SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
File No. 33-64872
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 16 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
File No. 811-7820
Amendment No. 16 [X]
(Check appropriate box or boxes.)
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
_________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
4500 Main Street, Kansas City, MO 64111
_________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 531-5575
David C. Tucker, Esq., 4500 Main Street, Kansas City, MO 64111
_________________________________________________________________
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: July 30, 1999
It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on July 30, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
AMERICAN CENTURY
Prospectus
Large Cap Value Fund
Value Fund
Small Cap Value Fund
Equity Income Fund
JULY 30, 1999
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.
Distributed by
Funds Distributor, Inc.
[american century logo (reg. sm)]
American
Century
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the funds and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The funds' primary investments and risks
* A description of who may or may not want to invest in the funds
* Fund performance, including returns for each year, best and worst quarters,
and average annual returns compared to the funds' benchmarks
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the funds. If you
have questions, our Investor Relations Representatives are available weekdays, 7
a.m. to 7 p.m., and Saturdays, 9 a.m. to 2 p.m., Central time. Our toll-free
number is 1-800-345-2021. We look forward to helping you achieve your financial
goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
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[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419200
Kansas City, MO
64141-6200
TABLE OF CONTENTS
An Overview of the Funds .................................................... 2
Fund Performance History .................................................... 3
Fees and Expenses ........................................................... 4
Information about the Funds ................................................. 5
Large Cap Value Fund ................................................... 5
Value Fund ............................................................. 5
Small Cap Value Fund ................................................... 5
Equity Income Fund ..................................................... 7
Management .................................................................. 8
Investing with American Century ............................................. 12
Share Price and Distributions ............................................... 16
Taxes ....................................................................... 17
Multiple Class Information .................................................. 18
Financial Highlights ........................................................ 19
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Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
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This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Large Cap Value, Value and Small Cap Value seek long-term capital growth. Income
is a secondary objective.
Equity Income seeks current income. Capital appreciation is a secondary
objective.
WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
In selecting stocks for Large Cap Value, Value and Small Cap Value, the fund
managers look for companies whose stock price is less than they believe the
company is worth in the market. They attempt to purchase the stock of these
undervalued companies and hold them until their stock price has increased to a
level the managers believe more accurately reflects the fair value of the
company. For Equity Income, the fund managers look for stocks of companies with
a favorable dividend-paying history and, secondarily, for potential increase in
share price.
The chart below shows the primary differences among the funds. A more detailed
description of the funds' investment strategies and risks begins on page 5.
Fund Primary Investments
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Large Cap Value Equity securities of larger companies
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Value Equity securities of medium to large companies
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Small Cap Value Equity securities of smaller companies
- --------------------------------------------------------------------------------
Equity Income Equity securities of companies with a favorable
dividend-paying history
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
If the market does not consider the individual stocks purchased by the funds to
be undervalued, or if the stocks purchased by Equity Income do not continue or
increase dividend payments or their stock price declines, the value of the
funds' shares may not increase as quickly as other funds and may decline, even
if stock prices are generally rising.
The smaller companies in which Small Cap Value invests may present greater
opportunities for capital appreciation than larger companies, but also may
present greater risks.
WHO MAY WANT TO INVEST IN THE FUNDS?
The funds may be a good investment if you are
* seeking long-term capital growth and income from your investment
* comfortable with the risks associated with the funds' investment strategies
* comfortable with the funds' short-term price volatility
* investing through an IRA or other tax-advantaged retirement plan
WHO MAY NOT WANT TO INVEST IN THE FUNDS?
The funds may not be a good investment if you are
* investing for a short period of time
* not seeking income from an equity investment
* uncomfortable with short-term volatility in the value of your investment
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An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
2 American Century Investments 1-800-345-2021
FUND PERFORMANCE HISTORY
VALUE FUND
EQUITY INCOME FUND
Average Total Returns (1)
The following bar chart shows the performance of the funds' Investor Class
shares for each full calendar year in the life of the funds. It indicates the
volatility of the funds' historical returns from year to year.
Large Cap Value and Small Cap Value are not included because they do not yet
have a full calendar year of performance.
[Bar chart data below]
Value Equity Income
1994 3.99%
1995 32.80% 29.63%
1996 24.25% 23.31%
1997 26.01% 28.26%
1998 4.99% 12.97%
(1) As of June 30, 1999, the end of the most recent calendar quarter, the funds'
year-to-date returns were: Value, 13.31% and Equity Income, 8.03%.
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
- ---------------------------------------------------------------------------
Value 18.45% (2Q 1999) -10.85% (3Q 1998)
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Equity Income 14.19% (4Q 1998) -6.23% (3Q 1998)
Average Annual Returns
The following table shows the average annual total returns of the funds'
Investor Class shares for the periods indicated. The S&P 500/BARRA Value Index
and the S&P 500 Index are unmanaged indices that have no operating costs and are
included in the table for performance comparison. The Lipper Equity Income Fund
Index is a non-weighted index of the 30 largest equity income mutual funds.
Large Cap Value and Small Cap Value are not included because they do not yet
have a full calendar year of performance.
<TABLE>
For the calendar year ended December 31, 1998 1 year 5 years Life of Fund(1)
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value 4.99% 17.82% 17.28%
S&P 500/BARRA Value Index 14.68% 19.88% 18.61%
- ------------------------------------------------------------------------------------
Equity Income 12.97% N/A 21.09%
Lipper Equity Income Index 11.78% N/A 18.95%
S&P 500 Index 28.68% N/A 27.54%
</TABLE>
(1) The inception dates for the funds are Value, September 1, 1993, and Equity
Income, August 1, 1994.
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The performance information on this page is designed to help you see how fund
returns can vary. Keep in mind that past performance does not predict how the
funds will perform in the future.
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For current performance information, including yields, please call us at
1-800-345-2021 or visit American Century's Web site at www.americancentury.com.
www.americancentury.com American Century Investments 3
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Investor Class shares of other American Century funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the funds.
<TABLE>
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Cap Value 0.90%(1) None 0.00%(2) 0.90%
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Value 1.00% None 0.00%(3) 1.00%
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Small Cap Value 1.25% None 0.00%(3) 1.25%
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Equity Income 1.00% None 0.00%(3) 1.00%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase. Please consult the Statement
of Additional Information for more details about the fund's management fee.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors, its legal counsel and interest, are expected to be less
than 0.005% for the current fiscal year.
(3) Other expenses, which include the fees and expenses of the funds'
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- -------------------------------------------------------------
Large Cap Value $92 $286 N/A N/A
- -------------------------------------------------------------
Value $102 $318 $551 $1,219
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Small Cap Value $127 $395 N/A N/A
- -------------------------------------------------------------
Equity Income $102 $318 $551 $1,219
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Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
4 American Century Investments 1-800-345-2021
INFORMATION ABOUT THE FUNDS
LARGE CAP VALUE FUND
VALUE FUND
SMALL CAP VALUE FUND
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The funds seek long-term capital growth. Income is a secondary objective.
HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?
The fund managers use a value investment strategy that looks primarily for
companies whose stock price is less than they believe the company is worth in
the market. They attempt to purchase the stock of these undervalued companies
and hold them until their stock price has increased to a level the managers
believe more accurately reflects the fair value of the company.
Companies may be undervalued due to market declines, poor economic conditions,
actual or anticipated bad news regarding the issuer or its industry, or because
they have been overlooked by the market. To identify these companies, the fund
managers look for companies with earnings, cash flows and/or assets may not be
reflected accurately in the stock price or may be outside of the companies'
historical range. The fund managers also look for companies whose dividend
payments appear high when compared to the stock price.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 65% of the funds' assets
invested in U.S. equity securities at all times. When the fund managers believe
that it is prudent, the funds also may invest a portion of their assets in
convertible securities, foreign securities, debt securities of companies, debt
obligations of governments and their agencies, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the funds' cash assets remain liquid while
performing more like stocks. The funds have a policy governing stock index
futures which prohibits leverage of the funds' assets by investing in a
derivative security. For example, the fund managers cannot invest in a
derivative security if it would be possible for a fund to lose more money than
it invested. A complete description of the derivatives policy is included in the
Statement of Additional Information.
In the event of exceptional market or economic conditions, the funds may, as a
temporary defensive measure, invest all or a substantial portion of their assets
in cash or short-term debt securities. To the extent a fund assumes a defensive
position, it will not be pursuing its objective of capital growth.
Additional information about the funds' investments is available in their annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
www.americancentury.com American Century Investments 5
WHAT IS THE DIFFERENCE BETWEEN THE FUNDS?
* Large Cap Value invests primarily in larger companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers ranking generally among the 1,000 largest companies
in the United States as measured by their MARKET CAPITALIZATION.
* Value invests primarily in medium to large companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers that the fund managers believe to be medium to
large companies as measured by their market capitalization. The fund managers
consider medium to large companies to include those with a market capitalization
larger than the largest company in the S&P SMALLCAP 600/BARRA VALUE INDEX.
* Small Cap Value invests primarily in smaller companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers that the fund managers believe to be smaller
companies as measured by their market capitalization. The fund managers consider
smaller companies to include those with a market capitalization that is not
bigger than that of the largest company in the S&P SmallCap 600/BARRA Value
Index.
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUNDS?
The value of a 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.
As with all funds, at any given time the value of your shares of a fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
If the market does not consider the individual stocks purchased by a fund to be
undervalued, the value of the fund's shares may not increase as quickly as other
funds and may decline, even if stock prices are generally rising.
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 a
fund's style, the fund's gains may not be as big as, or their losses may be
bigger than, other funds using different investment styles.
Small Cap Value invests primarily in securities of smaller companies. These
smaller companies may present greater opportunities for capital appreciation,
but also may involve greater risks than larger companies. Smaller companies may
have limited financial resources, product lines and markets, and their
securities trade less frequently and in more limited amounts than the securities
of large companies. As a result, the value of the stocks issued by these smaller
companies may go up and down more than the stocks of larger issuers. This price
volatility may be reflected in the share price of the fund.
Although the fund managers invest the funds' assets primarily in U.S. stocks,
the funds can invest in securities of foreign companies. Foreign securities can
have certain unique risks, including fluctuations in currency exchange rates,
less stable political and economic structures, reduced availability of public
information, and lack of uniform financial reporting and regulatory practices
similar to those that apply in the United States. These factors make investing
in foreign securities generally riskier than investing in U.S. stocks.
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The MARKET CAPITALIZATION of a company is the number of its outstanding shares
times the share price.
The S&P SMALLCAP 600/BARRA VALUE INDEX is an unmanaged stock index that tracks
the performance of small companies that may be attractive to investors using the
value style of investing. As of June 30, 1999, the largest company contained in
the index had a market capitalization of $2.3 billion, while the median company
in the index had a market capitalization of $390 million.
6 American Century Investments 1-800-345-2021
EQUITY INCOME FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
Equity Income seeks to provide current income. Capital appreciation is a
secondary objective.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?
The fund managers look for stocks with a favorable dividend-paying history that
have the prospects for dividend payments to continue or increase. Secondarily,
the fund managers look for the possibility that the stock price may increase.
The fund seeks to receive dividend payments that provide the fund a yield that
exceeds the yield of the stocks comprising the S&P 500 Index.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 85% of the fund's assets
invested in income-paying securities and at least 65% of its assets in U.S.
equity securities. When the fund managers believe that it is prudent, the fund
also may invest a portion of its assets in convertible securities, foreign
securities, debt securities of companies, debt obligations of governments and
their agencies, 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 which prohibits leverage of the
fund's assets by investing in a derivative security. For example, the fund
managers cannot invest in a derivative security if it would be possible for the
fund to lose more money than it invested. A complete description of the
derivatives policy is included in the Statement of Additional Information.
In 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 short-term debt securities. To the extent the fund assumes a
defensive position, it will not be pursuing its objective of capital growth.
Additional information about the fund's investments is available in its annual
andsemiannual 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.
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
If the individual stocks purchased by the fund do not continue or increase
dividend payments, or if their stock price does not increase, the value of the
fund's shares may not increase as quickly as other funds and may decline, even
if stock prices are generally rising.
The value of the fund's assets invested in bonds and other fixed-income
securities will go up and down as prevailing interest rates change. Generally,
when interest rates rise, the fund's share value will decline. The opposite is
true when interest rates decline.
To the extent the fund invests in foreign securities, the overall risk of the
fund could be affected. Foreign securities can have certain unique risks,
including fluctuations in currency exchange rates, less stable political and
economic structures, reduced availability of public information, and lack of
uniform financial reporting and regulatory practices similar to those that apply
in the United States. These factors make investing in foreign securities
generally riskier than investing in U.S. stocks.
www.americancentury.com American Century Investments 7
MANAGEMENT
WHO MANAGES THE FUNDS?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the funds.
THE BOARD OF DIRECTORS
The Board of Directors oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired an investment advisor to do
so. More than two-thirds of the directors are independent of the funds' advisor;
that is, they are not employed by and have no financial interest in the advisor
THE INVESTMENT ADVISOR
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.
For the services it provided to the funds during the most recent fiscal year,
the advisor received a unified management fee based on a percentage of the
average net assets of the Investor Class shares of each fund. The amount of the
management fee is calculated on a class-by-class basis daily and paid monthly.
Large Cap Value will pay the advisor a unified management fee of 0.90% of the
first $1 billion of average net assets, 0.80% of the next $4 billion of average
net assets, and 0.70% of average net assets over $5 billion of the Investor
Class of shares.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the funds 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 funds' advisor to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor.
Management Fees Paid by the Funds to the Advisor as a Percentage of Average Net
Assets for the Most Recent Fiscal Year Ended March 31, 1999
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Value 1.00%
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Small Cap Value 1.25%
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Equity Income 1.00%
8 American Century Investments 1-800-345-2021
THE FUND MANAGEMENT TEAMS
The advisor uses teams of portfolio managers, assistant portfolio managers and
analysts to manage the funds. Teams meet regularly to review portfolio holdings
and to discuss purchase and sale activity. Team members buy and sell securities
for a fund as they see fit, guided by the fund's investment objectives and
strategies.
The portfolio managers on the investment teams are identified below:
Large Cap Value
MARK MALLON
Mr. Mallon, Chief Investment Officer--Value and Quantitative Equities and Senior
Vice President, has been a member of the team that manages Large Cap Value since
its inception in July 1999. He joined American Century in April 1997. From
August 1978 until he joined American Century, he was employed in several
positions by Federated Investors and served as President and Chief Executive
Officer of Federated Investment Counseling and Executive Vice President of
Federated Research Corporation since January 1990. He has a bachelor of arts
from Westminster College and an MBA from Cornell University. He is a Chartered
Financial Analyst.
CHARLES RITTER
Mr. Ritter, Vice President and Portfolio Manager, has been a member of the team
that manages Large Cap Value since its inception in July 1999. He joined
American Century in December 1998. Before joining American Century, he spent 15
years with Federated Investors, most recently serving as Vice President and
Portfolio Manager. He has a bachelor's degree in mathematics and a master's in
economics from Carnegie Mellon University. He also has an MBA from the
University of Chicago. He is a Chartered Financial Analyst.
Value
PHILLIP N. DAVIDSON
Mr. Davidson, Vice President and Portfolio Manager, has been a member of the
team that manages Value since joining American Century in September 1993. Prior
to joining American Century, he spent 11 years at Boatmen's Trust Company in St.
Louis and served as Vice President and Portfolio Manager responsible for
institutional value equity clients. He has a bachelor's degree in finance and an
MBA from Illinois State University.
SCOTT A. MOORE
Mr. Moore, Portfolio Manager, has been a member of the team that manages Value
since October 1996 and Portfolio Manager since February 1999. He joined American
Century in August 1993 as an Investment Analyst. He has a bachelor's degree in
finance from Southern Illinois University and an MBA in finance from the
University of Missouri- Columbia. He is a Chartered Financial Analyst.
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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 funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or from 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.
www.americancentury.com American Century Investments 9
Small Cap Value
R. TODD VINGERS
Mr. Vingers, Portfolio Manager, has been a member of the team that manages Small
Cap Value since its inception in July 1998. He joined American Century in August
1994 as an Investment Analyst. He has a bachelor's degree in business
administration from the University of St. Thomas and an MBA in finance and
accounting from the University of Chicago. He is a Chartered Financial Analyst.
BENJAMIN Z. GIELE
Mr. Giele, Portfolio Manager, has been a member of the team that manages Small
Cap Value since its inception in July 1998 and Portfolio Manager since February
1999. He joined American Century in May 1998 as an Investment Analyst. Before
joining American Century, he served as an Investment Analyst at USAA Investment
Management Company from June 1995 to May 1998 and as an Investment Analyst at
Texas Commerce Investment Management from July 1992 to June 1995. He has a
bachelor of arts from Rice University and an MBA in finance and accounting from
the University of Texas-Austin. He is a Chartered Financial Analyst.
Equity Income
PHILLIP N. DAVIDSON
Mr. Davidson, Vice President and Portfolio Manager, has been a member of the
team that manages Equity Income since its inception in August 1994. He joined
American Century in September 1993. Prior to joining American Century, he spent
11 years at Boatmen's Trust Company in St. Louis and served as Vice President
and Portfolio Manager responsible for institutional value equity clients. He has
a bachelor's degree in finance and an MBA from Illinois State University.
SCOTT A. MOORE
Mr. Moore, Portfolio Manager, has been a member of the team that manages Equity
Income since October 1996 and Portfolio Manager since February 1999. He joined
American Century in August 1993 as an Investment Analyst. He has a bachelor's
degree in finance from Southern Illinois University and an MBA in finance from
the University of Missouri-Columbia. He is a Chartered Financial Analyst.
10 American Century Investments 1-800-345-2021
FUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Directors may change any other policies
and investment strategies.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the funds, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the funds' other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the funds' business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the funds own could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the funds' performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 11
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.
WAYS TO MANAGE YOUR ACCOUNT
- --------------------------------------------------------------------------------
BY TELEPHONE
Investor Relations 1-800-345-2021
Business, Not-For-Profit and Employer-Sponsored Retirement Plans
1-800-345-3533
Automated Information Line 1-800-345-8765
[illustration of telephone]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call us or use our Automated Information Line if you have authorized us to
accept telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call us or use our Automated Information Line if you have authorized us to
invest from your bank account.
SELL SHARES
Call an Investor Relations Representative.
- -------------------------------------------------------------------------------
BY MAIL OR FAX
P.O. Box 419200 Kansas City, MO 64141-6200
Fax
816-340-7962
[illustration of mail]
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send us written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send us your check or money order for at least $50 with an investment slip or
$250 without an investment slip. If you don't have an investment slip, include
your name, address and account number on your check or money order.
SELL SHARES
Send us written instructions or a redemption form to sell shares. Call an
Investor Relations Representative to request a form.
- -------------------------------------------------------------------------------
ONLINE
www.americancentury.com
[illustration of computer]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Exchange shares from another American Century account.
MAKE ADDITIONAL INVESTMENTS
Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.
SELL SHARES
Not available.
12 American Century Investments 1-800-345-2021
A NOTE ABOUT MAILINGS TO SHAREHOLDERS
To reduce expenses and demonstrate respect for our environment, we will deliver
most financial reports, prospectuses and account statements to households in a
single envelope, even if the accounts are registered under different names. If
you would like additional copies of financial reports and prospectuses or
separate mailing of account statements, please call us.
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.
- --------------------------------------------------------------------------------
BY WIRE
[graphic of pointing finger]
Please remember that if you request redemptions by wire, $10 will be deducted
from the amount redeemed. Your bank also may charge a fee.
[illustration of wire machine]
OPEN AN ACCOUNT
Call us to set up your account or mail a completed application to the address
provided in the "By mail" section and give your bank the following information
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number+
* Your name
* The contribution year (for IRAs only)
+For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions provided in the "Open an account" section.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
- -------------------------------------------------------------------------------
AUTOMATICALLY
[illustration of arrows in circle]
OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send us written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
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.
- -------------------------------------------------------------------------------
IN PERSON
[illustration of 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.
Kansas City, Missouri
8 a.m. to 5:30 p.m., Monday - Friday
1665 Charleston Road
Mountain View, California
8 a.m. to 5 p.m., Monday - Frida
4917 Town Center Drive
Leawood, Kansas
8 a.m. to 6 p.m., Monday -- Friday 8 a.m.
to noon, Saturday
9445 East County Line Road, Suite A
Englewood, Colorado
8 a.m. to 6 p.m., Monday
- - Friday 8 a.m. to noon, Saturday
www.americancentury.com American Century Investments 13
MINIMUM INITIAL INVESTMENT AMOUNTS
To open an account, the minimum investments are:
- --------------------------------------------------------------------------------
Individual or Joint $2,500
- --------------------------------------------------------------------------------
Traditional IRA $1,000
- --------------------------------------------------------------------------------
Roth IRA $1,000
- --------------------------------------------------------------------------------
Education IRA $500
- --------------------------------------------------------------------------------
UGMA/UTMA $1,000
- --------------------------------------------------------------------------------
403(b) No minimum
- --------------------------------------------------------------------------------
Qualified Retirement Plans $2,500(1)
(1 )The minimum investment requirements may be different for some types of
retirement accounts.
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.
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 funds and their 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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
14 American Century Investments 1-800-345-2021
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
* minimum investment requirements
* exchange policies
* fund choices
* cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statements 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 transactions in fund shares 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 funds.
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 funds have authorized
those intermediaries to accept orders on each 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 a fund's behalf.
[left margin]
[graphic of pointing finger]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
www.americancentury.com American Century Investments 15
SHARE PRICE AND DISTRIBUTIONS
SHARE PRICE
American Century determines the NET ASSET VALUE (NAV) of the funds 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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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 each fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means that the funds 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 funds pay distributions of substantially all of their income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. They may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
[left margin]
The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
16 American Century Investments 1-800-345-2021
TAXES
The tax consequences of owning shares of the funds will vary depending on
whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they have
received or capital gains they have generated through their 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 an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
Taxability of Distributions
Fund distributions may consist of income earned by the funds from sources such
as dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
<TABLE>
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28% Bracket or Above
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Short-term capital gains Ordinary income rate Ordinary income rate
- ----------------------------------------------------------------------------------------
Long-term capital gains 10% 20%
</TABLE>
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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always 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 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 distribution of long-term capital
gains to you with respect to such 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.
[left margin]
[graphic of pointing finger]
BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
www.americancentury.com American Century Investments 17
MULTIPLE CLASS INFORMATION
American Century offers three classes of the funds: 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 to institutional
investors through institutional distribution channels, such as
employer-sponsored retirement plans, or through banks, broker-dealers and
insurance companies. The other classes have different fees, expenses and/or
minimum investment requirements than 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 the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
18 American Century Investments 1-800-345-2021
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The tables on the next few pages itemize what contributed to the changes in
share price during the period. They also show the changes in share price for
this period in comparison to changes over the last five fiscal years or less, if
the share class is not five years old.
On a per-share basis, the tables include as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The tables also include some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Reports are included in the funds' annual
reports for the fiscal year ended March 31, 1999, which are incorporated by
reference into the Statement of Additional Information, and are available upon
request.
www.americancentury.com American Century Investments 19
VALUE FUND
<TABLE>
<CAPTION>
Investor Class
For a Share Outstanding Throughout the Years Ended March 31
Per-Share Data
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ....................$ 7.73 $ 6.58 $ 6.32 $ 5.46 $ 4.98
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net Investment Income(1) ............................ 0.08 0.10 0.12 0.13 0.12
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .......................... (0.80) 2.35 0.87 1.34 0.75
------------- ------------- ------------- ------------- -------------
Total From Investment Operations .................... (0.72) 2.45 0.99 1.47 0.87
------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment Income .......................... (0.09) (0.10) (0.12) (0.12) (0.12)
In Excess of Net Investment Income .................. -- -- --(2) (0.01) --
From Net Realized Gains on Investment Transactions .. (1.15) (1.20) (0.61) (0.48) (0.27)
------------- ------------- ------------- ------------- -------------
Total Distributions ................................. (1.24) (1.30) (0.73) (0.61) (0.39)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ..........................$ 5.77 $ 7.73 $ 6.58 $ 6.32 $ 5.46
============= ============= ============= ============= =============
Total Return(3) ..................................... (9.88)% 39.94% 15.92% 28.06% 18.56%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 1.00% 1.00% 1.00% 0.97% 1.00%
Ratio of Net Investment Income to Average Net Assets .. 1.19% 1.38% 1.86% 2.17% 2.65%
Portfolio Turnover Rate ............................... 130% 130% 111% 145% 94%
Net Assets, End of Year (in thousands) ................$ 1,719,367 $ 2,713,562 $ 1,743,582 $ 881,885 $ 348,281
(1) Computed using average shares outstanding throughout the period.
(2) Per share amount was less than $0.005.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
20 American Century Investments 1-800-345-2021
SMALL CAP VALUE FUND
Investor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ........................... $ 5.00
----------
Income From Investment Operations
Net Investment Income(2) ..................................... 0.03
Net Realized and Unrealized Loss on Investment Transactions .. (0.24)
----------
Total From Investment Operations ............................. (0.21)
----------
Distributions
From Net Investment Income ................................... (0.02)
From Net Realized Gains on Investment Transactions ........... (0.02)
In Excess of Net Realized Gains .............................. (0.02)
----------
Total Distributions .......................................... (0.06)
----------
Net Asset Value, End of Period ................................. $ 4.73
==========
Total Return(3) .............................................. (4.24)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets .............. 1.25%(4)
Ratio of Net Investment Income to Average Net Assets ........... 1.02%(4)
Portfolio Turnover Rate ........................................ 153%
Net Assets, End of Period (in thousands) ....................... $ 11,410
(1) July 31, 1998 (inception of fund and class) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
www.americancentury.com American Century Investments 21
EQUITY INCOME FUND
Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998 1997 1996 1995(1)
Net Asset Value, Beginning of Period .................. $ 7.15 $ 6.31 $ 6.10 $ 5.42 $ 5.00
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............................ 0.22 0.25 0.22 0.20 0.09
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (0.23) 1.99 0.75 1.13 0.44
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (0.01) 2.24 0.97 1.33 0.53
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income .......................... (0.23) (0.24) (0.21) (0.19) (0.09)
In Excess of Net Investment Income .................. -- -- --(3) (0.01) --
From Net Realized Gains on Investment Transactions .. (0.96) (1.16) (0.55) (0.45) (0.02)
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (1.19) (1.40) (0.76) (0.65) (0.11)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................ $ 5.95 $ 7.15 $ 6.31 $ 6.10 $ 5.42
=========== =========== =========== =========== ===========
Total Return(4) ..................................... (0.44)% 37.78% 16.24% 25.67% 10.69%
Ratios/Supplemental Data
1999 1998 1997 1996 1995(1)
Ratio of Operating Expenses to Average Net Assets ..... 1.00% 1.00% 1.00% 0.98% 1.00%(5)
Ratio of Net Investment Income to Average Net Assets .. 3.31% 3.52% 3.46% 3.51% 4.04%(5)
Portfolio Turnover Rate ............................... 180% 158% 159% 170% 45%
Net Assets, End of Period (in thousands) .............. $ 296,585 $ 355,962 $ 199,388 $ 116,692 $ 52,213
(1) August 1, 1994 (inception) through March 31, 1995.
(2) Computed using average shares outstanding throughout the period.
(3) Per share amount was less than $0.005.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
</TABLE>
22 American Century Investments 1-800-345-2021
NOTES
www.americancentury.com American Century Investments 23
NOTES
24 American Century Investments 1-800-345-2021
NOTES
www.americancentury.com American Century Investments 25
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These reports contain more information about the funds' investments and the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the funds' 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 funds or your accounts, by contacting American Century at
the address or telephone numbers listed below.
You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location
and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo(reg.sm)]
American
Century
AMERICAN CENTURY INVESTMENTS 9907
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
9907
SH-PRS-16635
<PAGE>
AMERICAN CENTURY
PROSPECTUS
Large Cap Value Fund
Value Fund
Small Cap Value Fund
Equity Income Fund
JULY 30, 1999
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.
Distributed by
Funds Distributor, Inc.
[american century logo(reg.sm)]
American
Century
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the funds and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The funds' primary investments and risks
* A description of who may or may not want to invest in the funds
* Fund performance, including returns for each year, best and worst quarters,
and average annual returns compared to the funds' benchmarks
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the funds. If you
have questions, our Service Representatives are available weekdays, 8 a.m. to 5
p.m., Central time. Our toll-free number is 1-800-345-3533. We look forward to
helping you achieve your financial goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
[left margin]
[american century logo(reg.sm)]
American
Century
AMERICAN CENTURY
INVESTMENTS
P.O. BOX 419385
KANSAS CITY, MO
64141-6385
TABLE OF CONTENTS
An Overview of the Funds .................................................... 2
Fund Performance History .................................................... 3
Fees and Expenses ........................................................... 4
Information about the Funds ................................................. 5
Large Cap Value Fund ................................................... 5
Value Fund ............................................................. 5
Small Cap Value Fund ................................................... 5
Equity Income Fund ..................................................... 7
Management .................................................................. 8
Investing with American Century ............................................. 12
Share Price and Distributions ............................................... 15
Taxes ....................................................................... 16
Multiple Class Information .................................................. 17
Financial Highlights ........................................................ 18
Performance Information of Other Class ...................................... 22
[left margin]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of finger pointing]
This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Large Cap Value, Value and Small Cap Value seek long-term capital growth. Income
is a secondary objective.
Equity Income seeks current income. Capital appreciation is a secondary
objective.
WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
In selecting stocks for Large Cap Value, Value and Small Cap Value, the fund
managers look for companies whose stock price is less than they believe the
company is worth in the market. They attempt to purchase the stock of these
undervalued companies and hold them until their stock price has increased to a
level the managers believe more accurately reflects the fair value of the
company. For Equity Income, the fund managers look for stocks of companies with
a favorable dividend-paying history and, secondarily, for potential increase in
share price.
The chart below shows the primary differences among the funds. A more detailed
description of the funds' investment strategies and risks begins on page 5.
FUND PRIMARY INVESTMENTS
- --------------------------------------------------------------------------------
Large Cap Value Equity securities of larger companies
- --------------------------------------------------------------------------------
Value Equity securities of medium to large companies
- --------------------------------------------------------------------------------
Small Cap Value Equity securities of smaller companies
- --------------------------------------------------------------------------------
Equity Income Equity securities of companies with a favorable
dividend-paying history
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
If the market does not consider the individual stocks purchased by the funds to
be undervalued, or if the stocks purchased by Equity Income do not continue or
increase dividend payments or their stock price declines, the value of the
funds' shares may not increase as quickly as other funds and may decline, even
if stock prices are generally rising.
The smaller companies in which Small Cap Value invests may present greater
opportunities for capital appreciation than larger companies, but also may
present greater risk.
WHO MAY WANT TO INVEST IN THE FUNDS?
The funds may be a good investment if you are
* seeking long-term capital growth and income from your investment
* comfortable with the risks associated with the funds' investment strategies
* comfortable with the funds' short-term price volatility
* investing through an IRA or other tax-advantaged retirement plan
WHO MAY NOT WANT TO INVEST IN THE FUNDS?
The funds may not be a good investment if you are
* investing for a short period of time
* not seeking income from an equity investment
* uncomfortable with short-term volatility in the value of your investment
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An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
2 American Century Investments 1-800-345-3533
FUND PERFORMANCE HISTORY
VALUE FUND
Average Total Returns(1)
The following bar chart shows the performance of Value's Institutional Class
shares for each full calendar year in the life of the class. Large Cap Value,
Small Cap Value and Equity Income are not included because the Institutional
Class of those funds does not yet have a full calendar year of performance.
[bar chart data below]
Value
1998 5.18%
(1) As of June 30, 1999, the end of the most recent calendar quarter, Value's
year-to-date return was 0.81%.
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
- --------------------------------------------------------------------------------
Value 18.31% (2Q 1999) -10.67% (3Q 1998)
Average Annual Returns
The following table shows the average annual total returns of Value's
Institutional Class shares for the periods indicated. The benchmark is an
unmanaged index that has no operating costs and is included in the table for
performance comparison. Large Cap Value, Small Cap Value and Equity Income are
not included because the Institutional Class of those funds does not yet have a
full calendar year of performance.
For the calendar year ended December 31, 1998 1 year Life of Fund(1)
- --------------------------------------------------------------------------------
Value 5.18% 7.31%
S&P 500/BARRA Value Index 14.68% 12.72%
(1) The inception date for the Institutional Class of Value is July 31, 1997.
Performance Information of Other Class
The original class of shares of the funds was the Investor Class. For
information about the historical performance of the original class of shares,
see page 22.
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The performance information on this page is designed to help you see how fund
returns can vary. Keep in mind that past performance does not predict how the
funds will perform in the future.
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For current performance information, including yields, please call us at
1-800-345-3533.
www.americancentury.com American Century Investments 3
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Institutional Class shares of other American Century
funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the funds.
<TABLE>
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Cap Value 0.70%(1) None 0.00%(2) 0.70%
- ---------------------------------------------------------------------------------------
Value 0.80% None 0.00%(3) 0.80%
- ---------------------------------------------------------------------------------------
Small Cap Value 1.05% None 0.00%(3) 1.05%
- ---------------------------------------------------------------------------------------
Equity Income 0.80% None 0.00%(3) 0.80%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase. Please consult the Statement
of Additional Information for more details about the fund's management fee.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors, its legal counsel and interest, are expected to be less
than 0.005% for the current fiscal year.
(3) Other expenses, which include the fees and expenses of the funds'
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- ----------------------------------------------------------------------------
Large Cap Value $71 $224 N/A N/A
- ----------------------------------------------------------------------------
Value $82 $255 $443 $987
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Small Cap Value $107 $333 N/A N/A
- ----------------------------------------------------------------------------
Equity Income $82 $255 $443 $987
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Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
4 American Century Investments 1-800-345-3533
INFORMATION ABOUT THE FUNDS
LARGE CAP VALUE FUND
VALUE FUND
SMALL CAP VALUE FUND
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The funds seek long-term capital growth. Income is a secondary objective.
HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?
The fund managers use a value investment strategy that looks primarily for
companies whose stock price is less than they believe the company is worth in
the market. They attempt to purchase the stock of these undervalued companies
and hold them until their stock price has increased to a level the managers
believe more accurately reflects the fair value of the company.
Companies may be undervalued due to market declines, poor economic conditions,
actual or anticipated bad news regarding the issuer or its industry, or because
they have been overlooked by the market. To identify these companies, the fund
managers look for companies with earnings, cash flows and/or assets may not be
reflected accurately in the stock price or may be outside of the companies'
historical range. The fund managers also look for companies whose dividend
payments appear high when compared to the stock price.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 65% of the funds' assets
invested in U.S. equity securities at all times. When the fund managers believe
that it is prudent, the funds also may invest a portion of their assets in
convertible securities, foreign securities, debt securities of companies, debt
obligations of governments and their agencies, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the funds' cash assets remain liquid while
performing more like stocks. The funds have a policy governing stock index
futures which prohibits leverage of the funds' assets by investing in a
derivative security. For example, the fund managers cannot invest in a
derivative security if it would be possible for a fund to lose more money than
it invested. A complete description of the derivatives policy is included in the
Statement of Additional Information.
In the event of exceptional market or economic conditions, the funds may, as a
temporary defensive measure, invest all or a substantial portion of their assets
in cash or short-term debt securities. To the extent a fund assumes a defensive
position, it will not be pursuing its objective of capital growth.
Additional information about the funds' investments is available in their annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
www.americancentury.com American Century Investments 5
WHAT IS THE DIFFERENCE BETWEEN THE FUNDS?
* Large Cap Value invests primarily in larger companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers ranking generally among the 1,000 largest
companies in the United States as measured by their MARKET CAPITALIZATION.
* Value invests primarily in medium to large companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers that the fund managers believe to be medium to
large companies as measured by their market capitalization. The fund managers
consider medium to large companies to include those with a market
capitalization larger than the largest company in the S&P SMALLCAP 600/BARRA
VALUE INDEX.
* Small Cap Value invests primarily in smaller companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers that the fund managers believe to be smaller
companies as measured by their market capitalization. The fund managers
consider smaller companies to include those with a market capitalization that
is not bigger than that of the largest company in the S&P SmallCap 600/BARRA
Value Index.
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUNDS?
The value of a 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.
As with all funds, at any given time the value of your shares of a fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
If the market does not consider the individual stocks purchased by a fund to be
undervalued, the value of the fund's shares may not increase as quickly as other
funds and may decline, even if stock prices are generally rising.
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 a
fund's style, the fund's gains may not be as big as, or their losses may be
bigger than, other funds using different investment styles.
Small Cap Value invests primarily in securities of smaller companies. These
smaller companies may present greater opportunities for capital appreciation,
but also may involve greater risks than larger companies. Smaller companies may
have limited financial resources, product lines and markets, and their
securities trade less frequently and in more limited amounts than the securities
of large companies. As a result, the value of the stocks issued by these smaller
companies may go up and down more than the stocks of larger issuers. This price
volatility may be reflected in the share price of the fund.
Although the fund managers invest the funds' assets primarily in U.S. stocks,
the funds can invest in securities of foreign companies. Foreign securities can
have certain unique risks, including fluctuations in currency exchange rates,
less stable political and economic structures, reduced availability of public
information, and lack of uniform financial reporting and regulatory practices
similar to those that apply in the United States. These factors make investing
in foreign securities generally riskier than investing in U.S. stocks.
[left margin]
The MARKET CAPITALIZATION of a company is the number of its outstanding shares
times the share price.
The S&P SMALLCAP 600/BARRA VALUE INDEX is an unmanaged stock index that tracks
the performance of small companies that may be attractive to investors using the
value style of investing. As of June 30, 1999, the largest company contained in
the index had a market capitalization of $2.3 billion, while the median company
in the index had a market capitalization of $390 million.
6 American Century Investments 1-800-345-3533
EQUITY INCOME FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
Equity Income seeks to provide current income. Capital appreciation is a
secondary objective.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?
The fund managers look for stocks with a favorable dividend-paying history that
have the prospects for dividend payments to continue or increase. Secondarily,
the fund managers look for the possibility that the stock price may increase.
The fund seeks to receive dividend payments that provide the fund a yield that
exceeds the yield of the stocks comprising the S&P 500 Index.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 85% of the fund's assets
invested in income-paying securities and at least 65% of its assets in U.S.
equity securities. When the fund managers believe that it is prudent, the fund
also may invest a portion of its assets in convertible securities, foreign
securities, debt securities of companies, debt obligations of governments and
their agencies, 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 which prohibits leverage of the
fund's assets by investing in a derivative security. For example, the fund
managers cannot invest in a derivative security if it would be possible for the
fund to lose more money than it invested. A complete description of the
derivatives policy is included in the Statement of Additional Information.
In 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 short-term debt securities. To the extent the fund assumes a
defensive position, it will not be pursuing its objective of capital growth.
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.
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
If the individual stocks purchased by the fund do not continue or increase
dividend payments, or if their stock price does not increase, the value of the
fund's shares may not increase as quickly as other funds and may decline, even
if stock prices are generally rising.
The value of the fund's assets invested in bonds and other fixed-income
securities will go up and down as prevailing interest rates change. Generally,
when interest rates rise, the fund's share value will decline. The opposite is
true when interest rates decline.
To the extent the fund invests in foreign securities, the overall risk of the
fund could be affected. Foreign securities can have certain unique risks,
including fluctuations in currency exchange rates, less stable political and
economic structures, reduced availability of public information, and lack of
uniform financial reporting and regulatory practices similar to those that apply
in the United States. These factors make investing in foreign securities
generally riskier than investing in U.S. stocks.
www.americancentury.com American Century Investments 7
MANAGEMENT
WHO MANAGES THE FUNDS?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the funds.
THE BOARD OF DIRECTORS
The Board of Directors oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired an investment advisor to do
so. More than two-thirds of the directors are independent of the funds' advisor;
that is, they are not employed by and have no financial interest in the advisor.
THE INVESTMENT ADVISOR
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.
For the services it provided to the funds during the most recent fiscal year,
the advisor received a unified management fee based on a percentage of the
average net assets of the Institutional Class shares of each fund. The amount of
the management fee is calculated on a class-by-class basis daily and paid
monthly. Large Cap Value will pay the advisor a unified management fee of 0.70%
of the first $1 billion of average net assets, 0.60% of the next $4 billion of
average net assets, and 0.50% of average net assets over $5 billion of the
Institutional Class of shares.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the funds 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 funds' advisor to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor.
Management Fees Paid by the Funds to the Advisor as a Percentage of Average Net
Assets for the Most Recent Fiscal Year Ended March 31, 1999
- --------------------------------------------------------------------------------
Value 0.80%
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Small Cap Value 1.05%
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Equity Income 0.80%
8 American Century Investments 1-800-345-3533
THE FUND MANAGEMENT TEAMS
The advisor uses teams of portfolio managers, assistant portfolio managers and
analysts to manage the funds. Teams meet regularly to review portfolio holdings
and to discuss purchase and sale activity. Team members buy and sell securities
for a fund as they see fit, guided by the fund's investment objectives and
strategies.
The portfolio managers on the investment teams are identified below:
Large Cap Value
MARK MALLON
Mr. Mallon, Chief Investment Officer--Value and Quantitative Equities and Senior
Vice President, has been a member of the team that manages Large Cap Value since
its inception in July 1999. He joined American Century in April 1997. From
August 1978 until he joined American Century, he was employed in several
positions by Federated Investors and served as President and Chief Executive
Officer of Federated Investment Counseling and Executive Vice President of
Federated Research Corporation since January 1990. He has a bachelor of arts
from Westminster College and an MBA from Cornell University. He is a Chartered
Financial Analyst.
CHARLES RITTER
Mr. Ritter, Vice President and Portfolio Manager, has been a member of the team
that manages Large Cap Value since its inception in July 1999. He joined
American Century in December 1998. Before joining American Century, he spent 15
years with Federated Investors, most recently serving as Vice President and
Portfolio Manager. He has a bachelor's degree in mathematics and a master's in
economics from Carnegie Mellon University. He also has an MBA from the
University of Chicago. He is a Chartered Financial Analyst.
Value
PHILLIP N. DAVIDSON
Mr. Davidson, Vice President and Portfolio Manager, has been a member of the
team that manages Value since joining American Century in September 1993. Prior
to joining American Century, he spent 11 years at Boatmen's Trust Company in St.
Louis and served as Vice President and Portfolio Manager responsible for
institutional value equity clients. He has a bachelor's degree in finance and an
MBA from Illinois State University.
SCOTT A. MOORE
Mr. Moore, Portfolio Manager, has been a member of the team that manages Value
since October 1996 and Portfolio Manager since February 1999. He joined American
Century in August 1993 as an Investment Analyst. He has a bachelor's degree in
finance from Southern Illinois University and an MBA in finance from the
University of Missouri- Columbia. He is a Chartered Financial Analyst.
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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 funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or from 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.
www.americancentury.com American Century Investments 9
Small Cap Value
R. TODD VINGERS
Mr. Vingers, Portfolio Manager, has been a member of the team that manages Small
Cap Value since its inception in July 1998. He joined American Century in August
1994 as an Investment Analyst. He has a bachelor's degree in business
administration from the University of St. Thomas and an MBA in finance and
accounting from the University of Chicago. He is a Chartered Financial Analyst.
BENJAMIN Z. GIELE
Mr. Giele, Portfolio Manager, has been a member of the team that manages Small
Cap Value since its inception in July 1998 and Portfolio Manager since February
1999. He joined American Century in May 1998 as an Investment Analyst. Before
joining American Century, he served as an Investment Analyst at USAA Investment
Management Company from June 1995 to May 1998 and as an Investment Analyst at
Texas Commerce Investment Management from July 1992 to June 1995. He has a
bachelor of arts from Rice University and an MBA in finance and accounting from
the University of Texas-Austin. He is a Chartered Financial Analyst.
Equity Income
PHILLIP N. DAVIDSON
Mr. Davidson, Vice President and Portfolio Manager, has been a member of the
team that manages Equity Income since its inception in August 1994. He joined
American Century in September 1993. Prior to joining American Century, he spent
11 years at Boatmen's Trust Company in St. Louis and served as Vice President
and Portfolio Manager responsible for institutional value equity clients. He has
a bachelor's degree in finance and an MBA from Illinois State University.
SCOTT A. MOORE
Mr. Moore, Portfolio Manager, has been a member of the team that manages Equity
Income since October 1996 and Portfolio Manager since February 1999. He joined
American Century in August 1993 as an Investment Analyst. He has a bachelor's
degree in finance from Southern Illinois University and an MBA in finance from
the University of Missouri-Columbia. He is a Chartered Financial Analyst.
10 American Century Investments 1-800-345-3533
FUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Directors may change any other policies
and investment strategies.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the funds, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the funds' other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the funds' business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the funds own could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the funds' performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 11
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
funds' minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.
MINIMUM INITIAL INVESTMENT AMOUNTS
The minimum investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermediary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has an aggregate
investment in our family of funds of $10 million or more ($5 million for
endowments and foundations). In addition, financial intermediaries or plan
recordkeepers may require retirement plans to meet certain additional
requirements, such as plan size or a minimum level of assets per participant, in
order to be eligible to purchase Institutional Class shares.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
If your 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 management fee that is 0.20%
higher than the Institutional Class.
SERVICES AUTOMATICALLY AVAILABLE TO YOU
You automatically will have access to the services listed on the next page 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.
12 American Century Investments 1-800-345-3533
WAYS TO MANAGE YOUR ACCOUNT
- --------------------------------------------------------------------------------
BY TELEPHONE
Service Representative
1-800-345-3533
[illustration of telephone]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call us or use our Automated Information Line if you have authorized us to
accept telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call us if you have authorized us to invest from your bank account.
SELL SHARES
Call a Service Representative.
- --------------------------------------------------------------------------------
BY MAIL OR FAX
P.O. Box 419385 Kansas City, MO 64141-6385
Fax
816-340-4655
[illustration of envelope]
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send us written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send us your check or money order for at least $50 with an investment slip or
$250 without an investment slip. If you don't have an investment slip, include
your name, address and account number on your check or money order.
SELL SHARES
Send us written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.
- --------------------------------------------------------------------------------
BY WIRE
[graphic of finger pointing]
Please remember that if you request redemptions by wire, $10 will be deducted
from the amount redeemed. Your bank also may charge a fee.
[illustration of wire machine]
OPEN AN ACCOUNT
Call us to set up your account or mail a completed application to the address
provided in the "By mail" section and give your bank the following information.
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number+
* Your name
* The contribution year (for IRAs only)
+ For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions provided in the "Open an account" section.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
- --------------------------------------------------------------------------------
AUTOMATICALLY
[illustration of arrows in circle]
OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send us written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
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.
www.americancentury.com American Century Investments 13
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 funds and their 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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
INVESTING THROUGH FINANCIAL INTERMEDIARIES
If you own or are considering purchasing shares through a financial intermediary
or a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statements 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 transactions in fund shares 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 funds.
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 funds have authorized
those intermediaries to accept orders on each 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 a fund's behalf.
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Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
14 American Century Investments 1-800-345-3533
SHARE PRICE AND DISTRIBUTIONS
SHARE PRICE
American Century determines the NET ASSET VALUE (NAV) of the funds 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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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 each fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means that the funds 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 funds pay distributions of substantially all of their income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. They may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
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The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
www.americancentury.com American Century Investments 15
TAXES
The tax consequences of owning shares of the funds will vary depending on
whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they have
received or capital gains they have generated through their 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 an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
Taxability of Distributions
Fund distributions may consist of income earned by the funds 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 Tax Rate for 28% Bracket
15% Bracket 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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always 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 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 distribution of long-term capital
gains to you with respect to such 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.
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BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
16 American Century Investments 1-800-345-3533
MULTIPLE CLASS INFORMATION
American Century offers three classes of the funds: Investor Class,
Institutional Class and Advisor Class. The shares offered by this Prospectus are
Institutional Class shares and are offered primarily to institutional investors
through institutional distribution channels, such as employer-sponsored
retirement plans, or through 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 than the
Institutional Class. The difference in the fee structures among the classes is
the result of their separate arrangements for shareholder and distribution
services and not the result of any difference in amounts charged by the advisor
for core investment advisory services. Accordingly, the core investment advisory
expenses do not vary by class. Different fees and expenses will affect
performance. For additional information concerning the other classes of shares
not offered by this Prospectus, call us at
* 1-800-345-2021 for Investor Class shares
* 1-800-345-3533 for Advisor Class shares
You also can contact a sales representative or financial intermediary who offers
those classes of shares.
Except as described below, all classes of shares of the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
www.americancentury.com American Century Investments 17
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The tables on the next few pages itemize what contributed to the changes in
share price during the period. They also show the changes in share price for
this period in comparison to changes over the last five fiscal years or less, if
the share class is not five years old.
On a per-share basis, the tables include as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The tables also include some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Reports are included in the funds' annual
reports for the fiscal year ended March 31, 1999, which are incorporated by
reference into the Statement of Additional Information, and are available upon
request.
18 American Century Investments 1-800-345-3533
<TABLE>
<CAPTION>
VALUE FUND
Institutional Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998(1)
<S> <C> <C>
Net Asset Value, Beginning of Period .................. $ 7.73 $ 7.84
---------- ----------
Income From Investment Operations
Net Investment Income(2) ............................ 0.10 0.15
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .......................... (0.80) 1.02
---------- ----------
Total From Investment Operations .................... (0.70) 1.17
---------- ----------
Distributions
From Net Investment Income .......................... (0.10) (0.08)
From Net Realized Gains on
Investment Transactions ............................. (1.15) (1.20)
---------- ----------
Total Distributions ................................. (1.25) (1.28)
---------- ----------
Net Asset Value, End of Period ........................ $ 5.78 $ 7.73
========== ==========
Total Return(3) ..................................... (9.52)% 17.14%
Ratios/Supplemental
1999 1998(1)
Ratio of Operating Expenses to Average Net Assets ..... 0.80% 0.80%(4)
Ratio of Net Investment Income to Average Net Assets .. 1.39% 2.97%(4)
Portfolio Turnover Rate ............................... 130% 130%
Net Assets, End of Period (in thousands) .............. $ 36,318 $ 5,944
(1) July 31, 1997 (commencement of sale) through March 31, 1998.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
</TABLE>
www.americancentury.com American Century Investments 19
SMALL CAP VALUE FUND
Institutional Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ............................ $ 4.83
--------
Income From Investment Operations
Net Investment Income(2) ...................................... 0.03
Net Realized and Unrealized Loss on Investment Transactions ... (0.06)
--------
Total From Investment Operations .............................. (0.03)
--------
Distributions
From Net Investment Income .................................... (0.02)
From Net Realized Gains on Investment Transactions ............ (0.04)
--------
Total Distributions ........................................... (0.06)
--------
Net Asset Value, End of Period .................................. $ 4.74
========
Total Return(3) ............................................... (0.60)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets ............... 1.05%(4)
Ratio of Net Investment Income to Average Net Assets ............ 1.22%(4)
Portfolio Turnover Rate ......................................... 153%
Net Assets, End of Period (in thousands) ........................ $ 986
(1) October 26, 1998 (commencement of sale) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
20 American Century Investments 1-800-345-3533
EQUITY INCOME FUND
Institutional Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ........................... $ 6.96
---------
Income From Investment Operations
Net Investment Income(2) ..................................... 0.07
Net Realized and Unrealized Gain on Investment Transactions .. 0.06
---------
Total From Investment Operations ............................. 0.13
---------
Distributions
From Net Investment Income ................................... (0.18)
From Net Realized Gains on Investment Transactions ........... (0.96)
---------
Total Distributions .......................................... (1.14)
---------
Net Asset Value, End of Period ................................. $ 5.95
=========
Total Return(3) .............................................. 1.60%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets .............. 0.80%(4)
Ratio of Net Investment Income to Average Net Assets ........... 1.61%(4)
Portfolio Turnover Rate ........................................ 180%
Net Assets, End of Period ...................................... $ 2,654
(1) July 8, 1998 (commencement of sale) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
www.americancentury.com American Century Investments 21
PERFORMANCE INFORMATION OF OTHER CLASS
The following financial information is provided to show the performance of the
funds' original class of shares. This class, the Investor Class, has a total
expense ratio that is 0.20% higher than the Institutional Class. If the
Institutional Class had existed during the periods presented, its performance
would have been higher because of the lower expense.
The tables on the next pages itemize what contributed to the changes in share
price during the period.
On a per-share basis, the tables include as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The tables also include some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER --the percentage of the fund's buying and selling activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Reports are included in the funds' annual
reports for the fiscal year ended March 31, 1999, which are incorporated by
reference into the Statement of Additional Information, and are available upon
request.
22 American Century Investments 1-800-345-3533
<TABLE>
<CAPTION>
VALUE FUND
Investor Class
For a Share Outstanding Throughout the Years Ended March 31
Per-Share Data
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ........ $ 7.73 $ 6.58 $ 6.32 $ 5.46 $ 4.98
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net Investment Income(1) ................ 0.08 0.10 0.12 0.13 0.12
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .............. (0.80) 2.35 0.87 1.34 0.75
------------- ------------- ------------- ------------- -------------
Total From Investment Operations ........ (0.72) 2.45 0.99 1.47 0.87
------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment Income .............. (0.09) (0.10) (0.12) (0.12) (0.12)
In Excess of Net Investment Income ...... -- -- --(2) (0.01) --
From Net Realized Gains
on Investment Transactions .............. (1.15) (1.20) (0.61) (0.48) (0.27)
------------- ------------- ------------- ------------- -------------
Total Distributions ..................... (1.24) (1.30) (0.73) (0.61) (0.39)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year .............. $ 5.77 $ 7.73 $ 6.58 $ 6.32 $ 5.46
============= ============= ============= ============= =============
Total Return(3) ......................... (9.88)% 39.94% 15.92% 28.06% 18.56%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses
to Average Net Assets ................... 1.00% 1.00% 1.00% 0.97% 1.00%
Ratio of Net Investment Income
to Average Net Assets ................... 1.19% 1.38% 1.86% 2.17% 2.65%
Portfolio Turnover Rate ................... 130% 130% 111% 145% 94%
Net Assets, End of Year (in thousands) .... $ 1,719,367 $ 2,713,562 $ 1,743,582 $ 881,885 $ 348,281
(1) Computed using average shares outstanding throughout the period.
(2) Per share amount was less than $0.005.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 23
SMALL CAP VALUE FUND
Investor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ............................ $ 5.00
----------
Income From Investment Operations
Net Investment Income(2) ...................................... 0.03
Net Realized and Unrealized Loss on Investment Transactions ... (0.24)
----------
Total From Investment Operations .............................. (0.21)
----------
Distributions
From Net Investment Income .................................... (0.02)
From Net Realized Gains on Investment Transactions ............ (0.02)
In Excess of Net Realized Gains ............................... (0.02)
----------
Total Distributions ........................................... (0.06)
----------
Net Asset Value, End of Period .................................. $ 4.73
==========
Total Return(3) ............................................... (4.24)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets ............... 1.25%(4)
Ratio of Net Investment Income to Average Net Assets ............ 1.02%(4)
Portfolio Turnover Rate ......................................... 153%
Net Assets, End of Period (in thousands) ........................ $ 11,410
(1) July 31, 1998 (inception of fund and class) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
24 American Century Investments 1-800-345-3533
EQUITY INCOME FUND
Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998 1997 1996 1995(1)
Net Asset Value, Beginning of Period ....... $ 7.15 $ 6.31 $ 6.10 $ 5.42 $ 5.00
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ................. 0.22 0.25 0.22 0.20 0.09
Net Realized and Unrealized Gain (Loss) on
Investment Transactions .................. (0.23) 1.99 0.75 1.13 0.44
----------- ----------- ----------- ----------- -----------
Total From Investment Operations ......... (0.01) 2.24 0.97 1.33 0.53
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income ............... (0.23) (0.24) (0.21) (0.19) (0.09)
In Excess of Net Investment Income ....... -- -- --(3) (0.01) --
From Net Realized Gains
on Investment Transactions ............... (0.96) (1.16) (0.55) (0.45) (0.02)
----------- ----------- ----------- ----------- -----------
Total Distributions ...................... (1.19) (1.40) (0.76) (0.65) (0.11)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ............. $ 5.95 $ 7.15 $ 6.31 $ 6.10 $ 5.42
=========== =========== =========== =========== ===========
Total Return(4) .......................... (0.44)% 37.78% 16.24% 25.67% 10.69%
Ratios/Supplemental Data
1999 1998 1997 1996 1995(1)
Ratio of Operating Expenses
to Average Net Assets .................... 1.00% 1.00% 1.00% 0.98% 1.00%(5)
Ratio of Net Investment Income
to Average Net Assets .................... 3.31% 3.52% 3.46% 3.51% 4.04%(5)
Portfolio Turnover Rate .................... 180% 158% 159% 170% 45%
Net Assets, End of Period (in thousands) ... $ 296,585 $ 355,962 $ 199,388 $ 116,692 $ 52,213
(1) August 1, 1994 (inception) through March 31, 1995.
(2) Computed using average shares outstanding throughout the period.
(3) Per share amount was less than $0.005.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
</TABLE>
www.americancentury.com American Century Investments 25
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These reports contain more information about the funds' investments and the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the funds' 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 funds or your accounts, by contacting American Century at
the address or telephone numbers listed below.
You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo(reg.sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-3533 or 816-531-5575
9907
SH-PRS-16637
<PAGE>
AMERICAN CENTURY
Prospectus
Large Cap Value Fund
Value Fund
Small Cap Value Fund
Equity Income Fund
JULY 30, 1999
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.
Distributed by
Funds Distributor, Inc.
[american century logo(reg.sm)]
American
Century
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the funds and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The funds' primary investments and risks
* A description of who may or may not want to invest in the funds
* Fund performance, including returns for each year, best and worst quarters,
and average annual returns compared to the funds' benchmarks
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the funds. If you
have questions, our Service Representatives are available weekdays, 8 a.m. to 5
p.m., Central time. Our toll-free number is 1-800-345-3533. We look forward to
helping you achieve your financial goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
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[american century logo(reg.sm)]
American
Century
American Century
Investments
P.O. Box 419385
Kansas City, MO
64141-6385
TABLE OF CONTENTS
An Overview of the Funds .................................................... 2
Fund Performance History .................................................... 3
Fees and Expenses ........................................................... 4
Information about the Funds ................................................. 5
Large Cap Value Fund ................................................... 5
Value Fund ............................................................. 5
Small Cap Value Fund ................................................... 5
Equity Income Fund ..................................................... 7
Management .................................................................. 8
Investing with American Century ............................................. 12
Share Price and Distributions ............................................... 14
Taxes ....................................................................... 15
Multiple Class Information .................................................. 16
Financial Highlights ........................................................ 17
Performance Information of Other Class ...................................... 20
[left margin]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of pointing finger]
This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
Large Cap Value, Value and Small Cap Value seek long-term capital growth. Income
is a secondary objective.
Equity Income seeks current income. Capital appreciation is a secondary
objective.
WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
In selecting stocks for Large Cap Value, Value and Small Cap Value, the fund
managers look for companies whose stock price is less than they believe the
company is worth in the market. They attempt to purchase the stock of these
undervalued companies and hold them until their stock price has increased to a
level the managers believe more accurately reflects the fair value of the
company. For Equity Income, the fund managers look for stocks of companies with
a favorable dividend-paying history and, secondarily, for potential increase in
share price.
The chart below shows the primary differences among the funds. A more detailed
description of the funds' investment strategies and risks begins on page 5.
Fund Primary Investments
- --------------------------------------------------------------------------------
Large Cap Value Equity securities of larger companies
- --------------------------------------------------------------------------------
Value Equity securities of medium to large companies
- --------------------------------------------------------------------------------
Small Cap Value Equity securities of smaller companies
- --------------------------------------------------------------------------------
Equity Income Equity securities of companies with a favorable
dividend-paying history
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
If the market does not consider the individual stocks purchased by the funds to
be undervalued, or if the stocks purchased by Equity Income do not continue or
increase dividend payments or their stock price declines, the value of the
funds' shares may not increase as quickly as other funds and may decline, even
if stock prices are generally rising.
The smaller companies in which Small Cap Value invests may present greater
opportunities for capital appreciation than larger companies, but also may
present greater risks.
WHO MAY WANT TO INVEST IN THE FUNDS?
The funds may be a good investment if you are
* seeking long-term capital growth and income from your investment
* comfortable with the risks associated with the funds' investment strategies
* comfortable with the funds' short-term price volatility
* investing through an IRA or other tax-advantaged retirement plan
WHO MAY NOT WANT TO INVEST IN THE FUNDS?
The funds may not be a good investment if you are
* investing for a short period of time
* not seeking income from an equity investment
* uncomfortable with short-term volatility in the value of your investment
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An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
2 American Century Investments 1-800-345-3533
FUND PERFORMANCE HISTORY
VALUE FUND
EQUITY INCOME FUND
Average Total Returns (1)
The following bar chart shows the performance of the funds' Advisor Class shares
for each full calendar year in the life of the class. It indicates the
volatility of the funds' historical returns from year to year. Large Cap Value
and Small Cap Value are not included because the Advisor Class of those funds
does not yet have a full calendar year of performance.
[bar chart data below]
Value Equity Index
1997 25.73%
1998 4.55% 12.29%
(1) As of June 30, 1999, the end of the most recent calendar quarter, the funds'
year-to-date returns were: Value, 13.19% and Equity Income, 7.89%.
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
- --------------------------------------------------------------------------------
Value 18.20% (2Q 1999) -10.90% (3Q 1998)
- --------------------------------------------------------------------------------
Equity Income 13.95% (4Q 1998) -6.25% (3Q 1998)
Average Annual Returns
The following table shows the average annual total returns of the funds' Advisor
Class shares for the periods indicated. The S&P 500/BARRA Value Index and the S&
P 500 Index are unmanaged indices that have no operating costs and are included
in the table for performance comparison. The Lipper Equity Income Fund Index is
a non-weighted index of the 30 largest equity income mutual funds. Large Cap
Value and Small Cap Value are not included because the Advisor Class of those
funds does not yet have a full calendar year of performance.
For the calendar year ended December 31, 1998 1 year Life of Fund(1)
- --------------------------------------------------------------------------------
Value 4.55% 16.76%
S&P 500/BARRA Value Index 14.68% 23.45%(2)
- --------------------------------------------------------------------------------
Equity Income 12.29% 19.94%
Lipper Equity Income Index 11.78% 21.09%(3)
S&P 500 Index 28.68% 28.53%
(1) The inception dates for the Advisor Class of the funds are Value, October 2,
1996, and Equity Income, March 7, 1997.
(2) Benchmark from October 31, 1996.
(3) Benchmark from March 31, 1997.
Performance Information of Other Class
The original class of shares of the funds was the Investor Class. For
information about the historical performance of the original class of shares,
see page 20.
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The performance information on this page is designed to help you see how fund
returns can vary. Keep in mind that past performance does not predict how the
funds will perform in the future.
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For current performance information, including yields, please call us at
1-800-345-3533.
www.americancentury.com American Century Investments 3
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Institutional Class shares of other American Century
funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the funds.
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Large Cap Value 0.65%(1) 0.50% 0.00%(2) 1.15%
- ----------------------------------------------------------------------------------------
Value 0.75% 0.50% 0.00%(3) 1.25%
- ----------------------------------------------------------------------------------------
Small Cap Value 1.00% 0.50% 0.00%(3) 1.50%
- ----------------------------------------------------------------------------------------
Equity Income 0.75% 0.50% 0.00%(3) 1.25%
</TABLE>
(1) The fund has a stepped fee schedule. As a result, the fund's management fee
rate generally decreases as fund assets increase. Please consult the Statement
of Additional Information for more details about the fund's management fee.
(2) Other expenses, which include the fees and expenses of the fund's
independent directors, its legal counsel and interest, are expected to be less
than 0.005% for the current fiscal year.
(3) Other expenses, which include the fees and expenses of the funds'
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- --------------------------------------------------------------
Large Cap Value $117 $364 N/A N/A
- --------------------------------------------------------------
Value $127 $395 $683 $1,503
- --------------------------------------------------------------
Small Cap Value $152 $472 N/A N/A
- --------------------------------------------------------------
Equity Income $127 $395 $683 $1,503
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Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
4 American Century Investments 1-800-345-3533
INFORMATION ABOUT THE FUNDS
LARGE CAP VALUE FUND
VALUE FUND
SMALL CAP VALUE FUND
WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?
The funds seek long-term capital growth. Income is a secondary objective.
HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?
The fund managers use a value investment strategy that looks primarily for
companies whose stock price is less than they believe the company is worth in
the market. They attempt to purchase the stock of these undervalued companies
and hold them until their stock price has increased to a level the managers
believe more accurately reflects the fair value of the company.
Companies may be undervalued due to market declines, poor economic conditions,
actual or anticipated bad news regarding the issuer or its industry, or because
they have been overlooked by the market. To identify these companies, the fund
managers look for companies with earnings, cash flows and/or assets may not be
reflected accurately in the stock price or may be outside of the companies'
historical range. The fund managers also look for companies whose dividend
payments appear high when compared to the stock price.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 65% of the funds' assets
invested in U.S. equity securities at all times. When the fund managers believe
that it is prudent, the funds also may invest a portion of their assets in
convertible securities, foreign securities, debt securities of companies, debt
obligations of governments and their agencies, non-leveraged stock index futures
contracts and other similar securities. Stock index futures contracts, a type of
derivative security, can help the funds' cash assets remain liquid while
performing more like stocks. The funds have a policy governing stock index
futures which prohibits leverage of the funds' assets by investing in a
derivative security. For example, the fund managers cannot invest in a
derivative security if it would be possible for a fund to lose more money than
it invested. A complete description of the derivatives policy is included in the
Statement of Additional Information.
In the event of exceptional market or economic conditions, the funds may, as a
temporary defensive measure, invest all or a substantial portion of their assets
in cash or short-term debt securities. To the extent a fund assumes a defensive
position, it will not be pursuing its objective of capital growth.
Additional information about the funds' investments is available in their annual
and semiannual reports. In these reports you will find a discussion of the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period. You may get these
reports at no cost by calling us.
www.americancentury.com American Century Investments 5
WHAT IS THE DIFFERENCE BETWEEN THE FUNDS?
* Large Cap Value invests primarily in larger companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers ranking generally among the 1,000 largest companies
in the United States as measured by their MARKET CAPITALIZATION.
* Value invests primarily in medium to large companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers that the fund managers believe to be medium to
large companies as measured by their market capitalization. The fund managers
consider medium to large companies to include those with a market capitalization
larger than the largest company in the S&P SMALLCAP 600/BARRA VALUE INDEX.
* Small Cap Value invests primarily in smaller companies. Under normal market
conditions, the fund will have at least 65% of its assets invested in U.S.
equity securities of issuers that the fund managers believe to be smaller
companies as measured by their market capitalization. The fund managers consider
smaller companies to include those with a market capitalization that is not
bigger than that of the largest company in the S&P SmallCap 600/BARRA Value
Index.
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUNDS?
The value of a 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.
As with all funds, at any given time the value of your shares of a fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
If the market does not consider the individual stocks purchased by a fund to be
undervalued, the value of the fund's shares may not increase as quickly as other
funds and may decline, even if stock prices are generally rising.
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 a
fund's style, the fund's gains may not be as big as, or their losses may be
bigger than, other funds using different investment styles.
Small Cap Value invests primarily in securities of smaller companies. These
smaller companies may present greater opportunities for capital appreciation,
but also may involve greater risks than larger companies. Smaller companies may
have limited financial resources, product lines and markets, and their
securities trade less frequently and in more limited amounts than the securities
of large companies. As a result, the value of the stocks issued by these smaller
companies may go up and down more than the stocks of larger issuers. This price
volatility may be reflected in the share price of the fund.
To the extent the funds invest in foreign securities, the overall risk of the
funds could be affected. Foreign securities can have certain unique risks,
including fluctuations in currency exchange rates, less stable political and
economic structures, reduced availability of public information, and lack of
uniform financial reporting and regulatory practices similar to those that apply
in the United States. These factors make investing in foreign securities
generally riskier than investing in U.S. stocks.
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The MARKET CAPITALIZATION of a company is the number of its outstanding shares
times the share price.
The S&P SMALLCAP 600/BARRA VALUE INDEX is an unmanaged stock index that tracks
the performance of small companies that may be attractive to investors using the
value style of investing. As of June 30, 1999, the largest company contained in
the index had a market capitalization of $2.3 billion, while the median company
in the index had a market capitalization of $390 million.
6 American Century Investments 1-800-345-3533
EQUITY INCOME FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
Equity Income seeks to provide current income. Capital appreciation is a
secondary objective.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?
The fund managers look for stocks with a favorable dividend-paying history that
have the prospects for dividend payments to continue or increase. Secondarily,
the fund managers look for the possibility that the stock price may increase.
The fund seeks to receive dividend payments that provide the fund a yield that
exceeds the yield of the stocks comprising the S&P 500 Index.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 85% of the fund's assets
invested in income-paying securities and at least 65% of its assets in U.S.
equity securities. When the fund managers believe that it is prudent, the fund
also may invest a portion of its assets in convertible securities, foreign
securities, debt securities of companies, debt obligations of governments and
their agencies, 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 which prohibits leverage of the
fund's assets by investing in a derivative security. For example, the fund
managers cannot invest in a derivative security if it would be possible for the
fund to lose more money than it invested. A complete description of the
derivatives policy is included in the Statement of Additional Information.
In 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 short-term debt securities. To the extent the fund assumes a
defensive position, it will not be pursuing its objective of capital growth.
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.
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
If the individual stocks purchased by the fund do not continue or increase
dividend payments, or if their stock price does not increase, the value of the
fund's shares may not increase as quickly as other funds and may decline, even
if stock prices are generally rising.
The value of the fund's assets invested in bonds and other fixed-income
securities will go up and down as prevailing interest rates change. Generally,
when interest rates rise, the fund's share value will decline. The opposite is
true when interest rates decline.
To the extent the fund invests in foreign securities, the overall risk of the
fund could be affected. Foreign securities can have certain unique risks,
including fluctuations in currency exchange rates, less stable political and
economic structures, reduced availability of public information, and lack of
uniform financial reporting and regulatory practices similar to those that apply
in the United States. These factors make investing in foreign securities
generally riskier than investing in U.S. stocks.
www.americancentury.com American Century Investments 7
MANAGEMENT
WHO MANAGES THE FUNDS?
The Board of Directors, investment advisor and fund management team play key
roles in the management of the funds.
THE BOARD OF DIRECTORS
The Board of Directors oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired an investment advisor to do
so. More than two-thirds of the directors are independent of the funds' advisor;
that is, they are not employed by and have no financial interest in the advisor.
THE INVESTMENT ADVISOR
The funds' investment advisor is American Century Investment Management, Inc.
The advisor has been managing mutual funds since 1958. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.
For the services it provided to the funds during the most recent fiscal year,
the advisor received a unified management fee based on a percentage of the
average net assets of the Advisor Class shares of each fund. The amount of the
management fee is calculated on a class-by-class basis daily and paid monthly.
Large Cap Value will pay the advisor a unified management fee of 0.65% of the
first $1 billion of average net assets, 0.55% of the next $4 billion of average
net assets, and 0.45% of average net assets over $5 billion of the Advisor Class
of shares.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the funds 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 funds' advisor to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed by
an affiliate of the advisor.
Management Fees Paid by the Funds to the Advisor as a Percentage of Average Net
Assets for the Most Recent Fiscal Year Ended March 31, 1999
- --------------------------------------------------------------------------------
Value 0.75%
- --------------------------------------------------------------------------------
Small Cap Value 1.00%
- --------------------------------------------------------------------------------
Equity Income 0.75%
8 American Century Investments 1-800-345-3533
THE FUND MANAGEMENT TEAMS
The advisor uses teams of portfolio managers, assistant portfolio managers and
analysts to manage the funds. Teams meet regularly to review portfolio holdings
and to discuss purchase and sale activity. Team members buy and sell securities
for a fund as they see fit, guided by the fund's investment objectives and
strategies.
The portfolio managers on the investment teams are identified below:
Large Cap Value
MARK MALLON
Mr. Mallon, Chief Investment Officer--Value and Quantitative Equities and Senior
Vice President, has been a member of the team that manages Large Cap Value since
its inception in July 1999. He joined American Century in April 1997. From
August 1978 until he joined American Century, he was employed in several
positions by Federated Investors and served as President and Chief Executive
Officer of Federated Investment Counseling and Executive Vice President of
Federated Research Corporation since January 1990. He has a bachelor of arts
from Westminster College and an MBA from Cornell University. He is a Chartered
Financial Analyst.
CHARLES RITTER
Mr. Ritter, Vice President and Portfolio Manager, has been a member of the team
that manages Large Cap Value since its inception in July 1999. He joined
American Century in December 1998. Before joining American Century, he spent 15
years with Federated Investors, most recently serving as Vice President and
Portfolio Manager. He has a bachelor's degree in mathematics and a master's in
economics from Carnegie Mellon University. He also has an MBA from the
University of Chicago. He is a Chartered Financial Analyst.
Value
PHILLIP N. DAVIDSON
Mr. Davidson, Vice President and Portfolio Manager, has been a member of the
team that manages Value since joining American Century in September 1993. Prior
to joining American Century, he spent 11 years at Boatmen's Trust Company in St.
Louis and served as Vice President and Portfolio Manager responsible for
institutional value equity clients. He has a bachelor's degree in finance and an
MBA from Illinois State University.
SCOTT A. MOORE
Mr. Moore, Portfolio Manager, has been a member of the team that manages Value
since October 1996 and Portfolio Manager since February 1999. He joined American
Century in August 1993 as an Investment Analyst. He has a bachelor's degree in
finance from Southern Illinois University and an MBA in finance from the
University of Missouri- Columbia. He is a Chartered Financial Analyst.
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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 funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or from 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.
www.americancentury.com American Century Investments 9
Small Cap Value
R. TODD VINGERS
Mr. Vingers, Portfolio Manager, has been a member of the team that manages Small
Cap Value since its inception in July 1998. He joined American Century in August
1994 as an Investment Analyst. He has a bachelor's degree in business
administration from the University of St. Thomas and an MBA in finance and
accounting from the University of Chicago. He is a Chartered Financial Analyst.
BENJAMIN Z. GIELE
Mr. Giele, Portfolio Manager, has been a member of the team that manages Small
Cap Value since its inception in July 1998 and Portfolio Manager since February
1999. He joined American Century in May 1998 as an Investment Analyst. Before
joining American Century, he served as an Investment Analyst at USAA Investment
Management Company from June 1995 to May 1998 and as an Investment Analyst at
Texas Commerce Investment Management from July 1992 to June 1995. He has a
bachelor of arts from Rice University and an MBA in finance and accounting from
the University of Texas-Austin. He is a Chartered Financial Analyst.
Equity Income
PHILLIP N. DAVIDSON
Mr. Davidson, Vice President and Portfolio Manager, has been a member of the
team that manages Equity Income since its inception in August 1994. He joined
American Century in September 1993. Prior to joining American Century, he spent
11 years at Boatmen's Trust Company in St. Louis and served as Vice President
and Portfolio Manager responsible for institutional value equity clients. He has
a bachelor's degree in finance and an MBA from Illinois State University.
SCOTT A. MOORE
Mr. Moore, Portfolio Manager, has been a member of the team that manages Equity
Income since October 1996 and Portfolio Manager since February 1999. He joined
American Century in August 1993 as an Investment Analyst. He has a bachelor's
degree in finance from Southern Illinois University and an MBA in finance from
the University of Missouri-Columbia. He is a Chartered Financial Analyst.
10 American Century Investments 1-800-345-3533
FUNDAMENTAL INVESTMENT POLICIES
Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without a shareholder vote. The Board of Directors may change any other policies
and investment strategies.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the funds, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the funds' other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the funds' business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the funds own could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the funds' performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 11
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 own or are considering purchasing shares through a financial intermediary
or a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* cutoff time for investments
Please contact your financial intermediary or plan sponsor for a complete
description of its policies. Copies of the funds' annual reports, semiannual
reports and Statements 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 transactions in fund shares 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 funds.
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 funds have authorized
those intermediaries to accept orders on each 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 a fund's behalf.
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[graphic of pointing finger]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
12 American Century Investments 1-800-345-3533
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 funds and their 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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
www.americancentury.com American Century Investments 13
SHARE PRICE AND DISTRIBUTIONS
SHARE PRICE
American Century determines the NET ASSET VALUE (NAV) of the funds 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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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 each fund to make distributions to its shareholders in
order to qualify as a "regulated investment company." Qualification as a
regulated investment company means that the funds 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 funds pay distributions of substantially all of their income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. They may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
[left margin]
The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
14 American Century Investments 1-800-345-3533
TAXES
The tax consequences of owning shares of the funds will vary depending on
whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they have
received or capital gains they have generated through their 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 an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
Taxability of Distributions
Fund distributions may consist of income earned by the funds from sources such
as dividends and interest, or capital gains generated from the sale of fund
investments. Distributions of income are taxed as ordinary income. Distributions
of capital gains are classified either as short term or long term and are taxed
as follows:
<TABLE>
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28% Bracket or Above
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Short-term capital gains Ordinary income rate Ordinary income rate
- ----------------------------------------------------------------------------------------
Long-term capital gains 10% 20%
</TABLE>
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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always 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 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 distribution of long-term capital
gains to you with respect to such 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.
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[graphic of pointing finger]
BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
www.americancentury.com American Century Investments 15
MULTIPLE CLASS INFORMATION
American Century offers three classes of the funds: Investor Class,
Institutional Class and Advisor Class. The shares offered by this Prospectus are
Advisor Class shares and are offered primarily to institutional investors
through institutional distribution channels, such as employer-sponsored
retirement plans, or through 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 than the Advisor
Class. The difference in the fee structures among the classes is the result of
their separate arrangements for shareholder and distribution services and not
the result of any difference in amounts charged by the advisor for core
investment advisory services. Accordingly, the core investment advisory expenses
do not vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at
* 1-800-345-2021 for Investor Class shares
* 1-800-345-3533 for Institutional Class shares
You also can contact a sales representative or financial intermediary who offers
those classes of shares.
Except as described below, all classes of shares of the funds have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
16 American Century Investments 1-800-345-3533
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The tables on the next few pages itemize what contributed to the changes in
share price during the period. They also show the changes in share price for
this period in comparison to changes over the last five fiscal years or less, if
the share class is not five years old.
On a per-share basis, the tables include as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The tables also include some key statistics for the period as appropriate
* TOTAL RETURN --the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Reports are included in the funds' annual
reports for the fiscal year ended March 31, 1999, which are incorporated by
reference into the Statement of Additional Information, and are available upon
request.
www.americancentury.com American Century Investments 17
<TABLE>
<CAPTION>
VALUE FUND
Advisor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998 1997(1)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 7.73 $ 6.58 $ 6.71
---------- ---------- ----------
Income From Investment Operations
Net Investment Income(2) ............................ 0.06 0.08 0.05
Net Realized and Unrealized Gain (Loss) on
Investment Transactions .............................. (0.80) 2.35 0.48
---------- ---------- ----------
Total From Investment Operations ................... (0.74) 2.43 0.53
---------- ---------- ----------
Distributions
From Net Investment Income .......................... (0.07) (0.08) (0.05)
In Excess of Net Investment Income .................. -- -- --(3)
From Net Realized Gains on Investment Transactions .. (1.15) (1.20) (0.61)
---------- ---------- ----------
Total Distributions ................................. (1.22) (1.28) (0.66)
---------- ---------- ----------
Net Asset Value, End of Period ........................ $ 5.77 $ 7.73 $ 6.58
========== ========== ==========
Total Return(4) ..................................... (10.09)% 39.60% 8.07%
Ratios/Supplemental Data
1999 1998 1997(1)
Ratio of Operating Expenses to Average Net Assets ..... 1.25% 1.25% 1.25%(5)
Ratio of Net Investment Income to Average Net Assets .. 0.94% 1.13% 1.50%(5)
Portfolio Turnover Rate ............................... 130% 130% 111%
Net Assets, End of Period (in thousands) .............. $ 54,277 $ 56,118 $ 29,250
(1) October 2, 1996 (commencement of sale) through March 31, 1997.
(2) Computed using average shares outstanding throughout the period.
(3) Per share amount was less than $0.005.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
18 American Century Investments 1-800-345-3533
EQUITY INCOME FUND
Advisor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998 1997(1)
Net Asset Value, Beginning of Period ................................... $ 7.16 $ 6.31 $ 6.57
---------- ---------- ----------
Income From Investment Operations
Net Investment Income(2) ............................................. 0.21 0.23 0.02
Net Realized and Unrealized Gain (Loss) on Investment Transactions ... (0.24) 2.00 (0.21)
---------- ---------- ----------
Total From Investment Operations ..................................... (0.03) 2.23 (0.19)
---------- ---------- ----------
Distributions
From Net Investment Income ........................................... (0.22) (0.22) (0.07)
In Excess of Net Investment Income ................................... -- -- --(3)
From Net Realized Gains on Investment Transactions ................... (0.96) (1.16) --
---------- ---------- ----------
Total Distributions .................................................. (1.18) (1.38) (0.07)
---------- ---------- ----------
Net Asset Value, End of Period ......................................... $ 5.95 $ 7.16 $ 6.31
========== ========== ==========
Total Return(4) ...................................................... (0.75)% 37.71% (2.89)%
Ratios/Supplemental Data
1999 1998 1997(1)
Ratio of Operating Expenses to Average Net Assets ...................... 1.25% 1.25% 1.25%(5)
Ratio of Net Investment Income to Average Net Assets ................... 3.06% 3.27% 1.64%(5)
Portfolio Turnover Rate ................................................ 180% 158% 159%
Net Assets, End of Period (in thousands) ............................... $ 12,251 $ 731 $ 18
(1) March 7, 1997 (commencement of sale) through March 31, 1997.
(2) Computed using average shares outstanding throughout the period.
(3) Per share amount was less than $0.005.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
</TABLE>
www.americancentury.com American Century Investments 19
PERFORMANCE INFORMATION OF OTHER CLASS
The following financial information is provided to show the performance of the
funds' original class of shares. This class, the Investor Class, has a total
expense ratio that is 0.25% lower than the Advisor Class. If the Advisor Class
had existed during the periods presented, its performance would have been lower
because of the additional expense.
The tables on the next pages itemize what contributed to the changes in share
price during the period.
On a per-share basis, the tables include as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The tables also include some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Reports are included in the funds' annual
reports for the fiscal year ended March 31, 1999, which are incorporated by
reference into the Statement of Additional Information, and are available upon
request.
20 American Century Investments 1-800-345-3533
<TABLE>
<CAPTION>
VALUE FUND
Investor Class
For a Share Outstanding Throughout the Years Ended March 31
Per-Share Data
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year ....................$ 7.73 $ 6.58 $ 6.32 $ 5.46 $ 4.98
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net Investment Income(1) ............................ 0.08 0.10 0.12 0.13 0.12
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ........................ (0.80) 2.35 0.87 1.34 0.75
------------- ------------- ------------- ------------- -------------
Total From Investment Operations .................... (0.72) 2.45 0.99 1.47 0.87
------------- ------------- ------------- ------------- -------------
Distributions
From Net Investment Income .......................... (0.09) (0.10) (0.12) (0.12) (0.12)
In Excess of Net Investment Income .................. -- -- --(2) (0.01) --
From Net Realized Gains on Investment Transactions .. (1.15) (1.20) (0.61) (0.48) (0.27)
------------- ------------- ------------- ------------- -------------
Total Distributions ................................. (1.24) (1.30) (0.73) (0.61) (0.39)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Year ..........................$ 5.77 $ 7.73 $ 6.58 $ 6.32 $ 5.46
============= ============= ============= ============= =============
Total Return(3) ..................................... (9.88)% 39.94% 15.92% 28.06% 18.56%
Ratios/Supplemental Data
1999 1998 1997 1996 1995
Ratio of Operating Expenses to Average Net Assets ..... 1.00% 1.00% 1.00% 0.97% 1.00%
Ratio of Net Investment Income to Average Net Assets .. 1.19% 1.38% 1.86% 2.17% 2.65%
Portfolio Turnover Rate ............................... 130% 130% 111% 145% 94%
Net Assets, End of Year (in thousands) ................$ 1,719,367 $ 2,713,562 $ 1,743,582 $ 881,885 $ 348,281
(1) Computed using average shares outstanding throughout the period.
(2) Per share amount was less than $0.005.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
www.americancentury.com American Century Investments 21
SMALL CAP VALUE FUND
Investor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ........................... $ 5.00
----------
Income From Investment Operations
Net Investment Income(2) ..................................... 0.03
Net Realized and Unrealized Loss on Investment Transactions .. (0.24)
----------
Total From Investment Operations ............................. (0.21)
----------
Distributions
From Net Investment Income ................................... (0.02)
From Net Realized Gains on Investment Transactions ........... (0.02)
In Excess of Net Realized Gains .............................. (0.02)
----------
Total Distributions .......................................... (0.06)
----------
Net Asset Value, End of Period ................................. $ 4.73
==========
Total Return(3) .............................................. (4.24)%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets .............. 1.25%(4)
Ratio of Net Investment Income to Average Net Assets ........... 1.02%(4)
Portfolio Turnover Rate ........................................ 153%
Net Assets, End of Period (in thousands) ....................... $ 11,410
(1) July 31, 1998 (inception of fund and class) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) Annualized.
22 American Century Investments 1-800-345-3533
EQUITY INCOME FUND
Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998 1997 1996 1995(1)
Net Asset Value, Beginning of Period .................. $ 7.15 $ 6.31 $ 6.10 $ 5.42 $ 5.00
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income(2) ............................ 0.22 0.25 0.22 0.20 0.09
Net Realized and Unrealized Gain (Loss) on
Investment Transactions ............................. (0.23) 1.99 0.75 1.13 0.44
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .................... (0.01) 2.24 0.97 1.33 0.53
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income .......................... (0.23) (0.24) (0.21) (0.19) (0.09)
In Excess of Net Investment Income .................. -- -- --(3) (0.01) --
From Net Realized Gains on Investment Transactions .. (0.96) (1.16) (0.55) (0.45) (0.02)
----------- ----------- ----------- ----------- -----------
Total Distributions ................................. (1.19) (1.40) (0.76) (0.65) (0.11)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................ $ 5.95 $ 7.15 $ 6.31 $ 6.10 $ 5.42
=========== =========== =========== =========== ===========
Total Return(4) ..................................... (0.44)% 37.78% 16.24% 25.67% 10.69%
Ratios/Supplemental Data
1999 1998 1997 1996 1995(1)
Ratio of Operating Expenses to Average Net Assets ..... 1.00% 1.00% 1.00% 0.98% 1.00%(5)
Ratio of Net Investment Income to Average Net Assets .. 3.31% 3.52% 3.46% 3.51% 4.04%(5)
Portfolio Turnover Rate ............................... 180% 158% 159% 170% 45%
Net Assets, End of Period (in thousands) .............. $ 296,585 $ 355,962 $ 199,388 $ 116,692 $ 52,213
(1) August 1, 1994 (inception) through March 31, 1995.
(2) Computed using average shares outstanding throughout the period.
(3) Per share amount was less than $0.005.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
</TABLE>
www.americancentury.com American Century Investments 23
NOTES
24 American Century Investments 1-800-345-3533
NOTES
www.americancentury.com American Century Investments 25
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
Annual and Semiannual Reports
These reports contain more information about the funds' investments and the
market conditions and investment strategies that significantly affected the
funds' performance during the most recent fiscal period.
Statement of Additional Information (SAI)
The SAI contains a more detailed, legal description of the funds' 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 funds or your accounts, by contacting American Century at
the address or telephone numbers listed below.
You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location
and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying the
documents.)
Investment Company Act File No. 811-7820
[american century logo]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-3533 or 816-531-5575
9907
SH-PRS-16636
<PAGE>
[front cover]
AMERICAN CENTURY
Prospectus
Equity Index Fund
[american century logo (reg. sm)]
American
Century
[left margin]
July 30, 1999
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.
Distributed by Funds Distributor, Inc.
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the fund and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The fund's primary investments and risks
* A description of who may or may not want to invest in the fund
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the fund. If you
have questions, our Investor Relations Representatives are available weekdays, 7
a.m. to 7 p.m., and Saturdays, 9 a.m. to 2 p.m., Central time. Our toll-free
number is 1-800-345-2021. We look forward to helping you achieve your financial
goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
[left margin]
[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419200
Kansas City, MO
64141-6200
TABLE OF CONTENTS
An Overview of the Funds .................................................. 2
Fees and Expenses ......................................................... 3
Information about the Funds ............................................... 4
Management ................................................................ 6
Investing with American Century ........................................... 8
Share Price and Distributions ............................................. 12
Taxes ..................................................................... 13
Multiple Class Information ................................................ 14
Financial Highlights ...................................................... 15
[left margin]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of pointing index finger] This symbol highlights special information
and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
Equity Index seeks long-term capital growth.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The fund seeks to match, as closely as possible, the investment characteristics
and results of the S&P 500 Composite Price Index (S&P 500 Index). The fund
managers buy and sell stocks and other securities in order to build an
investment portfolio that seeks to match the investment characteristics of the
S&P 500 Index. To build this portfolio, the fund managers will invest primarily
in the stocks contained in the S&P 500 Index in order of their weightings in the
index, beginning with the stocks that make up the largest portion of the index.
A more detailed description of the fund's investment strategies and risks begins
on page 4.
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
The fund's ability to match the performance of the S&P 500 Index may be affected
by many factors. The fund managers will use cash flows from purchase and
redemption activity to maintain, to the extent feasible, the similarity of the
fund's portfolio to the investment characteristics of the S&P 500 Index. Because
of the composition of the S&P 500 Index, it is possible that a relatively high
percentage of the fund's assets may be invested in companies in the same
industry or economic sector. As a result, the fund may be subject to greater
risks and market fluctuations than funds investing in a broader range of
industries.
WHO MAY WANT TO INVEST IN THE FUND?
The fund may be a good investment if you are
* seeking long-term capital growth from your investment
* comfortable with the risks associated with the fund's investment strategy
* comfortable with the fund's short-term price volatility
* 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
* investing for a short period of time
* uncomfortable with the risks associated with the fund's investment strategy
* uncomfortable with short-term volatility in the value of your investment
PERFORMANCE HISTORY
Because Equity Index is a new fund, a full calendar year of performance history
is not available as of the date of this prospectus.
[left margin]
[graphic of pointing index finger]
An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
[graphic of pointing index finger]
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
2 American Century Investments 1-800-345-2021
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Investor Class shares of other American Century funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the fund.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- -------------------------------------------------------------------------------
Equity Index 0.49% None 0.00%(1) 0.49%
(1) Other expenses, which include the fees and expenses of the fund's
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
- -----------------------------------------------------------------------------
Equity Index $50 $157
[left margin]
[graphic of pointing index finger]
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
www.americancentury.com American Century Investments 3
INFORMATION ABOUT THE FUND
EQUITY INDEX FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
Equity Index seeks long-term capital growth.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?
Equity Index seeks to match, as closely as possible, the investment
characteristics and results of the S&P 500 Index. The fund managers buy and sell
stocks and other securities in order to build an investment portfolio that seeks
to match the investment characteristics of the S&P 500 Index.
To build this investment portfolio, the fund managers will invest primarily in
the stocks contained in the S&P 500 Index in order of their weightings in the
index, beginning with the stocks that make up the largest portion of the index.
The fund attempts to be fully invested at all times in the stocks that comprise
the S&P 500 Index and, in any event, will keep at least 80% of the fund's total
assets invested this way.
The S&P 500 Index is an unmanaged index composed of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., chooses the stocks to be included
in the S&P 500 Index. The weightings of stocks in the S&P 500 Index are based on
each stock's total MARKET CAPITALIZATION relative to the other stocks contained
in the index. Because of this weighting, the fund expects that the 50 largest
companies will comprise a large proportion of the S&P 500 Index.
When the fund managers believe that it is prudent, the fund may invest a portion
of its assets in convertible securities, debt securities of companies, debt
obligations of governments and their agencies, 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
which prohibits leverage of the fund's assets by investing in a derivative
security. For example, the fund managers cannot invest in a derivative security
if it would be possible for the fund to lose more money than it invested. A
complete description of the derivatives policy is included in the Statement of
Additional Information.
"Standard & Poor's(reg.tm)," "S&P 500(reg.tm)" and "S&P(reg.tm)" are trademarks
of The McGraw-Hill Companies, Inc., and have been licensed for use by American
Century. The fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of investing in the fund. Inclusion of a security in the S&P 500 Index in no way
implies an opinion by Standard & Poor's as to its attractiveness as an
investment.
Additional information about the fund's investments is available in its annual
report. In this report 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 this report at no cost by calling us
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[graphic of pointing index finger]
The MARKET CAPITALIZATION of a company is the number of its outstanding shares
times the share price.
4 American Century Investments 1-800-345-2021
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
The fund managers' ability to match the performance of the S&P 500 Index may be
affected by many factors, such as changes in securities markets, the manner in
which the return of the S&P 500 Index is calculated, the size of the fund's
portfolio, the amount of cash held in the fund's portfolio, and the amount and
timing of shareholder purchases and redemptions. The fund managers will use cash
flows from shareholder purchase and redemption activity to maintain, to the
extent feasible, the similarity of its portfolio to the securities comprising
the S&P 500 Index.
It is intended that Equity Index will be diversified to the extent that the S&P
500 Index is diversified. Because of the composition of the S&P 500 Index, it is
possible that a relatively high percentage of the fund's assets may be invested
in the securities of a limited number of issuers, some of which may be in the
same industry or economic sector. As a result, the fund's portfolio may be more
sensitive to changes in the market value of a single issuer or industry than
other equity funds using different investment styles.
Market performance tends to be cyclical and, in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the fund's style, the fund's gains may not be as big as, or its losses may be
bigger than, other equity funds using different investment styles.
www.americancentury.com American Century Investments 5
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. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.
The advisor has, in turn, hired Barclays Global Fund Advisors to make the
day-to-day investment decisions for the fund. Barclays Global Fund Advisors
performs this function under the supervision of American Century Investment
Management, Inc. and the fund's Board of Directors.
For the services it provided to the fund during the most recent fiscal year, the
advisor received a unified management fee of 0.49% of the average net assets of
the Investor Class shares of the fund. The amount of the management fee is
calculated on a class-by-class basis daily and paid monthly.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. 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.
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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 from profiting from the purchase and sale of the same security within 60
calendar days. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the fund to obtain approval before executing permitted personal
trades.
6 American Century Investments 1-800-345-2021
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.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the fund, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the fund's other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the fund's business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the fund's performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 7
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.
WAYS TO MANAGE YOUR ACCOUNT
- --------------------------------------------------------------------------------
BY TELEPHONE
Investor Relations
1-800-345-2021
Business, Not-For-Profit and
Employer-Sponsored
Retirement Plans
1-800-345-3533
Automated Information Line
1-800-345-8765
[graphic of telephone]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call us or use our Automated Information Line if you have authorized us to
accept telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call us or use our Automated Information Line if you have authorized us to
invest from your bank account.
SELL SHARES
Call an Investor Relations Representative.
- --------------------------------------------------------------------------------
BY MAIL OR FAX
P.O. Box 419200
Kansas City, MO 64141-6200
Fax
816-340-7962
[graphic of envelope]
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send us written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send us your check or money order for at least $50 with an investment slip or
$250 without an investment slip. If you don't have an investment slip, include
your name, address and account number on your check or money order.
SELL SHARES
Send us written instructions or a redemption form to sell shares. Call an
Investor Relations Representative to request a form.
- --------------------------------------------------------------------------------
ONLINE
www.americancentury.com
[graphic of a computer]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Exchange shares from another American Century account.
MAKE ADDITIONAL INVESTMENTS
Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.
SELL SHARES
Not available.
8 American Century Investments 1-800-345-2021
A NOTE ABOUT MAILINGS TO SHAREHOLDERS
To reduce expenses and demonstrate respect for our environment, we will deliver
most financial reports, prospectuses and account statements to households in a
single envelope, even if the accounts are registered under different names. If
you would like additional copies of financial reports and prospectuses or
separate mailing of account statements, please call us.
YOUR GUIDE TO SERVICES AND POLICIES
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the fund and the transfer agent.
- --------------------------------------------------------------------------------
BY WIRE
[graphic of pointing index finger] Please remember that if you request
redemptions by wire, $10 will be deducted from the amount redeemed.
Your bank also may charge a fee.
[graphic of wire machine]
OPEN AN ACCOUNT
Call us to set up your account or mail a completed application to the address
provided in the "By mail" section and give your bank the following information.
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number+
* Your name
* The contribution year (for IRAs only)
+ For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions provided in the "Open an account" section.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
- --------------------------------------------------------------------------------
AUTOMATICALLY
[graphic of arrows in circle]
OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send us written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
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.
- --------------------------------------------------------------------------------
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.
Kansas City, Missouri
8 a.m. to 5 p.m., Monday - Friday
1665 Charleston Road
Mountain View, California
8:30 a.m. to 5 p.m., Monday - Friday
4917 Town Center Drive
Leawood, Kansas
8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday
9445 East County Line Road, Suite A
Englewood, Colorado
8 a.m. to 6 p.m., Monday - Friday
8 a.m. to noon, Saturday
www.americancentury.com American Century Investments 9
MINIMUM INITIAL INVESTMENT AMOUNTS
To open an account, the minimum investments are:
- --------------------------------------------------------------------------
Individual or Joint $10,000
- --------------------------------------------------------------------------
Traditional IRA $10,000
- --------------------------------------------------------------------------
Roth IRA $10,000
- --------------------------------------------------------------------------
Education IRA N/A
- --------------------------------------------------------------------------
UGMA/UTMA $10,000
- --------------------------------------------------------------------------
403(b) No minimum
- --------------------------------------------------------------------------
Qualified Retirement Plans $10,000(1)
(1) The minimum investment requirements may be different for some types of
retirement accounts.
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.
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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
10 American Century Investments 1-800-345-2021
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
* minimum investment requirements
* exchange policies
* fund choices
* 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 report 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 transactions in fund shares 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 those
intermediaries to accept orders on its 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.
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[graphic of pointing index finger]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
www.americancentury.com American Century Investments 11
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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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 that 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 pays distributions of substantially all of its income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. It may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
[left margin]
The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
12 American Century Investments 1-800-345-2021
TAXES
The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always 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 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 distribution of long-term capital
gains to you with respect to such 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.
[left margin]
[graphic of pointing index finger]
BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
www.americancentury.com American Century Investments 13
MULTIPLE CLASS INFORMATION
American Century offers two classes of the fund: Investor Class and
Institutional 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 class of shares primarily to institutional
investors through institutional distribution channels, such as
employer-sponsored retirement plans, or through banks, broker-dealers and
insurance companies. The other class has different fees, expenses and/or minimum
investment requirements than 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 class of shares not offered by this Prospectus, call us at
1-800-345-3533. You also can contact a sales representative or financial
intermediary who offers that class of shares.
Except as described below, all classes of shares of the fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
14 American Century Investments 1-800-345-2021
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The table on the next page itemizes what contributed to the changes in share
price during the period.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal period ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
www.americancentury.com American Century Investments 15
EQUITY INDEX FUND
Investor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
- -------------------------------------------------------------------------------
Net Asset Value, Beginning of Period ................................ $5.00
---------
Income From Investment Operations
Net Investment Income(2) .......................................... 0.01
Net Realized and Unrealized Gain on Investment Transactions ....... 0.19
---------
Total From Investment Operations .................................. 0.20
---------
Net Asset Value, End of Period ...................................... $5.20
=========
Total Return(3) ................................................... 4.00%
Ratios/Supplemental Data
1999(1)
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets ................... 0.49%(4)
Ratio of Net Investment Income to Average Net Assets ................ 1.13%(4)
Portfolio Turnover Rate ............................................. 0%
Net Assets, End of Period (in thousands) ............................ $17,010
(1) February 26, 1999 (inception) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total return for periods less than one year are not
annualized.
(4) Annualized.
16 American Century Investments 1-800-345-2021
NOTES
www.americancentury.com American Century Investments 17
[back cover]
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).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location
and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo (reg. sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
9907
SH-PRS-16854
<PAGE>
[front cover]
AMERICAN CENTURY
Prospectus
Equity Index Fund
[american century logo (reg. sm)]
American
Century
[left margin]
July 30, 1999
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.
Distributed by Funds Distributor, Inc.
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the fund and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The fund's primary investments and risks
* A description of who may or may not want to invest in the fund
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the fund. If you
have questions, our Service Representatives are available weekdays, 8 a.m. to 5
p.m., Central time. Our toll-free number is 1-800-345-3533. We look forward to
helping you achieve your financial goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
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[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419385
Kansas City, MO
64141-6385
TABLE OF CONTENTS
An Overview of the Fund .................................................. 2
Fees and Expenses ......................................................... 3
Information about the Fund ............................................... 4
Management ................................................................ 6
Investing with American Century ........................................... 8
Share Price and Distributions ............................................. 11
Taxes ..................................................................... 12
Multiple Class Information ................................................ 13
Financial Highlights ...................................................... 14
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Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of pointing index finger] This symbol highlights special information
and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUNDS
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
Equity Index seeks long-term capital growth.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The fund seeks to match, as closely as possible, the investment characteristics
and results of the S&P 500 Composite Price Index (S&P 500 Index). The fund
managers buy and sell stocks and other securities in order to build an
investment portfolio that seeks to match the investment characteristics of the
S&P 500 Index. To build this portfolio, the fund managers will invest primarily
in the stocks contained in the S&P 500 Index in order of their weightings in the
index, beginning with the stocks that make up the largest portion of the index.
A more detailed description of the fund's investment strategies and risks begins
on page 4.
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
The fund's ability to match the performance of the S&P 500 Index may be affected
by many factors. The fund managers will use cash flows from purchase and
redemption activity to maintain, to the extent feasible, the similarity of the
fund's portfolio to the investment characteristics of the S&P 500 Index. Because
of the composition of the S&P 500 Index, it is possible that a relatively high
percentage of the fund's assets may be invested in companies in the same
industry or economic sector. As a result, the fund may be subject to greater
risks and market fluctuations than funds investing in a broader range of
industries.
WHO MAY WANT TO INVEST IN THE FUND?
The fund may be a good investment if you are
* seeking long-term capital growth from your investment
* comfortable with the risks associated with the fund's investment strategy
* comfortable with the fund's short-term price volatility
* 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
* investing for a short period of time
* uncomfortable with the risks associated with the fund's investment strategy
* uncomfortable with short-term volatility in the value of your investment
PERFORMANCE HISTORY
Because Equity Index is a new fund, a full calendar year of performance history
is not available as of the date of this prospectus.
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An investment in the funds is not a bank deposit, and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
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For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
2 American Century Investments 1-800-345-3533
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Institutional Class shares of other American Century
funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the fund.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
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Equity Index 0.29% None 0.00%(1) 0.29%
(1) Other expenses, which include the fees and expenses of the fund's
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years
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Equity Index $30 $93
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Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
www.americancentury.com American Century Investments 3
INFORMATION ABOUT THE FUND
EQUITY INDEX FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
Equity Index seeks long-term capital growth.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?
Equity Index seeks to match, as closely as possible, the investment
characteristics and results of the S&P 500 Index. The fund managers buy and sell
stocks and other securities in order to build an investment portfolio that seeks
to match the investment characteristics of the S&P 500 Index.
To build this investment portfolio, the fund managers will invest primarily in
the stocks contained in the S&P 500 Index in order of their weightings in the
index, beginning with the stocks that make up the largest portion of the index.
The fund attempts to be fully invested at all times in the stocks that comprise
the S&P 500 Index and, in any event, will keep at least 80% of the fund's total
assets invested this way.
The S&P 500 Index is an unmanaged index composed of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. Standard & Poor's, a
division of The McGraw-Hill Companies, Inc., chooses the stocks to be included
in the S&P 500 Index. The weightings of stocks in the S&P 500 Index are based on
each stock's total MARKET CAPITALIZATION relative to the other stocks contained
in the index. Because of this weighting, the fund expects that the 50 largest
companies will comprise a large proportion of the S&P 500 Index.
When the fund managers believe that it is prudent, the fund may invest a portion
of its assets in convertible securities, debt securities of companies, debt
obligations of governments and their agencies, 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
which prohibits leverage of the fund's assets by investing in a derivative
security. For example, the fund managers cannot invest in a derivative security
if it would be possible for the fund to lose more money than it invested. A
complete description of the derivatives policy is included in the Statement of
Additional Information.
"Standard & Poor's(reg.tm)," "S&P 500(reg.tm)" and "S&P(reg.tm)" are trademarks
of The McGraw-Hill Companies, Inc., and have been licensed for use by American
Century. The fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the advisability
of investing in the fund. Inclusion of a security in the S&P 500 Index in no way
implies an opinion by Standard & Poor's as to its attractiveness as an
investment.
Additional information about the fund's investments is available in its annual
report. In this report 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 this report at no cost by calling us.
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The MARKET CAPITALIZATION of a company is the number of its outstanding shares
times the share price.
4 American Century Investments 1-800-345-3533
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
The fund managers' ability to match the performance of the S&P 500 Index may be
affected by many factors, such as changes in securities markets, the manner in
which the return of the S&P 500 Index is calculated, the size of the fund's
portfolio, the amount of cash held in the fund's portfolio, and the amount and
timing of shareholder purchases and redemptions. The fund managers will use cash
flows from shareholder purchase and redemption activity to maintain, to the
extent feasible, the similarity of its portfolio to the securities comprising
the S&P 500 Index.
It is intended that Equity Index will be diversified to the extent that the S&P
500 Index is diversified. Because of the composition of the S&P 500 Index, it is
possible that a relatively high percentage of the fund's assets may be invested
in the securities of a limited number of issuers, some of which may be in the
same industry or economic sector. As a result, the fund's portfolio may be more
sensitive to changes in the market value of a single issuer or industry than
other equity funds using different investment styles.
Market performance tends to be cyclical and, in the various cycles, certain
investment styles may fall in and out of favor. If the market is not favoring
the fund's style, the fund's gains may not be as big as, or its losses may be
bigger than, other equity funds using different investment styles.
www.americancentury.com American Century Investments 5
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. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.
The advisor has, in turn, hired Barclays Global Fund Advisors to make the
day-to-day investment decisions for the fund. Barclays Global Fund Advisors
performs this function under the supervision of American Century Investment
Management, Inc. and the fund's Board of Directors.
For the services it provided to the fund during the most recent fiscal year, the
advisor received a unified management fee of 0.29% of the average net assets of
the Institutional Class shares of the fund. The amount of the management fee is
calculated on a class-by-class basis daily and paid monthly.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. 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.
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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 from profiting from the purchase and sale of the same security within 60
calendar days. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the fund to obtain approval before executing permitted personal
trades.
6 American Century Investments 1-800-345-3533
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.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the fund, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the fund's other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the fund's business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the fund's performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 7
INVESTING WITH AMERICAN CENTURY
ELIGIBILITY FOR INSTITUTIONAL CLASS SHARES
The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
retirement plans, endowments, foundations and financial advisors that meet the
fund's minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.
MINIMUM INITIAL INVESTMENT AMOUNTS
The minimum investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermediary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has an aggregate
investment in our family of funds of $10 million or more ($5 million for
endowments and foundations). In addition, financial intermediaries or plan
recordkeepers may require retirement plans to meet certain additional
requirements, such as plan size or a minimum level of assets per participant, in
order to be eligible to purchase Institutional Class shares.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
If your 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 management fee that is 0.20%
higher than the Institutional Class.
SERVICES AUTOMATICALLY AVAILABLE TO YOU
You automatically will have access to the services listed on the next page 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.
8 American Century Investments 1-800-345-3533
WAYS TO MANAGE YOUR ACCOUNT
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BY TELEPHONE
Service Representative
1-800-345-3533
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OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call us or use our Automated Information Line if you have authorized us to
accept telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call us if you have authorized us to invest from your bank account.
SELL SHARES
Call a Service Representative.
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BY MAIL OR FAX
P.O. Box 419385
Kansas City, MO 64141-6385
Fax
816-340-4655
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send us written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send us your check or money order for at least $50 with an investment slip or
$250 without an investment slip. If you don't have an investment slip, include
your name, address and account number on your check or money order.
SELL SHARES
Send us written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.
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BY WIRE
[graphic of pointing index finger] Please remember that if you request
redemptions by wire, $10 will be deducted from the amount wired. Your bank also
may charge a fee.
[graphic of a wire machine]
OPEN AN ACCOUNT
Call us to set up your account or mail a completed application to the address
provided in the "By mail" section and give your bank the following information.
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number+
* Your name
* The contribution year (for IRAs only)
+ For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions provided in the "Open an account" section.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
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AUTOMATICALLY
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OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send us written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
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.
www.americancentury.com American Century Investments 9
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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
INVESTING THROUGH FINANCIAL INTERMEDIARIES
If you own or are considering purchasing shares through a financial intermediary
or a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* 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 report 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 transactions in fund shares 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 those
intermediaries to accept orders on its 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.
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Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
10 American Century Investments 1-800-345-3533
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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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.
It is the responsibility of your plan recordkeeper or financial intermediary to
transmit your purchase, exchange and redemption requests to the fund's transfer
agent prior to the applicable cutoff time for receiving orders and to make
payment for any purchase transactions in accordance with the fund's procedures
or any contractual arrangements with the fund or the fund's distributor in order
for you to receive that day's price.
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 that 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 pays distributions of substantially all of its income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. It may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
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The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
www.americancentury.com American Century Investments 11
TAXES
The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
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
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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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always 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 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 distribution of long-term capital
gains to you with respect to such 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.
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BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
12 American Century Investments 1-800-345-3533
MULTIPLE CLASS INFORMATION
American Century offers two classes of the fund: Investor Class and
Institutional Class. The shares offered by this Prospectus are Institutional
Class shares and are offered primarily to institutional investors through
institutional distribution channels, such as employer-sponsored retirement
plans, or through 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 Investor Class has
different fees, expenses and/or minimum investment requirements than the
Institutional Class. The difference in the fee structures among 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 class of shares not
offered by this Prospectus, call us at 1-800-345-2021 or contact a sales
representative or financial intermediary who offers that class of shares.
Except as described below, all classes of shares of the fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
www.americancentury.com American Century Investments 13
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The table on the next page itemizes what contributed to the changes in share
price during the period.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal period ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
14 American Century Investments 1-800-345-3533
EQUITY INDEX FUND
Institutional Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period .............................. $5.00
----------
Income From Investment Operations
Net Investment Income(2) ........................................ 0.01
Net Realized and Unrealized Gain on Investment Transactions ..... 0.19
----------
Total From Investment Operations ................................ 0.20
----------
Net Asset Value, End of Period .................................... $5.20
==========
Total Return(3) ................................................. 4.00%
Ratios/Supplemental Data
1999(1)
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets ................. 0.29%(4)
Ratio of Net Investment Income to Average Net Assets .............. 1.33%(4)
Portfolio Turnover Rate ........................................... 0%
Net Assets, End of Period (in thousands) .......................... $264,58
(1) February 26, 1999 (inception) through March 31, 1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total return for periods less than one year are not
annualized.
(4) Annualized.
www.americancentury.com American Century Investments 15
NOTES
16 American Century Investments 1-800-345-3533
NOTES
www.americancentury.com American Century Investments 17
[back cover]
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).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location
and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo (reg. sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-3533 or 816-531-5575
9907
SH-PRS-16855
<PAGE>
AMERICAN CENTURY
Prospectus
Real Estate Fund
[american century logo (reg. sm)]
American
Century
July 30, 1999
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.
Distributed by
Funds Distributor, Inc.
[inside front cover]
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the fund and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The fund's primary investments and risks
* A description of who may or may not want to invest in the fund
* Fund performance, including returns for each year, best and worst quarters,
and average annual returns compared to the fund's benchmark
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the fund. If you
have questions, our Investor Relations Representatives are available weekdays, 7
a.m. to 7 p.m., and Saturdays, 9 a.m. to 2 p.m., Central time. Our toll-free
number is 1-800-345-2021. We look forward to helping you achieve your financial
goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
[left margin]
[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419200
Kansas City, MO
64141-6200
TABLE OF CONTENTS
An Overview of the Fund ................................................... 2
Fund Performance History .................................................. 3
Fees and Expenses ......................................................... 4
Information about the Fund ................................................ 5
Management ................................................................ 7
Investing with American Century ........................................... 10
Share Price and Distributions ............................................. 14
Taxes ..................................................................... 15
Multiple Class Information ................................................ 17
Financial Highlights ...................................................... 18
[left margin]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of finger pointing]
This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
The Real Estate Fund seeks long-term capital appreciation. Income is a secondary
objective.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The fund invests primarily in real estate securities. These securities include
shares of real estate investment trusts (REITs) and companies engaged in the
real estate industry. The fund managers look for real estate securities they
believe will provide superior returns to the fund, focusing on companies with
the potential for stock price appreciation, plus strong growth of cash flow to
investors. A more detailed description of the fund's investment strategies and
risks begins on page 5.
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
An investment in the fund may be subject to many of the same risks as a direct
investment in real estate. These risks include changes in economic conditions,
interest rates, property values, property tax increases, overbuilding and
increased competition, environmental contamination, zoning and natural
disasters. This is due to the fact that the value of the fund's investments may
be affected by the value of the real estate owned by the companies in which it
invests. To the extent the fund invests in companies that make loans to real
estate companies, the fund also may be subject to interest rate risk.
Because the fund concentrates its investments in real estate securities, it may
be subject to greater risks and market fluctuations than funds investing in a
broader range of industries.
WHO MAY WANT TO INVEST IN THE FUND?
The fund may be a good investment if you are
* seeking long-term capital growth and current income from your investment
* seeking diversification of your investment portfolio through an investment in
real estate securities
* comfortable with the risks associated with investing in real estate
securities
* comfortable with the fund's short-term price volatility
* 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
* investing for a short period of time
* uncomfortable with the risks associated with investments in real estate
* uncomfortable with short-term volatility in the value of your investment
[left margin]
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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.
2 American Century Investments 1-800-345-2021
FUND PERFORMANCE HISTORY
REAL ESTATE FUND
Average Total Returns (1)
The following bar chart shows the performance of the fund's Investor Class
shares for each full calendar year in the life of the fund. It indicates the
volatility of the fund's historical returns from year to year.
[bar chart data below]
1996 40.81%
1997 25.21%
1998 -18.10%
(1) As of June 30, 1999, the end of the most recent calendar quarter, the Real
Estate Fund's year-to-date return was 7.44% .
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
- --------------------------------------------------------------------------------
Real Estate Fund 19.92% (4Q 1996) -13.35% (3Q 1998)
Average Annual Returns
The following table shows the average annual total returns of the fund's
Investor Class shares for the periods indicated. The benchmark is an unmanaged
index that has no operating costs and is included in the table for performance
comparison.
For the calendar year ended December 31, 1998 1 year Life of Fund (1)
- ------------------------------------------------------------------------------
Real Estate Fund -18.10% 13.54%
Wilshire REIT Index -16.96% 11.32%(2)
(1) The inception date for the Real Estate Fund is September 21, 1995.
(2) Benchmark from September 30, 1995.
[left margin]
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The performance information on this page is designed to help you see how fund
returns can vary. Keep in mind that past performance does not predict how the
fund will perform in the future.
[graphic of finger pointing]
For current performance information, please call us at 1-800-345-2021 or visit
American Century's Web site at www.americancentury.com.
www.americancentury.com American Century Investments 3
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Investor Class shares of other American Century funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the fund.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- --------------------------------------------------------------------------------
Real Estate Fund 1.20% None 0.00%(1) 1.20%
(1) Other expenses, which include the fees and expenses of the fund's
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
Real Estate Fund $122 $380 $657 $1,447
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Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
4 American Century Investments 1-800-345-2021
INFORMATION ABOUT THE FUND
REAL ESTATE FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
The Real Estate Fund seeks long-term capital appreciation. Income is a secondary
objective.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?
The fund invests primarily in equity securities issued by real estate investment
trusts (REITs) and companies engaged in the real estate industry. The fund
managers look for real estate securities they believe will provide superior
returns to the fund. They attempt to focus the fund's investments on real estate
companies and REITs with the potential for stock price appreciation, plus strong
growth of cash flow to investors.
To find these issuers, the fund managers track economic conditions and real
estate market performance in major metropolitan areas and analyze performance of
various property types within those regions. To perform this analysis, they use
information from a nationwide network of real estate professionals to evaluate
the holdings of real estate companies and REITs in which the fund may invest.
Their analysis also includes the companies' management structure, financial
structure and business strategy. The goal of these analyses is to determine
which of the issuers the fund managers believe will be the most profitable to
the fund. The fund managers also consider the effect of the real estate
securities markets in general when making investment decisions.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 80% of the fund's assets
invested in EQUITY SECURITIES of REITs or real estate companies. A company is
considered to be a real estate company if, in the opinion of the fund managers,
at least 50% of its revenues or 50% of the market value of its assets at the
time its securities are purchased by the fund are attributed to the ownership,
construction, management or sale of real estate.
When the fund managers believe that it is prudent, the fund may invest a portion
of its assets in other types of securities. These securities may include
convertible securities, foreign securities, short-term securities, bonds, notes,
securities of companies not principally engaged in the real estate industry,
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 which prohibits leverage of the fund's assets by
investing in a derivative security. For example, the fund managers cannot invest
in a derivative security if it would be possible for the fund to lose more money
than it invested. A complete description of the derivatives policy is included
in the Statement of Additional Information.
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.
WHAT IS A REIT?
A real estate investment trust, or REIT, invests primarily in income-producing
real estate or makes loans to persons involved in the real estate industry.
Some REITs, called equity REITs, buy real estate, and investors receive income
from the rents received and from any profits on the sale of its properties.
Other REITs, called mortgage REITs, lend money to building developers and other
real estate companies, and receive income from interest paid on those loans.
There are also hybrid REITs which engage in both owning real estate and making
loans.
If a REIT meets certain requirements, it is not taxed on the income it
distributes to its investors.
[left margin]
EQUITY SECURITIES include common stock, preferred stock and securities
convertible into common stock.
www.americancentury.com American Century Investments 5
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
An investment in the fund may be subject to many of the same risks as a direct
investment in real estate. This is due to the fact that the value of the fund's
investments may be affected by the value of the real estate owned by the
companies in which it invests. These risks include changes in economic
conditions, interest rates, property values, property tax increases,
overbuilding and increased competition, environmental contamination, zoning and
natural disasters.
To the extent the fund invests in mortgage REITs, it will be subject to credit
risk and interest rate risk with respect to the loans made by the REITs in which
it invests. Credit risk is the risk that the borrower will not be able to make
interest and principal payments on the loan to the REIT when they are due.
Interest rate risk is the risk that a change in the prevailing interest rate
will cause the value of the loan portfolio held by the REIT to rise or fall.
Generally, when interest rates rise, the value of the loan portfolio will
decline. The opposite is true when interest rates decline. The degree to which
interest rate changes affect the fund's performance varies and is related to the
specific characteristics of the loan portfolios of the mortgage REITs in which
the fund invests.
Because the fund concentrates its investments in real estate securities, it may
be subject to greater risks and market fluctuations than a fund representing a
broader range of industries. In addition, market performance tends to be
cyclical and, in the various cycles, certain investment styles may fall in and
out of favor. If the market is not favoring the fund's style, the fund's gains
may not be as big as, or its losses may be bigger than, other equity funds using
different investment styles.
6 American Century Investments 1-800-345-2021
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. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.
For the services it provided to the fund during the most recent fiscal year, the
advisor received a unified management fee of 1.20% of the average net assets of
the Investor Class shares of the fund. The amount of the management fee is
calculated on a class-by-class basis daily and paid monthly.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. 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.
www.americancentury.com American Century Investments 7
THE FUND MANAGEMENT TEAM
American Century Investment Management, Inc. provides investment advisory and
management services for the fund. American Century Investment Management, Inc.
has, in turn, hired RREEF America, L.L.C. to make the day-to-day investment
decisions for the fund. RREEF America performs this function under the
supervision of American Century Investment Management, Inc. and the fund's Board
of Directors.
The portfolio managers on the investment team are identified below:
KIM G. REDDING
Mr. Redding, Portfolio Manager, is a Senior Vice President of RREEF America.
From 1990 to 1993, he was a principal in K.G. Redding & Associates, an
investment advisor, and was previously the President of Redding, Melchor &
Company, an investment advisor. He has been managing portfolios of real estate
securities since 1987.
KAREN J. KNUDSON
Ms. Knudson, Portfolio Manager, is a Senior Vice President of RREEF America.
Prior to joining RREEF, she was a Senior Vice President and Chief Financial
Officer of Security Capital Group, an investment advisor. She has more than 16
years of real estate investment experience, specializing in real estate
investment trusts.
The representative of American Century Investment Management, Inc. who oversees
the management of the fund is identified as follows:
MARK MALLON
Mr. Mallon, Chief Investment Officer--Value and Quantitative Equities and Senior
Vice President, joined American Century in April 1997. From August 1978 until he
joined American Century, he was employed in several positions by Federated
Investors and served as President and Chief Executive Officer of Federated
Investment Counseling and Executive Vice President of Federated Research
Corporation since January 1990. He has a bachelor of arts from Westminster
College and an MBA from Cornell University. He is a Chartered Financial Analyst
[left margin]
[graphic of finger pointing]
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 from profiting from the purchase and sale of the same security within 60
calendar days. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the fund to obtain approval before executing permitted personal
trades.
8 American Century Investments 1-800-345-2021
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.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the fund, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the fund's other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the fund's business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the fund's performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 9
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.
WAYS TO MANAGE YOUR ACCOUNT
- --------------------------------------------------------------------------------
BY TELEPHONE
Investor Relations 1-800-345-2021
Business, Not-For-Profit and Employer-Sponsored Retirement Plans
1-800-345-3533
Automated Information Line 1-800-345-8765
[illustration of telephone]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call us or use our Automated Information Line if you have authorized us to
accept telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call us or use our Automated Information Line if you have authorized us to
invest from your bank account.
SELL SHARES
Call an Investor Relations Representative.
- --------------------------------------------------------------------------------
BY MAIL OR FAX
P.O. Box 419200 Kansas City, MO 64141-6200
Fax
816-340-7962
[illustration of envelope]
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send us written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send us your check or money order for at least $50 with an investment slip or
$250 without an investment slip. If you don't have an investment slip, include
your name, address and account number on your check or money order.
SELL SHARES
Send us written instructions or a redemption form to sell shares. Call an
Investor Relations Representative to request a form.
- --------------------------------------------------------------------------------
ONLINE
www.americancentury.com
[illustration of computer]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Exchange shares from another American Century account.
MAKE ADDITIONAL INVESTMENTS
Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.
SELL SHARES
Not available.
10 American Century Investments 1-800-345-2021
A NOTE ABOUT MAILINGS TO SHAREHOLDERS
To reduce expenses and demonstrate respect for our environment, we will deliver
most financial reports, prospectuses and account statements to households in a
single envelope, even if the accounts are registered under different names. If
you would like additional copies of financial reports and prospectuses or
separate mailing of account statements, please call us.
YOUR GUIDE TO SERVICES AND POLICIES
When you open an account, you will receive a services guide, which explains the
services available to you and the policies of the fund and the transfer agent.
- --------------------------------------------------------------------------------
BY WIRE
[graphic of finger pointing]
Please remember that if you request redemptions by wire, $10 will be deducted
from the amount redeemed. Your bank also may charge a fee.
[illustration of wire machine]
OPEN AN ACCOUNT
Call us to set up your account or mail a completed application to the address
provided in the "By mail" section and give your bank the following information
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number+
* Your name
* The contribution year (for IRAs only)
+ For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions provided in the "Open an account" section.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
- --------------------------------------------------------------------------------
AUTOMATICALLY
[illustration of arrows in circle]
OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send us written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
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.
- --------------------------------------------------------------------------------
IN PERSON
[illustration of a 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
www.americancentury.com American Century Investments 11
MINIMUM INITIAL INVESTMENT AMOUNTS
To open an account, the minimum investments are:
- --------------------------------------------------------------------------------
Individual or Joint $2,500
- --------------------------------------------------------------------------------
Traditional IRA $1,000
- --------------------------------------------------------------------------------
Roth IRA $1,000
- --------------------------------------------------------------------------------
Education IRA $500
- --------------------------------------------------------------------------------
UGMA/UTMA $1,000
- --------------------------------------------------------------------------------
403(b) No minimum
- --------------------------------------------------------------------------------
Qualified Retirement Plans $2,500(1)
(1 ) The minimum investment requirements may be different for some types of
retirement accounts.
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.
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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
12 American Century Investments 1-800-345-2021
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
* minimum investment requirements
* exchange policies
* fund choices
* 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 report, semiannual
report 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 transactions in fund shares 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 those
intermediaries to accept orders on its 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.
[left margin]
[graphic of finger pointing]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
www.americancentury.com American Century Investments 13
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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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 that 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 pays distributions of substantially all of its income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. It may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
[left margin]
The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
14 American Century Investments 1-800-345-2021
TAXES
The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
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, long term or UNRECAPTURED
SECTION 1250 CAPITAL GAINS, and are taxed as follows:
Type of Distribution Tax Rate for Tax Rate for
15% Bracket 28% Bracket or Above
- --------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
- --------------------------------------------------------------------------------
Long-term capital gains 10% 20%
- --------------------------------------------------------------------------------
Unrecaptured Section Ordinary income rate 25%
1250 capital gains
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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Additionally, the fund may receive distributions of unrecaptured Section 1250
capital gains from REITs. To the extent the fund receives such distributions,
unrecaptured Section 1250 capital gains will be distributed to shareholders of
the fund.
Because of the nature of REIT investments, REITs may generate significant
non-cash deductions, such as depreciation on real estate holdings, while having
a greater cash flow to distribute to its shareholders. If a REIT distributes
more cash flow than it has taxable income, a RETURN OF CAPITAL results. The fund
may pay a return of capital distribution to its shareholders by distributing
more cash than its taxable income. If you do not reinvest distributions, the
cost basis of your shares will be decreased by the amount of returned capital,
which may result in a larger capital gain when you sell your shares. Although a
return of capital generally is not taxable to you upon distribution, it would be
taxable to you as a capital gain if your cost basis in the shares is reduced to
zero. This could occur if you do not reinvest distributions and the returns of
capital are significant.
[left margin]
[graphic of finger pointing]
BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
UNRECAPTURED SECTION 1250 CAPITAL GAINS, named for the Internal Revenue Code
section that describes them, are frequently realized upon the sale of real
estate and are subject to a maximum tax rate of 25%. These gains are received by
the fund from its REIT securities and are then subsequently passed through to
shareholders.
A RETURN OF CAPITAL represents the return of a portion of a shareholder's
original investment that is generally non-taxable when distributed, or returned,
to the investor.
www.americancentury.com American Century Investments 15
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always consult your tax professional about federal,
state and local tax consequences.
Because the REITs invested in by the fund do not provide complete information
about the taxability of their distributions until after the calendar year end,
American Century may not be able to determine how much of the fund's
distribution is taxable to shareholders until after the January 31 deadline for
issuing Form 1099-DIV. As a result, the fund may request permission from the
Internal Revenue Service each year for an extension of time to issue Form
1099-DIV until February 28.
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 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 distribution of long-term capital
gains to you with respect to such 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.
16 American Century Investments 1-800-345-2021
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 to institutional
investors through institutional distribution channels, such as
employer-sponsored retirement plans, or through banks, broker-dealers and
insurance companies. The other classes have different fees, expenses and/or
minimum investment requirements than 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 the fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
www.americancentury.com American Century Investments 17
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The table on the next page itemizes what contributed to the changes in share
price during the period. It also shows the changes in share price for this
period in comparison to changes over the last five fiscal years.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal year ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
18 American Century Investments 1-800-345-2021
<TABLE>
<CAPTION>
REAL ESTATE FUND
Investor Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998(1) 1997(1) 1996(1) 1995(1)(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 16.12 $ 16.06 $ 12.29 $ 9.82 $ 10.00
Income From Investment Operations
Net Investment Income ............................... 0.73 0.25(3) 0.67(3) 0.55 0.07
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .......................... (4.09) 0.26 4.13 2.27 (0.25)
----- ---- ---- ---- -----
Total From Investment Operations .................... (3.36) 0.51 4.80 2.82 (0.18)
----- ---- ---- ---- -----
Distributions
From Net Investment Income .......................... (0.54) (0.18) (0.48) (0.35) --
From Net Realized Gains on
Investment Transactions ............................. (0.12) (0.27) (0.55) -- --
----- ----- -----
Total Distributions ................................. (0.66) (0.45) (1.03) (0.35) --
----- ----- ----- -----
Net Asset Value, End of Period ........................ $ 12.10 $ 16.12 $ 16.06 $ 12.29 $ 9.82
========= ========= ========= ========= ===========
Total Return(4) ..................................... (21.04)% 3.26% 40.69% 29.28% (1.80)%
Ratios/Supplemental Data
1999 1998(1) 1997(1) 1996(1) 1995(1)(2)
Ratio of Operating Expenses to Average Net Assets ..... 1.20% 1.15%(5) 1.17% 1.00% 1.50%(5)
Ratio of Operating Expenses to Average Net Assets
(before expense waivers and reimbursements)(6) ........ 1.20% 1.20%(5) 1.82% 6.83% 14.83%(5)
Ratio of Net Investment Income to Average Net Assets .. 5.41% 3.75%(5) 4.48% 5.84% 6.66%(5)
Ratio of Net Investment Income to Average Net Assets
(before expense waivers and reimbursements)(6) ........ 5.41% 3.70%(5) 3.84% 0.01% (6.67)%(5)
Portfolio Turnover Rate ............................... 66% 28% 69% 86% --
Net Assets, End of Period (in thousands) .............. $ 110,285 $ 135,922 $ 76,932 $ 7,209 $ 2,983
</TABLE>
(1) The period ended March 31, 1998 represents a five month reporting period.
The fund's fiscal year end was changed from October 31 to March 31 during
the period. Periods prior to 1998 are based on a fiscal year ended October
31.
(2) September 21, 1995 (inception) through October 31, 1995.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
(6) During the periods ended October 31, 1996 and October 31, 1995 and for a
portion of the period ended October 31, 1997, the advisor voluntarily
agreed to waive its management fee and reimburse certain expenses incurred
by the fund. Also, prior to the unified management fee structure, effective
June 13, 1997, the custodian offset part of its fees for balance credits
given to the fund. During the period ended March 31, 1998, a portion of the
subadvisory fee, which is paid for subadvisory services, was waived.
www.americancentury.com American Century Investments 19
NOTES
20 American Century Investments 1-800-345-2021
NOTES
www.americancentury.com American Century Investments 21
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).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo (reg. sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
9907
SH-PRS-16638
<PAGE>
AMERICAN CENTURY
Prospectus
Real Estate Fund
[american century logo (reg. sm)]
American
Century
JULY 30, 1999
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.
Distributed by
Funds Distributor, Inc.
[inside front cover]
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the fund and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The fund's primary investments and risks
* A description of who may or may not want to invest in the fund
* Fund performance, including returns for each year, best and worst quarters,
and average annual returns compared to the fund's benchmark
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the fund. If you
have questions, our Service Representatives are available weekdays, 8 a.m. to 5
p.m., Central time. Our toll-free number is 1-800-345-3533. We look forward to
helping you achieve your financial goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
[left margin]
[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419385
Kansas City, MO
64141-6385
TABLE OF CONTENTS
An Overview of the Fund .................................................... 2
Fund Performance History ................................................... 3
Fees and Expenses .......................................................... 4
Information about the Fund ................................................. 5
Management ................................................................. 7
Investing with American Century ............................................ 10
Share Price and Distributions .............................................. 13
Taxes ...................................................................... 14
Multiple Class Information ................................................. 16
Financial Highlights ....................................................... 17
Performance Information of Other Class ..................................... 19
[left margin]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of finger pointing]
This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
The Real Estate Fund seeks long-term capital appreciation. Income is a secondary
objective.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The fund invests primarily in real estate securities. These securities include
shares of real estate investment trusts (REITs) and companies engaged in the
real estate industry. The fund managers look for real estate securities they
believe will provide superior returns to the fund, focusing on companies with
the potential for stock price appreciation, plus strong growth of cash flow to
investors. A more detailed description of the fund's investment strategies and
risks begins on page 5.
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
An investment in the fund may be subject to many of the same risks as a direct
investment in real estate. These risks include changes in economic conditions,
interest rates, property values, property tax increases, overbuilding and
increased competition, environmental contamination, zoning and natural
disasters. This is due to the fact that the value of the fund's investments may
be affected by the value of the real estate owned by the companies in which it
invests. To the extent the fund invests in companies that make loans to real
estate companies, the fund also may be subject to interest rate risk.
Because the fund concentrates its investments in real estate securities, it may
be subject to greater risks and market fluctuations than funds investing in a
broader range of industries.
WHO MAY WANT TO INVEST IN THE FUND?
The fund may be a good investment if you are
* seeking long-term capital growth and current income from your investment
* seeking diversification of your investment portfolio through an investment in
real estate securities
* comfortable with the risks associated with investing in real estate
securities
* comfortable with the fund's short-term price volatility
* 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
* investing for a short period of time
* uncomfortable with the risks associated with investments in real estate
* uncomfortable with short-term volatility in the value of your investment
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[graphic of finger pointing]
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.
2 American Century Investments 1-800-345-3533
FUND PERFORMANCE HISTORY
REAL ESTATE FUND
Average Total Returns (1)
The following bar chart shows the performance of the fund's Institutional Class
shares for each full calendar year in the life of the class.
[bar chart data below]
1998 -17.86%
(1) As of June 30, 1999, the end of the most recent calendar quarter, the Real
Estate Fund's year-to-date return was 0.96%.
The highest and lowest quarterly returns for the period reflected in the bar
chart are:
Highest Lowest
- --------------------------------------------------------------------------------
Real Estate Fund 12.15% (4Q 1998) -13.23% (3Q 1998)
Average Annual Returns
The following table shows the average annual total returns of the fund's
Institutional Class shares for the periods indicated during the life of the
class. The benchmark is an unmanaged index that has no operating costs and is
included in the table for performance comparison.
For the calendar year ended December 31, 1998 1 year Life of Fund (1)
- ------------------------------------------------------------------------------
Real Estate Fund -17.86% -2.05%
Wilshire REIT Index -16.96% -4.06%(2)
(1) The inception date for the Institutional Class of the Real Estate Fund is
June 16, 1997.
(2) Benchmark from June 30, 1997.
Performance Information of Other Class
The original class of shares of the fund was the Investor Class. For information
about the historical performance of the original class of shares, see page 19.
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[graphic of finger pointing]
The performance information on this page is designed to help you see how fund
returns can vary. Keep in mind that past performance does not predict how the
fund will perform in the future.
[graphic of finger pointing]
For current performance information, please call us at 1-800-345-3533.
www.americancentury.com American Century Investments 3
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Institutional Class shares of other American Century
funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the fund.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- --------------------------------------------------------------------------------
Real Estate
Fund 1.00% None 0.00%(1) 1.00%
(1) Other expenses, which include the fees and expenses of the fund's
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------
Real Estate Fund $102 $318 $551 $1,219
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Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
4 American Century Investments 1-800-345-3533
INFORMATION ABOUT THE FUND
REAL ESTATE FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
The Real Estate Fund seeks long-term capital appreciation. Income is a secondary
objective.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?
The fund invests primarily in equity securities issued by real estate investment
trusts (REITs) and companies engaged in the real estate industry. The fund
managers look for real estate securities they believe will provide superior
returns to the fund. They attempt to focus the fund's investments on real estate
companies and REITs with the potential for stock price appreciation, plus strong
growth of cash flow to investors.
To find these issuers, the fund managers track economic conditions and real
estate market performance in major metropolitan areas and analyze performance of
various property types within those regions. To perform this analysis, they use
information from a nationwide network of real estate professionals to evaluate
the holdings of real estate companies and REITs in which the fund may invest.
Their analysis also includes the companies' management structure, financial
structure and business strategy. The goal of these analyses is to determine
which of the issuers the fund managers believe will be the most profitable to
the fund. The fund managers also consider the effect of the real estate
securities markets in general when making investment decisions.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 80% of the fund's assets
invested in EQUITY SECURITIES of REITs or real estate companies. A company is
considered to be a real estate company if, in the opinion of the fund managers,
at least 50% of its revenues or 50% of the market value of its assets at the
time the securities are purchased by the fund are attributed to the ownership,
construction, management or sale of real estate.
When the fund managers believe that it is prudent, the fund may invest a portion
of its assets in other types of securities. These securities may include
convertible securities, foreign securities, short-term securities, bonds, notes,
securities of companies not principally engaged in the real estate industry,
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 which prohibits leverage of the fund's assets by
investing in a derivative security. For example, the fund managers cannot invest
in a derivative security if it would be possible for the fund to lose more money
than it invested. A complete description of the derivatives policy is included
in the Statement of Additional Information.
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.
WHAT IS A REIT?
A real estate investment trust, or REIT, invests primarily in income-producing
real estate or makes loans to persons involved in the real estate industry.
Some REITs, called equity REITs, buy real estate, and investors receive income
from the rents received and from any profits on the sale of its properties.
Other REITs, called mortgage REITs, lend money to building developers and other
real estate companies, and receive income from interest paid on those loans.
There are also hybrid REITs which engage in both owning real estate and making
loans.
If a REIT meets certain requirements, it is not taxed on the income it
distributes to its investors.
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EQUITY SECURITIES include common stock, preferred stock and securities
convertible into common stock.
www.americancentury.com American Century Investments 5
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
An investment in the fund may be subject to many of the same risks as a direct
investment in real estate. This is due to the fact that the value of the fund's
investments may be affected by the value of the real estate owned by the
companies in which it invests. These risks include changes in economic
conditions, interest rates, property values, property tax increases,
overbuilding and increased competition, environmental contamination, zoning and
natural disasters.
To the extent the fund invests in mortgage REITs, it will be subject to credit
risk and interest rate risk with respect to the loans made by the REITs in which
it invests. Credit risk is the risk that the borrower will not be able to make
interest and principal payments on the loan to the REIT when they are due.
Interest rate risk is the risk that a change in the prevailing interest rate
will cause the value of the loan portfolio held by the REIT to rise or fall.
Generally, when interest rates rise, the value of the loan portfolio will
decline. The opposite is true when interest rates decline. The degree to which
interest rate changes affect the fund's performance varies and is related to the
specific characteristics of the loan portfolios of the mortgage REITs in which
the fund invests.
Because the fund concentrates its investments in real estate securities, it may
be subject to greater risks and market fluctuations than a fund representing a
broader range of industries. In addition, market performance tends to be
cyclical and, in the various cycles, certain investment styles may fall in and
out of favor. If the market is not favoring the fund's style, the fund's gains
may not be as big as, or its losses may be bigger than, other equity funds using
different investment styles.
6 American Century Investments 1-800-345-3533
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. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.
For the services it provided to the fund during the most recent fiscal year, the
advisor received a unified management fee of 1.00% of the average net assets of
the Institutional Class shares of the fund. The amount of the management fee is
calculated on a class- by-class basis daily and paid monthly.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. 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.
www.americancentury.com American Century Investments 7
THE FUND MANAGEMENT TEAM
American Century Investment Management, Inc. provides investment advisory and
management services for the fund. American Century Investment Management, Inc.
has, in turn, hired RREEF America, L.L.C. to make the day-to-day investment
decisions for the fund. RREEF America performs this function under the
supervision of American Century Investment Management, Inc. and the fund's Board
of Directors.
The portfolio managers on the investment team are identified below:
KIM G. REDDING
Mr. Redding, Portfolio Manager, is a Senior Vice President of RREEF America.
From 1990 to 1993, he was a principal in K.G. Redding & Associates, an
investment advisor, and was previously the President of Redding, Melchor &
Company, an investment advisor. He has been managing portfolios of real estate
securities since 1987.
KAREN J. KNUDSON
Ms. Knudson, Portfolio Manager, is a Senior Vice President of RREEF America.
Prior to joining RREEF, she was a Senior Vice President and Chief Financial
Officer of Security Capital Group, an investment advisor. She has more than 16
years of real estate investment experience, specializing in real estate
investment trusts.
The representative of American Century Investment Management, Inc. who oversees
the management of the fund is identified as follows:
MARK MALLON
Mr. Mallon, Chief Investment Officer--Value and Quantitative Equities and Senior
Vice President, joined American Century in April 1997. From August 1978 until he
joined American Century, he was employed in several positions by Federated
Investors and served as President and Chief Executive Officer of Federated
Investment Counseling and Executive Vice President of Federated Research
Corporation since January 1990. He has a bachelor of arts from Westminster
College and an MBA from Cornell University. He is a Chartered Financial Analyst.
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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 from profiting from the purchase and sale of the same security within 60
calendar days. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the fund to obtain approval before executing permitted personal
trades.
8 American Century Investments 1-800-345-3533
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.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the fund, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the fund's other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the fund's business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the fund's performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 9
INVESTING WITH AMERICAN CENTURY
ELIGIBILITY FOR INSTITUTIONAL CLASS SHARES
The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
retirement plans, endowments, foundations and financial advisors that meet the
fund's minimum investment requirements. Institutional Class shares are not
available for purchase by insurance companies for variable annuity and variable
life products.
MINIMUM INITIAL INVESTMENT AMOUNTS
The minimum investment is $5 million ($3 million for endowments and foundations)
per fund. If you invest with us through a financial intermediary, the minimum
investment requirement may be met by aggregating the investments of various
clients of your financial intermediary. The minimum investment requirement may
be waived if you or your financial intermediary, if applicable, has an aggregate
investment in our family of funds of $10 million or more ($5 million for
endowments and foundations). In addition, financial intermediaries or plan
recordkeepers may require retirement plans to meet certain additional
requirements, such as plan size or a minimum level of assets per participant, in
order to be eligible to purchase Institutional Class shares.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
If your 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 management fee that is 0.20%
higher than the Institutional Class.
SERVICES AUTOMATICALLY AVAILABLE TO YOU
You automatically will have access to the services listed on the next page 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.
10 American Century Investments 1-800-345-3533
WAYS TO MANAGE YOUR ACCOUNT
- --------------------------------------------------------------------------------
BY TELEPHONE
Service Representative
1-800-345-3533
[illustration of telephone]
OPEN AN ACCOUNT
If you are a current investor, you can open an account by exchanging shares from
another American Century account.
EXCHANGE SHARES
Call us or use our Automated Information Line if you have authorized us to
accept telephone instructions.
MAKE ADDITIONAL INVESTMENTS
Call us if you have authorized us to invest from your bank account.
SELL SHARES
Call a Service Representative.
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BY MAIL OR FAX
P.O. Box 419385
Kansas City, MO 64141-6385
Fax
816-340-4655
[illustration of envelope]
OPEN AN ACCOUNT
Send a signed, completed application and check or money order payable to
American Century Investments.
EXCHANGE SHARES
Send us written instructions to exchange your shares from one American Century
account to another.
MAKE ADDITIONAL INVESTMENTS
Send us your check or money order for at least $50 with an investment slip or
$250 without an investment slip. If you don't have an investment slip, include
your name, address and account number on your check or money order.
SELL SHARES
Send us written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.
- --------------------------------------------------------------------------------
BY WIRE
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Please remember that if you request redemptions by wire, $10 will be deducted
from the amount wired. Your bank also may charge a fee.
[illustration of wire machine]
OPEN AN ACCOUNT
Call us to set up your account or mail a completed application to the address
provided in the "By mail" section and give your bank the following information.
* Our bank information:
Commerce Bank N.A.
Routing No. 101000019
Account No. 2804918
* The fund name
* Your American Century account number+
* Your name
* The contribution year (for IRAs only)
+For additional investments only
MAKE ADDITIONAL INVESTMENTS
Follow the wire instructions provided in the "Open an account" section.
SELL SHARES
You can receive redemption proceeds by wire or electronic transfer.
EXCHANGE SHARES
Not available.
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AUTOMATICALLY
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OPEN AN ACCOUNT
Not available.
EXCHANGE SHARES
Send us written instructions to set up an automatic exchange of your shares from
one American Century account to another.
MAKE ADDITIONAL INVESTMENTS
With the automatic investment privilege, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.
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.
www.americancentury.com American Century Investments 11
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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
INVESTING THROUGH FINANCIAL INTERMEDIARIES
If you own or are considering purchasing shares through a financial intermediary
or a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* 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 report, semiannual
report 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 transactions in fund shares 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 those
intermediaries to accept orders on its 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.
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Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
12 American Century Investments 1-800-345-3533
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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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.
It is the responsibility of your plan recordkeeper or financial intermediary to
transmit your purchase, exchange and redemption requests to the fund's transfer
agent prior to the applicable cutoff time for receiving orders and to make
payment for any purchase transactions in accordance with the fund's procedures
or any contractual arrangements with the fund or the fund's distributor in order
for you to receive that day's price.
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 that 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 pays distributions of substantially all of its income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. It may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
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The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
www.americancentury.com American Century Investments 13
TAXES
The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
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, long term or UNRECAPTURED
SECTION 1250 CAPITAL GAINS, and are taxed as follows:
Type of Distribution Tax Rate for Tax Rate for 28%
15% Bracket Bracket or Above
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Short-term capital gains Ordinary income rate Ordinary income rate
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Long-term capital gains 10% 20%
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Unrecaptured Section Ordinary income rate 25%
1250 capital gains
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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Additionally, the fund may receive distributions of unrecaptured Section 1250
capital gains from REITs. To the extent the fund receives such distributions,
unrecaptured Section 1250 capital gains will be distributed to shareholders of
the fund.
Because of the nature of REIT investments, REITs may generate significant
non-cash deductions, such as depreciation on real estate holdings, while having
a greater cash flow to distribute to its shareholders. If a REIT distributes
more cash flow than it has taxable income, a RETURN OF CAPITAL results. The fund
may pay a return of capital distribution to its shareholders by distributing
more cash than its taxable income. If you do not reinvest distributions, the
cost basis of your shares will be decreased by the amount of returned capital,
which may result in a larger capital gain when you sell your shares. Although a
return of capital generally is not taxable to you upon distribution, it would be
taxable to you as a capital gain if your cost basis in the shares is reduced to
zero. This could occur if you do not reinvest distributions and the returns of
capital are significant.
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BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
UNRECAPTURED SECTION 1250 CAPITAL GAINS, named for the Internal Revenue Code
section that describes them, are frequently realized upon the sale of real
estate, and are subject to a maximum tax rate of 25%. These gains are received
by the fund from its REIT securities and are then subsequently passed through to
shareholders.
A RETURN OF CAPITAL represents the return of a portion of a shareholder's
original investment that is generally non-taxable when distributed, or returned,
to the investor.
14 American Century Investments 1-800-345-3533
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always consult your tax professional about federal,
state and local tax consequences.
Because the REITs invested in by the fund do not provide complete information
about the taxability of their distributions until after the calendar year end,
American Century may not be able to determine how much of the fund's
distribution is taxable to shareholders until after the January 31 deadline for
issuing Form 1099-DIV. As a result, the fund may request permission from the
Internal Revenue Service each year for an extension of time to issue Form
1099-DIV until February 28.
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 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 distribution of long-term capital
gains to you with respect to such 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.
www.americancentury.com American Century Investments 15
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 to institutional investors through
institutional distribution channels, such as employer-sponsored retirement
plans, or through 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 than the
Institutional Class. The difference in the fee structures among the classes is
the result of their separate arrangements for shareholder and distribution
services and not the result of any difference in amounts charged by the advisor
for core investment advisory services. Accordingly, the core investment advisory
expenses do not vary by class. Different fees and expenses will affect
performance. For additional information concerning the other classes of shares
not offered by this Prospectus, call us at
* 1-800-345-2021 for Investor Class shares
* 1-800-345-3533 for Advisor Class shares
You also can contact a sales representative or financial intermediary who offers
those classes of shares.
Except as described below, all classes of shares of the fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences between the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
16 American Century Investments 1-800-345-3533
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The table on the next page itemizes what contributed to the changes in share
price during the period. It also shows the changes in share price for this
period in comparison to changes over the last three fiscal years.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal year ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
www.americancentury.com American Century Investments 17
<TABLE>
<CAPTION>
REAL ESTATE FUND
Institutional Class
For a Share Outstanding Throughout the Years Ended March 31 (except as noted)
Per-Share Data
1999 1998(1) 1997(1)(2)
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 16.12 $ 16.06 $ 14.24
---------- ---------- ----------
Income From Investment Operations
Net Investment Income(3) ............................ 0.78 0.26 0.28
Net Realized and Unrealized Gain (Loss)
on Investment Transactions .......................... (4.09) 0.26 1.63
---------- ---------- ----------
Total From Investment Operations .................... (3.31) 0.52 1.91
---------- ---------- ----------
Distributions
From Net Investment Income .......................... (0.58) (0.19) (0.09)
From Net Realized Gains
on Investment Transactions .......................... (0.12) (0.27) --
---------- ---------- ----------
Total Distributions ................................. (0.70) (0.46) (0.09)
---------- ---------- ----------
Net Asset Value, End of Period ........................ $ 12.11 $ 16.12 $ 16.06
========== ========== ==========
Total Return(4) ..................................... (20.77)% 3.32% 13.40%
Ratios/Supplemental Data
1999 1998(1) 1997(1)(2)
Ratio of Operating Expenses to Average Net Assets ..... 1.00% 0.95%(5) 1.00%(5)
Ratio of Operating Expenses to Average Net Assets
(before expense waivers and reimbursements)(6) ........ 1.00% 1.00%(5) 1.00%(5)
Ratio of Net Investment Income to Average Net Assets .. 5.61% 4.00%(5) 4.85%(5)
Ratio of Net Investment Income to Average Net Assets
(before expense waivers and reimbursements)(6) ........ 5.61% 3.95%(5) 4.85%(5)
Portfolio Turnover Rate ............................... 66% 28% 69%
Net Assets, End of Period (in thousands) .............. $ 26,315 $ 14,795 $ 13,365
(1) The period ended March 31, 1998 represents a five month reporting period.
The fund's fiscal year was changed from October 31 to March 31 during the
period. Periods prior to 1998 are based on a fiscal year ended October 31.
(2) June 16, 1997 (commencement of sale) through October 31, 1997.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
(6) During the period ended March 31, 1998, a portion of the subadvisory fee,
which is paid for subadvisory services, was waived.
</TABLE>
18 American Century Investments 1-800-345-3533
PERFORMANCE INFORMATION OF OTHER CLASS
The following financial information is provided to show the performance of the
fund's original class of shares. This class, the Investor Class, has a total
expense ratio that is 0.20% higher than the Institutional Class. If the
Institutional Class had existed during the periods presented, its performance
would have been higher because of the lower expense.
The table on the next page itemizes what contributed to the changes in share
price during the period.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal year ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
www.americancentury.com American Century Investments 19
<TABLE>
<CAPTION>
REAL ESTATE FUND
Investor Class
For a Share Outstanding Throughout the Years (except as noted)
Per-Share Data
1999 1998(1) 1997(1) 1996(1) 1995(1)(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 16.12 $ 16.06 $ 12.29 $ 9.82 $ 10.00
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income ..................... 0.73(3) 0.25(3) 0.67(3) 0.55 0.07
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ................ (4.09) 0.26 4.13 2.27 (0.25)
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .......... (3.36) 0.51 4.80 2.82 (0.18)
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income ................ (0.54) (0.18) (0.48) (0.35) --
From Net Realized Gains on
Investment Transactions ................... (0.12) (0.27) (0.55) -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ....................... (0.66) (0.45) (1.03) (0.35) --
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period .............. $ 12.10 $ 16.12 $ 16.06 $ 12.29 $ 9.82
=========== =========== =========== =========== ===========
Total Return(4) ........................... (21.04)% 3.26% 40.69% 29.28% (1.80)%
Ratios/Supplemental Data
1999 1998(1) 1997(1) 1996(1) 1995(1)(2)
Ratio of Operating Expenses
to Average Net Assets ....................... 1.20% 1.15%(5) 1.17% 1.00% 1.50%(5)
Ratio of Operating Expenses
to Average Net Assets
(before expense waivers and
reimbursements)(6) .......................... 1.20% 1.20%(5) 1.82% 6.83% 14.83%(5)
Ratio of Net Investment Income
to Average Net Assets ....................... 5.41% 3.75%(5) 4.48% 5.84% 6.66%(5)
Ratio of Net Investment Income
to Average Net Assets
(before expense waivers and
reimbursements)(6) .......................... 5.41% 3.70%(5) 3.84% 0.01%
(6.67)%(5)
Portfolio Turnover Rate ..................... 66% 28% 69% 86% --
Net Assets, End of Period (in thousands) .... $ 110,285 $ 135,922 $ 76,932 $ 7,209 $ 2,983
(1) The period ended March 31, 1998 represents a five month reporting period.
The fund's fiscal year was changed from October 31 to March 31 during the
period. Periods prior to 1998 are based on a fiscal year ended October 31.
(2) September 21, 1995 (inception) through October 31, 1995.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
(6) During the periods ended October 31, 1996 and October 31, 1995 and for a
portion of the period ended October 31, 1997, the advisor voluntarily agreed to
waive its management fee and reimburse certain expenses incurred by the fund.
Also, prior to the unified management fee structure, effective June 13, 1997,
the custodian offset part of its fees for balance credits given to the fund.
During the period ended March 31, 1998, a portion of the subadvisory fee, which
is paid for subadvisory services, was waived.
</TABLE>
20 American Century Investments 1-800-345-3533
NOTES
www.americancentury.com American Century Investments 21
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).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo (reg. sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-3533 or 816-531-5575
9907
SH-PRS-16640
<PAGE>
AMERICAN CENTURY
Prospectus
Real Estate Fund
[american century logo (reg. sm)]
American
Century
JULY 30, 1999
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.
Distributed by
Funds Distributor, Inc.
[inside front cover]
Dear Investor,
Reading a prospectus doesn't have to be a chore. We've done the hard work so
you can focus on what's important--learning about the fund and tracking your
investments. Take a look inside, and you'll see this prospectus is different. It
takes a clear-cut approach to fund information.
Here's what you'll find:
* The fund's primary investments and risks
* A description of who may or may not want to invest in the fund
* Fund performance, including returns for each year, best and worst quarters,
and average annual returns compared to the fund's benchmark
* An overview of services available and ways to manage your accounts
* Helpful tips and definitions of key investment terms
Whether you're a current investor or investing in mutual funds for the first
time, this prospectus will give you a clear understanding of the fund. If you
have questions, our Service Representatives are available weekdays, 8 a.m. to 5
p.m., Central time. Our toll-free number is 1-800-345-3533. We look forward to
helping you achieve your financial goals.
Sincerely,
/s/Mark Killen
Mark Killen
Senior Vice President
American Century Investment Services, Inc.
[left margin]
[american century logo (reg. sm)]
American
Century
American Century
Investments
P.O. Box 419385
Kansas City, MO
64141-6385
TABLE OF CONTENTS
An Overview of the Fund ................................................... 2
Fund Performance History .................................................. 3
Fees and Expenses ......................................................... 4
Information about the Fund ................................................ 5
Management ................................................................ 7
Investing with American Century ........................................... 10
Share Price and Distributions ............................................. 12
Taxes ..................................................................... 13
Multiple Class Information ................................................ 15
Financial Highlights ...................................................... 16
Performance Information of Other Class .................................... 18
[left margin]
Throughout this book you'll find definitions of key investment terms and
phrases. When you see a word printed in GREEN ITALICS, look for its definition
in the left margin.
[graphic of finger pointing]
This symbol highlights special information and helpful tips.
American Century Investments
AN OVERVIEW OF THE FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
The Real Estate Fund seeks long-term capital appreciation. Income is a secondary
objective.
WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?
The fund invests primarily in real estate securities. These securities include
shares of real estate investment trusts (REITs) and companies engaged in the
real estate industry. The fund managers look for real estate securities they
believe will provide superior returns to the fund, focusing on companies with
the potential for stock price appreciation, plus strong growth of cash flow to
investors. A more detailed description of the fund's investment strategies and
risks begins on page 5.
The value of a 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 based on the performance of the companies that issued them, general
market and economic conditions, and investor confidence. As with all funds, if
you sell your shares when the value is less than the price you paid, you will
lose money.
An investment in the fund may be subject to many of the same risks as a direct
investment in real estate. These risks include changes in economic conditions,
interest rates, property values, property tax increases, overbuilding and
increased competition, environmental contamination, zoning and natural
disasters. This is due to the fact that the value of the fund's investments may
be affected by the value of the real estate owned by the companies in which it
invests. To the extent the fund invests in companies that make loans to real
estate companies, the fund also may be subject to interest rate risk.
Because the fund concentrates its investments in real estate securities, it may
be subject to greater risks and market fluctuations than funds investing in a
broader range of industries.
WHO MAY WANT TO INVEST IN THE FUND?
The fund may be a good investment if you are
* seeking long-term capital growth and current income from your investment
* seeking diversification of your investment portfolio through an investment in
real estate securities
* comfortable with the risks associated with investing in real estate
securities
* comfortable with the fund's short-term price volatility
* 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
* investing for a short period of time
* uncomfortable with the risks associated with investments in real estate
* uncomfortable with short-term volatility in the value of your investment
[left margin]
[graphic of finger pointing]
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.
2 American Century Investments 1-800-345-3533
FUND PERFORMANCE HISTORY
REAL ESTATE FUND
When the Advisor Class of the fund has investment results for a full calendar
year, this section will feature charts that show
* Annual Total Returns
* Highest and Lowest Quarterly Returns
* Average Annual Returns, including a comparison of these returns to a
benchmark index for the Advisor Class of the fund
In addition, investors can examine the performance of the fund's Investor Class
shares. The Investor Class has a total expense ratio that is 0.25% lower than
the Advisor Class. If the Advisor Class had existed during the periods
presented, its performance would have been lower because of the additional
expense.
All past performance information is designed to help show you how fund returns
can vary. Keep in mind that past performance does not predict how the fund will
perform in the future.
[left margin]
[graphic of finger pointing]
For current performance information, please call us at 1-800-345-3533.
www.americancentury.com American Century Investments 3
FEES AND EXPENSES
There are no sales loads, fees or other charges
* to buy fund shares directly from American Century
* to reinvest dividends in additional shares
* to exchange into the Advisor Class shares of other American Century funds
* to redeem your shares
The following table describes the fees and expenses that you will pay if you buy
and hold shares of the fund.
ANNUAL OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Distribution and Other Total Annual Fund
Fee Service (12b-1) Fees Expenses Operating Expenses
- --------------------------------------------------------------------------------
Real Estate
Fund 0.95% 0.50% 0.00%(1) 1.45%
(1) Other expenses, which include the fees and expenses of the fund's
independent directors, their legal counsel and interest, were less than 0.005%
for the most recent fiscal year.
EXAMPLE
The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Assuming
you . . .
* invest $10,000 in the fund
* redeem all of your shares at the end of the periods shown below
* earn a 5% return each year
* incur the same operating expenses as shown above
. . . your cost of investing in the fund would be:
1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------
Real Estate Fund $147 $456 $788 $1,724
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[graphic of finger pointing]
Use this example to compare the costs of investing in other funds. Of course,
your actual costs may be higher or lower.
4 American Century Investments 1-800-345-3533
INFORMATION ABOUT THE FUND
REAL ESTATE FUND
WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?
The Real Estate Fund seeks long-term capital appreciation. Income is a secondary
objective.
HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?
The fund invests primarily in equity securities issued by real estate investment
trusts (REITs) and companies engaged in the real estate industry. The fund
managers look for real estate securities they believe will provide superior
returns to the fund. They attempt to focus the fund's investments on real estate
companies and REITs with the potential for stock price appreciation, plus strong
growth of cash flow to investors.
To find these issuers, the fund managers track economic conditions and real
estate market performance in major metropolitan areas and analyze performance of
various property types within those regions. To perform this analysis, they use
information from a nationwide network of real estate professionals to evaluate
the holdings of real estate companies and REITs in which the fund may invest.
Their analysis also includes the companies' management structure, financial
structure and business strategy. The goal of these analyses is to determine
which of the issuers the fund managers believe will be the most profitable to
the fund. The fund managers also consider the effect of the real estate
securities markets in general when making investment decisions.
The fund managers do not attempt to time the market. Instead, under normal
market conditions, they intend to keep at least 80% of the fund's assets
invested in EQUITY SECURITIES of REITs or real estate companies. A company is
considered to be a real estate company if, in the opinion of the fund managers,
at least 50% of its revenues or 50% of the market value of its assets at the
time the securities are purchased by the fund are attributed to the ownership,
construction, management or sale of real estate.
When the fund managers believe that it is prudent, the fund may invest a portion
of its assets in other types of securities. These securities may include
convertible securities, foreign securities, short-term securities, bonds, notes,
securities of companies not principally engaged in the real estate industry,
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 which prohibits leverage of the fund's assets by
investing in a derivative security. For example, the fund managers cannot invest
in a derivative security if it would be possible for the fund to lose more money
than it invested. A complete description of the derivatives policy is included
in the Statement of Additional Information.
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.
WHAT IS A REIT?
A real estate investment trust, or REIT, invests primarily in income-producing
real estate or makes loans to persons involved in the real estate industry.
Some REITs, called equity REITs, buy real estate, and investors receive income
from the rents received and from any profits on the sale of its properties.
Other REITs, called mortgage REITs, lend money to building developers and other
real estate companies, and receive income from interest paid on those loans.
There are also hybrid REITs which engage in both owning real estate and making
loans.
If a REIT meets certain requirements, it is not taxed on the income it
distributes to its investors.
[left margin]
EQUITY SECURITIES include common stock, preferred stock and securities
convertible into common stock.
www.americancentury.com American Century Investments 5
WHAT ARE THE PRIMARY RISKS OF INVESTING IN THE FUND?
The value of the fund's shares depends on the value of the stocks and other
securities it owns. The value of the individual securities the fund owns will go
up and down depending on the performance of the companies that issued them,
general market and economic conditions, and investor confidence.
As with all funds, at any given time the value of your shares of the fund may be
worth more or less than the price you paid. If you sell your shares when the
value is less than the price you paid, you will lose money.
An investment in the fund may be subject to many of the same risks as a direct
investment in real estate. This is due to the fact that the value of the fund's
investments may be affected by the value of the real estate owned by the
companies in which it invests. These risks include changes in economic
conditions, interest rates, property values, property tax increases,
overbuilding and increased competition, environmental contamination, zoning and
natural disasters.
To the extent the fund invests in mortgage REITs, it will be subject to credit
risk and interest rate risk with respect to the loans made by the REITs in which
it invests. Credit risk is the risk that the borrower will not be able to make
interest and principal payments on the loan to the REIT when they are due.
Interest rate risk is the risk that a change in the prevailing interest rate
will cause the value of the loan portfolio held by the REIT to rise or fall.
Generally, when interest rates rise, the value of the loan portfolio will
decline. The opposite is true when interest rates decline. The degree to which
interest rate changes affect the fund's performance varies and is related to the
specific characteristics of the loan portfolios of the mortgage REITs in which
the fund invests.
Because the fund concentrates its investments in real estate securities, it may
be subject to greater risks and market fluctuations than a fund representing a
broader range of industries. In addition, market performance tends to be
cyclical and, in the various cycles, certain investment styles may fall in and
out of favor. If the market is not favoring the fund's style, the fund's gains
may not be as big as, or its losses may be bigger than, other equity funds using
different investment styles.
6 American Century Investments 1-800-345-3533
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. American Century is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.
The advisor is responsible for managing the investment portfolios of the fund
and directing the purchase and sale of its investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the fund to operate.
For the services it provided to the fund during the most recent fiscal year, the
advisor received a unified management fee of 0.95% of the average net assets of
the Advisor Class shares of the fund. The amount of the management fee is
calculated on a class-by-class basis daily and paid monthly.
The Statement of Additional Information contains detailed information about the
calculation of the management fee. 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.
www.americancentury.com American Century Investments 7
THE FUND MANAGEMENT TEAM
American Century Investment Management, Inc. provides investment advisory and
management services for the fund. American Century Investment Management, Inc.
has, in turn, hired RREEF America, L.L.C. to make the day-to-day investment
decisions for the fund. RREEF America performs this function under the
supervision of American Century Investment Management, Inc. and the fund's Board
of Directors.
The portfolio managers on the investment team are identified below:
KIM G. REDDING
Mr. Redding, Portfolio Manager, is a Senior Vice President of RREEF America.
From 1990 to 1993, he was a principal in K.G. Redding & Associates, an
investment advisor, and was previously the President of Redding, Melchor &
Company, an investment advisor. He has been managing portfolios of real estate
securities since 1987.
KAREN J. KNUDSON
Ms. Knudson, Portfolio Manager, is a Senior Vice President of RREEF America.
Prior to joining RREEF, she was a Senior Vice President and Chief Financial
Officer of Security Capital Group, an investment advisor. She has more than 16
years of real estate investment experience, specializing in real estate
investment trusts.
The representative of American Century Investment Management, Inc. who oversees
the management of the fund is identified as follows:
MARK MALLON
Mr. Mallon, Chief Investment Officer--Value and Quantitative Equities and Senior
Vice President, joined American Century in April 1997. From August 1978 until he
joined American Century, he was employed in several positions by Federated
Investors and served as President and Chief Executive Officer of Federated
Investment Counseling and Executive Vice President of Federated Research
Corporation since January 1990. He has a bachelor of arts from Westminster
College and an MBA from Cornell University. He is a Chartered Financial Analyst.
[left margin]
[graphic of finger pointing]
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 from profiting from the purchase and sale of the same security within 60
calendar days. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the fund to obtain approval before executing permitted personal
trades.
8 American Century Investments 1-800-345-3533
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.
YEAR 2000 ISSUES
Many of the world's computer systems were originally programmed in a way that
prevented them from properly recognizing or processing date-sensitive
information relating to the Year 2000 and beyond. Because this may impact the
computer systems of various American Century-affiliated and external service
providers for the fund, American Century formally initiated a Year 2000
readiness project in July 1997. It involves a team of information technology
professionals assisted by outside consultants and guided by a senior-level
steering committee. The team's goal is to assess the impact of the Year 2000 on
American Century's systems, renovate or replace noncompliant critical systems
and test those systems. In addition, the team has been working to gather
information about the Year 2000 efforts of the fund's other major service
providers.
Although American Century believes its critical systems will function properly
in the Year 2000, this is not guaranteed. If the efforts of American Century or
its external service providers are not successful, the fund's business,
particularly the provision of shareholder services, may be hampered.
In addition, the issuers of securities the fund owns could have Year 2000
computer problems. Foreign issuers, especially those in emerging markets, may be
more susceptible to such problems than U.S. issuers. These problems could
negatively affect the value of the issuers' securities, which, in turn, could
impact the fund's performance. The advisor has established a process to gather
publicly available information about the Year 2000 readiness of these issuers.
However, this process may not uncover all relevant information, and the
information gathered may not be complete and accurate. Moreover, an issuer's
Year 2000 readiness is only one of many factors the fund managers may consider
when making investment decisions, and other factors may receive greater weight.
www.americancentury.com American Century Investments 9
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 own or are considering purchasing shares through a financial intermediary
or a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include
* minimum investment requirements
* exchange policies
* fund choices
* 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 report, semiannual
report 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 transactions in fund shares 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 those
intermediaries to accept orders on its 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.
[left margin]
[graphic of finger pointing]
Financial intermediaries include banks, broker-dealers, insurance companies and
investment advisors.
10 American Century Investments 1-800-345-3533
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 cash. If we make payment
in securities, we will value the securities selected by the fund managers 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.
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 shareholders.
www.americancentury.com American Century Investments 11
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 of Directors. Trading of securities in
foreign markets may not take place every day the Exchange is open. Also, trading
in some foreign markets 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.
It is the responsibility of your plan recordkeeper or financial intermediary to
transmit your purchase, exchange and redemption requests to the fund's transfer
agent prior to the applicable cutoff time for receiving orders and to make
payment for any purchase transactions in accordance with the fund's procedures
or any contractual arrangements with the fund or the fund's distributor in order
for you to receive that day's price.
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 that 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 pays distributions of substantially all of its income quarterly.
Distributions from realized capital gains are paid annually, usually in
December. It may make more frequent distributions if necessary to comply with
Internal Revenue Code provisions. Distributions are reinvested automatically in
additional shares unless you choose another option.
You will participate in fund distributions, when they are declared, starting on
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 distribution 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.
[left margin]
The NET ASSET VALUE 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. Tax becomes due on capital gains once an
asset is sold.
12 American Century Investments 1-800-345-3533
TAXES
The tax consequences of owning shares of the fund will vary depending on whether
you own them through a taxable or tax-deferred account. Tax consequences result
from distributions by the fund of dividend and interest income it has received
or capital gains it has generated through its investment activities. Tax
consequences also result from sales of fund shares by investors after the net
asset value has increased or decreased.
Tax-Deferred Accounts
If you purchase fund shares through a tax-deferred account, such as an IRA or a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions usually will not be subject to current taxation, but will
accumulate in your account under the plan on a tax-deferred basis. Likewise,
moving from one fund to another fund within a plan or tax-deferred account
generally will not cause you to be taxed. For information about the tax
consequences of making purchases or withdrawals through an employer-sponsored
retirement or savings plan, or through an IRA, 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
sales by you of fund shares may cause you to be taxed.
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, long term or UNRECAPTURED
SECTION 1250 CAPITAL GAINS, and are taxed as follows:
Type of Distribution Tax Rate for Tax Rate for
15% Bracket 28% Bracket or Above
- ------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
- ------------------------------------------------------------------------------
Long-term capital gains 10% 20%
- ------------------------------------------------------------------------------
Unrecaptured Section Ordinary income rate 25%
1250 capital gains
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 send you the tax
status of fund distributions for each calendar year in an annual tax mailing
(Form 1099-DIV) from the fund.
Additionally, the fund may receive distributions of unrecaptured Section 1250
capital gains from REITs. To the extent the fund receives such distributions,
unrecaptured Section 1250 capital gains will be distributed to shareholders of
the fund.
Because of the nature of REIT investments, REITs may generate significant
non-cash deductions, such as depreciation on real estate holdings, while having
a greater cash flow to distribute to its shareholders. If a REIT distributes
more cash flow than it has taxable income, a RETURN OF CAPITAL results. The fund
may pay a return of capital distribution to its shareholders by distributing
more cash than its taxable income. If you do not reinvest distributions, the
cost basis of your shares will be decreased by the amount of returned capital,
which may result in a larger capital gain when you sell your shares. Although a
return of capital generally is not taxable to you upon distribution, it would be
taxable to you as a capital gain if your cost basis in the shares is reduced to
zero. This could occur if you do not reinvest distributions and the returns of
capital are significant.
[left margin]
[graphic of finger pointing]
BUYING A DIVIDEND
Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.
The risk in buying a dividend is that a fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. We distribute 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.
UNRECAPTURED SECTION 1250 CAPITAL GAINS, named for the Internal Revenue Code
section that describes them, are frequently realized upon the sale of real
estate, and are subject to a maximum tax rate of 25%. These gains are received
by the fund from its REIT securities and are then subsequently passed through to
shareholders.
A RETURN OF CAPITAL represents the return of a portion of a shareholder's
original investment that is generally non-taxable when distributed, or returned,
to the investor.
www.americancentury.com American Century Investments 13
Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, always consult your tax professional about federal,
state and local tax consequences.
Because the REITs invested in by the fund do not provide complete information
about the taxability of their distributions until after the calendar year end,
American Century may not be able to determine how much of the fund's
distribution is taxable to shareholders until after the January 31 deadline for
issuing Form 1099-DIV. As a result, the fund may request permission from the
Internal Revenue Service each year for an extension of time to issue Form
1099-DIV until February 28.
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 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 distribution of long-term capital
gains to you with respect to such 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.
14 American Century Investments 1-800-345-3533
MULTIPLE CLASS INFORMATION
American Century offers three classes of the fund: Investor Class, Institutional
Class and Advisor Class. The shares offered by this Prospectus are Advisor Class
shares and are offered primarily to institutional investors through
institutional distribution channels, such as employer-sponsored retirement
plans, or through 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 than the Advisor
Class. The difference in the fee structures among the classes is the result of
their separate arrangements for shareholder and distribution services and not
the result of any difference in amounts charged by the advisor for core
investment advisory services. Accordingly, the core investment advisory expenses
do not vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at
* 1-800-345-2021 for Investor Class shares
* 1-800-345-3533 for Institutional Class shares
You also can contact a sales representative or financial intermediary who offers
those classes of shares.
Except as described below, all classes of shares of the 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.
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 pays an annual fee of 0.50% of fund 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.
www.americancentury.com American Century Investments 15
FINANCIAL HIGHLIGHTS
UNDERSTANDING THE FINANCIAL HIGHLIGHTS
The table on the next page itemizes what contributed to the changes in share
price during the period.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal year ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
16 American Century Investments 1-800-345-3533
REAL ESTATE FUND
Advisor Class
For a Share Outstanding Throughout the Period Indicated
Per-Share Data
1999(1)
Net Asset Value, Beginning of Period ........................ $ 12.22
--------
Income From Investment Operations
Net Investment Income(2) .................................. 0.43
Net Realized and Unrealized Loss
on Investment Transactions ................................ (0.15)
--------
Total From Investment Operations .......................... 0.28
--------
Distributions
From Net Investment Income ................................ (0.28)
From Net Realized Gains on
Investment Transactions ................................... (0.12)
--------
Total Distributions ....................................... (0.40)
--------
Net Asset Value, End of Period .............................. $ 12.10
========
Total Return(3) ........................................... 2.25%
Ratios/Supplemental Data
1999(1)
Ratio of Operating Expenses to Average Net Assets ........... 1.45%(4)
Ratio of Net Investment Income to Average Net Assets ........ 5.16%(4)
Portfolio Turnover Rate ..................................... 66%
Net Assets, End of Period (in thousands) .................... $ 449
(1) October 6, 1998 (commencement of sale) through March 31,1999.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total return for periods less than one year are not
annualized.
(4) Annualized.
www.americancentury.com American Century Investments 17
PERFORMANCE INFORMATION OF OTHER CLASS
The following financial information is provided to show the performance of the
fund's original class of shares. This class, the Investor Class, has a total
expense ratio that is 0.25% lower than the Advisor Class. If the Advisor Class
had existed during the periods presented, its performance would have been lower
because of the additional expense.
The table on the next page itemizes what contributed to the changes in share
price during the period.
On a per-share basis, the table includes as appropriate
* share price at the beginning of the period
* investment income and capital gains or losses
* distributions of income and capital gains paid to shareholders
* share price at the end of the period
The table also includes some key statistics for the period as appropriate
* TOTAL RETURN -- the overall percentage of return of the fund, assuming the
reinvestment of all distributions
* EXPENSE RATIO -- operating expenses as a percentage of average net assets
* NET INCOME RATIO -- net investment income as a percentage of average net
assets
* PORTFOLIO TURNOVER -- the percentage of the fund's buying and selling
activity
The Financial Highlights have been audited by Deloitte & Touche LLP, independent
auditors. Their Independent Auditors' Report is included in the fund's annual
report for the fiscal year ended March 31, 1999, which is incorporated by
reference into the Statement of Additional Information, and is available upon
request.
18 American Century Investments 1-800-345-3533
<TABLE>
<CAPTION>
REAL ESTATE FUND
Investor Class
For a Share Outstanding Throughout the Years (except as noted)
Per-Share Data
1999 1998(1) 1997(1) 1996(1) 1995(1)(2)
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $ 16.12 $ 16.06 $ 12.29 $ 9.82 $ 10.00
----------- ----------- ----------- ----------- -----------
Income From Investment Operations
Net Investment Income ..................... 0.73(3) 0.25(3) 0.67(3) 0.55 0.07
Net Realized and Unrealized Gain (Loss)
on Investment Transactions ................ (4.09) 0.26 4.13 2.27 (0.25)
----------- ----------- ----------- ----------- -----------
Total From Investment Operations .......... (3.36) 0.51 4.80 2.82 (0.18)
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income ................ (0.54) (0.18) (0.48) (0.35) --
From Net Realized Gains on
Investment Transactions ................... (0.12) (0.27) (0.55) -- --
----------- ----------- ----------- ----------- -----------
Total Distributions ....................... (0.66) (0.45) (1.03) (0.35) --
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period .............. $ 12.10 $ 16.12 $ 16.06 $ 12.29 $ 9.82
=========== =========== =========== =========== ===========
Total Return(4) ........................... (21.04)% 3.26% 40.69% 29.28% (1.80)%
Ratios/Supplemental Data
1999 1998(1) 1997(1) 1996(1) 1995(1)(2)
Ratio of Operating Expenses
to Average Net Assets ....................... 1.20% 1.15%(5) 1.17% 1.00% 1.50%(5)
Ratio of Operating Expenses
to Average Net Assets
(before expense waivers and
reimbursements)(6) .......................... 1.20% 1.20%(5) 1.82% 6.83% 14.83%(5)
Ratio of Net Investment Income
to Average Net Assets ....................... 5.41% 3.75%(5) 4.48% 5.84% 6.66%(5)
Ratio of Net Investment Income
to Average Net Assets
(before expense waivers and
reimbursements)(6) .......................... 5.41% 3.70%(5) 3.84% 0.01%
(6.67)%(5)
Portfolio Turnover Rate ..................... 66% 28% 69% 86% --
Net Assets, End of Period (in thousands) .... $ 110,285 $ 135,922 $ 76,932 $ 7,209 $ 2,983
(1) The period ended March 31, 1998 represents a five month reporting period.
The fund's fiscal year was changed from October 31 to March 31 during the
period. Periods prior to 1998 are based on a fiscal year ended October 31.
(2) September 21, 1995 (inception) through October 31, 1995.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
(6) During the periods ended October 31, 1996 and October 31, 1995 and for a
portion of the period ended October 31, 1997, the advisor voluntarily agreed to
waive its management fee and reimburse certain expenses incurred by the fund.
Also, prior to the unified management fee structure, effective June 13, 1997,
the custodian offset part of its fees for balance credits given to the fund.
During the period ended March 31, 1998, a portion of the subadvisory fee, which
is paid for subadvisory services, was waived.
</TABLE>
www.americancentury.com American Century Investments 19
NOTES
20 American Century Investments 1-800-345-3533
NOTES
www.americancentury.com American Century Investments 21
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).
* In person SEC Public Reference Room
Washington, D.C.
Call 1-800-SEC-0330 for location and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C. 20549-6009
(The SEC will charge a fee for copying
the documents.)
Investment Company Act File No. 811-7820
[american century logo (reg. sm)]
American
Century
AMERICAN CENTURY INVESTMENTS
P.O. Box 419385
Kansas City, Missouri 64141-6385
1-800-345-3533 or 816-531-5575
9907
SH-PRS-16639
<PAGE>
AMERICAN CENTURY
[american century logo(reg.sm)]
American
Century
Statement of Additional Information
Large Cap Value Fund
Value Fund
Small Cap Value Fund
Equity Income Fund
Equity Index Fund
Real Estate Fund
JULY 30, 1999
THIS STATEMENT OF ADDITIONAL INFORMATION ADDS TO THE DISCUSSION IN THE
FUNDS' PROSPECTUSES, DATED JULY 30, 1999, BUT IS NOT A PROSPECTUS. THE
STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE
FUNDS' CURRENT PROSPECTUSES. IF YOU WOULD LIKE A COPY OF A PROSPECTUS, PLEASE
CONTACT US AT THE ADDRESS OR TELEPHONE NUMBERS LISTED ON THE BACK COVER
OR VISIT AMERICAN CENTURY'S WEB SITE AT
WWW.AMERICANCENTURY.COM.
THIS STATEMENT OF ADDITIONAL INFORMATION INCORPORATES BY REFERENCE
CERTAIN INFORMATION THAT APPEARS IN THE FUNDS' ANNUAL AND SEMIANNUAL REPORTS,
WHICH ARE DELIVERED TO ALL SHAREHOLDERS. YOU MAY OBTAIN A FREE COPY OF THE
FUNDS' ANNUAL OR SEMIANNUAL REPORTS BY CALLING 1-800-345-2021.
Distributed by
Funds Distributor, Inc.
STATEMENT OF ADDITIONAL INFORMATION
July 30, 1999
TABLE OF CONTENTS
The Funds' History .......................................................... 2
Fund Investment Guidelines .................................................. 2
Detailed Information about the Funds ........................................ 3
Investment Strategies and Risks ......................................... 3
Investment Policies ..................................................... 12
Portfolio Turnover ...................................................... 14
S&P 500 Index ........................................................... 14
Management .................................................................. 15
The Board of Directors .................................................. 15
Officers ................................................................ 17
The Funds' Principal Shareholders ........................................... 19
Service Providers ........................................................... 19
Investment Advisor ...................................................... 19
Transfer Agent and Administrator ........................................ 21
Distributor ............................................................. 21
Other Service Providers ..................................................... 22
Custodian Banks ......................................................... 22
Independent Auditors .................................................... 22
Brokerage Allocation ........................................................ 22
Information about Fund Shares ............................................... 23
Multiple Class Structure ................................................ 23
Buying and Selling Fund Shares .......................................... 25
Valuation of a Fund's Securities ........................................ 25
Taxes ....................................................................... 26
Federal Income Taxes .................................................... 26
State and Local Taxes ................................................... 27
Taxation of Certain Mortgage REITs ...................................... 27
How Fund Performance
Information Is Calculated ................................................... 27
Performance Comparisons ................................................. 29
Permissible Advertising Information ..................................... 29
Multiple Class Performance Advertising .................................. 30
Financial Statements ........................................................ 30
Explanation of Fixed-Income
Securities Ratings .......................................................... 30
Statement of Additional Information
THE FUNDS' HISTORY
American Century Capital Portfolios, Inc. is a registered open-end
management investment company that was organized as a Maryland corporation on
June 14, 1993. The corporation was known as Twentieth Century Capital
Portfolios, Inc. until January 1997. Throughout this Statement of Additional
Information we refer to American Century Capital Portfolios, Inc. as the
corporation.
Each fund described in this Statement of Additional Information is a
separate series of the corporation and operates for many purposes as if it were
an independent company. Each fund has its own investment objective, strategy,
management team, assets, tax identification and stock registration numbers.
<TABLE>
FUND INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
- ----------------------------------------------------------------------------------------------------------------
Ticker Symbol Inception Date Ticker Symbol Inception Date Ticker Symbol Inception Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Value N/A 07/30/99 N/A 07/30/99 N/A 07/30/99
Value TWVLX 09/01/93 TWADX 10/02/96 AVLIX 07/31/97
Small Cap Value ASVIX 07/31/98 N/A N/A N/A 10/26/98
Equity Income TWEIX 08/01/94 TWEAX 03/07/97 N/A 07/08/98
Equity Index ACQIX 02/26/99 N/A N/A N/A 02/26/99
Real Estate Fund REACX 09/21/95 N/A 10/06/98 REAIX 06/16/97
</TABLE>
FUND INVESTMENT GUIDELINES
This section explains the extent to which the funds' advisor, American
Century Investment Management, Inc., can use various investment vehicles and
strategies in managing a fund's assets. Descriptions of the investment
techniques and risks associated with each appear in the section, "Investment
Strategies and Risks," which begins on page 3. In the case of the funds'
principal investment strategies, these descriptions elaborate upon discussions
contained in the Prospectuses.
Large Cap Value, Value, Small Cap Value and Equity Income are each 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, each fund will not invest more than 5% of its total
assets in the securities of a single issuer.
Equity Index and the Real Estate Fund are non-diversified, open-end
investment companies as defined in the Investment Company Act. Non-diversified
means that the proportion of the funds' assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act.
It is intended that Equity Index will be diversified to the extent that the
S&P 500 Index is diversified. Because of the composition of the S&P 500 Index,
it is possible that a relatively high percentage of the fund's assets may be
invested in the securities of a limited number of issuers, some of which may be
in the same industry or economic sector. As a result, the fund's portfolio may
be more sensitive to changes in the market value of a single issuer or industry
than other equity funds using different investment styles.
To meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year (1) no more than 25% of its total assets are
invested in the securities of a single issuer (other than the U.S. government or
a regulated investment company), and (2) with respect to at least 50% of its
total assets, no more than 5% of its total assets are invested in the securities
of a single issuer.
In general, within the restrictions outlined here and in the funds'
Prospectuses, the fund managers have broad powers to decide how to invest fund
assets, including the power to hold them uninvested.
Investments are varied according to what is judged advantageous under
changing economic conditions. It is the advisor's policy to retain maximum
flexibility in management without restrictive provisions as to the proportion of
one or another class of securities that may be held, subject to the investment
restrictions described below. It is the advisor's intention that each fund
generally will consist of common stocks and equity-equivalent securities.
However, subject to the specific limitations applicable to a fund, the funds'
2 American Century Investments
management teams may invest the assets of each fund in varying amounts using
other investment techniques, such as those reflected in the table below, when
such a course is deemed appropriate in order to attempt to attain a fund's
investment objective. Senior securities that are high-grade issues, in the
opinion of the managers also may be purchased for defensive purposes.
Income is a primary or secondary objective of the Large Cap Value, Value,
Small Cap Value, Equity Income and Real Estate funds. As a result, a portion of
the portfolio of each of these funds may consist of debt securities.
So long as a sufficient number of acceptable securities are available, the
managers intend to keep the funds fully invested. However, under exceptional
conditions, the funds may assume a defensive position, temporarily investing all
or a substantial portion of their assets in cash or short-term securities.
The managers may use stock index futures and options as a way to expose the
funds' cash assets to the market while maintaining liquidity. As mentioned in
the Prospectuses, the managers may not leverage the funds' portfolios, so there
is no greater market risk to the funds than if they purchase stocks. See
"Derivative Securities," page 6, and "Short-Term Securities" and "Futures and
Options," page 9.
DETAILED INFORMATION ABOUT THE FUNDS
INVESTMENT STRATEGIES AND RISKS
This section describes various investment vehicles and techniques that the
fund managers can use in managing a fund's assets. It also details the risks
associated with each, because each technique contributes to a fund's overall
risk profile. To determine whether a fund may invest in a particular investment
vehicle, consult the table below.
EQUITY EQUIVALENTS
In addition to investing in common stocks, the funds may invest in other
equity securities and equity equivalents, including securities that permit a
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 equity securities and equity equivalents
include preferred stock, convertible preferred stock and convertible debt
securities.
Each fund will limit its holdings of convertible debt securities to those
that, at the time of purchase, are rated at least B- by S&P or B3 by Moody's,
or, if not rated by S&P or Moody's, are of equivalent
<TABLE>
Large Cap Value Small Cap Equity Equity Real Estate
Value Value Income Index Fund
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Equivalents x x x x x x
Debt Securities x x x x x x
Foreign Securities 35% 35% 35% 35% x --
Convertible Debt Securities x x x x x x
Short Sales x x x x x x
Portfolio Lending 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3% 33 1/3%
Derivative Securities x x x x x x
Investments in Companies with
Limited Operating Histories 5% 5% 5% 5% 5% 5%
Other Investment Companies 10% 10% 10% 10% 10% 10%
Repurchase Agreements x x x x x x
When-Issued and Forward
Commitment Agreements x x x x x x
Illiquid Securities 15% 15% 15% 15% 15% 15%
Restricted Securities x x x x x x
Short-Term Securities x x x x x x
Futures and Options x x x x x x
Forward Currency
Exchange Contracts x x x x x x
</TABLE>
Statement of Additional Information 3
investment quality as determined by the advisor. A fund's investments in
convertible debt securities and other high-yield, non-convertible debt
securities rated below investment-grade will comprise less than 35% of the
fund's net assets. Debt securities rated below the four highest categories are
not considered "investment-grade" obligations. These securities have speculative
characteristics and present more credit risk than investment-grade obligations.
For a description of the S&P and Moody's ratings categories, see "Explanation of
Fixed-Income Securities Ratings," page 30. Equity equivalents also may include
securities whose value or return is derived from the value or return of a
different security. Depositary receipts, which are described in the "Foreign
Securities" section, are an example of the type of derivative security in which
a fund might invest.
DEBT SECURITIES
Each of the funds may invest in debt securities. Large Cap Value, Value,
Small Cap Value, Equity Income and Real Estate have the creation of income as a
primary or secondary investment objective. As a result, these funds may invest
in debt securities where the fund managers believe such securities represent an
attractive investment for the funds. It is intended that these funds may invest
in debt securities for income or as a defensive strategy when the managers
believe adverse economic or market conditions exist.
Equity Index invests in debt securities primarily for cash management
purposes. The debt securities in which Equity Index invests generally consist of
short-term securities.
The value of the debt securities in which the funds may invest will
fluctuate based upon changes in interest rates and the credit quality of the
issuer. Debt securities that comprise part of a fund's fixed-income portfolio
will be limited primarily to "investment-grade" obligations. However, each fund
may invest up to 5% of its assets in "high-yield" securities. "Investment grade"
means that at the time of purchase, such obligations are rated within the four
highest categories by a nationally recognized statistical rating organization
(for example, at least Baa by Moody's Investors Service, Inc. or BBB by Standard
& Poor's Corporation), or, if not rated, are of equivalent investment quality as
determined by the fund's advisor. 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 and changing circumstances.
"High-yield" securities, sometimes referred to as "junk bonds," are higher
risk, non-convertible debt obligations that are rated below investment-grade
securities, or are unrated, but with similar credit quality.
There are no credit or maturity restrictions on the fixed-income securities
in which the high-yield portion of a fund's portfolio may be invested. Debt
securities rated lower than Baa by Moody's or BBB by S&P or their equivalent are
considered by many to be predominantly speculative. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such securities than is the case with
higher quality debt securities. Regardless of rating levels, all debt securities
considered for purchase by the fund are analyzed by the investment manager to
determine, to the extent reasonably possible, that the planned investment is
sound, given the investment objective of the fund. See "Explanation of
Fixed-Income Securities Ratings," page 30.
The funds will not necessarily dispose of high-yield securities if the
aggregate value of such securities exceeds 5% of a fund's assets, if such level
is exceeded as a result of market appreciation of the value of such securities
or market depreciation of the value of the other assets of the fund. Rather, the
fund managers will cease purchasing any additional high-yield securities until
the value of such securities is less than 5% of the fund's assets and will
monitor such investments to determine whether continuing to hold such
investments is likely to assist the fund in meeting its investment objectives.
In addition, the value of a 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
generally 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 a fund, impact the net asset value of that
fund's shares.
4 American Century Investments
Notwithstanding the fact that the funds will invest primarily in equity
securities, under exceptional market or economic conditions, the funds may
temporarily invest all or a substantial portion of their assets in cash or
investment-grade short-term securities (denominated in U.S. dollars or foreign
currencies).
To the extent that a fund assumes a defensive position, it will not be
investing for capital growth.
FOREIGN SECURITIES
Large Cap Value, Value, Small Cap Value, Equity Income and Equity Index may
invest in the securities of foreign issuers, including foreign governments and
their agencies, when these securities meet their standards of selection. The
advisor defines "foreign issuer" as a company whose principal trading market is
outside the United States.
The funds may make such investments either directly in foreign securities or
indirectly by purchasing depositary receipts for foreign securities. Depositary
receipts, depositary shares or similar instruments (collectively "depositary
receipts") are securities that are listed on exchanges or quoted in the domestic
over-the-counter markets in one country, but represent shares of issuers
domiciled in another country. Direct investments in foreign securities may be
made either on foreign securities exchanges or in the over-the-counter markets.
The funds may invest in common stocks, convertible securities, preferred
stocks, bonds, notes and other debt securities of foreign issuers, foreign
governments and their agencies. Large Cap Value, Value, Small Cap Value and
Equity Income will limit their purchase of foreign securities to those of
issuers whose principal business activities are located in developed countries.
The advisor considers "developed countries" to include Australia, Austria,
Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the
Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the
United Kingdom and the United States.
Investments in foreign securities may present certain risks, including:
Currency Risk. The value of the foreign investments held by the funds may be
significantly affected by changes in currency exchange rates. The dollar value
of a foreign security generally decreases when the value of the dollar rises
against the foreign currency in which the security is denominated and tends to
increase when the value of the dollar falls against such currency. In addition,
the value of fund assets may be affected by losses and other expenses incurred
in converting between various currencies in order to purchase and sell foreign
securities and by currency restrictions, exchange control regulation, currency
devaluations and political developments.
Political and Economic Risk. The economies of many of the countries in which
the funds invest are not as developed as the economy of the United States and
may be subject to significantly different forces. Political or social
instability, expropriation, nationalization, or confiscatory taxation, and
limitations on the removal of funds or other assets, could also adversely affect
the value of investments. Further, the funds may encounter difficulties or be
unable to enforce ownership rights, pursue legal remedies or obtain judgments in
foreign courts.
Regulatory Risk. Foreign companies generally are not subject to the
regulatory controls imposed on U.S. issuers and, in general, there is less
publicly available information about foreign securities than is available about
domestic securities. Many foreign companies are not subject to uniform
accounting, auditing and financial reporting standards, practices and
requirements comparable to those applicable to domestic companies. Income from
foreign securities owned by the funds may be reduced by a withholding tax at the
source, which would reduce dividend income payable to shareholders.
Market and Trading Risk. Brokerage commission rates in foreign countries,
which generally are fixed rather than subject to negotiation as in the United
States, are likely to be higher. The securities markets in many of the countries
in which the funds invest will have substantially less trading volume than the
principal U.S. markets. As a result, the securities of some companies in these
countries may be less liquid and more volatile than comparable U.S. securities.
Furthermore, one securities broker may represent all or a significant part of
the trading volume in a particular country, resulting in higher trading costs
and decreased liquidity due to a lack of alternative trading partners. There
generally is less government regulation and supervision of foreign stock
exchanges, brokers and issuers, which may make it difficult to enforce
contractual obligations.
Statement of Additional Information 5
Clearance and Settlement Risk. Foreign securities markets also have
different clearance and settlement procedures, and in certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Delays in clearance and settlement could result in temporary periods when assets
of the funds are uninvested and no return is earned thereon. The inability of
the funds to make intended security purchases due to clearance and settlement
problems could cause the funds to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to clearance and settlement
problems could result either in losses to the funds due to subsequent declines
in the value of the portfolio security or, if the fund has entered into a
contract to sell the security, liability to the purchaser.
Ownership Risk. Evidence of securities ownership may be uncertain in many
foreign countries. As a result, there may be a risk that a fund's trade details
could be incorrectly or fraudulently entered at the time of the transaction,
resulting in a loss to the fund.
CONVERTIBLE DEBT SECURITIES
A convertible debt security is a fixed-income security that offers the
potential for capital appreciation through a conversion feature that enables the
holder to convert the fixed-income security into a stated number of shares of
common stock. As fixed-income securities, convertible debt securities provide a
stable stream of income, with generally higher yields than common stocks.
Because 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, like all fixed-income securities, there can be no assurance of
current income because the issuers of the convertible 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 debt securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all equity
securities. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non- convertible
securities.
SHORT SALES
A fund may engage in short sales if, at the time of the short sale, the fund
owns or has the right to acquire securities equivalent in kind and amount to the
securities being sold short.
In a short sale, the seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
To make delivery to the purchaser, the executing broker borrows the securities
being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If a fund engages in a short sale, the collateral account will be
maintained by the fund's custodian. While the short sale is open, the fund will
maintain in a segregated custodial account an amount of securities convertible
into, or exchangeable for, such equivalent securities at no additional cost.
These securities would constitute the fund's long position.
A fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes. There will be
certain additional transaction costs associated with short sales, but the fund
will endeavor to offset these costs with income from the investment of the cash
proceeds of short sales.
PORTFOLIO LENDING
In order to realize additional income, a fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's total assets
valued at market except (i) through the purchase of debt securities in
accordance with its investment objectives, policies and limitations, or (ii) by
engaging in repurchase agreements with respect to portfolio securities.
DERIVATIVE SECURITIES
To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as derivative
securities. Generally a derivative is a financial
6 American Century Investment
arrangement, the value of which is based on or derived from a traditional
security, asset or market index. Certain derivative securities are described
more accurately as index/structured securities. Index/structured securities are
derivative securities whose value or performance is linked to other equity
securities (such as depositary receipts), currencies, interest rates, indices or
other financial indicators (reference indices).
Some derivatives, such as mortgage-related and other asset-backed
securities, are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.
There are many different types of derivatives and many different ways to use
them. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices or currency exchange rates, and for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.
No fund may invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund. For
example, a security whose underlying value is linked to the price of oil would
not be a permissible investment because the funds may not invest in oil and gas
leases or futures.
The return on a derivative security may increase or decrease, depending upon
changes in the reference index or instrument to which it relates.
There are a range of risks associated with derivative investments,
including:
* the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the fund managers
anticipate;
* 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;
* the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and
* 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.
INVESTMENT IN COMPANIES WITH LIMITED OPERATING HISTORIES
The funds may invest a portion of their assets in the securities of issuers
with limited operating histories. The 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 histories may
involve greater risks than investments in securities of more mature issuers. By
their nature, such issuers present limited operating histories and financial
information upon which the managers may base their investment decision on behalf
of the funds. In addition, financial and other information regarding such
issuers, when available, may be incomplete or inaccurate.
OTHER INVESTMENT COMPANIES
Each of the funds may invest up to 10% of its total assets in other mutual
funds, including those of 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 a fund's total assets in the
aggregate. Such purchases will be made in the open market where no commission or
profit to a sponsor or dealer results from the purchase other than the customary
brokers' commissions. As a shareholder of another investment company, a fund
would bear, along with other
Statement of Additional Information 7
shareholders, its pro rata portion of the other investment company's expenses,
including advisory fees. These expenses would be in addition to the management
fee that each fund bears directly in connection with its own operations.
REPURCHASE AGREEMENTS
Each fund may invest in repurchase agreements when such transactions 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 funds will limit repurchase agreement transactions to securities issued
by the U.S. government and its agencies and instrumentalities, and will enter
into such transactions with those banks and securities dealers who are deemed
creditworthy pursuant to criteria adopted by the funds' Board of Directors.
No fund will invest more than 15% of its assets in repurchase agreements
maturing in more than seven days.
WHEN-ISSUED AND FORWARD COMMITMENT AGREEMENTS
The funds may sometimes purchase new issues of securities on a when-issued
or forward commitment basis in which the transaction price and yield are each
fixed at the time the commitment is made, but payment and delivery occur at a
future date (typically 15 to 45 days later).
When purchasing securities on a when-issued or forward commitment basis, a
fund assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of such security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.
In purchasing securities on a when-issued or forward commitment basis, a
fund will establish and maintain a segregated account consisting of cash, cash
equivalents or other appropriate liquid securities until the settlement date in
an amount sufficient to meet the purchase price. When the time comes to pay for
the when-issued securities, a fund will meet its obligations with available
cash, through the sale of securities, or, although it would not normally expect
to do so, by selling the when-issued securities themselves (which may have a
market value greater or less than the fund's payment obligation). Selling
securities to meet when-issued or forward commitment obligations may generate
taxable capital gains or losses.
RESTRICTED AND ILLIQUID SECURITIES
The funds may, from time to time, purchase restricted or illiquid
securities, including Rule 144A securities, when they present attractive
investment opportunities that otherwise meet the funds' criteria for selection.
Rule 144A securities are securities that are privately placed with and traded
among qualified institutional investors rather than the general public. Although
Rule 144A securities are considered restricted securities, they are not
necessarily illiquid.
With respect to securities eligible for resale under Rule 144A, the staff of
the Securities and Exchange Commission (SEC) has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, 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
8 American Century Investments
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the Board of Directors of the funds has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the advisor.
The Board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.
Because the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A or other
security that is illiquid. In such an event, the fund managers will consider
appropriate remedies to minimize the effect on such fund's liquidity.
SHORT-TERM SECURITIES
In order to meet anticipated redemptions, to hold pending the purchase of
additional securities for a fund's portfolio, or, in some cases, for temporary
defensive purposes, the funds may invest a portion of their assets in money
market and other short-term securities.
Examples of those securities include:
* Securities issued or guaranteed by the U.S. government and its agencies
and instrumentalities;
* Commercial Paper;
* Certificates of Deposit and Euro Dollar Certificates of Deposit;
* Bankers' Acceptances;
* Short-term notes, bonds, debentures or other debt instruments; and
* Repurchase agreements.
In addition, each fund may invest up to 5% of its total assets in any money
market fund, including those advised by the advisor or, if applicable, the
subadvisor.
FUTURES AND OPTIONS
Each fund may enter into futures contracts, options or options on futures
contracts. Generally, futures transactions will be used to:
* protect against a decline in market value of the fund's securities (taking
a short futures position), or
* 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
* provide a temporary substitute for the purchase of an individual security
that may not be purchased in an orderly fashion.
Some futures and options strategies, such as selling futures, buying puts
and writing calls, hedge a fund's investments against price fluctuations. Other
strategies, such as buying futures, writing puts and buying calls, tend to
increase market exposure.
Although other techniques may be used to control a fund's exposure to market
fluctuations, the use of futures contracts may be a more effective means of
hedging this exposure. While a fund pays brokerage commissions in connection
with opening and closing out futures positions, these costs are lower than the
transaction costs incurred in the purchase and sale of the underlying
securities.
For example, the sale of a future by a fund means the fund becomes obligated
to deliver the security (or securities, in the case of an index future) at a
specified price on a specified date. The purchase of a future means the fund
becomes obligated to buy the security (or securities) at a specified price on a
specified date. Futures contracts provide for the sale by one party and purchase
by another party of a specific security at a specified future time and price.
The fund managers may engage in futures and options transactions based on
securities indices that are consistent with the fund's investment objectives.
Examples of indices that may be used include the Bond Buyer Index of Municipal
Bonds for fixed-income funds, or the S&P 500 Index for equity funds. The
managers also may engage in futures and options transactions based on specific
securities, such as U.S. Treasury bonds or notes. Futures contracts are traded
on national futures exchanges. Futures exchanges and trading are regulated under
the Commodity Exchange Act by the Commodity Futures Trading Commission (CFTC), a
U.S. government agency.
Index futures contracts differ from traditional futures contracts in that
when delivery takes place, no stocks or bonds change hands. Instead, these
contracts settle in cash at the spot market value of the index. Although other
types of futures contracts by their terms call for actual delivery or acceptance
of the underlying securities, in most cases the contracts are
Statement of Additional Information 9
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 fund's investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.
In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin 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.
A fund could suffer losses if it is unable to close out its position because
of an illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the fund managers consider it appropriate or desirable to
do so. In the event of adverse price movements, a fund would be required to
continue making daily cash payments to maintain its required margin. If the fund
had insufficient cash, it might have to sell portfolio securities to meet daily
margin requirements at a time when the fund managers would not otherwise elect
to do so. In addition, a fund may be required to deliver or take delivery of
instruments underlying futures contracts it holds. The fund managers will seek
to minimize these risks by limiting the contracts entered into on behalf of the
funds to those traded on national futures exchanges and for which there appears
to be a liquid secondary market.
A fund could suffer losses if the prices of its futures and options
positions were poorly correlated with its other investments, or if securities
underlying futures contracts purchased by a fund had different maturities than
those of the portfolio securities being hedged. Such imperfect correlation may
give rise to circumstances in which a fund loses money on a futures contract at
the same time that it experiences a decline in the value of its hedged portfolio
securities. A fund also could lose margin payments it has deposited with a
margin broker, if, for example, the broker became bankrupt.
Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of the trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
10 American Century Investments
Options on Futures
By purchasing an option on a futures contract, a fund obtains the right, but
not the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is exercised.
Although they do not currently intend to do so, the funds may write (or
sell) call options that obligate them to sell (or deliver) the option's
underlying instrument upon exercise of the option. While the receipt of option
premiums would mitigate the effects of price declines, the funds would give up
some ability to participate in a price increase on the underlying security. If a
fund were to engage in options transactions, it would own the futures contract
at the time a call were written and would keep the contract open until the
obligation to deliver it pursuant to the call expired.
Restrictions on the Use of Futures Contracts and Options
Under the Commodity Exchange Act, a fund may enter into futures and options
transactions (a) for hedging purposes without regard to the percentage of assets
committed to initial margin and option premiums or (b) for purposes other than
hedging, provided that assets committed to initial margin and option premiums do
not exceed 5% of the fund's total assets. To the extent required by law, each
fund will segregate cash or securities on its records in an amount sufficient to
cover its obligations under the futures contracts and options.
FORWARD CURRENCY EXCHANGE CONTRACTS
Each fund may purchase and sell foreign currency on a spot (i.e., cash)
basis and may engage in forward currency contracts, currency options and futures
transactions for hedging or any other lawful purpose. See "Derivative
Securities," page 6.
The funds expect to use forward contracts under two circumstances:
(1) When the fund managers wish to lock in the U.S. dollar price of a
security when a fund is purchasing or selling a security denominated in a
foreign currency, the fund would be able to enter into a forward contract to do
so; or
(2) When the fund managers believe that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, a fund would
be able to enter into a forward contract to sell foreign currency for a fixed
U.S. dollar amount approximating the value of some or all of its portfolio
securities either denominated in, or whose value is tied to, such foreign
currency.
In the first circumstance, when a fund enters into a trade for the purchase
or sale of a security denominated in a foreign currency, it may be desirable to
establish (lock in) the U.S. dollar cost or proceeds. By entering into forward
contracts in U.S. dollars for the purchase or sale of a foreign currency
involved in an underlying security transaction, the fund will be able to protect
itself against a possible loss between trade and settlement dates resulting from
the adverse change in the relationship between the U.S. dollar at the subject
foreign currency.
Under the second circumstance, when the fund managers believe that the
currency of a particular country may suffer a substantial decline relative to
the U.S. dollar, a fund could enter into a foreign contract to sell for a fixed
dollar amount the amount in foreign currencies approximating the value of some
or all of its portfolio securities either denominated in, or whose value is tied
to, such foreign currency. The fund will segregate on its records cash or
securities in an amount sufficient to cover its obligations under the contract.
The precise matching of forward contracts in the amounts and values of
securities involved generally would not be possible because the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The fund managers do not intend to enter into such
contracts on a regular basis. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the fund
managers believe that it is important to have flexibility to enter
Statement of Additional Information 11
into such forward contracts when they determine that a fund's best interests may
be served.
At the maturity of the forward contract, the fund may either sell the
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate the obligation to deliver the foreign currency by
purchasing an offsetting forward contract with the same currency trader
obligating the fund to purchase, on the same maturity date, the same amount of
the foreign currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for a fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.
INVESTMENT POLICIES
Unless otherwise indicated, with the exception of the percentage limitations
on borrowing, the following restrictions apply at the time transactions are
entered into. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund's net assets will not be considered
in determining whether it has complied with its investment restrictions.
FUNDAMENTAL INVESTMENT POLICIES
The funds are subject to the following investment restrictions that are
fundamental and may not be changed without approval of a majority of the
outstanding votes of shareholders of a fund, as determined in accordance with
the Investment Company Act.
Subject Policy
- --------------------------------------------------------------------------------
Senior Securities A fund may not issue senior securities, except as
permitted under the Investment Company Act.
- --------------------------------------------------------------------------------
Borrowing A fund may not borrow money, except for temporary or emergency
purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the fund's total assets.
- --------------------------------------------------------------------------------
Lending A fund may not lend any security or make any other loan if, as
a result, more than 33 1/3% of the fund's total assets would be
lent to other parties, except (i) through the purchase of debt
securities in accordance with its investment objectives,
policies and limitations, or (ii) by engaging in repurchase
agreements with respect to portfolio securities.
- --------------------------------------------------------------------------------
Real Estate A fund may not purchase or sell real estate unless acquired as
a result of ownership of securities or other instruments. This
policy shall not prevent a fund from investing in securities or
other instruments backed by real estate or securities of
companies that deal in real estate or are engaged in the real
estate business.
- --------------------------------------------------------------------------------
Concentration Large Cap Value, Value, Small Cap Value and Equity Income may
not concentrate their investments in securities of issuers in a
particular industry (other than securities issued or guaranteed
by the U.S. government or any of its agencies or
instrumentalities).
- --------------------------------------------------------------------------------
Underwriting A fund may not act as an underwriter of securities issued by
others, except to the extent that the fund may be considered an
underwriter within the meaning of the Securities Act of 1933 in
the disposition of restricted securities.
- --------------------------------------------------------------------------------
Commodities A fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other
instruments, provided that this limitation shall not prohibit
the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments
backed by physical commodities.
- --------------------------------------------------------------------------------
Control A fund may not invest for purposes of exercising control over
management.
- --------------------------------------------------------------------------------
12 American Century Investments
NONFUNDAMENTAL INVESTMENT POLICIES
In addition, the funds are subject to the following additional investment
restrictions that are not fundamental and may be changed by the Board of
Directors.
Subject Policy
- --------------------------------------------------------------------------------
Diversification A fund may not purchase additional investment securities
at any time during which outstanding borrowings exceed 5%
of the total assets of the fund.
- --------------------------------------------------------------------------------
Liquidity A fund may not purchase any security or enter into a
repurchase agreement if, as a result, more than 15% of its
net assets would be invested in 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 A fund may not sell securities short unless it owns or has
the right to obtain securities equivalent in kind and
amount to the securities sold short, and provided that
transactions in futures contracts and options are not
deemed to constitute selling securities short.
- --------------------------------------------------------------------------------
Margin A fund may not purchase securities on margin, except to
obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin
payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing
securities on margin.
- --------------------------------------------------------------------------------
Futures and Options A fund may enter into futures contracts and write and buy
put and call options relating to futures contracts. A fund
may not, however, enter into leveraged futures transactions
if it would be possible for the fund to lose more money
than it invested.
- --------------------------------------------------------------------------------
Issuers with A fund may invest up to 5% of its assets in the
Limited securities of issuers with limited operating histories.
Operating Histories An issuer is considered to have a limited operating history
if that issuer has a record of less than three years of
continuous operation. Periods of capital formation,
incubation, consolidations, and research and development
may be considered 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 funds of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership. Neither the SEC nor any other agency of the
federal or state government participates in or supervises the management of the
funds or their investment practices or policies.
For purposes of the investment restriction relating to concentration, Large
Cap Value, Value, Small Cap Value and Equity Income shall not purchase any
securities that would cause 25% or more of the value of the fund's total assets
at the time of purchase to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that (a) there is no limitation with respect to obligations issued or guaranteed
by the U.S. government; any state, territory or possession of the United States;
the District of Columbia; or any of their authorities, agencies,
instrumentalities or political subdivisions and repurchase agreements secured by
such instruments; (b) wholly owned finance companies will be considered to be in
the industries of their parents if their activities are primarily related to
financing the activities of the parents; (c) utilities will be divided according
to their services, for example, gas, gas transmission, electric and gas,
electric and telephone will each be considered a separate industry; and (d)
personal credit and business credit businesses will be considered separate
industries.
For purposes of determining industry groups in connection with this
restriction, the SEC ordinarily
Statement of Additional Information 13
uses the Standard Industry Classification codes developed by the U.S. Office of
Management and Budget. In the interest of ensuring adequate diversification, the
funds monitor industry concentration using a more restrictive list of industry
groups than that recommended by the SEC. The advisor believes that these
classifications are reasonable and are not so broad that the primary economic
characteristics of the companies in a single class are materially different. The
use of these restrictive industry classifications may, however, cause the funds
to forego investment possibilities that may otherwise be available to them under
the Investment Company Act.
PORTFOLIO TURNOVER
The portfolio turnover rates of the funds (other than Large Cap Value) are
shown in the Financial Highlights tables in the Prospectuses.
The fund managers will purchase and sell securities without regard to the
length of time the security has been held. Accordingly, the funds' rates of
port-folio turnover may be substantial.
The fund managers intend to purchase a given security whenever they believe
it will contribute to the stated objective of the fund. In order to achieve each
fund's investment objectives, the managers may sell a given security, no matter
how long or 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.
Because investment decisions are based on the anticipated contribution of
the security in question to a fund's objectives, the managers believe that the
rate of portfolio turnover is irrelevant when they believe a change is in order
to achieve the objectives. As a result, a fund's annual portfolio turnover rate
cannot be anticipated and may be higher than other mutual funds with similar
investment objectives. Higher turnover would generate correspondingly greater
brokerage commissions, which is a cost the funds pay directly. Portfolio
turnover also may affect the character of capital gains realized and distributed
by the fund, if any, because short-term capital gains are taxable as ordinary
income. This disclosure regarding portfolio turnover is a statement of
fundamental policy and may be changed only by a vote of the shareholders.
Because the managers do not take portfolio turnover rate into account in
making investment decisions, (1) the managers have no intention of accomplishing
any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as representative
of the rates that will be attained in the future.
S&P 500 INDEX
The Equity Index fund seeks to achieve a 95% or better correlation between
its total return and the total return of the S&P 500 Index. Correlation is
measured by comparing the fund's monthly total returns to those of the S&P 500
over the most recent 36-month period.
The fund is not sponsored, endorsed, sold or promoted by Standard & Poor's,
a division of The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no
representation or warranty, express or implied, to the owners of the fund or any
member of the public regarding the advisability of investing in securities
generally or in the fund particularly or the ability of the S&P 500 Index to
track general stock market performance. S&P's only relationship to American
Century is the licensing of certain trademarks and trade names of S&P and of the
S&P 500 Index which is determined, composed and calculated by S&P without regard
to the fund. S&P has no obligation to take the needs of American Century or the
owners of the fund into consideration in determining, composing or calculating
the S&P 500 the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the prices and amount of the fund or the
timing of the issuance or sale of the fund or in the determination or
calculation of the equation by which the fund is to be converted into cash. S&P
has no obligation or liability in connection with the administration, marketing
or trading of the fund.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data
14 American Century Investments
included therein and S&P shall have no liability for any errors, omissions, or
interruptions therein. S&P makes no warranty, express or implied, as to the
results to be obtained by the fund, owners of the fund, or any other person or
entity from the use of the S&P 500 Index or any data included therein. S&P makes
no express or implied warranties, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
S&P 500 Index or any data included therein. Without limiting any of the
foregoing, in no event shall S&P have any liability for any special, punitive,
indirect or consequential damages (including lost profits), even if notified of
the possibility of such damages.
In the future, the fund may select a different index if such a standard of
comparison is deemed to be more representative of the performance of the
securities the fund seeks to match.
MANAGEMENT
THE BOARD OF DIRECTORS
The Board of Directors oversees the management of the funds and meets at
least quarterly to review reports about fund operations. Although the Board of
Directors does not manage the funds, it has hired the advisor to do so.
Two-thirds of the directors are independent of the funds' advisor, that is, they
are not employed by and have no financial interest in the advisor.
The individuals listed in the table below whose names are marked by an
asterisk (*) are interested persons of the funds (as defined in the Investment
Company Act) by virtue of, among other considerations, their affiliation with
either the funds; the advisor, American Century Investment Management, Inc.
(ACIM); the funds' agent for transfer and administrative services, American
Century Services Corporation (ACSC); the parent corporation, American Century
Companies, Inc. (ACC) or ACC's subsidiaries; the funds' distribution agent and
co-administrator, Funds Distributor, Inc. (FDI); or other funds advised by the
advisor. Each director listed serves as a director of six registered investment
companies in the American Century family of funds, which are also advised by the
advisor.
<TABLE>
Name (Age) Position(s) Held Principal Occupation(s)
Address with Fund During Past Five Years
- ----------------------------------------------------------------------------------------
<S> <C> <C>
James E. Stowers, Jr.* (75) Director, Chairman Chairman, Director and
4500 Main St. of the Board controlling shareholder, ACC
Kansas City, MO 64111 Chairman and Director, ACIM, ACSC and
ACIS Father of James E. Stowers III
- ----------------------------------------------------------------------------------------
James E. Stowers III* (40) Director Director and Chief Executive Officer,
4500 Main St. ACC, ACIM, ASCS and ACIS
Kansas City, MO 64111 Son of James E. Stowers, Jr.
- ----------------------------------------------------------------------------------------
Thomas A. Brown (59) Director Director of Plains States Development,
4500 Main St. Applied Industrial Technologies, Inc.,
Kansas City, MO 64111 a corporation engaged in the sale of
bearings and power transmission products
- ----------------------------------------------------------------------------------------
Robert W. Doering, M.D. (66) Director Retired, formerly a general surgeon
4500 Main St.
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. (54) Director Senior Vice President and Associate
4500 Main St. Director, Midwest Research Institute
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------
(continued on next page)
Statement of Additional Information 15
Name (Age) Position(s) Held Principal Occupation(s)
Address with Fund During Past Five Years
- ---------------------------------------------------------------------------------------------
D.D. (Del) Hock (64) Director Retired, formerly Chairman, Public
4500 Main St. Service Company of Colorado Director,
Kansas City, MO 64111 Service Tech, Inc., Hathaway
Corporation, and J.D. Edwards & Company
- ---------------------------------------------------------------------------------------------
Donald H. Pratt (61) Director, Vice Chairman and Director, Butler
4500 Main St. Chairman of the Board Manufacturing Company
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------
Lloyd T. Silver, Jr. (71) Director President, LSC, Inc., manufacturer's
4500 Main St. representative
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------
M. Jeannine Strandjord (53) Director Senior Vice President, Finance, Sprint
4500 Main St. Corporation; Director, DST Systems, Inc.
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------
COMMITTEES
The Board has four standing committees to oversee specific functions of the
funds' operations. Information about these committees appears in the table
below. The director first named serves as chairman of the committee.
Committee Members Function of Committee
- --------------------------------------------------------------------------------
Executive James E. Stowers, Jr. The Executive Committee performs the
James E. Stowers III functions of the Board of
Donald H. Pratt Directors between Board meetings, subject
to the limitations on its 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
Donald H. Pratt results of the funds' compliance
Lloyd T. Silver, Jr. testing program, reviews quarterly reports
Andrea C. Hall, Ph.D. from the advisor to the Board regarding
various compliance matters, and monitors
the implementation of the funds' Code of
Ethics, including any violations
thereof.
- --------------------------------------------------------------------------------
Audit M. Jeannine Strandjord The Audit Committee recommends the
Robert W. Doering, M.D. engagement of the funds' independent
D.D. (Del) Hock auditors and oversees its activities.
The committee receives reports from the
advisor's Internal Audit Department,
which is accountable to the committee.
The committee also receives reporting
about compliance matters affecting the
funds.
- --------------------------------------------------------------------------------
Nominating Donald H. Pratt The Nominating Committee primarily considers
D.D. (Del) Hock and recommends individuals for nomination
James E. Stowers III as directors. The names of potential
director candidates are drawn from a
numb of sources, including
recommendations from Board members,
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>
16 American Century Investments
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 March 31, 1999
- --------------------------------------------------------------------------------
Total
Total Compensation
Compensation from the
from the American Century
Name of Director Funds (1) Family of Funds( (2))
- --------------------------------------------------------------------------------
Thomas A. Brown $2,925 $54,166
Robert W. Doering, M.D. 2,810 52,166
Andrea C. Hall, Ph.D. 2,818 52,166
D.D. (Del) Hock 2,842 52,666
Donald H. Pratt 2,927 54,166
Lloyd T. Silver, Jr. 2,913 52,166
M. Jeannine Strandjord 2,923 54,166
(1) Includes compensation paid to the directors during the fiscal year ended
March 31, 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 and Trustees. The total amount of deferred compensation
included in the preceding table is as follows: Mr. Brown, $579; Dr. Hall,
$1,245; Mr. Hock, $2,492; Mr. Pratt, $858; Mr. Silver, $1,676; and Ms.
Strandjord, $2,404.
(2 )Includes compensation paid by the six investment company members of the
American Century family of funds served by this Board.
The funds have adopted the American Century Deferred Compensation Plan for
Non-Interested Directors and Trustees. Under the plan, the independent directors
may defer receipt of all or any part of the fees to be paid to them for serving
as directors of the funds.
All deferred fees are credited to an account established in the name of the
directors. The amounts credited to the account then increase or decrease, as the
case may be, in accordance with the performance of one or more of the American
Century funds that are selected by the director. The account balance continues
to fluctuate in accordance with the performance of the selected fund or funds
until final payment of all amounts credited to the account. Directors are
allowed to change their designation of mutual funds from time to time.
No deferred fees are payable until such time as a director resigns, retires
or otherwise ceases to be a member of the Board of Directors. Directors may
receive deferred fee account balances either in a lump sum payment or in
substantially equal installment payments to be made over a period not to exceed
10 years. Upon the death of a director, all remaining deferred fee account
balances are paid to the director's beneficiary or, if none, to the director's
estate.
The plan is an unfunded plan and, accordingly, the funds have no obligation
to segregate assets to secure or fund the deferred fees. The rights of directors
to receive their deferred fee account balances are the same as the rights of a
general unsecured creditor of the funds. The plan may be terminated at any time
by the administrative committee of the plan. If terminated, all deferred fee
account balances will be paid in a lump sum.
No deferred fees were paid to any director under the plan during the fiscal
year ended March 31, 1999.
OFFICERS
Background information for the officers of the funds is provided in the
following table. All persons named as officers of the funds also serve in
similar capacities for the 12 other investment companies advised by ACIM. Not
all officers of the funds are listed; only those officers with policy-making
functions for the funds are listed. No officer is compensated for his or her
service as an officer of the funds. The individuals listed in the table are
interested persons of the funds (as defined in the Investment Company Act) by
virtue of, among other considerations, their affiliation with either the funds;
ACC; ACC's subsidiaries (including ACIM and ACSC); or the funds' distributor
(FDI).
Statement of Additional Information 17
<TABLE>
Name (Age) Positions Held with Principal Occupation(s)
Address Fund During Past Five Years
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
George A. Rio (44) President Executive Vice President and Director of
60 State St. Client Services, FDI
Boston, MA 02109 (March 1998 to present) 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) Senior Vice President and Manager of
Client Services and Director of Internal Audit,
The Boston Company, Inc. (September 1983 to May 1994)
- ------------------------------------------------------------------------------------------------
Christopher J. Kelley (34) Vice President Vice President and Associate General Counsel, FDI
60 State St. (July 1996 to present) Assistant Counsel,
Boston, MA 02109 Forum Financial Group (April 1994 to July 1996)
Compliance Officer, Putnam Investments
(1992 to April 1994)
- ------------------------------------------------------------------------------------------------
Mary A. Nelson (35) Vice President Vice President and Manager of Treasury
60 State St. Services and Administration, FDI (1994 to present)
Boston, MA 02109 Assistant Vice President and Client Manager,
The Boston Company, Inc. (1989 to 1994)
- ------------------------------------------------------------------------------------------------
Maryanne Roepke, CPA (43) Vice President Senior Vice President, Treasurer
4500 Main St. and Principal Accounting
Kansas City, MO 64111 and Treasurer Officer, ACSC
- ------------------------------------------------------------------------------------------------
David C. Tucker (41) Vice President Senior Vice President and General Counsel, ACSC
4500 Main St. and ACIM (June 1998 to present) General Counsel,
Kansas City, MO 64111 ACC (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. (49) Secretary Secretary, ACC (December 1998 to present)
4500 Main St. Director of Legal Operations, ACSC
Kansas City, MO 64111 (February 1996 to present)
Board Communications Manager, The Benham
Company (April 1994 to January 1996)
Legal Coordinator, State of California
Health & Welfare Agency (February 1992 to March 1994)
- -----------------------------------------------------------------------------------------------
Merele A. May (36) Controller Vice President, Controller-Fund Accounting, ACSC
4500 Main St.
Kansas City, MO 64111
- -----------------------------------------------------------------------------------------------
Jon Zindel (32) Tax Officer Vice President and Director of Taxation,
4500 Main St. ACSC (1996 to present)
Kansas City, MO 64111 Tax Manager, Price Waterhouse LLP (1989 to 1996)
- ----------------------------------------------------------------------------------------------
</TABLE>
18 American Century Investments
THE FUNDS' PRINCIPAL SHAREHOLDERS
As of July 1, 1999, the following companies were the record owners of more
than 5% of a fund's outstanding shares:
Shareholder and Percentage
Fund of Shares Outstanding
- -------------------------------------------------------------------------------
Value Charles Schwab & Company
San Francisco, CA -- 6.9%
- -------------------------------------------------------------------------------
Small Cap Value UMB Bank NA as Trustee for
American Century Services Corporation
Kansas City, MO - 6.4%
North Carolina Engineering Foundation
Raleigh, NC - 6.2%
- -------------------------------------------------------------------------------
Equity Income Charles Schwab & Company
San Francisco, CA -- 9.6%
- -------------------------------------------------------------------------------
Equity Index UMB Bank NA as Trustee
for Anderson Corporation
Kansas City, MO - 10.3%
Chase Manhattan Bank as Trustee
for Robert Bosch Corporation
New York, NY - 9.9%
Chase Manhattan Bank as Trustee
for Arch Coal Inc.
New York, NY - 6.5%
Chase Manhattan Bank as Trustee
for Huntsman Corporation
New York, NY - 5.7%
- -------------------------------------------------------------------------------
Real Estate Charles Schwab & Company
San Francisco, CA -- 33.7%
- -------------------------------------------------------------------------------
The funds are unaware of any other shareholders, beneficial or of record,
who own more than 5% of a fund's outstanding shares. As of July 1, 1999, the
officers and directors of the funds, as a group, own less than 1% of any fund's
outstanding shares.
SERVICE PROVIDERS
The funds have no employees. To conduct the funds' day-to-day activities,
the funds have hired a number of service providers. Each service provider has a
specific function to fill on behalf of the funds and is described below.
ACIM 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
A description of the responsibilities of the advisor appears in the
Prospectus under the heading "Management."
For the services provided to the funds, the advisor receives a monthly fee
based on a percentage of the average net assets of the funds as follows:
Fund Class Percentage of Net Assets
- -------------------------------------------------------------------------------
Large Cap Value Investor 0.90% of first $1 billion
0.80% of the next $4 billion
0.70% over $5 billion
Institutional 0.70% of first $1 billion
0.60% of the next $4 billion
0.50% over $5 billion
Advisor 0.65% of first $1 billion
0.55% of the next $4 billion
0.45% over $5 billion
- -------------------------------------------------------------------------------
Value Investor 1.00%
Institutional 0.80%
Advisor 0.75%
- -------------------------------------------------------------------------------
Small Cap Value Investor 1.25%
Institutional 1.05%
Advisor 1.00%
- -------------------------------------------------------------------------------
Equity Income Investor 1.00%
Institutional 0.80%
Advisor 0.75%
- -------------------------------------------------------------------------------
Equity Index Investor 0.49%
Institutional 0.29%
- -------------------------------------------------------------------------------
Real Estate Investor 1.20%
Institutional 1.00%
Advisor 0.95%
- -------------------------------------------------------------------------------
Statement of Additional Information 19
On the first business day of each month, the funds pay a management fee to
the advisor for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for the fund by
the aggregate average daily closing value of a fund's net assets during the
previous month. This number is then multiplied by a fraction, the numerator of
which is the number of days in the previous month and the denominator of which
is 365 (366 in leap years).
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved, at least annually, by (1) the funds'
Board of Directors, or 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 funds who are not parties to the agreement or interested
persons of the advisor, cast in person at a meeting called for the purpose of
voting on such approval.
The management agreement provides that it may be terminated at any time
without payment of any penalty by the funds' Board of Directors, or by a vote of
a majority of outstanding votes, on 60 days' written notice to the advisor, and
that it shall be automatically terminated if it is assigned.
The management agreement provides that the advisor shall not be liable to
the funds or their shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties. The
management agreement also provides that the advisor and its officers, directors
and employees may engage in other business, devote time and attention to any
other business whether of a similar or dissimilar nature, and render services to
others.
Certain investments may be appropriate for the funds and also for other
clients advised by the advisor. Investment decisions for the funds and other
clients are made with a view to achieving their respective investment objectives
after consideration of such factors as their current holdings, availability of
cash for investment and the size of their investment generally. A particular
security may be bought or sold for only one client or fund, or in different
amounts and at different times for more than one but less than all clients or
funds. In addition, purchases or sales of the same security may be made for two
or more clients or funds on the same date. Such transactions will be allocated
among clients in a manner believed by the advisor to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by a fund.
The advisor may aggregate purchase and sale orders of the funds with
purchase and sale orders of its other clients when the advisor believes that
such aggregation provides the best execution for the funds. The Board of
Directors has approved the policy of the advisor with respect to the aggregation
of portfolio transactions. Where portfolio transactions have been aggregated,
the funds participate at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
advisor will not aggregate portfolio transactions of the funds unless it
believes such aggregation is consistent with its duty to seek best execution on
behalf of the funds and the terms of the management agreement. The advisor
receives no additional compensation or remuneration as a result of such
aggregation.
Unified management fees incurred by each fund by class for the fiscal
periods ended March 31, 1999, 1998, and 1997, are indicated in the following
table.
20 American Century Investments
UNIFIED MANAGEMENT FEES
Fund 1999 1998 1997
- --------------------------------------------------------------------------------
VALUE
Investor $21,943,111 $22,462,663 $12,940,373
Institutional 88,534 12,733 (1) N/A
Advisor 394,296 303,110 106,780 (2)
- --------------------------------------------------------------------------------
SMALL CAP VALUE
Investor 71,636 N/A N/A
Institutional 4,618 N/A N/A
Advisor N/A N/A N/A
- --------------------------------------------------------------------------------
EQUITY INCOME
Investor 3,171,000 2,719,021 1,579,948
Institutional 810 N/A N/A
Advisor 34,006 3,083 9 (3)
- --------------------------------------------------------------------------------
EQUITY INDEX
Investor 4,659 N/A N/A
Institutional 68,622 N/A N/A
- --------------------------------------------------------------------------------
REAL ESTATE
Investor 1,475,686 527,319 (4) 247,066 (5)
Institutional 224,102 54,963 (6) 48,843 (7)
Advisor 673 N/A N/A
- --------------------------------------------------------------------------------
(1) For the period July 31, 1997 (inception) through March 31, 1997.
(2) For the period October 2, 1996 (inception) through March 31, 1997.
(3) For the period March 7, 1997 (inception) through March 31, 1997.
(4) For the five months ended March 31, 1998. Does not include $25,548 of fees,
the payment of which was voluntarily waived by the advisor.
(5) For the 12 months ended October 31, 1997.
(6) For the five months ended March 31, 1998. Does not include $3,001 of fees,
the payment of which was voluntarily waived by the advisor.
(7) For the period June 16, 1997 (inception) through October 31, 1997.
Other Advisory Relationships
In addition to managing the funds, the advisor also serves as an investment
advisor to seven institutional accounts and to the following registered
investment companies:
American Century Mutual Funds, Inc.
American Century World Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Variable Portfolios, Inc.
American Century Strategic Asset Allocations, Inc.
American Century Municipal Trust
American Century Government Income Trust
American Century Investment Trust
American Century Target Maturities Trust
American Century Quantitative Equity Funds
American Century International Bond Funds
American Century California Tax-Free and Municipal Funds
TRANSFER AGENT AND ADMINISTRATOR
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, serves as transfer agent and dividend-paying agent for the
funds. It provides physical facilities, computer hardware and software and
personnel, for the day-to-day administration of the funds and of the advisor.
The advisor pays ACSC for such services.
From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the advisor.
Pursuant to a Sub-Administration Agreement with the advisor, Funds
Distributor, Inc. (FDI) serves as the co-administrator for the funds. FDI is
responsible for (i) providing certain officers of the funds and (ii) reviewing
and filing marketing and sales literature on behalf of the funds. The fees and
expenses of FDI are paid by the advisor out of its unified fee.
DISTRIBUTOR
The funds' shares are distributed by FDI, a registered broker-dealer. The
distributor is a wholly owned, indirect subsidiary of Boston Institutional
Group, Inc. The distributor's principal business address is 60 State Street,
Suite 1300, Boston, Massachusetts 02109.
The distributor is the principal underwriter of the funds' shares. The
distributor makes a continuous, best-efforts underwriting of the funds' shares.
This means that the distributor has no liability for unsold shares.
Statement of Additional Information 21
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 funds. The custodians take no part
in determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds, however, may invest in
certain obligations of the custodians and may purchase or sell certain
securities from or to the custodians.
INDEPENDENT AUDITORS
Deloitte & Touche LLP is the independent auditor of the funds. The address
of Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas City, Missouri 64106.
As the independent auditor of the funds, Deloitte & Touche provides services
including (1) audit of the annual financial statements for each fund, (2)
assistance and consultation in connection with SEC filings, and (3) review of
the annual federal income tax return filed for each fund.
BROKERAGE ALLOCATION
Under the management agreement between the funds and the advisor, the
advisor has the responsibility of selecting brokers and dealers to execute
portfolio transactions. The funds' policy is to secure the most favorable prices
and execution of orders on its portfolio transactions. So long as that policy is
met, the advisor may take into consideration the factors discussed below when
selecting brokers. For Equity Index and the Real Estate Fund, the advisor has
delegated responsibility for selecting brokers to execute portfolio transactions
to the subadvisor under the terms of the applicable investment subadvisory
agreement.
The advisor, or the subadvisor, as the case may be, receives statistical and
other information and services, including research, without cost from brokers
and dealers. The advisor or the subadvisor evaluates such information and
services, together with all other information that it may have, in supervising
and managing the investments of the funds. Because such information and services
may vary in amount, quality and reliability, its influence in selecting brokers
varies from none to very substantial. The advisor or the subadvisor proposes to
continue to place some of the funds' brokerage business with one or more brokers
who provide information and services. Such information and services will be in
addition to and not in lieu of services required to be performed by the advisor.
The advisor does not utilize brokers that provide such information and services
for the purpose of reducing the expense of providing required services to the
funds.
In the fiscal periods March 31, 1999, 1998 and 1997, the brokerage
commissions of each fund were as follows:
Fund 1999 1998 1997
- ------------------------------------------------------------------------------
Value $8,037,803 $8,771,789 $4,841,179
- ------------------------------------------------------------------------------
Small
Cap
Value 43,018 N/A N/A
- ------------------------------------------------------------------------------
Equity
Income 1,184,393 812,420 537,710
- ------------------------------------------------------------------------------
Equity
Index 1,677 N/A N/A
- ------------------------------------------------------------------------------
Real Estate 444,518 164,977 (1) 140,226 (2)
- ------------------------------------------------------------------------------
(1) For the five months ended March 31, 1998.
(2) For the 12 months ended October 31, 1997.
The brokerage commissions paid by the funds may exceed those that another
broker might have charged for effecting the same transactions, because of the
value of the brokerage and research services provided by the broker. Research
services furnished by brokers through whom the funds effect securities
transactions may be used by the advisor in servicing all of its accounts, and
not all such services may be used by the advisor in managing the portfolios of
the funds.
The staff of the SEC has expressed the view that the best price and
execution of over-the-counter transactions in portfolio securities may be
secured by dealing directly with principal market makers, thereby avoiding the
payment of compensation to another broker. In certain situations, the officers
of the funds and the advisor believe that the facilities, expert personnel and
technological systems of a broker often
22 American Century Investments
enable the funds to secure as good a net price by dealing with a broker instead
of a principal market maker, even after payment of the compensation to the
broker. The funds regularly place their over-the-counter transactions with
principal market makers, but also may deal on a brokerage basis when utilizing
electronic trading networks or as circumstances warrant.
================================================================================
INFORMATION ABOUT FUND SHARES
Each of the funds named on the front of this Statement of Additional
Information is a series of shares issued by the corporation, and shares of each
fund have equal voting rights. In addition, each series (or fund) may be divided
into separate classes. See "Multiple Class Structure" which follows. Additional
funds and classes may be added without a shareholder vote.
Each fund votes separately on matters affecting that fund exclusively.
Voting rights are not cumulative, so 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 a shareholder is entitled to is based upon the dollar amount of
the shareholder's investment. The election of directors is determined by the
votes received from all the corporation's shareholders without regard to whether
a majority of shares of any one fund voted in favor of a particular nominee or
all nominees as a group.
The assets belonging to each series or class of shares are held separately
by the custodian, and the shares of each series or class represent a beneficial
interest in the principal, earnings and profit (or losses) of investments and
other assets held for each series or class. Your rights as a shareholder are the
same for all series or classes 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 funds,
shareholders of each series or class of shares shall be entitled to receive, pro
rata, all of the assets less the liabilities of that series or class.
Each shareholder has rights to dividends and distributions declared by the
fund he or she owns and to the net assets of such fund upon its liquidation or
dissolution proportionate to his or her share ownership interest in the fund.
MULTIPLE CLASS STRUCTURE
The corporation's Board of Directors has adopted a multiple class plan (the
Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such
plan, the funds may issue up to four classes of shares: an Investor Class, an
Institutional Class, a Service Class and an Advisor Class. Not all funds offer
all four classes.
The Investor Class is made available to investors directly without any load
or commission, for a single unified management fee. The Institutional, Service
and Advisor Classes are made available to institutional shareholders or through
financial intermediaries that do not require the same level of shareholder and
administrative services from the advisor as Investor Class shareholders. As a
result, the advisor is able to charge these classes a lower total management
fee. In addition to the management fee, however, the Advisor Class shares are
subject to a Master Distribution and Shareholder Services Plan (described
beginning on page 25). The plan has been adopted by the funds' Board of
Directors and initial shareholder in accordance with Rule 12b-1 adopted by the
SEC under the Investment Company Act.
RULE 12B-1
Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the investment
company's Board of Directors and approved by its shareholders. Pursuant to such
rule, the Board of Directors and initial shareholder of the funds' Advisor Class
have approved and entered into a Master Distribution and Shareholder Services
Plan, with respect to the Advisor Class (the Plan). The Plan is described below.
In adopting the Plan, the Board of Directors (including a majority of
directors who are not interested persons of the funds [as defined in the
Investment Company Act], hereafter referred to as the independent directors)
determined that there was a reasonable likelihood that the Plan would benefit
the funds and the shareholders of the affected class. Pursuant to Rule 12b-1,
information with respect to revenues and expenses under the Plan is presented to
the Board of Directors quarterly for its consideration in connection with its
deliberations as to the
Statement of Additional Information 23
continuance of the Plan. Continuance of the Plan must be approved by the Board
of Directors (including a majority of the independent directors) annually. The
Plan may be amended by a vote of the Board of Directors (including a majority of
the independent directors), except that the Plan may not be amended to
materially increase the amount to be spent for distribution without majority
approval of the shareholders of the affected class. The Plan terminates
automatically in the event of an assignment and may be terminated upon a vote of
a majority of the independent directors or by vote of a majority of the
outstanding voting securities of the affected class.
All fees paid under the Plan will be made in accordance with Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers
(NASD).
MASTER DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
As described in the Prospectuses, the funds' Advisor Class of shares also is
made available to participants in employer-sponsored retirement or savings plans
and to persons purchasing through financial intermediaries such as banks,
broker-dealers and insurance companies. The funds' distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries, with respect to the sale of the funds' shares and/or
the use of the funds' shares in various investment products or in connection
with various financial services.
Certain recordkeeping and administrative services that are provided by the
funds' transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for shareholders in
the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.
To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
advisor has reduced its management fee by 0.25% per annum with respect to the
Advisor Class shares and the funds' Board of Directors has adopted a Master
Distribution and Shareholder Services Plan. Pursuant to the Plan, the Advisor
Class shares pay a fee of 0.50% annually of the aggregate average daily assets
of the funds' Advisor Class shares, 0.25% of which is paid for shareholder
services (as described below) and 0.25% of which is paid for distribution
services.
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 funds as underlying investment media) of
shares and placing purchase, exchange and redemption orders with the funds'
distributor; (b) providing shareholders with a service that invests the assets
of their accounts in shares pursuant to specific or pre-authorized instructions;
(c) processing dividend payments from a fund on behalf of shareholders and
assisting shareholders in changing dividend options, account designations and
addresses; (d) providing and maintaining elective services such as check writing
and wire transfer services; (e) acting as shareholder of record and nominee for
beneficial owners; (f) maintaining account records for 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
funds (such as proxies, shareholder reports, annual and semiannual 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 funds.
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, ongoing commissions and other payments to brokers, dealers,
financial institutions or others who sell Advisor Class shares pursuant to
Selling Agreements; (b) compensation to registered representatives or other
employees of distributor who engage in or support distribution of the funds'
Advisor Class shares; (c) compensation to, and expenses (including overhead and
telephone expenses) of, distributor; (d) the printing of prospectuses,
statements of additional information and reports for other-than-existing
shareholders; (e) the
24 American Century Investments
preparation, printing and distribution of sales literature and advertising
materials provided to the funds' 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 funds
pursuant to the terms of this Agreement 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
Your Guide to American Century Services. The guide is available to investors
without charge and may be obtained by calling us.
VALUATION OF A FUND'S SECURITIES
Each fund's net asset value per share (NAV) is calculated as of the close of
business of the New York Stock Exchange (the Exchange), usually at 4 p.m.
Eastern time on each day the Exchange is open for business. The Exchange
typically observes the following holidays: New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Although the funds expect the same
holidays to be observed in the future, the Exchange may modify its holiday
schedule at any time.
Each fund's NAV is calculated by adding the value of all portfolio
securities and other assets, deducting liabilities and dividing the result by
the number of shares outstanding. Expenses and interest earned on portfolio
securities are accrued daily.
The portfolio securities of the funds, except as otherwise noted, listed or
traded on a domestic securities exchange, are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges generally are valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.
Debt 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.
Statement of Additional Information 25
Trading of these securities in foreign markets may not take place on every
exchange business day. In addition, trading may take place in various foreign
markets on Saturdays or on other days when the exchange is not open and on which
the funds' net asset values are not calculated. Therefore, such calculations do
not take place contemporaneously with the determination of the prices of many of
the portfolio securities used in such calculation and the value of the funds'
portfolios may be affected on days when shares of the funds may not be purchased
or redeemed.
TAXES
FEDERAL INCOME TAXES
Each fund intends to qualify annually as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the Code).
By so qualifying, a fund will be exempt from federal income taxes to the extent
that it distributes substantially all of its net investment income and net
realized capital gains (if any) to 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
funds.
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. The dividends from net income may qualify for the 70%
dividends-received deduction for corporations to the extent that the fund held
shares receiving the dividend for more than 45 days.
Distributions from gains on assets held longer than 12 months are taxable as
long-term gains regardless of the length of time you have held the shares.
However, you should note that any loss realized upon the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any distributions of long-term capital gains to you with
respect to such shares.
Dividends and interest received by a fund on foreign securities may give
rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Foreign countries generally do not impose taxes on capital
gains with respect to investments by non-resident investors. The foreign taxes
paid by a fund will reduce its dividends.
If more than 50% of the value of a fund's total assets at the end of its
fiscal year consists of securities of foreign corporations, the fund may qualify
for and make an election with the Internal Revenue Service with respect to such
fiscal year so that fund shareholders may be able to claim a foreign tax credit
in lieu of a deduction for foreign income taxes paid by the fund. If such an
election is made, the foreign taxes paid by the fund will be treated as income
received by you. In order for you to utilize the foreign tax credit, you must
have held your shares for 16 days or more during the 30-day period, beginning 15
days prior to the ex- dividend date for the 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 and distribute them to shareholders. Any
distribution attributable to a PFIC is characterized as ordinary income.
If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, either American Century or your financial intermediary is
required by federal law to withhold and remit 31% of reportable payments (which
may include dividends, capital gains distributions and redemptions) to the IRS.
Those regulations require you to certify that the Social Security number or tax
identification number you provide is correct and that you are not subject to 31%
withholding for previous under-reporting to the IRS.
26 American Century Investments
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 redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes, and
shareholders generally will recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. If a loss is
realized on the redemption of fund shares, the reinvestment in additional fund
shares within 30 days before or after the redemption may be subject to the "wash
sale" rules of the Code, resulting in a postponement of the recognition of such
loss for federal income tax purposes.
STATE AND LOCAL TAXES
Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
TAXATION OF CERTAIN MORTGAGE REITS
The funds may invest in REITs that hold residual interests in real estate
mortgage investment conduits. Under Treasury regulations that have not yet been
issued, but may apply retroactively, a portion of a fund's income from a REIT
that is attributable to the REIT's residual interest in a REMIC (referred to in
the Code as an "excess inclusion") will be subject to federal income tax in all
events. These regulations are also expected to provide that excess inclusion
income of a regulated investment company, such as a fund, will be allocated to
shareholders of the regulated investment company in proportion to the dividends
received by them with the same consequences as if these shareholders held the
related REMIC residual interest directly. In general, excess inclusion income
allocated to shareholders (i) cannot be offset by net operating losses (subject
to a limited exception for certain thrift institutions) and (ii) will constitute
unrelated business taxable income to entities (including a qualified pension
plan, an individual retirement account, a 401(k) plan, a Keogh plan or other
tax-exempt entity) subject to tax on unrelated business income, thereby
potentially requiring such an entity that is allocated excess inclusion income,
and otherwise might be required to file a tax return, to file a tax return and
pay tax on some income. In addition, if at any time during any taxable year a
"disqualified organization" (as defined in the Code) is a record holder of a
share in a regulated investment company, then the regulated investment company
will be subject to a tax equal to that portion of its excess inclusion income
for the taxable year that is allocable to the disqualified organization,
multiplied by the highest federal income tax rate imposed on corporations.
HOW FUND PERFORMANCE INFORMATION IS CALCULATED
The funds may quote performance in various ways. Fund performance may be
shown by presenting one or more performance measurements, including cumulative
total return, average annual total return or yield.
All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
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
Statement of Additional Information 27
annual total returns are a convenient means of comparing investment
alternatives, investors should realize that the funds' performance is not
constant over time, but changes from year-to-year, and that average annual total
returns represent averaged figures as opposed to actual year-to-year
performance.
The following tables set forth the average annual total return for the various
classes of the funds for the one-, five- and 10-year periods (or the period
since inception) ended March 31, 1999, the last day of the funds' most recent
fiscal year.
As a new fund, performance information for Large Cap Value is not available as
of the date of this Statement of Additional Information.
AVERAGE ANNUAL TOTAL RETURNS--INVESTOR CLASS
Fund 1 year 5 years 10 years From Inception
- ------------------------------------------------------------------------------
Value -9.88% 17.29% N/A 15.54%
Small Cap Value N/A N/A N/A -4.24%
Equity Income -0.44% N/A N/A 18.63%
Equity Index N/A N/A N/A 4.00%
Real Estate -21.04% N/A N/A 11.16%
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS--INSTITUTIIONAL CLASS
Fund 1 year 5 years 10 years From Inception
- ------------------------------------------------------------------------------
Value -9.52% N/A N/A 3.55%
Small Cap Value N/A N/A N/A -0.60%
Equity Income N/A N/A N/A 1.60%
Equity Index N/A N/A N/A 4.00%
Real Estate -20.77% N/A N/A -4.08%
- ------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS--ADVISOR CLASS
Fund 1 year 5 years 10 years From Inception
- ------------------------------------------------------------------------------
Value -10.09% N/A N/A 13.01%
Equity Income -0.75% N/A N/A 14.69%
Real Estate N/A N/A N/A 2.25%
- ------------------------------------------------------------------------------
In addition to average annual total returns, each fund may quote unaveraged or
cumulative totalreturns reflecting the simple change in value of aninvestment
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.
28 American Century Investments
The funds also may elect to advertise cumulative total return, computed as
described above. The following table shows the cumulative total return of the
funds by class since their respective dates of inception (as noted) through
March 31, 1999.
<TABLE>
Fund Class Cumulative Total Return since Inception Date of Inception
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Investor 123.82% 09/01/93
Institutional 5.99% 07/31/97
Advisor 35.65% 10/02/96
- ------------------------------------------------------------------------------------------------------------
Small Cap Value Investor -4.24% 07/31/98
Institutional -0.60% 10/26/98
- ------------------------------------------------------------------------------------------------------------
Equity Income Investor 121.82% 08/01/94
Institutional 1.60% 07/08/98
Advisor 32.73% 03/07/97
- ------------------------------------------------------------------------------------------------------------
Equity Index Investor 4.00% 02/26/99
Institutional 4.00% 02/26/99
- ------------------------------------------------------------------------------------------------------------
Real Estate Investor 45.18% 09/21/95
Institutional -7.18% 06/16/97
Advisor 2.25% 10/06/98
- ------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE COMPARISONS
The funds' performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indices of market
performance. This may include comparisons with funds that, unlike the American
Century funds, are sold with a sales charge or deferred sales charge. Sources of
economic data that may be used for such comparisons may include, but are not
limited to: U.S. Treasury bill, note and bond yields, money market fund yields,
U.S. government debt and percentage held by foreigners, the U.S. money supply,
net free reserves, and yields on current-coupon GNMAs (source: Board of
Governors of the Federal Reserve System); the federal funds and discount rates
(source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated, tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government
reports; the junk bond market (source: Data Resources, Inc.); the CRB Futures
Index (source: Commodity Index Report); the price of gold (sources: London
a.m./p.m. fixing and New York Comex Spot Price); rankings of any mutual fund or
mutual fund category tracked by Lipper, Inc. or Morningstar, Inc.; mutual fund
rankings published in major, nationally distributed periodicals; data provided
by the Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills,
and Inflation; major indices of stock market performance; and indices and
historical data supplied by major securities brokerage or investment advisory
firms. The funds also may utilize reprints from newspapers and magazines
furnished by third parties to illustrate historical performance or to provide
general information about the funds.
PERMISSIBLE ADVERTISING INFORMATION
From time to time, the funds may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to shareholders: (1) discussions of
general economic or financial principles
Statement of Additional Information 29
(such as the effects of compounding and the benefits of dollar-cost averaging);
(2) discussions of general economic trends; (3) presentations of statistical
data to supplement such discussions; (4) descriptions of past or anticipated
portfolio holdings for one or more of the funds; (5) descriptions of investment
strategies for one or more of the funds; (6) descriptions or comparisons of
various savings and investment products (including, but not limited to,
qualified retirement plans and individual stocks and bonds), which may or may
not include the funds; (7) comparisons of investment products (including the
funds) with relevant market or industry indices or other appropriate benchmarks;
(8) discussions of fund rankings or ratings by recognized rating organizations;
and (9) testimonials describing the experience of persons who have invested in
one or more of the funds. The funds also may include calculations, such as
hypothetical compounding examples, which describe hypothetical investment
results. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of any of the funds.
MULTIPLE CLASS PERFORMANCE ADVERTISING
Pursuant to the Multiple Class Plan, the funds may issue additional classes
of existing funds or introduce new funds with multiple classes available for
purchase. To the extent a new class is added to an existing fund, the advisor
may, in compliance with SEC and NASD rules, regulations and guidelines, market
the new class of shares using the historical performance information of the
original class of shares. When quoting performance information for the new class
of shares for periods prior to the first full quarter after inception, the
original class' performance will be restated to reflect the expenses of the new
class, and for periods after the first full quarter after inception, actual
performance of the new class will be used.
FINANCIAL STATEMENTS
The financial statements of the funds (other than Large Cap Value) are
included in the annual reports to shareholders for the fiscal year ended March
31, 1999. Each annual report is incorporated herein by reference. You may
receive copies of the reports without charge upon request to American Century at
the address and telephone numbers shown on the back cover of this Statement of
Additional Information.
EXPLANATION OF FIXED-INCOME SECURITIES RATINGS
As described in the Prospectuses, the funds may invest in fixed-income
securities. Those investments, however, are subject to certain credit quality
restrictions, as noted in the Prospectuses. The following is a summary of the
rating categories referenced in the prospectus disclosure.
30 American Century Investments
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. It
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.
- --------------------------------------------------------------------------------
Statement of Additional Information 31
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 payment is strong.
(P-1) 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 satisfactory, but the relative degree of
(P-2) 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 this rating are somewhat
(P-3) 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.
- --------------------------------------------------------------------------------
32 American Century Investments
MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS
ANNUAL AND SEMIANNUAL REPORTS
These contain more information about the funds' investments and the market
conditions and investment strategies that significantly affected the funds'
performance during the most recent fiscal period. The annual and semiannual
reports are incorporated by reference into this SAI. This means that these are
legally part of this SAI.
You can receive free copies of the annual and semiannual reports, and ask
any questions about the funds and your accounts, by contacting American Century
at the address or telephone numbers listed below.
If you own or are considering purchasing fund shares through
* an employer-sponsored retirement plan
* a bank
* a broker-dealer
* an insurance company
* another financial intermediary
you can receive the annual and semiannual reports directly from them.
You also can get information about the funds from the Security and Exchange
Commission (SEC).
* In person SEC Public Reference Room
Washington, D.C. Call 1-800-SEC-0330 for location
and hours.
* On the Internet www.sec.gov
* By mail SEC Public Reference Section
Washington, D.C.
20549-6009 (The SEC will charge a fee for copying the
documents.)
Investment Company Act File No. 811-7820
- --------------------------------------------------------------------------------
[american century logo (reg. sm)]
American
Century
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
1-800-345-353
SH-SAI-16644 9907
<PAGE>
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
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 Capital
Portfolios, Inc., dated June 11, 1993 (filed electronically as
Exhibit 1a to Post-Effective Amendment No. 5 to the Registration
Statement on July 31, 1996, File No. 33-64872).
(2) Articles Supplementary of Twentieth Century Capital
Portfolios, Inc., dated March 11, 1996 (filed electronically as
Exhibit 1b to Post-Effective Amendment No. 5 to the Registration
Statement on July 31, 1996, File No. 33-64872).
(3) Articles Supplementary of Twentieth Century Capital
Portfolios, Inc. dated September 9, 1996 (filed electronically as
Exhibit a3 to Post-Effective Amendment No. 15 to the Registration
Statement on May 14, 1999, File No. 33-64872).
(4) Articles of Amendment of Twentieth Century Capital
Portfolios, Inc., dated December 2, 1996 (filed electronically as
Exhibit b1c to Post-Effective Amendment No. 7 to the Registration
Statement on March 3, 1997, File No. 33-64872).
(5) Articles Supplementary of American Century Capital
Portfolios, Inc., dated December 2, 1996 (filed electronically as
Exhibit b1d to Post-Effective Amendment No. 7 to the Registration
Statement on March 3, 1997, File No. 33-64872).
(6) Articles Supplementary of American Century Capital
Portfolios, Inc. dated April 30, 1997 (filed electronically as
Exhibit b1e to Post-Effective Amendment No. 8 to the Registration
Statement on May 21, 1997, File No. 33-64872).
(7) Certificate of Correction of Articles Supplementary of
American Century Capital Portfolios, Inc. dated May 15, 1997
(filed electronically as Exhibit b1f to Post-Effective Amendment
No. 8 to the Registration Statement on May 21, 1997, File No.
33-64872).
(8) Articles of Merger merging RREEF Securities Fund, Inc. with
and into American Century Capital Portfolios, Inc. dated June 13,
1997 (filed electronically as Exhibit a8 to Post-Effective
Amendment No. 15 to the Registration Statement on May 14, 1999,
File No. 33-64872).
(9) Articles Supplementary of American Century Capital
Portfolios, Inc. dated December 18, 1997 (filed electronically as
Exhibit b1g to Post-Effective Amendment No. 9 to the Registration
Statement on February 17, 1998, File No. 33-64872).
(10) Articles Supplementary of American Century Capital
Portfolios, Inc. dated June 1, 1998 (filed electronically as
Exhibit b1h to Post-Effective Amendment No. 11 to the
Registration Statement on June 26, 1998, File No. 33-64872).
(11) Articles Supplementary of American Century Capital
Portfolios, Inc. dated January 29, 1999 (filed electronically as
Exhibit b1i to Post-Effective Amendment No. 14 to the
Registration Statement on December 29, 1998, File No. 33-64872).
(12) Articles Supplementary of American Century Capital
Portfolios, Inc. dated February 16, 1999 (filed electronically as
Exhibit a12 to Post-Effective Amendment No. 15 to the
Registration Statement on May 14, 1999, File No. 33-64872).
(13) Articles Supplementary of American Century Capital
Portfolios, Inc. is included herein.
(b) (1) By-Laws of Twentieth Century Capital Portfolios, Inc. (filed
electronically as Exhibit 2 to Post-Effective Amendment No. 5 to
the Registration Statement on July 31, 1996, File No. 33-64872).
(2) Amendment to By-Laws of American Century Capital Portfolios,
Inc. (filed electronically as Exhibit b2b to Post-Effective
Amendment No. 9 to the Registration Statement on February 17,
1998, File No. 33-64872).
(c) Registrant hereby incorporates by reference, as though set forth
fully herein, Article Fifth, Article Seventh and Article Eighth
of Registrants Articles of Incorporation, appearing as Exhibit 1a
to Post-Effective Amendment No. 5 on Form N-1A of the Registrant;
and Sections 3, 4, 5, 6, 7, 8, 9, 10, 11, 22, 33, 39, 40, 45 and
46 of Registrants By-Laws appearing as Exhibit 2 to
Post-Effective Amendment No. 5 on Form N-1A of the Registrant,
and Sections 25, 30, and 31 of Registrants Amendment to By-Laws
appearing as Exhibit 2b to Post-Effective Amendment No. 9 on Form
N-1A of the Registrant.
(d) (1) Management Agreement between American Century Capital
Portfolios, Inc. and American Century Investment Management, Inc.
dated August 1, 1997 (filed electronically as Exhibit b5a to
Post-Effective Amendment No. 9 to the Registration Statement on
February 17, 1998, File No. 33-64872).
(2) Subadvisory Agreement by and between American Century Capital
Portfolios, Inc., American Century Investment Management, Inc.
and RREEF America, L.L.C., dated January 27, 1998 (filed
electronically as Exhibit b5b to Post-Effective Amendment No. 9
to the Registration Statement on February 17, 1998, File No.
33-64872).
(3) Addendum to Management Agreement between American Century
Capital Portfolios, Inc. and American Century Investment
Management, Inc. dated July 30, 1998 (filed electronically as
Exhibit b5c to Post-Effective Amendment No. 11 to the
Registration Statement on June 26, 1998, File No. 33-64872).
(4) Subadvisory Agreement between Barclays Global Fund Advisers
and American Century Investment Management, Inc. dated January
29, 1999 (filed electronically as Exhibit b5d to Post-Effective
Amendment No. 14 to the Registration Statement on December 29,
1998, File No. 33-64872).
(5) Addendum to Management Agreement between American Century
Capital Portfolios, Inc. and American Century Investment
Management, Inc. dated January 29, 1999 (filed electronically as
Exhibit b5e to Post-Effective Amendment No. 14 to the
Registration Statement on December 29, 1998, File No. 33-64872).
(6) Addendum to Management Agreement between American Century
Capital Portfolios, Inc. and American Century Investment
Management, Inc. is included herein.
(e) (1) Distribution Agreement between American Century Capital
Portfolios, Inc. and Funds Distributor, Inc., dated January 15,
1998 (filed electronically as Exhibit b6 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 Capital Portfolios, Inc. and Funds Distributor,
Inc. dated June 1, 1998 (filed electronically as Exhibit b6b to
Post-Effective Amendment No. 11 to the Registration Statement on
June 26, 1998, File No. 33-64872).
(3) Amendment No. 2 to the Distribution Agreement between
American Century Capital Portfolios, Inc. and Funds Distributor,
Inc. dated December 1, 1998 (filed electronically as Exhibit b6c
to Post-Effective Amendment No. 12 to the Registration Statement
of American Century World Mutual Funds, Inc. on November 13,
1998, File No. 33-39242).
(4) Amendment No. 3 to the Distribution Agreement between
American Century Capital Portfolios, Inc. and Funds Distributor,
Inc. dated January 29, 1999 (filed electronically as Exhibit e4
to Post-Effective Amendment No. 24 of American Century Variable
Portfolios, Inc. on January 15, 1999, File No. 33-14567).
(5) Amendment No. 4 to the Distribution Agreement between
American Century Capital Portfolios, Inc. and Funds Distributor,
Inc. is included herein.
(f) Not applicable.
(g) (1) Master Agreement by and between Twentieth Century Services,
Inc. and Commerce Bank, N.A. dated January 22, 1997 (filed
electronically as Exhibit 8e to Post-Effective Amendment No. 76
to the Registration Statement of American Century Mutual Funds,
Inc. on February 28, 1997, File No. 2-14213).
(2) Global Custody Agreement between The Chase Manhattan Bank and
the Twentieth Century and Benham Funds, dated August 9, 1996
(filed electronically as Exhibit 8 to Post-Effective Amendment
No. 31 to the Registration Statement of American Century
Government Income Trust on February 7, 1997, File No. 2-99222).
(h) (1) Transfer Agency Agreement, dated as of August 1, 1993, by and
between Twentieth Century Capital Portfolios, Inc. and Twentieth
Century Services, Inc. (filed electronically as Exhibit 9 to
Post-Effective Amendment No. 5 to the Registration Statement on
July 31, 1996, File No. 33-64872).
(2) Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent dated as of December 18,
1998 (filed electronically as Exhibit h2 to Post-Effective
Amendment No. 37 to the Registration Statement of American
Century Government Income Trust on May 7, 1999, File No.
2-99222).
(i) Opinion and Consent of Counsel is included herein.
(j) (1) Consent of Deloitte & Touche LLP is included herein.
(2) Power of Attorney dated February 19, 1999 (filed
electronically as Exhibit j2 to Post-Effective Amendment No. 15
to the Registration Statement on May 14, 1999, File No.
33-64872).
(k) Not applicable.
(m) (1) Master Distribution and Shareholder Services Plan of
Twentieth Century Capital Portfolios, Inc., Twentieth Century
Investors, Inc., Twentieth Century Strategic Asset Allocations,
Inc. and Twentieth Century World Investors, Inc. (Advisor Class)
dated September 3, 1996 (filed electronically as Exhibit b15a to
Post-Effective Amendment No. 9 to the Registration Statement on
February 17, 1998, 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
Exhibit b15d to Post-Effective Amendment No. 77 to the
Registration Statement of American Century Mutual Funds, Inc. on
July 17, 1997, 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 Exhibit b15c to Post-Effective Amendment No. 78
to the Registration Statement of American Century Mutual Funds,
Inc. on February 26, 1998, 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
Exhibit b15e to Post-Effective Amendment No. 11 to the
Registration Statement on June 26, 1998, 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 Exhibit b15e to Post-Effective Amendment No. 12
to the Registration Statement of American Century World Mutual
Funds, Inc. 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 Exhibit m6 to Post-Effective Amendment No. 83
to the Registration Statement of American Century Mutual Funds,
Inc. on February 26, 1999, 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) is included herein.
(8) Shareholder Services Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc., Twentieth
Century Strategic Asset Allocations, Inc. and Twentieth Century
World Investors, Inc. (Service Class) dated September 3, 1996
(filed electronically as Exhibit b15b to Post-Effective Amendment
No. 9 to the Registration Statement on February 17, 1998, File
No. 33-64872).
(n) (1) Financial Data Schedule for Value Fund, Investor Class, is
included herein.
(2) Financial Data Schedule for Value Fund, Institutional Class,
is included herein.
(3) Financial Data Schedule for Value Fund, Advisor Class, is
included herein.
(4) Financial Data Schedule for Equity Income Fund, Investor
Class, is included herein.
(5) Financial Data Schedule for Equity Income Fund, Institutional
Class, is included herein.
(6) Financial Data Schedule for Equity Income Fund, Advisor
Class, is included herein.
(7) Financial Data Schedule for Real Estate Fund, Investor Class,
is included herein.
(8) Financial Data Schedule for Real Estate Fund, Institutional
Class, is included herein.
(9) Financial Data Schedule for Real Estate Fund, Advisor Class,
is included herein.
(10) Financial Data Schedule for is included Small Cap Value
Fund, Investor Class, herein.
(11) Financial Data Schedule for is included Small Cap Value
Fund, Institutional Class, herein.
(12) Financial Data Schedule for Equity Index Fund, Investor
Class, is included herein.
(13) Financial Data Schedule for Equity Index Fund, Institutional
Class, is included herein.
(14) Financial Data Schedule for is included Large Cap Value Fund
herein.
(o) (1) Multiple Class Plan of Twentieth Century Capital Portfolios,
Inc., Twentieth Century Investors, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. dated September 3, 1996 (filed electronically as
Exhibit b18 to Post-Effective Amendment No. 9 to the Registration
Statement on February 17, 1998, 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 Exhibit b18b to Post-Effective Amendment No. 77
to the Registration Statement of American Century Mutual Funds,
Inc. on July 17, 1997, 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 Exhibit b18c to Post-Effective Amendment No. 78
to the Registration Statement of American Century Mutual Funds,
Inc. on February 26, 1998, 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 Exhibit b18d to Post-Effective Amendment No. 11
to the Registration Statement on June 26, 1998, 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 Exhibit b18e to Post-Effective Amendment No. 12
to the Registration Statement of American Century World Mutual
Funds, Inc. 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 Exhibit b18f to Post-Effective Amendment No. 14
to the Registration Statement 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. is included herein.
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 Underwriters
(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
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Kobrick 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>
Name and Principal Business Positions and Offices with Positions and Offices with
Address* 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
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
</TABLE>
(c) Not applicable.
ITEM 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the rules promulgated thereunder,
are in the possession of Registrant, American Century Services
Corporation and American Century Investment Management, Inc., all
located at 4500 Main Street, Kansas City, Missouri 64111.
ITEM 29. Management Services - Not applicable.
ITEM 30. Undertakings - Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 16 to its
Registration Statement pursuant to Rule 485(b) promulgated under the Securities
Act of 1933, as amended, and has duly caused this Post-Effective Amendment No.
16 to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Kansas City, State of Missouri on the
29th day of July, 1999.
American Century Capital Portfolios, Inc.
(Registrant)
By: /*/George A. Rio
George A. Rio, President,
Principal Executive and
Principal Financial 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.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
*George A. Rio President, Principal Executive July 29, 1999
- ------------------------- and Principal Financial Officer
George A. Rio
*Maryanne Roepke Vice President and Treasurer July 29, 1999
- -------------------------
Maryanne Roepke
*James E. Stowers, Jr. Director July 29, 1999
- -------------------------
James E. Stowers, Jr.
*James E. Stowers III Director July 29, 1999
- -------------------------
James E. Stowers, III
*Thomas A. Brown Director July 29, 1999
- -------------------------
Thomas A. Brown
*Robert W. Doering, M.D. Director July 29, 1999
- -------------------------
Robert W. Doering, M.D.
*Andrea C. Hall, Ph.D. Director July 29, 1999
- -------------------------
Andrea C. Hall, Ph.D.
*D. D. (Del) Hock Director July 29, 1999
- -------------------------
D. D. (Del) Hock
*Donald H. Pratt Director July 29, 1999
- -------------------------
Donald H. Pratt
*Lloyd T. Silver, Jr. Director July 29, 1999
- -------------------------
Lloyd T. Silver, Jr.
*M. Jeannine Strandjord Director July 29, 1999
- -------------------------
M. Jeannine Strandjord
*By /s/David H. Reinmiller
David H. Reinmiller
Attorney-in-Fact
</TABLE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER
EX-99.a1 Articles of Incorporation of Twentieth Century Capital
Portfolios, Inc. (filed as Exhibit 1a to Post-Effective Amendment
No. 5 to the Registration Statement on Form N-1A of the
Registrant, File No. 33-64872, filed on July 31, 1996, and
incorporated herein by reference).
EX-99.a2 Articles Supplementary of Twentieth Century Capital Portfolios,
Inc. (filed as Exhibit 1b to Post-Effective Amendment No. 5 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-64872, filed on July 31, 1996, and incorporated herein by
reference).
EX-99.a3 Articles Supplementary of Twentieth Century Capital Portfolios,
Inc. dated September 9, 1996 (filed as Exhibit a3 to
Post-Effective Amendment No. 15 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on May 14,
1999, and incorporated herein by reference).
EX-99.a4 Articles of Amendment of Twentieth Century Capital Portfolios,
Inc., dated December 2, 1996 (filed as Exhibit b1c to
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on March 3,
1997, and incorporated herein by reference).
EX-99.a5 Articles Supplementary of American Century Capital Portfolios,
Inc., dated December 2, 1996 (filed as Exhibit b1d to
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on March 3,
1997, and incorporated herein by reference).
EX-99.a6 Articles Supplementary of American Century Capital Portfolios,
Inc. dated April 30, 1997 (filed as Exhibit b1e to Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A of the
Registrant, File No. 33-64872, filed on May 21, 1997, and
incorporated herein by reference).
EX-99.a7 Certificate of Correction to Articles Supplementary of American
Century Capital Portfolios, Inc. dated May 15, 1997 (filed as
Exhibit b1f to Post-Effective Amendment No. 8 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-64872,
filed on May 21, 1997, and incorporated herein by reference).
EX-99.a8 Articles of Merger merging RREEF Securities Fund Inc. with and
into American Century Capital Portfolios, Inc. dated June 13,
1997 (filed as Exhibit a8 to Post-Effective Amendment No. 15 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-64872, filed on May 14, 1999, and incorporated herein by
reference).
EX-99.a9 Articles Supplementary of American Century Capital Portfolios,
Inc. dated December 18, 1997 (filed as Exhibit b1g to
Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on February
17, 1998, and incorporated herein by reference).
EX-99.a10 Articles Supplementary of American Century Capital Portfolios,
Inc. dated June 1, 1998 (filed as Exhibit b1h to Post-Effective
Amendment No. 11 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-64872, filed on June 26, 1998, and
incorporated herein by reference).
EX-99.a11 Articles Supplementary of American Century Capital Portfolios,
Inc. dated January 29, 1999 (filed as Exhibit b1i to
Post-Effective Amendment No. 14 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on December
29, 1998, and incorporated herein by reference).
EX-99.a12 Articles Supplementary of American Century Capital Portfolios,
Inc. dated February 16, 1999 (filed as Exhibit a12 to
Post-Effective Amendment No. 15 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on May 14,
1999, and incorporated herein by reference).
EX-99.a13 Articles Supplementary of American Century Capital Portfolios,
Inc. is included herein.
EX-99.b1 By-Laws of Twentieth Century Capital Portfolios, Inc. (filed as
Exhibit 2 to Post-Effective Amendment No. 5 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-64872,
filed on July 31, 1996, and incorporated herein by reference).
EX-99.b2 Amendment to By-Laws of American Century Capital Portfolios, Inc.
(filed as Exhibit b2b to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of the Registrant, File No.
33-64872, filed February 17, 1998, and incorporated herein by
reference).
EX-99.d1 Management Agreement between American Century Capital Portfolios,
Inc. and American Century Investment Management, Inc. dated
August 1, 1997 (filed as Exhibit b5a to Post-Effective Amendment
No. 9 to the Registration Statement on Form N-1A of the
Registrant, File No. 33-64872, filed February 17, 1998, and
incorporated herein by reference).
EX-99.d2 Subadvisory Agreement by and between American Century Capital
Portfolios, Inc., American Century Investment Management, Inc.
and RREEF America L.L.C., dated January 27, 1998 (filed as
Exhibit b5b to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A of the Registrant, File No. 33-64872,
filed February 17, 1998, and incorporated herein by reference).
EX-99.d3 Addendum to Management Agreement between American Century Capital
Portfolios, Inc. and American Century Investment Management, Inc.
dated July 30, 1998 (filed as Exhibit b5c to Post-Effective
Amendment No. 11 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-64872, filed June 26, 1998, and
incorporated herein by reference).
EX-99.d4 Subadvisory Agreement between Barclays Global Fund Advisers and
American Century Investment Management, Inc. dated January 29,
1999 (filed as Exhibit b5d to Post-Effective Amendment No. 14 to
the Registration Statement on Form N-1A of the Registrant, File
No. 33-64872, filed on December 29, 1998, and incorporated herein
by reference).
EX-99.d5 Addendum to Management Agreement between American Century Capital
Portfolios, Inc. and American Century Investment Management, Inc.
dated January 29, 1999 (filed as Exhibit b5e to Post-Effective
Amendment No. 14 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-64872, filed on December 29, 1998,
and incorporated herein by reference).
EX-99.d6 Addendum to Management Agreement between American Century Capital
Portfolios, Inc. and American Century Investment Management, Inc.
is included herein.
EX-99.e1 Distribution Agreement between American Century Capital
Portfolios, Inc. and Funds Distributor, Inc. dated January 15,
1998 (filed as Exhibit 6 to 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 Distribution Agreement between American
Century Capital Portfolios, Inc. and Funds Distributor, Inc.
dated June 1, 1998 (filed as Exhibit b6b to Post-Effective
Amendment No. 11 to the Registration Statement on Form N-1A of
the Registrant, File No. 33-64872, filed on June 26, 1998, and
incorporated herein by reference).
EX-99.e3 Amendment No. 2 to Distribution Agreement between American
Century Capital Portfolios, Inc. and Funds Distributor, Inc.
dated December 1, 1998 (filed as Exhibit b6c to Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A of
American Century World Mutual Funds, Inc., File No. 33-39242,
filed on November 13, 1998, and incorporated herein by
reference).
EX-99.e4 Amendment No. 3 to Distribution Agreement between American
Century Capital Portfolios, Inc. and Funds Distributor, Inc.
dated January 29, 1999 (filed as Exhibit e4 to Post-Effective
Amendment No. 28 to the Registration Statement on Form N-1A of
American Century Variable Portfolios, Inc., File No. 33-14567,
filed on January 15, 1999, and incorporated herein by reference).
EX-99.e5 Amendment No. 4 to Distribution Agreement between American
Century Capital Portfolios, Inc. and Funds Distributor, Inc. is
included herein.
EX-99.g1 Master Agreement by and between Twentieth Century Services, Inc.
and Commerce Bank, N.A. dated January 22, 1997 (filed as Exhibit
8e to Post-Effective Amendment No. 76 to the Registration
Statement on Form N-1A of American Century Mutual Funds, Inc.,
File No. 2-14213, filed on February 28, 1997 and incorporated
herein by reference).
EX-99.g2 Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham Funds, dated August 9, 1996 (filed
as Exhibit b8 to 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.h1 Transfer Agency Agreement dated as of August 1, 1993, by and
between Twentieth Century Capital Portfolios, Inc. and Twentieth
Century Services, Inc. (filed as Exhibit 9 to Post-Effective
Amendment No. 5 to the Registration Statement on Form N-1A of the
Registrant, File No. 33-64872, filed on July 31, 1996, and
incorporated herein by reference).
EX-99.h2 Credit Agreement between American Century Funds and The Chase
Manhattan Bank, as Administrative Agent dated as of December 18,
1998 (filed as Exhibit h2 to Post-Effective Amendment No. 37 to
the Registration Statement on Form N-1A of American Century
Government Income Trust, File No. 2-99222, filed on May 7, 1999,
and incorporated herein by reference).
EX-99.i Opinion and Consent of Counsel is included herein.
EX-99.j1 Consent of Deloitte & Touche LLP is included herein.
EX-99.j2 Power of Attorney dated February 19, 1999 (filed as Exhibit j2 to
Post-Effective Amendment No. 15 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on May 14,
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 Exhibit b15a to Post-Effective
Amendment No. 9 to the Registration Statement on Form N-1A of the
Registrant, File No. 33-64872, filed on 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 Exhibit b15b to
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.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 Exhibit b15c
to 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.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 Exhibit b15e to
Post-Effective Amendment No. 11 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on 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 Exhibit b15e to
Post-Effective Amendment No. 12 to the Registration Statement on
Form N-1A of American Century World Mutual Funds, Inc., File No.
33-39242, filed on 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 Exhibit m6 to
Post-Effective Amendment No. 83 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., File No.
2-14213, filed on 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) is included herein.
EX-99.m8 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 Exhibit b15b to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of the Registrant, File No.
33-64872, filed on 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 Exhibit b18 to
Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A of the Registrant, File No. 33-64872, filed on 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
Exhibit b18b to 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 Exhibit b18c to 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
Exhibit b18d to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A of the Registrant, 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 Exhibit b18e to Post-Effective Amendment No. 12 to the
Registration Statement of American Century World Mutual Funds,
Inc., File No. 33-39242, filed on 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
Exhibit b18f to Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A of the Registrant, 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. is included herein.
EX-27.1.1a Financial Data Schedule for Value Fund - Investor Class.
EX-27.1.1b Financial Data Schedule for Value Fund - Institutional Class.
EX-27.1.1c Financial Data Schedule for Value Fund - Advisor Class.
EX-27.1.2a Financial Data Schedule for Equity Income Fund - Investor Class.
EX-27.1.2b Financial Data Schedule for Equity Income Fund - Institutional
Class.
EX-27.1.2c Financial Data Schedule for Equity Income Fund - Advisor Class.
EX-27.1.3a Financial Data Schedule for Real Estate Fund - Investor Class.
EX-27.1.3b Financial Data Schedule for Real Estate Fund - Institutional
Class.
EX-27.1.3c Financial Data Schedule for Real Estate Fund - Advisor Class.
EX-27.1.4a Financial Data Schedule for Small Cap Value Fund - Investor
Class.
EX-27.1.4b Financial Data Schedule for Small Cap Value Fund - Institutional
Class.
EX-27.1.5a Financial Data Schedule for Equity Index Fund - Investor Class.
EX-27.1.5b Financial Data Schedule for Equity Index Fund - Institutional
Class.
EX-27.1.6 Financial Data Schedule for Large Cap Value Fund.
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
ARTICLES SUPPLEMENTARY
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC., a Maryland corporation whose
principal Maryland office is located in Baltimore, Maryland (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to authority expressly vested in the Board of Directors
by Article FIFTH and Article SEVENTH of the Articles of Incorporation of the
Corporation, the Board of Directors of the Corporation has duly established a
new series of shares titled Large Cap Value Fund (hereinafter referred to as a
"Series") for the Corporation's stock and has allocated One Hundred Million
(100,000,000) shares of the One Billion One Hundred Million (1,100,000,000)
shares of authorized capital stock of the Corporation, par value One Cent
($0.01) per share, for an aggregate par value of One Million Dollars
($1,000,000) to the new Series. As a result of the action taken by the Board of
Directors referenced in Article FIRST of these Articles Supplementary, the six
(6) Series of stock of the Corporation and the number of shares and aggregate
par value of each is as follows:
Series Number of Shares Aggregate Par Value
Value Fund 550,000,000 $5,500,000
Equity Income Fund 125,000,000 $1,250,000
Real Estate Fund 100,000,000 $1,000,000
Small Cap Value Fund 100,000,000 $1,000,000
Equity Index Fund 125,000,000 $ 1,250,000
Large Cap Value 100,000,000 $1,000,000
The par value of each share of stock in each Series is One Cent ($0.01) per
share.
SECOND: Pursuant to authority expressly vested in the Board of
Directors by Article FIFTH and Article SEVENTH of the Articles of Incorporation,
the Board of Directors of the Corporation (a) has duly established three (3)
classes of shares (each hereinafter referred to as a "Class") for the new Series
of the capital stock of the Corporation and (b) has allocated the shares
designated to the new Series in Article FIRST above among the Classes of shares.
As a result of the action taken by the Board of Directors, the Classes of shares
of the six (6) Series of stock of the Corporation and the number of shares and
aggregate par value of each is as follows:
Number of Shares Aggregate
Series Name Class Name as Allocated Par Value
Value Fund Investor 500,000,000 $5,000,000
Institutional 25,000,000 250,000
Service 0 0
Advisor 25,000,000 250,000
Equity Income Fund Investor 75,000,000 $ 750,000
Institutional 25,000,000 250,000
Service 0 0
Advisor 25,000,000 250,000
Real Estate Fund Investor 50,000,000 $ 500,000
Institutional 25,000,000 250,000
Advisor 25,000,000 250,000
Small Cap Value Fund Investor 50,000,000 $ 500,000
Institutional 25,000,000 250,000
Advisor 25,000,000 250,000
Equity Index Fund Investor 25,000,000 $ 250,000
Institutional 100,000,000 1,000,000
Large Cap Value Fund Investor 50,000,000 $ 500,000
Institutional 25,000,000 250,000
Advisor 25,000,000 250,000
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to serialize, classify or
reclassify and issue any unissued shares of any Series or Class or any unissued
shares that have not been allocated to a Series or Class, and to fix or alter
all terms thereof, to the full extent provided by the Articles of Incorporation
of the Corporation.
FOURTH: A description of the series and classes of shares, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions for
redemption is set forth in the Articles of Incorporation of the Corporation and
is not changed by these Articles Supplementary, except with respect to the
creation and/or designation of the various Series.
FIFTH: The Board of Directors of the Corporation duly adopted
resolutions dividing into Series the authorized capital stock of the Corporation
and allocating shares to each Series as set forth in these Articles
Supplementary.
SIXTH: The Board of Directors of the Corporation duly adopted
resolutions establishing a new Series and allocating shares to the Series, as
set forth in Article FIRST, and dividing the Series of capital stock of the
Corporation into Classes as set forth in Article SECOND.
IN WITNESS WHEREOF, AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. has
caused these Articles Supplementary to be signed and acknowledged in its name
and on its behalf by its Vice President and attested to by its Assistant
Secretary on this 2nd day of June, 1999.
AMERICAN CENTURY CAPITAL
ATTEST: PORTFOLIOS, INC.
/s/ David H. Reinmiller By: /s/ David C. Tucker
Name: David H. Reinmiller Name: David C. Tucker
Title: Assistant Secretary Title: Vice President
THE UNDERSIGNED Vice President of AMERICAN CENTURY CAPITAL PORTFOLIOS,
INC., who executed on behalf of said Corporation the foregoing Articles
Supplementary to the Charter, of which this certificate is made a part, hereby
acknowledges, in the name of and on behalf of said Corporation, the foregoing
Articles Supplementary to the Charter to be the corporate act of said
Corporation, and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects under the penalties of
perjury.
Dated: June 2, 1999. /s/ David C. Tucker
David C. Tucker, Vice President
ADDENDUM TO MANAGEMENT AGREEMENT
This Addendum, dated as of July 30, 1999, supplements the Management
Agreement (the "Agreement") dated as of August 1, 1997, by and between American
Century Capital Portfolios, Inc., ("ACCP") and American Century Investment
Management, Inc. ("ACIM").
IN CONSIDERATION of the mutual promises and conditions herein
contained, the parties agree as follows (all capitalized terms used herein and
not otherwise defined having the meaning given them in the Agreement):
1. ACIM shall manage the following series (the "New Series") of shares
to be issued by ACCP, and for such management shall receive the Applicable Fee
set forth below:
Average Applicable
Name of Series Name of Class Net Assets Fee Rate
- -------------- ------------- ---------- --------
Large Cap Value Fund Investor Class first $ 1 billion 0.90%
next $4 billion 0.80%
over $5 billion 0.70%
Institutional Class first $1 billion 0.70%
next $4 billion 0.60%
over $5 billion 0.50%
Advisor Class first $1 billion 0.65%
next $4 billion 0.55%
over $5 billion 0.45%
2. ACIM shall manage the New Series in accordance with the terms and
conditions specified in the Agreement for its existing management
responsibilities.
IN WITNESS WHEREOF, the parties have caused this Addendum to the
Agreement to be executed by their respective duly authorized officers as of the
day and year first above written.
Attest: AMERICAN CENTURY
CAPITAL PORTFOLIOS, INC.
/s/ David H. Reinmiller /s/ David C. Tucker
David H. Reinmiller David C. Tucker
Assistant Secretary Vice President
Attest: AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC.
/s/ David H. Reinmiller /s/ William M. Lyons
David H. Reinmiller Willliam M. Lyons
Assistant Secretary Executive Vice President
AMENDMENT NO. 4 TO DISTRIBUTION AGREEMENT
THIS AMENDMENT NO. 4 TO DISTRIBUTION AGREEMENT is made as of the 30th
of July, 1999, by and between each of the open end management investment
companies listed on Schedule A, attached hereto, as of the dates noted on such
Schedule A, together with all other open end management investment companies
subsequently established and made subject to this Agreement in accordance with
Section 16 (the "Issuers") and Funds Distributor, Inc. ("Distributor").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Distribution Agreement.
RECITALS
WHEREAS, the Issuers and Distributor are parties to a certain
Distribution Agreement dated January 15, 1998, amended June 1, 1998, December 1,
1998 and January 29, 1999 (the "Distribution Agreement"); and
WHEREAS, since the date of the Distribution Agreement, the names of the
Funds have changed ; and
WHEREAS, American Century Capital Portfolios, Inc. has added a series,
Large Cap Value Fund; and
WHEREAS, the parties desire to amend the Distribution Agreement to
reflect the new names of the funds and to add the new series and multiple
classes.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. The new series is hereby added as a party to the Distribution
Agreement.
2. Schedules A, B, C, D and E to Distribution Agreement are hereby
amended by deleting the text thereof in their entirety and inserting in lieu
therefor the Schedules A, B, C, D and E attached hereto.
3. After the date hereof, all references to the Distribution Agreement
shall be deemed to mean the Distribution Agreement, as amended by Amendment No.
1, Amendment 2, Amendment No. 3 and this Amendment No. 4.
4. In the event of a conflict between the terms of this Amendment No.
4, Amendment No. 3, Amendment No. 2, Amendment No. 1 and the Distribution
Agreement, it is the intention of the parties that the terms of this Amendment
No. 4 shall control and the Distribution Agreement shall be interpreted on that
basis. To the extent the provisions of the Distribution Agreement, Amendment No.
1, Amendment No. 2 and Amendment No. 3 have not been amended by this Amendment
No. 4, the parties hereby confirm and ratify the Distribution Agreement.
5. This Amendment No. 4 may be executed in two or more counterparts,
each of which shall be an original and all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 4
as of the date first above written.
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
Name: Marie E. Connolly
Title: President and CEO
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.
By: /s/ David C. Tucker
David C. Tucker
Vice President of each of the Issuers
<TABLE>
SCHEDULE A
COMPANIES AND FUNDS COVERED BY THIS DISTRIBUTION AGREEMENT
FUND DATE OF AGREEMENT
- ---- -----------------
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
<S> <C> <C>
>> California Municipal Money Market Fund January 15, 1998
>> California High-Yield Municipal Fund January 15, 1998
>> California Tax-Free Money Market Fund January 15, 1998
>> California Limited Term Tax-Free Fund January 15, 1998
>> California Intermediate-Term Tax-Free Fund January 15, 1998
>> California Long-Term Tax-Free Fund January 15, 1998
>> California Insured Tax-Free Fund January 15, 1998
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
>> Equity Income Fund January 15, 1998
>> Real Estate Fund January 15, 1998
>> Value Fund January 15, 1998
>> Small Cap Value Fund July 30, 1998
>> Equity Index Fund January 29, 1999
>> Large Cap Value Fund July 30, 1999
AMERICAN CENTURY GOVERNMENT INCOME TRUST
>> Short-Term Treasury Fund January 15, 1998
>> Intermediate-Term Treasury Fund January 15, 1998
>> Long-Term Treasury Fund January 15, 1998
>> Government Agency Money Market Fund January 15, 1998
>> Short-Term Government Fund January 15, 1998
>> GNMA Fund January 15, 1998
>> Inflation-Adjusted Treasury Fund January 15, 1998
>> Capital Preservation Fund January 15, 1998
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
>> International Bond Fund January 15, 1998
AMERICAN CENTURY INVESTMENT TRUST
>> Prime Money Market Fund January 15, 1998
AMERICAN CENTURY MUNICIPAL TRUST
>> Arizona Intermediate-Term Municipal Fund January 15, 1998
>> Florida Municipal Money Market Fund January 15, 1998
>> Florida Intermediate-Term Municipal Fund January 15, 1998
>> Tax-Free Money Market Fund January 15, 1998
>> Intermediate-Term Tax-Free Fund January 15, 1998
>> Long-Term Tax-Free Fund January 15, 1998
>> Limited-Term Tax-Free Fund January 15, 1998
>> High-Yield Municipal Fund March 31, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
>> Balanced Fund January 15, 1998
>> Growth Fund January 15, 1998
>> Heritage Fund January 15, 1998
>> Intermediate-Term Bond Fund January 15, 1998
>> Limited-Term Bond Fund January 15, 1998
>> Bond Fund January 15, 1998
>> Select Fund January 15, 1998
>> Ultra Fund January 15, 1998
>> Vista Fund January 15, 1998
>> Giftrust Fund January 15, 1998
>> New Opportunities Fund January 15, 1998
>> High-Yield Fund January 15, 1998
>> Tax-Managed Value Fund February 15, 1999
AMERICAN CENTURY PREMIUM RESERVES, INC.
>> Premium Government Reserve Fund January 15, 1998
>> Premium Capital Reserve Fund January 15, 1998
>> Premium Managed Bond Fund January 15, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
>> Equity Growth Fund January 15, 1998
>> Income & Growth Fund January 15, 1998
>> Global Gold Fund January 15, 1998
>> Global Natural Resources Fund January 15, 1998
>> Utilities Fund January 15, 1998
>> Small Cap Quantitative Fund July 30, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
>> Strategic Allocation: Aggressive Fund January 15, 1998
>> Strategic Allocation: Conservative Fund January 15, 1998
>> Strategic Allocation: Moderate Fund January 15, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
>> Target 2000 Fund January 15, 1998
>> Target 2005 Fund January 15, 1998
>> Target 2010 Fund January 15, 1998
>> Target 2015 Fund January 15, 1998
>> Target 2020 Fund January 15, 1998
>> Target 2025 Fund January 15, 1998
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
>> VP Advantage Fund January 15, 1998
>> VP Balanced Fund January 15, 1998
>> VP Capital Appreciation Fund January 15, 1998
>> VP International Fund January 15, 1998
>> VP Income & Growth Fund January 15, 1998
>> VP Value Fund January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
>> Emerging Markets Fund January 15, 1998
>> International Growth Fund January 15, 1998
>> International Discovery Fund January 15, 1998
>> Global Growth Fund December 1, 1998
SCHEDULE B
INVESTOR CLASS FUNDS
FUND DATE OF AGREEMENT
- ---- -----------------
AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
>> California Municipal Money Market Fund January 15, 1998
>> California High-Yield Municipal Fund January 15, 1998
>> California Tax-Free Money Market Fund January 15, 1998
>> California Limited Term Tax-Free Fund January 15, 1998
>> California Intermediate-Term Tax-Free Fund January 15, 1998
>> California Long-Term Tax-Free Fund January 15, 1998
>> California Insured Tax-Free Fund January 15, 1998
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
>> Equity Income Fund1 January 15, 1998
>> Real Estate Fund1 January 15, 1998
>> Value Fund1 January 15, 1998
>> Small Cap Value Fund1 July 30, 1998
>> Equity Index Fund1 January 29, 1999
>> Large Cap Value Fund1 July 30, 1999
AMERICAN CENTURY GOVERNMENT INCOME TRUST
>> Short-Term Treasury Fund1 January 15, 1998
>> Intermediate-Term Treasury Fund1 January 15, 1998
>> Long-Term Treasury Fund1 January 15, 1998
>> Government Agency Money Market Fund1 January 15, 1998
>> Short-Term Government Fund1 January 15, 1998
>> GNMA Fund1 January 15, 1998
>> Inflation-Adjusted Treasury Fund1 January 15, 1998
>> Capital Preservation Fund January 15, 1998
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
>> International Bond Fund1 January 15, 1998
AMERICAN CENTURY INVESTMENT TRUST
>> Prime Money Market Fund1 June 1, 1998
AMERICAN CENTURY MUNICIPAL TRUST
>> Arizona Intermediate-Term Municipal Fund January 15, 1998
>> Florida Municipal Money Market Fund January 15, 1998
>> Florida Intermediate-Term Municipal Fund January 15, 1998
>> Tax-Free Money Market Fund January 15, 1998
>> Intermediate-Term Tax-Free Fund January 15, 1998
>> Long-Term Tax-Free Fund January 15, 1998
>> Limited-Term Tax-Free Fund January 15, 1998
>> High-Yield Municipal Fund March 31, 1998
>> AMERICAN CENTURY MUTUAL FUNDS, INC.
>> Balanced Fund1 January 15, 1998
>> Growth Fund1 January 15, 1998
>> Heritage Fund1 January 15, 1998
>> Intermediate-Term Bond Fund1 January 15, 1998
>> Limited-Term Bond Fund1 January 15, 1998
>> Bond Fund1 January 15, 1998
>> Select Fund1 January 15, 1998
>> Ultra Fund1 January 15, 1998
>> Vista Fund1 January 15, 1998
>> Giftrust January 15, 1998
>> New Opportunities Fund January 15, 1998
>> High-Yield Fund January 15, 1998
>> Tax-Managed Value Fund February 15, 1999
AMERICAN CENTURY PREMIUM RESERVES, INC.
>> Premium Government Reserve Fund January 15, 1998
>> Premium Capital Reserve Fund January 15, 1998
>> Premium Bond Fund January 15, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
>> Equity Growth Fund1 January 15, 1998
>> Income & Growth Fund1 January 15, 1998
>> Global Gold Fund1 January 15, 1998
>> Global Natural Resources Fund1 January 15, 1998
>> Utilities Fund1 January 15, 1998
>> Small Cap Quantitative Fund1 July 30, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
>> Strategic Allocation: Aggressive1 January 15, 1998
>> Strategic Allocation: Conservative1 January 15, 1998
>> Strategic Allocation: Moderate1 January 15, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
>> Target 2000 Fund1 January 15, 1998
>> Target 2005 Fund1 January 15, 1998
>> Target 2010 Fund1 January 15, 1998
>> Target 2015 Fund1 January 15, 1998
>> Target 2020 Fund1 January 15, 1998
>> Target 2025 Fund1 January 15, 1998
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC.
>> VP Advantage Fund January 15, 1998
>> VP Balanced Fund January 15, 1998
>> VP Capital Appreciation Fund January 15, 1998
>> VP International Fund January 15, 1998
>> VP Income & Growth Fund January 15, 1998
>> VP Value Fund January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
>> Emerging Markets Fund1 January 15, 1998
>> International Growth Fund1 January 15, 1998
>> International Discovery Fund1 January 15, 1998
>> Global Growth Fund1 December 1, 1998
- --------
1 Multiple Classes of Shares
SCHEDULE C
INSTITUTIONAL CLASS FUNDS
FUND DATE OF AGREEMENT
- ---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
>> Equity Income Fund January 15, 1998
>> Real Estate Fund January 15, 1998
>> Value Fund January 15, 1998
>> Small Cap Value Fund July 30, 1998
>> Equity Index Fund January 29, 1999
>> Large Cap Value Fund July 30, 1999
AMERICAN CENTURY MUTUAL FUNDS, INC.
>> Balanced Fund January 15, 1998
>> Growth Fund January 15, 1998
>> Heritage Fund January 15, 1998
>> Select Fund January 15, 1998
>> Ultra Fund January 15, 1998
>> Vista Fund January 15, 1998
>> Tax-Managed Value Fund February 15, 1999
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
>> Equity Growth Fund January 15, 1998
>> Income & Growth Fund January 15, 1998
>> Small Cap Quantitative Fund July 30, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
>> Emerging Markets Fund January 15, 1998
>> International Growth Fund January 15, 1998
>> International Discovery Fund January 15, 1998
>> Global Growth Fund December 1, 1998
SCHEDULE D
SERVICE CLASS FUNDS
FUND DATE OF AGREEMENT
- ---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
>> Equity Income Fund January 15, 1998
>> Real Estate Fund January 15, 1998
>> Value Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
>> Balanced Fund January 15, 1998
>> Growth Fund January 15, 1998
>> Heritage Fund January 15, 1998
>> Intermediate-Term Bond Fund January 15, 1998
>> Limited-Term Bond Fund January 15, 1998
>> Bond Fund January 15, 1998
>> Select Fund January 15, 1998
>> Ultra Fund January 15, 1998
>> Vista Fund January 15, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
>> Strategic Allocation: Aggressive January 15, 1998
>> Strategic Allocation: Conservative January 15, 1998
>> Strategic Allocation: Moderate January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
>> Emerging Markets Fund January 15, 1998
>> International Growth Fund January 15, 1998
>> International Discovery Fund January 15, 1998
SCHEDULE E
ADVISOR CLASS FUNDS
FUND DATE OF AGREEMENT
- ---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
>> Equity Income Fund January 15, 1998
>> Value Fund January 15, 1998
>> Real Estate Fund January 15, 1998
>> Small Cap Value Fund July 30, 1998
>> Large Cap Value Fund July 30, 1999
AMERICAN CENTURY GOVERNMENT INCOME TRUST
>> Short-Term Treasury Fund January 15, 1998
>> Intermediate-Term Treasury Fund January 15, 1998
>> Long-Term Treasury Fund January 15, 1998
>> Government Agency Money Market Fund January 15, 1998
>> Short-Term Government Fund January 15, 1998
>> GNMA Fund January 15, 1998
>> Inflation-Adjusted Treasury Fund January 15, 1998
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
>> International Bond Fund January 15, 1998
AMERICAN CENTURY MUTUAL FUNDS, INC.
>> Balanced Fund January 15, 1998
>> Growth Fund January 15, 1998
>> Heritage Fund January 15, 1998
>> Intermediate-Term Bond Fund January 15, 1998
>> Limited-Term Bond Fund January 15, 1998
>> Bond Fund January 15, 1998
>> Select Fund January 15, 1998
>> Ultra Fund January 15, 1998
>> Vista Fund January 15, 1998
>> High-Yield Fund January 15, 1998
>> Tax-Managed Value Fund February 15, 1999
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
>> Equity Growth Fund January 15, 1998
>> Income & Growth Fund January 15, 1998
>> Global Gold Fund January 15, 1998
>> Global Natural Resources Fund January 15, 1998
>> Utilities Fund January 15, 1998
>> Small Cap Quantitative Fund July 30, 1998
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
>> Strategic Allocation: Aggressive January 15, 1998
>> Strategic Allocation: Conservative January 15, 1998
>> Strategic Allocation: Moderate January 15, 1998
AMERICAN CENTURY TARGET MATURITIES TRUST
>> Target 2000 Fund January 15, 1998
>> Target 2005 Fund January 15, 1998
>> Target 2010 Fund January 15, 1998
>> Target 2015 Fund January 15, 1998
>> Target 2020 Fund January 15, 1998
>> Target 2025 Fund January 15, 1998
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
>> Emerging Markets Fund January 15, 1998
>> International Growth Fund January 15, 1998
>> International Discovery Fund January 15, 1998
>> Global Growth Fund December 1, 1998
AMERICAN CENTURY INVESTMENT TRUST
>> Prime Money Market Fund June 1, 1998
</TABLE>
DAVID H. REINMILLER
Attorney At Law
4500 Main Street, P.O. Box 418210
Kansas City, Missouri 64141-9210
Telephone (816)340-4046
Telecopier (816)340-4964
July 27, 1999
American Century Capital Portfolios, Inc.
American Century Tower
4500 Main Street
Kansas City, Missouri 64111
Ladies and Gentlemen:
As counsel to American Century Capital Portfolios, Inc., I am generally
familiar with its affairs. Based upon this familiarity, and upon the examination
of such documents as I have deemed relevant, it is my opinion that the shares of
the Corporation described in Post-Effective Amendment No. 16 to its Registration
Statement on Form N-1A to be filed with the Securities and Exchange Commission
on or about July 29, 1999, will, when issued, be validly issued, fully paid and
nonassessable.
For the record, it should be stated that I am an officer and employee
of American Century Services Corporation, an affiliated corporation of American
Century Investment Management, Inc., the investment advisor of American Century
Capital Portfolios, Inc.
I hereby consent to the use of this opinion as an exhibit to
Post-Effective Amendment No. 16.
Very truly yours,
/s/David H. Reinmiller
David H. Reinmiller
Independent Auditors' Consent
We consent to the incorporation by reference in this Post-Effective Amendment
No. 16 to Registration Statement No. 33-64872 of American Century Capital
Portfolios, Inc. on Form N-1A of our Independent Auditors' Reports dated May 7,
1999, appearing in the Annual Reports of the five funds comprising American
Century Capital Portfolios, Inc. for the year ended March 31, 1999, and to the
reference to us under the heading "Financial Highlights" in the Prospectuses,
which are a part of such Registration Statement.
/*/Deloitte & Touche LLP
Deloitte & Touche LLP
Kansas City, Missouri
July 27, 1999
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.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
ADVISOR CLASS
THIS AMENDMENT NO. 6 TO MASTER DISTRIBUTION AND SHAREHOLDER SERVICES
PLAN is made as of the 30th day of July, 1999, by each of the above named
corporations (the "Issuers"). Capitalized terms not otherwise defined herein
shall have the meaning ascribed to them in the Master Distribution and
Shareholder Services Plan.
RECITALS
WHEREAS, the Issuers are parties to a certain Master Distribution and
Shareholder Services Plan dated September 3, 1996, amended June 13, 1997,
September 30, 1997, June 30, 1998, November 13, 1998 and February 16, 1999 (the
"Plan"); and
WHEREAS, American Century Capital Portfolios, Inc., has added a series,
the Large Cap Value Fund (the "Fund"), for which the Fund's board has
established an Advisor Class of shares; and
WHEREAS, the parties desire to amend the Plan to adopt the Plan on
behalf of the Fund.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. American Century Mutual Funds, Inc. hereby adopts the Plan on behalf
of the Fund, in accordance with Rule 12b-1 under the 1940 Act and on the terms
and conditions contained in the Plan.
2. Schedule A to the Plan is hereby amended by deleting the text
thereof in its entirety and inserting in lieu therefor the Schedule A attached
hereto.
3. After the date hereof, all references to the Plan shall be deemed to
mean the Master Distribution and Shareholder Services Plan, as amended by
Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment
No. 5 and this Amendment No. 6.
4. In the event of a conflict between the terms of this Amendment No.6
and the Plan, it is the intention of the parties that the terms of this
Amendment No. 6 shall control and the Plan shall be interpreted on that basis.
To the extent the provisions of the Plan have not been amended by this Amendment
No. 6, the parties hereby confirm and ratify the Plan.
5. This Amendment No. 6 may be executed in two or more counterparts,
each of which shall be an original and all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 6
as of the date first above written.
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
BY: /s/ David C. Tucker
David C. Tucker
Vice President of each of the Issuers
SCHEDULE A
SERIES OFFERING ADVISOR CLASS SHARES
FUND DATE PLAN ADOPTED
- ---- -----------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
>> Equity Income Fund September 3, 1996
>> Value Fund September 3, 1996
>> Real Estate Fund June 13, 1997
>> Small Cap Value Fund June 30, 1998
>> Large Cap Value Fund July 30, 1999
AMERICAN CENTURY MUTUAL FUNDS, INC.
>> Balanced Fund September 3, 1996
>> Growth Fund September 3, 1996
>> Heritage Fund September 3, 1996
>> Intermediate-Term Bond Fund September 3, 1996
>> Limited-Term Bond Fund September 3, 1996
>> Bond Fund September 3, 1996
>> Select Fund September 3, 1996
>> Ultra Fund September 3, 1996
>> Vista Fund September 3, 1996
>> High-Yield Fund September 20, 1997
>> Tax-Managed Value Fund February 26, 1999
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
>> Strategic Allocation: Aggressive Fund September 3, 1996
>> Strategic Allocation: Conservative Fund September 3, 1996
>> Strategic Allocation: Moderate Fund September 3, 1996
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
>> International Growth Fund September 3, 1996
>> International Discovery Fund September 3, 1996
>> Emerging Markets Fund September 3, 1996
>> Global Growth Fund December 1, 1998
AMENDMENT NO. 6 TO MULTIPLE CLASS PLAN
OF
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
THIS AMENDMENT NO. 6 TO MULTIPLE CLASS PLAN is made as of the 30th day
of July, 1999, by each of the above named corporations (the "Issuers").
Capitalized terms not otherwise defined herein shall have the meaning ascribed
to them in the Multiple Class Plan.
RECITALS
WHEREAS, the Issuers are parties to a certain Multiple Class Plan dated
as of May 31, 1996, amended June 13, 1997, September 30, 1997, June 30, 1998,
November 13, 1998 and January 29, 1999 (the "Plan"); and
WHEREAS, American Century Capital Portfolios, Inc., has added a series,
Large Cap Value Fund (the "Fund"), offering multiple classes; and
WHEREAS, the parties desire to amend the Plan to adopt the Plan on
behalf of the Fund.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties hereto agree as follows:
1. American Century Capital Portfolios, Inc. hereby adopt the Plan on
behalf of the Fund, in accordance with Rule 18f-3 under the 1940 Act and on the
terms and conditions contained in the Plan.
2. Schedule A to the Plan is hereby amended by deleting the text
thereof in its entirety and inserting in lieu therefor the Schedule A attached
hereto.
3. After the date hereof, all references to the Plan shall be deemed to
mean the Multiple Class Plan, as amended by Amendment No. 6.
4. In the event of a conflict between the terms of this Amendment No.6
and the Plan, it is the intention of the parties that the terms of this
Amendment No. 6 shall control and the Plan shall be interpreted on that basis.
To the extent the provisions of the Plan have not been amended by this Amendment
No. 6, the parties hereby confirm and ratify the Plan.
5. This Amendment No. 6 may be executed in two or more counterparts,
each of which shall be an original and all of which together shall constitute
one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 6
as of the date first above written.
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
AMERICAN CENTURY MUTUAL FUNDS, INC.
AMERICAN CENTURY STRATEGIC ASSET
ALLOCATIONS, INC.
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
BY: /s/ David C. Tucker
David C. Tucker
Vice President of each of the Issuers
<TABLE>
SCHEDULE A
Companies and Funds Covered by this Multiclass Plan
- --------------------------------------------------------------- ------------ -------------------- -------------- -------------------
Investor Institutional Service Advisor
Fund Class Class Class Class
- --------------------------------------------------------------- ------------ -------------------- -------------- -------------------
AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<S> <C> <C> <C> <C> <C>
Equity Income Fund Yes Yes Yes Yes
Value Fund Yes Yes Yes Yes
Real Estate Fund Yes Yes No Yes
Small Cap Value Fund Yes Yes No Yes
Equity Index Fund Yes Yes No No
Large Cap Value Fund Yes Yes No Yes
- --------------------------------------------------------------- ------------ -------------------- -------------- -------------------
AMERICAN CENTURY MUTUAL FUNDS, INC.
Balanced Fund Yes Yes Yes Yes
Growth Fund Yes Yes Yes Yes
Heritage Fund Yes Yes Yes Yes
Intermediate-Term Bond Fund Yes No Yes Yes
Limited-Term Bond Fund Yes No Yes Yes
Bond Fund Yes No Yes Yes
Select Fund Yes Yes Yes Yes
Ultra Fund Yes Yes Yes Yes
Vista Fund Yes Yes Yes Yes
Giftrust Fund Yes No No No
New Opportunities Fund Yes No No No
High-Yield Fund Yes No No Yes
Tax-Managed Value Fund Yes Yes No Yes
- --------------------------------------------------------------- ------------ -------------------- -------------- -------------------
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
Strategic Allocation: Aggressive Yes No Yes Yes
Strategic Allocation: Conservative Yes No Yes Yes
Strategic Allocation: Moderate Yes No Yes Yes
- --------------------------------------------------------------- ------------ -------------------- -------------- -------------------
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
International Growth Fund Yes Yes Yes Yes
International Discovery Fund Yes Yes Yes Yes
Emerging Markets Fund Yes Yes Yes Yes
Global Growth Fund Yes Yes No Yes
- --------------------------------------------------------------- ------------ -------------------- -------------- -------------------
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 11
<NAME> VALUE FUND INVESTOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 1,939,998,721
<INVESTMENTS-AT-VALUE> 1,810,051,637
<RECEIVABLES> 27,892,798
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,837,944,435
<PAYABLE-FOR-SECURITIES> 23,305,249
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,677,793
<TOTAL-LIABILITIES> 27,983,042
<SENIOR-EQUITY> 2,978,514
<PAID-IN-CAPITAL-COMMON> 1,934,693,595
<SHARES-COMMON-STOCK> 297,851,438
<SHARES-COMMON-PRIOR> 350,746,371
<ACCUMULATED-NII-CURRENT> 259,057
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,977,311
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (129,947,084)
<NET-ASSETS> 1,809,961,393
<DIVIDEND-INCOME> 46,911,892
<INTEREST-INCOME> 2,593,733
<OTHER-INCOME> 0
<EXPENSES-NET> (22,709,823)
<NET-INVESTMENT-INCOME> 26,795,802
<REALIZED-GAINS-CURRENT> 195,098,537
<APPREC-INCREASE-CURRENT> (486,683,191)
<NET-CHANGE-FROM-OPS> (264,788,852)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (27,029,374)
<DISTRIBUTIONS-OF-GAINS> (334,647,261)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 118,264,078
<NUMBER-OF-SHARES-REDEEMED> (230,575,028)
<SHARES-REINVESTED> 59,242,080
<NET-CHANGE-IN-ASSETS> (965,662,573)
<ACCUMULATED-NII-PRIOR> 283,462
<ACCUMULATED-GAINS-PRIOR> 331,861,333
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,425,941
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,709,823
<AVERAGE-NET-ASSETS> 2,194,311,097
<PER-SHARE-NAV-BEGIN> 7.73
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> (0.80)
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (1.15)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.77
<EXPENSE-RATIO> 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 12
<NAME> VALUE FUND INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 1,939,998,721
<INVESTMENTS-AT-VALUE> 1,810,051,637
<RECEIVABLES> 27,892,798
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,837,944,435
<PAYABLE-FOR-SECURITIES> 23,305,249
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,677,793
<TOTAL-LIABILITIES> 27,983,042
<SENIOR-EQUITY> 62,854
<PAID-IN-CAPITAL-COMMON> 1,937,609,255
<SHARES-COMMON-STOCK> 6,285,391
<SHARES-COMMON-PRIOR> 768,698
<ACCUMULATED-NII-CURRENT> 259,057
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,977,311
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (129,947,084)
<NET-ASSETS> 1,809,961,393
<DIVIDEND-INCOME> 46,911,892
<INTEREST-INCOME> 2,593,733
<OTHER-INCOME> 0
<EXPENSES-NET> (22,709,823)
<NET-INVESTMENT-INCOME> 26,795,802
<REALIZED-GAINS-CURRENT> 195,098,537
<APPREC-INCREASE-CURRENT> (486,683,191)
<NET-CHANGE-FROM-OPS> (264,788,852)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (232,110)
<DISTRIBUTIONS-OF-GAINS> (2,250,870)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,519,460
<NUMBER-OF-SHARES-REDEEMED> (1,410,565)
<SHARES-REINVESTED> 407,798
<NET-CHANGE-IN-ASSETS> (965,662,573)
<ACCUMULATED-NII-PRIOR> 283,462
<ACCUMULATED-GAINS-PRIOR> 331,861,333
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,425,941
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,709,823
<AVERAGE-NET-ASSETS> 11,066,766
<PER-SHARE-NAV-BEGIN> 7.73
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> (0.80)
<PER-SHARE-DIVIDEND> (0.10)
<PER-SHARE-DISTRIBUTIONS> (1.15)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.78
<EXPENSE-RATIO> 0.80
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 13
<NAME> VALUE FUND ADVISOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 1,939,998,721
<INVESTMENTS-AT-VALUE> 1,810,051,637
<RECEIVABLES> 27,892,798
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,837,944,435
<PAYABLE-FOR-SECURITIES> 23,305,249
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,677,793
<TOTAL-LIABILITIES> 27,983,042
<SENIOR-EQUITY> 94,046
<PAID-IN-CAPITAL-COMMON> 1,937,578,063
<SHARES-COMMON-STOCK> 9,404,576
<SHARES-COMMON-PRIOR> 7,214,551
<ACCUMULATED-NII-CURRENT> 259,057
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,977,311
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (129,947,084)
<NET-ASSETS> 1,809,961,393
<DIVIDEND-INCOME> 46,911,892
<INTEREST-INCOME> 2,593,733
<OTHER-INCOME> 0
<EXPENSES-NET> (22,709,823)
<NET-INVESTMENT-INCOME> 26,795,802
<REALIZED-GAINS-CURRENT> 195,098,537
<APPREC-INCREASE-CURRENT> (486,683,191)
<NET-CHANGE-FROM-OPS> (264,788,852)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (556,573)
<DISTRIBUTIONS-OF-GAINS> (8,157,990)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,304,387
<NUMBER-OF-SHARES-REDEEMED> (3,600,008)
<SHARES-REINVESTED> 1,441,856
<NET-CHANGE-IN-ASSETS> (965,662,573)
<ACCUMULATED-NII-PRIOR> 283,462
<ACCUMULATED-GAINS-PRIOR> 331,861,333
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 22,425,941
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 22,709,823
<AVERAGE-NET-ASSETS> 52,572,803
<PER-SHARE-NAV-BEGIN> 7.73
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> (0.80)
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (1.15)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.77
<EXPENSE-RATIO> 1.25
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 21
<NAME> EQUITY INCOME INVESTOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 328,710,219
<INVESTMENTS-AT-VALUE> 311,597,740
<RECEIVABLES> 4,992,803
<ASSETS-OTHER> 337,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 316,928,053
<PAYABLE-FOR-SECURITIES> 4,748,028
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 689,839
<TOTAL-LIABILITIES> 5,437,867
<SENIOR-EQUITY> 498,515
<PAID-IN-CAPITAL-COMMON> 321,630,238
<SHARES-COMMON-STOCK> 49,851,485
<SHARES-COMMON-PRIOR> 49,806,617
<ACCUMULATED-NII-CURRENT> 71,907
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,402,005
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (17,112,479)
<NET-ASSETS> 311,490,186
<DIVIDEND-INCOME> 10,817,840
<INTEREST-INCOME> 3,051,456
<OTHER-INCOME> 0
<EXPENSES-NET> (3,231,310)
<NET-INVESTMENT-INCOME> 1,037,986
<REALIZED-GAINS-CURRENT> 31,755,781
<APPREC-INCREASE-CURRENT> (45,429,913)
<NET-CHANGE-FROM-OPS> (3,036,146)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10,625,704)
<DISTRIBUTIONS-OF-GAINS> (43,173,325)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28,666,383
<NUMBER-OF-SHARES-REDEEMED> (36,724,976)
<SHARES-REINVESTED> 8,242,886
<NET-CHANGE-IN-ASSETS> (45,202,271)
<ACCUMULATED-NII-PRIOR> 32,005
<ACCUMULATED-GAINS-PRIOR> 34,956,912
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,205,816
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,231,310
<AVERAGE-NET-ASSETS> 317,100,069
<PER-SHARE-NAV-BEGIN> 7.15
<PER-SHARE-NII> 0.22
<PER-SHARE-GAIN-APPREC> (0.23)
<PER-SHARE-DIVIDEND> (0.23)
<PER-SHARE-DISTRIBUTIONS> (0.96)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.95
<EXPENSE-RATIO> 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 22
<NAME> EQUITY INCOME INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 328,710,219
<INVESTMENTS-AT-VALUE> 311,597,740
<RECEIVABLES> 4,992,803
<ASSETS-OTHER> 337,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 316,928,053
<PAYABLE-FOR-SECURITIES> 4,748,028
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 689,839
<TOTAL-LIABILITIES> 5,437,867
<SENIOR-EQUITY> 4,459
<PAID-IN-CAPITAL-COMMON> 322,124,294
<SHARES-COMMON-STOCK> 445,883
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 71,907
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,402,005
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (17,112,479)
<NET-ASSETS> 311,490,186
<DIVIDEND-INCOME> 10,817,840
<INTEREST-INCOME> 3,051,456
<OTHER-INCOME> 0
<EXPENSES-NET> (3,231,310)
<NET-INVESTMENT-INCOME> 1,037,986
<REALIZED-GAINS-CURRENT> 31,755,781
<APPREC-INCREASE-CURRENT> (45,429,913)
<NET-CHANGE-FROM-OPS> (3,036,146)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (26,713)
<DISTRIBUTIONS-OF-GAINS> (700)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 442,110
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 3,773
<NET-CHANGE-IN-ASSETS> (45,202,271)
<ACCUMULATED-NII-PRIOR> 32,005
<ACCUMULATED-GAINS-PRIOR> 34,956,912
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,205,816
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,231,310
<AVERAGE-NET-ASSETS> 138,341
<PER-SHARE-NAV-BEGIN> 6.96
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 0.06
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (0.96)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.95
<EXPENSE-RATIO> 0.80
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 23
<NAME> EQUITY INCOME ADVISOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 328,710,219
<INVESTMENTS-AT-VALUE> 311,597,740
<RECEIVABLES> 4,992,803
<ASSETS-OTHER> 337,510
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 316,928,053
<PAYABLE-FOR-SECURITIES> 4,748,028
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 689,839
<TOTAL-LIABILITIES> 5,437,867
<SENIOR-EQUITY> 20,596
<PAID-IN-CAPITAL-COMMON> 322,108,157
<SHARES-COMMON-STOCK> 2,059,576
<SHARES-COMMON-PRIOR> 102,097
<ACCUMULATED-NII-CURRENT> 71,907
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,402,005
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (17,112,479)
<NET-ASSETS> 311,490,186
<DIVIDEND-INCOME> 10,817,840
<INTEREST-INCOME> 3,051,456
<OTHER-INCOME> 0
<EXPENSES-NET> (3,231,310)
<NET-INVESTMENT-INCOME> 1,037,986
<REALIZED-GAINS-CURRENT> 31,755,781
<APPREC-INCREASE-CURRENT> (45,429,913)
<NET-CHANGE-FROM-OPS> (3,036,146)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (199,229)
<DISTRIBUTIONS-OF-GAINS> (824,603)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,102,548
<NUMBER-OF-SHARES-REDEEMED> (289,382)
<SHARES-REINVESTED> 144,320
<NET-CHANGE-IN-ASSETS> (45,202,271)
<ACCUMULATED-NII-PRIOR> 32,005
<ACCUMULATED-GAINS-PRIOR> 34,956,912
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,205,816
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 3,231,310
<AVERAGE-NET-ASSETS> 4,534,126
<PER-SHARE-NAV-BEGIN> 7.16
<PER-SHARE-NII> 0.21
<PER-SHARE-GAIN-APPREC> (0.24)
<PER-SHARE-DIVIDEND> (0.22)
<PER-SHARE-DISTRIBUTIONS> (0.96)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.95
<EXPENSE-RATIO> 1.25
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 31
<NAME> REAL ESTATE FUND- INVESTOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 152,794,818
<INVESTMENTS-AT-VALUE> 134,653,513
<RECEIVABLES> 1,817,380
<ASSETS-OTHER> 1,071,786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,542,679
<PAYABLE-FOR-SECURITIES> 302,767
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191,369
<TOTAL-LIABILITIES> 494,136
<SENIOR-EQUITY> 91,110
<PAID-IN-CAPITAL-COMMON> 170,888,396
<SHARES-COMMON-STOCK> 9,110,962
<SHARES-COMMON-PRIOR> 8,441,011
<ACCUMULATED-NII-CURRENT> 746,412
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,536,070)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (18,141,305)
<NET-ASSETS> 137,048,543
<DIVIDEND-INCOME> 9,410,776
<INTEREST-INCOME> 199,453
<OTHER-INCOME> 0
<EXPENSES-NET> (1,702,129)
<NET-INVESTMENT-INCOME> 7,908,100
<REALIZED-GAINS-CURRENT> (18,562,395)
<APPREC-INCREASE-CURRENT> (23,965,828)
<NET-CHANGE-FROM-OPS> (34,620,123)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,933,750)
<DISTRIBUTIONS-OF-GAINS> (1,111,296)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,944,040
<NUMBER-OF-SHARES-REDEEMED> (8,692,855)
<SHARES-REINVESTED> 425,283
<NET-CHANGE-IN-ASSETS> (13,668,939)
<ACCUMULATED-NII-PRIOR> 1,165,092
<ACCUMULATED-GAINS-PRIOR> (1,328,236)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,700,461
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,702,129
<AVERAGE-NET-ASSETS> 122,973,799
<PER-SHARE-NAV-BEGIN> 16.12
<PER-SHARE-NII> 0.73
<PER-SHARE-GAIN-APPREC> (4.09)
<PER-SHARE-DIVIDEND> (0.54)
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.10
<EXPENSE-RATIO> 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 32
<NAME> REAL ESTATE FUND- INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 152,794,818
<INVESTMENTS-AT-VALUE> 134,653,513
<RECEIVABLES> 1,817,380
<ASSETS-OTHER> 1,071,786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,542,679
<PAYABLE-FOR-SECURITIES> 302,767
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191,369
<TOTAL-LIABILITIES> 494,136
<SENIOR-EQUITY> 21,732
<PAID-IN-CAPITAL-COMMON> 170,957,774
<SHARES-COMMON-STOCK> 2,173,167
<SHARES-COMMON-PRIOR> 917,096
<ACCUMULATED-NII-CURRENT> 746,412
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,536,070)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (18,141,305)
<NET-ASSETS> 137,048,543
<DIVIDEND-INCOME> 9,410,776
<INTEREST-INCOME> 199,453
<OTHER-INCOME> 0
<EXPENSES-NET> (1,702,129)
<NET-INVESTMENT-INCOME> 7,908,100
<REALIZED-GAINS-CURRENT> (18,562,395)
<APPREC-INCREASE-CURRENT> (23,965,828)
<NET-CHANGE-FROM-OPS> (34,620,123)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,054,610)
<DISTRIBUTIONS-OF-GAINS> (266,386)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,180,812
<NUMBER-OF-SHARES-REDEEMED> (1,008,425)
<SHARES-REINVESTED> 82,762
<NET-CHANGE-IN-ASSETS> (13,668,939)
<ACCUMULATED-NII-PRIOR> 1,165,092
<ACCUMULATED-GAINS-PRIOR> (1,328,236)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,700,461
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,702,129
<AVERAGE-NET-ASSETS> 22,410,231
<PER-SHARE-NAV-BEGIN> 16.12
<PER-SHARE-NII> 0.78
<PER-SHARE-GAIN-APPREC> (4.09)
<PER-SHARE-DIVIDEND> (0.58)
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.11
<EXPENSE-RATIO> 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 33
<NAME> REAL ESTATE FUND- ADVISOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 152,794,818
<INVESTMENTS-AT-VALUE> 134,653,513
<RECEIVABLES> 1,817,380
<ASSETS-OTHER> 1,071,786
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,542,679
<PAYABLE-FOR-SECURITIES> 302,767
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 191,369
<TOTAL-LIABILITIES> 494,136
<SENIOR-EQUITY> 371
<PAID-IN-CAPITAL-COMMON> 170,979,132
<SHARES-COMMON-STOCK> 37,063
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 746,412
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (16,536,070)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (18,141,305)
<NET-ASSETS> 137,048,543
<DIVIDEND-INCOME> 9,410,776
<INTEREST-INCOME> 199,453
<OTHER-INCOME> 0
<EXPENSES-NET> (1,702,129)
<NET-INVESTMENT-INCOME> 7,908,100
<REALIZED-GAINS-CURRENT> (18,562,395)
<APPREC-INCREASE-CURRENT> (23,965,828)
<NET-CHANGE-FROM-OPS> (34,620,123)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,632)
<DISTRIBUTIONS-OF-GAINS> (325)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 38,324
<NUMBER-OF-SHARES-REDEEMED> (1,678)
<SHARES-REINVESTED> 418
<NET-CHANGE-IN-ASSETS> (13,668,939)
<ACCUMULATED-NII-PRIOR> 1,165,092
<ACCUMULATED-GAINS-PRIOR> (1,328,236)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,700,461
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,702,129
<AVERAGE-NET-ASSETS> 146,057
<PER-SHARE-NAV-BEGIN> 12.22
<PER-SHARE-NII> 0.43
<PER-SHARE-GAIN-APPREC> (0.15)
<PER-SHARE-DIVIDEND> (0.28)
<PER-SHARE-DISTRIBUTIONS> (0.12)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.10
<EXPENSE-RATIO> 1.45
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 41
<NAME> SMALL CAP VALUE INVESTOR CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 12,593,034
<INVESTMENTS-AT-VALUE> 12,193,022
<RECEIVABLES> 338,008
<ASSETS-OTHER> 131,814
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,662,844
<PAYABLE-FOR-SECURITIES> 253,210
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,365
<TOTAL-LIABILITIES> 266,575
<SENIOR-EQUITY> 24,122
<PAID-IN-CAPITAL-COMMON> 12,789,539
<SHARES-COMMON-STOCK> 2,412,196
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 22,512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (39,892)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (400,012)
<NET-ASSETS> 12,396,269
<DIVIDEND-INCOME> 126,393
<INTEREST-INCOME> 13,978
<OTHER-INCOME> 0
<EXPENSES-NET> (76,318)
<NET-INVESTMENT-INCOME> 64,053
<REALIZED-GAINS-CURRENT> 65,026
<APPREC-INCREASE-CURRENT> (400,012)
<NET-CHANGE-FROM-OPS> (270,933)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (37,689)
<DISTRIBUTIONS-OF-GAINS> (56,049)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,844,651
<NUMBER-OF-SHARES-REDEEMED> (1,459,617)
<SHARES-REINVESTED> 27,162
<NET-CHANGE-IN-ASSETS> (146,459)
<ACCUMULATED-NII-PRIOR> 6,286
<ACCUMULATED-GAINS-PRIOR> (91,166)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 76,254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 76,318
<AVERAGE-NET-ASSETS> 8,572,856
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (0.24)
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (0.02)
<RETURNS-OF-CAPITAL> (0.02)
<PER-SHARE-NAV-END> 4.73
<EXPENSE-RATIO> 1.25
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 42
<NAME> SMALL CAP VALUE INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 12,593,034
<INVESTMENTS-AT-VALUE> 12,193,022
<RECEIVABLES> 338,008
<ASSETS-OTHER> 131,814
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,662,844
<PAYABLE-FOR-SECURITIES> 253,210
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 13,365
<TOTAL-LIABILITIES> 266,575
<SENIOR-EQUITY> 2,082
<PAID-IN-CAPITAL-COMMON> 12,811,579
<SHARES-COMMON-STOCK> 208,198
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 22,512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (39,892)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (400,012)
<NET-ASSETS> 12,396,269
<DIVIDEND-INCOME> 126,393
<INTEREST-INCOME> 13,978
<OTHER-INCOME> 0
<EXPENSES-NET> (76,318)
<NET-INVESTMENT-INCOME> 64,053
<REALIZED-GAINS-CURRENT> 65,026
<APPREC-INCREASE-CURRENT> (400,012)
<NET-CHANGE-FROM-OPS> (270,933)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,852)
<DISTRIBUTIONS-OF-GAINS> (8,977)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 211,202
<NUMBER-OF-SHARES-REDEEMED> (5,659)
<SHARES-REINVESTED> 2,655
<NET-CHANGE-IN-ASSETS> (146,459)
<ACCUMULATED-NII-PRIOR> 6,286
<ACCUMULATED-GAINS-PRIOR> (91,166)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 76,254
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 76,318
<AVERAGE-NET-ASSETS> 1,022,518
<PER-SHARE-NAV-BEGIN> 4.83
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> (0.04)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 4.74
<EXPENSE-RATIO> 1.05
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 51
<NAME> EQUITY INDEX INVESTOR CLASS
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 272,176,594
<INVESTMENTS-AT-VALUE> 281,415,633
<RECEIVABLES> 236,294
<ASSETS-OTHER> 744,455
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 282,396,382
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 807,018
<TOTAL-LIABILITIES> 807,018
<SENIOR-EQUITY> 32,737
<PAID-IN-CAPITAL-COMMON> 271,414,464
<SHARES-COMMON-STOCK> 3,273,692
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 323,966
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 651,108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,167,089
<NET-ASSETS> 281,589,364
<DIVIDEND-INCOME> 287,184
<INTEREST-INCOME> 110,400
<OTHER-INCOME> 0
<EXPENSES-NET> (73,618)
<NET-INVESTMENT-INCOME> 323,966
<REALIZED-GAINS-CURRENT> 651,108
<APPREC-INCREASE-CURRENT> 9,167,089
<NET-CHANGE-FROM-OPS> 10,142,163
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,412,730
<NUMBER-OF-SHARES-REDEEMED> (139,038)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 281,589,364
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 73,281
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 73,618
<AVERAGE-NET-ASSETS> 10,516,915
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.19
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.20
<EXPENSE-RATIO> 0.49
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 52
<NAME> EQUITY INDEX INSTITUTIONAL CLASS
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 272,176,594
<INVESTMENTS-AT-VALUE> 281,415,633
<RECEIVABLES> 236,294
<ASSETS-OTHER> 744,455
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 282,396,382
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 807,018
<TOTAL-LIABILITIES> 807,018
<SENIOR-EQUITY> 509,148
<PAID-IN-CAPITAL-COMMON> 270,938,053
<SHARES-COMMON-STOCK> 50,914,827
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 323,966
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 651,108
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,167,089
<NET-ASSETS> 281,589,364
<DIVIDEND-INCOME> 287,184
<INTEREST-INCOME> 110,400
<OTHER-INCOME> 0
<EXPENSES-NET> (73,618)
<NET-INVESTMENT-INCOME> 323,966
<REALIZED-GAINS-CURRENT> 651,108
<APPREC-INCREASE-CURRENT> 9,167,089
<NET-CHANGE-FROM-OPS> 10,142,163
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 52,351,049
<NUMBER-OF-SHARES-REDEEMED> (1,436,222)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 281,589,364
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 73,281
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 73,618
<AVERAGE-NET-ASSETS> 254,028,289
<PER-SHARE-NAV-BEGIN> 5.00
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 0.19
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.20
<EXPENSE-RATIO> 0.29
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY CAPITAL PORTFOLIOS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000908186
<NAME> AMERICAN CENTURY CAPITAL PORTFOLIOS, INC.
<SERIES>
<NUMBER> 61
<NAME> AMERICAN CENTURY LARGE CAP VALUE FUND
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
