James E. Stowers, Jr. The Executive Committee performs the functions of the Board of
James E. Stowers III Directors between Board meetings, subject to the limitations on its
Donald H. Pratt power set out in the Maryland General Corporation Law, and except
for matters required by the Investment Company Act to be acted
upon by the whole Board.
- ----------------------------------------------------------------------------------------------------------------------------------
Compliance Thomas A. Brown The Compliance Committee reviews the results of the fund's
Donald H. Pratt compliance testing program, reviews quarterly reports from the
Andrea C. Hall, Ph.D advisor to the Board regarding various compliance
matters and monitors the implementation of the fund's Code of Ethics,
including any violations.
- ----------------------------------------------------------------------------------------------------------------------------------
Audit Jeannine Strandjord The Audit Committee recommends the engagement of the fund's
Robert W. Doering, M.D. independent auditors and oversees its activities. The Committee
D.D. (Del) Hock receives reports from the advisor's Internal Audit Department, which
is accountable to the Committee. The Committee also receives
reporting about compliance matters affecting the fund.
- ----------------------------------------------------------------------------------------------------------------------------------
Nominating Donald H. Pratt The Nominating Committee primarily considers and recommends
D.D. (Del) Hock individuals for nomination as directors. The names of potential
Andrea C. Hall, Ph.D. director candidates are drawn from a number of sources, including
recommendations from members of the Board, management and
shareholders. This committee also reviews and makes
recommendations to the Board with respect to the composition of
Board committees and other Board-related matters, including its
organization, size, composition, responsibilities, functions and compensation.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Compensation of Directors
The directors also serve as directors for five American Century investment
companies other than the corporation. Each director who is not an interested
person as defined in the Investment Company Act receives compensation for
service as a member of the Board of all six such companies based on a schedule
that takes into account the number of meetings attended and the assets of the
funds for which the meetings are held. These fees and expenses are divided among
the six investment companies based, in part, upon their relative net assets.
Under the terms of the management agreement with the advisor, the funds are
responsible for paying such fees and expenses.
The following table shows the aggregate compensation paid by the corporation for
the periods indicated and by the six investment companies served by this Board
to each director who is not an interested person as defined in the Investment
Company Act.
Aggregate Director Compensation for Fiscal Year Ended November 30, 1999
Total Compensation Total Compensation from the
Name of Director from the Fund(1) American Century Family of
Funds(2)
Thomas A. Brown N/A $57,497
Robert W. Doering, M.D. N/A $55,750
Andrea C. Hall, Ph.D. N/A $56,250
D.D. (Del) Hock N/A $56,000
Donald H. Pratt N/A $59,590
Lloyd T. Silver, Jr. N/A $56,000
M. Jeannine Strandjord N/A $58,000
(1) Includes compensation paid to the directors during the fiscal year ended
November 30, 1999, and also includes amounts deferred at the election of the
directors under the American Century Mutual Funds Deferred Compensation Plan
for Non-Interested Directors.
(2) Includes compensation paid by the six investment company members of the
American Century family of funds served by this Board.
The fund has adopted the Amended and Restated American Century Mutual Funds
Deferred Compensation Plan for Non-Interested Directors. Under the plan, the
independent directors may defer receipt of all or any part of the fees to be
paid to them for serving as directors of the fund.
All deferred fees are credited to an account established in the name of the
directors. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the director. The account balance continues
to fluctuate in accordance with the performance of the selected fund or funds
until final payment of all amounts credited to the account. Directors are
allowed to change their designation of mutual funds from time to time.
No deferred fees are payable until such time as a director resigns, retires or
otherwise ceases to be a member of the Board of Directors. Directors may receive
deferred fee account balances either in a lump sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a director, all remaining deferred fee account balances are paid to
the director's beneficiary or, if none, to the director's estate.
The plan is an unfunded plan and, accordingly, the fund has no obligation to
segregate assets to secure or fund the deferred fees. The rights of directors to
receive their deferred fee account balances are the same as the rights of a
general unsecured creditor of the fund. The plan may be terminated at any time
by the administrative committee of the plan. If terminated, all deferred fee
account balances will be paid in a lump sum.
No deferred fees were paid to any director under the plan during the fiscal year
ended November 30, 1999.
OFFICERS
Background information about the officers of the fund is provided in the table
below. All persons named as officers of the fund also serve in similar
capacities for the 12 other investment companies advised by ACIM. Not all
officers of the fund are listed; only those officers with policy-making
functions for the fund are listed. No officer is compensated for his or her
service as an officer of the fund. The individuals listed in the following table
are interested persons of the fund (as defined in the Investment Company Act) by
virtue of, among other considerations, their affiliation with the fund, ACC,
ACC's subsidiaries (including ACIM and ACSC), or the fund's distributor (FDI),
as specified in the following table.
<TABLE>
<CAPTION>
Position(s)
Name (Age) Held With Principal Occupation(s)
Address Funds During Past Five Years
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
George A. Rio (45) President Executive Vice President and Director of Client Services, FDI
60 State Street (March 1998 to present)
Boston, MA 02109 Senior Vice President and Senior Key Account Manager, Putnam
Mutual Funds (June 1995 to March 1998)
Director Business Development, First Data Corporation
(May 1994 to June 1995)
- ----------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (35) Vice President Vice President and Associate General Counsel, FDI (since July
60 State Street 1996)
Boston, MA 02109 Assistant Counsel, Forum Financial Group (April 1994 to July 1996)
- ----------------------------------------------------------------------------------------------------------------------------------
Mary A. Nelson (35) Vice President Vice President and Manager of Treasury Services and
60 State Street Administration, FDI (1994 to present)
Boston, MA 02109
- ----------------------------------------------------------------------------------------------------------------------------------
Maryanne Roepke, CPA (44) Vice President Senior Vice President and Treasurer, ACSC
4500 Main Street and Treasurer
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
David C. Tucker (41) Vice President Senior Vice President, ACIM, ACSC, ACIS and three other ACC
4500 Main Street subsidiaries (June 1998 to present)
Kansas City, MO 64111 General Counsel, ACC and nine ACC subsidiaries (June 1998 to
present)
Consultant to mutual fund industry (May 1997 to April 1998)
Vice President and General Counsel, Janus Companies
(1990 to 1997)
- ----------------------------------------------------------------------------------------------------------------------------------
Paul J. Carrigan Jr. (50) Secretary Secretary, ACC (February 1998 to present)
4500 Main Street Director of Legal Operations (February 1996 to present)
Kansas City, MO 64111 Board Communications Manager, The Benham Company
(April 1994 to January 1996)
- ----------------------------------------------------------------------------------------------------------------------------------
Robert J. Leach (33) Controller Vice President, ACSC (February 2000 to present)
4500 Main Street Controller-Fund Accounting, ACSC
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
Jon Zindel (32) Tax Officer Vice President of Taxation, ACSC (1996 to present)
4500 Main Street Vice President, ACIM and 15 other ACC subsidiaries (April 1999 to
Kansas City, MO 64111 present)
Treasurer, American Century Ventures, Inc. (December 1999 to
present)
Tax Manager, Price Waterhouse LLP (1989 to 1996)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CODE OF ETHICS
The funds, their investment advisor and principal underwriters have adopted
codes of ethics under Rule 17j-1 of the Investment Company Act and these codes
of ethics permit personnel subject to the codes to invest in securities,
including securities that may be purchased or held by the funds, provided that
they first obtain approval from their employer's compliance department before
making such investments.
SERVICE PROVIDERS
The fund has no employees. To conduct the fund's day-to-day activities, the fund
has hired a number of service providers. Each service provider has a specific
function to fill on behalf of the fund and is described below.
ACIM and ACSC are both wholly owned by ACC. James E. Stowers Jr., Chairman of
ACC, controls ACC by virtue of his ownership of a majority of its voting stock.
INVESTMENT ADVISOR
American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for the fund. A description of the responsibilities of the advisor
appears in the Prospectus under the heading Management.
For the services provided to the fund, the advisor receives a monthly fee based
on a percentage of the average net assets of the fund. The fund has a stepped
fee structure, as follows:
Fund Class Percent of Average Net Assets
- -------------------------------------------------------------------------------
Life Sciences Investor x.xx% of first $1 billion
x.xx% of the next $1 billion
x.xx% over $2 billion
- -------------------------------------------------------------------------------
Institutional x.xx% of first $1 billion
x.xx% of the next $1 billion
x.xx% over $2 billion
- -------------------------------------------------------------------------------
Advisor x.xx% of first $1 billion
x.xx% of the next $1 billion
x.xx% over $2 billion
- -------------------------------------------------------------------------------
On the first business day of each month, the fund pays a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of the fund's net assets during the
previous month. This number is then multiplied by a fraction, the numerator of
which is the number of days in the previous month and the denominator of which
is 365 (366 in leap years).
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by
(1) the fund's Board of Directors, or by the vote of a majority of outstanding
votes (as defined in the Investment Company Act) and
(2) the vote of a majority of the directors of the fund who are not parties to
the agreement or interested persons of the advisor, cast in person at a
meeting called for the purpose of voting on such approval.
The management agreement provides that it may be terminated at any time, without
payment of any penalty, by the fund's Board of Directors, or by a vote of a
majority of outstanding votes, on 60 days' written notice to the advisor, and
that it shall be automatically terminated if it is assigned.
The management agreement states that the advisor shall not be liable to the fund
or its shareholders for anything other than willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties.
The management agreement also provides that the advisor and its officers,
directors and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
Certain investments may be appropriate for the fund and also for other clients
advised by the advisor. Investment decisions for the fund and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment, generally. A particular
security may be bought or sold for only one client or fund, or in different
amounts and at different times for more than one but less than all clients or
funds. In addition, purchases or sales of the same security may be made for two
or more clients or funds on the same date. Such transactions will be allocated
among clients in a manner believed by the advisor to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by a fund.
The advisor may aggregate purchase and sale orders of the fund with purchase and
sale orders of its other clients when the advisor believes that such aggregation
provides the best execution for the fund. The corporation's Board of Directors
has approved the policy of the advisor with respect to the aggregation of
portfolio transactions. Where portfolio transactions have been aggregated, the
fund participates at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
advisor will not aggregate portfolio transactions of the fund unless it believes
such aggregation is consistent with its duty to seek best execution on behalf of
the fund and the terms of the management agreement. The advisor receives no
additional compensation or remuneration as a result of such aggregation.
TRANSFER AGENT AND ADMINISTRATOR
American Century Services Corporation, 4500 Main Street, Kansas City, Missouri
64111, acts as transfer agent and dividend-paying agent for the fund. It
provides physical facilities, computer hardware and software and personnel, for
the day-to-day administration of the fund and the advisor. The advisor pays ACSC
for these services out of its unified management fee.
From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.
Pursuant to a Sub-Administration Agreement with the advisor, Funds Distributor,
Inc. (FDI) serves as the co-administrator for the fund. FDI is responsible for
(i) providing certain officers of the fund and (ii) reviewing and filing
marketing and sales literature on behalf of the fund. The fees and expenses of
FDI are paid by the advisor out of its unified fee.
DISTRIBUTORS
The fund's shares are distributed by FDI and ACIS, both registered
broker-dealers. FDI is a wholly owned indirect subsidiary of Boston
Institutional Group, Inc., and its principal business address is 60 State
Street, Suite 1300, Boston, Massachusetts 02109. ACIS is a wholly owned
subsidiary of ACC, and is located at 4500 Main Street, Kansas City, Missouri
64111.
The distributor is the principal underwriter of the fund's shares. The
distributor makes a continuous, best efforts underwriting of the fund's shares.
This means the distributor has no liability for unsold shares.
OTHER SERVICE PROVIDERS
CUSTODIAN BANKS
Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York 10003-9598,
and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves
as custodian of the assets of the fund. The custodians take no part in
determining the investment policies of the fund or in deciding which securities
are purchased or sold by the fund. The fund, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.
INDEPENDENT AUDITOR
Deloitte & Touche LLP is the independent auditor of the fund. The address of
Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas City, Missouri 64106. As
the independent auditor of the fund, Deloitte & Touche LLP provides services
including
(1) audit of the annual financial statements for the fund,
(2) assistance and consultation in connection with SEC filings, and
(3) review of the annual federal income tax return filed for the fund.
BROKERAGE ALLOCATION
Under the management agreement between the fund and the advisor, the advisor has
the responsibility of selecting brokers and dealers to execute portfolio
transactions. The fund's policy is to secure the most favorable prices and
execution of orders on its portfolio transactions. So long as that policy is
met, the advisor may take into consideration the factors discussed below when
selecting brokers.
The advisor receives statistical and other information and services, including
research, without cost from brokers and dealers. The advisor evaluates such
information and services, together with all other information that it may have,
in supervising and managing the investments of the fund. Because such
information and services may vary in amount, quality and reliability, their
influence in selecting brokers varies from none to very substantial. The advisor
proposes to continue to place some of the fund's brokerage business with one or
more brokers who provide information and services. Such information and services
will be in addition to and not in lieu of services required to be performed by
the advisor. The advisor does not utilize brokers that provide such information
and services for the purpose of reducing the expense of providing required
services to the fund.
The brokerage commissions paid by the fund may exceed those which another broker
might have charged for effecting the same transactions, because of the value of
the brokerage and research services provided by the broker. Research services
furnished by brokers through whom the fund effect securities transactions may be
used by the advisor in servicing all of its accounts, and not all such services
may be used by the advisor in managing the portfolios of the fund.
The staff of the SEC has expressed the view that the best price and execution of
over-the-counter transactions in portfolio securities may be secured by dealing
directly with principal market makers, thereby avoiding the payment of
compensation to another broker. In certain situations, the officers of the fund
and the advisor believe that the facilities, expert personnel and technological
systems of a broker often enable the fund to secure as good a net price by
dealing with a broker instead of a principal market maker, even after payment of
the compensation to the broker. The fund regularly place its over-the-counter
transactions with principal market makers, but may also deal on a brokerage
basis when utilizing electronic trading networks or as circumstances warrant.
INFORMATION ABOUT FUND SHARES
The fund is a series of shares issued by the corporation, and shares of the fund
have equal voting rights as other series (funds) issued by the corporation. In
addition, each series (or fund) may be divided into separate classes. See
Multiple Class Structure which follows. Additional funds and classes may be
added without a shareholder vote.
Each fund votes separately from the other series of shares (funds) issued by the
corporation on matters affecting the fund exclusively. Voting rights are not
cumulative, so that investors holding more than 50% of the corporation's (i.e.,
all funds') outstanding shares may be able to elect a Board of Directors. The
corporation undertakes dollar-based voting, meaning that the number of votes you
are entitled to is based upon the dollar amount of your investment. The election
of directors is determined by the votes received from all the corporation's
shareholders without regard to whether a majority of shares of any one fund
voted in favor of a particular nominee or all nominees as a group.
The assets belonging to each series of shares are held separately by the
custodian and the shares of each series or class represent a beneficial interest
in the principal, earnings and profit (or losses) of investment and other assets
held for each series or class. Your rights as a shareholder are the same for all
series or class of securities unless otherwise stated. Within their respective
series or class, all shares have equal redemption rights. Each share, when
issued, is fully paid and non-assessable.
In the event of complete liquidation or dissolution of the fund, shareholders of
each series or class of shares will be entitled to receive, pro rata, all of the
assets less the liabilities of that series or class.
Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.
MULTIPLE CLASS STRUCTURE
The corporation's Board of Directors has adopted a multiple class plan (the
Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such
plan, the fund may issue up to four classes of shares: an Investor Class, an
Institutional Class, a Service Class and an Advisor Class. Not all funds offer
all four classes.
The Investor Class is made available to investors directly without any load or
commission, for a single unified management fee. The Institutional, Service and
Advisor Classes are made available to institutional shareholders or through
financial intermediaries that do not require the same level of shareholder and
administrative services from the advisor as Investor Class shareholders. As a
result, the advisor is able to charge these classes a lower total management
fee. In addition to the management fee, however, the Advisor Class shares are
subject to a Master Distribution and Shareholder Services Plan (described
beginning on this page). The plan has been adopted by the fund's Board of
Directors and initial shareholder in accordance with Rule 12b-1 adopted by the
SEC under the Investment Company Act.
Rule 12b-1
Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the investment
company's Board of Directors and approved by its shareholders. Pursuant to such
rule, the Board of Directors and initial shareholder of the fund's Advisor Class
have approved and entered into a Master Distribution and Shareholder Services
Plan, with respect to the Advisor Class (the Plan). The Plan is described below.
In adopting the Plan, the Board of Directors (including a majority of directors
who are not interested persons of the fund as defined in the Investment Company
Act, hereafter referred to as the independent directors) determined that there
was a reasonable likelihood that the Plan would benefit the fund and the
shareholders of the affected class. Pursuant to Rule 12b-1, information with
respect to revenues and expenses under the Plan is presented to the Board of
Directors quarterly for its consideration in connection with its deliberations
as to the continuance of the Plan. Continuance of the Plan must be approved by
the Board of Directors (including a majority of the independent directors)
annually. The Plan may be amended by a vote of the Board of Directors (including
a majority of the independent directors), except that the Plan may not be
amended to materially increase the amount to be spent for distribution without
majority approval of the shareholders of the affected class. The Plan terminates
automatically in the event of an assignment and may be terminated upon a vote of
a majority of the independent directors or by vote of a majority of the
outstanding voting securities of the affected class.
All fees paid under the Plan will be made in accordance with Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers
(NASD).
Master Distribution and Shareholder Services Plan
As described in the Prospectus, the fund's Advisor Class shares are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. The fund's distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries with respect to the sale of the fund's shares and/or
the use of the fund's shares in various investment products or in connection
with various financial services.
Certain recordkeeping and administrative services that are provided by the
fund's transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for shareholders in
the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.
To enable the fund's shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the fund's
advisor has reduced its management fee by 0.25% per annum with respect to the
Advisor Class shares and the fund's Board of Directors has adopted a Master
Distribution and Shareholder Services Plan. Pursuant to the Plan, the Advisor
Class shares pay a fee of 0.50% annually of the aggregate average daily net
assets of the fund's Advisor Class shares, 0.25% of which is paid for
Shareholder Services (as described above) and 0.25% of which is paid for
distribution services.
Payments may be made for a variety of shareholder services, including, but are
not limited to
(a) receiving, aggregating and processing purchase, exchange and redemption
requests from beneficial owners (including contract owners of insurance
products that utilize the fund as underlying investment media) of shares and
placing purchase, exchange and redemption orders with the fund's distributor
(b) providing shareholders with a service that invests the assets of their
accounts in shares pursuant to specific or pre-authorized instructions
(c) processing dividend payments from a fund on behalf of shareholders and
assisting shareholders in changing dividend options, account designations
and addresses
(d) providing and maintaining elective services such as check writing and wire
transfer services
(e) acting as shareholder of record and nominee for beneficial owners
(f) maintaining account records for shareholders and/or other beneficial owners
(g) issuing confirmations of transactions
(h) providing subaccounting with respect to shares beneficially owned by
customers of third parties or providing the information to a fund as
necessary for such subaccounting
(i) preparing and forwarding shareholder communications from the fund (such as
proxies, shareholder reports, annual and semi-annual financial statements
and dividend, distribution and tax notices) to shareholders and/or other
beneficial owners; and
(j) providing other similar administrative and sub-transfer agency services.
Shareholder Services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the fund.
Shareholder services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the fund.
Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of Advisor Class shares, which
services may include but are not limited to
(a) the payment of sales commissions, on going commissions and other payments to
brokers, dealers, financial institutions or others who sell Advisor Class
shares pursuant to Selling Agreements;
(b) compensation to registered representatives or other employees of Distributor
who engage in or support distribution of the fund's Advisor Class shares
(c) compensation to, and expenses (including overhead and telephone expenses)
of, Distributor
(d) the printing of prospectuses, statements of additional information and
reports for other than existing shareholders
(e) the preparation, printing and distribution of sales literature and
advertising materials provided to the fund's shareholders and prospective
shareholders
(f) receiving and answering correspondence from prospective shareholders,
including distributing prospectuses, statements of additional information,
and shareholder reports
(g) the providing of facilities to answer questions from prospective investors
about fund shares
(h) complying with federal and state securities laws pertaining to the sale of
fund shares
(i) assisting investors in completing application forms and selecting dividend
and other account options
(j) the providing of other reasonable assistance in connection with the
distribution of fund shares
(k) the organizing and conducting of sales seminars and payments in the form of
transactional and compensation or promotional incentives
(l) profit on the foregoing
(m) the payment of "service fees" for the provision of personal, continuing
services to investors, as contemplated by the Rules of Fair Practice of the
NASD; and
(n) such other distribution and services activities as the advisor determines
may be paid for by the fund pursuant to the terms of the agreement between
the corporation and the fund's distributor and in accordance with Rule 12b-1
of the Investment Company Act.
BUYING AND SELLING FUND SHARES
Information about buying, selling and exchanging fund shares is contained in the
fund's Prospectus and in Your Guide to American Century Services. The Prospectus
and guide are available to investors without charge and may be obtained by
calling us.
VALUATION OF A FUND'S SECURITIES
The fund's net asset value (NAV) is calculated as of the close of business of
the New York Stock Exchange (the Exchange), usually at 4 p.m. Eastern time each
day the Exchange is open for business. The Exchange usually closes at 4 p.m.
Eastern time. The Exchange typically observes the following holidays: New Year's
Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Although the
fund expects the same holiday schedule to be observed in the future, the
Exchange may modify its holiday schedule at any time.
The fund's NAV is calculated by adding the value of all portfolio securities and
other assets, deducting liabilities and dividing the result by the number of
shares outstanding. Expenses and interest earned on portfolio securities are
accrued daily.
The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded or as of the close of the New
York Stock Exchange, if that is earlier. That value is then converted to U.S.
dollars at the prevailing foreign exchange rate. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors.
Securities maturing within 60 days of the valuation date may be valued at cost,
plus or minus any amortized discount or premium, unless the directors determine
that this would not result in fair valuation of a given security. Other assets
and securities for which quotations are not readily available are valued in good
faith at their fair value using methods approved by the Board of Directors.
The value of an exchange-traded foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded or as of the close of business on the New York Stock Exchange, if that is
earlier. That value is then translated to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
Trading of these securities in foreign markets may not take place on every New
York Stock Exchange business day. In addition, trading may take place in various
foreign markets and on some electronic trading networks on Saturdays or on other
days when the New York Stock Exchange is not open and on which the fund's net
asset value is not calculated. Therefore, such calculation does not take place
contemporaneously with the determination of the prices of many of the portfolio
securities used in such calculation and the value of the fund's portfolio may be
affected on days when shares of the fund may not be purchased or redeemed.
TAXES
FEDERAL INCOME TAXES
The fund intends to qualify annually as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). By so
qualifying, a fund will be exempt from federal income taxes to the extent that
it distributes substantially all of its net investment income and net realized
capital gains (if any) to shareholders. If a fund fails to qualify as a
regulated investment company, it will be liable for taxes, significantly
reducing its distributions to shareholders and eliminating shareholders' ability
to treat distributions of the funds in the manner they were realized by the
fund.
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. The dividends from net income may quality for the 70% dividends
received deduction for corporations to the extent that the fund held shares
receiving the dividend for more than 45 days. Distributions from gains on assets
held greater than 12 months are taxable as long-term gains regardless of the
length of time you have held the shares. However, you should note that any loss
realized upon the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of any distributions of
long-term capital gain to you with respect to such shares.
Dividends and interest received by a fund on foreign securities may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Foreign countries generally do not impose taxes on capital gains in
respect of investments by non-resident investors. The foreign taxes paid by a
fund will reduce its dividends.
If more than 50% of the value of a fund's total assets at the end of each
quarter of its fiscal year consists of securities of foreign corporations, the
fund may qualify for and make an election with the Internal Revenue Service with
respect to such fiscal year so that fund shareholders may be able to claim a
foreign tax credit in lieu of a deduction for foreign income taxes paid by the
fund. If such an election is made, the foreign taxes paid by the fund will be
treated as income received by you. In order for you to utilize the foreign tax
credit, the mutual fund shares must have been held for 16 days or more during
the 30-day period, beginning 15 days prior to the ex-dividend date for the
mutual fund shares. The mutual fund must meet a similar holding period
requirement with respect to foreign securities to which a dividend is
attributable. Any portion of the foreign tax credit that is ineligible as a
result of the fund not meeting the holding period requirement will be deducted
in computing net investment income.
If a fund purchases the securities of certain foreign investment funds or trusts
called passive foreign investment companies (PFIC), capital gains on the sale of
such holdings will be deemed to be ordinary income regardless of how long the
fund holds its investment. The fund also may be subject to corporate income tax
and an interest charge on certain dividends and capital gains earned from these
investments, regardless of whether such income and gains are distributed to
shareholders. In the alternative, the fund may elect to recognize cumulative
gains on such investments as of the last day of its fiscal year and distribute
them to shareholders. Any distribution attributable to a PFIC is characterized
as ordinary income.
If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, either American Century or your financial intermediary is
required by federal law to withhold and remit to the IRS 31% of reportable
payments (which may include dividends, capital gains distributions and
redemptions) to the IRS. Those regulations require you to certify that the
Social Security number or tax identification number you provide is correct and
that you are not subject to 31% withholding for previous under-reporting to the
IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.
Redemption of shares of a fund (including redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
you will generally recognize gain or loss in an amount equal to the difference
between the basis of the shares and the amount received. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the "wash sale"
rules of the Code, resulting in a postponement of the recognition of such loss
for federal income tax purposes.
STATE AND LOCAL TAXES
Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
HOW FUND PERFORMANCE INFORMATION IS CALCULATED
The fund may quote performance in various ways. Fund performance may be shown by
presenting one or more performance measurements, including cumulative total
return, average annual total return or yield.
All performance information advertised by the fund is historical in nature and
is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
Total returns quoted in advertising and sales literature reflect all aspects of
a fund's return, including the effect of reinvesting dividends and capital gain
distributions (if any) and any change in the fund's NAV during the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a fund during a stated
period and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative total return of 100%
over 10 years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the fund's performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
In addition to average annual total returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period, including periods other than one, five and 10 years.
Average annual and cumulative total returns may be quoted as percentages or as
dollar amounts and may be calculated for a single investment, a series of
investments, or a series of redemptions over any time period. Total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of these
factors and their contributions to total return.
As a new fund, performance information for the fund is not available as of the
date of this Statement of Additional Information.
PERFORMANCE COMPARISONS
The fund's performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indexes of market
performance. This may include comparisons with funds that, unlike the American
Century funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be used for such comparisons may include, but are not
limited to, U.S. Treasury bill, note and bond yields, money market fund yields,
U.S. government debt and percentage held by foreigners, the U.S. money supply,
net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper, Inc. or Morningstar, Inc.; mutual fund
rankings published in major, nationally distributed periodicals; data provided
by the Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills,
and Inflation; major indices of stock market performance; and indexes and
historical data supplied by major securities brokerage or investment advisory
firms. The fund also may utilize reprints from newspapers and magazines
furnished by third parties to illustrate historical performance or to provide
general information about the fund.
PERMISSIBLE ADVERTISING INFORMATION
From time to time, the fund may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to shareholders:
(1) discussions of general economic or financial principles (such as the effects
of compounding and the benefits of dollar-cost averaging)
(2) discussions of general economic trends
(3) presentations of statistical data to supplement such discussions
(4) descriptions of past or anticipated portfolio holdings for the fund
(5) descriptions of investment strategies for the fund
(6) descriptions or comparisons of various savings and investment products
(including, but not limited to, qualified retirement plans and individual
stocks and bonds), which may or may not include the fund
(7) comparisons of investment products (including the fund) with relevant market
or industry indices or other appropriate benchmarks
(8) discussions of fund rankings or ratings by recognized rating organizations;
and
(9) testimonials describing the experience of persons that have invested in the
fund. The fund may also include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results in such
communications. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of any of the fund.
MULTIPLE CLASS PERFORMANCE ADVERTISING
Pursuant to the Multiple Class Plan, the fund may issue additional classes of
existing funds or introduce new funds with multiple classes available for
purchase. To the extent a new class is added to an existing fund, the managers
may, in compliance with SEC and NASD rules, regulations and guidelines, market
the new class of shares using the historical performance information of the
original class of shares. When quoting performance information for the new class
of shares for periods prior to the first full quarter after inception, the
original class' performance will be restated to reflect the expenses of the new
class and for periods after the first full quarter after inception, actual
performance of the new class will be used.
EXPLANATION OF FIXED-INCOME SECURITIES RATINGS
As described in the Prospectus and in this SAI, the fund may invest in
fixed-income securities. Those investments, however, are subject to certain
credit quality restrictions as noted in the Prospectuses. The following is a
summary of the rating categories referenced in the prospectus.
Bond Ratings
S&P Moody's Description
AAA Aaa These are the highest ratings assigned by S&P and Moody's
to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
AA Aa Debt rated in this category is considered to have a very
strong capacity to pay interest and repay principal and
differs from AAA/Aaa issues only in a small degree.
A A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
BBB Baa Debt rated BBB/Baa is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated
categories.
BB Ba Debt rated BB/Ba has less near-term vulnerability to
default than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business,
financial or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The
BB rating category also is used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.
B B Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an
actual or implied BB/Ba or BB-/Ba3 rating.
CCC Caa Debt rated CCC/Caa has a currently identifiable
vulnerability to default and is dependent upon favorable
business, financial and economic conditions to meet timely
payment of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay
principal. The CCC/Caa rating category is also used for debt
subordinated to senior debt that is assigned an actual or
implied B or B-/B3 rating.
CC Ca The rating CC/Ca typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC/Caa
rating.
C C The rating C typically is applied to debt subordinated to
senior debt, which is assigned an actual or implied CCC-/Caa3
debt rating. The C rating may be used to cover a situation
where a bankruptcy petition has been filed, but debt service
payments are continued.
CI - The rating CI is reserved for income bonds on which no
interest is being paid.
D D Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made
on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made
during such grace period. The D rating also will be used upon
the filing of a bankruptcy petition if debt service payments
are jeopardized.
To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3) to designate relative standing within
its major bond rating categories. Fitch Investors Service, Inc. also rates bonds
and uses a ratings system that is substantially similar to that used by Standard
& Poor's.
Commercial Paper Ratings
S&P Moody's Description
A-1 Prime-1 This indicates that the degree of safety regarding timely
(P-1) payment is strong. Standard & Poor's rates those issues
determined to possess extremely strong safety characteristics
as A-1+.
A-2 Prime-2 Capacity for timely payment on commercial paper is
(P-2) satisfactory, but the relative degree of safety is not as high
as for issues designated A-1. Earnings trends and
coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriated, may be more affected by external conditions.
Ample alternate liquidity is maintained.
A-3 Prime-3 Satisfactory capacity for timely repayment. Issues that carry
(P-3) this rating are somewhat more vulnerable to the adverse
changes in circumstances than obligations carrying
the higher designations.
Note Ratings
S&P Moody's Description
SP-1 MIG-1; VMIG-1 Notes are of the highest quality
enjoying strong protection from established cash
flows of funds for their servicing or from
established and broad-based access to the market for
refinancing, or both.
SP-2 MIG-2; VMIG-2 Notes are of high quality with margins
of protection ample, although not so large as in the
preceding group.
SP-3 MIG-3; VMIG-3 Notes are of favorable quality with all
security elements accounted for, but lacking the
undeniable strength of the preceding grades. Market
access for refinancing, in particular, is likely to
be less well established.
SP-4 MIG-4; VMIG-4 Notes are of adequate quality carrying
specific risk but having protection and not
distinctly or predominantly speculative.
MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These contain more information about the fund's investments and the market
conditions and investment strategies that significantly affected the fund's
performance during the most recent fiscal period. The annual and semiannual
reports are incorporated by reference into this SAI. This means that these are
legally part of this SAI.
You can receive a free copy of the annual and
semiannual reports, and ask questions about the fund and your accounts, by
contacting American Century at the address or telephone numbers listed below.
If you own or are considering purchasing fund shares through
o an employer-sponsored retirement plan
o a bank
o a broker-dealer
o an insurance company
o another financial intermediary
you can receive the annual and semiannual reports directly from them.
You also can get information about the fund from the Security and Exchange
Commission (SEC). The SEC charges a duplicating fee to provide copies of this
information.
o In person SEC Public Reference Room
Washington, D.C.
Call 1-202-942-8090 for location and hours.
o On the Internet o EDGAR database at www.sec.gov
o By email request at [email protected]
o By mail SEC Public Reference Section
Washington, D.C.
20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
Investor Relations
1-800-345-2021 or 816-531-5575
Automated Information Line
1-800-345-8765
www.americancentury.com
Fax
816-340-7962
Telecommunications Device for the Deaf
1-800-634-4113 or 816-444-3485
Business; Not-For-Profit and
Employer-Sponsored Retirement Plans
1-800-345-3533
SH-SAI-xxxxx 0004
<PAGE>
American Century
- --------------------------------------------------------------------------------
Prospectus
Technology Fund
[Effective Date]
Investor Class
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
Funds Distributor, Inc. and American Century Investment Services, Inc.,
Distributors
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this Prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Fund - Learn about fund goals, strategies and risks, and who
may or may not want to invest.
Fund Performance History - See how the fund performed from year to year.
Fees and Expenses - Find out about fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Fund section.
As you continue to read, the Management section will acquaint you with the fund
management teams, and Investing with American Century gives an overview about
how to invest and manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
Prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m. Central
time. Give us a call at 1-800-345-2021.
Sincerely,
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
Table of Contents
An Overview of the Fund....................................................X
Fund Performance History...................................................X
Fees and Expenses..........................................................X
Objectives, Strategies and Risks...........................................X
Management.................................................................X
Investing with American Century...........................................XX
Share Price and Distributions.............................................XX
Taxes.....................................................................XX
Multiple Class Information................................................XX
Financial Highlights......................................................XX
CALLOUTS
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in blue italics, look for its definition in
the left margin.
This symbol highlights special information and helpful tips.
An Overview of the Fund
What is the fund's investment objective?
This fund seeks capital growth.
What is the fund's primary investment strategies and principal risks?
The fund managers look for stocks of growing U.S. and foreign companies that the
fund managers believe will benefit significantly from advances or improvements
in technology. If the fund managers are unable to find such securities, a
significant portion of thte fund's assets may be in cash or similar securities.
The investment strategy of this fund is based on the belief that, over the long
term, stocks of companies with earnings and revenue growth have a
greater-than-average chance to increase in value over time. A more detailed
description of American Century's growth investment style and the fun's
investment strategies and risks begins on [page x].
The fund's principal risks include
o Market Risk - The value of a fund's shares will go up and down based on the
performance of the companies whose securities it owns and other factors
generally affecting the securities market.
o Price Volatility - The value of a fund's shares may fluctuate significantly
in the short term.
o Concentration - The fund will focus on the technology and telecommunications
industries and related industry groups. Because of this, companies in the
fund's portfolio may react similarly to market developments. As a result,
the fund's net asset values may be more volatile than those of less
concentrated funds.
o Principal Loss - As with all mutual funds, if you sell your shares when
their value is less than the price you paid, you will lose money.
o Foreign Risk - The fund may invest in foreign securities, which can be
riskier than investing in U.S. stocks.
Who may want to invest in the fund?
The fund may be a good investment if you are
o seeking long-term capital growth potential from your investment
o seeking diversification of your investment portfolio through investment in
technology related securities
o comfortable with the risks associated with investing in U.S. and foreign
technology related securities
o comfortable with the fund's short-term price volatility
o investing through an IRA or other tax-advantaged retirement plan
Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with the risks associated with this fund
o uncomfortable with short-term volatility in the value of your investment
CALLOUT
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Fund Performance History
As a new fund, it has no performance history as of the date of this Prospectus.
CALLOUT
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
Fees and Expenses
There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Investor Class shares of other American Century funds
o to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating Expenses
<S> <C> <C> <C> <C>
Technology Fund x.xx% None 0.00% x.xx%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors and their legal counsel as well as interest, are expected
to be less than 0.005% for the current fiscal year.
Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
Technology Fund $xxx $xxx
CALLOUT
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Objectives, Strategies and Risks
Technology Fund
What is the fund's investment objective?
This fund seeks capital growth.
How does the fund pursue its investment objective?
The fund managers look for stocks of growing technology related companies. To
achieve its objective, the fund invests primarily in companies that the fund
managers believe have or will develop products, processes or services that will
provide significant technological advancements or improvements, and companies
that the fund managers believe rely extensively on technology in connection with
their operations or services. The fund may invest in U.S. or foreign companies
of any size.
Sometimes a company will engage in multiple lines of business. We will generally
consider a company to be a technology company if
o at least 50% of its gross income or net assets come from activities in the
sector;
o at least 50% of its assets are devoted to producing revenues from the
sector; or
o based on other information we obtain, we determine that its primary business
should be categorized within the sector.
The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy. This strategy looks for
companies with earnings and revenues that are not only growing, but growing at a
successively faster, or accelerating pace. This strategy is based on the premise
that, over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.
The managers use a bottom-up approach to select stocks for the fund. That means
they first look for strong, growing companies to invest in, rather than simply
buying any company in a growing industry or sector. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the compa1nies' earnings and
revenues. This information is used to help the fund managers select and hold
stocks of companies they believe will be able to sustain accelerating growth and
to sell stocks of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund managers review and may invest in companies that experience a change in
their business that will stimulate future revenue and earnings acceleration and
lead to positive investor perception. The change typically is the result of key
events including: entry into a new market, a new product, patent or license. The
fund managers also believe that it can benefit by diversifying the fund's
holdings across different countries and geographical regions. For this reason,
the fund managers also consider the prospects for relative economic growth among
countries or regions, economic and political conditions, expected inflation
rates, currency exchange fluctuations and tax considerations when making
investments.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, or if they are unable to find securities that meet the
fund's requirements, the fund may invest a portion of its assets in convertible
debt securities, short-term securities, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the fund's cash assets remain liquid while
performing more like stocks. The fund has a policy governing stock index futures
and similar derivative securities to help manage the risk of these types of
investments. For example, the managers cannot leverage the fund's assets by
investing in a derivative security. A complete description of the derivatives
policy is included in the Statement of Additional Information.
Additional information about the fund's investments is available in its annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
CALLOUT
Accelerating growth is shown, for example, by growth that is faster this quarter
than last or faster this year than the year before.
What kinds of securities does the fund buy?
The fund will generally purchase equity securities of both U.S. and foreign
companies. The fund can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, non-leveraged futures and options, notes, bonds and other debt
securities of companies, and obligations of domestic or foreign governments and
their agencies.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent the fund
assumes a defensive position, it will not be pursuing its objective of capital
growth.
What are the principal risks of investing in the fund?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
The fund will focus its investments among companies in the technology sector.
Because those investments are concentrated in a comparatively narrow segment of
the total market, the fund's investments are not as diversified as many other
mutual funds. Because of this, companies in the fund's portfolio may react
similarly to market developments, such as government regulation, subsidies, or
technological advancements. This means that the fund's net asset values may be
more volatile than those of less concentrated funds. As a result, the value of
an investment in the fund may rise or fall rapidly.
In addition, the fund is nondiversified. This means that the fund's managers may
choose to invest in a relatively small number of securities. If so, a price
change in any one of these securities may have a greater impact on the fund's
share price than would be the case if the fund were diversified. Although the
fund's managers expect it will ordinarily invest in enough securities to qualify
as a diversified fund, its nondiversified status gives them more flexibility to
invest heavily in the most attractive companies identified by the fund's
methodology.
Many faster-growing technology companies have limited operating histories.
Continuing technological advances may mean rapid obsolescence of key products
and services. These business uncertainties may increase the volatility of the
prices for these companies' securities.
In addition to publicly traded securities, the fund may invest up to 15% in
privately placed securities. These securities may be considered illiquid if they
cannot be sold in seven days at approximately the price the fund is valuing
them. Privately placed securities are valued by the manager following procedures
established by the fund's Board of Directors.
The fund managers may buy a large amount of a company's stock quickly, and may
dispose of it quickly if it no longer meets their investment criteria. While the
managers believe this strategy provides substantial appreciation potential over
the long term, in the short term it can create a significant amount of portfolio
turnover and share price volatility. This portfolio turnover and share price
volatility can be greater than that of the average stock fund. Higher portfolio
turnover leads to higher brokerage costs, which are borne by the fund.
Market performance tends to be cyclical, and in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the style used by the fund's management team, the fund's gains may not be as big
as, or its losses may be bigger than, other equity funds using different
investment styles.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The fund may invest in companies regardless of size, which means it may invest
in smaller U.S. and foreign companies. Investing in smaller companies generally
presents unique risks. Smaller companies may have limited resources, trade less
frequently and have less publicly available information. They also may be more
sensitive to changing political and economic conditions. These factors may cause
investments in smaller companies to experience more price volatility.
Investing in foreign securities has certain unique risks that make it generally
riskier than investing in U.S. stocks. These risks include increased exposure to
political, social and economic events in world markets; limited availability of
public information about a company; less developed trading markets and
regulatory practices; and a lack of uniform financial reporting practices
compared to those that apply in the United States.
In addition, foreign securities are subject to currency risk, meaning that
because the fund's investments are generally held in foreign currencies, the
fund could experience gains or losses based solely on changes in the exchange
rate between foreign currencies and the U.S. dollar.
In summary, investing in this fund is intended for investors who find investing
in a global, all cap, technology sector fund an appropriate investment and
who are willing to accept the increased risk associated with a fund's investment
strategy.
These and other risks of investing in the fund are described in the fund's
Statement of Additional Information.
Management
Who manages the fund?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.
The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For the services it provided to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of each class of
shares of the fund. The amount of the management fee for a fund is calculated on
a class-by-class basis daily and paid monthly. Technology will pay the
advisor a unified management fee for the Investor Class of shares of x.xx% of
the first $xxx million of average net assets, x.xx% of the next $xxx million of
average net assets and x.xx% of the average net assets over $xxx billion.
Out of that fee, the advisor paid all expenses of managing and operating the
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses. A portion of the management fee may be paid by the fund's advisor to
unaffiliated third parties who provide recordkeeping and administrative services
that would otherwise be performed by an affiliate of the advisor.
The Fund Management Team
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the funds' investment
objective and strategy.
The portfolio manager on the investment team is identified below:
James E. Stowers III
Mr. Stowers, Chief Executive Officer and Portfolio Manager, has been a member of
the team that manages Technology since its inception. He also is the Chief
Investment Officer-U.S. Growth Equities and as such oversees the investment
discipline used by the fund and seven other growth funds. He joined American
Century in 1981. He has a bachelor's degree in finance from Arizona State
University.
CALLOUT
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.
Investing with American Century
Services Automatically Available to You
You automatically will have access to the services listed below when you open
your account. If you do not want these services, see Conducting Business in
Writing below.
Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.
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Ways to Manage Your Account
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<S> <C> <C>
By telephone Open an account Make additional investments
Investor Relations If you are a current investor, you can open Call or use our Automated Information Line if
1-800-345-2021 an account by exchanging shares from another you have authorized us to invest from your
American Century account. bank account.
Business, Not-For-Profit Exchange shares Sell shares
and Employer-Sponsored Call or use our Automated Information Line Call a Service Representative.
Retirement Plans if you have authorized us to accept
1-800-345-3533 telephone instructions.
Automated Information Line
1-800-345-8765
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Online Open an account Make additional investments
www.americancentury.com If you are a current investor, you can open Make an additional investment into an
an account by exchanging shares from another established American Century account if you
American Century account. have authorized us to invest from your bank
account.
Exchange shares
Exchange shares from another American Sell shares
Century account. Not available.
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By mail or fax Open an account Make additional investments
P.O. Box 419200 Send a signed, completed application and Send your check or money order for at least
Kansas City, MO 64141-6200 check or money order payable to American $50 with an investment slip or $250 without
Century Investments. an investment slip. If you don't have an
Fax investment slip, include your name, address
816-340-7962 Exchange shares and account number on your check or money
Send written instructions to exchange your order.
shares from one American Century account to
another. Sell shares
Send written instructions or a redemption form
to sell shares. Call a Service Representative
to request a form.
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A Note about Mailings to Shareholders
To reduce expenses and demonstrate respect for our environment, we will deliver
a single copy of most financial reports and prospectuses to investors who share
an address, even if the accounts are registered under different names. If you
would like to receive separate mailings, please call us and we will begin
individual delivery within 30 days. If you'd like to reduce mailbox clutter even
more, visit www.americancentury.com and sign up to receive these documents by
email. In most cases, we also will deliver account statements for all the
investors in a household in a single envelope.
Your Guide to Services and Policies
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the funds and the transfer agent.
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Automatically Open an account Make additional investments
Not available. With the automatic investment privilege, you
can purchase shares on a regular basis. You
Exchange shares must invest at least $600 per year per
Send written instructions to set up an account.
automatic exchange of your shares from one
American Century account to another. Sell shares
If you have at least $10,000 in your account,
you may sell shares automatically by
establishing Check-A-Month or Automatic
Redemption plans.
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By wire Open an account Make additional investments
Call to set up your account or mail a Follow the wire instructions.
completed application to the address provided
in the "By mail" section. Give your bank the Sell shares
following information to wire money. You can receive redemption proceeds by wire
Our bank information: or electronic transfer.
Please remember if you request Commerce Bank N.A.
redemptions by wire, $10 will Routing No. 101000019
be deducted from the amount Account No. 2804918
redeemed. Your bank also may The fund name
charge a fee. Your American Century account number* Exchange shares
Your name Not available.
The contribution year (for IRAs only)
*For additional investments only
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In person If you prefer to handle your
transactions in person, visit one of our
Investor Centers and a representative can help
you open an account, make additional
investments, and sell or exchange shares.
4500 Main St. 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5:30 p.m., Monday - Friday 8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday
1665 Charleston Road 9445 East County Line Road, Suite A
Mountain View, California Englewood, Colorado
8 a.m. to 5 p.m., Monday - Friday 8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday
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Minimum Initial Investment Amounts
To open an account, the minimum investments are: Technology
Individual or Joint $2,500
Traditional IRA $1,000
Roth IRA $1,000
Education IRA $500
UGMA/UTMA $1,000
403(b) $1,000(1)
Qualified Retirement Plans $2,500(2)
1 For each fund you select, American Century will waive the fund minimum if you
make a contribution of at least $50 a month. If your contribution is less than
$50, you may make only one fund choice.
2 The minimum investment requirements may be different for some types of
retirement plans.
Redemption of Shares in Low-Balance Accounts
If your redemption activity causes your account balance to fall below the
minimum initial investment amount, we will notify you and give you 90 days to
meet the minimum. If you do not meet the deadline, American Century will redeem
the shares in the account and send the proceeds to your address of record.
Modifying or Canceling an Investment
Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and it reserves the right to reject any specific purchase order
(including purchases by exchange or conversion). Additionally, we may refuse a
purchase if, in our judgment, it is of a size that would disrupt the management
of the fund.
Abusive Trading Practices
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. These
securities would be selected from the fund's portfolio by the fund managers. A
payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to
pay brokerage or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments
Please contact your financial intermediary or plan sponsor for a
complete description of its policies. Copies of the fund's annual reports,
semiannual reports and Statement of Additional Information are available from
your intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although fund shares transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the fund.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The fund has authorized these
intermediaries to accept orders on the fund's behalf up to the time at which the
net asset value is determined. If those orders are transmitted to American
Century and paid for in accordance with the contract, they will be priced at the
net asset value next determined after your request is received in the form
required by the intermediary on the fund's behalf.
CALLOUT
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
Share Price and Distributions
Share Price
American Century determines the net asset value (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is not open
(including certain U.S. holidays), we do not calculate the NAV. The NAV of a
fund share is the current value of the fund's assets, minus any liabilities,
divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
Distributions
Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as capital gains realized on the
sale of investment securities. The fund generally pays distributions from net
income, if any, once a year in December. Distributions from realized capital
gains are paid twice a year, usually in March and December. A fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
CALLOUT
The net asset value, or NAV, of a fund is the price of the fund's shares.
Capital gains are increases in the values of capital assets, such as stock, from
the time the assets are purchased.
Taxes
The tax consequences of owning shares of the fund will vary depending on whether
you own it through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.
If you invest through a taxable account, you may be able to claim a foreign tax
credit for any foreign income taxes paid by the funds. In order to qualify for
this tax credit, certain requirements must be satisfied. Please consult the
Statement of Additional Information for a more complete discussion of the tax
consequences of owning shares of the funds.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28%
Bracket or Above
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
CALLOUT
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Investor
Class shares and have no up-front or deferred charges, commissions, or 12b-1
fees.
American Century offers the other classes of shares primarily through
employer-sponsored retirement plans, or through institutions like banks,
broker-dealers and insurance companies. The other classes have different fees,
expenses and/or minimum investment requirements from the Investor Class. The
difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at 1-800-345-3533 for Advisor or Institutional Class
shares. You also can contact a sales representative or financial intermediary
who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
More information about the fund is contained in these documents
Annual and Semiannual Reports
These reports contain more information about the
fund's investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent fiscal
period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.
You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-PRS-xxxxx
<PAGE>
AMERICAN CENTURY
- -------------------------------------------------------------------------------
PROSPECTUS
Technology Fund
[Effective Date]
ADVISOR CLASS
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
Funds Distributor, Inc. and American Century Investment
Services, Inc., Distributors
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this Prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Fund - Learn about fund goals, strategies and risks, and who
may or may not want to invest.
Fund Performance History - See how the fund performed from year to year.
Fees and Expenses - Find out about fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Fund section.
As you continue to read, the Management section will acquaint you with the fund
management teams, and Investing with American Century gives an overview about
how to invest and manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
Prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m. Central
time. Give us a call at 1-800-345-2021.
Sincerely,
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
Table of Contents
An Overview of the Fund...................................................X
Fund Performance History..................................................X
Fees and Expenses.........................................................X
Objectives, Strategies and Risks..........................................X
Management................................................................X
Investing with American Century..........................................XX
Share Price and Distributions............................................XX
Taxes....................................................................XX
Multiple Class Information...............................................XX
Financial Highlights.....................................................XX
CALLOUTS
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.
This symbol highlights special information and helpful tips.
An Overview of the Fund
What is the fund's investment objective?
This fund seeks capital growth.
What is the fund's primary investment strategies and principal risks?
The fund managers look for stocks of growing U.S. and foreign companies that the
fund managers believe will benefit significantly from advances or improvements
in technology. If the fund managers are unable to find such securities, a
significant portion of thte fund's assets may be in cash or similar securities.
The investment strategy of this fund is based on the belief that, over the long
term, stocks of companies with earnings and revenue growth have a
greater-than-average chance to increase in value over time. A more detailed
description of American Century's growth investment style and the fun's
investment strategies and risks begins on [page x].
The fund's principal risks include
o Market Risk - The value of a fund's shares will go up and down based on the
performance of the companies whose securities it owns and other factors
generally affecting the securities market.
o Price Volatility - The value of a fund's shares may fluctuate significantly
in the short term.
o Concentration - The fund will focus on the technology and telecommunications
industries and related industry groups. Because of this, companies in the
fund's portfolio may react similarly to market developments. As a result,
the fund's net asset values may be more volatile than those of less
concentrated funds.
o Principal Loss - As with all mutual funds, if you sell your shares when
their value is less than the price you paid, you will lose money.
o Foreign Risk - The fund may invest in foreign securities, which can be
riskier than investing in U.S. stocks.
Who may want to invest in the fund?
The fund may be a good investment if you are
o seeking long-term capital growth potential from your investment
o seeking diversification of your investment portfolio through investment in
technology related securities
o comfortable with the risks associated with investing in U.S. and foreign
technology related securities
o comfortable with the fund's short-term price volatility
o investing through an IRA or other tax-advantaged retirement plan
Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with the risks associated with this fund
o uncomfortable with short-term volatility in the value of your investment
CALLOUT
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Fund Performance History
As a new fund, it has no performance history as of the date of this Prospectus.
CALLOUT
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
Fees and Expenses
There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Advisor Class shares of other American Century funds
o to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees(2) Expenses(3) Operating Expenses
<S> <C> <C> <C> <C>
Technolgy Fund x.xx% 0.50% 0.00% x.xx%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(2) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other financial
intermediaries. A portion of the fee is used to compensate them for ongoing
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor, and a portion is used to compenstate them for
distribution and other shareholder services. For more information, see Service
and Distribution Fees, page xx.
(3) Other expenses, which include the fees and expenses of the fund's
independent directors and their legal counsel as well as interest, are expected
to be less than 0.005% for the current fiscal year.
Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
Technology Fund $xxx $xxx
CALLOUT
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Objectives, Strategies and Risks
Technology Fund
What is the fund's investment objective?
This fund seeks capital growth.
How does the fund pursue its investment objective?
The fund managers look for stocks of growing technology related companies. To
achieve its objective, the fund invests primarily in companies that the fund
managers believe have or will develop products, processes or services that will
provide significant technological advancements or improvements, and companies
that the fund managers believe rely extensively on technology in connection with
their operations or services. The fund may invest in U.S. or foreign companies
of any size.
Sometimes a company will engage in multiple lines of business. We will generally
consider a company to be a technology company if
o at least 50% of its gross income or net assets come from activities in the
sector;
o at least 50% of its assets are devoted to producing revenues from the
sector; or
o based on other information we obtain, we determine that its primary business
should be categorized within the sector.
The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy. This strategy looks for
companies with earnings and revenues that are not only growing, but growing at a
successively faster, or accelerating pace. This strategy is based on the premise
that, over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.
The managers use a bottom-up approach to select stocks for the fund. That means
they first look for strong, growing companies to invest in, rather than simply
buying any company in a growing industry or sector. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the compa1nies' earnings and
revenues. This information is used to help the fund managers select and hold
stocks of companies they believe will be able to sustain accelerating growth and
to sell stocks of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund managers review and may invest in companies that experience a change in
their business that will stimulate future revenue and earnings acceleration and
lead to positive investor perception. The change typically is the result of key
events including: entry into a new market, a new product, patent or license. The
fund managers also believe that it can benefit by diversifying the fund's
holdings across different countries and geographical regions. For this reason,
the fund managers also consider the prospects for relative economic growth among
countries or regions, economic and political conditions, expected inflation
rates, currency exchange fluctuations and tax considerations when making
investments.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, or if they are unable to find securities that meet the
fund's requirements, the fund may invest a portion of its assets in convertible
debt securities, short-term securities, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the fund's cash assets remain liquid while
performing more like stocks. The fund has a policy governing stock index futures
and similar derivative securities to help manage the risk of these types of
investments. For example, the managers cannot leverage the fund's assets by
investing in a derivative security. A complete description of the derivatives
policy is included in the Statement of Additional Information.
Additional information about the fund's investments is available in its annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
CALLOUT
Accelerating growth is shown, for example, by growth that is faster this quarter
than last or faster this year than the year before.
What kinds of securities does the fund buy?
The fund will generally purchase equity securities of both U.S. and foreign
companies. The fund can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, non-leveraged futures and options, notes, bonds and other debt
securities of companies, and obligations of domestic or foreign governments and
their agencies.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent the fund
assumes a defensive position, it will not be pursuing its objective of capital
growth.
What are the principal risks of investing in the fund?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
The fund will focus its investments among companies in the technology sector.
Because those investments are concentrated in a comparatively narrow segment of
the total market, the fund's investments are not as diversified as many other
mutual funds. Because of this, companies in the fund's portfolio may react
similarly to market developments, such as government regulation, subsidies, or
technological advancements. This means that the fund's net asset values may be
more volatile than those of less concentrated funds. As a result, the value of
an investment in the fund may rise or fall rapidly.
In addition, the fund is nondiversified. This means that the fund's managers may
choose to invest in a relatively small number of securities. If so, a price
change in any one of these securities may have a greater impact on the fund's
share price than would be the case if the fund were diversified. Although the
fund's managers expect it will ordinarily invest in enough securities to qualify
as a diversified fund, its nondiversified status gives them more flexibility to
invest heavily in the most attractive companies identified by the fund's
methodology.
Many faster-growing technology companies have limited operating histories.
Continuing technological advances may mean rapid obsolescence of key products
and services. These business uncertainties may increase the volatility of the
prices for these companies' securities.
In addition to publicly traded securities, the fund may invest up to 15% in
privately placed securities. These securities may be considered illiquid if they
cannot be sold in seven days at approximately the price the fund is valuing
them. Privately placed securities are valued by the manager following procedures
established by the fund's Board of Directors.
The fund managers may buy a large amount of a company's stock quickly, and may
dispose of it quickly if it no longer meets their investment criteria. While the
managers believe this strategy provides substantial appreciation potential over
the long term, in the short term it can create a significant amount of portfolio
turnover and share price volatility. This portfolio turnover and share price
volatility can be greater than that of the average stock fund. Higher portfolio
turnover leads to higher brokerage costs, which are borne by the fund.
Market performance tends to be cyclical, and in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the style used by the fund's management team, the fund's gains may not be as big
as, or its losses may be bigger than, other equity funds using different
investment styles.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The fund may invest in companies regardless of size, which means it may invest
in smaller U.S. and foreign companies. Investing in smaller companies generally
presents unique risks. Smaller companies may have limited resources, trade less
frequently and have less publicly available information. They also may be more
sensitive to changing political and economic conditions. These factors may cause
investments in smaller companies to experience more price volatility.
Investing in foreign securities has certain unique risks that make it generally
riskier than investing in U.S. stocks. These risks include increased exposure to
political, social and economic events in world markets; limited availability of
public information about a company; less developed trading markets and
regulatory practices; and a lack of uniform financial reporting practices
compared to those that apply in the United States.
In addition, foreign securities are subject to currency risk, meaning that
because the fund's investments are generally held in foreign currencies, the
fund could experience gains or losses based solely on changes in the exchange
rate between foreign currencies and the U.S. dollar.
In summary, investing in this fund is intended for investors who find investing
in a global, all cap, technology sector fund an appropriate investment and
who are willing to accept the increased risk associated with a fund's investment
strategy.
These and other risks of investing in the fund are described in the fund's
Statement of Additional Information.
Management
Who manages the fund?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.
The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For the services it provided to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of each class of
shares of the fund. The amount of the management fee for a fund is calculated on
a class-by-class basis daily and paid monthly. Technology will pay the
advisor a unified management fee for the Advisor Class of shares of x.xx% of the
first $xxx million of average net assets, x.xx% of the next $xxx million of
average net assets and x.xx% of the average net assets over $xxx billion.
Out of that fee, the advisor paid all expenses of managing and operating the
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses.
The Fund Management Team
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the funds' investment
objective and strategy.
The portfolio manager on the investment team identified below:
James E. Stowers III
Mr. Stowers, Chief Executive Officer and Portfolio Manager, has been a member of
the team that manages Technology since its inception. He also is the Chief
Investment Officer-U.S. Growth Equities and as such oversees the investment
discipline used by the fund and seven other growth funds. He joined American
Century in 1981. He has a bachelor's degree in finance from Arizona State
University.
CALLOUT
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.
Investing with American Century
Eligibility for Advisor Class Shares
The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies, and other financial
intermediaries that provide various administrative and distribution services.
Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the fund's annual reports, semiannual
reports and Statement of Additional Information are available from your
intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although fund shares transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the fund.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The fund has authorized these
intermediaries to accept orders on the fund's behalf up to the time at which the
net asset value is determined. If those orders are transmitted to American
Century and paid for in accordance with the contract, they will be priced at the
net asset value next determined after your request is received in the form
required by the intermediary on the fund's behalf.
CALLOUT
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
Modifying or Canceling an Investment
Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and it reserves the right to reject any specific purchase order
(including purchases by exchange or conversion). Additionally, we may refuse a
purchase if, in our judgment, it is of a size that would disrupt the management
of the fund.
Abusive Trading Practices
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. These
securities would be selected from the fund's portfolio by the fund managers. A
payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to pay brokerage
or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
Share Price and Distributions
Share Price
American Century determines the NET ASSET VALUE (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is not open
(including certain U.S. holidays), we do not calculate the NAV. The NAV of a
fund share is the current value of the fund's assets, minus any liabilities,
divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
Distributions
Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as capital gains realized on the
sale of investment securities. The fund generally pays distributions from net
income, if any, once a year in December. Distributions from realized capital
gains are paid twice a year, usually in March and December. A fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
CALLOUT
The NET ASSET VALUE, or NAV, of a fund is the price of the fund's shares.
CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased.
Taxes
The tax consequences of owning shares of the fund will vary depending on whether
you own it through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.
If you invest through a taxable account, you may be able to claim a foreign tax
credit for any foreign income taxes paid by the funds. In order to qualify for
this tax credit, certain requirements must be satisfied. Please consult the
Statement of Additional Information for a more complete discussion of the tax
consequences of owning shares of the funds.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28%
Bracket or Above
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
CALLOUT
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Advisor Class
shares and have no up-front or deferred charges, commissions, or 12b-1 fees.
American Century offers the other classes of shares primarily through
employer-sponsored retirement plans, or through institutions like banks,
broker-dealers and insurance companies. The other classes have different fees,
expenses and/or minimum investment requirements from the Advisor Class. The
difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at 1-800-345-3533 for Advisor or Institutional Class
shares. You also can contact a sales representative or financial intermediary
who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Advisor Class of the
same fund.
Service and Distribution Fees
Investment Company Act Rule 12b-1 permits mutual funds that adopt a written plan
to pay certain expenses associated with the distribution of their shares out of
fund assets. The fund's Advisor Class shares have a 12b-1 Plan. Under the Plan,
the fund's Advisor Class pays an annual fee of 0.50% of Advisor Class average
net assets, half for certain shareholder and administrative services and half
for distribution services. The advisor, as paying agent for the fund, pays all
or a portion of such fees to the banks, broker-dealers and insurance companies
that make such shares available. Because these fees are paid out of the fund's
assets on an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges. For
additional information about the Plan and its terms, see Multiple Class
Structure - Master Distribution and Shareholder Services Plan in the Statement
of Additional Information.
More information about the fund is contained in these documents
Annual and Semiannual Reports
These reports contain more information about the fund's investments and the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.
You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-PRS-xxxxx
<PAGE>
AMERICAN CENTURY
- ------------------------------------------------------------------------------
PROSPECTUS
Technology Fund
[Effective Date]
INSTITUTIONAL CLASS
The Securities and Exchange Commission has not approved or disapproved these
securities or determined if this Prospectus is accurate or complete. Anyone who
tells you otherwise is committing a crime.
Funds Distributor, Inc. and
American Century Investment Services, Inc., Distributors
Dear Investor,
Planning and maintaining your investment portfolio is a big job. However, an
easy-to-understand Prospectus can make your work a lot less daunting. We hope
you'll find this Prospectus easy to understand, and more importantly, that it
gives you confidence in the investment decisions you have made or are soon to
make.
As you begin to read through this Prospectus, take a look at the table of
contents to understand how it is organized. The first four sections take a
close-up look at the funds.
An Overview of the Fund - Learn about fund goals, strategies and risks, and who
may or may not want to invest.
Fund Performance History - See how the fund performed from year to year.
Fees and Expenses - Find out about fund management fees and other expenses
associated with investing.
Objectives, Strategies and Risks - Take a more detailed look at the principal
investment objectives, strategies and risks presented in the Overview of the
Fund section.
As you continue to read, the Management section will acquaint you with the fund
management teams, and Investing with American Century gives an overview about
how to invest and manage your account.
Share Price and Distributions, Taxes and Financial Highlights wrap up the
Prospectus with important financial information you'll need to make an informed
decision.
Naturally, you may have questions about investing after you read through the
Prospectus. Our Web site, www.americancentury.com, offers information that could
answer many of your questions. Or, an Investor Relations Representative will be
happy to help weekdays, 7 a.m. to 7 p.m. and Saturdays, 9 a.m. to 2 p.m. Central
time. Give us a call at 1-800-345-2021.
Sincerely,
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
Table of Contents
An Overview of the Fund.............................................X
Fund Performance History............................................X
Fees and Expenses...................................................X
Objectives, Strategies and Risks....................................X
Management..........................................................X
Investing with American Century....................................XX
Share Price and Distributions......................................XX
Taxes..............................................................XX
Multiple Class Information.........................................XX
Financial Highlights...............................................XX
CALLOUTS
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in BLUE ITALICS, look for its definition in
the left margin.
This symbol highlights special information and helpful tips.
An Overview of the Fund
What is the fund's investment objective?
This fund seeks capital growth.
What is the fund's primary investment strategies and principal risks?
The fund managers look for stocks of growing U.S. and foreign companies that the
fund managers believe will benefit significantly from advances or improvements
in technology. If the fund managers are unable to find such securities, a
significant portion of thte fund's assets may be in cash or similar securities.
The investment strategy of this fund is based on the belief that, over the long
term, stocks of companies with earnings and revenue growth have a
greater-than-average chance to increase in value over time. A more detailed
description of American Century's growth investment style and the fun's
investment strategies and risks begins on [page x].
The fund's principal risks include
o Market Risk - The value of a fund's shares will go up and down based on the
performance of the companies whose securities it owns and other factors
generally affecting the securities market.
o Price Volatility - The value of a fund's shares may fluctuate significantly
in the short term.
o Concentration - The fund will focus on the technology and telecommunications
industries and related industry groups. Because of this, companies in the
fund's portfolio may react similarly to market developments. As a result,
the fund's net asset values may be more volatile than those of less
concentrated funds.
o Principal Loss - As with all mutual funds, if you sell your shares when
their value is less than the price you paid, you will lose money.
o Foreign Risk - The fund may invest in foreign securities, which can be
riskier than investing in U.S. stocks.
Who may want to invest in the fund?
The fund may be a good investment if you are
o seeking long-term capital growth potential from your investment
o seeking diversification of your investment portfolio through investment in
technology related securities
o comfortable with the risks associated with investing in U.S. and foreign
technology related securities
o comfortable with the fund's short-term price volatility
o investing through an IRA or other tax-advantaged retirement plan
Who may not want to invest in the fund?
The fund may not be a good investment if you are
o seeking current income from your investment
o investing for a short period of time
o uncomfortable with the risks associated with this fund
o uncomfortable with short-term volatility in the value of your investment
CALLOUT
An investment in the fund is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
Fund Performance History
As a new fund, it has no performance history as of the date of this Prospectus.
CALLOUT
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
Fees and Expenses
There are no sales loads, fees or other charges
o to buy fund shares directly from American Century
o to reinvest dividends in additional shares
o to exchange into the Institutional Class shares of other American Century
funds
o to redeem your shares
The following table describes the fees and expenses you will pay if you buy and
hold shares of the funds.
Annual Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating Expenses
<S> <C> <C> <C> <C>
Technology Fund x.xx% None 0.00% x.xx%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors and their legal counsel as well as interest, are expected
to be less than 0.005% for the current fiscal year.
Example
The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds.
Assuming you . . .
o invest $10,000 in the fund
o redeem all of your shares at the end of the periods shown below
o earn a 5% return each year
o incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
Technology Fund $xxx $xxx
CALLOUT
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
Objectives, Strategies and Risks
Technology Fund
What is the fund's investment objective?
This fund seeks capital growth.
How does the fund pursue its investment objective?
The fund managers look for stocks of growing technology related companies. To
achieve its objective, the fund invests primarily in companies that the fund
managers believe have or will develop products, processes or services that will
provide significant technological advancements or improvements, and companies
that the fund managers believe rely extensively on technology in connection with
their operations or services. The fund may invest in U.S. or foreign companies
of any size.
Sometimes a company will engage in multiple lines of business. We will generally
consider a company to be a technology company if
o at least 50% of its gross income or net assets come from activities in the
sector;
o at least 50% of its assets are devoted to producing revenues from the
sector; or
o based on other information we obtain, we determine that its primary business
should be categorized within the sector.
The fund managers look for stocks of companies they believe will increase in
value over time, using a growth investment strategy. This strategy looks for
companies with earnings and revenues that are not only growing, but growing at a
successively faster, or accelerating pace. This strategy is based on the premise
that, over the long term, the stocks of companies with accelerating earnings and
revenues have a greater-than-average chance to increase in value.
The managers use a bottom-up approach to select stocks for the fund. That means
they first look for strong, growing companies to invest in, rather than simply
buying any company in a growing industry or sector. Using American Century's
extensive computer database, the managers track financial information for
thousands of companies to identify trends in the compa1nies' earnings and
revenues. This information is used to help the fund managers select and hold
stocks of companies they believe will be able to sustain accelerating growth and
to sell stocks of companies whose growth begins to slow down.
In addition to locating strong companies with earnings and revenue growth, the
fund managers review and may invest in companies that experience a change in
their business that will stimulate future revenue and earnings acceleration and
lead to positive investor perception. The change typically is the result of key
events including: entry into a new market, a new product, patent or license. The
fund managers also believe that it can benefit by diversifying the fund's
holdings across different countries and geographical regions. For this reason,
the fund managers also consider the prospects for relative economic growth among
countries or regions, economic and political conditions, expected inflation
rates, currency exchange fluctuations and tax considerations when making
investments.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep the fund essentially fully invested in
stocks regardless of the movement of stock prices generally. When the managers
believe it is prudent, or if they are unable to find securities that meet the
fund's requirements, the fund may invest a portion of its assets in convertible
debt securities, short-term securities, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the fund's cash assets remain liquid while
performing more like stocks. The fund has a policy governing stock index futures
and similar derivative securities to help manage the risk of these types of
investments. For example, the managers cannot leverage the fund's assets by
investing in a derivative security. A complete description of the derivatives
policy is included in the Statement of Additional Information.
Additional information about the fund's investments is available in its annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
CALLOUT
Accelerating growth is shown, for example, by growth that is faster this quarter
than last or faster this year than the year before.
What kinds of securities does the fund buy?
The fund will generally purchase equity securities of both U.S. and foreign
companies. The fund can purchase other types of securities as well, such as
domestic and foreign preferred stocks, convertible securities, equity-equivalent
securities, non-leveraged futures and options, notes, bonds and other debt
securities of companies, and obligations of domestic or foreign governments and
their agencies.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent the fund
assumes a defensive position, it will not be pursuing its objective of capital
growth.
What are the principal risks of investing in the fund?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities a fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
The fund will focus its investments among companies in the technology sector.
Because those investments are concentrated in a comparatively narrow segment of
the total market, the fund's investments are not as diversified as many other
mutual funds. Because of this, companies in the fund's portfolio may react
similarly to market developments, such as government regulation, subsidies, or
technological advancements. This means that the fund's net asset values may be
more volatile than those of less concentrated funds. As a result, the value of
an investment in the fund may rise or fall rapidly.
In addition, the fund is nondiversified. This means that the fund's managers may
choose to invest in a relatively small number of securities. If so, a price
change in any one of these securities may have a greater impact on the fund's
share price than would be the case if the fund were diversified. Although the
fund's managers expect it will ordinarily invest in enough securities to qualify
as a diversified fund, its nondiversified status gives them more flexibility to
invest heavily in the most attractive companies identified by the fund's
methodology.
Many faster-growing technology companies have limited operating histories.
Continuing technological advances may mean rapid obsolescence of key products
and services. These business uncertainties may increase the volatility of the
prices for these companies' securities.
In addition to publicly traded securities, the fund may invest up to 15% in
privately placed securities. These securities may be considered illiquid if they
cannot be sold in seven days at approximately the price the fund is valuing
them. Privately placed securities are valued by the manager following procedures
established by the fund's Board of Directors.
The fund managers may buy a large amount of a company's stock quickly, and may
dispose of it quickly if it no longer meets their investment criteria. While the
managers believe this strategy provides substantial appreciation potential over
the long term, in the short term it can create a significant amount of portfolio
turnover and share price volatility. This portfolio turnover and share price
volatility can be greater than that of the average stock fund. Higher portfolio
turnover leads to higher brokerage costs, which are borne by the fund.
Market performance tends to be cyclical, and in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the style used by the fund's management team, the fund's gains may not be as big
as, or its losses may be bigger than, other equity funds using different
investment styles.
As with all funds, your shares may be worth more or less at any given time than
the price you paid for them. If you sell your shares when the value is less than
the price you paid, you will lose money.
The fund may invest in companies regardless of size, which means it may invest
in smaller U.S. and foreign companies. Investing in smaller companies generally
presents unique risks. Smaller companies may have limited resources, trade less
frequently and have less publicly available information. They also may be more
sensitive to changing political and economic conditions. These factors may cause
investments in smaller companies to experience more price volatility.
Investing in foreign securities has certain unique risks that make it generally
riskier than investing in U.S. stocks. These risks include increased exposure to
political, social and economic events in world markets; limited availability of
public information about a company; less developed trading markets and
regulatory practices; and a lack of uniform financial reporting practices
compared to those that apply in the United States.
In addition, foreign securities are subject to currency risk, meaning that
because the fund's investments are generally held in foreign currencies, the
fund could experience gains or losses based solely on changes in the exchange
rate between foreign currencies and the U.S. dollar.
In summary, investing in this fund is intended for investors who find investing
in a global, all cap, technology sector fund an appropriate investment and
who are willing to accept the increased risk associated with a fund's investment
strategy.
These and other risks of investing in the fund are described in the fund's
Statement of Additional Information.
Management
Who manages the fund?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the fund.
The Board of Directors
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired an investment advisor to do so.
More than two-thirds of the directors are independent of the fund's advisor;
that is, they are not employed by and have no financial interest in the advisor.
The Investment Advisor
The fund's investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958 and is headquartered at
4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.
For the services it provided to the fund, the advisor receives a unified
management fee based on a percentage of the average net assets of each class of
shares of the fund. The amount of the management fee for a fund is calculated on
a class-by-class basis daily and paid monthly. Technology will pay the
advisor a unified management fee for the Institutional Class of shares of x.xx%
of the first $xxx million of average net assets, x.xx% of the next $xxx million
of average net assets and x.xx% of the average net assets over $xxx billion.
Out of that fee, the advisor paid all expenses of managing and operating the
fund except brokerage expenses, taxes, interest, fees and expenses of the
independent directors (including legal counsel fees), and extraordinary
expenses. A portion of the management fee may be paid by the fund's advisor to
unaffiliated third parties who provide recordkeeping and administrative services
that would otherwise be performed by an affiliate of the advisor.
The Fund Management Team
The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for the fund as they see fit, guided by the funds' investment
objective and strategy.
The portfolio manager on the investment team is identified below:
James E. Stowers III
Mr. Stowers, Chief Executive Officer and Portfolio Manager, has been a member of
the team that manages Technology since its inception. He also is the Chief
Investment Officer-U.S. Growth Equities and as such oversees the investment
discipline used by the fund and seven other growth funds. He joined American
Century in 1981. He has a bachelor's degree in finance from Arizona State
University.
CALLOUT
Code of Ethics
American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. In addition, the Code of Ethics requires portfolio managers and other
employees with access to information about the purchase or sale of securities by
the funds to obtain approval before executing permitted personal trades.
Fundamental Investment Policies
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
a shareholder vote. The Board of Directors may change any other policies and
investment strategies.
Investing with American Century
Eligibility for Institutional Class Shares
The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
retirement plans, endowments, foundations and financial advisors that meet the
fund's minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.
Minimum Initial Investment Amounts
The minimum investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermeidary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has an aggregate
investment in our family of funds of $10 million or more ($5 million for
endowments and foundations). In addition, financial intermediaries or plan
recordkeepers may require retirement plans to meet certain additional
requirements, such as plan size or a minimum level of assets per participant, in
order to be eligible to purchase Institutional Class shares.
Redemption of Shares in Low-Balance Accounts
If your balance or the balance of your financial intermediary, if applicable,
falls below the minimum investment requirements due to redemptions or exchanges,
we reserve the right to convert your shares to Investor Class shares of the same
fund. The Investor Class shares have a unified managemnet fee that is 0.20%
higher than the Institutional Class.
Services Automatically Available to You
You automatically will have access to the services listed below when you open
your account. If you do not want these services, see Conducting Business in
Writing below.
Conducting Business in Writing
If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form.
<TABLE>
<CAPTION>
Ways to Manage Your Account
- -------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------- --------------------------------------------- -----------------------------------------------
<S> <C> <C>
By telephone Open an account Make additional investments
Service Representative If you are a current investor, you can open Call if you have authorized us to invest from
1-800-345-3533 an account by exchanging shares from your bank account.
another American Century account.
Sell shares
Exchange shares Call a Service Representative.
Call or use our Automated Information Line
if you have authorized us to accept
telephone instructions.
- ----------------------------------- --------------------------------------------- -----------------------------------------------
- ----------------------------------- --------------------------------------------- -----------------------------------------------
By mail or fax Open an account Make additional investments
P.O. Box 419385 Send a signed, completed application and Send your check or money order for at least
Kansas City, MO 64141-6385 check or money order payable to American $50 with an investment slip or $250 without
Century Investments. an investment slip. If you don't have an
Fax investment slip, include your name, address
816-340-4655 Exchange shares and account number on your check or money
Send written instructions to exchange your order.
shares from one American Century account to
another. Sell shares
Send written instructions or a redemption
form to sell shares. Call a Service Representative
to request a form.
- ----------------------------------- --------------------------------------------- -----------------------------------------------
- ----------------------------------- --------------------------------------------- -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
Automatically Open an account Make additional investments
Not available. With the automatic investment privilege, you
can purchase shares on a regular basis. You
Exchange shares must invest at least $600 per year per
Send written instructions to set up an account.
automatic exchange of your shares from one
American Century account to another. Sell shares
If you have at least $10,000 in your account,
you may sell shares automatically by
establishing Check-A-Month or Automatic
Redemption plans.
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------ -----------------------------------------------
By wire Open an account Make additional investments
Call to set up your account or mail a Follow the wire instructions.
completed application to the address provided
in the "By mail" section. Give your bank the Sell shares
following information to wire money. You can receive redemption proceeds by wire
Our bank information: or electronic transfer.
Please remember if you request Commerce Bank N.A.
redemptions by wire, $10 will Routing No. 101000019
be deducted from the amount Account No. 2804918
redeemed. Your bank also may The fund name
charge a fee. Your American Century account number* Exchange shares
Your name Not available.
The contribution year (for IRAs only)
*For additional investments only
- -------------------------------- ------------------------------------------------ -----------------------------------------------
- -------------------------------- ------------------------------------------------------------------------------------------------
</TABLE>
Modifying or Canceling an Investment
Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time, and it reserves the right to reject any specific purchase order
(including purchases by exchange or conversion). Additionally, we may refuse a
purchase if, in our judgment, it is of a size that would disrupt the management
of the fund.
Abusive Trading Practices
We do not permit market timing or other abusive trading practices in our funds.
Excessive, short-term (market timing) or other abusive trading practices may
disrupt portfolio management strategies and harm fund performance. To minimize
harm to the fund and its shareholders, we reserve the right to reject any
purchase order (including exchanges) from any investor we believe has a history
of abusive trading or whose trading, in our judgment, has been or may be
disruptive to a fund. In making this judgment, we may consider trading done in
multiple accounts under common ownership or control. We also reserve the right
to delay delivery of your redemption proceeds--up to seven days--or to honor
certain redemptions with securities, rather than cash, as described in the next
section.
Special Requirements for Large Redemptions
If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the assets of the fund if that percentage is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. These
securities would be selected from the fund's portfolio by the fund managers. A
payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.
We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice.
Also, if payment is made in securities, a shareholder may have to
pay brokerage or other transaction costs to convert the securities to cash.
If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining investors.
Investing through Financial Intermediaries
If you do business with us through a financial intermediary or a retirement
plan, your ability to purchase, exchange and redeem shares will depend on the
policies of that entity. Some policy differences may include
|X| minimum investment requirements
|X| exchange policies
|X| fund choices
|X| cutoff time for investments
Please contact your financial intermediary or plan sponsor for a
complete description of its policies. Copies of the fund's annual reports,
semiannual reports and Statement of Additional Information are available from
your intermediary or plan sponsor.
Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, American Century will pay the
service provider a fee for performing those services.
Although fund shares transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the fund.
American Century has contracts with certain financial intermediaries requiring
them to track the time investment orders are received and to comply with
procedures relating to the transmission of orders. The fund has authorized these
intermediaries to accept orders on the fund's behalf up to the time at which the
net asset value is determined. If those orders are transmitted to American
Century and paid for in accordance with the contract, they will be priced at the
net asset value next determined after your request is received in the form
required by the intermediary on the fund's behalf.
CALLOUT
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
Share Price and Distributions
Share Price
American Century determines the NET ASSET VALUE (NAV) of the fund as of the
close of regular trading on the New York Stock Exchange (usually 4 p.m. Eastern
time) on each day the Exchange is open. On days when the Exchange is not open
(including certain U.S. holidays), we do not calculate the NAV. The NAV of a
fund share is the current value of the fund's assets, minus any liabilities,
divided by the number of fund shares outstanding.
If current market prices of securities owned by a fund are not readily
available, the advisor may determine their fair value in accordance with
procedures adopted by the fund's Board. Trading of securities in foreign markets
may not take place every day the Exchange is open. Also, trading in some foreign
markets and on some electronic trading networks may take place on weekends or
holidays when a fund's NAV is not calculated. So, the value of a fund's
portfolio may be affected on days when you can't purchase or redeem shares of
the fund.
We will price your purchase, exchange or redemption at the NAV next determined
after we receive your transaction request in good order.
Distributions
Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means the fund will not be subject to state or
federal income tax on amounts distributed. The distributions generally consist
of dividends and interest received, as well as capital gains realized on the
sale of investment securities. The fund generally pays distributions from net
income, if any, once a year in December. Distributions from realized capital
gains are paid twice a year, usually in March and December. A fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions.
You will participate in fund distributions, when they are declared, starting the
day after your purchase is effective. For example, if you purchase shares on a
day that a distribution is declared, you will not receive that distribution. If
you redeem shares, you will receive any distribution declared on the day you
redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts, we will
reinvest distributions unless you elect to receive them in cash. Please consult
your services guide for further information regarding distributions and your
distribution options.
CALLOUT
The NET ASSET VALUE, or NAV, of a fund is the price of the fund's shares.
CAPITAL GAINS are increases in the values of capital assets, such as stock, from
the time the assets are purchased.
Taxes
The tax consequences of owning shares of the fund will vary depending on whether
you own it through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a
professional tax advisor.
Taxable Accounts
If you own fund shares through a taxable account, distributions by the fund and
your sales of fund shares may cause you to be taxed on your investment.
If you invest through a taxable account, you may be able to claim a foreign tax
credit for any foreign income taxes paid by the funds. In order to qualify for
this tax credit, certain requirements must be satisfied. Please consult the
Statement of Additional Information for a more complete discussion of the tax
consequences of owning shares of the funds.
Taxability of Distributions
Fund distributions may consist of income earned by the fund from sources such as
dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28%
Bracket or Above
Short-term capital gains Ordinary income rate Ordinary income rate
Long-term capital gains 10% 20%
The tax status of any distributions of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund, or whether you reinvest your distributions in
additional shares or take them in cash. American Century will inform you of the
tax status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV).
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.
Taxes on Transactions
Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain to you with respect to those shares. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the wash sale rules of the
Internal Revenue Code. This may result in a postponement of the recognition of
such loss for federal income tax purposes.
If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.
CALLOUT
Buying a Dividend
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.
If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.
Multiple Class Information
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Institutional
Class shares and are offered primarily through employer-sponsored retirement
plans, or through institutions like banks, broker-dealers and insurance
companies.
The Investor Class, which has no up-front or deferred charges, commissions or
12b-1 fees, is offered primarily to retail investors.
The other classes have different fees, expenses and/or minimum investment
requirements from the Institutional Class. The difference in the fee structures
between the classes is the result of their separate arrangements for shareholder
and distribution services and not the result of any difference in amounts
charged by the advisor for core investment advisory services. Accordingly, the
core investment advisory expenses do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this Prospectus, call us at
o 1-800-345-2021 for Investor Class shares
o 1-800-345-3533 for Advisor Class shares
You also can contact a sales representative or financial intermediary who offers
those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
More information about the fund is contained in these documents
Annual and Semiannual Reports
These reports contain more information about the fund's investments and the
market conditions and investment strategies that significantly affected the
fund's performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.
You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.
You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.
In person SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.
On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
By mail SEC Public Reference Section
Washington, D.C. 20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
0004
SH-PRS-xxxxx
<PAGE>
Technology Fund
[Effective Date]
American Century World
Mutual Funds, Inc.
This Statement of Additional Information adds to the discussion in the fund's
Prospectuses, dated [Effective Date], but is not a Prospectus. The Statement of
Additional Information should be read in conjunction with the fund's current
Prospectus. If you would like a copy of the Prospectus, please contact us at one
of the addresses or telephone numbers listed on the back cover or visit American
Century's Web site at www.americancentury.com.
This Statement of Additional Information incorporates by reference certain
information that appears in the fund's annual and semiannual reports, which are
delivered to all investors. You may obtain a free copy of the fund's annual or
semiannual reports by calling 1-800-345-2021.
Funds Distributor, Inc. and American
Century Investment Services, Inc., Distributors
Table of Contents
The Funds' History X
Fund Investment Guidelines X
Fund Investments and Risks X
Investment Strategies and Risks X
Investment Policies X
Portfolio Turnover X
Management X
The Board of Directors X
Officers X
The Funds' Principal Shareholders X
Service Providers X
Investment Advisor X
Transfer Agent and Administrator X
Distributor X
Other Service Providers X
Custodian Banks X
Independent Auditor X
Brokerage Allocation X
Information about Fund Shares X
Multiple Class Structure X
Buying and Selling Fund Shares X
Valuation of a Fund's Securities X
Taxes X
Federal Income Tax X
State and Local Income Tax X
How Fund Performance Information Is Calculated X
Performance Comparisons X
Permissible Advertising Information X
Multiple Class Performance Advertising X
Financial Statements X
Explanation of Fixed-Income Securities Ratings X
THE FUND'S HISTORY
American Century World Mutual Funds, Inc., is a registered open-end management
investment company that was organized in 1990 as a Maryland corporation under
the name Twentieth Century World Investors, Inc. In January 1997 it changed its
name to American Century World Mutual Funds, Inc. Throughout this Statement of
Additional Information we refer to American Century World Mutual Funds, Inc. as
the corporation.
The fund described in this Statement of Additional Information is a separate
series of the corporation and operates for many purposes as if it were an
independent company. The fund has its own investment objective, strategy,
management team, assets, tax identification and stock registration numbers.
<TABLE>
Investor Class Advisor Class Institutional Class
<S> <C> <C> <C> <C> <C> <C>
Ticker Inception Ticker Inception Ticker Inception
Fund Symbol Date Symbol Date Symbol Date
Technology N/A [Effective Date] N/A [Effective Date] N/A N/A
</TABLE>
FUND INVESTMENT GUIDELINES
This section explains the extent to which the fund's advisor, American Century
Investment Management, Inc., can use various investment vehicles and strategies
in managing the fund's assets. Descriptions of the investment techniques and
risks associated with each appear in the section Investment Strategies and
Risks, which begins on [PAGE XX]. In the case of the fund's principal investment
strategies, these descriptions elaborate upon discussions contained in the
Prospectuses.
The fund is a diversified open-end investment company as defined in the
Investment Company Act of 1940 (the Investment Company Act). Diversified means
that, with respect to 75% of its total assets, the fund will not invest more
than 5% of its total assets in the securities of a single issuer or own more
than 10% of the outstanding voting securities of a single issuer.
To meet federal tax requirements for qualification as a regulated investment
company, the fund must limit its investments so that at the close of each
quarter of its taxable year (1) no more than 25% of its total assets are
invested in the securities of a single issuer (other than the U.S government or
a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities
of a single issuer.
In general, within the restrictions outlined here and in the fund's Prospectus,
the fund managers have broad powers to decide how to invest fund assets,
including the power to hold them uninvested.
Investments are varied according to what is judged advantageous under changing
economic conditions. It is the advisor's policy to retain maximum flexibility in
management without restrictive provisions as to the proportion of one or another
class of securities that may be held, subject to the investment restrictions
described below. It is the advisor's intention that the fund will generally
consist of U.S. and foreign equity securities. However, subject to the specific
limitations applicable to the fund, the fund's management team may invest the
assets of the fund in varying amounts in other instruments, such as those
reflected in Table 1 on [PAGE XX], when such a course is deemed appropriate.
So long as a sufficient number of acceptable securities are available, the fund
managers intend to keep the fund fully invested in equity securities, regardless
of the movement of stock prices, generally. In most circumstances, the fund's
actual level of cash and cash equivalents will be less than 10%. [The managers
may use stock index futures as a way to expose the fund's cash assets to the
market, while maintaining liquidity.] As mentioned in the Prospectus, the
managers may not leverage the fund's portfolios; so there is no greater market
risk to the fund than if it purchases stocks. See Short-term Securities, [PAGE
XX], Futures and Options, [PAGE XX], and Derivative Securities, [PAGE XX].
Table 1
Technology
Foreign Securities X
Equity Equivalents X
Debt Securities X
Sovereign Debt Obligations X
Convertible Securities X
Short Sales
Portfolio Lending 33 1/3%
Derivative Securities X
Investments in Companies with Limited
Operating Histories 15%
Other Investment Companies 10%
Repurchase Agreements X
When-Issued and Forward Commitment
Agreements X
Restricted and Illiquid Securities 15%
Short-Term Securities X
Futures & Options X
Forward Currency Exchange Contracts X
FUND INVESTMENTS AND RISKS
INVESTMENT STRATEGIES AND RISKS
This section describes various investment vehicles and techniques that the fund
managers can use in managing the fund's assets. It also details the risks
associated with each investment vehicle or technique, because each investment
vehicle and technique contributes to the fund's overall risk profile. To
determine whether the fund may invest in a particular investment vehicle and
whether there is a limit on the amount of fund assets that can be invested in
such vehicle or utilize such technique, consult Table 1.
Foreign Securities
A description of the fund's investment strategy regarding foreign securities is
contained in the fund's Prospectus. Investing in securities of foreign issuers
generally involves greater risks than investing in the securities of domestic
companies including:
Currency Risk. The value of the foreign investments held by the fund may be
significantly affected by changes in currency exchange rates. The dollar value
of a foreign security generally decreases when the value of the dollar rises
against the foreign currency in which the security is denominated and tends to
increase when the value of the dollar falls against such currency. In addition,
the value of fund assets may be affected by losses and other expenses incurred
in converting between various currencies in order to purchase and sell foreign
securities, and by currency restrictions, exchange control regulation, currency
devaluations and political developments.
Political and Economic Risk. The economies of many of the countries in which the
fund invests are not as developed as the economy of the United States and may be
subject to significantly different forces. Political or social instability,
expropriation, nationalization, or confiscatory taxation, and limitations on the
removal of the fund or other assets, could also adversely affect the value of
investments. Further, the fund may encounter difficulties or be unable to
enforce ownership rights, pursue legal remedies or obtain judgments in foreign
courts.
Regulatory Risk. Foreign companies generally are not subject to the regulatory
controls imposed on U.S. issuers and, in general, there is less publicly
available information about foreign securities than is available about domestic
securities. Many foreign companies are not subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic companies. Income from foreign
securities owned by the fund may be reduced by a withholding tax at the source,
which would reduce dividend income payable to shareholders.
Market and Trading Risk. Brokerage commission rates in foreign countries, which
are generally fixed rather than subject to negotiation as in the United States,
are likely to be higher. The securities markets in many of the countries in
which the fund invests will have substantially less trading volume than the
principal U.S. markets. As a result, the securities of some companies in these
countries may be less liquid and more volatile than comparable U.S. securities.
Furthermore, one securities broker may represent all or a significant part of
the trading volume in a particular country, resulting in higher trading costs
and decreased liquidity due to a lack of alternative trading partners. There is
generally less government regulation and supervision of foreign stock exchanges,
brokers and issuers, which may make it difficult to enforce contractual
obligations.
Clearance and Settlement Risk. Foreign securities markets also have different
clearance and settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in clearance and settlement could result in temporary periods when assets
of the fund is uninvested and no return is earned thereon. The inability of the
fund to make intended security purchases due to clearance and settlement
problems could cause the fund to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to clearance and settlement
problems could result either in losses to the fund due to subsequent declines in
the value of the portfolio security or, if the fund has entered into a contract
to sell the security, liability to the purchaser.
Ownership Risk. Evidence of securities ownership may be uncertain in many
foreign countries. In many of these countries, the most notable of which is the
Russian Federation, the ultimate evidence of securities ownership is the share
register held by the issuing company or its registrar. While some companies may
issue share certificates or provide extracts of the company's share register,
these are not negotiable instruments and are not effective evidence of
securities ownership. In an ownership dispute, the company's share register is
controlling. As a result, there is a risk that a fund's trade details could be
incorrectly or fraudulently entered on the issuer's share register at the time
of the transaction, or that a fund's ownership position could thereafter be
altered or deleted entirely, resulting in a loss to the fund. While the fund
intends to invest directly in Russian companies that utilize an independent
registrar, there can be no assurance that such investments will not result in a
loss to the fund.
Emerging Markets. Investing in emerging market companies generally is also
riskier than investing in other foreign securities. Emerging market countries
may have unstable governments and/or economies that are subject to sudden
change. These changes may be magnified by the countries' emergent financial
markets, resulting in significant volatility to investments in these countries.
These countries also may lack the legal, business and social framework to
support securities markets.As a result, this fund is intended for aggressive
investors seeking gains through a health care sector fund that may make
investments in foreign, as well as U.S., securities. Those investors must be
willing and able to accept the significant risks associated with the investment
strategy that the fund will pursue. An investment in the fund is not appropriate
for individuals with limited investment resources or who are unable to tolerate
fluctuations in the value of their investment.
Equity Equivalents
The fund may make foreign investments either directly in foreign securities or
indirectly by purchasing depositary receipts, depositary shares or similar
instruments (DRs) for foreign securities. DRs are securities that are listed on
exchanges or quoted in over-the-counter markets in one country but represent
shares of issuers domiciled in another country. The fund also may purchase
securities of such issuers in foreign markets, either on foreign securities
exchanges, electronic trading networks or in over-the-counter markets.
The fund also may invest in other equity securities and equity equivalents.
Other equity securities and equity equivalents include securities that permit
the fund to receive an equity interest in an issuer, the opportunity to acquire
an equity interest in an issuer or the opportunity to receive a return on its
investment that permits the fund to benefit from the growth over time in the
equity of an issuer. Examples of other equity securities and equity equivalents
are preferred stock, convertible preferred stock and convertible debt
securities. Equity equivalents also may include securities whose value or return
is derived from the value or return of a different security. An example of one
type of derivative security in which the fund might invest is a depositary
receipt.
Debt Securities
The managers believe that common stocks and other equity and equity-equivalent
securities ordinarily offer the greatest potential for capital appreciation. The
fund may invest, however, in any security the managers believe has the potential
for capital appreciation. When the managers believe that the total return
potential of other securities equals or exceeds the potential return of equity
securities, the fund may invest [up to 35%] in such other securities. The other
securities the fund may invest in are bonds, notes and debt securities of
companies, and obligations of domestic or foreign governments and their
agencies. The fund will attempt to stay fully invested regardless of the
movement of stock and bond prices generally.
In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or high-quality, short-term debt securities. To the extent a fund
assumes a defensive position, it will not be pursuing its objective of capital
growth. [Technology will limit its purchases of debt securities to
investment-grade obligations. For long-term debt obligations, this includes
securities that are rated Baa or better by Moody's Investors Service, Inc. or
BBB or better by Standard & Poor's Corporation (S&P), or that are not rated but
are considered by the managers to be of equivalent quality. According to
Moody's, bonds rated Baa are medium-grade and possess some speculative
characteristics. A BBB rating by S&P indicates S&P's belief that a security
exhibits a satisfactory degree of safety and capacity for repayment, but is more
vulnerable to adverse economic conditions or changing circumstances than is the
case with higher-quality debt securities. See Explanation of Fixed-Income
Securities Ratings, [PAGE XX].]
[With respect to Technology, there are no credit quality or maturity
restrictions with regard to the bonds, corporate debt securities and government
obligations in which the fund may invest, although less than [35%] of the fund's
assets will be invested in below-investment-grade fixed income securities. See
Explanation of Fixed-Income Securities Ratings, [PAGE XX]. Debt securities,
especially those of issuers in emerging market countries, may be of poor quality
and speculative in nature. While these securities will be chosen primarily for
their appreciation potential, the fund also may take the potential for income
into account when selecting investments.]
In addition to other factors that will affect its value, the value of the fund's
investments in fixed income securities will change as prevailing interest rates
change. In general, the prices of such securities vary inversely with interest
rates. As prevailing interest rates fall, the prices of bonds and other
securities that trade on a yield basis rise. When prevailing interest rates
rise, bond prices generally fall. These changes in value may, depending upon the
particular amount and type of fixed-income securities holdings of the fund,
impact the net asset value of that fund's shares.
Sovereign Debt Obligations
The fund may purchase sovereign debt instruments issued or guaranteed by foreign
governments or their agencies, including debt of emerging market countries.
Sovereign debt may be in the form of conventional securities or other types of
debt instruments, such as loans or loan participations. Sovereign debt of
emerging market countries may involve a high degree of risk and may present a
risk of default or renegotiation or rescheduling of debt payments.
Convertible Debt Securities
A convertible debt security is a fixed-income security that offers the potential
for capital appreciation through a conversion feature that enables the holder to
convert the fixed-income security into a stated number of shares of common
stock. As fixed-income securities, convertible debt securities provide a stable
stream of income, with generally higher yields than common stocks. Convertible
debt securities offer the potential to benefit from increases in the market
price of the underlying common stock, however, they generally offer lower yields
than non-convertible securities of similar quality. Of course, as with all
fixed-income securities, there can be no assurance of current income because the
issuers of the convertible debt securities may default on their obligations. In
addition, there can be no assurance of capital appreciation because the value of
the underlying common stock will fluctuate.
Convertible debt securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds, as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.
Unlike a convertible security that is a single security, a synthetic convertible
security is comprised of two distinct securities that together resemble
convertible securities in certain respects. Synthetic convertible securities are
created by combining non-convertible bonds or preferred stocks with warrants or
stock call options. The options that will form elements of synthetic convertible
securities will be listed on a securities exchange or NASDAQ. The two components
of a synthetic convertible security, which will be issued with respect to the
same entity, generally are not offered as a unit, and may be purchased and sold
by the fund at different times. Synthetic convertible securities differ from
convertible securities in certain respects. Each component of a synthetic
convertible security has a separate market value and responds differently to
market fluctuations. Investing in a synthetic convertible security involves the
risk normally found in holding the securities comprising the synthetic
convertible security.
Short Sales
The fund may engage in short sales if, at the time of the short sale, the fund
owns or has the right to acquire securities equivalent in kind and amount to the
securities being sold short.
In a short sale, the seller does not immediately deliver the securities sold and
is said to have a short position in those securities until delivery occurs. To
make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If the fund engages in a short sale, the collateral account will be
maintained by the fund's custodian. While the short sale is open, the fund will
maintain in a segregated custodial account an amount of securities convertible
into, or exchangeable for, such equivalent securities at no additional cost.
These securities would constitute the fund's long position.
The fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes. There will be
certain additional transaction costs associated with short sales, but the fund
will endeavor to offset these costs with income from the investment of the cash
proceeds of short sales.
Portfolio Lending
In order to realize additional income, the fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's total net assets
valued at market except
o through the purchase of debt securities in accordance with its investment
objectives, policies and limitations, or
o by engaging in repurchase agreements with respect to portfolio securities.
Derivative Securities
The fund may invest in securities that are commonly referred to as derivative
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or derived from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
index/structured securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts), currencies, interest rates, indices or other financial
indicators (reference indices). For example, Standard & Poor's Depositary
Receipts, also known as spiders, track the price performance and dividend yield
of the S&P Index by providing a stake in the stocks that make up that index.
Some derivatives, such as mortgage-related and other asset-backed securities,
are in many respects like any other investment, although they may be more
volatile or less liquid than more traditional debt securities.
There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices, or currency exchange rates and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.
The fund may not invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund.
The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.
There is a range of risks associated with derivative investments, including:
o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the fund managers anticipate;
o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;
o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and
o the risk that the counterparty will fail to perform its obligations.
The Board of Directors has approved the advisor's policy regarding investments
in derivative securities. That policy specifies factors that must be considered
in connection with a purchase of derivative securities. The policy also
establishes a committee that must review certain proposed purchases before the
purchases can be made. The advisor will report on fund activity in derivative
securities to the Board of Directors as necessary. In addition, the Board will
review the advisor's policy for investments in the derivative securities
annually.
Investments in Companies with Limited Operating Histories
The fund may invest a portion of its assets in the securities of issuers with
limited operating history. The fund managers consider an issuer to have a
limited operating history if that issuer has a record of less than three years
of continuous operation. The managers will consider periods of capital
formation, incubation, consolidations, and research and development in
determining whether a particular issuer has a record of three years of
continuous operation.
Investments in securities of issuers with limited operating history may involve
greater risks than investments in securities of more mature issuers. By their
nature, such issuers present limited operating history and financial information
upon which the managers may base their investment decision on behalf of the
fund. In addition, financial and other information regarding such issuers, when
available, may be incomplete or inaccurate.
Other Investment Companies
The fund may invest up to 10% of its total assets in other mutual funds,
including those managed by the advisor, provided that the investment is
consistent with the fund's investment policies and restrictions. Under the
Investment Company Act, a fund's investment in such securities, subject to
certain exceptions, currently is limited to (a) 3% of the total voting stock of
any one investment company, (b) 5% of the fund's total assets with respect to
any one investment company and (c) 10% of the fund's total assets in the
aggregate. Such purchases will be made in the open market where no commission or
profit to a sponsor or dealer results from the purchase other than the customary
brokers' commissions. As a shareholder of another investment company, the fund
would bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would be
in addition to the management fee that the fund bears directly in connection
with its own operations.
Repurchase Agreements
The fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of that fund.
A repurchase agreement occurs when, at the time the fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.
Because the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.
The fund will limit repurchase agreement transactions to securities issued by
the U.S. government, its agencies and instrumentalities, and will enter into
such transactions with those banks and securities dealers who are deemed
creditworthy by the fund's advisor.
Repurchase agreements maturing in more than seven days would count toward the
fund's 15% limit on illiquid securities.
When-Issued and Forward Commitment Agreements
The fund may sometimes purchase new issues of securities on a when-issued or
forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future
date (typically 15 to 45 days later).
When purchasing securities on a when-issued or forward commitment basis, the
fund assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of the security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.
In purchasing securities on a when-issued or forward commitment basis, the fund
will establish and maintain until the settlement date a segregated account
consisting of cash, cash equivalents or other appropriate liquid securities in
an amount sufficient to meet the purchase price. When the time comes to pay for
the when-issued securities, the fund will meet its obligations with available
cash, through the sale of securities, or, although it would not normally expect
to do so, by selling the when-issued securities themselves (which may have a
market value greater or less than the fund's payment obligation). Selling
securities to meet when-issued or forward commitment obligations may generate
taxable capital gains or losses.
Restricted and Illiquid Securities
The fund may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the fund's criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among
qualified institutional investors rather than the general public. Although Rule
144A securities are considered restricted securities, they are not necessarily
illiquid.
With respect to securities eligible for resale under Rule 144A, the
staff of the Securities and Exchange Commission (SEC) has taken the position
that the liquidity of such securities in the portfolio of a fund offering
redeemable securities is a question of fact for the Board of Directors to
determine, such determination to be based upon a consideration of the readily
available trading markets and the review of any contractual restrictions.
Accordingly, the Board of Directors is responsible for developing and
establishing the guidelines and procedures for determining the liquidity of Rule
144A securities. As allowed by Rule 144A, the Board of Directors of the fund has
delegated the day-to-day function of determining the liquidity of Rule 144A
securities to the fund managers. The Board retains the responsibility to monitor
the implementation of the guidelines and procedures it has adopted.
Since the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and the fund may, from time to time, hold a Rule 144A or other
security that is illiquid. In such an event, the fund managers will consider
appropriate remedies to minimize the effect on such fund's liquidity.
Short-Term Securities
In order to meet anticipated redemptions, to hold pending the purchase of
additional securities for the fund's portfolio, or, in some cases, for temporary
defensive purposes, the fund may invest a portion of its assets in money market
and other short-term securities.
Examples of those securities include:
o Securities issued or guaranteed by the U.S. government and its agencies and
instrumentalities;
o Commercial Paper;
o Certificates of Deposit and Euro Dollar Certificates of Deposit;
o Bankers' Acceptances;
o Short-term notes, bonds,debentures, or other debt instruments; and
o Repurchase agreements.
In addition, the fund may invest up to 10% of its total assets in money market
mutual funds, including those managed by the advisor, with a limit of 5% of its
total assets in any one mutual fund. See the discussion under Other Investment
Companies, [PAGE XX], for more information about fund investments in other
mutual funds.
Futures and Options
The fund may enter into futures contracts, options or options on futures
contracts. Generally, futures transactions will be used to:
o protect against a decline in market value of the fund's securities (taking a
short futures position), or
o protect against the risk of an increase in market value for securities in
which the fund generally invests at a time when the fund is not
fully-invested (taking a long futures position), or
o provide a temporary substitute for the purchase of an individual security
that may be purchased in an orderly fashion.
Some futures and options strategies, such as selling futures, buying puts and
writing calls, hedge a fund's investments against price fluctuations. Other
strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure. Although other techniques may be used to control a
fund's exposure to market fluctuations, the use of futures contracts may be a
more effective means of hedging this exposure. While a fund pays brokerage
commissions in connection with opening and closing out futures positions, these
costs are lower than the transaction costs incurred in the purchase and sale of
the underlying securities.
For example, the sale of a future by a fund means the fund becomes obligated to
deliver the security (or securities, in the case of an index future) at a
specified price on a specified date. The purchase of a future means the fund
becomes obligated to buy the security (or securities) at a specified price on a
specified date. Futures contracts provide for the sale by one party and purchase
by another party of a specific security at a specified future time and price.
The fund managers may engage in futures and options transactions based on
securities indexes that are consistent with the fund's investment objectives.
Examples of indices that may be used include the MSCI EAFE Index and MSCI
Emerging Markets Free Index. The managers also may engage in futures and options
transactions based on specific securities, such as U.S. Treasury bonds or notes.
Futures contracts are traded on national futures exchanges. Futures exchanges
and trading are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission (CFTC), a U.S. government agency.
Index futures contracts differ from traditional futures contracts in that when
delivery takes place, no stocks or bonds change hands. Instead, these contracts
settle in cash at the spot market value of the index. Although other types of
futures contracts by their terms call for actual delivery or acceptance of the
underlying securities, in most cases the contracts are closed out before the
settlement date. A futures position may be closed by taking an opposite position
in an identical contract (i.e., buying a contract that has previously been sold
or selling a contract that has previously been bought).
Unlike when the fund purchases or sells a bond, no price is paid or received by
the fund upon the purchase or sale of the future. Initially, the fund will be
required to deposit an amount of cash or securities equal to a varying specified
percentage of the contract amount. This amount is known as initial margin. The
margin deposit is intended to ensure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. A margin deposit does not constitute margin
transactions for purposes of the funds' investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.
In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin account is not income
producing. Subsequent payments, to and from the broker, called variation margin,
will be made on a daily basis as the price of the underlying debt securities or
index fluctuates, making the future more or less valuable, a process known as
marking the contract to market. Changes in variation margin are recorded by the
fund as unrealized gains or losses. At any time prior to expiration of the
future, the fund may elect to close the position by taking an opposite position
that will operate to terminate its position in the future. A final determination
of variation margin is then made; additional cash is required to be paid by or
released to the fund and the fund realizes a loss or gain.
Risks Related to Futures and Options Transactions
Futures and options prices can be volatile, and trading in these markets
involves certain risks. If the fund managers apply a hedge at an inappropriate
time or judge interest rate or equity market trends incorrectly, futures and
options strategies may lower a fund's return.
The fund could suffer losses if it were unable to close out its position because
of an illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the fund managers consider it appropriate or desirable to
do so. In the event of adverse price movements, the fund would be required to
continue making daily cash payments to maintain its required margin. If the fund
had insufficient cash, it might have to sell portfolio securities to meet daily
margin requirements at a time when the fund managers would not otherwise elect
to do so. In addition, the fund may be required to deliver or take delivery of
instruments underlying futures contracts it holds. The fund managers will seek
to minimize these risks by limiting the contracts entered into on behalf of the
fund to those traded on national futures exchanges and for which there appears
to be a liquid secondary market.
The fund could suffer losses if the prices of its futures and options positions
were poorly correlated with its other investments, or if securities underlying
futures contracts purchased by the fund had different maturities than those of
the portfolio securities being hedged. Such imperfect correlation may give rise
to circumstances in which the fund loses money on a futures contract at the same
time that it experiences a decline in the value of its hedged portfolio
securities. The fund also could lose margin payments it has deposited with a
margin broker, if, for example, the broker became bankrupt.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of the trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
Options on Futures
By purchasing an option on a futures contract, a fund obtains the right, but not
the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is exercised.
Although it does not currently intend to do so, the fund may write (or sell)
call options that obligate it to sell (or deliver) the option's underlying
instrument upon exercise of the option. While the receipt of option premiums
would mitigate the effects of price declines, the fund would give up some
ability to participate in a price increase on the underlying security. If the
fund were to engage in options transactions, it would own the futures contract
at the time a call were written and would keep the contract open until the
obligation to deliver it pursuant to the call expired.
Restrictions on the Use of Futures Contracts and Options
The fund may enter into futures contracts, options or options on futures
contracts.
Under the Commodity Exchange Act, the fund may enter into futures and options
transactions (a) for hedging purposes without regard to the percentage of assets
committed to initial margin and option premiums or (b) for other than hedging
purposes, provided that assets committed to initial margin and option premiums
do not exceed 5% of the fund's total assets. To the extent required by law, the
fund will segregate cash or securities on its records in an amount sufficient to
cover its obligations under the futures contracts and options.
Forward Currency Exchange Contracts
The fund may purchase and sell foreign currency on a spot (i.e., cash) basis and
may engage in forward currency contracts, currency options and futures
transactions for hedging or any other lawful purpose. See Derivative Securities,
[PAGE XX].
The fund expects to use forward contracts under two circumstances:
(1) When the fund managers wish to lock in the U.S. dollar price of a security
when the fund is purchasing or selling a security denominated in a foreign
currency, the fund would be able to enter into a forward contract to do so;
or
(2) When the fund managers believe that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, the fund
would be able to enter into a forward contract to sell foreign currency for
a fixed U.S. dollar amount approximating the value of some or all of its
portfolio securities either denominated in, or whose value is tied to, such
foreign currency.
In the first circumstance, when the fund enters into a trade for the purchase or
sale of a security denominated in a foreign currency, it may be desirable to
establish (lock in) the U.S. dollar cost or proceeds. By entering into forward
contracts in U.S. dollars for the purchase or sale of a foreign currency
involved in an underlying security transaction, the fund will be able to protect
itself against a possible loss between trade and settlement dates resulting from
the adverse change in the relationship between the U.S. dollar and the subject
foreign currency.
Under the second circumstance, when the fund managers believe that the currency
of a particular country may suffer a substantial decline relative to the U.S.
dollar, the fund could enter into a forward contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all
of its portfolio securities either denominated in, or whose value is tied to,
such foreign currency. The fund will segregate on its records cash or securities
in an amount sufficient to cover its obligations under the contract.
The precise matching of forward contracts in the amounts and values of
securities involved generally would not be possible because the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The fund managers do not intend to enter into such
contracts on a regular basis. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the managers
believe that it is important to have flexibility to enter into such forward
contracts when they determine that a fund's best interests may be served.
At the maturity of the forward contract, the fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate the obligation to deliver the foreign currency by
purchasing an offsetting forward contract with the same currency trader
obligating the fund to purchase, on the same maturity date, the same amount of
the foreign currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for the fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.
INVESTMENT POLICIES
Unless otherwise indicated, with the exception of the percentage limitations on
borrowing, the restrictions described below apply at the time a fund enters into
a transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment restrictions.
Fundamental Investment Policies
The fund's fundamental investment restrictions are set forth below. These
investment restrictions may not be changed without approval of a majority of the
outstanding votes of shareholders of the fund, as determined in accordance with
the Investment Company Act.
Subject Policy
Senior Securities The fund may not issue senior securities, except as
permitted under the Investment Company Act.
Borrowing The fund may not borrow money, except for temporary or
emergency purposes (not for leveraging or investment) in an
amount not exceeding 33-1/3% of the fund's total assets
(including the amount borrowed) less liabilities (other
than borrowings).
Lending The fund may not lend any security or make any other loan
if, as a result, more than 33-1/3% of the fund's total
assets would be lent to other parties, except, (i) through
the purchase of debt securities in accordance with its
investment objective, policies and limitations or (ii) by
engaging in repurchase agreements with respect to portfolio
securities.
Real Estate The fund may not purchase or sell real estate unless
acquired as a result of ownership of securities or other
instruments. This policy shall not prevent a fund from
investing in securities or other instruments backed by real
estate or securities of companies that deal in real estate
or are engaged in the real estate business.
Concentration The fund may not concentrate its investments in securities
of issuers in a particular industry (other than securities
issued or guaranteed by the U.S. government or any of its
agencies or instrumentalities).
Underwriting The fund may not act as an underwriter of securities issued
by others, except to the extent that the fund may be
considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted
securities.
Commodities The fund may not purchase or sell physical commodities
unless acquired as a result of ownership of securities or
other instruments; provided that this limitation shall not
prohibit the fund from purchasing or selling options and
futures contracts or from investing in securities or other
instruments backed by physical commodities.
Control The fund may not invest for purposes of exercising control
over management.
For purposes of the investment restrictions relating to lending and borrowing,
the fund has received an exemptive order from the SEC regarding interfund
lending. Under the terms of the exemptive order, the fund may borrow money from
or lend money to other funds, advised by ACIM, that permit such transactions.
All such transactions will be subject to the limits set above for borrowing and
lending. The fund will borrow money through the program only when the costs are
equal to or lower than the cost of short-term bank loans. Interfund loans and
borrowings normally extend only overnight, but can have a maximum duration of
seven days. The fund will lend through the program only when the returns are
higher than those available from other short-term instruments (such as
repurchase agreements). The fund may have to borrow from a bank at a higher
interest rate if an interfund loan is called or not renewed. Any delay in
repayment to a lending fund could result in a lost investment opportunity or
additional borrowing costs.
Nonfundamental Investment Policies
In addition, the fund is subject to the following investment restrictions that
are not fundamental and may be changed by the Board of Directors.
Subject Policy
Leveraging The fund may not purchase additional investment securities at
any time during which outstanding borrowings exceed 5% of the
total assets of the fund.
Liquidity The fund may not purchase any security or enter into a
repurchase agreement if, as a result, more than 15% of its net
assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by
virtue of legal or contractual restrictions on resale or the
absence of a readily available market.
Short Sales The fund may not sell securities short, unless it owns
or has the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that
transactions in futures contracts and options are not deemed
to constitute selling securities short.
Margin The fund may not purchase securities on margin, except that
the fund may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin
payments in connection with futures contracts and options on
futures contracts shall not constitute purchasing securities
on margin.
Futures and The fund may enter into futures contracts and write and buy
Options put and call options relating to futures contracts. The fund
may not, however, enter into leveraged futures transactions
if it would be possible for the fund to lose more money than
it invested.
Issuers with The fund may invest a portion of its assets in the securities
Limited of issuers with limited operating histories. An issuer is
Operating considered to have a limited operating history if that issuer
Histories has a record of less than three years of continuous operation.
Periods of capital formation, incubation, consolidations, and
research and development may be considered in determining
whether a particular issuer has a record of three years
of continuous operation.
The Investment Company Act imposes certain additional restrictions upon
acquisition by the fund of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership. Neither the SEC nor any other agency of the
federal or state agency participates in or supervises the management of the fund
or its investment practices or policies.
PORTFOLIO TURNOVER
The portfolio turnover rates of the fund will be shown in the Financial
Highlights table in the Prospectus.
The fund managers will purchase and sell securities without regard to the length
of time the security has been held. Accordingly, the fund's rate of portfolio
turnover may be substantial.
The fund managers intend to purchase a given security whenever they believe it
will contribute to the stated objective of the fund. In order to achieve the
fund's investment objective, the fund managers may sell a given security, no
matter for how long or for how short a period it has been held in the portfolio,
and no matter whether the sale is at a gain or at a loss, if the managers
believe that the security is not fulfilling its purpose, either because, among
other things, it did not live up to the managers' expectations, or because it
may be replaced with another security holding greater promise, or because it has
reached its optimum potential, or because of a change in the circumstances of a
particular company or industry or in general economic conditions, or because of
some combination of such reasons.
When a general decline in security prices is anticipated, the fund may decrease
or eliminate entirely its equity positions and increase its cash positions, and
when a rise in price levels is anticipated, the fund may increase its equity
positions and decrease its cash positions. However, it should be expected that
the fund will, under most circumstances, be essentially fully invested in equity
securities.
Because investment decisions are based on the anticipated contribution of the
security in question to the fund's objectives, the managers believe that the
rate of portfolio turnover is irrelevant when they believe a change is in order
to achieve those objectives. As a result, a fund's annual portfolio turnover
rate cannot be anticipated and may be higher than that of other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost the fund pays
directly. Portfolio turnover also may affect the character of capital gains
realized and distributed by the fund, if any, since short-term capital gains are
taxable as ordinary income. This disclosure regarding portfolio turnover is a
statement of fundamental policy and may be changed only by a vote of the
shareholders.
Because the managers do not take portfolio turnover rate into account in making
investment decisions, (1) the managers have no intention of accomplishing any
particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as representative
of the rates that will be attained in the future.
MANAGEMENT
THE BOARD OF DIRECTORS
The Board of Directors oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the fund, it has hired the advisor to do so.
Two-thirds of the directors are independent of the fund's advisor; that is, they
are not employed by and have no financial interest in the advisor.
The individuals listed in the following table whose names are marked by an
asterisk (*) are interested persons of the fund (as defined in the Investment
Company Act) by virtue of, among other considerations, their affiliation with
either the fund; the advisor, American Century Investment Management, Inc.
(ACIM); the fund's agent for transfer and administrative services, American
Century Services Corporation (ACSC); the parent corporation, American Century
Companies, Inc. (ACC) or ACC's subsidiaries (including ACIM and ACSC); the
fund's distribution agent and co-administrator, Funds Distributor, Inc. (FDI);
the fund's other distribution agent, American Century Investment Services, Inc.
(ACIS); or other funds advised by the advisor. Each director listed below serves
as a director of five other registered investment companies in the American
Century family of funds, which are also advised by the advisor.
<TABLE>
<CAPTION>
Name (Age) Position(s) Held With Fund Principal Occupation(s) during Past five Years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James E. Stowers, Jr.* (76) Director, Chairman, Director and controlling shareholder, ACC,
4500 Main Street Chairman of the Board Chairman, ACIM, ACSC, ACIS and six other ACC
Kansas City, MO 64111 subsidiaries
Director, ACIM, ACSC, ACIS and 10 other ACC
subsidiaries(1)
- -----------------------------------------------------------------------------------------------------------------------------------
James E. Stowers III* (41) Director Chief Executive Officer and Director, ACC
4500 Main Street Chief Executive Officer, ACIM, ACSC, ACIS and six other
Kansas City, MO 64111 ACC subsidiaries
Director, ACIM, ACSC, ACIS and 11 other ACC
subsidiaries(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas A. Brown (59) Director Director of Plains States Development, Applied
4500 Main Street Industrial Technologies, Inc., a corporation engaged
Kansas City, MO 64111 in the sale of bearings and power transmission products
- ----------------------------------------------------------------------------------------------------------------------------------
Robert W. Doering, M.D. (67) Director Retired, formerly a general surgeon
4500 Main Street
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. (55) Director Senior Vice President and Director, Midwest
4500 Main Street Research Institute
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
D.D. (Del) Hock (65) Director Retired, formerly Chairman, Public Service Company
4500 Main Street of Colorado; Director, Service Tech, Inc., Hathaway
Kansas City, MO 64111 Corporation, and J.D. Edwards & Company
- ----------------------------------------------------------------------------------------------------------------------------------
Donald H. Pratt (62) Director, Chairman and Director, Butler Manufacturing
4500 Main Street Vice Chairman of the Board Company; Director, Atlas-Copco North America, Inc.
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
M. Jeannine Strandjord (54) Director Senior Vice President, Long Distance Finance, Sprint
4500 Main Street Director, DST Systems, Inc.
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
(1)Father of James E. Stowers III
(2)Son of James E. Stowers, Jr.
Committees
The Board has four standing committees to oversee specific functions of the fund's operations. Information about these
committees appears in the table below. The director first named acts as chairman of the committee.
Committee Members Function of Committee
- ----------------------------------------------------------------------------------------------------------------------------------
Executive James E. Stowers, Jr. The Executive Committee performs the functions of the Board of
James E. Stowers III Directors between Board meetings, subject to the limitations on its
Donald H. Pratt power set out in the Maryland General Corporation Law, and except
for matters required by the Investment Company Act to be acted
upon by the whole Board.
- ----------------------------------------------------------------------------------------------------------------------------------
Compliance Thomas A. Brown The Compliance Committee reviews the results of the fund's
Donald H. Pratt compliance testing program, reviews quarterly reports from the
Andrea C. Hall, Ph.D advisor to the Board regarding various compliance
matters and monitors the implementation of the fund's Code of Ethics,
including any violations.
- ----------------------------------------------------------------------------------------------------------------------------------
Audit Jeannine Strandjord The Audit Committee recommends the engagement of the fund's
Robert W. Doering, M.D. independent auditors and oversees its activities. The Committee
D.D. (Del) Hock receives reports from the advisor's Internal Audit Department,which
is accountable to the Committee. The Committee also receives
reporting about compliance matters affecting the fund.
- ----------------------------------------------------------------------------------------------------------------------------------
Nominating Donald H. Pratt The Nominating Committee primarily considers and recommends
D.D. (Del) Hock individuals for nomination as directors. The names of potential
Andrea C. Hall, Ph.D. director candidates are drawn from a number of sources, including
recommendations from members of the Board, management and
shareholders. This committee also reviews and makes
recommendations to the Board with respect to the composition of
Board committees and other Board-related matters, including its
organization, size, composition, responsibilities, functions and compensation.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Compensation of Directors
The directors also serve as directors for five American Century investment
companies other than the corporation. Each director who is not an interested
person as defined in the Investment Company Act receives compensation for
service as a member of the Board of all six such companies based on a schedule
that takes into account the number of meetings attended and the assets of the
funds for which the meetings are held. These fees and expenses are divided among
the six investment companies based, in part, upon their relative net assets.
Under the terms of the management agreement with the advisor, the funds are
responsible for paying such fees and expenses.
The following table shows the aggregate compensation paid by the corporation for
the periods indicated and by the six investment companies served by this Board
to each director who is not an interested person as defined in the Investment
Company Act.
Aggregate Director Compensation for Fiscal Year Ended November 30, 1999
Total Compensation Total Compensation from the
Name of Director from the Fund(1) American Century Family of
Funds(2)
Thomas A. Brown N/A $57,497
Robert W. Doering, M.D. N/A $55,750
Andrea C. Hall, Ph.D. N/A $56,250
D.D. (Del) Hock N/A $56,000
Donald H. Pratt N/A $59,590
Lloyd T. Silver, Jr. N/A $56,000
M. Jeannine Strandjord N/A $58,000
(1) Includes compensation paid to the directors during the fiscal year ended
November 30, 1999, and also includes amounts deferred at the election of the
directors under the American Century Mutual Funds Deferred Compensation Plan
for Non-Interested Directors.
(2) Includes compensation paid by the six investment company members of the
American Century family of funds served by this Board.
The fund has adopted the Amended and Restated American Century Mutual Funds
Deferred Compensation Plan for Non-Interested Directors. Under the plan, the
independent directors may defer receipt of all or any part of the fees to be
paid to them for serving as directors of the fund.
All deferred fees are credited to an account established in the name of the
directors. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the director. The account balance continues
to fluctuate in accordance with the performance of the selected fund or funds
until final payment of all amounts credited to the account. Directors are
allowed to change their designation of mutual funds from time to time.
No deferred fees are payable until such time as a director resigns, retires or
otherwise ceases to be a member of the Board of Directors. Directors may receive
deferred fee account balances either in a lump sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a director, all remaining deferred fee account balances are paid to
the director's beneficiary or, if none, to the director's estate.
The plan is an unfunded plan and, accordingly, the fund has no obligation to
segregate assets to secure or fund the deferred fees. The rights of directors to
receive their deferred fee account balances are the same as the rights of a
general unsecured creditor of the fund. The plan may be terminated at any time
by the administrative committee of the plan. If terminated, all deferred fee
account balances will be paid in a lump sum.
No deferred fees were paid to any director under the plan during the fiscal year
ended November 30, 1999.
OFFICERS
Background information about the officers of the fund is provided in the table
below. All persons named as officers of the fund also serve in similar
capacities for the 12 other investment companies advised by ACIM. Not all
officers of the fund are listed; only those officers with policy-making
functions for the fund are listed. No officer is compensated for his or her
service as an officer of the fund. The individuals listed in the following table
are interested persons of the fund (as defined in the Investment Company Act) by
virtue of, among other considerations, their affiliation with the fund, ACC,
ACC's subsidiaries (including ACIM and ACSC), or the fund's distributor (FDI),
as specified in the following table.
<TABLE>
<CAPTION>
Position(s)
Name (Age) Held With Principal Occupation(s)
Address Funds During Past Five Years
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
George A. Rio (45) President Executive Vice President and Director of Client Services, FDI
60 State Street (March 1998 to present)
Boston, MA 02109 Senior Vice President and Senior Key Account Manager, Putnam
Mutual Funds (June 1995 to March 1998)
Director Business Development, First Data Corporation
(May 1994 to June 1995)
- ----------------------------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (35) Vice President Vice President and Associate General Counsel, FDI (since July
60 State Street 1996)
Boston, MA 02109 Assistant Counsel, Forum Financial Group (April 1994 to July 1996)
- ----------------------------------------------------------------------------------------------------------------------------------
Mary A. Nelson (35) Vice President Vice President and Manager of Treasury Services and
60 State Street Administration, FDI (1994 to present)
Boston, MA 02109
- ----------------------------------------------------------------------------------------------------------------------------------
Maryanne Roepke, CPA (44) Vice President Senior Vice President and Treasurer, ACSC
4500 Main Street and Treasurer
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
David C. Tucker (41) Vice President Senior Vice President, ACIM, ACSC, ACIS and three other ACC
4500 Main Street subsidiaries (June 1998 to present)
Kansas City, MO 64111 General Counsel, ACC and nine ACC subsidiaries (June 1998 to
present)
Consultant to mutual fund industry (May 1997 to April 1998)
Vice President and General Counsel, Janus Companies
(1990 to 1997)
- ----------------------------------------------------------------------------------------------------------------------------------
Paul J. Carrigan Jr. (50) Secretary Secretary, ACC (February 1998 to present)
4500 Main Street Director of Legal Operations (February 1996 to present)
Kansas City, MO 64111 Board Communications Manager, The Benham Company
(April 1994 to January 1996)
- ----------------------------------------------------------------------------------------------------------------------------------
Robert J. Leach (33) Controller Vice President, ACSC (February 2000 to present)
4500 Main Street Controller-Fund Accounting, ACSC
Kansas City, MO 64111
- ----------------------------------------------------------------------------------------------------------------------------------
Jon Zindel (32) Tax Officer Vice President of Taxation, ACSC (1996 to present)
4500 Main Street Vice President, ACIM and 15 other ACC subsidiaries (April 1999 to
Kansas City, MO 64111 present)
Treasurer, American Century Ventures, Inc. (December 1999 to
present)
Tax Manager, Price Waterhouse LLP (1989 to 1996)
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CODE OF ETHICS
The funds, their investment advisor and principal underwriters have adopted
codes of ethics under Rule 17j-1 of the Investment Company Act and these codes
of ethics permit personnel subject to the codes to invest in securities,
including securities that may be purchased or held by the funds, provided that
they first obtain approval from their employer's compliance department before
making such investments.
SERVICE PROVIDERS
The fund has no employees. To conduct the fund's day-to-day activities, the fund
has hired a number of service providers. Each service provider has a specific
function to fill on behalf of the fund and is described below.
ACIM and ACSC are both wholly owned by ACC. James E. Stowers Jr., Chairman of
ACC, controls ACC by virtue of his ownership of a majority of its voting stock.
INVESTMENT ADVISOR
American Century Investment Management, Inc. (ACIM) serves as the investment
advisor for the fund. A description of the responsibilities of the advisor
appears in the Prospectus under the heading Management.
For the services provided to the fund, the advisor receives a monthly fee based
on a percentage of the average net assets of the fund. The fund has a stepped
fee structure, as follows:
Fund Class Percent of Average Net Assets
- -------------------------------------------------------------------------------
Technology Investor x.xx% of first $1 billion
x.xx% of the next $1 billion
x.xx% over $2 billion
- -------------------------------------------------------------------------------
Institutional x.xx% of first $1 billion
x.xx% of the next $1 billion
x.xx% over $2 billion
- -------------------------------------------------------------------------------
Advisor x.xx% of first $1 billion
x.xx% of the next $1 billion
x.xx% over $2 billion
- -------------------------------------------------------------------------------
On the first business day of each month, the fund pays a management fee to the
advisor for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of the fund's net assets during the
previous month. This number is then multiplied by a fraction, the numerator of
which is the number of days in the previous month and the denominator of which
is 365 (366 in leap years).
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by
(1) the fund's Board of Directors, or by the vote of a majority of outstanding
votes (as defined in the Investment Company Act) and
(2) the vote of a majority of the directors of the fund who are not parties to
the agreement or interested persons of the advisor, cast in person at a
meeting called for the purpose of voting on such approval.
The management agreement provides that it may be terminated at any time, without
payment of any penalty, by the fund's Board of Directors, or by a vote of a
majority of outstanding votes, on 60 days' written notice to the advisor, and
that it shall be automatically terminated if it is assigned.
The management agreement states that the advisor shall not be liable to the fund
or its shareholders for anything other than willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties.
The management agreement also provides that the advisor and its officers,
directors and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
Certain investments may be appropriate for the fund and also for other clients
advised by the advisor. Investment decisions for the fund and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment, generally. A particular
security may be bought or sold for only one client or fund, or in different
amounts and at different times for more than one but less than all clients or
funds. In addition, purchases or sales of the same security may be made for two
or more clients or funds on the same date. Such transactions will be allocated
among clients in a manner believed by the advisor to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by a fund.
The advisor may aggregate purchase and sale orders of the fund with purchase and
sale orders of its other clients when the advisor believes that such aggregation
provides the best execution for the fund. The corporation's Board of Directors
has approved the policy of the advisor with respect to the aggregation of
portfolio transactions. Where portfolio transactions have been aggregated, the
fund participates at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
advisor will not aggregate portfolio transactions of the fund unless it believes
such aggregation is consistent with its duty to seek best execution on behalf of
the fund and the terms of the management agreement. The advisor receives no
additional compensation or remuneration as a result of such aggregation.
TRANSFER AGENT AND ADMINISTRATOR
American Century Services Corporation, 4500 Main Street, Kansas City, Missouri
64111, acts as transfer agent and dividend-paying agent for the fund. It
provides physical facilities, computer hardware and software and personnel, for
the day-to-day administration of the fund and the advisor. The advisor pays ACSC
for these services out of its unified management fee.
From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.
Pursuant to a Sub-Administration Agreement with the advisor, Funds Distributor,
Inc. (FDI) serves as the co-administrator for the fund. FDI is responsible for
(i) providing certain officers of the fund and (ii) reviewing and filing
marketing and sales literature on behalf of the fund. The fees and expenses of
FDI are paid by the advisor out of its unified fee.
DISTRIBUTORS
The fund's shares are distributed by FDI and ACIS, both registered
broker-dealers. FDI is a wholly owned indirect subsidiary of Boston
Institutional Group, Inc.,and its principal business address is 60 State Street,
Suite 1300, Boston, Massachusetts 02109. ACIS is a wholly owned subsidiary of
ACC, and is located at 4500 Main Street, Kansas City, Missouri 64111.
The distributor is the principal underwriter of the fund's shares. The
distributor makes a continuous, best efforts underwriting of the fund's shares.
This means the distributor has no liability for unsold shares.
OTHER SERVICE PROVIDERS
CUSTODIAN BANKS
Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York 10003-9598,
and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, each serves
as custodian of the assets of the fund. The custodians take no part in
determining the investment policies of the fund or in deciding which securities
are purchased or sold by the fund. The fund, however, may invest in certain
obligations of the custodians and may purchase or sell certain securities from
or to the custodians.
INDEPENDENT AUDITOR
Deloitte & Touche LLP is the independent auditor of the fund. The address of
Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas City, Missouri 64106. As
the independent auditor of the fund, Deloitte & Touche LLP provides services
including
(1) audit of the annual financial statements for the fund,
(2) assistance and consultation in connection with SEC filings, and
(3) review of the annual federal income tax return filed for the fund.
BROKERAGE ALLOCATION
Under the management agreement between the fund and the advisor, the advisor has
the responsibility of selecting brokers and dealers to execute portfolio
transactions. The fund's policy is to secure the most favorable prices and
execution of orders on its portfolio transactions. So long as that policy is
met, the advisor may take into consideration the factors discussed below when
selecting brokers.
The advisor receives statistical and other information and services, including
research, without cost from brokers and dealers. The advisor evaluates such
information and services, together with all other information that it may have,
in supervising and managing the investments of the fund. Because such
information and services may vary in amount, quality and reliability, their
influence in selecting brokers varies from none to very substantial. The advisor
proposes to continue to place some of the fund's brokerage business with one or
more brokers who provide information and services. Such information and services
will be in addition to and not in lieu of services required to be performed by
the advisor. The advisor does not utilize brokers that provide such information
and services for the purpose of reducing the expense of providing required
services to the fund.
The brokerage commissions paid by the fund may exceed those which another broker
might have charged for effecting the same transactions, because of the value of
the brokerage and research services provided by the broker. Research services
furnished by brokers through whom the fund effect securities transactions may be
used by the advisor in servicing all of its accounts, and not all such services
may be used by the advisor in managing the portfolios of the fund.
The staff of the SEC has expressed the view that the best price and execution of
over-the-counter transactions in portfolio securities may be secured by dealing
directly with principal market makers, thereby avoiding the payment of
compensation to another broker. In certain situations, the officers of the fund
and the advisor believe that the facilities, expert personnel and technological
systems of a broker often enable the fund to secure as good a net price by
dealing with a broker instead of a principal market maker, even after payment of
the compensation to the broker. The fund regularly place its over-the-counter
transactions with principal market makers, but may also deal on a brokerage
basis when utilizing electronic trading networks or as circumstances warrant.
INFORMATION ABOUT FUND SHARES
The fund is a series of shares issued by the corporation, and shares of the fund
have equal voting rights as other series (funds) issued by the corporation. In
addition, each series (or fund) may be divided into separate classes. See
Multiple Class Structure which follows. Additional funds and classes may be
added without a shareholder vote.
Each fund votes separately from the other series of shares (funds) issued by the
corporation on matters affecting the fund exclusively. Voting rights are not
cumulative, so that investors holding more than 50% of the corporation's (i.e.,
all funds') outstanding shares may be able to elect a Board of Directors. The
corporation undertakes dollar-based voting, meaning that the number of votes you
are entitled to is based upon the dollar amount of your investment. The election
of directors is determined by the votes received from all the corporation's
shareholders without regard to whether a majority of shares of any one fund
voted in favor of a particular nominee or all nominees as a group.
The assets belonging to each series of shares are held separately by the
custodian and the shares of each series or class represent a beneficial interest
in the principal, earnings and profit (or losses) of investment and other assets
held for each series or class. Your rights as a shareholder are the same for all
series or class of securities unless otherwise stated. Within their respective
series or class, all shares have equal redemption rights. Each share, when
issued, is fully paid and non-assessable.
In the event of complete liquidation or dissolution of the fund, shareholders of
each series or class of shares will be entitled to receive, pro rata, all of the
assets less the liabilities of that series or class.
Each shareholder has rights to dividends and distributions declared by the fund
he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.
MULTIPLE CLASS STRUCTURE
The corporation's Board of Directors has adopted a multiple class plan (the
Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such
plan, the fund may issue up to four classes of shares: an Investor Class, an
Institutional Class, a Service Class and an Advisor Class. Not all funds offer
all four classes.
The Investor Class is made available to investors directly without any load or
commission, for a single unified management fee. The Institutional, Service and
Advisor Classes are made available to institutional shareholders or through
financial intermediaries that do not require the same level of shareholder and
administrative services from the advisor as Investor Class shareholders. As a
result, the advisor is able to charge these classes a lower total management
fee. In addition to the management fee, however, the Advisor Class shares are
subject to a Master Distribution and Shareholder Services Plan (described
beginning on this page). The plan has been adopted by the fund's Board of
Directors and initial shareholder in accordance with Rule 12b-1 adopted by the
SEC under the Investment Company Act.
Rule 12b-1
Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the investment
company's Board of Directors and approved by its shareholders. Pursuant to such
rule, the Board of Directors and initial shareholder of the fund's Advisor Class
have approved and entered into a Master Distribution and Shareholder Services
Plan, with respect to the Advisor Class (the Plan). The Plan is described below.
In adopting the Plan, the Board of Directors (including a majority of directors
who are not interested persons of the fund as defined in the Investment Company
Act, hereafter referred to as the independent directors) determined that there
was a reasonable likelihood that the Plan would benefit the fund and the
shareholders of the affected class. Pursuant to Rule 12b-1, information with
respect to revenues and expenses under the Plan is presented to the Board of
Directors quarterly for its consideration in connection with its deliberations
as to the continuance of the Plan. Continuance of the Plan must be approved by
the Board of Directors (including a majority of the independent directors)
annually. The Plan may be amended by a vote of the Board of Directors (including
a majority of the independent directors), except that the Plan may not be
amended to materially increase the amount to be spent for distribution without
majority approval of the shareholders of the affected class. The Plan terminates
automatically in the event of an assignment and may be terminated upon a vote of
a majority of the independent directors or by vote of a majority of the
outstanding voting securities of the affected class.
All fees paid under the Plan will be made in accordance with Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers
(NASD).
Master Distribution and Shareholder Services Plan
As described in the Prospectus, the fund's Advisor Class shares are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. The fund's distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries with respect to the sale of the fund's shares and/or
the use of the fund's shares in various investment products or in connection
with various financial services.
Certain recordkeeping and administrative services that are provided by the
fund's transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for shareholders in
the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.
To enable the fund's shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the fund's
advisor has reduced its management fee by 0.25% per annum with respect to the
Advisor Class shares and the fund's Board of Directors has adopted a Master
Distribution and Shareholder Services Plan. Pursuant to the Plan, the Advisor
Class shares pay a fee of 0.50% annually of the aggregate average daily net
assets of the fund's Advisor Class shares, 0.25% of which is paid for
Shareholder Services (as described above) and 0.25% of which is paid for
distribution services.
Payments may be made for a variety of shareholder services, including, but are
not limited to
(a) receiving, aggregating and processing purchase, exchange and redemption
requests from beneficial owners (including contract owners of insurance
products that utilize the fund as underlying investment media) of shares and
placing purchase, exchange and redemption orders with the fund's distributor
(b) providing shareholders with a service that invests the assets of their
accounts in shares pursuant to specific or pre-authorized instructions
(c) processing dividend payments from a fund on behalf of shareholders and
assisting shareholders in changing dividend options, account designations
and addresses
(d) providing and maintaining elective services such as check writing and wire
transfer services
(e) acting as shareholder of record and nominee for beneficial owners
(f) maintaining account records for shareholders and/or other beneficial owners
(g) issuing confirmations of transactions
(h) providing subaccounting with respect to shares beneficially owned by
customers of third parties or providing the information to a fund as
necessary for such subaccounting
(i) preparing and forwarding shareholder communications from the fund (such as
proxies, shareholder reports, annual and semi-annual financial statements
and dividend, distribution and tax notices) to shareholders and/or other
beneficial owners; and
(j) providing other similar administrative and sub-transfer agency services.
Shareholder Services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the fund.
Shareholder services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the fund.
Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of Advisor Class shares, which
services may include but are not limited to
(a) the payment of sales commissions, on going commissions and other payments to
brokers, dealers, financial institutions or others who sell Advisor Class
shares pursuant to Selling Agreements;
(b) compensation to registered representatives or other employees of Distributor
who engage in or support distribution of the fund's Advisor Class shares
(c) compensation to, and expenses (including overhead and telephone expenses)
of, Distributor
(d) the printing of prospectuses, statements of additional information and
reports for other than existing shareholders
(e) the preparation, printing and distribution of sales literature and
advertising materials provided to the fund's shareholders and prospective
shareholders
(f) receiving and answering correspondence from prospective shareholders,
including distributing prospectuses, statements of additional information,
and shareholder reports
(g) the providing of facilities to answer questions from prospective investors
about fund shares
(h) complying with federal and state securities laws pertaining to the sale of
fund shares
(i) assisting investors in completing application forms and selecting dividend
and other account options
(j) the providing of other reasonable assistance in connection with the
distribution of fund shares
(k) the organizing and conducting of sales seminars and payments in the form of
transactional and compensation or promotional incentives
(l) profit on the foregoing
(m) the payment of "service fees" for the provision of personal, continuing
services to investors, as contemplated by the Rules of Fair Practice of the
NASD; and
(n) such other distribution and services activities as the advisor determines
may be paid for by the fund pursuant to the terms of the agreement between
the corporation and the fund's distributor and in accordance with Rule 12b-1
of the Investment Company Act.
BUYING AND SELLING FUND SHARES
Information about buying, selling and exchanging fund shares is contained in the
fund's Prospectus and in Your Guide to American Century Services. The Prospectus
and guide are available to investors without charge and may be obtained by
calling us.
VALUATION OF A FUND'S SECURITIES
The fund's net asset value (NAV) is calculated as of the close of business of
the New York Stock Exchange (the Exchange), usually at 4 p.m. Eastern time each
day the Exchange is open for business. The Exchange usually closes at 4 p.m.
Eastern time. The Exchange typically observes the following holidays: New Year's
Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Although the
fund expects the same holiday schedule to be observed in the future, the
Exchange may modify its holiday schedule at any time.
The fund's NAV is calculated by adding the value of all portfolio securities and
other assets, deducting liabilities and dividing the result by the number of
shares outstanding. Expenses and interest earned on portfolio securities are
accrued daily.
The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded or as of the close of the New
York Stock Exchange, if that is earlier. That value is then converted to U.S.
dollars at the prevailing foreign exchange rate. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors.
Securities maturing within 60 days of the valuation date may be valued at cost,
plus or minus any amortized discount or premium, unless the directors determine
that this would not result in fair valuation of a given security. Other assets
and securities for which quotations are not readily available are valued in good
faith at their fair value using methods approved by the Board of Directors.
The value of an exchange-traded foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded or as of the close of business on the New York Stock Exchange, if that is
earlier. That value is then translated to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
Trading of these securities in foreign markets may not take place on every New
York Stock Exchange business day. In addition, trading may take place in various
foreign markets and on some electronic trading networks on Saturdays or on other
days when the New York Stock Exchange is not open and on which the fund's net
asset value is not calculated. Therefore, such calculation does not take place
contemporaneously with the determination of the prices of many of the portfolio
securities used in such calculation and the value of the fund's portfolio may be
affected on days when shares of the fund may not be purchased or redeemed.
TAXES
FEDERAL INCOME TAXES
The fund intends to qualify annually as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). By so
qualifying, a fund will be exempt from federal income taxes to the extent that
it distributes substantially all of its net investment income and net realized
capital gains (if any) to shareholders. If a fund fails to qualify as a
regulated investment company, it will be liable for taxes, significantly
reducing its distributions to shareholders and eliminating shareholders' ability
to treat distributions of the funds in the manner they were realized by the
fund.
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. The dividends from net income may quality for the 70% dividends
received deduction for corporations to the extent that the fund held shares
receiving the dividend for more than 45 days. Distributions from gains on assets
held greater than 12 months are taxable as long-term gains regardless of the
length of time you have held the shares. However, you should note that any loss
realized upon the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of any distributions of
long-term capital gain to you with respect to such shares.
Dividends and interest received by a fund on foreign securities may give rise to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the United States may reduce or eliminate such
taxes. Foreign countries generally do not impose taxes on capital gains in
respect of investments by non-resident investors. The foreign taxes paid by a
fund will reduce its dividends.
If more than 50% of the value of a fund's total assets at the end of each
quarter of its fiscal year consists of securities of foreign corporations, the
fund may qualify for and make an election with the Internal Revenue Service with
respect to such fiscal year so that fund shareholders may be able to claim a
foreign tax credit in lieu of a deduction for foreign income taxes paid by the
fund. If such an election is made, the foreign taxes paid by the fund will be
treated as income received by you. In order for you to utilize the foreign tax
credit, the mutual fund shares must have been held for 16 days or more during
the 30-day period, beginning 15 days prior to the ex-dividend date for the
mutual fund shares. The mutual fund must meet a similar holding period
requirement with respect to foreign securities to which a dividend is
attributable. Any portion of the foreign tax credit that is ineligible as a
result of the fund not meeting the holding period requirement will be deducted
in computing net investment income.
If a fund purchases the securities of certain foreign investment funds or trusts
called passive foreign investment companies (PFIC), capital gains on the sale of
such holdings will be deemed to be ordinary income regardless of how long the
fund holds its investment. The fund also may be subject to corporate income tax
and an interest charge on certain dividends and capital gains earned from these
investments, regardless of whether such income and gains are distributed to
shareholders. In the alternative, the fund may elect to recognize cumulative
gains on such investments as of the last day of its fiscal year and distribute
them to shareholders. Any distribution attributable to a PFIC is characterized
as ordinary income.
If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, either American Century or your financial intermediary is
required by federal law to withhold and remit to the IRS 31% of reportable
payments (which may include dividends, capital gains distributions and
redemptions) to the IRS. Those regulations require you to certify that the
Social Security number or tax identification number you provide is correct and
that you are not subject to 31% withholding for previous under-reporting to the
IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed, and is not refundable.
Redemption of shares of a fund (including redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
you will generally recognize gain or loss in an amount equal to the difference
between the basis of the shares and the amount received. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the "wash sale"
rules of the Code, resulting in a postponement of the recognition of such loss
for federal income tax purposes.
STATE AND LOCAL TAXES
Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
HOW FUND PERFORMANCE INFORMATION IS CALCULATED
The fund may quote performance in various ways. Fund performance may be shown by
presenting one or more performance measurements, including cumulative total
return, average annual total return or yield.
All performance information advertised by the fund is historical in nature and
is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
Total returns quoted in advertising and sales literature reflect all aspects of
a fund's return, including the effect of reinvesting dividends and capital gain
distributions (if any) and any change in the fund's NAV during the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in a fund during a stated
period and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant throughout the period. For example, a cumulative total return of 100%
over 10 years would produce an average annual return of 7.18%, which is the
steady annual rate that would equal 100% growth on a compounded basis in 10
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the fund's performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to actual year-to-year
performance.
In addition to average annual total returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period, including periods other than one, five and 10 years.
Average annual and cumulative total returns may be quoted as percentages or as
dollar amounts and may be calculated for a single investment, a series of
investments, or a series of redemptions over any time period. Total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of these
factors and their contributions to total return.
As a new fund, performance information for the fund is not available as of the
date of this Statement of Additional Information.
PERFORMANCE COMPARISONS
The fund's performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indexes of market
performance. This may include comparisons with funds that, unlike the American
Century funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be used for such comparisons may include, but are not
limited to, U.S. Treasury bill, note and bond yields, money market fund yields,
U.S. government debt and percentage held by foreigners, the U.S. money supply,
net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper, Inc. or Morningstar, Inc.; mutual fund
rankings published in major, nationally distributed periodicals; data provided
by the Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills,
and Inflation; major indices of stock market performance; and indexes and
historical data supplied by major securities brokerage or investment advisory
firms. The fund also may utilize reprints from newspapers and magazines
furnished by third parties to illustrate historical performance or to provide
general information about the fund.
PERMISSIBLE ADVERTISING INFORMATION
From time to time, the fund may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to shareholders:
(1) discussions of general economic or financial principles (such as the effects
of compounding and the benefits of dollar-cost averaging)
(2) discussions of general economic trends
(3) presentations of statistical data to supplement such discussions
(4) descriptions of past or anticipated portfolio holdings for the fund
(5) descriptions of investment strategies for the fund
(6) descriptions or comparisons of various savings and investment products
(including, but not limited to, qualified retirement plans and individual
stocks and bonds), which may or may not include the fund
(7) comparisons of investment products (including the fund) with relevant market
or industry indices or other appropriate benchmarks
(8) discussions of fund rankings or ratings by recognized rating organizations;
and
(9) testimonials describing the experience of persons that have invested in the
fund. The fund may also include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results in such
communications. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of any of the fund.
MULTIPLE CLASS PERFORMANCE ADVERTISING
Pursuant to the Multiple Class Plan, the fund may issue additional classes of
existing funds or introduce new funds with multiple classes available for
purchase. To the extent a new class is added to an existing fund, the managers
may, in compliance with SEC and NASD rules, regulations and guidelines, market
the new class of shares using the historical performance information of the
original class of shares. When quoting performance information for the new class
of shares for periods prior to the first full quarter after inception, the
original class' performance will be restated to reflect the expenses of the new
class and for periods after the first full quarter after inception, actual
performance of the new class will be used.
EXPLANATION OF FIXED-INCOME SECURITIES RATINGS
As described in the Prospectus and in this SAI, the fund may invest in
fixed-income securities. Those investments, however, are subject to certain
credit quality restrictions as noted in the Prospectuses. The following is a
summary of the rating categories referenced in the prospectus.
Bond Ratings
S&P Moody's Description
AAA Aaa These are the highest ratings assigned by S&P and Moody's
to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
AA Aa Debt rated in this category is considered to have a very
strong capacity to pay interest and repay principal and
differs from AAA/Aaa issues only in a small degree.
A A Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
BBB Baa Debt rated BBB/Baa is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more likely
to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated
categories.
BB Ba Debt rated BB/Ba has less near-term vulnerability to
default than other speculative issues. However, it faces major
ongoing uncertainties or exposure to adverse business,
financial or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The
BB rating category also is used for debt subordinated to
senior debt that is assigned an actual or implied BBB- rating.
B B Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial or economic
conditions will likely impair capacity or willingness to pay
interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an
actual or implied BB/Ba or BB-/Ba3 rating.
CCC Caa Debt rated CCC/Caa has a currently identifiable
vulnerability to default and is dependent upon favorable
business, financial and economic conditions to meet timely
payment of interest and repayment of principal. In the event
of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay
principal. The CCC/Caa rating category is also used for debt
subordinated to senior debt that is assigned an actual or
implied B or B-/B3 rating.
CC Ca The rating CC/Ca typically is applied to debt subordinated
to senior debt that is assigned an actual or implied CCC/Caa
rating.
C C The rating C typically is applied to debt subordinated to
senior debt, which is assigned an actual or implied CCC-/Caa3
debt rating. The C rating may be used to cover a situation
where a bankruptcy petition has been filed, but debt service
payments are continued.
CI - The rating CI is reserved for income bonds on which no
interest is being paid.
D D Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made
on the date due even if the applicable grace period has not
expired, unless S&P believes that such payments will be made
during such grace period. The D rating also will be used upon
the filing of a bankruptcy petition if debt service payments
are jeopardized.
To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3) to designate relative standing within
its major bond rating categories. Fitch Investors Service, Inc. also rates bonds
and uses a ratings system that is substantially similar to that used by Standard
& Poor's.
Commercial Paper Ratings
S&P Moody's Description
A-1 Prime-1 This indicates that the degree of safety regarding timely
(P-1) payment is strong. Standard & Poor's rates those issues
determined to possess extremely strong safety characteristics
as A-1+.
A-2 Prime-2 Capacity for timely payment on commercial paper is
(P-2) satisfactory, but the relative degree of safety is not as high
as for issues designated A-1. Earnings trends and
coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriated, may be more affected by external conditions.
Ample alternate liquidity is maintained.
A-3 Prime-3 Satisfactory capacity for timely repayment. Issues that carry
(P-3) this rating are somewhat more vulnerable to the adverse
changes in circumstances than obligations carrying
the higher designations.
Note Ratings
S&P Moody's Description
SP-1 MIG-1; VMIG-1 Notes are of the highest quality
enjoying strong protection from established cash
flows of funds for their servicing or from
established and broad-based access to the market for
refinancing, or both.
SP-2 MIG-2; VMIG-2 Notes are of high quality with margins
of protection ample, although not so large as in the
preceding group.
SP-3 MIG-3; VMIG-3 Notes are of favorable quality with all
security elements accounted for, but lacking the
undeniable strength of the preceding grades. Market
access for refinancing, in particular, is likely to
be less well established.
SP-4 MIG-4; VMIG-4 Notes are of adequate quality carrying
specific risk but having protection and not
distinctly or predominantly speculative.
MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These contain more information about the fund's investments and the market
conditions and investment strategies that significantly affected the fund's
performance during the most recent fiscal period. The annual and semiannual
reports are incorporated by reference into this SAI. This means that these are
legally part of this SAI.
You can receive a free copy of the annual and
semiannual reports, and ask questions about the fund and your accounts, by
contacting American Century at the address or telephone numbers listed below.
If you own or are considering purchasing fund shares through
o an employer-sponsored retirement plan
o a bank
o a broker-dealer
o an insurance company
o another financial intermediary
you can receive the annual and semiannual reports directly from them.
You also can get information about the fund from the Security and Exchange
Commission (SEC). The SEC charges a duplicating fee to provide copies of this
information.
o In person SEC Public Reference Room
Washington, D.C.
Call 1-202-942-8090 for location and hours.
o On the Internet oEDGAR database at www.sec.gov
oBy email request at [email protected]
o By mail SEC Public Reference Section
Washington, D.C.
20549-0102
Investment Company Act File No. 811-6247
American Century Investments
P.O. Box 419200
Kansas City, Missouri 64141-6200
Investor Relations
1-800-345-2021 or 816-531-5575
Automated Information Line
1-800-345-8765
www.americancentury.com
Fax
816-340-7962
Telecommunications Device for the Deaf
1-800-634-4113 or 816-444-3485
Business; Not-For-Profit and
Employer-Sponsored Retirement Plans
1-800-345-3533
SH-SAI-xxxxx 0004
<PAGE>
PART C OTHER INFORMATION
ITEM 23. Exhibits (all exhibits not filed herewith are being incorporated
herein by reference).
(a) (1) Articles of Incorporation of Twentieth Century World Investors,
Inc. (filed electronically as an Exhibit to Post-Effective Amendment
No. 6 to the Registration Statement on March 29, 1996, File No.
33-39242).
(2) Articles of Amendment of Twentieth Century World Investors, Inc.,
dated August 10, 1993 (filed Electronically as an Exhibit to
Post-Effective Amendment No. 9 to the Registration Statement on March
30, 1998, File No. 33-39242).
(3) Articles Supplementary of Twentieth Century World Investors, Inc.,
dated November 8, 1993 (filed electronically as an Exhibit to
Post-Effective Amendment No. 6 to the Registration Statement on March
29, 1996, File No. 33-39242).
(4) Articles Supplementary of Twentieth Century World Investors, Inc.,
dated April 24, 1995 (filed electronically as an Exhibit to
Post-Effective Amendment No. 6 to the Registration Statement on March
29, 1996, File No. 33-39242).
(5) Articles Supplementary of Twentieth Century World Investors, Inc.,
dated March 11, 1996 filed electronically as an Exhibit to
Post-Effective Amendment No. 7 to the Registration Statement on June
13, 1996, File No. 33-9242).
(6) Articles Supplementary of Twentieth Century World Investors, Inc.,
dated September 9, 1996 (filed electronically as an Exhibit to
Post-Effective Amendment No. 9 to the Registration Statement on March
30, 1998, File No. 33-39242).
(7) Articles of Amendment of Twentieth Century World Investors, Inc.
dated December 2, 1996 (filed electronically as an Exhibit to
Post-Effective Amendment o8 to the Registration Statement on March 31,
1997, File No. 33-39242).
(8) Articles Supplementary of American Century World Mutual Funds,
Inc. dated December 2, 1996 (filed electronically as an Exhibit to
Post-Effective Amendment No. 8 to the Registration Statement on March
31, 1997, File No. 33-39242).
(9) Articles Supplementary of American Century World Mutual Funds,
Inc. dated November 13, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 12 to the Registration Statement of the
Registrant on November 13, 1998, File No. 33-39242).
(10) Articles Supplementary of American Century World Mutual Funds,
Inc. dated February 16, 1999 (filed electronically as an Exhibit to
Post-Effective Amendment No. 15 to the Registration Statement of the
Registrant on March 31, 1999, File No. 33-39242).
(11) Articles Supplementary of American Century World Mutual Funds,
Inc. (to be filed by amendment).
(b) (1) By-Laws of Twentieth Century World Investors, Inc. (filed
electronically as an Exhibit to Post-Effective Amendment No. 6 to the
Registration Statement of the Registrant on March 29, 1996, File No.
33-39242).
(2) Amendment to By-Laws of American Century World Mutual Funds, Inc.
(filed electronically as an Exhibit to Post-Effective Amendment No. 9
to the Registration Statement of American Century Capital Portfolios,
Inc. on February 17, 1998, File No. 33-64872).
(c) Registrant hereby incorporates by reference, as though set forth fully
herein, Article Fifth, Article Seventh, Article Eighth, and Article
Ninth of Registrants Articles of Incorporation, appearing as Exhibit
(a)(1) to Post- Effective Amendment No. 6 on Form N-1A of the
Registrant, and Article Fifth of Registrants Articles of Amendment,
appearing as Exhibit (a)(2) to Post-Effective Amendment No. 9 to the
Registration Statement on March 30, 1998; and Sections 3, 4, 5, 7, 8,
9, 10, 11, 22, 25, 30, 31, 33, 39, 45 and 46 of Registrants By-Laws
appearing as Exhibit (b)(1) to Post-Effective Amendment No. 6 on Form
N-1A, and Sections 25, 30 & 31 of Registrants By-Laws appearing as
Exhibit (b)(2) to Post-Effective Amendment No. 9 on Form N-1A of
American Century Capital Portfolios, Inc., Commission No. 33-64872.
(d) (1) Management Agreement between American Century World Mutual Funds,
Inc. and American Century Investment Management, Inc. dated August 1,
1997 (filed electronically as an Exhibit to Post-Effective Amendment
No. 12 to the Registration Statement of the Registrant on November 13,
1998, File No. 33-39242).
(2) Addendum to Management Agreement between American Century World
Mutual Funds, Inc. and American Century Investment Management, Inc.
dated December 1, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 15 to the Registration Statement of the
Registrant on March 31, 1999, File No. 33-39242).
(3) Addendum to Management Agreement between American Century World
Mutual Funds, Inc. and American Century Investment Management, Inc.
(to be filed by amendment).
(e) (1) Distribution Agreement between American Century World Mutual
Funds, Inc. and Funds Distributor, Inc. dated January 15, 1998 (filed
electronically as an Exhibit to Post-Effective Amendment No. 28 to the
Registration Statement of American Century Target Maturities Trust on
January 30, 1998, File No. 2-94608).
(2) Amendment No. 1 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc. dated
June 1, 1998 (filed electronically as an Exhibit to Post-Effective
Amendment No. 11 to the Registration Statement of American Century
Capital Portfolios, Inc. on June 26, 1998, File No. 33-64872).
(3) Amendment No. 2 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc. dated
December 1, 1998 (filed electronically as an Exhibit to Post-Effective
Amendment No. 12 to the Registration Statement of the Registrant on
November 13, 1998, File No. 33-39242).
(4) Amendment No. 3 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc. dated
January 29, 1999 (filed electronically as Exhibit to Post-Effective
Amendment No. 28 on Form N-1A of American Century California Tax-Free
and Municipal Funds, on December 28, 1998, File No. 2-82734).
(5) Amendment No. 4 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc. dated
July 30, 1999 (filed electronically as an Exhibit to Post-Effective
Amendment No. 16 to the Registration Statement of American Century
Capital Portfolios, Inc., File No. 33-64872, on July 29, 1999).
(6) Amendment No. 5 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc. (filed
electronically as an Exhibit to Post-Effective Amendment No. 87 on
Form N-1A on November 29, 1999).
(7) Distribution Agreement between American Century World Mutual
Funds, Inc., and American Century Investment Services, Inc. (to be
filed by amendment).
(f) Not applicable.
(g) (1) Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham funds, dated August 6, 1996 (filed
electronically as an Exhibit to Post-Effective Amendment No. 31 of
American Century Government Income Trust, File No. 2-99222).
(2) Master Agreement by and between Twentieth Century Services, Inc.
and Commerce Bank, N. A. dated January 22, 1997 (filed electronically
as an Exhibit to Post-Effective Amendment No. 76 to the Registration
Statement of American Century Mutual Funds, Inc., File No. 2-14213).
(h) (1) Transfer Agency Agreement dated as of March 1, 1991, by and
between Twentieth Century World Investors, Inc. and Twentieth Century
Services, Inc. (filed electronically as an Exhibit to Post-Effective
Amendment No. 6 to the Registration Statement of the Registrant on
March 29, 1996, File No. 33-39242).
(2) Supplemental Agreement dated July 30, 1999, by and between
American Century International Discovery Fund, American Century
Emerging Markets Fund and American Century Global Growth Fund and The
Chase Manhattan Bank, filed herewith as EX-99-h2.
(3) Credit Agreement between American Century Funds and the Chase
Manhattan Bank, as Administrative Agent dated as of December 21, 1999
(filed electronically as an Exhibit to Post-Effective Amendment No. 29
to the Registration Statement of American Century California Tax-Free
and Municipal Funds, File No. 2-82734, on December 29, 1999).
(i) Opinion and Consent of Counsel (to be filed by amendment).
(j) Power of Attorney dated February 19, 1999 (filed electronically as an
Exhibit to Post-Effective Amendment No. 15 to the Registration
Statement of the Registrant, on March 31, 1999, File No. 33-39242).
(k) Not applicable.
(l) Not applicable.
(m) (1) Master Distribution and Shareholder Services Plan of Twentieth
Century Capital Portfolios, Inc., Twentieth Century Investors, Inc.,
Twentieth Century Strategic Asset Allocations, Inc. and Twentieth
Century World Investors, Inc. (Advisor Class) dated September 3, 1996
(filed electronically as an Exhibit to Post-Effective Amendment No. 9
of American Century Capital Portfilios, Inc., File No. 33-64872).
(2) Amendment No. 1 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations, Inc.
and American Century World Mutual Funds, Inc. (Advisor Class) dated
June 13, 1997 (filed electronically as an exhibit to Post-Effective
Amendment No. 77 of American Century Mutual Funds, Inc., File No.
2-14213).
(3) Amendment No. 2 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations, Inc.
and American Century World Mutual Funds, Inc. (Advisor Class) dated
September 30, 1997 (filed electronically as an exhibit to Post-
Effective Amendment No. 78 of American Century Mutual Funds, Inc.,
File No. 2-14213).
(4) Amendment No. 3 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations,
Inc., and American Century World Mutual Funds, Inc. (Advisor Class)
dated June 30, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 11 of American Century Capital
Portfolios, Inc., File No. 33-64872).
(5) Amendment No. 4 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations,
Inc., and American Century World Mutual Funds, Inc. (Advisor Class)
dated November 13, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 12 to the Registration Statement of the
Registrant on November 13, 1998, File No. 33-39242).
(6) Amendment No. 5 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations, Inc.
and American Century World Mutual Funds, Inc. (Advisor Class) dated
February 16, 1999 (filed electronically as an Exhibit to
Post-Effective Amendment No. 83 of American Century Mutual Funds,
Inc., File No. 2-14213).
(7) Amendment No. 6 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations, Inc.
and American Century World Mutual Funds, Inc. (Advisor Class) dated
July 30, 1999 (filed electronically as an Exhibit to Post-Effective
Amendment No. 16 on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, on July 29, 1999).
(8) Amendment No. 7 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations, Inc.
and American Century World Mutual Funds, Inc. (Advisor Class) (filed
electronically as an Exhibit to Post-Effective Amendment No. 87 on
Form N-1A on November 29, 1999).
(9) Amendment No. 8 to Master Distribution and Shareholder services
Plan of American Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset Allocations, Inc.
and American Century World Mutual Funds, Inc. (Advisor Class) (to be
filed by amendment).
(10) Shareholder Services Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. (Service Class) dated September 3, 1996 (filed
electronically as an Exhibit to Post-Effective Amendment No. 9 on of
American Century Capital Portfolios, Inc., File No. 33-64872).
(o) (1) Multiple Class Plan of Twentieth Century Capital Portfolios, Inc.,
Twentieth Century Investors, Inc., Twentieth Century Strategic Asset
Allocations, Inc. and Twentieth Century World Investors, Inc. dated
September 3, 1996 (filed electronically as an Exhibit to
Post-Effective Amendment No. 9 of American Century Capital Portfolios,
Inc., File No. 33-64872).
(2) Amendment No. 1 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. dated June 13, 1997 (filed electronically as an
Exhibit to Post-Effective Amendment No. 77 of American Century Mutual
Funds, Inc., File No. 2-14213).
(3) Amendment No. 2 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. dated September 30, 1997 (filed electronically as
an Exhibit to Post-Effective Amendment No. 78 of American Century
Mutual Funds, Inc., File No. 2-14213).
(4) Amendment No. 3 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. dated June 30, 1998 (filed electronically as an
Exhibit to Post-Effective Amendment No. 11 of American Century Capital
Portfolios, Inc., File No. 33-64872).
(5) Amendment No. 4 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. dated November 13, 1998 (filed electronically as an
Exhibit to Post-Effective Amendment No. 12 to the Registration
Statement of the Registrant on November 13, 1998, File No. 33-39242).
(6) Amendment No. 5 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. dated January 29, 1999 (filed electronically as an
Exhibit to Post-Effective Amendment No. 14 of American Century Capital
Portfolios, Inc. on December 29, 1998, File No. 33-64872).
(7) Amendment No. 6 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. dated July 30, 1999 (filed electronically as
Exhibit o7 to Post-Effective Amendment No. 16 on Form N-1A of American
Century Capital Portfolios, Inc., File No. 33-64872, on July 29,
1999).
(8) Amendment No. 7 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. (filed electronically as Exhibit o8 to
Post-Effective Amendment No. 87 on Form N-1A on November 29, 1999).
(9) Amendment No. 8 to Multiple Class Plan of American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American Century World
Mutual Funds, Inc. (to be filed by amendment).
(p) (1) American Century Investments Code of Ethics, filed herewith as
EX-99.p1.
(2) Funds Distributor, Inc. Code of Ethics, filed herewith as
EX-99.p2.
ITEM 24 Persons Controlled by or Under Common Control with Registrant - None.
ITEM 25 Indemnification.
The Registrant is a Maryland Corporation. Section 2-418 of the
Maryland General Corporation Law allows a Maryland corporation to
indemnify its officers, directors, employees and agents to the extent
provided in such statute.
Article XIII of the Registrant's Articles of Incorporation, requires
the indemnification of the Registrant's directors and officers to the
extent permitted by Section 2-418 of the Maryland General Corporation
Law, the Investment Company Act of 1940 and all other applicable
laws.
The Registrant has purchased an insurance policy insuring its
Officers and directors against certain liabilities which such
officers and directors may incur while acting in such capacities and
providing reimbursement to the Registrant for sums which it may be
permitted or required to pay to its officers and directors by way of
indemnification against such liabilities, subject in either case to
clauses respecting deductibility and participation.
ITEM 26 Business and Other Connections of Investment Advisor.
American Century Investment Management, Inc., the investment advisor,
is engaged in the business of managing investments for registered
investment companies, deferred compensation plans and other
institutional investors.
ITEM 27 Principal Underwriter.
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies.
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+ Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds, Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Kobrick-Cendant Investment Trust
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Orbitex Group of Funds
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
The Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. The Distributor is located at 60 State Street, Suite 1300,
Boston, Massachusetts 02109. The Distributor is an indirect wholly-owned
subsidiary of Boston Institutional Group, Inc., a holding company all of whose
outstanding shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of the Distributor:
<TABLE>
<CAPTION>
Name and Principal Business Address* Positions and Offices with Positions and Offices with
Underwriter Registrant
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Marie E. Connolly Director, President and Chief none
Executive Officer
George A. Rio Executive Vice President President, Principal Executive
and Principal Financial Officer
Donald R. Roberson Executive Vice President none
William S. Nichols Executive Vice President none
Margaret W. Chambers Senior Vice President, none
General Counsel, Chief
Compliance Officer,
Secretary and Clerk
Michael S. Petrucelli Senior Vice President none
Joseph F. Tower, III Director, Senior Vice President, none
Treasurer and Chief Financial
Officer
Paula R. David Senior Vice President none
Gary S. MacDonald Senior Vice President none
Judith K. Benson Senior Vice President none
William J. Nutt Chairman and Director none
- --------------------
* All addresses are 60 State Street, Suite 1300, Boston, Massachusetts 02109
(c) Not applicable.
</TABLE>
ITEM 28 Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the rules promulgated thereunder,
are in the possession of Registrant, American Century Services
Corporation and American Century Investment Management, Inc., all
located at American Century Tower, 4500 Main Street, Kansas City,
Missouri 64111.
ITEM 29 Management Services.
Not applicable.
ITEM 30 Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, American Century World Mutual Funds, Inc., the
Registrant, certifies that it meets all the requirements for effectiveness of
this Post-Effective Amendment No. 16 to it's Registration Statement pursuant to
Rule 485(a) promulgated under the Securities Act of 1933, as amended, and has
duly caused this Post-Effective Amendment No. 16 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Kansas City, State of
Missouri on the 10th day of March, 2000.
American Century World Mutual Funds, Inc.
(Registrant)
By: /*/George A. Rio
George A. Rio
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 16 has been signed below by the following persons
in the capacities and on the dates indicated.
Signature Title Date
*George A. Rio President, Principal Executive March 10, 2000
George A. Rio and Principal Financial Officer
*Maryanne Roepke Vice President, Treasurer and March 10, 2000
Maryanne Roepke Principal Financial Officer
*James E. Stowers, Jr. Chairman of the Board and March 10, 2000
James E. Stowers, Jr. Director
*James E. Stowers III Director March 10, 2000
James E. Stowers III
*Thomas A. Brown Director March 10, 2000
Thomas A. Brown
*Robert W. Doering, M.D. Director March 10, 2000
Robert W. Doering, M.D.
*Andrea C. Hall, Ph.D. Director March 10, 2000
Andrea C. Hall, Ph.D.
*Donald H. Pratt Director March 10, 2000
Donald H. Pratt
*M. Jeannine Strandjord Director March 10, 2000
M. Jeannine Strandjord
*D. D. (Del) Hock Director March 10, 2000
D. D. (Del) Hock
*By /s/Charles A. Etherington
Charles A. Etherington
Attorney-in-Fact
EXHIBIT INDEX
American Century World Mutual Funds, Inc.
Exhibit Description of Document
Number
EX-99.a1 Articles of Incorporation of Twentieth Century World Investors,
Inc. (filed as a part of Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A of the Registrant, File No.
33-39242, filed March 29, 1996 and incorporated herein by
reference).
EX-99.a2 Articles of Amendment of Twentieth Century World Investors, Inc.
dated August 10, 1993 (filed as a part of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 30, 1998 and
incorporated herein by reference).
EX-99.a3 Articles Supplementary of Twentieth Century World Investors,
Inc., dated November 8, 1993 (filed as a part of Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 29, 1996 and
incorporated herein by reference).
EX-99.a4 Articles Supplementary of Twentieth Century World Investors,
Inc., dated April 24, 1995 (filed as a part of Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 29, 1996 and
incorporated herein by reference).
EX-99.a5 Articles Supplementary of Twentieth Century World Investors,
Inc., dated March 11, 1996 (filed as a part of Post-Effective
Amendment No. 7 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed June 13, 1996 and
incorporated herein by reference).
Ex-99.a6 Articles Supplementary of Twentieth Century World Investors,
Inc. dated September 9, 1996 (filed as a part of Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 30, 1998 and
incorporated herein by reference).
EX-99.a7 Articles of Amendment of Twentieth Century World Investors, Inc.
dated December 2, 1996 (filed as a part of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 31, 1997 and
incorporated herein by reference).
EX-99.a8 Articles Supplementary of American Century World Mutual Funds,
Inc. dated December 2, 1996 (filed as a part of Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 31, 1997 and
incorporated herein by reference).
EX-99.a9 Articles Supplementary of American Century World Mutual Funds,
Inc. dated November 13, 1998 (filed as a part of Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed November 13, 1998 and
incorporated herein by reference).
EX-99.a10 Articles Supplementary of American Century World Mutual Funds,
Inc. dated February 16, 1999 (filed as a part of Post-Effective
Amendment No. 15 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242 on March 31, 1999 and
incorporated herein by reference).
EX-99.a11 Articles Supplementary of American Century World Mutual Funds,
Inc. to be filed by amendment.
EX-99.b1 By-Laws of Twentieth Century World Investors, Inc. (filed as a
part of Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-39242,
filed March 29, 1996 and incorporated herein by reference).
Ex-99.b2 Amendment to By-Laws of American Century World Mutual Funds,
Inc. (filed as a part of Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of American Century Capital
Portfolios, Inc., File No. 33-64872, filed February 17, 1998 and
incorporated herein by reference).
EX-99.d1 Management Agreement between American Century World Mutual
Funds, Inc. and American Century Investment Management, Inc.
dated August 1, 1997 (filed as a part of Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed November 13, 1998 and
incorporated herein by reference).
EX-99.d2 Addendum to Management Agreement between American Century World
Mutual Funds, Inc. and American Century Investment Management,
Inc. dated December 1, 1998 (filed as a part of Post-Effective
Amendment No. 15 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242 on March 31, 1999 and
incorporated herein by reference).
EX-99.d3 Addendum to Management Agreement between American Century World
Mutual Funds, Inc. and American Century Investment Management,
Inc., to be filed by amendment.
EX-99.e1 Distribution Agreement between American Century World Mutual
Funds, Inc. and Funds Distributor, Inc. dated January 15, 1998
(filed as a part of Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A of American Century Target
Maturities Trust, File No. 2-94608, filed on January 30, 1998,
and incorporated herein by reference).
EX-99.e2 Amendment No. 1 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc.
dated June 1, 1998 (filed as a part of Post-Effective Amendment
No. 11 to the Registration Statement on Form N-1A of American
Century Capital Portfolios, Inc., File No. 33-64872, filed on
June 26, 1998, and incorporated herein by reference).
EX-99.e3 Amendment No. 2 to the Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc.
dated December 1, 1998 (filed as a part of Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed November 13, 1998 and
incorporated herein by reference).
EX-99.e4 Amendment No. 3 to Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor,
Inc. dated January 29, 1999 (filed electronically as Exhibit e4
to Post-Effective Amendment No. 28 on Form N-1A of American
Century California Tax-Free and Municipal Funds, File No.
2-82734, filed December 28, 1998, and incorporated herein by
reference).
EX-99.e5 Amendment No. 4 to Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, Inc.
dated July 30, 1999 (filed as a part of Post-Effective Amendment
No. 16 to the Registration Statement on Form N-1A of American
Century Capital Portfolios, Inc., File No. 33-64872, filed on
July 29, 1999, and incorporated herein by reference).
EX-99.e6 Amendment No. 5 to Distribution Agreement between American
Century World Mutual Funds, Inc. and Funds Distributor, (filed as
a part of Post-Effective Amendment No. 87 to the Registration
Statement on Form N-1A of the Registrant, File No. 2-14213, filed
on November 29, 1999, and incorporated herein by reference).
EX-99.e7 Distribution Agreement between American Century World Mutual
Funds, Inc. and American Century Investment Services, Inc., to be
filed by amendment.
EX-99.g1 Global Custody Agreement between The Chase Manhattan Bank and
the Twentieth Century and Benham funds, dated August 6, 1996
(filed as a part of Post-Effective Amendment No. 31 to the
Registration Statement on Form N-1A of American Century
Government Income Trust, File No. 2-99222, filed February 7,
1997, and incorporated herein by reference).
EX-99.g2 Master Agreement by and between Twentieth Century Services, Inc.
and Commerce Bank, N. A. dated January 22, 1997 (filed as a part
of Post-Effective Amendment No. 76 to the Registration Statement
on Form N-1A of American Century Mutual Funds, Inc., File No.
2-14213, filed February 28, 1997 and incorporated herein by
reference).
EX-99.h1 Transfer Agency Agreement dated as of March 1, 1991, by and
between Twentieth Century World Investors, Inc. and Twentieth
Century Services, Inc. (filed as a part of Post-Effective
Amendment No. 6 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-39242, filed March 29, 1996 and
incorporated herein by reference).
EX-99.h2 Supplemental Agreement dated July 30, 1999, by and between
American Century International Discovery Fund, American Century
Emerging Markets Fund and American Century Global Growth Fund and
The Chase Manhattan Bank, filed herewith.
EX-99.h3 Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent dated as of December 21,
1999 (filed electronically as a part of Post-Effective Amendment
No. 29 to the Registration Statement on Form N-1A of American
Century California Tax-Free and Municipal Funds, File No. 2-82734
filed on December 29, 1999, and incorporated herein by
reference).
EX-99.i Opinion and Consent of Counsel to be filed by amendment.
EX-99.j Power of Attorney dated February 19, 1999 (filed electronically
as a part of Post-Effective Amendment No. 15 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-39242,
filed on March 31, 1999, and incorporated herein by reference).
EX-99.m1 Master Distribution and Shareholder Services Plan of Twentieth
Century Capital Portfolios, Inc., Twentieth Century Investors,
Inc., Twentieth Century Strategic Asset Allocations, Inc. and
Twentieth Century World Investors, Inc. (Advisor Class) dated
September 3, 1996 (filed as a part of Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A of American
Century Capital Portfolios, Inc., File No. 33-64872, filed
February 17, 1998 and incorporated herein by reference).
EX-99.m2 Amendment No. 1 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated June 13, 1997 (filed as a part of
Post-Effective Amendment No. 77 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., File No.
2-14213, filed July 17, 1997 and incorporated herein by
reference).
EX-99.m3 Amendment No. 2 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated September 30, 1997 (filed as a part of
Post-Effective Amendment No. 78 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., File No.
2-14213, filed February 26, 1998 and incorporated herein by
reference).
EX-99.m4 Amendment No. 3 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated June 30, 1998 (filed as a part of
Post-Effective Amendment No. 11 to the Registration Statement on
Form N-1A of American Century Capital Portfolios, Inc., File No.
33-64872, filed June 26, 1998 and incorporated herein by
reference).
EX-99.m5 Amendment No. 4 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated November 13, 1998 (filed as a part of
Post-Effective Amendment No. 12 to the Registration Statement of
the Registrant, File No. 33-39242, filed November 13, 1998, and
incorporated herein by reference).
EX-99.m6 Amendment No. 5 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated February 16, 1999 (filed as a part of
Post-Effective Amendment No. 83 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., File No.
2-14213, filed February 26, 1999 and incorporated herein by
reference).
EX-99.m7 Amendment No. 6 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated July 30, 1999 (filed as a part of
Post-Effective Amendment No. 16 on Form N-1A of American Century
Capital Portfolios, Inc., File No. 33-64872, on July 29, 1999 and
incorporated herein by reference).
EX-99.m8 Amendment No. 7 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) (filed as a part of Post-Effective Amendment No.
87 to the Registration Statement on Form N-1A of the Registrant,
File No. 2-14213, filed on November 29, 1999 and incorporated
herein by reference).
EX-99.m9 Amendment No. 8 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class), to be filed by amendment.
EX-99.m10 Shareholder Services Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc., Twentieth
Century Strategic Asset Allocations, Inc. and Twentieth Century
World Investors, Inc. (Service Class) dated September 3, 1996
(filed as a part of Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of American Century Capital
Portfolios, Inc., File No. 33-64872, filed February 17, 1998 and
incorporated herein by reference).
EX-99.o1 Multiple Class Plan of Twentieth Century Capital Portfolios,
Inc., Twentieth Century Investors, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. dated September 3, 1996 (filed as a part of
Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A of American Century Capital Portfolios, Inc., File No.
33-64872, filed February 17, 1998 and incorporated herein by
reference).
EX-99.o2 Amendment No. 1 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated June 13, 1997 (filed as a
part of Post-Effective Amendment No. 77 to the Registration
Statement on Form N-1A of American Century Mutual Funds, Inc.,
File No. 2-14213, filed on July 17, 1997 and incorporated herein
by reference).
EX-99.o3 Amendment No. 2 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated September 30, 1997 (filed
as a part of Post-Effective Amendment No. 78 to the Registration
Statement on Form N-1A of American Century Mutual Funds, Inc.,
File No. 2-14213, filed on February 26, 1998 and incorporated
herein by reference).
EX-99.o4 Amendment No. 3 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated June 30, 1998 (filed as a
part of Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, filed on June 26, 1998 and incorporated
herein by reference).
EX-99.o5 Amendment No. 4 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated November 13, 1998 (filed
as a part of Post-Effective Amendment No. 12 to the Registration
Statement of the Registrant, File No. 33-39242, filed November
13, 1998, and incorporated herein by reference).
EX-99.o6 Amendment No. 5 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated January 29, 1999 (filed
as a part of Post-Effective Amendment No. 14 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, filed on December 29, 1998, and
incorporated herein by reference).
EX-99.o7 Amendment No. 6 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated July 30, 1999 (filed as a
part of Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, on July 29, 1999, and incorporated
herein by reference).
EX-99.o8 Amendment No. 7 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (filed as a part of
Post-Effective Amendment No. 87 to the Registration Statement on
Form N-1A of the Registrant, File No. 2-14213, filed on November
29, 1999, and incorporated herein by reference).
EX-99.o9 Amendment No. 8 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc., to be filed by amendment.
EX-99.p1 American Century Investments Code of Ethics
EX-99.p2 Funds Distributor, Inc. Code of Ethics
SUPPLEMENTAL AGREEMENT
AMENDMENT, dated July 30, 1999, to the August 9, 1996 custody agreement
("Agreement"), between American Century International Discovery Fund (formerly
American Century - Twentieth Century International Discovery Fund), American
Century Emerging Markets Fund (formerly American Century - Twentieth Century
Emerging Markets Fund) ("Customer"), and American Century Global Growth Fund
(formerly American Century - Twentieth Century Global Growth Fund) having a
place of business at 4500 Main Street, Kansas City, Missouri (U.S.A.) 64111, and
The Chase Manhattan Bank ("Bank"), having a place of business at 270 Park Ave.,
New York, N.Y. 10017-2070.
It is hereby agreed as follows:
Section 1. Except as modified hereby, the Agreement is confirmed in all
respects. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement.
Section 2. The Agreement is amended as follows by adding the following
as new ss.15:
"Unless the context clearly requires otherwise, the following words
shall have the meanings set forth below when used herein:
"(a) "CMBI" shall mean Chase Manhattan Bank International, an
indirect wholly-owned subsidiary of Bank, located in Moscow, Russia, and any
nominee companies appointed by it.
"(b) "International Financial Institution" shall mean any bank
in the top 1,000 (together with their affiliated companies) as measured by "Tier
1" capital or any broker/dealer in the top 100 as measured by capital.
"(c) "Negligence" shall mean the failure to exercise
"Reasonable Care".
"(d) "No-Action Letter" shall mean the response of the
Securities and Exchange Commission's Office of Chief Counsel of Investment
Management, dated April 18, 1995, in respect of the Templeton Russia Fund, Inc.
(SEC Ref. No. 95-151-CC, File No. 811-8788) providing "no-action" relief under
ss.17(f) of The Investment Company Act of 1940, as amended, and SEC Rule 17f-5
thereunder, in connection with custody of such Templeton Russia Fund, Inc.'s
investments in Russian Securities.
"(e) "Reasonable Care" shall mean the use of reasonable
custodial practices under the applicable circumstances as measured by the
custodial practices then prevailing in Russia of International Financial
Institutions acting as custodians for their institutional investor clients in
Russia.
"(f) "Registrar Company" shall mean any entity providing share
registration services to an issuer of Russian Securities.
"(g) "Registrar Contract" shall mean a contract between CMBI
and a Registrar Company (and as the same may be amended from time to time)
containing, inter alia, the contractual provisions described at paragraphs
(a)-(e) on pps. 5-6 of the No-Action Letter.
"(h) "Russian Security" shall mean a Security issued by a
Russian issuer.
"(i) "Share Extract" shall mean: (1) an extract of its share
registration books issued by a Registrar Company indicating an investor's
ownership of a security; and (2) a form prepared by CMBI or its agent in those
cases where a Registrar Company is unwilling to issue a Share Extract.
Section 3. Section 6(a) of the Agreement is amended by adding the
following at the end thereof: "With respect to purchasing a Russian Security,
payment for such Russian Security shall not be made prior to the issuance and
receipt of the Share Extract (as defined in Section 15(i)(1)) relating to such
Russian Security. Delivery of Russian Securities may be made in accordance with
the customary or established securities trading or securities processing
practices and procedures in Russia. Delivery of Russian Securities may also be
made in any manner specifically required by Instructions acceptable to the Bank.
Customer shall promptly supply such transaction and settlement information as
may be requested by Bank or CMBI in connection with particular transactions."
Section 4. Section 8 of the Agreement is amended by adding a new
paragraph to the end thereof as follows: "It is understood and agreed that Bank
need only use its reasonable efforts with respect to performing the functions
described in this ss.8 with respect to Russian Securities (except that Bank
shall use Reasonable Care with respect to its duties to transmit information to
Customer), it being understood that proxy voting services are not available. To
the extent that Bank receives proxy materials (whether or not received in a
timely fashion), it will forward the same to Customer upon request and without
translation."
Section 5. Section 12(a)(i) of the Agreement is amended with respect to
Russian custody by deleting the phrase "reasonable care" wherever it appears and
substituting, in lieu thereof, the phrase "Reasonable Care".
Section 6. Section 12(a)(i) of the Agreement is further amended with
respect to Russian custody by inserting the following at the end of the first
sentence thereof: "; provided that, with respect to Russian Securities, Bank's
responsibilities shall be limited to safekeeping relevant Share Extracts."
Section 7. Section 12(a)(i) of the Agreement is further amended with
respect to Russian custody by inserting the following after the second sentence
thereof: "Delegation by Bank to CMBI shall not relieve Bank of any
responsibility to Customer for any loss due to such delegation, and Bank shall
be liable for any loss or claim arising out of or in connection with the
performance by CMBI of such delegated duties to the same extent as if Bank had
itself provided the custody services hereunder. In connection with the
foregoing, neither Bank nor CMBI shall assume responsibility for, and neither
shall be liable for, any action or inaction of any Registrar Company and no
Registrar Company shall be, or shall be deemed to be, Bank, CMBI, a
Subcustodian, a securities depository or the employee, agent or personnel of any
of the foregoing. To the extent that CMBI employs agents to perform any of the
functions to be performed by Bank or CMBI with respect to Russian Securities,
neither Bank nor CMBI shall be responsible for any act, omission, default or for
the solvency of any such agent unless the appointment of such agent was made
with Negligence or in bad faith, except that where Bank or CMBI uses (i) an
affiliated nominee or (ii) an agent to perform the share registration or share
confirmation functions described in paragraphs (a)-(e) on pps. 5-6 of the
No-Action Letter, and, to the extent applicable to CMBI, the share registration
functions described on pps. 2-3 of the No-Action Letter, Bank and CMBI shall be
liable to Customer as if CMBI were responsible for performing such services
itself."
Section 8. Section 12(a)(ii) is amended with respect to Russian custody
by deleting the word "negligently" and substituting, in lieu thereof, the word
"Negligently".
Section 9. Section 12(a)(iii) is amended with respect to Russian
custody by deleting the word "negligence" and substituting, in lieu thereof, the
word "Negligence".
Section 10. Add a new Section 16 to the Agreement as follows:
"(a) Bank will advise Customer (and will update such advice
from time to time as changes occur) of those Registrar Companies with which CMBI
has entered into a Registrar Contract. Bank shall cause CMBI both to monitor
each Registrar Company and to promptly advise Customer and its investment
advisor when CMBI has actual knowledge of the occurrence of any one or more of
the events described in paragraphs (i)-(v) on pps. 8-9 of the No-Action Letter
with respect to a Registrar Company that serves in that capacity for any issuer
the shares of which are held by Customer.
"(b) Where Customer is considering investing in the Russian
Securities of an issuer as to which CMBI does not have a Registrar Contract with
the issuer's Registrar Company, Customer may request that Bank ask that CMBI
both consider whether it would be willing to attempt to enter into such a
Registrar Contract and to advise Customer of its willingness to do so. Where
CMBI has agreed to make such an attempt, Bank will advise Customer of the
occurrence of any one or more of the events described in paragraphs (i)-(iv) on
pps. 8-9 of the No-Action Letter of which CMBI has actual knowledge.
(c) Where Customer is considering investing in the Russian
Securities of an issuer as to which CMBI has a Registrar Contract with the
issuer's Registrar Company, Customer may advise Bank of its interest in
investing in such issuer and, in such event, Bank will advise Customer of the
occurrence of any one or more of the events described in paragraphs (i)-(v) on
pps. 8-9 of the No-Action Letter of which CMBI has actual knowledge."
Section 11. Add a new Section 17 to the Agreement as follows: "Customer
shall pay for and hold Bank and CMBI harmless from any liability or loss
resulting from the imposition or assessment of any taxes (including, but not
limited to, state, stamp and other duties) or other governmental charges, and
any related expenses incurred by Bank, CMBI or their respective agents with
respect to income on Customer's Russian Securities.
Section 12. Add a new Section 18 to the Agreement as follows: "Customer
acknowledges and agrees that CMBI may not be able, in given cases and despite
its reasonable efforts, to obtain a Share Extract from a Registrar Company and
CMBI shall not be liable in any such event including with respect to any losses
resulting from such failure."
Section 13. Add a new Section 19 to the Agreement as follows: "Customer
acknowledges that it has received, reviewed and understands Bank's market report
for Russia, including, but not limited to, the risks described therein."
Section 14. Add a new Section 20 to the Agreement as follows: "Subject
to the cooperation of a Registrar Company, for at least the first two years
following CMBI's first use of a Registrar Company, Bank shall cause CMBI to
conduct share confirmations on at least a quarterly basis, although thereafter
confirmations may be conducted on a less frequent basis if Customer's Board of
Directors, in consultation with CMBI, determines it to be appropriate."
Section 15. Add a new Section 21 to the Agreement as follows: "Bank
shall cause CMBI to prepare for distribution to Customer's Board of Directors a
quarterly report identifying: (i) any concerns it has regarding the Russian
share registration system that should be brought to the attention of the Board
of Directors; and (ii) the steps CMBI has taken during the reporting period to
ensure that Customer's interests continue to be appropriately recorded."
Section 16. Add a new Section 22 to the Agreement as follows: "Except
as provided in new ss.16(b), the services to be provided by Bank hereunder will
be provided only in relation to Russian Securities for which CMBI has entered
into a Registrar Contract with the relevant Registrar Company."
*********************
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
AMERICAN CENTURY
INTERNATIONAL DISCOVERY FUND,
AMERICAN CENTURY THE CHASE MANHATTAN BANK
EMERGING MARKETS FUND
and
AMERICAN CENTURY
GLOBAL GROWTH FUND
By: /s/ Robert J. Leach By: ____________________
Name: Robert J. Leach Name: ____________________
Title: Controller, International Funds Title: ____________________
Date: July 30, 1999 Date: ____________________
American Century Investments
Working with Integrity...
Code of Ethics
Terms that are in bold italics in the text are defined in Appendix 1.
- -------------------------------------------------------------------------------
I. Purpose of Code.
The Code of Ethics establishes rules that govern personal investment
activities of American Century employees, officers and directors, including
members of their immediate family. (1) The Directors of American Century's
registered investment companies (our "Fund Clients")(2) who are not "interested
persons" (the "Independent Directors") are covered under separate Codes
applicable only to them.
II. Why Do We Have a Code of Ethics?
A. Investors have placed their trust in American Century.
American Century is entrusted with the money of other people for investment
purposes. These investors are our "Clients"; our Fund Clients are simply our
biggest Client group. We cannot afford to breach this trust. The Code of Ethics
is one safeguard which helps us to ensure that we will not breach our Clients'
trust in us.
B. American Century wants to protect its Clients.
We have a duty to place the interests of our Clients first and to avoid even
the appearance of a conflict of interest. This is how we earn and keep our
Clients' trust. We must conduct ourselves and our personal securities
transactions in a manner that does not create a conflict of interest with our
Clients or take unfair advantage of the relationship with them. We will hold
ourselves to the highest ethical standards.
C. American Century wants to give you flexible investing options.
Management believes that American Century's mutual funds provide a broad
range of investment alternatives for any investment portfolio. We therefore do
not encourage active trading by our employees; we encourage employees to place
their investable assets in our mutual funds. We recognize, however, that
individual needs differ and that there are other attractive investment
opportunities. We want to give you and your family flexibility to invest,
without jeopardizing relationships with our Clients.
D. Federal law requires that we have a Code of Ethics.
The Investment Company Act of 1940 and the Investment Advisers Act of 1940
require that we have in place safeguards to prevent behavior and activities that
might disadvantage our Clients. These safeguards are embodied in this Code of
Ethics. (3)
III. Does the Code of Ethics apply to You?
Yes! The principles contained in the Code of Ethics must be observed by all
employees (including contract personnel). However, there are different
categories of restrictions on personal investing activities. The category in
which you have been placed generally depends on your job function, although
unique circumstances may prompt us to place you in a different category. The
range of categories is as follows:
------------------------------------------------------------------------
Fewest Restrictions Most Restrictions
------------------------------------------------------------------------
------------------------------------------------------------------------
Non-Access Person Access Person Investment Person Portfolio Person
------------------------------------------------------------------------
The standard profile for each of the categories is described below:
A. Portfolio Persons.
Portfolio Persons are those employees entrusted with direct responsibility
and authority to make investment decisions affecting one or more Client
portfolios.
B. Investment Persons.
Investment Persons are financial analysts, investment analysts, traders and
other employees who provide information or advice to a portfolio management team
or who help execute the portfolio management team's decisions.
C. Access Persons.
You are an Access Person if your job normally involves any of the following:
the purchase or sale of securities for Client portfolios;any function which
relates to the making of recommendations with respect to such purchases or sales
of securities for Client portfolios; OR access to information regarding the
purchase or sale of securities for Client portfolios.
In addition, you are an Access Person if you are any of the following: an
officer or "interested" director of our Fund Clients; OR an officer or director
of American Century Investment Management, Inc.
D. Non-Access Persons.
If you are an officer, director, employee or contractor of any of American
Century's companies AND you do not fit into any of the above categories, you are
a Non-Access Person. Because you normally do not receive confidential
information about Client portfolios, you are subject only to American Century's
Code of Business Conduct.
IV. Restrictions on Personal Investing Activities.
As you are aware, you are prohibited by federal law from investing based on
material nonpublic information which you receive from any source. This includes
any confidential information which may be obtained by Portfolio, Investment and
Access Persons regarding the advisability of purchasing or selling specific
securities on behalf of Clients. You are expected to abide by the highest
ethical and legal standards in conducting your personal securities transactions.
For more information, please consult American Century's Insider Trading Policy.
A. Preclearance of Personal Securities Transactions
Before either of the following things happen: the purchase or sale of a
security for your own account; OR the purchase or sale of a security for an
account for which you are a beneficial owner
you must follow the following preclearance procedures:
1. Is the security a "Code-Exempt Security"?
Check Appendix 3 to see if the security is listed as a Code-Exempt Security.
If it is, then you may execute the transaction. Otherwise, proceed to the next
step.
2. Preclear the transaction with the Legal Department's Compliance Group.
There are two ways to do this:
a. E-mail your request to "LG-Personal Security Trades" (or
[email protected], if sending from outside
American Century's Lotus Notes system), and provide the following information:
Issuer name;
Ticker symbol or CUSIP number;
Type of security (stock, bond, note, etc.);
Maximum expected dollar amount of proposed transaction; AND
Nature of transaction (purchase or sale)
b. Use the "PTRA" routine in the CICS system and enter your request at the
Personal Trade System screen.
3. If you receive preclearance for the transaction (4):
You have 5 business days to execute your transaction.
B. Additional Restrictions
[Investment and Portfolio Persons]
1. Initial Public Offerings.
You cannot acquire securities issued in an initial public offering.
2. Private Placements.
Before you acquire any securities in a private placement, you must obtain
approval from American Century's Chief Investment Officer (5). We will help with
this process if you send your request to LG-Personal Security Trades. Once you
receive approval, you cannot participate in any subsequent consideration of an
investment in that issuer for any of our Clients.
3. Short-Term Trading Profits.
You cannot profit from any purchase and sale, or sale and purchase, of the
same (or equivalent) securities within sixty (60) calendar days.
C. Blackout Period
[Portfolio Persons]
If you are a Portfolio Person, you may not purchase or sell a security
within seven (7) days before and after a Client portfolio that you manage
executes a trade in that security.
V. Reporting Requirements.
A. Quarterly Report of Securities Transactions
Each quarter you will be asked to verify the transactions you have made for
your personal accounts. This will come to you in the form of an e-mail message
containing the trades about which we have been informed through your broker's
duplicate confirmations. If the report contained in the e-mail to you is
correct, you need only to indicate so by clicking the appropriate button in the
message. If the message is incomplete or otherwise incorrect, you must provide
the following information about each transaction omitted from the message:
The date of the transaction, the description and number of shares, and the
principal amount of each security involved; The nature of the transaction, that
is, purchase, sale or any other type of acquisition or disposition; The
transaction price; AND The name of the broker, dealer or bank through whom the
transaction was effected.
B. Duplicate Confirmations
You must instruct your broker-dealer to send duplicate confirmations of all
transactions in such accounts to:
American Century Companies, Inc.
P.O. Box 410141
Kansas City, MO 64141
Attention: Compliance
Please note that "your broker-dealer" includes both of the following:
a broker or dealer with whom you have a securities brokerage account; AND
a broker or dealer who maintains an account for a person whose trades you must
report because you are a beneficial owner.
C. Report of Securities Holdings and Brokerage Accounts
When you first become subject to the Code of Ethics as an Access, Investment
or Portfolio Person, you must provide us with a list of all securities subject
to this Code for which you are a registered owner or in which you have a
beneficial ownership interest and the financial services provider through whom
they are held. You will be asked to provide a revised version of this list
annually.
VI. Can there be any exceptions to the restrictions?
Yes. The General Counsel or his or her designee, upon consultation with your
manager, may grant limited exemptions to specific provisions of the Code on a
case-by-case basis.
A. How to Request an Exemption
E-mail a written request to "LG-Personal Security Trades" (or
[email protected] if sending from outside American
Century's Lotus Notes system), detailing your situation.
B. Factors Considered
In considering your request, the General Counsel or his or her designee will
grant your exemption request if he or she is satisfied that:
your request addresses an undue personal hardship imposed on you by the Code of
Ethics;your situation is not contemplated by the Code of Ethics; and
your exemption, if granted, would be consistent with the achievement of the
objectives of the Code of Ethics.
C. Exemption Reporting
All exemptions granted must be reported to the Boards of Directors of our
Fund Clients. The Boards of Directors may choose to delegate the task of
receiving and reviewing reports to a Committee comprised of Independent
Directors.
VII. Confidential Information.
All information about Clients' securities transactions, actual or
contemplated, is confidential. You must not disclose, except as required by the
duties of your employment, securities transactions of Clients, actual or
contemplated, or the contents of any written or oral communication, study,
report or opinion concerning any security. This does not apply to information
which has already been publicly disclosed.
VIII. Conflicts of Interest.
You must receive prior written approval from our Clients and/or the
Independent Directors of our Fund Clients, as appropriate, to do any of the
following:
negotiate or enter into any agreement on a Client's behalf with any business
concern doing or seeking to do business with the Client if you, or a person
related to you, has a substantial interest in the business concern; enter into
an agreement, negotiate or otherwise do business on the Client's behalf with a
personal friend or a person related to you; OR serve on the board of directors
of, or act as consultant to, any publicly traded corporation.
IX. What happens if you violate the rules in the Code of Ethics?
You may be subject to serious penalties.
A. The penalties which may be imposed include:
formal warning;
restriction of trading privileges;
disgorgement of trading profits;
fine; AND/OR
suspension or termination of employment.
B. Penalty Factors
The factors which may be considered when determining the appropriate penalty
include, but are not limited to: the harm to Client interests; the extent of
unjust enrichment; the frequency of occurrence; the degree to which there is
personal benefit from unique knowledge obtained through employment with American
Century; the degree of perception of a conflict of interest; evidence of fraud,
violation of law, or reckless disregard of a regulatory requirement; AND/OR the
level of accurate, honest and timely cooperation from the person subject to the
Code.
If you have any questions about the Code, do not hesitate to ask a member of
management or Compliance.
X. Annual Certification of Compliance with the Code
As a condition of your employment, you will be asked to certify annually:
that you have read this Code of Ethics;
that you understand this Code of Ethics; AND
that you have complied with this Code of Ethics.
XI. American Century's Quarterly Report to Fund Directors
American Century management will prepare a quarterly report to the Board of
Directors of each Fund Client of any violation of this Code of Ethics requiring
significant sanctions.
APPENDIX 1: DEFINITIONS
1. "Beneficial Ownership"
See "Appendix 2: What is Beneficial Ownership?".
2. "Code-Exempt Security"
A "code-exempt security" is a security in which you may invest without
preclearing or reporting such transactions with American Century. The list of
Code-Exempt Securities appears in Appendix 3.
3. "Initial Public Offering"
"Initial public offering" means an offering of securities for which a
registration statement has not previously been filed with the SEC and for which
there is no active public market in the shares.
4. "Private Placement"
"Private placement" means an offering of securities in which the issuer
relies on an exemption from the registration provisions of the federal
securities laws, and usually involves a limited number of sophisticated
investors and a restriction on resale of the securities.
5. "Security"
A "security" includes a great number of different investment vehicles.
However, for purposes of this Code of Ethics, "security" includes any of the
following:
note,stock,treasury stock,bond,debenture,evidence of indebtedness,
certificate of interest or participation in any profit-sharing
agreement,collateral-trust certificate,preorganization certificate or
subscription,transferable share, investment contract,
voting-trust certificate,certificate of deposit for a security,
fractional undivided interest in oil, gas or other mineral rights,
any put, call, straddle, option, or privilege on any security
(including a certificate of deposit) or on any group or
index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or privilege
entered into on a national securities exchange relating to foreign
currency, or in general, any interest or instrument commonly known as
a "security," or any certificate of interest or participation in,
temporary or interim certificate for, receipt for, guarantee of,
future on or warrant or right to subscribe to or purchase, any of the
foregoing.
APPENDIX 2: WHAT IS "BENEFICIAL OWNERSHIP"?
1. Are securities held by family members or domestic partners "beneficially
owned" by me?
Probably. As a general rule, you are regarded as the beneficial owner of
securities held in the name of your spouse or domestic partner; your minor
children; a relative who shares your home; OR any other person IF:
You obtain from such securities benefits substantially similar to those of
ownership. For example, if you receive or benefit from some of the income from
the securities held by your spouse, you are the beneficial owner; OR
You can obtain title to the securities now or in the future.
2. Are securities held by a company I own also "beneficially owned" by me?
Probably not. Owning the securities of a company does not mean you
"beneficially own" the securities that the company itself owns. However, you
will be deemed to "beneficially own" these securities if: The company is merely
a medium through which you (by yourself or with others) in a small group invest
or trade in securities; AND The company has no other substantial business.
In such cases, you and those who are in a position to control the company
will be deemed to "beneficially own" the securities owned by the company.
3. Are securities held in trust "beneficially owned" by me?
Maybe. You are deemed to "beneficially own" securities held in trust if any
of the following is true:
You are a trustee and either you or members of your immediate family have a
vested interest in the income or corpus of the trust;
You have a vested beneficial interest in the trust; OR
You are settlor of the trust and you have the power to revoke the trust
without obtaining the consent of all the beneficiaries.
As used in this section, the "immediate family" of a trustee means:
A son or daughter of the trustee, or a descendent of either;
A stepson or stepdaughter of the trustee;
The father or mother of the trustee, or an ancestor of either;
A stepfather or stepmother of the trustee; and
A spouse or domestic partner of the trustee.
For the purpose of determining whether any of the foregoing relationships
exists, a legally adopted child of a person is considered a child of such
person by blood.
4. Are securities in pension or retirement plans "beneficially owned" by me?
Probably not. Beneficial ownership does not include indirect interest by any
person in portfolio securities held by a pension or retirement plan holding
securities of an issuer whose employees generally are the beneficiaries of the
plan. However, your participation in a pension or retirement plan is considered
beneficial ownership of the portfolio securities if you can withdraw and trade
the securities without withdrawing from the plan.
5. Examples of Beneficial Ownership
Securities Held by Family Members or Domestic Partners
Example 1: Tom and Mary are married. Although Mary has an independent source
of income from a family inheritance and segregates her funds from those of her
husband, Mary contributes to the maintenance of the family home. Tom and Mary
have engaged in joint estate planning and have the same financial adviser. Since
Tom and Mary's resources are clearly significantly directed towards their common
property, they shall be deemed to be the beneficial owners of each other's
securities.
Example 2: Mike's adult son David lives in Mike's home. David is
self-supporting and contributes to household expenses. Mike is a beneficial
owner of David's securities.
Example 3: Joe's mother Margaret lives alone and is financially independent.
Joe has power of attorney over his mother's estate, pays all her bills and
manages her investment affairs. Joe borrows freely from Margaret without being
required to pay back funds with interest, if at all. Joe takes out personal
loans from Margaret's bank in Margaret's name, the interest from such loans
being paid from Margaret's account. Joe is a significant heir of Margaret's
estate. Joe is a beneficial owner of Margaret's estate.
Example 4: Bob and Nancy are engaged. The house they share is still in
Nancy's name only. They have separate checking accounts with an informal
understanding that both individuals contribute to the mortgage payments and
other common expenses. Although Nancy is the only one employed by American
Century, Bob is a beneficial owner and subject to the Code of Ethics.
Securities Held by a Company
Example 5: ABC is a holding company with five shareholders owning equal
shares in the company. Although ABC Company does no business on its own, it has
several wholly-owned subsidiaries which invest in securities. Stan is a
shareholder of ABC Company. Stan has a beneficial interest in the securities
owned by ABC Company's subsidiaries.
Securities Held in Trust
Example 6: John is trustee of a trust created for his two minor children.
When both of John's children reach 21, each shall receive an equal share of the
corpus of the trust. John is a beneficial owner of the trust.
Example 7: Jane is trustee of an irrevocable trust for her daughter. Jane is
a director of the issuer of the equity securities held by the trust. The
daughter is entitled to the income of the trust until she is 25 years old, and
is then entitled to the corpus. If the daughter dies before reaching 25, Jane is
entitled to the corpus. Jane is a beneficial owner of the trust.
APPENDIX 3: CODE-EXEMPT SECURITIES
Because they do not pose a possibility for abuse, some securities are exempt
from American Century's Code of Ethics. The following is the current list of
"Code-Exempt Securities":
Mutual funds (open-end funds)
Closed-end funds
Bank Certificates of Deposit
U.S. government securities (such as Treasury notes, etc.)
Securities which are acquired through an employer-sponsored automatic
payroll deduction plan
securities purchased through dividend reinvestment programs
commercial paper;
bankers acceptances; AND
Futures contracts (and option contracts) on the following:
Standard & Poor's 500 Index; or
Standard & Poor's 100 Index
High quality short-term debt instruments, including repurchase
agreements. A "high quality short-term debt instrument" means any
instrument that has a maturity at issuance of less than 366 days and
that is rated in one of the two highest rating categories by a
nationally recognized rating organization.
NASDAQ 100 Shares (Ticker QQQ)
We may modify this list of securities at any time, please send an e-mail to
"LG-Personal Security Trades" to request the most current list.
APPENDIX 4: HOW DOES THE PRECLEARANCE PROCESS WORK?
An employee in the "LG-Personal Security Trades" message group will enter
your request into our mainframe system. Your request is then subjected to the
following tests.
Step 1: De Minimis Transaction Test
Is the security issuer's market capitalization greater than $1 billion?
Will your proposed transaction, together with your other transactions in the
security for the current calendar quarter, be less than $10,000?
Does the security trade on a national securities exchange or market, such as
the New York Stock Exchange (NYSE) or National Association of Securities Dealers
Automated Quotation System (NASDAQ)?
If the answer to ALL of these questions is "YES", the system will generate a
message and send it to you approving your proposed transaction.
If the answer to ANY of these questions is "NO", then your request is
subject to Step 2.
Step 2: Open Order Test
Is there an open order for that security for any Client?
If "YES", the system will send a message to you to DENY the personal trade
request.
If "NO", then your request is subject to Step 3.
Step 3: Follow List Test
Does any account or Fund own the security?
Does the security appear on the computerized list of stocks American
Century is considering to purchase for a Client?
If the answer to BOTH of these questions is "NO", the system will send a
message to you to APPROVE your proposed transaction.
If the answer to EITHER of these questions is "YES", then your request is
subject to Step 4.
Step 4: Present Intentions Test
The system sends a message to our trading desk in Kansas City which
identifies the security described in your preclearance request. A trading desk
representative then contacts a representative from each of the portfolio
management teams asks if any portfolio manager is considering buying or selling
the security within the next five (5) business days.?
If ALL of the portfolio management teams respond "NO", your request will be
APPROVED (unless you are a Portfolio Person, see Step 5).
If ANY of the portfolio management teams respond "YES", your request will
be DENIED.
Step 5: Portfolio Persons Only
The General Counsel or his/her designee must approve your request before an
APPROVAL or a DENIAL message is sent to you.
The preclearance process can be changed at any time to ensure that the goals of
American Century's Code of Ethics are advanced.
SCHEDULE A
INVESTMENT MANAGER:
American Century Investment Management, Inc.
THE FUND CLIENTS:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
- --------
1 See Appendix 2 for an explanation of the family members and others
included within this Code of Ethics.
2 See Schedule A for a listing of all of our Fund Clients.
3 Rule 17j-1 under the Investment Company Act of 1940 and Rule 204-2 under
the Investment Advisers Act of 1940 serve as a basis for much of what is
contained in American Century's Code of Ethics.
4 How does American Century determine whether to approve or deny your
preclearance request? See Appendix 4 for a description of the process.
5 If you are the Chief Investment Officer, you must receive your approval
from the General Counsel.
FUNDS DISTRIBUTOR, INC.
CODE OF ETHICS
October 1, 1996
I. Introduction
All employees are expected to help protect and enhance the assets and
reputation of Funds Distributor, Inc.(the "Company"). Every individual with whom
we come into contact must believe in our honesty, integrity and dependability.
In the rapidly evolving businesses in which we are engaged, each employee is
challenged by a complex environment often requiring fast responses under high
pressure. No written policy can definitively state for employees the appropriate
action for all business situations. Accordingly, this Code emphasizes a norm or
standard of conduct that must permeate all business dealings and relationships
rather than a set of specific rules.
In addition, this Code requires all employees to adhere to all Company
policies, including, without limitation, those governing insider trading, equal
employment opportunity, and sexual harassment.
II. Management Responsibility
Managers by virtue of their positions of authority play a particularly
important role in developing the commitment and ability of their associates to
make sound ethical judgments. This requires recognition of the ethical issues
often inherent in business decisions, analysis of the ethical aspects of very
complex situations, and knowing when to seek assistance in determining the
ethical course of action. Other aspects of ethical leadership include:
o Ensuring that your own conduct is above reproach.
o Communicating personal support for, and the seriousness of,
ethical conduct.
o Educating your associates in all aspects of ethical conduct.
o Creating an environment that encourages employees to voice ethical
concerns and supporting those who speak out for honesty and integrity.
o Avoiding creating pressures and circumstances which influence employees
to produce results which are not reasonable and which may inadvertently
cloud the judgment of otherwise ethical employees.
o Ensuring that claims about our own products and services are
valid and honest while avoiding disparagement or unfair treatment
of competitors.
III. Financial Records and Reporting
Each employee involved in the preparation of the Company's financial
statements, records and reports must do so in accordance with the letter and
spirit of generally accepted accounting standards and all other applicable laws,
regulations and standards. All records must accurately and completely reflect
the financial condition of the Company.
Federal and other laws require accurate recordkeeping and accounting and
impose civil and criminal penalties on individuals and companies that violate
these requirements. Any attempts to create false or misleading records are
forbidden. Both law and company policy require that no undisclosed funds or
accounts shall be established for any purpose. Moreover, Company policy
prohibits any employee from knowingly making a misleading, incomplete or false
statement to an accountant or an attorney in connection with an audit or any
filing with a governmental or regulatory agency.
IV. Conflicts of Interest
Every employee must avoid conduct that conflicts, or appears to conflict,
with his or her duty to the Company. All employees should conduct themselves
such that a reasonable observer, whether a client, supplier, fellow employee, or
regulator, would have no grounds for belief that a conflict of interest exists.
Employees are not permitted to self-deal or otherwise to use their positions
with the Company to further their own or any other related person's business
opportunities. A related person is any family member, any person residing in the
same household as the employee, any person with whom the employee has a direct
or indirect personal relationship, or any organization or business activity in
which the employee has an interest.
From time to time, situations will arise that are not clear-cut. If you are
uncertain about the propriety of your conduct or business relationships consult
your manager. If you determine that a conflict does exist please report it
immediately to the General Counsel of the Company. In either case, you can be
sure that any such discussion will be held in confidence.
Employees should be aware of the following specific guidelines regarding
conflicts of interest
A. No employee should use his or her position with the Company or information
acquired during employment in a manner that may create a conflict, or the
appearance of a conflict, between personal interests and those of the
Company. If a conflict or potential conflict arises, report it immediately
to the General Counsel of the Company.
For example, Company policy does not permit you to:
1. Accept, directly or indirectly, any money or object of value from any person
or enterprise which has or is seeking business with the Company which may
affect, or appear to influence, your business judgment. You should not offer
excessive gifts or entertainment to others whose business the Company may be
seeking. You may accept business-related meals, entertainment, gifts or
favors when the value involved is not significant and clearly will not place
you under any obligation to the donor.
2. Accept simultaneous employment with any concern that does business or
competes with the Company, or with any other concern if that employment
would interfere with your full-time and efficient service as an employee of
the Company. In addition, if a related person works for a company or firm
either in direct competition with or which does business with the Company
and occupies a position that can influence decisions affecting lines of
business of such other company or firm which compete with the Company's
businesses or which relate to the business such other company conducts with
the Company, you must disclose such related person's position on the
attached agreement.
B. Certain situations require approval before you become involved.
Specifically, you must submit a request to the General Counsel before you:
1. Serve as a director, general partner, or officer of any unaffiliated
business organization. This rule does not apply to charitable, civic,
religious, public, political, or social organizations, the activities of
which do not conflict with the interests of the Company and do not impose
excessive demands on your time.
2. Obtain an interest in any enterprise which has or is seeking to establish
business relations with the Company. However, employees may invest in stock
or other securities of publicly-owned companies.
C. From time to time situations also occur that must be disclosed to the
Company's General Counsel. Examples of such situations include:
1. Business opportunities, commissions or other financial arrangements that are
offered to related persons by persons or firms that are customers, vendors,
or business partners of the Company. The Company requires such disclosure to
make a determination of the appropriateness of such offers beforehand and to
prevent even the appearance that Company employees might be improperly using
their positions in the Company to promote the pDersona1 or financial
interests of related persons.
2. Acquisitions of Company property or services on terms other than those
available to the general public or other than those established by Company
policy.
These guidelines are intended to protect both you and the Company from
conflicts of interest, divided loyalties, and situations that create the
perception of impropriety. They will help to prevent you from compromising your
ability to act solely in the Company's interest and aid you in complying with
existing laws and regulations.
V. Proprietary Information and Trade Secrets
All persons who work for the Company learn, to a greater or lesser degree,
facts about the Company's business methods that are not known to the general
public or to competitors. For example, customer lists, the terms or fees offered
to a particular customer, or marketing or strategic plans, may give the Company
an advantage and must not be disclosed. In addition, such things as internal
processing arrangements or proprietary systems developments must not be
disclosed. These are just a few examples.
Because these trade practices or methods are developed by employees in the
course of their jobs for which the Company pays them a salary, these matters are
the property of the Company, and it is important to the continued success of the
Company that they remain known only to the Company.
Therefore, except as a duly authorized senior officer of the Company may
otherwise consent in writing, you shall not at any time disclose or use, either
during or subsequent to your employment by the Company, any information,
knowledge or data you receive or develop during your employment which is
considered proprietary by the Company. This includes, but is not limited to,
information stored for business purposes on any computer system (e.g.,
mainframes, individual terminals and personal computers) and software used by
the Company.
In addition, no employee shall disclose information which relates to the
Company's secrets as contained in business processes, methods, compositions,
improvements, inventions, discoveries or otherwise, or which the Company has
received in confidence from others. On the other hand, the Company will not ask
you to reveal, and no employee shall disclose to the Company, the proprietary
information or trade secrets of others.
VI. Insider Trading
The Company believes that it is inconsistent with its reputation for
integrity (as well as being illegal) for any employee to trade in securities on
the basis of material, nonpublic, or "inside," information about the issuer
obtained as a result of the employee's affiliation with the Company.
Employees should consult the Company's Policy on Insider Trading and Other
Misuse of Nonpublic Information for a more detailed discussion of this issue.
VII. Compliance With Laws and Regulations
The policy of the Company is to comply in all respects with all applicable
SEC and NASD rules and regulations and with all applicable federal, state and
local laws and regulations in the United States and in any other countries in
which we operate. To this end, the Company has established and maintained
various practices and procedures (including assigning management oversight
responsibilities) which collectively comprise a corporate program intended to
promote ethical behavior of employees and agents and to prevent and detect
criminal conduct. These practices and procedures must be periodically reviewed
and compliance activities properly recorded in order to assure compliance with
the standards that have been established in the Guidelines for Sentencing of
Organizations promulgated by the U.S. Sentencing Commission. The Company has
established and will periodically augment an effective compliance program that
conforms to the standards established in the Sentencing Guidelines.
In addition, employees should be sensitive to the various equal employment
opportunity laws and to the Company's strong policy against sexual harassment.
The Company will exercise due diligence in attempting to detect and to
prevent criminal conduct by employees and agents. In this regard from time to
time the General Counsel may circulate specific laws and regulations because of
their high degree of relevance to your activities. However, all employees are
expected to be familiar with the laws and regulations that relate to the
performance of their jobs and, if in doubt, to seek advice from the General
Counsel as to what those laws and regulations are.
VIII. Administration
The Company's Code of Ethics calls for you to abide by the policies set
forth above. Exceptions to these policies may be granted only by the General
Counsel, who is responsible for the interpretation of the Code.
To the extent that the Company has adopted or in the future may adopt
specific policies pertaining to any of the matters covered in the Code of
Ethics, the Code also mandates your agreement to abide by the terms of such
policies. Neither this Code nor your agreement to abide it is meant to vary or
supersede the regular terms and conditions of your employment by the Company or
to constitute an employment contract.
All employees are required to review the Code of Ethics annually and to
complete, sign and return a statement acknowledging their agreement to abide by
the Code. The Company takes the matters discussed in this Code very seriously.
Violations of the Code may result in disciplinary actions up to and including
termination of employment.
FUNDS DISTRIBUTOR, INC.
CODE OF ETHICS AGREEMENT & DISCLOSURE
I acknowledge receipt of Funds Distributor's Code of Ethics dated October 1,
1996 and, in consideration of my employment with the Company, agree to abide by
the terms of the policies set forth therein. I understand that my obligations
under these policies may not be changed or modified, released, discharged,
abandoned or terminated, in whole or in part, except by an instrument in writing
signed by a duly authorized officer of the Company. I further understand that my
obligation to abide by these policies is ongoing (both during and after my
employment with the Company) and I agree to promptly disclose to the General
Counsel any exceptions to or potential conflicts with this agreement that exist
now or may arise in the future. I acknowledge that neither this agreement nor
the Code of Ethics is meant to vary or supersede the regular terms and
conditions of my employment with the Company or to constitute an employment
contract.
In the space below list any exceptions to the Code of Ethics or other
matters that you feel should be disclosed. Specifically, you should list any
existing or potential conflicts of interest and any directorships, partnerships,
officerships, or other positions held in unaffiliated business organizations.
You should list those positions even if you serve at the request of or with the
permission of the Company. Please also disclose the positions of any related
persons if so required by the Company's policy on conflicts of interests.
All necessary disclosures should be made on this form even if they have been
previously disclosed to the Company.
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
Employee Signature:______________________________Date:________________
Employee Name (please print or type):____________________________________
Title:_______________________________ Phone extension:__________________
PLEASE COMPLETE, SIGN AND DATE THIS AGREEMENT, DETACH THIS PAGE AND SEND IT
UNDER CONFIDENTIAL COVER TO THE ATTENTION OF PATRICK W. MCKEON, V.P.-DIRECTOR OF
COMPLIANCE. YOU SHOULD RETAIN A COPY OF THIS AGREEMENT FOR YOUR OWN RECORDS.
